Does the Firm’s Technology and Marketing

Does the Firm’s Technology and Marketing -...

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12 ABSTRACT The authors examine the influence of the firm’s technology and marketing profile on foreign market entry mode by testing hy- potheses based on data from 105 firms in four European coun- tries. Four technology and marketing variables were the most important: (1) the firm’s generic marketing strategy—market concentration versus diversification, (2) demand uncertainty— the position in the life cycle of the firm’s principal product, (3) transaction costs—transaction uncertainty and research and development, and (4) value added—product patents. The au- thors suggest ways managers may be assisted in their foreign market entry decisions on the basis of their firms’ technology and marketing profile. Foreign market entry (FME) is a complex decision for a firm, which first involves whether to enter foreign markets. A pos- itive decision leads to the question of which country or coun- tries to enter and in what sequence, which raises issues of concentration and diversification. For each market selected, firms also face the question of which mode to use in entering these markets. This issue of FME choice is one of the most important aspects of international marketing management. Injudicious selection of entry mode may give rise to opportu- nity costs and in some cases thwart subsequent endeavors in international markets. Entry mode choice also has implica- tions for the level of resource commitment and may signifi- cantly affect the performance and survival potential of a foreign venture. Despite this, there is still no unified theory to guide managers in their choice of FME mode. Kogut and Singh (1988, p. 411) report that “there have been surprisingly few statistical investigations concerning entry mode,” and Contractor (1990, p. 44) notes that much of the existing liter- ature attempts to reconcile different entry mode explanations within a single theoretical framework, namely, transactions cost, which is limiting. Foreign market entry and development, with an emphasis on the growth of the multinational enterprise (MNE), has been discussed in the economics literature for decades. The gen- eral proposition arising from this literature is that firms must possess some form of advantage if they are to compete suc- cessfully in an unfamiliar foreign environment against do- mestic incumbents with local knowledge and the advantages Does the Firm’s Technology and Marketing Profile Affect Foreign Market Entry? Submitted October 1999 Revised February 1999 July 2000 © Journal of International Marketing Vol. 8, No. 4, 2000, pp. 12–36 ISSN 1069-031X Frank Bradley and Michael Gannon
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of local nationality. Theorists of MNE have drawn attention to the nature of what are now called the ownership-specific or firm-specific advantages of foreign enterprises. These ad- vantages may derive from “technology and marketing skills, oligopolistic market structure and behavior, excess manager- ial capacity [and] … diversification of investment” (Hood
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Does the Firm’s Technology and Marketing -...

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