Strategic Orientation and the Choice of Foreign Market Entry Mode An Empirical Examination

Drawing on the transaction costs, strategic capability and the strategic cognition perspectives, our study seeks to examine whether and how firms' strategic orientations at the business level influence the entry mode choices that firms make in accessing foreign markets. The study uses a sample of 332 foreign market entries made by 62 U.S. based firms over a period of 6 years to test hypotheses linking firm business level strategy to the choice of foreign entry modes. Findings indicate that Prospectors are more likely to choose equity-based foreign market entry modes than Defenders. In addition, Prospectors favor full-ownership entry modes, namely, greenfield investments and full acquisitions, over shared-ownership modes such as joint ventures and partial acquisitions.