Bunched Foreign Market Entry: Competition and Imitation Among Japanese Firms, 1980-1998

Abstract

We examine the timing of foreign market entry by extending neoinstitutional theory's predictions about imitative influences on market entry rates, to include elements of a firm's competitive environment. Our focal construct is a bunched entry, which we define as a foreign market entry made as a timely response to a rival's entry. We find that the likelihood of a bunched entry is influenced by the density of prior entry activity of other home country firms and by industry rivals. Bunched entry is also influenced by conditions in the home country in terms of seller concentration in a firm's industry, and the characteristics of the entering firm and the preceding entrant. These findings, which are based on 18 years of data collected for 2,572 foreign market entries of 608 Japanese firms in 64 countries, support the idea that home rivalry is an important aspect of international strategy.

Keywords: FDI, competition, rivalry, imitation, legitimacy, international strategy, Japan