Uncertainty and a Firm's Entry Mode: the Role of Knowledge

The decision of mode of entry and knowledge should be simultaneously considered when an MNC expands into a foreign market. Previous studies tend to view them in isolation, mainly focusing on minimizing the transaction cost, and their conclusions are partial and may be untrue in volatile environments. Knowledge is the source of sustainable competitive advantage of a firm, and should be taken into consideration while the firm makes the choice of mode of entry. This paper analyzes the role of knowledge and its influence on a firm's mode of entry when deciding to expand overseas and puts forward some suggestions.