Retailers׳ expansion mode choice in foreign markets: Antecedents for expansion mode choice in the light of internationalization theories

Whenever a retail company expands its store network in a foreign market, decisions have to be made about how this can be achieved. Existing studies of retail internationalization have usually analyzed the “entry mode” choice as an end in itself, and not as the start of a firm׳s international development. In addition, there is much debate in the academic literature about the antecedents for retail foreign operation mode choice and the relevance of generic internationalization theories to international retailing. Therefore, the objectives of this research are (1) to investigate the paths of entry and subsequent expansion modes pursued by retailers in international markets and (2) to develop and test a model of expansion mode antecedents in the light of generic business internationalization theories. This is achieved on the basis of data collected from 43 French fashion retailers and a PLS-SEM approach. Results show that (1) retailers clearly differentiate between entry and expansion modes; (2) the international marketing plan, the perceived attractiveness of the foreign market, and strategic and ownership conditions are the key antecedents for the choice of an expansion mode. After comparing the results with the explanations proposed by the generic internationalization theories, a multi-theoretical framework is proposed which draws from the Uppsala internationalization process model, network theory and the born-global theory. The findings provide a wealth of information for retailers׳ use in choosing appropriate foreign operation modes.     

Determinants of international retail operation mode choice: Towards a conceptual framework based on evidence from French specialised retail chains

Abstract

More and more retailers have expanded internationally. Because of its impact on the success of a retailer's international operations, a critical aspect of an internationalisation strategy consists of choosing the appropriate entry and expansion modes. The phenomenon remains misunderstood as little research in international retailing has focused on this question and findings from international management literature find limited application to services.

This paper draws upon a literature review and six case-studies from French specialised retailers to provide an exploratory framework for examining key determinants of operation mode choice. It is found that retailers consider four underlying dimensions of operation modes. These dimensions are affected by situational, individual and marketing factors whose explanatory impacts are moderated by the motives for internationalisation and relationship networks.     

International Retail Restructuring and Divestment: The Experience of Tesco

A key purpose of this study is to explore the lessons learned from international retail divestment and market withdrawal experiences. Drawing on 33 in-depth interviews with leading investment banks and key retail executives at Tesco, the study investigates the company's international restructuring and divestment activities in Ireland and France during the mid -1980s and 1990s. It has been demonstrated that, despite the progressive merger and acquisition wave sweeping through the corporate retail landscape recently, international retail divestment is quite widespread. The main conclusion from this study is that Tesco originally did not envisage divestment or de-internationalisation as part of the original internationalisation strategy process in either the acquisition of Three Guys in Ireland or Catteau in France. There was no appreciation from Tesco during their early period of expansion of the fact that exit pressures might arise during the course of market entry. In this regard, the case study provides insights into the relationship between investment and divestment within the context of international retail restructuring. The case evidence also demonstrates the positive impact of the Three Guys and Catteau divestments which helped management to refocus and rejuvenate the company's internationalisation process.     

The Internationalisation of Small to Medium-Sized Retail Companies: Towards A Conceptual Framework

The internationalisation of large multinational retailers is well documented and much research attention has been given to their processes, motives and strategies for expansion. However, a successful international retailer does not necessarily have to be a large retailer. Dynamic smallerretailers with strong concepts, formats and products have shown themselves capable of rapid international growth. To date there has been a distinct lack of research on the internationalisation of small to medium-sized companies (SMEs) operating in the retail sector. Any discussion of SME internationalisationwithin the retail industry should recognise that research on large multinational corporations is not directly transferable to small and medium-sized firms who by their very nature and characteristics embrace a very different set of opportunities in the international market. To address thisgap in research, this paper draws upon broader established international SME and entrepreneurship literatures to provide a framework for examining some of the key aspects of the internationalisation of retail SMEs.     

