Market Selection Research Articles

Entry Mode, Market Selection, and Innovation Performance

Recent studies highlighted the need for multi-perspective research on the internationalization and performance of emerging market multinational enterprises (EM-MNEs) and revealed why many EM-MNEs perform negatively when they respond to the host-country environment. Using a sample of listed Chinese manufacturing firms from 2003 to 2014, this study examines the relationship between entry mode choice, which is driven by different environmental response patterns, and firms’ innovation performance. We further analyze the moderating role of market selection on the relationship between host-country institutional factors and firms’ innovation performance. The results show that the international breadth of firms and the economic stability and investment protection of the host country significantly promote firms’ innovation performance. While the entry mode is unilaterally driven by the host-country response, early international experience and the international depth of firms have significant negative effects on firms’ innovation performance. The level of economic development in the invested area plays a moderating role in the relationship between the host-country institutional factors and firms’ innovation performance. Our findings enrich the literature on the relationship between internationalization and EM-MNE performance, and provide inspiring and straightforward empirical evidence.

Thoughts on Informatization of Prefabricated Building

Prefabricated buildings are the reorganization and optimization of related resources such as design, component production and prefabricated construction, which are the inevitable result of market selection, industry development and productivity improvement. Prefabricated overall correlation, parallel design, modular combination and generalization have transformed the construction industry from a traditional sector to an industrial sector and presented some features of informatization. On account of the limitations of BIM, the low degree of informatization of component manufacturing and key node technology research, informationization of prefabricated technology and design has not yet taken shape, which restricts informationization of prefabricated building.Overcoming the inadequacy of building an integrated information system can help modernization of the construction industry.

Branded retailer expansion on a continent-sized emerging market

PurposeThe purpose of this paper is to identify patterns for the intra-market expansion of international branded retailers on a continent-sized emerging market using the network approach.Design/methodology/approachA multiple-case study design of four foreign branded retailers that have expanded onto regional markets in Brazil is used.FindingsThe intra-market expansion process shares similarities with the cross-market expansion process; is influenced by the relationships of foreign branded retailers with local competitors and shopping mall firms; and market selection, mode of operation and store location decisions are interrelated and conjointly taken, instead of forming a three-stage process. Additionally, the importance of relationships with host market shopping malls firms is highlighted.Research limitations/implicationsThis paper advances a conceptual model of the intra-market expansion process, which comprises a system of interrelated decisions – (regional) market selection, mode of operation and store location – influenced by several network effects.Practical implicationsManagers of foreign branded retail suffer from liability of foreignness when undertaking intra-market expansion. Although Brazil is a large market, the retail community is highly connected because of managers’ personal relationships. Brazilian shopping malls dominate suitable store locations, and represent a valuable source of knowledge and resources for the foreign branded retailer.Originality/valueThis paper addresses two under-researched aspects of international retail: branded retailers – manufacturers that develop brands and operate stores – and intra-market expansion (i.e. to geographic regions of a given foreign country). It also discusses the challenges of intra-market expansion in continent-sized emerging markets, with considerable regional diversity (culture, infrastructure and institutions).

Outside (option) in the orchard: lemons or peaches?

We study how an employment-related outside option affects equilibrium properties of credit markets plagued with asymmetric information, when returns to entrepreneurial ventures are ranked by first-order stochastic dominance. While greater separation of expected payoffs in paid employment than in entrepreneurship may involve credit rationing or market breakdown, a lemons problem in the outside option may produce multiple competitive equilibria, each featuring favorable selection in the credit market. Under these circumstances, informational asymmetries will not prevent high-ability individuals from pursuing entrepreneurship and yet induce more investment than is socially efficient. This prediction is consistent with recent empirical evidence on the relative importance of rationing vis-a-vis over-provision for credit seeking, informationally opaque firms.

