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Choice Between Non-Equity Entry Modes: An Organizational Capability Perspective

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  • M Krishna Erramilli

    (Nanyang Technological University)

  • Sanjeev Agarwal

    (Iowa State University)

  • Chekitan S Dev

    (Cornell University)

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    Abstract

    Many studies have examined the choice between different types of equity and non-equity modes; however, none has focused on the choice between different types of non-equity modes that service firms employ routinely. This study develops a theoretical framework based on the “organizational capability” perspective to explain the choice between two non-equity modes— franchising and management-service contracts. While previous studies are based on the premise that foreign market entrants choose a mode—equity or non-equity—that offers them most control given their particular circumstances, the premise of this study is that foreign entrants choose a non-equity mode that, in addition, offers effective transfer of the firm's capabilities to the host-country venture.© 2002 JIBS. Journal of International Business Studies (2002) 33, 223–242

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    Bibliographic Info

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

    Volume (Year): 33 (2002)
    Issue (Month): 2 (June)
    Pages: 223-242

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    Handle: RePEc:pal:jintbs:v:33:y:2002:i:2:p:223-242

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    Cited by:
    1. 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.
    2. Sanchez-Peinado, Esther & Pla-Barber, Jose, 2006. "A multidimensional concept of uncertainty and its influence on the entry mode choice: An empirical analysis in the service sector," International Business Review, Elsevier, Elsevier, vol. 15(3), pages 215-232, June.
    3. 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.
    4. Musso, Fabio & Francioni, Barbara, 2009. "Foreign markets entry mode decision for SMEs. Key factors and role of industrial districts," MPRA Paper 32153, University Library of Munich, Germany.
    5. Petrou, Andreas, 2007. "Multinational banks from developing versus developed countries: Competing in the same arena?," Journal of International Management, Elsevier, Elsevier, vol. 13(3), pages 376-397, September.
    6. Mai Thai & Li Chong, 2013. "Dynamic experimental internationalization: Strategy of SMEs from a transition economy," Journal of International Entrepreneurship, Springer, Springer, vol. 11(4), pages 370-399, December.
    7. Katrijn Gielens & Marnik G. Dekimpe, 2004. "How To Seize a Window of Opportunity: The Entry Strategy of Retail Firms into Transition Economies," LICOS Discussion Papers, LICOS - Centre for Institutions and Economic Performance, KU Leuven 14604, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    8. Musso, Fabio & Francioni, Barbara, 2011. "Foreign Markets Entry Mode Decision for Italian Small and Medium-Sized Enterprises," MPRA Paper 50067, University Library of Munich, Germany, revised 31 Oct 2011.
    9. Chen, Jean Jinghan & Dimou, Irini, 2005. "Expansion strategy of international hotel firms," Journal of Business Research, Elsevier, Elsevier, vol. 58(12), pages 1730-1740, December.
    10. Ruckman, Karen, 2004. "Mode of entry mode into a foreign market: the case of U.S. mutual funds in Canada," Journal of International Economics, Elsevier, Elsevier, vol. 62(2), pages 417-432, March.
    11. Dunning, John H. & Pak, Yong Suhk & Beldona, Sam, 2007. "Foreign ownership strategies of UK and US international franchisors: An exploratory application of Dunning's envelope paradigm," International Business Review, Elsevier, Elsevier, vol. 16(5), pages 531-548, October.
    12. Brouthers, Lance Eliot & Mukhopadhyay, Somnath & Wilkinson, Timothy J. & Brouthers, Keith D., 2009. "International market selection and subsidiary performance: A neural network approach," Journal of World Business, Elsevier, Elsevier, vol. 44(3), pages 262-273, July.
    13. Maria João Sousa & Susana Costa e Silva, 2008. "THE USE of CONSORTIA for the INTERNATIONALIZATION of FIRMS – MOTA-ENGIL CASE STUDY," Working Papers de Gestão (Management Working Papers), Faculdade de Economia e Gestão, Universidade Católica Portuguesa (Porto) 012008, Faculdade de Economia e Gestão, Universidade Católica Portuguesa (Porto).
    14. Jell-Ojobor, Maria & Windsperger, Josef, 2014. "The Choice of Governance Modes of International Franchise Firms — Development of an Integrative Model," Journal of International Management, Elsevier, Elsevier, vol. 20(2), pages 153-187.
    15. Parente, Ronaldo & Choi, Byeongyong Paul & Slangen, Arjen H.L. & Ketkar, Sonia, 2010. "Distribution system choice in a service industry: An analysis of international insurance firms operating in the United States," Journal of International Management, Elsevier, Elsevier, vol. 16(3), pages 275-287, September.

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