Internationalisation and mode switching-performance, strategy and timing

The subject of this thesis is the management of foreign operations and the switching of modes for international business. Contrary to research on the market entry, the focus here lies on the further development of the initially selected market entry strategy and the question of identifying the right timing and optimal approach for changing strategies (strategy change). Based on a comprehensive review of literature on internationalisation and mode switching, a theoretical concept for decision-making behaviour during a switch is formulated. The hypotheses derived from this are empirically assessed through interviews with top managers and alarge-scale survey of 192 companies (51 % switchers; 49% nonswitchers). Here, the companies surveyed can be classified into five characteristic groups based on the preferred mode, corporate characteristics, timing of the mode decision and mode-switching probability. The results show that the mode switch is an important option for improving performance in foreign markets. Satisfaction with current performance of foreign operation is the main driver for or against the mode switch. When a firm makes the decision to switch modes, it is shown that, through the mode switch, success in the foreign market is significantly improved. Yet the switch is not in itself a prerequisite for success. The study shows that both switchers and non-switchers can be successful. The results also reinforce the assumed relationship between management style and the probability of a mode switch. Clear causal relationships are identified between systematic internationalisation planning and success. In addition, the dwelling time after market entry is shown to be critical; for example, it is established that the mode of "importers" is usually tied to a longer stay in a market than as with other mode strategies. This indicates apath-dependency with certain modes. This study shows that, over the duration of foreign business activity, companies pursue characteristic internationalisation pathways through their choice of mode. With regard to timing in the decision-making process, the conclusion is reached that there should be sufficient time and space for the development, negotiation and evaluation in the sense of using a co-evolutionary perspective. Timing is viewed as a result emerging from co-evolution of internationalisation activities, corporate characteristics, mode strategy, management style and industry influences. Areas for further research are identified and recommendations on how to improve decision making in the management of foreign operation are provided. The study concludes with an explanatory theory on mode switching, based on the theory of pathway dependency.