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International Markets Entry Strategy Determinants: An Exploratory Study in Peru
International Markets Entry Strategy Determinants: An Exploratory Study in Peru
33
N° 59
Cuadernos de Administración Sep. - Dec.
Journal of Management 2017
Print ISSN: 0120-4645 / E-ISSN: 2256-5078 / Short name: cuad.adm. / Pages: 2-19
Facultad de Ciencias de la Administración / Universidad del Valle / Cali - Colombia
Nowadays a progressively more dynamic and global economic environment causes a higher number of enterprises to
pick an entry strategy to become international. The choice of a strategy of entry into foreign markets constitutes one of
the most relevant decisions for a company, for it impacts on its performance and means it being ready to cooperate, to
a greater or lesser extent, with global supply chains. The present article identifies the determining factors of the stra-
tegies of entry into international markets as implemented by Peruvian businessmen, which impact on the integration
level into an international market. The companies that participated in this exploratory study have growing exportation
levels within the non-traditional sector. The results allow to appreciate exporters employing entry strategies with low
levels of integration, and predominantly prefer low-risk markets and high resemblance to the Peruvian market, with
regards to cultural affinity and business behavior.
Keywords: Entry strategies, Determinant factors, Exportation, International market, Level of integration.
Resumen
En la actualidad, el entorno económico progresivamente más dinámico y global, genera que un mayor número de em-
presas elija alguna estrategia de entrada para internacionalizarse. La elección de la estrategia de entrada a mercados
extranjeros constituye una de las decisiones más relevantes para la empresa, en tanto impacta en el desempeño e
implica que esté dispuesta a colaborar, en menor o mayor medida, con cadenas de abastecimiento globales. En el
1
Civil Engineer, Universidad Nacional de Ingeniería, Perú, PhD in Administration, Pennsylvania State university, United States.
2
Industrial engineer, Universidad Nacional de Ingeniería, Lima, Perú, PhD in Administration, IESE, Universidad de Navarra, Spain.
Cuadernos de Administración :: Universidad del Valle :: Vol. 33 N° 59 :: September - December 2017
presente artículo se identifican los factores determinan- each level of integration, the degree of risk
tes de las estrategias de entrada a mercados interna- and control varies as well the degree of co-
cionales implementadas por empresarios peruanos, que llaboration; as such companies need to iden-
impactan en el nivel de integración en el mercado inter- tify the balance of flexibility and control in
nacional. Las empresas que participaron en el estudio
their decisions of integration (Aulakh and Ko-
exploratorio tienen crecientes niveles de exportación en
el sector no tradicional. Los resultados permiten apre- tabe, 1997). In Peru, not enough information
ciar que los exportadores emplean estrategias de en- is handled about entry strategies; exporters
trada con bajos niveles de integración, y predominante- still make empirical decisions, do not syste-
mente prefieren mercados de bajo riesgo y alta similitud matize experiences and there’s evidence on
al mercado peruano en cuanto a la afinidad cultural y al the lack of knowledge shared in the sector
comportamiento en los negocios. about Good Practices.
Palabras clave: Estrategias de entrada, Factores The present article bears the purpose of
determinantes, Exportación, Mercado internacional, identifying how internal and external factors
Nivel de integración.
impact on the election of a strategy of entry
Résumé into international markets as implemented
by Peruvian exporters of the non-traditional
Actuellement, l’evironnement économique progresive- sector, considering the level of integration of
ment plus dynamique et mondial, produit qu’un grand said strategies (David, 2004; Akhter and Ro-
nombre d’entreprises choisissent une estratégie d’en-
bles, 2006).
