The impact of firm resources on international entry mode strategy: the moderating effect of country specific risk factors
Uhomhoabhi, Fredrick Albert (2008)
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Tiivistelmä
The main focus of this study was to examine the impact of firm resources on entry mode strategy and to explore the possible moderating effect of country specific risks on the relationship between firm resources and entry mode amongst Finnish firms with international operations.
In the theoretical part of this study, the resource based view concept was applied through which the conceptual framework for the study was developed, which led to a more focus on some firm resources namely firm size, international experience and firm’s unique resources; and some country risks namely political risk and economic risk. However, ceteris paribus, this approach was also complemented by other theories for example, transaction cost theory, industrial organization theory, organization capability theory etc.
Over 2.000 web mails were sent to key decision makers of 96 Finnish firms with international operations. The quantitative data collected was tested with, first was the Chi-Square test method to determine the impact of firm resources on entry mode strategy. The second, a descriptive analysis, to determine the moderating effect of country risk on the relationship between firm resources and entry mode.
The findings from the study showed that, in line with the resource based theory, not all firm resources could drive a firm strategy under certain country risk condition. Large firms were moderated in terms of high resource committed entry mode with high political risk, but could strive in high economic risk environment. Firms with high international experience and high firm’s unique resources reduced the propensity to drive their strategy in terms of high resource commitment in both political and economic risky environment, however, international experience seem to have partial support in this regard.
In the theoretical part of this study, the resource based view concept was applied through which the conceptual framework for the study was developed, which led to a more focus on some firm resources namely firm size, international experience and firm’s unique resources; and some country risks namely political risk and economic risk. However, ceteris paribus, this approach was also complemented by other theories for example, transaction cost theory, industrial organization theory, organization capability theory etc.
Over 2.000 web mails were sent to key decision makers of 96 Finnish firms with international operations. The quantitative data collected was tested with, first was the Chi-Square test method to determine the impact of firm resources on entry mode strategy. The second, a descriptive analysis, to determine the moderating effect of country risk on the relationship between firm resources and entry mode.
The findings from the study showed that, in line with the resource based theory, not all firm resources could drive a firm strategy under certain country risk condition. Large firms were moderated in terms of high resource committed entry mode with high political risk, but could strive in high economic risk environment. Firms with high international experience and high firm’s unique resources reduced the propensity to drive their strategy in terms of high resource commitment in both political and economic risky environment, however, international experience seem to have partial support in this regard.
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