Foreign Entry Mode

The first operation mode used by a firm in a new foreign country is referred to as a foreign entry mode (FEM). Hence, the foreign entry mode is the operation mode by which the firm initially enters a given foreign country. More specifically, it is a firm’s choice of value chain activities located in a host country, or production in its home country with the purpose of selling abroad (exporting), and the governance form by which these activities are operated. Entry mode research more or less explicitly assumes that mode shift is difficult and costly: “Channel choices, once made, are often difficult to change” (). Therefore, choosing the “right” entry mode initially is considered strategically important and, in the overwhelming bulk of research on foreign operation modes, the focus has accordingly been on modes of entry rather than subsequent shifts of operation modes that might occur. Several overview articles and meta-analyses have been published, indicating that this has become a mature field of research.