Team Nogueira: Invasão do Mixed Martial Arts no Universo Fitness

Resumo Este caso para ensino descreve o desafio de Sergio Lyra, CEO da Team Nogueira, rede de academias de ginástica fundada pelos irmãos Rodrigo e Rogério Nogueira, dois dos maiores lutadores da história do Mixed Martial Arts (MMA) mundial, que haviam transformado seu centro de treinamento em uma academia e, posteriormente, em uma rede de franquias. Em 2015, a Team Nogueira contava com mais de trinta academias por todo o Brasil, no entanto, a desaceleração da popularização da modalidade, aliada à crise econômica que assolava o país e à aposentadoria dos irmãos que davam nome à rede, criavam um cenário de incertezas e preocupações. Esse caso serve de pano de fundo para a discussão sobre a aplicação do marketing no contexto esportivo, permitindo a discussão sobre os desafios relacionados ao alinhamento entre segmentação, seleção do mercado-alvo e posicionamento. Portanto, o caso é recomendado para a disciplina de Fundamentos de Marketing ou Marketing Esportivo em cursos de graduação e pós-graduação, nas sessões dedicadas à discussão sobre segmentação, posicionamento competitivo ou estratégia de marketing.

Are Gold and Government Bond Safe‐Haven Assets? An Extremal Quantile Regression Analysis

AbstractThis study reexamines gold and government bonds as potential safe‐haven assets (SHAs) during market turmoil from daily data in 16 international markets over the past 20 years. We apply the extremal quantile regression model by Chernozhukov and Chernozhukov and Fernandez‐Val for empirical investigation. The outcomes indicate that a government bond is more likely to be qualified an active SHA, which can increase in value during market turmoil. Gold can be generally evaluated as a passive SHA, which is uncorrelated with market slumps. However, at the extremal 0.001 quantile level, neither asset can be qualified as a SHA. Since both assets exhibit a similar number of cases of being qualified as SHAs, we cannot significantly differentiate the “flight‐to‐liquidity” and “flight‐to‐quality” hypotheses. In terms of market selection, United States and Singapore are the top two choices while France and Hungary are the least commended markets to invest their local gold market as SHA.

Identifying export opportunities between IORA member states using the TRADE-DSM® methodology: a case study involving South Africa and Thailand

ABSTRACTExporters, in developing countries, often struggle to access accurate market information which will help them make informed decisions about which export markets and products to focus on. Despite the existence of several market selection techniques, a lack of market information has been identified as a major impediment to export activity in the Indian Ocean Rim region. This paper introduces the TRADE-DSM®, a scientific market selection methodology that screens large quantities of data to reveal the most promising realistic export opportunities for a company, industry, country or region. The hypothesis of this paper is two-fold: (i) whether the TRADE-DSM® could help fill the information gap that exporters and export promotion organizations in the Indian Ocean Rim Association (IORA) experience, and (ii) whether the TRADE-DSM® could provide the building blocks for the development of a region-wide export promotion strategy for IORA.

Patterns in international ICT entrepreneurship: Mexico’s case

PropósitoEsta investigación persigue un entendimiento de los antecedentes en la internacionalización de la PyME para un pequeño conjunto de negocios mexicanos de TIC emprendedores, en conexión con posiciones subsectoriales en una curva con forma de sonrisa. Dichos antecedentes constituyen patrones exploratorios relacionados con características de internacionalización simplificadas, en función de la selección del mercado, los antecedentes del fundador, y las afiliaciones no espaciales, ofreciendo una técnica complementaria para la identificación de elementos que moldean la internacionalización de la PyME en América Latina.Diseño/metodología/enfoqueUna curva de valor añadido en forma de “sonrisa” es delineada de acuerdo con la clasificación industrial SCIAN, mapeando una muestra deliberada no probabilística de PyMEs mexicanas. csQCA ha sido aplicado a la muestra con base en datos secundarios. El comportamiento exportador de México en TIC es analizado también.HallazgosLas PyMEs internacionalizadas en la muestra tienden a agruparse en patrones que se aproximan a las posiciones de mayor valor añadido dentro de la curva de la “sonrisa,” ejemplificando un tipo de conglomerado no geográfico. Ciertos agrupamientos parecen prevalecer respecto a la selección del mercado (América del norte vs. Latinoamérica). Los antecedentes del fundador no determinan las opciones de internacionalización. La muestra incluyó contraejemplos (nuevos participantes, casos limitados que involucran actividades de I+D), los cuales sugieren validaciones relevantes de la literatura una vez analizados.Originalidad/valorEsta investigación contextualiza la internacionalización sectorial de la PyME desde una perspectiva latinoamericana, identificando patrones simples alrededor de subsectores particulares de TIC. Se enfoca en un tipo de emprendimiento internacional que llega a ser excepcional en regiones en desarrollo: orientado a la tecnología. csQCA se presenta como una técnica preliminar (exploratoria) para delinear marcos teóricos alternativos para la internacionalización de la PyME, específicamente, selección del mercado y comportamiento de conglomerados no espaciales alrededor de cadenas de valor añadido, llevando a nuevas perspectivas teóricas en la internacionalización de la PyME.

