Subsidiary Capacity Building in Emerging Markets: How Japanese MNEs Sequence Market Entry and Development Strategies in India

This paper asks the pragmatic question of how and to what extent firms build subsidiary competitiveness over time. By merging international business and international marketing theory, we integrate the unconnected discourses on market entry, development, product sequencing, and diffusion. The context of our research questions is marketing and entry strategies of four Japanese firms in India. All have had to learn the sequencing of both entry and product diversification. While strategies vary between the firms, the cases exhibit that entry and product diversification decisions are interlinked. Market entry configurations are central for developing market‐led solutions in large emerging markets. This study offers insights into how Japanese MNEs build subsidiary competitiveness when faced with the early stages of the Indian consumer market take‐off. Second, through the integration of international business and international marketing theory, we find that new product performance and international diversification interact in specific ways, and this contributes to future theoretical developments. © 2015 Wiley Periodicals, Inc.     

Industry,Organizational Age,and Size as Predictors of Organizational Values in the Context of a Transition Society: The Case of Estonian Organizations

ABSTRACT

Over the past 20 years, China and India have emerged as the fastest growing economies in the world. In this context, the authors review, examine, and list the factors that have contributed to the emergence of China and India (referred to as Chindia). The authors compare the antecedents, characteristics, and consequences of their emergence in the global market. This article provides insights for the researchers and multinational enterprises from rest of the world to carry out studies on country analysis as well as foreign market entry modes. Besides, we posit theoretical and testable propositions for future research.     

Rethinking Management Theory and Practice for the Indian Context: An International Management Perspective

The Indian economy characterized variously as a slumbering giant, powerful tiger, and the most promising market has witnessed a slowdown, occasional disturbances in the industrial relations space, and attention of the world in the last five years. In this special issue, we raise pertinent questions and present research on multiple dimensions of the dynamic and rapidly changing business environment of India. The suitability of management models and frameworks developed in the North American contexts in emerging markets like India and China is questioned. One example of how the well‐established models in the literature on success of international joint ventures were insufficient to explain the success of three international joint ventures in the insurance space in India is presented as case in point. Finally, the nine papers that materially contribute to the theme of this special issue are introduced. © 2016 Wiley Periodicals, Inc.     

Foreign Direct Investment in China

Summary

China has attracted the second largest amount of foreign direct investment in the world each year since 1993. Hundreds of thousands of foreign-invested enterprises are in operation in China. However, what drive the success or cause the failure of foreign investments is still not well understood. This paper critically examines one success factor, i.e., the importance of timing of marketing entry into China. It begins with a brief review of the literature on first-mover advantages and the recent empirical research. It then attempts to theorize on why timing of market entry matters in the context of foreign direct investment. Apart from drawing upon the four recent studies in this area, this paper focuses on the auto industry in China and the case of Volkswagen to illustrate the importance of early entry into an overseas market. It calls for foreign investors to seize the first-wave opportunities when the door is opened a certain sector. It pays in the long run both in terms of the market share position and profitability.     

Towards a comprehensive model of entry timing in the ICT industry: Direct and indirect effects

We propose and contrast a model that integrates the factors influencing entry timing and the way entry timing influences firm performance, using a sample of firms that carry out international activities from the Information and Communications Technology Industry (ICT) in Spain. We found that capabilities are the main factor influencing firm performance. We also demonstrate that entry timing plays a significant mediator role in this relationship. Furthermore, we found that the utility strategy, which combines efforts in costs and differentiation, is a basic factor that explains and reinforces sustainable competitive advantages for those firms that enter early into the market. Managers need to analyse the implications of entry timing at length. In this sense, managers should evaluate if they have a suitable configuration of capabilities for entering the market successfully. They should also try to consolidate first mover advantages (FMAs), developing hybrid strategies that combine low cost and differentiation.     

Doing business in China II. Investing and managing in china—how to dance with the dragon

This article presents the second part of a comprehensive analysis of the key issues involved in conducting business in China. It provides practical advice and recommendations on how to invest and manage successfully in the world's most complex market (“know‐how”). Topics include investment strategies, market‐entry options, key factors for success in management, as well as functional strategies for optimizing the value chain. Chinese business practices and culture, as well as different opportunities and threats, also are discussed. A key theme is that foreign investors and businessmen entering China and managing on the ground have to devise and execute intelligent strategic approaches that fully leverage new “third growth wave” opportunities in China and create a market niche in an extremely competitive environment. Otherwise, they will produce similarly disappointing results as most foreign investment in the Central Kingdom so far. © 2000 John Wiley & Sons, Inc.     

Us foreign direct investment in India: Emerging trends in MNC entry strategies

India, along with China, is one of the key emerging markets in the region that has attracted multinational corporate interest. This has been enhanced by recent economic reforms and enormous market potential. After briefly tracing the political precipitants of the economic reforms, this article reviews the new FDI rules and the opportunities and challenges that this new investment climate presents the US investor. Finally, the FDIs of 30 US MNCs are classified according to the entry strategies being employed and some rationale is provided on the primary entry modes of choice.     

