International Market Entry by U.S. Internet Firms: An Empirical Analysis of Country Risk, National Culture, and Market Size

Journal of Management, Vol. 31, 2005

Posted: 16 Nov 2004

See all articles by Frank T. Rothaermel

Frank T. Rothaermel

Georgia Institute of Technology; Georgia Institute of Technology - Scheller College of Business

Suresh Kotha

Foster School of Business

Kevin Steensma

University of Washington

Multiple version iconThere are 2 versions of this paper

Abstract

We study international market entry in the context of the Internet, and ask: On what basis do U.S. Internet firms choose the markets that they enter? Our baseline hypothesis is that international market entry decisions are based on balancing perceived risks and returns inherent in a foreign target market. In addition, firms in the Internet sector face somewhat unique challenges when expanding abroad. Drawing on a sample of close to 7,000 country entry decisions undertaken by 179 U.S. Internet firms, we find that country risk, cultural distance, and uncertainty avoidance reduce the likelihood international market entry, while individualism and masculinity increase the probability of market entry. In general, the size of the international market moderates these relationships by weakening the negative effects, while strengthening the positive effects.

Keywords: International market entry, country risk, national culture, market size, e-commerce

JEL Classification: F21, F23, M1, M13, O3, O33

Suggested Citation

Rothaermel, Frank T. and Kotha, Suresh and Steensma, Kevin, International Market Entry by U.S. Internet Firms: An Empirical Analysis of Country Risk, National Culture, and Market Size. Journal of Management, Vol. 31, 2005, Available at SSRN: https://ssrn.com/abstract=618766

Frank T. Rothaermel (Contact Author)

Georgia Institute of Technology ( email )

800 West Peachtree Street NW
Atlanta, GA 30308-1149
United States
404-385-5108 (Phone)
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HOME PAGE: http://mgt.gatech.edu/rothaermel

Georgia Institute of Technology - Scheller College of Business ( email )

800 West Peachtree St.
Atlanta, GA 30308
United States

Suresh Kotha

Foster School of Business ( email )

University of Washington
Seattle, WA
United States
206-543-4466 (Phone)
206-683-9392 (Fax)

Kevin Steensma

University of Washington ( email )

Seattle, WA 98195
United States

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