Early Stage Internationalisation in Challenging Business Environments: An Exploratory Study of Modes Adopted by Medium-Sized Enterprises Seeking Market Entry in Kenya

This paper analyses the entry modes adopted by export oriented European medium-sized enterprises (MEs) seeking entry into African markets. In spite of the fact that MEs increasingly are internationalising into distant and difficult markets of developing countries, this aspect is largely ignored by recent IB literature. Based on a review of the extant literature on entry mode choice, the paper develops a model for analysing entry mode choice by MEs in challenging business environments that combines transaction, resource and localisation perspectives. The model proposes that MEs’ choice of entry mode in Africa must be understood in the interface of challenging business environment factors, transaction costs and MEs’ resource constraints. Via a longitudinal case study of 14 European MEs’ attempted entry into the Kenyan market, it is found that MEs typically enter with limited resource investment through distributor agreements which provide access to local business networks . Entry mode is not typically a result of stringent analysis of the location, but follows previous experiences from other locations. The paper has implications for the broader IB literature, as it re-vitalizes the debate on early stage export oriented internationalisation.