Accessing Foreign Markets Based on Own- and Other-Prior Entries: The Internationalization of Japanese Multinationals in the Electronic Sector

Informações

Código: ESO2649
Divisão: ESO - Estratégia em Organizações
Tema de Interesse: Tema 08 - Negócios Internacionais

Autores

Mário Henrique Ogasavara

Resumo

This study investigates whether or not a relationship exists between the first entry strategydecision of a particular firm and the prior foreign market entries made by other firms. Moreover,considering that foreign market entry is not a one-time decision, it analyzes whether or not priorforeign market entry in a particular country has influence on the choice of repeated entries in thesame country. This research provides a preliminary analysis considering the foreign marketdecision made by nine large Japanese multinationals in the electronics sector: Fujitsu, Hitachi,Matsushita Electric, Mitsubishi Electric, NEC, Sanyo, Sharp, Sony, and Toshiba. First, aliterature review of international entry strategy is provided in order to present morecomprehensive classification of market entries. Second, this study adopts the legitimacy theorycontext in order to examine whether the entry mode of a multinational company in a foreignmarket is influenced by the previous decision of other firms or tend to repeat prior entry strategicactions that companies have executed in the past. The subsidiary level data were collected fromToyo Keizai Databank that resulted in a sample of over 1,400 subsidiaries established byJapanese multinational electronic firms over the period 1995 to 2006 in sixty-four countries. Byconsidering a wide-ranging classification of entry mode and taking into account that entrystrategy has to be viewed as a sequential process. In order to observe the effect of prior entries ofother firms on the first investment in a host country, two subsamples were considered: (1)subsidiaries of a parent firm with only one investment; (2) subsidiaries with more than oneinvestment in a host country. In addition, another subsample is considered in order to see theeffect of its own firm and other firms’ prior entries on subsequent investment in a host country. Astatistical t-test is performed in order to compare the mean differences between the analyzedcases. The initial findings revealed the impact of legitimacy on the entry mode strategies of firmsin the electronic sector. It implies that firms tend to follow the prior entry strategy of other firmsin the case of first time investors. While for subsequent foreign direct investments, both priormarket entries made by the parent firm and competitors have great influence on the choice ofentry mode in a particular country. The results suggest that the effect of market competitioncannot be neglected when examining the foreign entry choice in a particular market. Furthermore,when examining the effect of entry mode in the internationalization process of multinationalcompanies, there is a need to consider entry strategy choice as a dynamic rather than a staticdecision-making process. The findings show the importance to distinguish the first-timeinvestment from the sequential FDI.

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