Exploring brand identity and entrepreneurship as drivers of small specialist retailer internationalisation: a German case study

While the comparatively sparse literature on small specialist retailing typically supports a proactive interpretation of the drivers of retail internationalisation, a more differentiated picture exists with regard to understanding the role of the brand construct in this process. The wider marketing literature recognises that brand identity, as well as brand image, can inform the process of internationalisation; yet, research focusing on small specialist retail internationalisation remains underdeveloped in this regard. Neither the notion of a multi-faceted brand concept nor its function as a strategic device in the internationalisation process has been analysed with sufficient depth. Furthermore, a better understanding of how and to what extent brand identity is interdependent upon the characteristics and activities of the entrepreneur is yet to emerge. This paper explores the construct of brand identity and its role within small specialist retail internationalisation, and the related influence of the entrepreneur on the internationalisation process. A case study approach is adopted, examining one German small specialist retailer. Data collection involved semi-structured interviews with owner-managers and other senior management, an assessment of company documentation as well as participant observation, providing in-depth insights into distinctive internationalisation patterns. The study finds that a simple ‘either-or’ approach, in terms of characterising the retailer’s motivation to internationalisation as being either reactive or proactive, is inadequate in understanding this particular case. Whilst initial motivation was characterised as being reactive, the motivations underpinning further planned internationalisation are determined to be more proactive. More particularly, analysis reveals how brand identity is considered to play an important role in the internationalisation of the case study retailer, and highlights the numerous ways in which the characteristics and activities of the entrepreneurial owner-managers impact the firm’s internationalisation. This research contributes to retail and management research concerning SME internationalisation as well as to the retail branding literature.     

Reciprocal Retail Internationalisation: the Southland Corporation,Ito-Yokado and 7-Eleven Convenience Stores

Retail internationalisation has become a focus of research activity in recent years. This research has become perhaps both more broad and deep than previous research, reflecting the changes in retail internationalisation itself. There remain, however, fundamental issues about the process and nature of retail internationalisation. This paper examines initially the internationalisation of a concept -the 7-Eleven convenience store - from the USA to Japan. This concept has been subsequently ‘Japanized’ as the convenience store sector in Japan grew rapidly and successfully. The new approach to convenience stoers has now been re-introduced into the United States through the agreed take-over of The Southland Corporation by its original Japanese franchisee, Ito-Yokado. This process of retail internationalisation is analysed and described and placed into the context of current conceptualisations on retail internationalisation.     

Foreign market entry mode in the hotel industry: The impact of country- and firm-specific factors

One of the key decisions in the internationalisation process of hotel firms is the choice of the entry mode into a foreign country. Many different factors influence this strategic decision. From a sample of 127 entries carried out by Spanish hotel firms between 2001 and 2003, this study provides new empirical evidence that cultural distance reduces the likelihood of choosing equity entry modes, while firm profitability and internal financial funds availability favour the assumption of greater commitment in the international expansion process.     

Core competences,strategy and performance: the case of international retailers in China

This research aims to analyse the central role of core competences in retail internationalisation. The authors analyse field data generated from in-depth interviews of top Chinese subsidiary managers, using the principles of the grounded theory methodology. The inductive process identified two types of core competences in the subsidiaries of international retailers: basic competences and architectural competences. This classification leads to research propositions on the impact of the core competences on strategy choice, and on the performance of the subsidiaries of international retailers.     

International entrepreneurial SMEs in the muslim world: The role of religion in the GCC countries

Recent studies examining the internationalisation of SMEs in emerging economies have observed that religion affects international market entry, which suggests that specific cultural aspects, such as religion, have not hitherto received enough attention. Hence, this study examines a theme that has seemingly escaped the research agenda: how does religion affect SMEs’ internationalisation? The study draws empirical evidence from 10 manufacturing SMEs located in the Gulf Cooperation Council (GCC) region. Through an embedded approach to case study research, the study queries the role of religion in the development of intra-Muslim internationalisation and contributes to the scant literature that examines the impact of Islamic values on international business activities. The findings show three dimensions of Islamic entrepreneurship, viz. regional rather than international networking orientation, risk aversion and proactiveness.     

Shutting up shop: understanding the international exit process in retailing

Internationalisation is a much-studied phenomenon. Exit from international markets has been less analysed. Where it has been studied, most work has been on motives and causes, with relatively little on processes. This article explores the process of international exit in a retail context. It examines the run-up to, announcement of and fall-out from the decision by Marks and Spencer (one of Britain's leading retailers) to close its French stores. The article concludes that understanding the process of market exit is at least as important both for theoretical and practical reasons as understanding the decision to exit or divest. Further research needs to be undertaken on market exit and the processes involved, in order to contribute further to the theory and practice of internationalisation.     

