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National Culture Im Pact on Entry Mode Attractiveness

In:

Submitted By Lookolooko
Words 2467
Pages 10
Introduction
Nowadays the world is in a constant change and as a result the business environment has become significantly more complex and rewarding on the one hand but more demanding and risky on the other
.
Consequently, in their attempt to gain competitive adva ntage, firms frequently expand their operations to new foreign markets and their choice o f how to enter those markets is influenced by a wide variety of factors. This paper will only focus on developin g a conceptual model of the influence of national culture on the entry mode decisions by combining two international business themes
: the multi - national business perspective with the ho me and ho st country influences. The paper will be structured as follows: firstly, a short review of the theories used, more precisely of the hierarchical model of market entry modes and of
Geert
Hofstede’s model of five cultural dimensions of national culture , will b e provided
. Secondly, a conceptual model will be developed, proposing that national culture influences choices between equity and non
-
equity, as well as within the equity category, but not within the non
-
equity category. Finally, several conclusions will b e drawn
.
A multi
-
national business perspective
-
The hierarchical model of m arket entry modes

When deciding to enter a new market, firms are confronted with a wide variety of different entry modes to choose from, taking into account their desired level of ownership and control, resource commitment and risk taking among others
.
Thus, entry modes choices are highly strategic decisions, assuming a trade
-
off between risk and return (Davis, 2006).
According to Pan & Tse (2000), in order to better unders tand how firms decide between entry modes, a division between equity
-
based and non
-
equity
-
based modes proves useful.

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