Linking Entry Timing (ET) and Entry Mode (EM) Decisions in International Market Expansion by Malaysian Construction Firm: Toward the Development of ETEM Model

Abstract

Neglecting to properly choose the right combination of entry mode and entry timing strategies can lead to poor performance in international business ventures. The paper focuses on the linking of entry timing (ET) and entry mode (EM) decisions and the factors influencing both decisions. By consolidating the findings for both entry decisions, an ETEM model to guide the construction firms to access the targeted markets will be developed. The questionnaire surveys were sent to 115 Malaysian construction firms listed under Construction Industry Development Board (CIDB) Malaysia with 39.1 % response rate. The logistic regression (LR) model revealed that the majority of construction firms have chosen to be the late movers (LMs). Factor analysis carried out shows that the factors significantly influenced the firms’ entry timing decision as LMs are the firm’s international experience, level of knowledge, research and development intensity, competencies in project management, specialist expertise and technology, and financing capacity. The multinomial logistic regression (MLR) model has shown that majority of the construction firms preferred both equity (EQ) and non-equity (NEQ) entry modes. The factor analysis revealed that the factors that significantly influenced the firms’ entry mode decisions to choose both types of entry mode are the firm’s management of quality and risk attitudes, strong resources, experience in similar works, ability to assess market signals and opportunities, superior management and organizational dynamic capabilities, availability of partner/alliance, and existence of strict time limitations. The consolidation of findings shows that the majority of the Malaysian construction firms were the late movers, and they preferred both EQ and NEQ entry modes. Hence, this study contributes to an improved understanding of particular relationships that exist between the entry timing and entry mode decisions made by firms into international market.