The Process of Internationalisation: Entry Mode Strategy and International Knowledge Acquisition

Abstract

The increase in international business emphasises the need to study international entry strategies. Many studies have endeavoured to develop this field and provide practical guides, but there are still some questions and gaps that are unresolved. This thesis specifically aims to explore firms’ international entry modes and their knowledge acquisition relative to post-entry R&D activities. Considerable research has been done about entry mode decisions – the first step of operating in foreign markets. However, a more comprehensive discussion about entry mode choices is necessary due to the conflicting empirical results and the factors that have been ignored. The thesis combines the two fields that are examined separately in existing studies through a meta-analysis of the entry mode choices associated with the antecedents and outcomes. Based on 1,499 effect sizes from 230 published empirical studies, the thesis examines fifteen antecedents and two post-entry outcomes that are related to two entry mode choices based on resource-based view (RBV) and transaction cost economics (TCE). The two entry mode choices are affected by different antecedents; they have different mediation effects between the antecedents and the outcomes. The antecedents of entry modes may affect the outcomes differently. The complicated direct and indirect effects require more empirical studies connecting antecedents and outcomes in one model.
In addition to the meta-review of entry mode choices, this thesis develops an empirical examination of the R&D investments of multinational enterprises (MNE) after international knowledge acquisition. The analysis focuses on cross-border acquisitions, as they are one of the most important ways to gain knowledge; it explains how the interorganisational knowledge (relative knowledge size and technological overlap) of the acquiring and target firms affects the post-entry R&D intensity. The relationships are examined based on 94 cross-border acquisitions worldwide using the digestibility perspective. The relative knowledge size and the technological overlap both have positive influences on acquirers’ R&D investments. Moreover, the presence of institutional distance has a positive effect on the influence of relative knowledge size but a negative effect on technological overlap influences.
The thesis contributes to international entry strategy by generalising current conflict results and clarifying the ignored relationships. Combining the RBV and the TCE, the thesis strengthens the importance of examining antecedents and outcomes in one model, which extends the knowledge about the mediation effects of entry mode choices. Moreover, the analysis of the interorganisational knowledge in cross-border acquisitions complements the current studies by showing how the asymmetric knowledge between partners affects MNE strategic allocations for R&D investments. By using the digestibility perspective to explain the institutional environments, this study deepens the learning about the influences that international environments have on firms’ digestion of acquired knowledge.