The trade-off between institutionally proximal and distal markets: The impact of home market pressures on firms’ export market selection

This study uses an organizational change perspective to analyze firms' export market selection (EMS) to adapt to home country market pressures. We argue that firms' strategic objectives influence whether they will enter institutionally proximal or distal markets. A model with two curvilinear (U-shaped and inverted U-shaped) relationships is found by testing 1940 Taiwanese export firms based on two official datasets. The model shows that firms are more likely to increase their exports to institutionally proximal markets and to decrease their exports to institutionally distal markets if they have an increasing but still controllable degree of competitive and marketing pressures in the home country. This response represents an incremental change by exporting firms. However, firms increase their exports to institutionally distal markets while decreasing their exports to institutionally proximal markets if they have an excessively increasing degree of competitive and marketing pressures in the home country. This response represents a radical change by exporting firms. We find that export firms' strategic objectives in choosing different organizational change styles (incremental or radical) are highly related to this trade-off in their EMS decision making.

Knowledge proxies and internationalization: the moderating effects of entrepreneurial motivation

International business research has identified a number of unique constructs important to foreign market selection: such as, psychic distance, networks, country specific experience, home host simil...

Letter from the Editors: Special Issue on the 2018 Peter J. Buckley and Mark Casson AIB Dissertation Award

This issue of AIB Insights focuses on the 2018 Peter J. Buckley and Mark Casson AIB Dissertation Award. It includes “Firm’s Economic Reliance to National Markets and the Corporate Provision of Public Goods: Evidence from Corporate Disaster Philanthropy” by Luis Ballesteros; “Country Familiarity: Three Essays on Entrepreneur Foreign Market Selection” by Daniel Clark; “What Drives Tax Avoidance Strategies Adopted by US MNEs: Understanding the Heterogeneity of Approaches to Corporate Tax Planning in US Multinational Enterprises” by Maggie Cooper; “Institutional Voids, Investment Purposes, and Foreign Subsidiaries of Multinational Enterprises” by Yamlaksira Getachew; and “Essays on Nonmarket Strategy” by Jin Hyung Kim.

Institutional quality and market selection in the transition to market economy

This paper investigates the impact of institutional quality on the productivity, profitability and survival of new entrants versus those of incumbent firms in a transitional setting, Vietnam. By integrating economic and institutional perspectives, we emphasize the importance of institutional quality in shaping the evolution of industry dynamics. We find that poor institutional quality that acts as institutional buffering for incumbents jeopardizes the Schumpeterian market selection process. In particular, despite being more productive and profitable, new entrants are still more likely to exit than incumbents on average. As a consequence, facing poor institutions, only new entrants with sufficiently high productivity and profitability are able to survive. However, improving institutional quality does not enhance new entrants' survival and entrepreneurial performance; rather, it removes the survival advantage of incumbents and thus reduces the differences in performance and exit hazard between new entrants and incumbents. We investigate this seemingly paradoxical relationship using Vietnamese census data from 2006 to 2013.

