Non-Equity Mode versus Equity Mode for Multinational Companies in Thailand

Abstract

This research aims to understand the decision making of foreign entrepreneurs in choosing modes of foreign market entry in relation to the differences in cultural characteristics of the entrepreneurs, locations of the businesses, and the business experiences. The hypotheses were based on the differences in cultural characteristics of these entrepreneurs, locations of the businesses, and the business experiences affecting differences in decision making of foreign entrepreneurs in choosing modes of foreign market entry divided into Equity modes versus Non-Equity Modes. Convenience sampling was use to collect the 100 questionnaires from international businesses in various industries, divided into 50 businesses located in Special Economic Zone or Costal areas and 50 businesses located outside Special Economic Zone or Costal area. The data was analyzed using multiple regressions. The findings found that the more entrepreneur value high power distance leads to the high tendency to use equity modes of foreign market entry.  Moreover, they found that the more entrepreneur value low uncertainty avoidance, compared with those who value high uncertainty avoidance, leads to the high tendency to use equity modes of foreign market entry. However, high business experiences and doing business in special economic zone or costal area are not the factor affecting entrepreneurs’ decision to choose either non-entry modes or entry modes of foreign market entry. As a result, these findings support past research on the relationship between cultural dimensions and foreign market entry modes.