1st Global Business Summit Conference (GBSC 2009), Kelantan, Malaysia
University of Technology Mara Malaysia, Shah Alam, 15-17 June 2009.
Entry Mode Strategies of Malaysian Service Firms:
A Resource-Based Approach
Mohammadreza Asgari*, Mohd Nazari Ismail**, Syed Zamberi Ahmad***
Faculty of Business and Accountancy, University of Malaya, Kuala Lumpur
ABSTRACT
The rapid progress in services has attracted scholars to study the behaviour and decisions of service
firms. Firms from Malaysia, as a developing country, with a fast growing economy that
increasingly relies on services have shown a remarkable expansion into foreign markets, which has
resulted in high foreign direct investment (FDI) outward inflows and increasing exports of services.
This paper utilizes the resource-based theory, in which the main determinants of the choice of entry
mode are organizational variables compared to environmental factors, to explain the choice of entry
strategies made by Malaysian service firms and the motives for it. This study aims to develop a
framework for the choice of entry mode strategies that has fewer shortages than others, analyze the
determinants of entry mode strategy in order to find the similarities and differences existing
between firms in the decision-making process for the choice of entry mode, and consider the role of
psychic distance in adopting an appropriate strategy in different markets. Suggestions for future
research are also presented.
Keywords: Entry mode strategy, developing country, Malaysia, service industries, multinational
corporations
INTRODUCTION
Because of the fast globalization of business since the 1980s, many firms have developed strategies
to enter foreign markets and expand their operations beyond their national boundaries. Generally,
the destination of such firms was emerging Asian and Latin American markets as well as large
established markets in North America, Europe and Japan (Osland et al., 2001). These companies,
named Multinational