Foreign Market Entry Strategies and Performance: Empirical Evidence from Norway

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• Foreign Market Entry Strategies and Performance
  Empirical Evidence from Norway

Post Graduate Research Conference 2nd July 2008
Communication and Participation
Shaista Nisar, PhD
Student
(s.nisar_at_leedsmet.ac.uk)


Supervisors
Dr Junjie Wu, Dr
Mary Leung and
Professor John Shutt,
Leeds
Metropolitan University
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• Presentation Outline

• Introduction
• Research Area
• Research Questions
• Theoretical framework
• Research methodology
• Analysis
• Contribution

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Introduction

• Increase of foreign direct investment (FDI) is
  one of the most important characteristics of
  globalisation
• Three main entry strategies for FDI are Cross
  Border Mergers Acquisitions (CB MA),
  International Joint Ventures (IJV) and Foreign
  Wholly Owned Subsidiaries (F WOS)
• FDI activity in Norway has also increased
  rapidly, SSB (2006) reports an increase of around
  50 billion USD in inward FDI from 1998 to 2004
• Norway do also provides a hospitable climate to
  foreign investors, as FDI is critical for the
  Norwegian economy
• Around 60 of foreign investments in Norway are
  in oil and gas exploration and manufacturing
  industries. Service industry is the third largest
  industry in Norway and provides opportunities
  for FDI

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Research Area
FOREIGN DIRECT INVESTMENT

PERFORMANCE
INTERNATIONAL JOINT VENTURES
FOREIGN WHOLLY OWNED SUBSIDIARIES
CROSS BORDER MERGERS ACQUISITIONS

• Sub-areas
• Inward FDI in Norway in oil and gas, manufacture
  and service industry
• Subjective and Objective measures of performance,
  their importance at country, industry and firm
  level, their frequency of use
• Comparison of the performance among entry
  strategies

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Research Questions

• Is there a link between the entry strategy used
  by a foreign investor
• and the subsequent performance?
• How do managers of IJVs, CB MAs and F WOSs in
  Norway
• assess the ex-post performance, what
  measures are they using for the assessment?
• Does one particular entry mode lead to better
• performance than the other?

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Theoretical Framework

• Resource Based View (RBV) to understand the
  reasons for selecting specific entry strategy
• Physical Resources
• Human Resources
• Organisational Resources

RESOURCES
Motivation
IJV
CB MA
F WOS
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• FDI theories to understand the concept and
  importance of entry strategies
• Identify the most commonly used performance
  measures for each entry strategy in Norway -
  Subjective or Objective measures
• Build on the explanation of performance to see
  how it varies in different industries
• Entry Mode studies to understand the link between
  performance and entry strategies

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Research Methodology

• Previous studies have mainly used quantitative
  methodology, this
• study will adopt
• Multi Method Approach
• Methods
• - Case studies with in depth interviews,
  open semi-structured
• format, interviews conducted in Norwegian
  language
• - Mail questionnaire sent via post and e-mail
• Case studies will be of a qualitative approach
  and questionnaire of a quantitative approach.
• Quantitative approach will be the main approach,
  supported and extended by the qualitative
  approach

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• Sample
• IJVs, CB MAs and F WOSs formed in Norway
• Industries Oil and gas, Manufacture ( chemicals
  ) and Services
• ( finance and commercial services )
• The companies will be operating in Norway for the
  last 3 years or over
• Since the required information needs to be very
  detailed, respondents with specialised knowledge
  will be required to answer the questions
• While the secondary data will be used to identify
  FDI patterns and
• trends, government policy, multinational
  activity, ownership type,
• formation type of company and all other
  information needed, the primary
• data will be the foundation of this study

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Analysis

• Several separate but related analysis
• Discussion of the results and their implication
• Detailed descriptions of each analytical
  component in appropriate chapters
• SPSS and other appropriate soft-wares
• Visual and descriptive representations

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Contribution

• Extensive literature on FDI, market entry
  strategies, performance, relation between entry
  strategies and performance, comparison of WOS and
  JV, MA and JV, WOS and MA, strategic alliances
  and WOS, no literature on comparison of all
  three among each other
• Performance What is performance? How and why
  does it vary? What are the main drivers of
  performance? Literature in sketchy and
  unsystematic
• In terms of developed countries research on this
  topic tends to focus more on US and the UK
• Choice of Norway No study on this topic in
  Norway, previous studies tends to focus more on
  outward FDI and not inward

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• Non-EU country in Europe with increasing trends
  of FDI, belongs to the leading group of the
  richest countries in the world measured by GDP
  per capita
• Norway welcomes FDI in most of the sectors,
  however investors are lawfully banned from
  investing in industries, which are monopolised by
  the government because of their strategic
  interest to the country
• Norway is different from most of the other
  European countries in terms of the climate,
  wealth in natural resources, the knowledge and
  understanding of other countries will therefore
  be irrelevant for situation faced up in Norway
• Given the small size of the Norwegian economy, it
  should be possible to analyse as much of the
  population of foreign investments in Norway as
  possible. Randoy and Dibrel (2002) did a study on
  Norwegian companies overseas, where they received
  approximately 50 response

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• This study will attempt to provide host country
  effects on the performance of IJVs, CB MAs and F
  WOSs in Norway, as Norway is a small country with
  a fairly homogenous population
• Demand for research on this topic (Brouthers and
  Hennart, 2007 Brouthers and Nakos, 2004)
• Methodological not many previous studies have
  used qualitative methods for investigation

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• Thank you !!!
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