Analysis of market entry strategies by New Zealand companies doing business with Taiwan

Abstract

Many issues need to be considered when firms decide to internationalise their operations. One key issue is to decide the best way to service a particular foreign market. Because of its central role in international operations, entry mode is described as a “frontier issue”. The choice of market entry mode is considered as one of the most critical decisions facing international firms because it has a decisive impact on the success of a firm’s international operations.

Findings on New Zealand firms’ choice of market entry modes are either incomplete or far from comprehensive. This study is designed to examine the choice of market entry mode of New Zealand companies conducting business with Taiwan. Unlike previous research, this study is the first of its type to include international distribution system and business system theories as part of the market entry mode choice framework.

This study, by examining selected factors influencing the choice of market entry mode of 124 New Zealand firms conducting business with Taiwan, had generated a number of interesting findings. Empirical results suggested that the choice of market entry modes was significantly influenced by the host market’s business system, product type, ownership of the company, market size of the industry, market portfolio, international business experience, and host market retailing system. Immigrant links also proved to be a factor influencing a firm’s choice of market entry mode. Firms established by immigrants originating from the host country did not follow the traditional incremental internationalisation theory. Factors such as firm size, before-after sales service, product differentiation, competitors’ choice, home market position, and market potential of the industry were not found to be related to firms’ choice of market entry mode behaviour.

The key statistical analysis tool employed in the study was binary logistic regression analysis. As a result of the logistic regression analysis testing, a research framework on which future inquiries might be based was established.