Business networks as a mode of market entry into emerging markets

Abstract

The internationalisation efforts of emerging market multinational corporations in new emerging markets are frequently hampered by prevalent absent and weakened institutions in the target market. Furthermore, acquisition of knowledge, information flow and the development of a decision-making system focused on general internationalisation issues as well as target market specific information while critical to the success of market entry into emerging markets, are difficult factors to put in place in the context of uncertainty and high risk caused by institutional voids. Business networks offer value with respect to access to information and knowledge as well as overcoming institutional voids in emerging markets. While the common modes of market entry for EMNCs expanding into emerging markets include start-up, acquisition, contractual agreement and joint ventures, this study delved into the possibility that business networks of a mode of market entry in themselves and attempted to understand how EMNCs are leveraging business networks as a mode of entry. The results reported indicate that business networks and knowledge & learning are significant contributors to the mode of market entry selected by EMNCs for emerging market expansion. Furthermore, institutional voids while posing significant challenges for EMNCs, were found not to contribute to the mode of market entry used by EMNCs for internationalisation.