ARTÍCULOS ORIGINALES

Analysis of the Entry Mode Choice

from Both Transaction Costs and

Resource Based Theory

* PhD en Management Sciences, Doctor en Ciencias de la Gestión y Doctor en Empresa. Investigador. Facultad de Economía y

Negocios. Universidad Andrés Bello, Santiago de Chile, Chile. E-mail: l.arayacastillo@uandresbello.edu. ORCID: 0000-0001-

7574-3907. Google Scholar: https://scholar.google.es/citations?hl=es&user=U2zDNT8AAAAJ.

** PhD en Filosofía en Administración de Empresas. Académico e investigador. Universidad Miguel de Cervantes, Santiago

de Chile, Chile. E-mail: nbarrientos@umcervantes.cl. ORCID: 0000-0002-5854-9501. Google Scholar: https://scholar.google.

cl/citations?view_op=list_works&hl=es&user=xVacvRgAAAAJ.

*** PhD en Filosofía en Administración de Empresas. Director del Área Académica y Administrativa. Instituto de Salud

Pública. Universidad Andrés Bello, Santiago de Chile, Chile. Email: victor.yanez@unab.cl. ORCID: 0000-0002-8552-7842.

Google Scholar: https://scholar.google.cl/citations?user=v7z-jSUAAAAJ&hl=es.

**** Postdoctorado en Gerencia Pública y Gobierno, Doctor en Ciencias Gerenciales. Académico e investigador. Facultad de

Administración y Negocios. Universidad Autónoma de Chile, Santiago de Chile, Chile. E-mail: angel.acevedo@cloud.uautonoma.

cl. ORCID: 0000-0002-8774-3282. Google Scholar: https://scholar.google.cl/citations?hl=es&user=0RTkP8sAAAAJ.

pp. 7-20

rpe.ceipa.edu.co

 2389-8186

- 2389-8194

Vol. 6, No. 1

Enero-junio de 2019

doi: https://doi.org/10.16967/23898186.228

LUIS ARAYA-CASTILLO*

NICOLÁS BARRIENTOS ORADINI**

VÍCTOR MANUEL YÁÑEZ-JARA***

ÁNGEL ACEVEDO DUQUE****

RESUMEN

La liberación de los mercados abrió las puertas a la expansión e incrementó el

nivel de competencia en numerosos mercados. Esto explica que las compañías se estén

diversiﬁcando cada vez más a través de las fronteras nacionales. Este fenómeno está re-

lacionado con el emprendimiento internacional puesto que la internacionalización es un

ejemplo de un cambio de estrategia que puede ser deﬁnido como un acto emprendedor.

En este contexto, los académicos en el campo de los negocios internacionales han dado

respuesta básicamente a tres preguntas: por qué, dónde y cómo se internacionalizan

las compañías. Debido a que la presente investigación trata sobre la sección de modos

de entrada, el enfoque es claramente sobre el ‘cómo’. La selección del modo de entrada

constituye una de las decisiones más críticas para el éxito de la estrategia internacional.

Esta investigación analiza la selección del modo de entrada tanto desde la perspectiva de

los costos de transacción como desde la teoría de los recursos y las capacidades, ya que

estas perspectivas usan y consideran diferentes supuestos. Dado lo anterior, hacemos 4

proposiciones relacionadas con el estudio de la selección del modo de entrada a partir de

los costos de transacción y la teoría de los recursos y las capacidades.

PALABRAS CLAVE

internacionalización, selección del modo de entrada, teoría de los

costos de transacción, teoría de los recursos y las capacidades.

COMO CITAR ESTE ARTÍCULO

How to cite this article:

Araya-Castillo, L. et al. (2019).

Analysis of the Entry Mode

Choice from Both Transaction

Costs and Resource Based

Theory. Revista Perspectiva

Empresarial, 6(1), 7-20

Recibido: 15 de julio de 2018

Aprobado: 22 de octubre de

2018

ABSTRACT

The liberalization of markets opened doors for expansion and increased

the level of competition in numerous markets. This explains that ﬁrms are increasingly

diversifying across national borders. This phenomenon is related with the international

entrepreneurship, since internationalization is an example of a strategy change that can

be deﬁned as an entrepreneurial act. In this context, the scholars in international busi-

ness have given answers to basically three questions: Why, where, and how do companies

internationalize. Since the present research deals with entry modes choice, the focus is

clearly on “how.” The choice of entry mode constitutes one of the most critical decisions

for international strategy success. This research analyzes the entry mode choice from the

perspective of both transaction costs and resource based theory, because these perspec-

tives use dierent assumptions and consider dierent assumptions. Given this, I propose

4 propositions related with the study of entry mode choice from the transaction costs and

resource based theory.

