The effects of own- and other-prior entry modes in the internationalization of Japanese multinational companies in the electronic sector
| Published date | 20 December 2013 |
| DOI | https://doi.org/10.1108/JABS-07-2012-0036 |
| Date | 20 December 2013 |
| Pages | 18-28 |
| Author | Mario Henrique Ogasavara |
| Subject Matter | Strategy,International business |
The effects of own- and other-prior entry
modes in the internationalization of
Japanese multinational companies in the
electronic sector
Mario Henrique Ogasavara
Abstract
Purpose – This paper goes above and beyond the prior research on entry mode by considering the
organizational approach and examines entry mode selection between wholly-owned subsidiaries and
joint venture by taking into account the existence of different types of joint ventures. In this way, this
paper seeks to investigate whether or not a relationshipexists between the first entry strategy decision of
a particular firm and the prior foreign market entries made by other firms. Moreover, considering that
foreign market entry is not a one-time decision, this study analyses whether or not prior entry in a
particular country has influence on the choice of repeated entries in the same country.
Design/methodology/approach – This paper uses data of 1,470 subsidiaries established by
Japanese electronics firms in 64 countries. The propositionsare tested by applying a statistical t-test to
compare the mean differences between the analyzed cases.
Findings – The findings revealed the legitimacy effect on the entry mode selection. Firms tend to follow
the prior entry strategies of its rivals in the case of first time investors, while for subsequent investments,
both prior entries made by the parent firm and competitors have great influence on the market accessin
a particular country. It suggests that the effect of market competition cannot be neglected when
examining entry mode selection. Furthermore, there is a need to consider entry strategy as a dynamic
rather than a static decision-making process.
Originality/value – The findings from this study are useful for scholars interested in advancing the
knowledge on entry mode strategies of multinational companies.
Keywords Internationalization, Legitimacy, Electronic sector, Entry strategy, Japanese firms
Paper type Research paper
Introduction
Multinational companies have to make an important strategic decision when investing in
foreign markets. Firms are not only concerned about which country or region to invest in, but
how to enter this particular market. This means that choosing a selected entry mode can
have great consequences for the firm’s strategy of international expansion (Agarwal and
Ramaswami, 1992).
International entry mode has been recognized as an important topic in the international
business area, representing the third most researched field only behind foreign direct
investment and internationalization (Werner, 2002). Previous scholars have extensively
examined the determinants of foreign entry mode in the international business literature over
the last 20 years and have already identified a diversity of variables that influence this
decision (Canabal and White, 2008). These investigations try to analyse the decision of
foreign entry mode and internationalization process from different research approaches,
including transaction cost theory (Anderson and Gatignon, 1986; Brouthers et al., 2003;
Hennart, 1988; Madhok, 1998; Meyer, 2001), eclectic paradigm (Dunning, 1980, 1988,
PAGE 18
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JOURNAL OF ASIA BUSINESS STUDIES
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VOL. 8 NO. 1 2014, pp. 18-28, QEmerald Group Publishing Limited, ISSN 1558-7894 DOI 10.1108/JABS-07-2012-0036
Mario Henrique Ogasavara
is based at ESPM (Escola
Superior de Propaganda e
Marketing) – Programa de
Mestrado em Gesta
˜o
Internacional, Sao Paulo,
Brazil.
This research would not have
been possible without a
research grant provided by
Banco do Nordeste do Brasil
(BNB) and FUNCAP
(Foundation of Ceara State to
Support Scientific and
Technology Development).
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