Entry for supermarket feature me-too brands: An empirical explanation of incidence and timing

Anticipating the speed of market entry can help the feature pioneer and me-too brands develop more informed product launch strategies. This paper explains imitation speed, broken down into the incidence and timing of imitation, across 144 imitators and 847 nonimitators in 22 consumer packaged goods subcategories. On average, it takes 85 weeks for a me-too brand to introduce its feature imitation. Increasing category market share increases the incidence of imitation and, conditional on their occurrence, decreases the time to market of feature imitators. Faster entry arises for store brands as they are more likely to imitate and tend to take shorter times to market. Price premium does not have a significant effect on the incidence or timing of a me-too brand as it tends to dissipate after the first year. Brands imitate innovative features more often than noninnovative features. Some evidence indicates these imitators can take a longer time to enter the market. New product managers may benefit from the direction as well as the magnitude of these results.

The role of seeding in multi-market entry

Firms introducing new products into multi-markets often face the dilemma of how to dynamically allocate their marketing resources during penetration. The aim of this study is to examine which responsive allocation strategy is more effective for these firms. We explore three major resource allocation strategies: uniform strategy, in which the firm distributes the marketing efforts evenly among its regions regardless of market development; support-the-strong strategy, under which the firm invests its efforts proportional to the number of adopters in that region (at least up to a certain market coverage); and support-the-weak strategy, in which the firm invests its efforts proportional to the remaining market potential.Using both formal analysis and complex systems simulations, we find that strategies that disperse marketing efforts, such as support-the-weak and uniform strategies, are generally superior to support-the-strong strategy. Not only is this finding surprisingly robust to market conditions and variations on these strategies, but it also runs counter to conventional wisdom prevailing in international marketing. The conditions under which support-the-strong policy might become more effective include: (a) fixed entry or operation costs above a certain level; and (b) substantial variance between regions in responsiveness to marketing efforts. However, variance in intrinsic innovativeness between regions does not imply the superiority of support-the-strong strategy.     

Market entry in japan—Some problems and solutions 1

Japan is recognised as a major competitor in world markets but is less well‐known as an attractive market in its own right. This paper proposes that with the right strategies it is possible to successfully penetrate the difficult Japanese market. Problems and opportunities presented by the market are discussed, and some of the findings of a survey of Japanese and German managers in Japan and German‐based managers are reviewed. The paper covers the survey findings on market characteristics, barriers to entry, information requirements, factors contributing to success and methods of market entry. German and UK sources of information and advice on the Japanese market are given for those interested in pursuing the matter further.     

An Empirical Analysis of Danish Companies' Experiences in the People's Republic of China

In the last ten years or so, the People's Republic of China has been the subject of increasing attention on the part of researchers and practicioners alike, not least because of the potential trading implications for Western firms (and economies) of China's "open door policy." This paper examines the business experience of small and medium-sized Danish companies in dealing with the People's Republic of China. Based on information provided by 49 companies responding to a mail questionnaire, the study provides empirical evidence relating to (1) the motivation underlying the firms' decision to enter the Chinese market, (2) the forms of initial market contact and modes of market entry, (3) the bases of competitive advantage, (4) the specific difficulties/problems associated with setting up and operating in this market, and (6)the perception of the companies as to the success of their efforts. The results are placed in the context of previous analyses of the peculiarities of China as a trading partner for Western firms and their managerial implications are considered in terms of highlighting issues of practical importance for companies contemplating the establishment of links with what has come to be known as "the world's largest untapped market."     

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.     

Firm competencies on market entry success: Evidence from a high-tech industry in an emerging market

This study explores the effects of three firm competencies, namely, business network, new product development (NPD), and marketing management on market entry success of a high-tech industry in an emerging market. Business network encompasses research and development (R&D) partnership, inter-organizational network, and government relationship (guanxi). NPD consists of R&D capability and product process innovation, while marketing management encompasses distribution channel, promotion, branding, and information management. Using data from 55 biopharmaceutical multinational companies in China, this study applies structural equation modeling technique with confirmatory factor analysis for testing and estimating relationships. We find that only marketing directly influences entry success, whereas the other two yield indirect effects. Our study also suggests the critical role of business network as a prerequisite for entry process. Simultaneously, NPD serves as the driving force of marketing through the creation of product competitiveness.     

Legitimacy and accelerated internationalisation: An Indian perspective

This paper extends the institutional theory perspective by examining the strategic behaviour of founders of smaller service firms in a key emerging economy—India. Building on accelerated internationalisation and legitimacy literature in the emerging market context, we provide a new perspective, emerging market aggressiveness, which explains why founders/managers are not always passive recipients of their environment. Their selections of locations are dependent on the vision and stretch goals of the founder and their ability to gain legitimacy quickly to move that vision to a reality. They do not appear to be limited by their potential liabilities of newness, foreignness, emergingness or outsidership. They adopt committed modes of entry from the outset to build their legitimacy and reduce their liability as an outsider. Using a qualitative multiple case study approach, we demonstrate that managers are able to use proactive, planned and unplanned strategies simultaneously, in order to quickly prepare themselves to take advantage of transient international opportunities, ahead of their competitors in advanced markets.     

