Entry Mode Choice in China’s Regional Distribution Markets:

• Main Authors: Yung-jui Chen, 陳永瑞
• Other Authors: Chyan Yang
• Format: Others
• Language: en_US
• Published: 2008
• Online Access: http://ndltd.ncl.edu.tw/handle/7naq64

博士 === 國立交通大學 === 管理科學系所 === 96 === In this paper, we investigate the entry mode choice of a leading Taiwanese food company in setting up regional distributors in China’s 312 sales districts. Our study shows that, in entry mode decisions, the institutional factors are more important than transaction cost considerations. Both formal and informal institutions are considered. Formal institutions refer to government prescribed institutions (laws and regulations), while informal institutions refer to rules prescribed by the industry and the society. Both institutions are shown to affect the entry mode choices but one important type of institution, professional norms, is conspicuously missing in China. Professional norms exert peer pressures on the practitioners in the same profession, forcing their behaviors to conform to a common pattern. In the absence of professional norms, the roles of network ties and mimetic behaviors are heightened and they become a proxy for professional norms. As a foreign enterprise operating in China’s local markets, the Taiwanese food company attained legitimacy by forming alliances with local wholesalers and by following its predecessors in selecting organization forms.