ECONOMIC ANALYSIS OF SOCIAL SECURITY SURVIVORS INSURANCE

AbstractThis article develops a heterogeneous agents model to analyze the effects of Social Security survivors insurance. The model features a negative mortality–income gradient, asymmetric information of individual mortality rates, and a warm‐glow bequest motive that varies by age and family structure. The model matches life‐cycle changes in life insurance coverage and generates advantageous selection in the insurance market. For male agents, reducing survivors benefits for dependent children generates welfare losses, whereas reducing survivors benefits for aged spouses produces welfare gains. The opposing welfare results are explained by differences in the timing of benefits and in the funding cost.

Comparison of Value-Added Analysis of Coffee Processing with Different Market Orientations: (Case Study on Cooperative of Producer Coffee Margamulya)

Cooperative of Producer Coffee Margamulya (CPCM) consists of 140 members who produced Arabica java preanger coffee with an average of 70 tons green bean per year. The cherry coffee is first processed into green bean using wet processing method before being sold. Eighty percent of green beans are marketed to exporters (PT. Taman Delta Indonesia / PT. TDI) while 10% to Indocom and the other 10% to various markets with various products. This study was more focused on the analysis of difference of added value obtained by cooperatives from the dominant market for green bean, i.e., to exporters and Indocom. Also, this study aimed to determine the factors that influence market selection. The method used was a case study, with Hayami value-added analysis technique. The result showed that the added value of cherry processing became green bean for the export market was 19% while the value added for Indocom was 34%. The reason for choosing the market to exporters is that PT. TDI receives a large number of green beans, and provides UTZ (utilize) certification assistance. On the contrary, Indocom only bought smaller volumes than PT. TDI with non-fixed frequencies.

(Neutrally) Optimal Mechanism under Adverse Selection: The canonical insurance problem

This paper revisits the problem of adverse selection in the insurance market of Rothschild and Stiglitz (1976). We extend the three-stage game in Hellwig (1987) by allowing firms to endogenously choose whether or not to pre-commit on their contractual offers (menus). We show how this mechanism can deliver the Miyazaki–Wilson–Spence allocation as the unique perfect-Bayesian equilibrium. This allocation is the unique incentive-efficient and individually-rational maximizer of the utility of the most profitable type. In fact, given that the informed player has only two types, it is the unique core allocation and thus the unique neutral optimum in the sense of Myerson (1983).

Households rejecting loan offers from banks

This paper studies the mechanism of adverse selection in the credit market using a sample of mortgage applications that are approved by lenders but rejected by applicants. We find that a low-risk applicant is more likely to reject a loan offer, except when the offer is made by an informed lender. Using jumbo mortgage and loan acceptance rate data to proxy for the information advantage, we find that lenders with a lower likelihood of being rejected are indeed better informed than others.

Mean-Variance Portfolio Selection in a Jump-Diffusion Financial Market with Common Shock Dependence

This paper considers the optimal investment problem in a financial market with one risk-free asset and one jump-diffusion risky asset. It is assumed that the insurance risk process is driven by a compound Poisson process and the two jump number processes are correlated by a common shock. A general mean-variance optimization problem is investigated, that is, besides the objective of terminal condition, the quadratic optimization functional includes also a running penalizing cost, which represents the deviations of the insurer’s wealth from a desired profit-solvency goal. By solving the Hamilton-Jacobi-Bellman (HJB) equation, we derive the closed-form expressions for the value function, as well as the optimal strategy. Moreover, under suitable assumption on model parameters, our problem reduces to the classical mean-variance portfolio selection problem and the efficient frontier is obtained.