trée à l’internasionalisation. Le choix de la stratégie
d’entrée sur les marchés étrangers est l’une de décisions The relevance of adequately choosing a
la plus importante pour l’entreprise, tandis que produit
strategy of entry into international markets
un impact sur les performances et des moyens qui sont
prêts à collaborer, plus ou moins, avec des chaînes d’ap- has been highlighted by several researchers
provisionnement mondiales. Dans cet article, nous iden- and experts, deemed as a critical topic within
tifions les facteurs déterminants des stratégies d’entrée international marketing due it having a great
sur les marchés internationaux mis en œuvre par des impact on international operations, affecting
entrepreneurs péruviens, ce qui influe sur le niveau d’in- decisions and future performance on foreign
tégration sur le marché international. Les entreprises markets, and defining a scale of resources
qui ont participé dans l’étude exploratoire ont des ni- commited according to the chosen strategy
veaux d’exportation croissants dans le domaine non tra- which are difficult to transfer from one al-
ditionnel. Les résultats montrent que les exportateurs
ternative to another; all of which transcends
utilisent des stratégies d’entrée avec de bas niveaux
d’intégration et preferent des marchés à faible risque et in the success and achievement of objectives
une forte similitude avec le marché péruvien en termes (Zhao and Decker, 2004).
d’affinité culturelle et de comportement commercial.
Studying strategies of entry into interna-
Mots-clés: Stratégies d’entrée, Facteurs tional markets, applied to Peruvian expor-
déterminants, Exportation, Marché international, ters’ experience, contributes to reaching bet-
Niveau d’intégration. ter knowledge and understanding of this field
in order to strengthen decisions within the
processes of choosing the best strategy for
1. Introduction the company in a given context.
An important decision companies make at The first part presents theories and mo-
the moment of becoming international in or- dels about strategies of entry into interna-
der to reach greater growth and competitive- tional markets as well as the internal and
ness is the choice of an entry strategy, for the external factors that determine its election,
choice they make and the way the strategy international markets entry barriers and le-
is implemented can determine the success or vel of integration. The second part describes
failure of their international enterprise. On the exportation of non-traditional products.
one hand, a company might decide to become The third part details the methodology em-
fully integrated and stablish a subsidiary in a ployed in this study, and the fourth part
foreign market. On the other hand, a company shows the results and discussion; and finally
might decide to hire independent distributors the study’s conclusions.
and be in charge of attracting new clients. In
3
Fernando Robles Gutiérrez :: Kety Lourdes Jáuregui Machuca
Country of Destination
• Host country’s environmental factors
• Market factors
• Production factors
ty and similarity among businesses. Akhter ping specialized processes, adapting equip-
and Robles (2006) hold the importance of ta- ment and tools of production, developing and
king advantage of internal competencies and adapting marketing systems, developing and
managing environmental uncertainties, as adapting new products, developing proces-
these two considerations affect proneness to ses of coordination between headquarters
cooperate in international markets. and international markets, developing a spe-
cial logistics system, acquiring assets in the
Unique resources refer to competitive markets of entry and developing specialized
advantages that the exporting company de- human resources. The specificity of assets
velops internally, which other exporters do refers to the extent to which investments are
not possess and cannot imitate. The decision required to support a transaction (Aulakh
to enter new markets implies seizing of the and Kotabe, 1997).
company’s own competitive advantages. Au-
thors such as Hamel and Prahalad (1990) re- Uncertainty is a key external factor in ex-
ference basic competencies, whereas Teece porters’ decision of integration (Achrol and
and Pisano (1994) go further into competitive Stern, 1988) as it is assessed on the basis of
advantages. different the different edges present within
the market to entered, including the percep-
Investment on assets is an internal factor tion of environmental characteristics of the
that implies increasing transaction costs. As country of destination, uncertainty regar-
transaction costs increase the company’s ra- ding the behavior of partners in said new
ther operate internally those activities rela- markets and the feasibility of reversing the
ted to the usage of these assets. Becoming decision of investment, either by postponing
immersed in international markets demands the decision or recuperating the capital if the
significant investments from exporting entering has taken place.
companies in order to be able to adequate-
ly understand its international customers. Business similarity is an external factor
6 As example of investments there is: develo- referring to the predictability of the macro-
Cuadernos de Administración :: Universidad del Valle :: Vol. 33 N° 59 :: September - December 2017
economic, political, regulatory, competitive, ded to be carried out. The degree of control
market and environments; the supply of ma- is inversely related with proneness to colla-
terials and distribution in the last country borate (Akhter and Robles, 2006), which im-
entered by the exported company. The as- plies utilizing strategies where the control of
sessment of similarity between the country exportation processes is shared with other
being considered for entering and the Peru- companies, both local and the country of des-
vian environment is carried out by firstly con- tination, in order to make viable the entry to
sidering the perception of the last country of international markets; whereas internatio-
entering’s general business environment and nalization (non-collaboration) is understood
Peru’s, with regards to trade, regulatory, po- as the decision to exercise control over pro-
litical, economic, technological and cultural cesses of exportation. Hence, the greater the
practices; and secondly, with regards to the extent of proneness to collaborate, the lesser
manner of doing businesses in the country of the degree of control will be.
destination.
