Gaba

Timing of Entry in International Market: An Empirical Study of U.S. Eortune 500 Eirms in China

Vibha Gaba*

UNIVERSITY OF OREGON

Yigang Pan**

YORK UNIVERSITY AND UNIVERSITY OF HONG KONG

Gerardo R. Ungson***

SAN FRANCISCO STATE UNIVERSITY

This study attempts to explain the timing of entry of firms in international markets. Based on the existing literature, we propose a framework that consists of firm-specific factors, industry/market factors, and host country factors. Empirical results, based on the entry information of U.S. Fortune 500 firms in China between 1979 and 1996,

INTRODUCTION

show that larger firms with greater level of internalization and scope economies are likely to enter this foreign market earlier. In addition, non-equity modes, competitors' behavior in the product market, and lower levels of country risk are significantly associated with early entry.

Firms face three interlocking questions with regard to international expansion: what market to enter (entry location), how to enter {mode of entry), and when to enter (timing of entry). Earlier

studies have focused on thefirsttwo questions, with particular attention to the prevalence, sequence, trade-offs, and effectiveness of different modes of entry (Kim and Hwang, 1992; Woodcock, Beamish, and Makino, 1994; Madhok,

*Vibha Gaba is a PhD student at the Lundquist Gollege of Business, University of Oregon. ** Yigang Pan is Scotiabank Professor of International Business, Scbulich School of Business, York University, and School of Business, University of Hong Kong (2000-2002). ***Gerardo Rivera Ungson is the Y.F. Chang Professor of International Business, College of Business, San Francisco State University, and Professor of Mgmt., LCB, University of Oregon. We thank Rick Mov^rday, Alan Meyer, Michael Russo, and three anonymous reviewers for their suggestions on earlier versions.

JOURNAL OF INTERNATIONAL BUSINESS STUDIES, 33, 1 (FIRST QUARTER 2002): 39-55

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