Strategic market entry choices : experience of Chinese SME managers

Quan, Rose (2007) Strategic market entry choices : experience of Chinese SME managers. Doctoral thesis, Northumbria University.

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Abstract

There is intensive research in international business studies exploring strategic decisions relating to the choice of entry mode. As a frontier issue the choice of entry mode has been widely recognised as being one of the critical decisions in a firm's internationalisation. However, most of the research primarily focuses upon Western multi-national enterprises (MNEs) rather than small-medium sized enterprises (SMEs). Recently, interest in the international business activities of SMEs has been increasing. Nevertheless, little has been done in light of the choice of entry mode in the SME sector, especially for SMEs from developing countries. This study explored how Chinese SME managers make their strategic market entry choices when entering the UK to address the issue of whether Western MNEs' foreign investment theories are applicable to Asian SMEs. The decision making of entry mode choices involves complicated social processes such as social relationships both in and outside the firm. This research takes a social constructionist paradigm, trying to understand and interpret the Chinese SMEs decision maker's unique experiences, perceived values and embedded Chinese culture that can have great impact on their choice of entry modes. Cohering with this philosophical stance, 10 Chinese SMEs managers in the North East of the England were involved in qualitative interviews and data was analysed through template analysis. The findings of this thesis offer a more holistic picture of SME managers' decision making in terms of their entry mode choices. This study is inconsistent with the more classic motives of firms' internationalisation, such as securing raw materials and seeking low-cost labour as it reveals 2 previously unrecognised motives of Chinese SMEs' internationalisation, namely `seeking entrepreneurial freedom' and 'building their own international teams'. Moreover, 4 entry modes were used by the Chinese SMEs' entering the North East of England markets, including direct exporting, joint venture and wholly-owned subsidiary and internet entry mode. Interestingly, the joint venture mode used by Chinese SMEs in this study is operationally different from traditional joint ventures. Furthermore, a number of influencing factors emerged from the Chinese SME managers' accounts: firm-specific factors, strategy-factors, product-specific factors, networks and social culture factors and the decision maker's personal characteristics. In drawing upon their motives, influencing factors, and entry modes a 3-stage decision making process was discovered which combined rational and cybernetic strategic approaches that have been adopted by Chinese SMEs managers at different levels. Contributively, this study offers alternative understandings of the choice of entry mode. By drawing upon experiences of Chinese SME managers it extends the foreign investment theories based on Western-MNEs and offers a contribution to practice grounded in an Asian-SME context. Significantly, this thesis develops a practice-based framework by integrating factors into the whole decision making process, providing practical guidance for SME managers to inform their entry mode choices.

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