Entry mode strategies of Finnish firms entering the Malaysian market
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Date
2010
Authors
Alapiha, Janika Marianne
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Abstract
Firm’s internationalization is a topic that has been widely researched; complex
option decisions are faced by companies attempting to seize new business
opportunities through foreign market expansion. In this study entry mode
strategies are researched from the point of view of Finnish companies.
A framework consisting of firm-specific factors, country-specific factors, and
market-specific factors is adapted for this study. The paper develops and tests a
model that investigates the association between identified variables, i.e. asset
specificity, international experience, country risk, cultural distance, market
potential, demand uncertainty, competitive intensity, and the company’s choice
of entry mode. This paper also examines the role of firm size as a moderator.
Responses from 62 Finnish companies were collected through distribution of
questionnaires, contributing to a response rate of 41.9%. The results from the
regression analysis found that Finnish firms tend to adopt a higher-control entry
mode to enter Malaysia when the asset specificity is high, when the firm’s
international experience is wide, when the company perceives the market
potential good and when the demand uncertainty in the host country is low. On
the other hand, country risk, cultural distance and competitive intensity do not
play a major part in the decision making process. At the same time, firm size is
found to moderate the relationship between cultural distance and the entry
mode choice. Similarly, firm size moderates the relationship between
competitive intensity and the entry mode choice.
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Keywords
Business Administration , Finnish Firms , Malaysian Market