Research Article
Determinants of Market Entry Mode of Multinational Hotel Enterprises
Keimyung University
Keimyung University
Published: January 2004 · Vol. 33, No. 1 · pp. 1-23
Abstract
The present study empirically analyzed determinants of the choice of foreign market entry modes, particularly focusing on the hotel industry. The research model was constructed primarily on the basis of the eclectic theory, and hypotheses were tested. Data for the empirical analysis were collected through questionnaires from 88 foreign hotels located in Japan. Entry modes were classified separately into four categories (franchise, management service contract, joint venture, sole venture), and into two categories(contractual agreement and equity investment). Then, multiple regression and the logit analysis were applied, respectively. The multiple regression analysis produced slightly better results than the logit analysis, and the results are as follows: Among the ownership-advantage factors, international experience, size of parent company, and product differentiation are negatively related to the control level of entry mode. For the internalization-advantage factors, quality control of services is positively related to the control level while the strategic importance of host market is negatively associated with it as a factor of the location-specific advantage. These empirical results turned out to be different a little from those of the previous studies focusing on foreign market entry strategy of manufacturing industry. In this regard, existing theories need to be modified for the explanation of service industry's foreign expansion.
