Going global in groups: a relevant market entry strategy?

Abstract

PurposeThe purpose of this paper is to identify whether the new Chinese phenomenon of going global in groups represents a more advantageous market entry mode than the phenomena considered in previous studies.Design/methodology/approachIn this empirical research paper, the authors draw upon the literature in academic journals and books regarding the Chinese special economic zones overseas to analyze and compare collective internationalization (i.e. going global in groups) with traditional market entry modes as per the ownership, location and internalization paradigm (OLI) and transaction cost approach (TCA).FindingsThe authors identified that financial and diplomatic support provided by the Chinese Government has reinforced internationalization in groups, thereby minimizing some structural risks in host countries. Pre-operational and operating costs have been lowered or shared among group members, and weighted average cost of capital has dropped due to the availability of specific funding lines with subsidized interest rates.Research limitations/implicationsGiven the lack of available literature on the topic, the authors based their study of the collective internationalization of Chinese firms on very few cases, most of which represent market entry in African countries.Practical implicationsThe study calls attention to a new, more efficient and less risky characteristic of international entry modes, which implies that companies can reap multiple benefits by entering markets in global groups.Originality/valueAs literature addressing market entry modes focuses mostly on individual enterprises, this paper contributes to the identification of advantages in collective internationalization.