The relationship between firm's entry mode strategies and Institutional weaknesses in emerging markets

Abstract

The objective of this thesis is find a relation between entry mode degree of control and institutional voids. The literature analyzed present contradictory findings, for this reason we compare a group of articles with the aim of find what join that with the same result. Emerging markets are affected by lack of market intermediaries, lack of infrastructure, corruption, weak institutional quality, the so-called Institutional Voids. Weaknesses in host countries institutions can hamper foreign direct investments and the development of local firms. Some scholars suggest a set of strategies to fill these voids and take advantage of the opportunities that emerging markets offer. Our findings indicate that a high rate of institutional voids correspond low degree of control, external uncertainty seem to increase the propensity of entering a market with a Joint Venture. Companies consider too risky enter through a Wholly Owned Subsidiary that, even if it ensure a higher degree of control, it involve a higher resource commitment.