Success through Trust, Control, and Learning? Contrasting the Drivers of SME Performance between Different Modes of Foreign Market Entry

Maximilian Holtgrave and Mert Onay
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Maximilian Holtgrave: Research Centre “Trust and Communication in a Digitized World”, University of Muenster, Geiststraße 24-26, 48151 Münster, Germany
Mert Onay: Research Centre “Trust and Communication in a Digitized World”, University of Muenster, Geiststraße 24-26, 48151 Münster, Germany

Administrative Sciences, 2017, vol. 7, issue 2, 1-24

Abstract: Globalization and international competition have driven a large number of small- and medium-sized enterprises (SMEs) to enter foreign markets. However, current knowledge on which factors determine SMEs’ foreign market performance and secure their success is limited. Using empirical data on 280 German SMEs’ activities in Arab markets, we contrast the performance effect of trust with those of control and learning (three of the most prominently studied success factors) across three different structural modes of market entry: non-equity entry, cooperative entry, and wholly-owned subsidiaries. Our results reveal marked differences between the three entry modes and we offer a detailed discussion of the underlying structural and cultural reasons. Consequently, this study allows for a comprehensive understanding of the determinants of SMEs’ foreign market performance and provides relevant advice as to which managerial approach to emphasize for which mode of foreign market entry.

Keywords: SME; trust; control; learning; performance; market entry; Arab markets (search for similar items in EconPapers)
JEL-codes: L M M0 M1 M10 M11 M12 M14 M15 M16 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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