Abstract
Most entry mode theories and empirical research has acknowledged that prior entry mode experience facilitates organizational learning that determines subsequent entry mode choice. However, empirical literature reveals inconsistent findings regarding the influence of prior experience on future mode selection i.e. ranging from no significant relationship between experience and entry mode choice, to firm’s preference for high-control modes or Wholly-Owned Subsidiaries (WOSs) as well as for low-control modes or shared ownership structures including Joint Ventures (JVs). In addition, the focus of prior studies has been on a few specific attributes of experience namely frequency, host country experience, general international experience and geographical diversity. There is a paucity of strategic solutions that assist managers in an informed entry mode choice based upon global strategic posture and interdependence among prior entries.Building upon recent calls to reinvigorate the entry mode research and alleviate these limitations, I have theorised a novel perspective known as Entry Mode Portfolio (EMP) theory that explores the collective influence of diverse attributes of historical entry mode experience on next mode choice through organizational learning. EMP is defined as a collection or a portfolio of organizational learning that evolves from eight attributes of prior entry mode experience namely, frequency, geographical diversity, performance, host country experience, general international experience, function, size and recentness. In EMP perspective, I explain how the combined influence of organizational learning facilitates a superior entry mode choice by alleviating limitations of the learning that evolve from individual attributes such as organizational inertia, learning myopia and application errors. Additionally, I theorise that interactions among different learning facilitate synergies and enable the firm to leverage a higher performance through a correct entry mode choice.
Based upon the sample of European firms, empirical findings reveal that for WOS-specific experience, prior attributes including frequency, geographical diversity, function, recentness, general international experience and host country experience were bundled together in a composite experience-based construct termed as WOS Experience Portfolio. However, for JV-specific experience two distinct experience portfolios were formed; first, JV Experience Portfolio that consists of frequency, geographical diversity, function and recentness and second, JV Country-Specific Experience Portfolio that comprised of general international experience and host country experience. In addition, average performance and recent performance of prior WOSs and JVs were found to be encapsulated in performance-related composites known as WOS Performance Portfolio and JV Performance Portfolio.
Logistic regression analysis revealed that firms with greater WOS Experience Portfolio were more likely to choose a WOS as the next mode of entry, while extensive JV Experience Portfolio and JV Country-Specific Experience Portfolio enhanced the likelihood of international entry by the means of a JV. However, no interaction effects between WOS Performance Portfolio and WOS Experience Portfolio as well as between JV Performance Portfolio and JV Experience Portfolio were found. Overall, the evidence suggests that EMP theory partially explains the entry mode choice.
The research enlightens the entry mode literature with a novel perspective built upon the holistic influence of historical entry mode experience, its attributes and organizational learning. Importantly, it addresses the issue of the lack of empirical consensus by determining a broader and composite experience-based construct that yields a unanimous result regarding influence of experience on firm’s subsequent mode choice. EMP perspective also draws the attention towards less researched attributes of mode experience such as function, size, recentness and performance as well as explains the nature of learning, that is, behavioural and cognitive learning that evolves from these attributes and determines future mode selection.
| Date of Award | 2019 |
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| Original language | English |
| Awarding Institution |
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| Supervisor | Keith Brouthers (Supervisor) & Thomas Roulet (Supervisor) |