Supply chain capabilities for facilitating the internationalisation of retailers – a multiple case study of three Swedish retail companies

ABSTRACT

Market-oriented aspects of retail internationalisation have received a lot of research attention since the 1990s. However, beyond these aspects lies also supply-chain oriented capabilities that are necessary for retailers to successfully internationalise into foreign sales markets. By using a perspective based on resource-based theories, this paper explores supply-chain oriented capabilities that facilitate retail internationalisation. The research is based on a multiple case study of three Swedish retailers. Through the perspective of research based theories, specifically capabilities, the empirical data is studied in a single-case as well as a cross-case analysis. Findings reveal three supply chain-oriented capability categories (leadership capability, integration capability and learning capability) of importance for retail internationalisation. Resources necessary for the capabilities are to be found internally at the retailer, but also externally at other firms. This research adds to the market-oriented knowledge on retail internationalisation by adding a supply-chain oriented perspective. Further, it provides an understanding of the early phases of retail internationalisation.     

The erosion of stable shareholder practice in Japan (“Anteikabunushi Kosaku”)

This study reviews the academic literature to explain internationalisation, mode of entry choice and strategic momentum theory. In this research, we ask whether DiMaggio's theory of isomorphism can be applied to Japan, given the country's Anteikabunushi Kosaku practices and the evidence cited in the literature that suggests that national culture influences managerial work values and Japanese entry mode strategies.We suggest that Japanese management attitudes towards entry mode strategy are changing due to a change in corporate governance policy and competition. In response, we argue that Japan's stable shareholder practice is eroding and that as a result of this erosion, the change observed in institutional behaviour is isomorphic.     

The role of business support organisations in the process of retailer internationalisation

In the field of international retail research, there has been little attention paid to the role of business support organisations in the process of internationalisation. Given the barriers to foreign market expansion, the focus of this study is to investigate the importance of facilitating factors, in the form of business support organisations, which can assist retailers in the process of international expansion. A qualitative research methodology was employed and the findings provide evidence relating to three important areas: firstly, the types of business support programmes available to retailers seeking to internationalise from the UK, secondly, the barriers encountered by retail companies expanding overseas, and thirdly, how government and private organisations can assist in helping retailers overcome these hurdles.     

Factors enhancing the choice of higher resource commitment entry modes in international new ventures

The choice of entry mode in foreign markets is an important strategic decision with major consequences for the success of international new ventures (INVs). It is generally accepted that these firms choose relatively low-resource commitment entry modes to operate in foreign markets. Nevertheless, some researchers have suggested that higher resource commitment entry modes in foreign markets also seem to be competitive strategies for INVs. In this study, from a marketing/international entrepreneurship interface perspective and focusing on organizational issues, we center our attention on international market orientation as a neglected yet important factor in INVs’ choice of higher resource commitment entry modes in foreign markets. We suggest that an entrepreneurial orientation and the timing of international entry are important correlates to an international market orientation. We also suggest that the international learning effort of INVs through their international market orientation has a direct, positive impact on the resources these companies commit to their foreign markets through the use of higher resource commitment entry modes. Accordingly, the model proposes a positive effect of entrepreneurial orientation and early international entry on international market orientation which, in turn, is positively related to higher resource commitment entry modes. The hypotheses were tested on country-level data from Spain, using a structural equation model to analyze relationships between the latent variables.This study extends previous international entrepreneurship research, including insights on antecedents of international new ventures’ choice of resource commitment entry modes in foreign markets. The paper also goes further than previous international entrepreneurship research, by addressing the strategic consequences of rapid entry into foreign markets. Additionally, the results of this work encourage international entrepreneurs to look beyond the explicit value of experiential market knowledge to realize the potential value of international market orientation as an antecedent to higher resource commitment entry modes.     

Liberty in Paris: International retailing, 1889–1932

This article considers the international retailing operation of Liberty of London in Paris between 1889 and 1932. Using data from the company archive, the article challenges assumptions regarding the nature and role of early retail activity in the internationalisation process. Drawing on theoretical frameworks from the marketing and management literature, the article considers Liberty’s Paris operation from entry stage activity in the late 1880s through to the divestment process in the early 1930s. Detailed consideration of this firm shows that the specialist retailer with distinct firm specific assets developed in the domestic market was operating internationally in the late nineteenth century.     

