Academic journal article Journal of Business Economics and Management

Does the Foreign Market Entry Mode Choice Affect Export Performance? the Case of the Spanish Hotel industry/Ar Eijimo I Uzsienio Rinka Strategijos Pasirinkimas Turi Itakos Eksporto Skatinimui? Ispanijos Viesbuciu Sektoriaus Pavyzdys

Academic journal article Journal of Business Economics and Management

Does the Foreign Market Entry Mode Choice Affect Export Performance? the Case of the Spanish Hotel industry/Ar Eijimo I Uzsienio Rinka Strategijos Pasirinkimas Turi Itakos Eksporto Skatinimui? Ispanijos Viesbuciu Sektoriaus Pavyzdys

Article excerpt

1. Introduction

An important issue to be considered when a company is going to internationalize is the entry mode through which the firm decides to serve foreign markets (Root 1987). The set of options to penetrate other markets is pretty broad and varied, with several ways of action depending on the parameters that are given more importance to. In all of these ways of action, the level of resources endowment and the degree of risk assumed are moving in the same direction. Nevertheless, this is not the case of the degree of control, which is increased as the resources endowment goes up at the same time that flexibility decreases.

The specialist literature offers a set of works which suggest that the proper election of the entry mode would have a positive impact on the performance (Chen, Hu 2002; Brouthers 2002; Aulahk, Kotabe 1997). Thus, those companies that, according to their own characteristics, do not choose correctly the entry mode to foreign countries will become less efficient and, depending on market forces, could be expelled by the competition (Brouthers 2002). Therefore, the relationship between entry mode and performance variables could be analysed in the following way: firstly, it would be interesting to study if the entry mode decision has been correctly made by the surveyed firms according to the theoretical prescription; and secondly, it would also be attractive to compare the performance level between those companies that chose correctly the entry mode and those firms that did not. This twofold objective will allow us to analyse in an integrative way the decision concerning the entry mode and its consequences on the performance level (Sanchez, Pla 2003).

There are studies such as the one carried out by Brouthers (2002) that try to shed light on this topic. Brouthers (2002), taking the transaction cost theory as a starting point, reveals differences in export performance among the different market entry modes. More recent studies such as the one developed by Ekeledo and Sivakumar (2004), based on the Resource Based View, or the one made by Rasheed (2005), also reveal the differences in export performance due to the entry mode election. Hence, the election of an entry mode is possibly related to export performance.

Bearing in mind the considerations above mentioned, this work has the intention of deepening in the analysis of the factors which affect the export performance, but paying a special attention to the relationship with the entry mode variable. To do so, this work is structured as follows: after this introduction, we are going to expose the set of theories more relevant to both variables (entry mode and export performance); secondly, we will carry out an analytic review on the literature about export performance. In this sense, we will employ the meta-analysis technique in order to find out, in recent years, which factors are affecting the export performance variable and determine its relationship with the entry mode variable; next, we will describe the research methodology employed in our study, and finally, we will show the results obtained with our analysis and describe the main conclusions we reach as a result of our work.

2. Relevant theories on entry mode and export performance

In this section, we are going to make reference to two different theoretical fields: one related to the entry mode topic, and the other one linked to the export performance analysis. Both fields offer complementary explanations to better understand how the process of internationalisation is carried out and how the best entry mode may be selected when entering foreign markets.

2.1. The entry mode topic

Within the wide scope of theories concerning business internationalisation, two specific theories conclusively explain and analyse the entry mode topic. These theories are the Internalization Theory (among others: Brouthers 2002; Shrader 2001; Liesch, Knight 1999; Caves 1996; Buckley, Casson 1988; Anderson, Gatigon 1986) and the Resource Based View of the firm (among others: Kalnins, Chung 2004; Madhok 1997; Kogut, Zander 1993)

The entry mode in foreign markets is a classical issue within the specialist literature on international businesses. …

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