Regarding the decision on the strategy of
entry, David (2004) proposes the level of inte-
2.4. Entry barriers to international gration model (David, 2004), which is compli-
mented by the model of level of risk (Akhter
markets and Robles, 2006).
Some of the foregoing factors might re-
present barriers of entry to foreign markets. The Mercadex- Desjardins level of integra-
In this regard, Madhok (1997) mentions “the tion model (David, 2004) classifies strategies
lack of financial, physical or technological re- of entry according to their degree of inte-
sources; the lack of opportunities and insuffi- gration, by referring to the extent to which
ciency of managerial skills might limit inter- the origin company can commit to the coun-
national activity”. try of destination; and the method of pene-
tration, by referring to how the company of
The OECD studies barriers to access in- origin approaches the country of destination.
ternational markets. Among the main ones, The model was developed from a study ca-
according to the raking, there are: 1. Lack rried out by Mercadex International Cana-
of investment capital to finance exportations, da in collaboration with the Desjardins del
2. Identification of business opportunities Quebec´s Caisse central, which permits the
abroad, 3. Limited information to analyze/ planning of internationalization strategies
localize markets, 4. Incapability to reach for small and medium-sized companies (af-
potential foreign clients, 5. Attainment of ter being analyzed it is deemed applicable
reliable foreign representatives, 6. Lack of to any company size). This approach holds
management time to deal with internationa- that the creation of entry strategies for in-
lization, 7. Inadequate amount and personnel ternational markets implies considering the
for internationalization, 8. Difficulty to equa- following perspectives: (a) the integration
te with competitors’ process, 9. Lack of assis- level perspective, which indicates the depth
tance/incentives from the local government of the relationship between the company and
and 10. Excessive costs of transportation the international market posing delegation,
(OECD, 2009). cooperation and control as possibilities of in-
tegration; and (b) the insertion into foreign
markets perspective, which presents those
2.5. Levels of integration in the entry to means with which the company may enter an
international markets international market in particular defining
the transactional, contractual and structural
The level of integration refers to the depth environment as insertion alternatives.
of the entry strategy, which is defined level
of risk, degree of control and degree of com- The degree of delegation implies a low le-
mitted resources (Anderson and Gatignon, vel of integration, which generally constitu-
1986; Zhao and Decker, 2004; Aulakh and tes one of companies’ the first experiences
Kotabe, 1997; Hill, Hwang and Kim (1990). in the international scenario, and it consists
The risk level regards the uncertainty of the on working with domestic business partners
destination with which businesses are inten- (a foreign trade house, for instance) whom 7
Fernando Robles Gutiérrez :: Kety Lourdes Jáuregui Machuca
shall act as buyers of the product and will The transactional method refers to the
take charge of all activities of exportation. conventional exchange of goods and services;
The company may not be aware of the pro- direct or indirect importation or exportation,
duct’s final destination, especially regarding for instance. In this case, the bonds between
industrial components. This level of integra- partners are generally limited in terms of
tion allows the company to slowly begin its time and business deals, and allows the com-
process of internationalization but with the pany to set a simple entry strategy.
certainty of obtaining an initial idea of the
potential market for its products. The contractual method implies establi-
shing legal agreements between parties.
The degree of cooperation constitutes the In this case the terms of the agreement in-
medium level of integration, where the com- clude aspects regarding the partnership’s
pany sets deals with particularly important duration, participation in resources and re-
strategic partners in countries where the re- sults. Some reasons to pick this method are
quirements of entry are generally larger than the need to carry out personalization to the
the company’s resources. In this case the customer, regulatory control or considerable
company is relatively familiarized with the costs of transportation. This means permits
foreign market (for instance: supply, demand, to generate longer-lasting bonds than the
idiom, business culture), but does not possess transactional and less-lasting than the struc-
the necessary business contacts to successfu- tural would, and it is preferable when selling
lly trade its products in that market. services in a foreign country.