The role of service embeddedness in the internationalisation process of manufacturing firms

Over the last decade the growth of service firms, and their internationalisation, has attracted considerable attention from researchers, with a special focus on characteristics that distinguish services from goods. However, as the composition of a firm's product can contain both good and service elements, this paper argues that it is somewhat misleading to categorise a product simply as either a ‘good’ or a ‘service’. Manufactured goods often contain client-related services embedded in them. Further, the nature of these embedded services may vary with respect to their degree of separability of production and consumption. Based on several case studies of Australian manufacturing subsidiaries in the UK, this paper examines the impact of inseparable embedded services on a firm's entry-mode choice. It reveals that the extent and nature of embedded services have a considerable impact on a firm's choice of foreign entry mode. The research findings are likely to contribute to the existing marketing and internationalisation literature.     

An Exploratory Framework for Analysing International Retail Learning

It is argued that international retail research has overlooked an essential component of the retail internationalization process, notably learning. This paper proposes an exploratory framework that enables the application of learning theory to the study of international retailing. The paper provides a meaningful starting point for developing an overarching framework which would represent one sort of re-conceptualization of the retail internationalization process, and arguably a new perspective for reinterpreting, re-evaluating and refining the existing literature on international retailing. Alongside this exploratory framework, we present a series of research propositions that might serve as an agenda for research into international retail learning. The paper concludes with a summary of the key themes and ways in which the area of international retail learning may be investigated.     

Rigidity in SME export commencement decisions

In an increasingly globalised world, firms generally have become more internationalised utilising a range of different modes of operation. In the case of small-medium sized enterprises (SMEs), exporting is the favoured mode of international market entry, at least in the early stages of internationalisation, and many governments have supported SME exports through export promotion policies because of the importance of SMEs in employment creation. However, in spite of this policy focus, in most countries, the proportional involvement of SMEs in exporting remains low, which raises an important question as to what factors are inhibiting firms that are successful domestically from exporting. In addressing this question, much scholarly research has focused on the broad concept of ‘export barriers’. These barriers, for example, tariffs, quotas and administrative obstacles, are seen as a primary source of export reluctance. This paper takes a different approach to previous studies and proposes that a firm's resistance to exporting can be better understood through an analysis of the behavioural decision process of firms in line with the Uppsala internationalisation model. We propose ‘lateral rigidity’, first introduced in the literature in the 1970s, as an important concept in export commencement. By applying factor analysis to a survey of Australian SMEs, we provide a measurement model for lateral rigidity, revealing its important factors and thus strengthening understanding of firms' export commencement decisions. We conclude by drawing implications for internationalisation theory, practice and public policy and suggesting ways to extend this work through future research.     

Choice of Market Entry Mode in Emerging Markets

Summary

This study explores the antecedents of market entry strategy in emerging markets and examines the market environmental, transaction-specific, competitive strategic factors and organizational capability that influence the choice of market entry mode. Empirical results based on a survey of Japanese companies support the combined relevance of their factors on choice of market entry mode in an emerging market. Although most of the mode of entry research assumes that the firm has the option to choose any entry mode in a given market, this study examines the impact of the factors in the internationalization process of firms. The results suggest that experiential knowledge has an immense impact on the choice of entry mode in China, an emerging market with high environmental uncertainty, but also high market potential. The empirical findings also show the important influences of risk-absorption capability and risk-dispersion mechanism on the choice of entry mode into the Chinese market.     

Entry mode choice of Chinese enterprises: The impacts of country risk, cultural distance and their interactions

Recent years have witnessed a phenomenal growth in the number of Chinese enterprises “going global.” Drawing on three leading theoretical perspectives including the transaction cost theory, organizational capability theory and eclectic theory, this paper develops hypotheses to test how country risk and cultural distance are associated with entry mode choices of enterprises from China. Based on a sample of 167 Chinese companies, an empirical investigation has been conducted employing logistic regression and hierarchical regression analyses. Our results show that country risk and cultural distance have significant impact on entry mode choice. With the increase of country risk or cultural distance, businesses prefer non-ownership-based entry modes such as trade and licensing. However, entry mode choice is also noticeably influenced by the interaction between country risk and cultural distance, which is a new finding of international entry mode research. Furthermore, private enterprises are more likely to adopt high-involvement entry mode than the state-owned enterprises, and service enterprises are less likely to use high-involvement entry mode, which suggests that different approaches are used to deal with country risk and cultural distance by various types of enterprises.