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The Impact of Order and Mode of Market Entry on Profitability and Market Share

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  • Yigang Pan

    (University of Oregon and University of Hong Kong)

  • Shaomin Li

    (City University of Hong Kong)

  • David K Tse

    (University of Hong Kong)

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    Abstract

    Market share performance and profitability of overseas business activities has long been an important issue in international business. In this study, we explore the impact of order and mode of market entry into an overseas market. We find that early entrants have significantly higher market shares and profitability than late followers. We also find that equity joint ventures have a higher profitability than either wholly owned operations or contractual joint ventures. A significant interaction exists between order and mode of market entry. As expected, firm efficiency and size affect the performance of firms. These results are based on the business activities of a sample of 14,466 foreign firms in China in 1995.© 1999 JIBS. Journal of International Business Studies (1999) 30, 81–103

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    Bibliographic Info

    Article provided by Palgrave Macmillan in its journal Journal of International Business Studies.

    Volume (Year): 30 (1999)
    Issue (Month): 1 (March)
    Pages: 81-103

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    Handle: RePEc:pal:jintbs:v:30:y:1999:i:1:p:81-103

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    Cited by:
    1. Xu, Dean & Pan, Yigang & Wu, Changqi & Yim, Bennett, 2006. "Performance of domestic and foreign-invested enterprises in China," Journal of World Business, Elsevier, Elsevier, vol. 41(3), pages 261-274, September.
    2. Yasheng Huang & Wenhua Di, 2004. "A Tale of Two Provinces: The Institutional Environment and Foreign Ownership in China," William Davidson Institute Working Papers Series, William Davidson Institute at the University of Michigan 2004-667, William Davidson Institute at the University of Michigan.
    3. Lu, Jane W., 2003. "The evolving contributions in international strategic management research," Journal of International Management, Elsevier, Elsevier, vol. 9(2), pages 193-213.
    4. Lauren Cohen & Umit G. Gurun & Christopher J. Malloy, 2012. "Resident Networks and Firm Trade," NBER Working Papers 18312, National Bureau of Economic Research, Inc.
    5. Shieh, Bih-Lian & Wu, Tzong-Chen, 2012. "Equity-based entry modes of the Greater Chinese Economic Area's foreign direct investments in Vietnam," International Business Review, Elsevier, Elsevier, vol. 21(3), pages 508-517.
    6. Tomassen, Sverre & Benito, Gabriel R.G., 2009. "The costs of governance in international companies," International Business Review, Elsevier, Elsevier, vol. 18(3), pages 292-304, June.
    7. Elango, B. & Sambharya, Rakesh B., 2004. "The influence of industry structure on the entry mode choice of overseas entrants in manufacturing industries," Journal of International Management, Elsevier, Elsevier, vol. 10(1), pages 107-124.
    8. Claudio Giachetti, 2013. "Competitive Aggressiveness and Performance of Developed Country-Based Firms in the Chinese Emerging Economy: The Moderating Effect of Institutional Voids and Entry Mode Degree of Control," Working Papers 1, Department of Management, Università Ca' Foscari Venezia.
    9. Zhou, Dongsheng & Li, Shaomin & Tse, David K., 2002. "The impact of FDI on the productivity of domestic firms: the case of China," International Business Review, Elsevier, Elsevier, vol. 11(4), pages 465-484, August.
    10. Fetscherin, Marc & Voss, Hinrich & Gugler, Philippe, 2010. "30 Years of foreign direct investment to China: An interdisciplinary literature review," International Business Review, Elsevier, Elsevier, vol. 19(3), pages 235-246, June.
    11. Mohr, Alexander T., 2006. "A multiple constituency approach to IJV performance measurement," Journal of World Business, Elsevier, Elsevier, vol. 41(3), pages 247-260, September.
    12. Canabal, Anne & White III, George O., 2008. "Entry mode research: Past and future," International Business Review, Elsevier, Elsevier, vol. 17(3), pages 267-284, June.
    13. Demirbag, Mehmet & Tatoglu, Ekrem & Glaister, Keith W., 2007. "Factors influencing perceptions of performance: The case of western FDI in an emerging market," International Business Review, Elsevier, Elsevier, vol. 16(3), pages 310-336, June.
    14. Quer, Diego & Claver, Enrique & Andreu, Rosario, 2007. "Foreign market entry mode in the hotel industry: The impact of country- and firm-specific factors," International Business Review, Elsevier, Elsevier, vol. 16(3), pages 362-376, June.
    15. Jing Yang & Frank Tipton & Jiatao Li, 2011. "A review of foreign business management in China," Asia Pacific Journal of Management, Springer, Springer, vol. 28(3), pages 627-659, September.
    16. Javalgi, Rajshekhar (Raj) G. & Deligonul, Seyda & Dixit, Ashutosh & Cavusgil, S. Tamer, 2011. "International Market Reentry: A Review and Research Framework," International Business Review, Elsevier, Elsevier, vol. 20(4), pages 377-393, August.
    17. Simon Lam & Joseph Yeung, 2010. "Staff localization and environmental uncertainty on firm performance in China," Asia Pacific Journal of Management, Springer, Springer, vol. 27(4), pages 677-695, December.
    18. Dimitratos, Pavlos & Lioukas, Spyros & Carter, Sara, 2004. "The relationship between entrepreneurship and international performance: the importance of domestic environment," International Business Review, Elsevier, Elsevier, vol. 13(1), pages 19-41, February.
    19. García-Villaverde, Pedro M. & Ruiz-Ortega, María J. & Parra-Requena, Gloria, 2012. "Towards a comprehensive model of entry timing in the ICT industry: Direct and indirect effects," Journal of World Business, Elsevier, Elsevier, vol. 47(2), pages 297-310.
    20. Xia, Jun & Li, Shaomin & Long, Cheryl, 2009. "The Transformation of Collectively Owned Enterprises and its Outcomes in China, 2001-05," World Development, Elsevier, Elsevier, vol. 37(10), pages 1651-1662, October.
    21. Gleason, Kimberly C. & Wiggenhorn, Joan, 2007. "Born globals, the choice of globalization strategy, and the market's perception of performance," Journal of World Business, Elsevier, Elsevier, vol. 42(3), pages 322-335, September.
    22. Jiang, Ruihua Joy & Beamish, Paul W. & Makino, Shige, 2014. "Time compression diseconomies in foreign expansion," Journal of World Business, Elsevier, Elsevier, vol. 49(1), pages 114-121.
    23. Zulima Fernández & Belén Usero, 2007. "The erosion of pioneer advantage in the European mobile telecommunications industry," Service Business, Springer, Springer, vol. 1(3), pages 195-210, September.

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