The degree of control sets a high level of The structural method involves genera-
integration, which enables the company to ting investment and the company’s perma-
maintain the highest level of control over its nence in the foreign market, which might be
product and distribution network (salesforce convenient to offshore its production or to be
and margin of intermediation). It may occur closer to the target market.
when clients insist on shorter channels (limi-
ting the number of intermediaries) thus re- The overlapping of these perspectives ge-
quiring the company to be closer to the fo- nerates a matrix of integration levels that is
reign market. In this case, the company must shown in Table 2, with nine generic strate-
have an excellent knowledge on the foreign gies of internationalization as well as exam-
country, its business practices and idiom. ples for each one.
Drawing upon the previous table from the rrespond to a medium-integration strategy;
Mercadex-Desjardin model it may be deduced a high level of uncertainty and high market
that strategies of collaboration would be all similarity correspond to a medium-integra-
those corresponding to the delegation and tion strategy; lastly, a high level of uncertain-
cooperation levels of integration; whereas of ty and low market similarity correspond to a
non-collaboration ones would be those of con- high-integration strategy.
trol, regardless of the chosen means of pene-
tration. The risk-minimizing logic is activated
by thinking that an integration strategy is
Regarding the presented model a diagonal appropriate when both factors (uncertainty
movement from the left upper corner (dele- and similarity) are high; therefore the com-
gation/transactional) to the lower right cor- pany seeks to control the risk by internali-
ner (control/structural) implies a movement zing costs (transaction cost theory) and pro-
from a lesser to a higher level of integration. tecting its competitive advantages. This case
In a level of low integration, as occurs with is particularly important for exporting com-
companies exporting raw materials, there’s panies with high investments on assets and
no participation from the company in the pro- competitive advantages such as patents, uni-
cess of transformation of the final product. que processes and brand power.
In a medium level of integration the company
participates in several or all activities of Depending on the risk’s origin the recom-
transformation as collaborator or participa- mended strategies are different. When the
ting in controlling the companies making up risk stems from low market similarity the
the global chain. A high level of integration logic is to collaborate with local partners in
is not common and only large-sized global order to adapt the strategy to local condi-
companies are capable of facing it, due to the tions. When stems from market uncertainty
considerable amount of financial and human (pricing uncertainty, for instance) a strate-
resources required (Bello and Lothia, 1995). gy fitting strategy would be contractual or
control/contractual cooperation. Market un-
Regarding levels of uncertainty Table 3 certainty might disappear, and the company
presents the interactions between market should keep its options open in order to ad-
uncertainty and similarity in a specific con- just to a new situation.
text, where risk levels are key since to a lar-
ger extent of market uncertainty the larger In low-risk situations there are no major
the risk will be; likewise, the risk will be hi- benefits in integrating. Moreover, transac-
gher to lesser similarity. tion cost theory suggests that companies may
enter contractual relationships and minimize
costs; production agreements, for instance.
Table 3. Risk level in international markets model
In medium-risk situations the decision’s logic
Low Uncertainty High Uncertainty is to compensate risk with a certain level of
control. This is achieved by medium-integra-
tion strategies.
Market Similarity
cultural, textile, fishing, woods and papers, Chile (8%) and Canada (6%); the last country
chemical, metal-mechanics, iron and steel, displaying an important 213% growth with
jewelry, non-metallic mining and others. respect to 2004 (Prompex 2006a).
companies were considered those constitu- tem of logistics, acquisition of assets in the
ting 76% of firms with non-traditional expor- markets of entry and development of specia-
tations, which had a 23% share in total (USD) lized human resources. A 7-point Likert scale
Peruvian exportations values in 2007. was used, 1 being fully disagree and 7 fully
agree.
