Finally there are two other home country factors that

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Unformatted text preview: 94). 17 LITERATURE REVIEW Home Country Factors Market, production, and environmental factors in the home country also influence a company’s choice of entry mode to penetrate a target country. A big domestic market allows a company to grow to a large size before it turns to foreign markets. The competitive structure of the home market also affects the entry mode. Firms in oligopolistic industries tend to imitate the actions of rival domestic firms that threaten to upset competitive equilibrium. Finally, there are two other home country factors that deserve to be mentioned. High production costs in the home country relative to the foreign target country encourage entry modes involving local production, such as licensing, contract manufacture and investment. The second factor is the policy of the home government toward exporting and foreign investment by domestic firms (Root, 1994). In addition Root (1994) also bring forward the geographic distance as an influencing factor due to the fact of high transportation cost when the distance is great and to suc...
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