Foreign market entry mode – Developing the Industry Internationalisation model

Abstract: The research on internationalisation goes back a long time. Despite this, there exist no theories on how different industries enter new markets, and by which mode of entry. This dissertation attempts to develop a model with the purpose to explain the differences in foreign market entry mode decision between industries. In order to describe these differences, the foundations of our model are the relative degree of firm specific assets and the need of local representation, and if the industry use the firm specific asset internally or externally. The suggested model is based upon concepts of prior theories on internationalisation, with a focus on Dunning´s Eclectic Paradigm. What separates the proposed model from the Eclectic Paradigm is the need of local representation, which differences are of great importance of different industries. The Uppsala Internationalisation model and Transaction Cost Analysis were also contributing in the development of the model. Propositions were created on each industry to test the validity of the model and the presumed entry mode decision. As this dissertation used a deductive approach, the model was developed by existing theories of internationalisation and then tested empirically by an internet-based questionnaire on companies on the Swedish stock market. The result demonstrated the applicability of the model. In addition, the analysis contains a detailed description of the findings on each industry, and summarises the model with a combined result. Finally, the conclusions are presented to summarise the work, the practical implementations and suggestions for further research.