The sampling was non-probabilistic since
companies reached were those with greater Competence was measured by regarding
exporter activity from different exporting the analysis of the following competitive ad-
sectors and different kinds of exportations. vantages to enter the last international mar-
Within each company it was sought to make ket: unique specialized knowledge and the
contact Exportations Managers, Foreign Tra- firm’s intellectual property processes, uni-
de Managers, CEOs, among others. que and specialized skills, usage of specia-
lized technological infrastructure, difficulty
With respect to the amount of workers, to transmit knowledge and processes of the
companies from the non-traditional sector company’s ownership, difficulty to replicate
count with 375 workers on average. Their knowledge and processes of the company’s
time of operation is at least 2 years. ownership, difficulty to imitate knowledge
and techniques by competitors and brand re-
In the sample the most representative sec-
cognition in the target market. The -point Li-
tors are textile and clothing (28%), agricul-
kert scale was used, 1 being fully disagree
tural (24%), steel and metallurgy (14%) and
and 7 fully agree.
chemical products (13%).
Environmental uncertainty was measured
based on different edges of the new market’s
4.2. Recollection, analysis and data environment and perception of environmen-
processing tal characteristics in the country of desti-
The self-applied questionnaire technique nation by assessing conditions for general
was employed with an appropriate format so investment, specific perception of the macro-
as to be applied by the interviewee himself. economic, political, regulatory, competitive
and environment, the market, and supply and
The questionnaire’s design included the demand of materials and distribution (all of
amount of countries towards which the ori- the above referring to the last entered inter-
gin company exports, its years of experien- national market); uncertainty regarding the
ce in international markets, its first and last behavior of partners at said new markets as
country of destination, the relevance of ex- well as the feasibility to revert investment
portations within the company’s total sales, decisions, either by postponing the decision
the level of assets located at international or getting back the capital in case of having
markets, determining factors within its in- already entered. The 7-point Likert scale was
ternational strategy, among others. used varying the description of 1 and 7 when
appropriate.
Four exogenous constructs were posed:
specificity of assets, competence, environ- The degree of investment reversibility in
mental uncertainty and environmental simi- international markets has been appraised
larity. based on exporting companies’ perception
regarding the feasibility of getting capital
Assets specificity was measured by inqui- or assets back; or the possibility of having
ring respondents whether they had perfor- been able to postpone the decision to enter
med significant investments in the following the international market. In the appraisal re-
eight areas in order to stablish their presen- garding feasibility to get investments back
ce in the last market where they last per- a 7-point scale has also been used, where 7
formed: development of specialized proces- means “non-recoverable” and 1 “fully reco-
ses, adaptation of production equipment and verable”.
tools, development and adaptation of marke-
ting systems, development and adaptation Business environment similarity assesse
of new products, development for coordina- the perceptions held by companies regarding
the degree of likeness had by Peru and the
tion between headquarters and international
last entered international market. This as-
11
markets, developments of a specialized sys-
Fernando Robles Gutiérrez :: Kety Lourdes Jáuregui Machuca
quarters and international markets, (f) deve- their products having brand recognition, and
lopment of special logistics system, (g) acqui- the fact that they counted on specialized te-
sition of assets in markets of entrance and (h) chnological infrastructure.
development of specialized human resources.
These three leading competitive advan-
The raking shows that investment (b) occu- tages of the companies, which have served
pies the first place since it is one of the catego- them as platform to enter new markets, evi-
ries with most input for exporter companies. dence that said advantages are mainly ba-
The second place is occupied by investment sed on profound and specialized knowledge
(d) due to the specialized and sophistica- of internal processes (know-how) as well as
ted nature of non-traditional products. Af- on the brand’s strength, which indicates that
terwards come investment (a), with the com- in order to successfully enter new markets
panies who belong in the Top 100 being the counting on a solid operative basis is recom-
ones to have invested the most on account mendable especially if it is unique, and coun-
of their foreign trade dimension and move- ting on a strong brand.
ment, and investment (e). The third place is
occupied by investments (h), (c) and (f). The-
re’s consensus among exporters regarding 5.2.2. External factors
the avoidance of investment (g), signaling a
According to literature’s review, among
tendency towards not assuming greater risks
the external factors that determine the elec-
through initial significant fixed costs, which
tion of an entry strategy into international
coherent with what was already observed.
markets lays uncertainty (about the envi-
This sort of investments evidence the need ronment, partners’ behavior and feasibility
to adapt, firstly, the company’s operability so of reverting investment decisions) and busi-
as to achieve process effectiveness in order ness similarity (regarding the general envi-
to successfully introduce products into inter- ronment’s perception and the manner of bu-
national markets; also becoming adapted to siness-making in the country of destination).
foreign customers’ needs.
