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The Hierarchical Model of Market Entry Modes

Yigang Pan and David K Tse
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Yigang Pan: York University and University of Hong Kong
David K Tse: University of Hong Kong

Journal of International Business Studies, 2000, vol. 31, issue 4, 535-554

Abstract: In this study, we propose and test a hierarchical model of market entry modes. Entry modes can first be viewed as equity-based versus non-equity-based. Within equity-based modes, the choice is between wholly owned operations and equity joint ventures, while within non-equity-based modes, the choice is between contractual agreements and export. Empirically, we demonstrate that there are factors that exert substantial influences at the equity versus non-equity level, but rather weak influences at the lower level of choice hierarchy. The empirical results are based on a sample of over 10,000 foreign entry activities into China between 1979 to 1998. The findings provide supportive evidence for the hierarchical model of market entry modes.© 2000 JIBS. Journal of International Business Studies (2000) 31, 535–554

Date: 2000
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