Financial connectedness of BRICS and global sovereign bond markets

The paper examines the financial connectedness via return and volatility spillovers between Brazil, Russia, India, China and South Africa (BRICS) and three global bond market indices represented by the United States of America (USA), European Monetary Union (EMU) and Japan for the period 01 January 1997 to 27 July 2016 (weekly data). We find that Russia followed by South Africa is the net transmitter of shocks within BRICS, implying that the risk arising from these markets may have an adverse impact on others in BRICS. However, China and India exhibit weak connectedness, suggesting that these markets may be useful for hedging and diversification opportunities in BRICS. The networks of pairwise spillover results further confirm this. Among global indices, China appears as highly interconnected with the USA. USA is the strongest transmitter of shocks to BRICS bond indices. The panel data results further confirm the significant determinants of net directional spillover. Thus, we can conclude that BRICS is a heterogeneous asset class even in the case of the bond market. India and China are the markets to look for better risk management strategies.     

The double helix effect: Catch-up and local-foreign co-evolution in the Indian and Chinese automotive industries

The rapid development of emerging market firms and their foray into global value chains has attracted significant attention. In this perspectives paper, we draw on case studies from the automotive industries in India and China, to describe the coevolution of domestic firms and advanced economy multinational enterprises (AMNE) entrants. We first show that domestic firms that used catch-up strategies such as capability upgradation, investments into internal R&D and globalization through mergers & acquisitions have managed to succeed in local markets as well as climb into global value chains. We next illustrate that the strategy adopted by the most successful AMNEs involves combining the formation of vertical partnerships with local sub-assembly suppliers and horizontal collaborations with local network orchestrators. Simultaneously weaving together embeddedness in these two cortical sides of the local business eco-system on the one hand and within its global corporate value chain networks on the other – generates a “double helix” effect, whereby its local and global capabilities reinforce each other. The double helix improves cost competitiveness and pushes the product innovative envelope in both local and global markets.     

Knowledge seeking in going abroad

Based on knowledge theories, this study examines the impact of client‐following and market‐seeking entry strategies on foreign market entry by firms. The article also explores the subsequent development of knowledge in firms. Using data from 116 firms, we test three hypotheses using logistic regression. Our hypotheses are supported in the data. Our analysis shows that significant differences exist between client‐following firms and market‐seeking firms. Client followers are both supported and trapped by their international network, whereas market seekers, though not supported, are much freer to pursue higher‐order learning. Due to differences in their network ties, these two types of firms learn at different speeds and learn different things. We also found that firms with proactive knowledge‐seeking strategies learn more. Thus, learning strategies have consequences for exploration and exploitation of international markets, what is learned and how much is learned, and proactive internationalization strategies for firms. © 2009 Wiley Periodicals, Inc.     

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.     

A Critical Review of Market Entry Selection and Expansion Into Japan's Market

ABSTRACT

This article offers a contribution to the Japan market entry model selection. It critically analyzes the various models such as the eclectic, transaction cost analysis, Uppsala, resource-based, interactive network, and bargaining power models, with examples as they relate to foreign firms that had used some of these models to successfully establish their businesses in Japan, as well as some foreign firms that have failed in the market. Data were gathered from the past academic journals, the Japan External Trade Organization (JETRO), newsmagazines, and other sources. Knowledge of corporate Japan and the society played a major role in gathering data for this study. The aim of this article is not to prescribe or offer a solution for the best-available model to use in the market entry into Japan but rather to act as a trigger for a critical checkup on foreign firms planning to internationalize their business and enter the Japanese market. Since there has not been a specific model designed for a Confucian society like Japan, an integrated model combining all the models together was examined using the market entry in Japan of Vodafone, Yahoo, Pfizer, GlaxoSmithKline, and Bayer Yakuhin as examples. Finally, the article offers some suggestions on how to enter and expand business in the Japanese market.     

Why Do Firms Enter into a New Niche Market? An Integrated View of Objective and Subjective Antecedents of Strategic Decisions

This study is based on behavioral theories and has the purpose of determining the predictors and contingencies of strategic decision making within the strategic tripod framework and CEO age effect. Furthermore, we focus on the effect of the interaction of these aspects on strategic decisions. Multiple theories and concepts are applied in this paper, such as the institution-, industry-, and resource-based view, upper echelons theory, socio-emotional wealth, empathy, and so on. Specifically, we focus on why Chinese real estate firms decide to enter the aged housing market. By conducting an empirical study using panel data from 134 listed Chinese real estate companies, we make the following conclusions: Institutional pressure and competitor numbers positively affect, whereas slack harms, the likelihood of entry. Ceteris paribus, the resource effect is strongest when the institutional effect is the most significant. When facing institutional pressure, a firm with a CEO older than 50 is significantly more likely to enter the aged housing market than firms with a CEO that is younger.Relieving institutional pressure and avoiding cutthroat competition are helpful in making strategic decisions but not for digesting slack resources. The CEO makes strategic decisions by replying to institutional pressure but likely not from engagements in resource or competitive affairs.