International Hotel Firms’ Choices of Entry Mode

Abstract

This study examines the choices of entry modes of international hotel firms. This research effort was designed to investigate the influential factors in the environment of a foreign country and international lodging company. Once identified, an attempt was made to determine if there were any relationships which existed between these factors and entry mode choices when these international hotels attempted expansion into new foreign markets. This effort was initially influenced by the transaction cost analysis (TCA) which insists firm chooses an entry mode which minimize the all costs associated with its integration. A total of 591 international hotel openings are included in the sample and ordered logit model was used to analyze the sample. The findings included eight propositions that explain the relationships among the influential variables and entry mode choices in the international hotel firms. Although several factors appear to influence a firm’s particular choice of entry mode in a given situation, uncertainty variables seem to be particularly important. TCA requires extensions and modifications to be effective as a general theory of entry mode for the circumstances of international lodging firms.