Firm's Expansion in Global Markets

Literature Review and Hypothesis Development

Studies related to firm’s expansion in global markets have received increasing attention at both empirical and conceptual levels. Numerous conceptual frame works and studies have been put frontward outlining firm’s choice on the way to establish internationalization procedure Whitelock (2002) and Andersen (1997).

In prior studies related to the strategic management and international business have investigated a lot about the performance inference of the globally diversification strategies. However there is less work done on the performance inference of the globalization strategies related to the entrepreneurship and firm related literature. It has been empirically tested and argued by several researchers that better firms performance is related with the better level of global diversification for example Daniels and Bracker (1989), Tallman and Li (1996), Grant (1987) and Kim, Hwang and Burgers (1993).

Barringer and Greening (1998) argued that one of the most important paths for the firm’s growth is geographic expansion. This type of growth strategy is relatively much important for SMEs whose scope has been confined geographically. According to Zahra, Ireland, and Hitt, (2000) the larger volume of growth and production of firms can be achieved by expanding customer bases by going into new markets. Furthermore in different geographic areas of the world, markets prevails different conditions. Firms can get high rate of return on their assets and can take advantage on market imperfection by leveraging their assets in dissimilar markets. SMEs will have to expand across the border markets to get better opportunities and better rate of returns to their assets.

Milinaric (2010) has focuse...

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...ee hypotheses were developed through extensive literature review.

H1: Location specific factors are positively related with firm’s foreign market performance.

H2: Firm specific factors are positively related with firm’s foreign market performance.

H3: Owner specific factors are positively related with firm’s foreign market performance.

Theoretical Framework

FLO-FE model

Measurement

Before conducting regression analyses, data reduction was performed for factor analysis. The Firm specific factors, Location specific factors and Owner specific factors were measured on 5 point Liker scale. Ranking started from “1= strongly disagree” to “5= strongly agree. The responses to the Foreign entry performance questions ranged from “1=Much Worse” to “5=Much better”.

To determine the internal reliability of the variables, cronbach’s alpha was run.