Foreign Operation Mode Combinations and Internationalization

The standard formula in theoretical and empirical studies of entry mode choice and internationalization processes of firms has been ‘one foreign country, one operation mode’, i.e. a singular mode approach. However, even with fairly broad operation mode definitions it is by no means exceptional to see firms having more than one operation mode in a foreign country. This paper explores the phenomenon of ‘multiple’, ‘mixed’, or ‘combined’ foreign operation modes. Although several occurrences of mode combinations are reported in the IB literature, the phenomenon has not yet been made the subject of direct analysis. The paper introduces a classification of multiple mode appearances based on the degree of interaction between operation modes (which vary considerably). Special attention is paid to ‘mode packages’, i.e. the concerted use of several operation modes in an integrated, complementary way. In a study of Danish MNCs with simultaneous use of subsidiaries and independent local intermediaries it was found that in most cases the two modes are operating in a complementary way. A framework for analyzing the roles within packages is presented and it is argued that the use of ‘mode packages’ may offer the multinational firm scope for improved international market penetration capacity.