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InternationalMarketingReviewEmeraldArticle:ImpactofHostCountryMarketCharacteristicsontheChoiceofForeignMarketEntryModeYung-ChulKwon,LeonardJ.KonopaArticleinformation:Tocitethisdocument:Yung-ChulKwon,LeonardJ.Konopa,(1993),ImpactofHostCountryMarketCharacteristicsontheChoiceofForeignMarketEntryMode,InternationalMarketingReview,Vol.10Iss:2pp.null-nullPermanentlinktothisdocument::03-05-2012Citations:Thisdocumenthasbeencitedby6otherdocumentsTocopythisdocument:[e-mail]rantedthroughanEmeraldsubscriptionprovidedbyMACQUARIEUNIVERSITYForAuthors:Ifyouwouldliketowriteforthis,oranyotherEmeraldpublication,thenpleaseuseourEmeraldforAuthorsservice.Informationabouthowtochoosewhichpublicationtowriteforandsubmissionguidelinesareavailableforall.AdditionalhelpforauthorsisavailableforEmeraldsubscribers.Pleasevisit(COPE)andalsoworkswithPorticoandtheLOCKSSinitiativefordigitalarchivepreservation.*Relatedcontentanddownloadinformationcorrectattimeofdownload.ImpactofHostCountryMarketCharacteristicsontheChoiceofForeignMarketEntryModeYung-ChulKwonYeungnamUniversity,KoreaandLeonardJ.KonopaKentStateUniversity,Ohio,USAInternationalMarketingReview10,260SubmittedFebruary1992RevisedMay1992September1992Broadlyspeaking,therearetwosomewhatopposingviewsconcerningthefirm'sforeignmarketentrymodedecisions:namely,theinternationalization(gradualinvolvement)viewandthecontingency(strategy/selectivechoice)view.Therationaleofthegradualinternationalizationmodelisbasedonafirm'sdesiretominimizerisk.Foreignmarketinvolvementisinherentlyriskyduetoelementssuchasculturaldifferences,politicalinstability,orchangesinthevalueofexchangerates.Afirm,therefore,islikelytoenteraparticularforeignmarketinitiallybyalowresourcecommitmententrymode(e.g.exporting)tominimizetheriskofforeignmarketinvolvement.Butasafirmacquiresknowledgeandexperienceaboutthatforeignmarketittendstoshifttoahighresourcecommitmententrymode(e.g.foreignproduction)withanexpectationofhigherrateofreturn(Bilkey,1978;BuckleyandMathew,1978;JohansonandVahlne,1977;JohansonandWeidersheim-Paul,1975;JullandWalters,1987;McDonald,1961).Ithasbeenarguedrecentlythatthegradualinternationalizationmodelistoogeneraltoexplaintheglobalizationpatternsoffirmsthatservemultipleforeignmarketswithmultipleproductlines.Thatistosay,theentrymodedecisionintheglobalizationstageislikelytobemoreselectiveandstrategic(AndersonandGatignon,1986;Goodnow,1985;Reid,1983;Root,1987).Theprimaryconcernofthisresearchistodeterminewhichfactorsplayaselectiveanddeterminantroleinthefirm'schoicebetweentwoforeignmarketentrymodes,exportingversusforeignproduction.Therestofthearticleisorganizedinfivesections.Theconceptualframeworkoftheforeignmarketentrymodechoiceisdescribedinthefirstsection.Theresearchhypothesesdevelopedtoexaminethefactorsinfluencingthechoiceofforeignmarketentrymodeareexplainedinthesecondsection.Theresearchmethodologyispresentedinthethirdsection.Theempiricalresultsarepresentedanddiscussedinthefourthsection.Finally,thesummaryandimplicationsareprovidedinthelastsection.InternationalMarketingReview,Vol.10No.2,1993,pp.60-76©MCBUniversityPress,0265-1335HostCountryMarketCharacteristics61ConceptualFrameworkoftheForeignMarketEntryModeChoiceFirmsthathaveprotractedinternationalbusinessexperiencearelikelytoserverespectiveforeignmarketviadifferententrymodes.Forinstance,afirmmayexportfromahomecountrytooneofitsforeignmarketswhileitmayengageinforeignproductioninanotherforeignmarketThischoicefrequentlyisexacerbatedbythefactthatavarietyofproductsisofferedbyafirm.Consequently,targetforeignmarketsrequireanalysesofentrymodechoiceaswellasproductportfolioofferings(s)toascertainthepay-offs-suchassalesrevenueormarketshareandprofit-ofalternativeentrymodesandproducts.TheconceptualframeworkoftheforeignmarketentrymodechoiceadoptedinthisarticleisshowninFigure1.AnexplanationoftheelementsinFigure1follows.FactorsInfluencingtheForeignMarketEntryModeChoiceForeignmarketentrymodesarethemeansoflinkingacompany'sproduct(s)toforeignmarket(s).Thusafirm'sentrymodechoicedependsonnotonlythecharacteristicsofacompanyanditsproduct(s)butalsoonaforeignmarket'scharacteristics.Goodnow(1985)andRoot(1987)viewedcompanyandproductcharacteristicsasinternalfactorsandforeignmarket'scharacteristicsasexternalfactors.Goodnowspecificallyidentifiedcorporatestrength,competitiveposition,InternationalMarketingReview10,262corporatepolicy,andaproduct'scharacteristicsasinternalfactors.Heregardedtheforeignmarket'sopportunity,itseconomicd