Regarding uncertainty about the environ-
The analysis of results about internal fac- ment Peruvian exporting companies belie-
tors allows us to conclude that Peruvian ex- ve investment conditions to be lightly stable
porting companies acknowledge having im- (Standard deviation= 1.90). With respect to
portant unique resources, yet a low level of the degree of complexity of investment con-
specific assets in the countries of destina- dition the mean of companies set it at an in-
tion, although there have been significant in- termediate level; namely, they do not deem it
vestments on the development and adapting neither complex not simple. It is worth poin-
of marketing systems as well as on develo- ting out that companies´ perceptions regar-
ping a special system of logistic, thus detec- ding the degree of stability of investment
ting notorious differences among companies. conditions in the last international market
Strategies of entry into international markets they entered have been found to be directly
from these companies were characterized by correlated with their perception of complexi-
a lower level of integration than those of ex- ty, so that as those conditions are perceived
porting companies in countries were these as volatile they will be considered more com-
competitive advantages and investment on plex. With respect to the country of destina-
assets are high. It is worth noting that even tion’s environment’s level of predictability,
though the time of experience if 18 years on companies perceive a degree of predictabi-
average companies have yet to achieve con- lity from medium to high mainly in the re-
solidating their unique resources, just as the gulatory environment, and low with regards
fact of being present in 13 countries does not to the macroeconomic and political environ-
imply a higher investment on specific assets ment (with a high degree of discrepancy). It
in the countries of destination. could be said that the environmental factors
of the markets where Peruvian companies
In this vein, the set of exporting compa- destine their exports are predictable, mea-
nies has manifested that in the last market ning that risk levels are low to medium.
they entered, quite useful were their set of
13 unique and special skills, the advantage of Regarding uncertainty about partners’ 13
Fernando Robles Gutiérrez :: Kety Lourdes Jáuregui Machuca
behavior is perceived a light a tendency to the economic and political environment the
believing that there is misusage of intellec- greatest differences regard North America
tual-property processes, but it wouldn’t be a (The United States and Canada).
limitation in decision-making. Likewise, may
be appreciated that, averagely, companies’ Regarding similarity in business-making,
opinions regarding costs and hardships when averagely, exporting companies consider that
finding partners to collaborate with tend to there are differences in production proces-
present a neutral position with a light hint of ses, similarities in direct marketing (espe-
it being costly and difficult, which also highli- cially with companies having from 11 to 20
ghts that while it is an aspect to look after, years of experience), likenesses on customer
it’s not a limitation in decision-making. Ac- service and light differences in the handling
cording to the foregoing, interviewees signal of human resources (lightly similar within
that while partnerships are not simple, they the Top 100 and lightly different within the
aren’t problematic either. non-Top 100). In general, the opinion could be
said to be neutral (due to high existing varia-
As the last factor referring to the level of bility among companies’ opinions).
uncertainty, the degree of investment rever-
sibility (sunk costs1) at international markets In synthesis, according to the results on
was rated as considerably high, thus eviden- external factors Peruvian exporters in the
cing that while a certain risk of not fully reco- sample operate in markets characterized by
vering investments is acknowledged, an im- low levels of environmental and partner be-
portant degree of trust regarding recovery havior uncertainty. Investments performed at
is expressed, which has surely constituted a these markets are reversible; namely, opera-
favorable factor when deciding to enter the tional and financial risk levels faced by Peru-
ventured destination. Likewise, with regards vian exporters are low. Finally, last-destina-
to deciding to postpone entering the inter- tion markets entered by Peruvian exporters
national market exporters within the sample are lightly similar or neutral regarding their
expressed to be lightly in disagreement with environment and business-making manner
the possibility of postponing investment deci- (the amount of years exporting tends to ho-
sions, a light degree of commitment from the mogenize these differences).
company to enter the chosen market at the
moment they were carried out.
