Impact of sequence of international entries on country exits

Document Type

Article

Publication Date

10-2-2017

Abstract

A classic model of international entries—the Uppsala model—postulated that firms enter foreign countries in increasing order of psychic distance between the home and the host country to minimize the risk of failure. A question that was left unanswered was whether this sequence of entry results in any performance benefits. Literature on the impact of psychic distance, or its components like culture distance, on the performance of foreign operations abounds but the order of entry that is critical to the Uppsala model remains conspicuously absent. This paper presents an analysis of foreign country entries and exits by the U.S. multinationals in the manufacturing and service sectors since 1965. Companies that enter foreign countries in increasing order of culture distance do gain a significant performance advantage over those who do not. Changes over time and across industry sectors are discussed.

DOI

10.1080/15475778.2017.1389598

Publication Title

Journal of Transnational Management

Volume Number

22

Issue Number

4

First Page

260

Last Page

272

ISSN

15475778

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