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Foreign Operation Mode Combinations and Internationalization

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  • Petersen, Bent

    (Department of International Economics and Management, Copenhagen Business School)

  • Welch, Lawrence S.

    (Norwegian School of Management)

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    Abstract

    The standard formula in theoretical and empirical studies of entry mode choice and internationalization processes of firms has been ‘one foreign country, one operation mode’, i.e. a singular mode approach. However, even with fairly broad operation mode definitions it is by no means exceptional to see firms having more than one operation mode in a foreign country. This paper explores the phenomenon of ‘multiple’, ‘mixed’, or ‘combined’ foreign operation modes. Although several occurrences of mode combinations are reported in the IB literature, the phenomenon has not yet been made the subject of direct analysis. The paper introduces a classification of multiple mode appearances based on the degree of interaction between operation modes (which vary considerably). Special attention is paid to ‘mode packages’, i.e. the concerted use of several operation modes in an integrated, complementary way. In a study of Danish MNCs with simultaneous use of subsidiaries and independent local intermediaries it was found that in most cases the two modes are operating in a complementary way. A framework for analyzing the roles within packages is presented and it is argued that the use of ‘mode packages’ may offer the multinational firm scope for improved international market penetration capacity.

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    File URL: http://openarchive.cbs.dk/cbsweb/handle/10398/6530
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    Bibliographic Info

    Paper provided by Copenhagen Business School, Department of International Economics and Management in its series Working Papers with number 6-1999.

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    Length: 22 pages
    Date of creation: 30 May 1999
    Date of revision:
    Handle: RePEc:hhb:cbsint:1999-006

    Contact details of provider:
    Postal: Department of International Economics and Management, Copenhagen Business School, Howitzvej 60, DK-2000 Frederiksberg, Denmark
    Phone: +45 3815 2515
    Fax: +45 3815 2500
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    Web page: http://www.cbs.dk/departments/int/
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    Related research

    Keywords: Internationalization; foreign operation modes; mode combination; mode packages.;

    References

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    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    1. Benito, Gabriel R. G. & Pedersen, Torben & Petersen, Bent, 1999. "Foreign operation methods and switching costs: conceptual issues and possible effects," Scandinavian Journal of Management, Elsevier, vol. 15(2), pages 213-229, June.
    2. Brickley, James A. & Dark, Frederick H., 1987. "The choice of organizational form The case of franchising," Journal of Financial Economics, Elsevier, vol. 18(2), pages 401-420, June.
    3. Petersen, Bent & Welch, Lawrence S., 1999. "International Retailing Operations: Downstream Entry and Expansion via Franchising," Working Papers 5-1999, Copenhagen Business School, Department of International Economics and Management.
    4. Cavusgil, S. Tamer & Yaprak, Attila & Yeoh, Poh-Lin, 1993. "A decision-making framework for global sourcing," International Business Review, Elsevier, vol. 2(2), pages 143-156.
    5. Sanjeev Agarwal & Sridhar N Ramaswami, 1992. "Choice of Foreign Market Entry Mode: Impact of Ownership, Location and Internationalization Factors," Journal of International Business Studies, Palgrave Macmillan, vol. 23(1), pages 1-27, March.
    6. Dutta, Shantanu, et al, 1995. "Understanding Dual Distribution: The Case of Reps and House Accounts," Journal of Law, Economics and Organization, Oxford University Press, vol. 11(1), pages 189-204, April.
    7. Calof, Jonathan L., 1993. "The mode choice and change decision process and its impact on international performance," International Business Review, Elsevier, vol. 2(1), pages 97-120.
    8. Clark, Timothy & Pugh, Derek S. & Mallory, Geoff, 1997. "The process of internationalization in the operating firm," International Business Review, Elsevier, vol. 6(6), pages 605-623, December.
    9. Pedersen, Torben & Petersen, Bent, 1998. "Explaining gradually increasing resource commitment to a foreign market," International Business Review, Elsevier, vol. 7(5), pages 483-501, October.
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