An Explanatory Model for the Decision to Enter Emerging Markets: A Shareholder Perspective

This paper proposes an alternative framework for making the decision the to enter emerging markets. The approach takes the view of the shareholders of a multinational enterprise to analyze the entry decisions: whether or not enter an emerging market and how to enter the market. Emerging markets prov...

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Bibliographic Details
Published in:International journal of management 2010-08, Vol.27 (2), p.320
Main Author: Kos, Anthony J
Format: Article
Language:English
Subjects:
Corporate governance
Costs
Emerging markets
Joint ventures
Market entry
Multinational corporations
Risk management
Stockholders
Studies
Online Access:Get full text
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Summary:This paper proposes an alternative framework for making the decision the to enter emerging markets. The approach takes the view of the shareholders of a multinational enterprise to analyze the entry decisions: whether or not enter an emerging market and how to enter the market. Emerging markets provide opportunities for multinational enterprises, and also pose great risks if a multinational enterprise enters. It is theorized that if excessive returns are less than the associated risk firms will choose not to enter. If potential returns are greater than the risk associated with entry into emerging markets, firm risk tolerance is a determinant of entry mode choice. Firms with low risk tolerance are predicted to enter through joint ventures or strategic alliances while those with a higher tolerance for risk are likely to enter through wholly owned enterprises. [PUBLICATION ABSTRACT]
ISSN:0813-0183