Foreign Market Entry Mode Choice

Abstract

The purpose of this chapter is to empirically examine firms’ internal and external factors that can affect their foreign market mode choice. The model is comprised of internal factors such as control, domestic business experience, and industry type; and external factors in terms of culture of foreign markets and intensity of competition. A mail-out survey to Australian firms involved in international business generated 315 useful responses. The hypotheses were tested using direct logistic regression analysis. Among the five variables, industry type, domestic business experience, and intensity of competition were found statistically significant. While industry type and domestic business experience encourage non-export mode, intensity of competition favours export mode. The major contributions of this study are the discovery of a variable, domestic business experience that is new in the literature; and the reinforcement of the importance of examining both internal and external factors when making a foreign market entry mode choice.