AN APPROPRIATE MARKET ENTRY FOR TJ HUGHES INTO NIGERIA MARKET

An Appropriate Market entry for TJ Hughes into Nigeria market

Abstract

Purpose - The purpose of this study is to examine how liability of foreignness (LOF) influences TJ Hughes market entry strategy.Design/methodology/approach - Building on the extant literature, this paper examines the influence of LOF on four TJ Hughes market entry strategies (i.e. market-seeking, resource-seeking, competitive advantage and control-orientation) in a sample of 3,085 Sino-foreign joint ventures formed in manufacturing sectors in Nigeria.Findings - The findings indicate that LOF influences market entry strategies selected by TJ Hughes. Specifically, TJ Hughes from low LOF countries adopt resource-seeking strategies and strategies to utilize their competitive advantages in labor-intensive industries more than TJ Hughes from high LOF countries, while investors from high LOF countries adopt market-seeking and control-oriented strategies to a greater degree than TJ Hughes from low LOF countries.Originality/value - This study provides new theoretical insights into LOF for academics as well as suggests the need for managers to explicitly incorporate LOF into market entry strategy decisions.

An Appropriate Market Entry For TJ Hughes Into Nigeria Market

Chapter I: Introduction

The issue of market entry strategy continues to be of great interest to international business academics and practitioners (Ekeledo and Sivakumar, 1998; Erramilli and Rao, 1993; Malhotra et al., 2003; Mayrhofer, 2004). The chosen market entry strategy is important as it determines the manner in which TJ Hughes develop and implement marketing programs, coordinate business activities both within and across markets, and ultimately the TJ Hughes' success in foreign markets (Erramilli and Rao, 1993; Malhotra et al., 2003). From a market entry strategy standpoint, one of the greatest challenges for TJ Hughes investing abroad is overcoming the liability of foreignness (LOF), i.e. the liability associated with foreign operations (Hymer, 1976; Mezias, 2002; Miller and Parkhe, 2002; Zaheer, 1995; Zaheer and Mosakowski, 1997).

The literature indicates that the additional costs incurred by a foreign firm due to LOF, ceteris paribus, diminish its competitive advantages over domestic counterparts (Luo and Mezias, 2002, Luo et al., 2002; Zaheer, 1995). Although a great deal of research has focused on LOF (Luo and Mezias, 2002, Luo et al., 2002; Zaheer, 1995) significant gaps remain in the literature hampering academic understanding and managerial action.

First, prior research investigating LOF has primarily focused on the sources of LOF (Hymer, 1976; Zaheer, 1995). For example, Zaheer (1995) classified sources of LOF into the following categories:

spatial distance between home and host countries;

lack of roots in a local environment;

host country environment; and

home country environment.

While this literature has substantially advanced our understanding of LOF, with few exceptions (Sethi and Guisinger, 2002), researchers have not directly examined how LOF influences a firm's market entry strategy decision. Failure to understand how LOF influences market entry strategy decisions is of significant importance for practitioners and academics as it directly concerns issues of strategy employment, thus having the potential to influence strategic positioning and ultimately TJ Hughes performance. Thus, the first research question underlying this study is “how does LOF influence TJ Hughes market entry strategy?”

Second, ...