What affects the choice of entry mode? : - A study made on Swedish Companies in the United Arab Emirates.
When firms decide to enter a new country there are many considerations to be made, and one of the most important one’s is the choice of entry mode. Previous research indicates that there are several factors that affect the choice of entry mode in the internationalization of a company. The authors decided to look at the following factors: government ownership restrictions, country risk, market attractiveness, cultural distance, and control.
The study focuses on Swedish companies that have entered the United Arab Emirates. The forms of entry that were examined were representative offices, wholly owned (branch offices), joint ventures (LLC) and wholly owned firms located in free zones. A quantitative
approached was used where information was gathered from the respondents through a web survey. In addition to this a qualitative interview was conducted with a representative from the Swedish Trade Council in Dubai in order to get a deeper insight to the business climate. The results of the study are based on the responses from 39 Swedish firms. The results of the study indicate that market attractiveness is the most important factor that affects the choice of entry mode followed by the need for control. The affect of government
ownership restrictions was also considered to have an effect on the entry mode choice. However, the authors found a very weak connection between cultural distance and the choice of entry mode, the results also indicate that country risk had very little affect on the choice of entry mode.
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