Research On Ways To Enter International Business

There is a perpetual question asked in reviews of entry mode literature, however, of whether or not entry mode studies continue to contribute new and meaningful ideas to the field of international business. It is argued in Shaver (2013) that entry mode studies are becoming more and more narrow and, though this leads to specificity, it removes the chance for entry mode studies to make a more meaningful and impactful contribution to international business literature. And so, the question of whether or not entry mode studies should continue to be pursued should evolve into a question of how entry mode studies should change to better accommodate the goal of making a more substantial contribution as opposed to making a smaller, more specialized contribution.

Up until now, the three major focuses of international business research were the explanation of foreign direct investment (FDI) flows, explaining the way that multinational enterprises (MNEs) worked, and understanding as well as predicting developments in the internationalization of firms.

These were each connected with different periods in marketing history, or the “eras.” Buckley (2002) suggests several candidates that will be the focus of upcoming research eras. Most of these candidates focus on entry modes, such as the study of mergers and acquisitions as well as geography and location. He emphasizes the need for researchers to find the “next big question” to lead to increased quality in future research.

One of the ways that Shaver (2013) identifies as new studies contributing new, substantial research specific to entry modes is by not just examining transaction costs, but also cultural and institutional costs.

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A worry expressed immediately after this assertion that cultural and institutional contexts should be included, however, is that this will lead to researchers focusing on explanatory power and only looking for things that the current research has overlooked (Shaver 2013). This could be a potential problem since what researchers should be focusing on is not just the explanatory power, but what leads to that explanatory power.

Shaver (2013) also identifies what should not be focused on in future research. These include not focusing on measurement or statistical methodology for the sake of measurement or methodology and not focusing on sample setting for the sake of sample setting. There are also suggested routes that future research should take. These are the study of what companies are doing compared to what they should be doing, the interdependence of entry modes, and whether choice sets are complete. To begin, future research on entry modes should focus on studying what companies are doing and consider if that is what they should be doing (Shaver 2013). Understanding whether studies are being descriptive or prescriptive will lead to a better understanding of the differences between studying what companies are doing and if it is working compared to what companies should be doing will help lead research away from just looking at firms on a surface level.

The question of whether entry modes are interdependent is also important to consider. This is the question of whether or not firms should examine each entry decision that needs to be made individually and decide on an entry strategy based on that. It is possible that firms also need to examine what they have done previously, how an entry mode worked in another market, and what their competition is doing. Finally, examining choice sets related to the number of entry modes that are explored in the current literature is emphasized. Shaver (2013) recommends that more entry mode studies are considered in research or that researchers at least consider the effect caused by limiting the number entry modes studied, especially since research seems to all focus on the same entry modes.

Hennart and Slangen (2014) respond to Shaver (2012) and expand on this research. They begin with the idea that what companies are doing is not what they should be doing. The way they present this idea, compared to Shaver (2012), is that scholars should go beyond just explaining whether they plan to make a predictive analysis or not. Hennart and Slangen (2014) believe that scholars should begin focusing on choices that might deviate from a theoretical model, called “non-fit” cases.

Hennart and Slangen (2014) also examine the assertion that more attention needs to be paid to choice sets. They take the examination made by Shaver (2012) a step further by suggesting that researchers should look at how to decide on alternative forms of choice sets. They offer two approaches to determining a choice set: inductive and deductive, where deductive is driven by theory and indicative is driven by managerial practice. Overall, there are many different opinions concerning whether or not entry mode studies are continuing to provide meaningful contributions. The suggestions provided by the above mentioned authors, however, imply that entry mode studies are still vital to international business research and that there are various ways that researchers can improve their entry mode research on a conceptual level.