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Factors in international market selection: the influence of international experience on the decision making

Jansen, Sil T.G. (2013) Factors in international market selection: the influence of international experience on the decision making.

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Abstract:International market selection is an important aspect for a company that is thinking about expanding business abroad through locations, partners, customers or delivery points. The company might invest in this new opportunity and therefore the choice of country should be the right one. There are many factors which the company can take into account when making the international market selection decision. What are the most important factors for the companies to take into account and will the international experience of the company play a factor in choosing these factors? That is what this study is about. According to the literature there are three approaches in international market selection, a systematic approach, a non-systematic approach and a relationship approach (Andersen & Buvik, 2002). These three approaches can be linked to the concepts of causation and effectuation which are originated by Sarasvathy (2001). These two entrepreneurial processes are about decision making and future planning. When using the causation process the goal is clear, but the means are not. When using the effectuation process the means are clear, but the goal is not (Chandler, De Tienne, McKelvie, & Mumford, 2011; Sarasvathy, 2001). The systematic approach can be linked to the concepts of the causation process, based on their focus on the predictable aspects of the future, and the non-systematic approach and the relationship approach can be linked to the concepts of the effectuation process, since they are aimed at controlling the future through cooperative strategies and alliances. Theory about international market selection has been investigated in order to find international market selection factors for each of these three approaches. 28 factors were found which can be used in the international market selection and these 28 factors were used in the next step of the study, interviewing four companies in order to find out about their international market selection. The interviews were also used to form the basis of the quantitative study, a questionnaire in which four factors are used to determine whether companies have a preference for a certain type of factor based on their international experience. A conjoint analysis is used for this quantitative study and four factors have been included since this is the right amount for industrial respondents (Green & Srinivasan, 1990). 2 Factors in International Market Selection S.T.G. Jansen University of Twente When the interviews were analysed it became clear that there is a difference between the four companies when looking at their way of handling IMS. This difference seems to correspond with their international experience. More experienced companies prefer a more structured way of working in IMS in comparison to the less experienced companies, that mainly worked based on their own intuition and with the help of their contacts when performing IMS. In addition these interviews brought up four important factors which will be taken into the conjoint analysis, since this conjoint analysis is aimed at finding the most important factors to be used by the respondents in the IMS. These four factors are capability enhancement, long-term economic development, process standardization and visits to the markets. A conjoint analysis can be performed with four factors when working with industrial respondents (Green & Srinivasan, 1990). In the interviews the respondents have indicated that there are four factors they prefer the most. These four factors have been used in a conjoint analysis to find out how important these factors are deemed by a larger respondent group and in order to find out whether international experience is responsible for the preference of the factors. The less experienced respondent group seems to cling to all the factors that they are getting valuable information on. The more experienced respondent group, however, seems to slightly prefer the factors that can be termed as calculative factors. These factors belong to the systematic approach, which this respondent group already seemed to prefer in the interviews. So international experience does influence the preference for international market selection processes and factors. Less experienced companies perform their IMS with the help of all information they can get and with the help of trusted partners. More experienced companies work more structured and make use of information out of official sources which they seem to trust better.
Item Type:Essay (Master)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:Business Administration MSc (60644)
Link to this item:http://purl.utwente.nl/essays/63059
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