Chapter 6

Entry and Operation Modes

Experience builds a firm’s knowledge of a market, and that body of knowledge influences decisions about the level of commitment and the activities that subsequently grow out of them.

—Jan Johanson and Jan-Erik Vahlne, 20091

Together with location choices, decisions on entry and operation mode arrangements are considered to be the most critical in a company’s international expansion strategy. An entry mode refers to the institutional arrangement chosen by a company when entering a market. Entry modes can be classified along a continuum that ranges from low through medium to high levels of equity and control (see Figure 6.1). As the foreign company invests more equity in a given operation, it accepts a greater ...

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