Entering the Chinese Market: Implications for foreign micro E-businesses

Abstract: Abstract   Purpose: The purpose of this thesis is to show how the firm-specific resources interact with the institutional context of an emerging country in the case of E-business micro firms. This is done by identifying the factors and investigating the outcomes of those factors which give these firms economic performance from the perspective of the entry, as well as growth. This study aims at extending the knowledge on the entry and strategies of E-business micro firms entering into China. The goal of the study is to answer the research question, “How can firm-specific resources, paired with country-specific institutional context influence the successful entering into China for micro e-businesses?”, and to provide entrepreneurs which desire to internationalize on the Chinese market with a frame of reference and good practices in E-business.   Frame of references: Literature on SMEs and their associated entry modes, institutional context, firm resources and performance was used to develop a theoretical basis for the paper. The research gap was found in the corroboration of these terms in the context of the emerging Chinese E-business market.   Method: This study has adopted an inductive approach and was exploratory in nature. Qualitative case studies were employed to collect and analyze data with regards to micro E-businesses currently active on the Chinese market. The firms found are all foreign to China but active on Chinese soil. To collect primary data, we have used semi-structured interviews. For secondary data, we have used financial data, websites, and firms’ power point presentations. Following, the data was categorized, coded and analyzed according to professional research methods. Because the study is inductive, the literature was linked and discussed in relation to the findings.   Findings: The findings are numerous, stemming from both the analysis of the data, as well as from the coupling of the initial firm-resource findings with the institutional context findings. The discussion and conclusion hold all the findings. Due to their amount, they cannot be presented here in their entirety. However, the two major findings and criteria to be considered in the case of our research questions are: Proposition 1: For micro B2C E-businesses, the tangible resource is less important than the intangible resource. The capability of applying the Chinese market knowledge and experience to the institutional context, and bringing the results into the entry strategy is more important than the tangible resources Proposition 2: In a matured E-business institutional context, a partnership entry mode which requires lower investment is preferable for foreign micro E-businesses and can lead to a higher possibility for success.