How do cultural and institutional factors influence the entry mode decision of a multinational firm? A case study of a Norwegian MN

Abstract

This Master Thesis investigates how cultural and institutional factors affect the entry mode choice of a multinational firm. Previous research has found equivocal results regarding the effect of these factors on the entry mode choice. One metaanalysis has found that one third of all studies found one particular effect, another third found the opposite, and the last third found no effect. The span of the results is therefore wildly conflicting, and in need of further investigation. We therefore conducted a singular case study on a multinational firm in order to gather information-rich data on the effect of these factors on the entry mode decision. We conducted semi-structured interviews with employees from each of the regions that the firm operates in. These employees have been present in the early stages of market entry and can therefore paint a comprehensive picture of the factors that affect the entry mode choice. We found that cultural and institutional factors did not have an effect on the entry mode choice, but rather on the establishment mode, the ownership structure, and on the type of partner used, whether local or foreign. Throughout the paper we refer to these as variations within the entry mode choice. The entry mode choice was found to be determined by firm- and industry characteristics, and the firm uses a partnership structure in all markets in which they operate in order to reduce the amount of resources committed in each market and to reduce the risk that is tied to the high failure rate of the industry.