5.3. Results about levels of integration in
As for general environment similarity per- the entry strategy
ceptions the aspects deemed as most distant
between Peru and the last entered country With regards to the election of the entry
have been the political and economic envi- strategy employed at the last entered coun-
ronment (with notable differences between try 23% of companies opted for exporting
responses), which could be due to the clearly through direct sales to clients, 35% for ex-
existing differences among countries around porting through a distributor at the country
the world. With respect to distribution chan- of destination, 27% for exporting through an
nels responses have been neutral. Companies agent at the country of destination, 10% for
believe Latin-American markets to be similar a trading company at the country of destina-
to Peru’s in most aspects related to the busi- tion, 3% for a trading company at the country
ness environment, and especially regarding of origin and 2% opted for its own sales sub-
the cultural, economic, political, technologi- sidiary.
cal and trading environments. Nevertheless, When classifying entry strategies accor-
Peru is deemed as highly different from East ding to their level of integration these are
Asia and the Pacific (China, Japan, Australia mainly of transactional kind, meaning con-
and New Zealand) technologically speaking; ventional exchange of goods and services
while culturally it is thought of as conside- where bonds between partners are generally
rably different from several countries again limited to time specifications and business
from East Asia and the Pacific, aside from deals, which would enable a simpler access
Western Europe and North America. Within for Peruvian companies with less a risk.
14 1
Refers to costs already assumed that cannot be recovered.
Cuadernos de Administración :: Universidad del Valle :: Vol. 33 N° 59 :: September - December 2017
When classifying entry strategies accor- Thusly, results have been favorable on
ding to them being of collaboration (distri- each of these variables since what was ex-
butor, agent, trading company and trading pected and beyond was achieved, especially
company at the country of origin) or non-colla- regarding exportation sales levels since 87%
boration (direct sales and owning sales subsi- has yielded favorable results, where 34% be-
diaries) these entry strategies of low-medium lieves to have achieved beyond expectations.
integration reflect that 75% of Peruvian ex- On the other hand, profit levels is the varia-
porting companies opted for a collaboration ble with relatively less achievements (also be-
strategy at the last country of entry; whereas ing quite favorable) since it’s been signaled
those who opted for non-collaboration strate- to a greater degree in other variables to have
gies (25% of remaining companies) basically achieved less than expected (18%), and the
employed direct sales to clients, thus prefe- proportion of companies having surpassed
rring to have control. their expectations is relatively smaller (18%),
which differs from what other variables ex-
Over half the companies (65%) would ra- pressed.
ther collaborate with a company at the coun-
try of destination should they adopt a strate-
gy of collaboration. Seventeen percent (17%) 5.5. Discussion
would rather collaborate with a company
from the country, and 9% would do it with a The results on internal factors as presen-
company in a third country. ted by Akhter and Robles (2006) in the litera-
ture’s review permit to observe that the lack
It is worth pointing out that a direct rela- of unique-resources strengthening causes
tion between employed entry strategy type companies to enter international markets by
and the company’s preference to collabora- low-integration strategies such as the tran-
te at international markets, since both the sactional Mercadex-Desjardins model, when
companies that used collaboration strategies they should be capable of integrating through
as those who used non-collaboration ones on contractual or structural mechanisms reflec-
average signaled similar levels of preferen- ting a higher level of integration. An example
ce to collaborate, which would indicate that on this factor’s importance is the case of a
their preference to collaborate levels have no Peruvian exporter who developed a code bar
incidence on the actual decision on an entry system in coordination with the customs hou-
strategy, depending in all respects on other ses at the countries where he operates, which
variables probably closer to the desired en- identifies the information that enables his
try destination’s own characteristics. containers to speed up their passage throu-
gh customs without human intervention. This
About the level of risk, Peruvian business- system of his own reduces transit time com-
men locate themselves at the low-uncertainty pared to that of other exporters who do not
and high-similarity quadrant as they’d rather possess it.