Institutional knowledge

PurposeRarely have studies on the acquisition of knowledge in internationalisation focused on institutional knowledge. The purpose of this paper is, therefore, to investigate the acquisition of this knowledge, and its assimilation and exploitation processes in internationalisation.Design/methodology/approachThe paper utilises ten longitudinal revelatory case studies built from multiple semi-structured interviews conducted with three different firm types of small- and medium-sized enterprise (SMEs) in the pharmaceutical industry and secondary documents to which the researchers obtained proprietary access.FindingsThe study enhances the conceptual understanding of the institutional learning process in internationalisation by, for the first time, developing a framework to characterise this process. The study explores and identifies multiple types of institutional knowledge required, the sequencing of their acquisition, sources and learning methods utilised. It also discusses transferability of this learning across foreign markets and firms’ absorptive capacity for that knowledge. Regulatory-specific product knowledge, found to be the most important type required, appeared to affect significantly both market selection and mode of entry, and when acquired insufficiently, prevented internationalisation.Research limitations/implicationsWhile the sample size is relatively small, and sector-specific, the findings were consistent across all the SME firms and firm types. They may also be generalisable to other sectors, firm sizes such as MNEs and types, particularly those which are knowledge-based or highly regulated, given that similar institutional knowledge and processes of acquisition are necessary for firms of all sizes in internationalisation.Practical implicationsInternational marketing managers will gain valuable insights, based on a framework proven to propel firms to successful internationalisation, upon how to plan, organise, manage and match their institutional knowledge-seeking and learning activities with their firms’ internal capabilities, staffing and other resources in an effective and timely manner.Originality/valueThis study contributes to the conceptual understanding of the institutional knowledge learning process in the internationalisation.

Study of car-sharing diffusion criticality conditions based on human traveling network

Car-sharing program, like Car2go, is an innovative urban transportation mode where the car-sharing company provides a car fleet to offer people with the short-term access of car traveling. As a new traveling service, car-sharing platforms have been struggling hard to trigger initial users and speed up their diffusion process. Unlike new product spreading via geographical proximity people, car-sharing users usually drive sharing cars to different destinations and influence people there, and potential user decision also depends on previous user activity at all their destinations. Car-sharing user connections are mainly affected by their traveling behaviors. The influence of user traveling network on new service/product spreading process has been rarely studied before. Here, we find that the infective rate between users with the same destination is critical to the minimum user base of car-sharing diffusion. Moreover, a city with central user network is more appropriate for car-sharing. It leads to a small critical infective rate for diffusion, and a large stable market size of car-sharing service. Our study can impact car-sharing market strategies ranging from market expansion in one city to optimal market selection among different cities.

KONAKLAMA İŞLETMELERİNDE SEGMENTASYON STRATEJİLERİ: SAMSUN İLİNDEKİ 5 YILDIZLI OTEL UYGULAMASI

Günümüzde, pazar bölümlendirme ve hedef pazar stratejilerinin belirlenmesi işletmelerin yerine getirmesi gereken en önemli faaliyetleri arasında yer aldığı görülmektedir. Bu sayede işletmelerin hedef kitleye ulaşmasının önü açılırken aynı zamanda stratejik pazarlama hedeflerinin belirlenmesi de kolaylaşacaktır. Son dönemde konaklama işletmelerinin pazar bölümlendirme ve hedef pazar seçimi uygulamasını amaç ve hedeflerine ulaşabilmek adına önemsediği görülmektedir. Bu düşünceden hareketle oluşturulan araştırma, Samsun ilinde bulunan beş yıldızlı otellerin pazar bölümlendirme yapıp yapmadıkları eğer yapıyorlarsa nelere dikkat ettiklerini araştırmayı amaçlamaktadır. Çalışmada araştırma yöntemi olarak nitel araştırma tekniklerinden derinlemesine mülakat tekniği kullanılmıştır. Araştırma sonucunda Samsun ilinde bulunan ve araştırmada yer almayı kabul eden beş yıldızlı otel işletmelerinin hedef pazar seçim stratejilerine kısmen önem verdiği görülmekle beraber, cevaplayıcıların hedef pazar seçimi stratejilerini uygulama çabası içinde olduğu sonucuna varılmıştır.