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Though international entry mode choice largely depends on a firm’s resource base, host country
governments make efforts to promote policy relaxation with incentives in order to attract more FDI inflow.
Here, we establish a consolidated framework with the widely used theoretical perspectives of transaction
cost economies (TCE), network theory, and institutional theory for small and medium enterprises (SMEs)
as a direct response to Laufs and Schwens (2014)’s call to examine the factors that contribute to the
effectiveness of entry mode choice in driving their international performance. From home-host country
dyads, our study is based on the statistical analysis of 242 surveys given to SMEs that have expanded from
a single home country, Taiwan, into various host countries, such as China, Vietnam, Indonesia, Singapore,
and India. Our results demonstrate that SMEs’ entry mode choice is favorably influenced by the degree of
reinforcement of SMEs’ commitment to foreign market entry and further establish that the reduction of
perceived uncertainty positively impacts international performance. We also found that while network
capability was the essential determinant for SMEs’ entry mode choice, favorable change to the host
institution does matter when SMEs choose greenfield as foreign market entry mode compared with other
non-equity modes. Such change to the host institution will also trigger in specific context, such as for
Taiwanese SMEs’ entry to India.
IRIS S.Y. CHEN, YI-LONG JAW. (2020) Examining the Effectiveness of Entry Mode Choice in Driving Small and Medium Enterprises’ International Performance from the Home-Host Country Dyads, International Review of Management and Business Research, Volume 9, Issue 3.
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