Firms’ Marketing Mix Effectiveness and Modes of Entry in the Host Countries

Abstract

The theoretical underpinning of this paper is that the modes of entry adopted by firms investing overseas depend on the effectiveness of their marketing mix. These modes range from simple exporting and licensing to more advanced ones such as joint ventures and setting up wholly-owned subsidiaries. Applying the theory of internationalization of the firms from a marketing perspective, this study posits that the higher the level of marketing mix effectiveness of firms, the more likely they will commit to more advanced modes of entry. This relationship is tested using data from a survey of firms in Australia, Singapore and Hong Kong. Results from a polychotomous regression analysis, treating the entry modes as an ordinal progression, revealed that product quality, design, price competitiveness, language skills and multinationality contribute to the propensity of firms to choose more advanced entry modes. However, country differences among firms are found in the areas of advertising and reputation.