perform operations at international markets
similar Peru’s, with regards to general envi- Likewise, results referring to investments
ronment and business behavior. on fixed assets match transaction cost, in-
ternalization and eclectic paradigm theories
with regards to their statements about the
5.4. Results regarding general satisfaction company keeping management of its unique
level resources. However, they do not match the
internationalization process perspective for
The general level of satisfaction with the it explains that when a company has more ex-
effort carried out at the last entered country perience in processes of internationalization,
is directly related to the level of goals achie- it should commit a greater amount of resour-
ved at said country, and the rate of exporta- ces and manage risk better; yet, in practice,
tion sales that was obtained as well as (thou- Peruvian companies, even when averaging
gh to a lesser degree) with profit rates and 18 years of experience in the market, are
growth of exportation sales after the ente- not willing to take on greater risks and com-
ring, so that to the extent that achievements mit greater resources. Hence, instead of mo-
on each aspect improved so did the general
level of satisfaction.
ving forward towards an exporting strategy, 15
Fernando Robles Gutiérrez :: Kety Lourdes Jáuregui Machuca
towards a strategy of foreign direct invest- it could be that a company believes that if its
ment they could remain static through time. attitude is one of working closely with the
people involved in a non-collaboration stra-
Moreover, the results evidence a relatively tegy, it will qualify itself as collaborator, not
conservative behavior from Peruvian expor- for the type of strategy as much as for its at-
ters with respect to uncertainty and business titude of openness.
similarity, for although uncertainty on part-
ners’ behavior turned out to be low as well With regards to satisfaction perceived by
as business similarity. Even so, exporters of exporters, although with a low level of inte-
Peruvian non-traditional products present a gration, 87% of them perceive their level of
low level of integration towards international satisfaction with the chosen entry strategy to
markets. be as much or greater than that of the last en-
tered international market, specifically with
Table 4 shows the relationship of integra- sales increasing after the entering, level of
tion models and risk level in the Peruvian ex- profits and achievement of objectives at said
porter companies that were analyzed, which country. Gomes-Casseres (1989) mention
emerged from the location of low-level risk that selecting an entry strategy is influenced
results (with which Peruvian exporters are by basic competencies, which are relatively
willing to become integrated) on Table 2 and low at Peruvian companies although their im-
the delegation/transaction and cooperation/ portance is acknowledged, as well as vulne-
transaction entry strategies on Table 3. rability to external changes in the country
of destination, which hasn’t turned out to be
The result lead us to an additional reflec-
preoccupying to Peruvian exporters. The fo-
tion with respect to proneness to collabora-
regoing reflects that if basic competencies
te, defined by Akhter and Robles (2006) as
are sustainably developed, results would im-
the co-participation taken on by ab exporting
prove just like expectations.
company with others on diverse activities re-
garding exportation processes. On one hand, It’s important to highlight that this study
exporting companies could be using alterna- bears the limitation of a small sample, for
tive strategies to those of their preference not all exporters invited to participate in
depending on the destination dealt with or the study answered the questionnaire. The-
other situational variables; or their percep- refore, broadening the sample is recommen-
tion on the probability of collaborating with ded for suture studies. Likewise, the sam-
other companies when deciding to enter new ple included exporters of traditional as well
markets not being quite associated to the as non-traditional products, and taking into
entry strategy’s characteristics but to the account that entry strategies differ for both
intensity of the relationship stablished with segments the results have presented a con-
the companies they associate with. Namely,
16 siderable level of dispersion that could have
Cuadernos de Administración :: Universidad del Valle :: Vol. 33 N° 59 :: September - December 2017
been avoided by working with a single group barrier when selecting an entry strategy for
and more representative sectors. For future international markets.
research performing a by-sector analysis is
proposed for the most representative sectors, Peruvian exporters’ behavior refers low
as well as going further into the application integration and low risk tolerance for inter-
of other entry strategy models; broadening national markets entry strategies, as well
the study of competitive advantages as a me- as limited usage of strategies is concerning
chanism to gain higher integration, and dee- because it limits the development of capaci-
pening on what collaborating with other com- ties and competitive advantages that demand
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