A Critical Review on Foreign Entry Mode and Performance: The Moderating Effects of Environment by Howard S. RasheedI. Project Rationale (15%)1.1 Research ProblemIn the past, many studies had focused on the market entry strategies of multinational corporations. The knowledge body of internationalization lacks the studies of internationalization with focus on the small and medium sized enterprises. Thus this study intends to solve the problem with existing knowledge body and research. The research makes inquires on relationships between choice of entry strategies and the performance outcomes of small and medium enterprise (SMEs) in their efforts in internationalization in a given domestic and foreign environments. It is found that the research excludes the inquiry on what factors influence the choice of market entry mode in internationalization.
In addition, the study also excludes the management skills of the SMEs which may contribute to the choice as well as the performance success of internationalization. 1.2 Aims, Objectives, Questions and Hypothesis1.2.1 Aims: This research aims to examine the relationship between market entry mode and performance outcomes of small and medium sized companies in the United States of America.
Based on the theories of market diversification and contingency, the study aims to develop a conceptual relationship between the market entry choice of SME companies and the outcome performance in the internationalization market. The study intends to show the effect of domestic and foreign market environmental factors which moderate the relationship between the performance outcomes and market entry mode selection of SMEs in internationalization in the globalization market. The study aim was clearly stated. However, there is no conceptual framework depicting the aim was exhibited in the research study. 1.2.2 Objectives: The study has three objectives.
to examine how performance outcomes vary between equity and non-equity entry modes depending on the effects of domestic and foreign environmental factors. to test and validate the contingency model proposed in the research paper. to discuss the findings of the test on contingency model. It is found that the study clearly states the objectives. However, the study does not clearly sates that it intends to propose a new conceptual model in which the new testing of contingency theory was not mentioned. 1.2.3 Hypothesis: There are three hypotheses proposed to be tested in the research problem.
The hypotheses are stated between the dependent variable of outcome performance and entry mode choice. The relationships between the two variables are tested in the context of domestic environmental and foreign environmental factors. A. Domestic Environmental FactorsH1: When domestic munificence is high, firms using non-equity modes will have higher rates of international revenue growth. The statement of the hypothesis H1 should use different wording. The wording of “will have” assumes that the association between the non-equity modes and higher rates of international revenue growth as to be certain.
The wording should be “it is likely to have” rather than “will have”. The second hypothesis was stated as follows: H2: When domestic volatility is high, firms using non-equity modes will have higher rates of international revenue growth. The suggested re-wording above should be applied to the second hypothesis testing. The second hypothesis testing should be using the “it is likely to have” in stead of “will have”.