GLOBAL STRATEGY AND MULTINATIONALS' ENTRY MODE CHOICE

GLOBAL STRATEGY AND MULTINATIONALS' ENTRY MODE CHOICE

First Quarter 1992 | W. Chan Kim, Peter Hwang
This paper emphasizes the importance of global strategic considerations in determining the entry mode of multinationals. While existing studies focus on environmental and transaction-specific factors, the authors argue that global strategic considerations should also be considered. They propose an eclectic framework that incorporates various global strategic variables into the analysis of entry mode decisions. The framework is tested using responses from 96 multinational managers, revealing the importance of global strategic variables in differentiating entry modes. The paper argues that the decision to enter a foreign market is not made in isolation but is influenced by the multinational's global strategic posture, which involves the strategic relationship between its operations across borders. The theoretical foundation of this argument is rooted in the geocentric approach to multinational management, as outlined by Perlmutter, and the subsequent literature on global strategy. The authors note that while global strategic prescriptions vary, they all aim for overall corporate success and require active management of interdependencies across subsidiary units. The paper concludes that a multinational's global strategic posture significantly influences its entry mode choice, and that incorporating global strategic variables into the analysis of entry mode decisions is essential.This paper emphasizes the importance of global strategic considerations in determining the entry mode of multinationals. While existing studies focus on environmental and transaction-specific factors, the authors argue that global strategic considerations should also be considered. They propose an eclectic framework that incorporates various global strategic variables into the analysis of entry mode decisions. The framework is tested using responses from 96 multinational managers, revealing the importance of global strategic variables in differentiating entry modes. The paper argues that the decision to enter a foreign market is not made in isolation but is influenced by the multinational's global strategic posture, which involves the strategic relationship between its operations across borders. The theoretical foundation of this argument is rooted in the geocentric approach to multinational management, as outlined by Perlmutter, and the subsequent literature on global strategy. The authors note that while global strategic prescriptions vary, they all aim for overall corporate success and require active management of interdependencies across subsidiary units. The paper concludes that a multinational's global strategic posture significantly influences its entry mode choice, and that incorporating global strategic variables into the analysis of entry mode decisions is essential.
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