Abstract
The topic of internationalization has received an increased amount of attention due to globalization and growing amounts of international trade. One of the most important factors for the success of foreign market operations is the choice of the entry mode. This paper investigates the key determinants for the choice of foreign market entry mode. Specifically, the research examines the effects of market-related factors of the selected entry mode on service companies. This study contributes to the existing knowledge of internationalization of service companies by analyzing market-related factors of entry modes. Moreover, it provides managerial implications that might be applied by companies and governmental agencies to promote investment and internationalization of local companies.
Highlights
One of the most important factors for the success of foreign market operations – besides market selection – is the choice of the entry mode (Lee, 2010; Kennedy, 2005)
A conceptual model was constructed in order to evaluate the effect of market-related factors as well as firm specific characteristics on the choice of foreign market entry mode
The results have shown that generally none of the variables comply with a normal distribution
Summary
One of the most important factors for the success of foreign market operations – besides market selection – is the choice of the entry mode (Lee, 2010; Kennedy, 2005). The choice of foreign market entry mode is explained by several key theories such as the Internationalization Theory (Canabala & White, 2008), the Transaction Cost Theory (Erramilli & Rao, 1993), Dunning’s eclectic paradigm (Dunning, 1993) and the resource-based theory (Barney, 1991) These studies lack focus on the internationalization of service companies. The relatively well protected environment of SME’s domestic markets was influenced by increasing competition, as a result such companies had to internationalize to survive (Lee, 2010) This was followed by an increased focus from researchers analyzing SME entry modes to foreign markets
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