KEY WORDS

Internationalization, entry mode choice, transaction costs theory, resource

based theory.l

Análisis de la selección del modo de entrada a partir de los costos de

transacción y la teoría de los recursos y las capacidades

 2389-8186

- 2389-8194

Vol. 6, No. 1

Enero-junio de 2019

doi: https://doi.org/10.16967/23898186.228

ARTÍCULOS

LUIS ARAYA-CASTILLO, NICOLÁS BARRIENTOS ORADINI, VÍCTOR MANUEL YÁÑEZ-JARA, ÁNGEL ACEVEDO DUQUE

Revista Perspectiva Empresarial, Vol. 6, No. 1, enero-junio de 2019, 7-20

ISSN 2389-8186, E-ISSN 2389-8194

Análise da seleção do modo de entrada a partir dos custos de

transações e a teoria dos recursos e as capacidades

RESUMO

A liberação dos mercados abriu as portas à expansão e incrementou o

nível de concorrência em muitos mercados. Isto explica que as companhias se es-

tejam diversiﬁcando cada vez mais através das fronteiras nacionais. Este fenômeno

está relacionado com o empreendimento internacional, já que a internacionalização

é um exemplo de uma mudança de estratégia que pode ser deﬁnido como um ato

empreendedor. Neste contexto, os acadêmicos no campo dos negócios internacio-

nais há dado resposta basicamente a três perguntas: porque, onde, e como se inter-

nacionalizam as companhias? Devido a que a presente pesquisa trata sobre a seção

de modos de entrada, o enfoque é claramente sobre “como”. A seleção do modo

de entrada constitui uma das decisões mais críticas para o sucesso da estratégia

internacional. Esta pesquisa analisa a seleção do modo de entrada tanto desde la

perspectiva dos custos de transação como desde a teoria dos recursos e as capa-

cidades, já que estas perspectivas usam e consideram diferentes supostos. Dado

lo anterior, faço 4 proposições relacionadas com o estudo da seleção do modo de

entrada a partir dos custos de transação e a teoria dos recursos e as capacidades.

PALAVRAS-CHAVE

internacionalização, seleção do modo de entrada, teoria dos

custos de transação, teoria dos recursos e as capacidades.

ARTÍCULOS ORIGINALES

LUIS ARAYA-CASTILLO, NICOLÁS BARRIENTOS ORADINI, VÍCTOR MANUEL YÁÑEZ-JARA, ÁNGEL ACEVEDO DUQUE

Revista Perspectiva Empresarial, Vol. 6, No. 1, enero-junio de 2019, 7-20

ISSN 2389-8186, E-ISSN 2389-8194

International Business

The phenomenon of internationalization of

the enterprises is considered one of the princi-

pal areas of study of international businesses

(Sapienza et al., 2006; Laanti, Gabrielsson and

Gabrielsson, 2007), in that entering foreign mar-

kets has become an attractive option for enterpri-

se (Bobillo, López-Iturriaga and Tejerina-Gaite,

2012), whether small or large (Lu and Beamish,

2001).

Furthermore, it can be argued that the in-

ternationalization of enterprises has become in

recent decades a phenomenon that has spread

throughout the world, and that has notably facili-



industrially behind (Binda, 2009). This is becau-

     

their competitive advantages and performance

(Hagemejer and Kolasa, 2011).

This explains that in the last decades, we have

-

ms and industries (Johanson and Vahlne, 1990).

In this point, Welch and Luostarinen (1988) indi-

cate that internationalization corresponds to the

set of activities that facilitate and establish more

or less stable ties between companies and inter-

national markets, along with a process of growing

implication and international projection. In a si-

milar vein, internationalization is understood as

       



international transactions on their future and es-

tablish and conduct transactions with other coun-

tries (Beamish, 1990).

     -

derstood as the enlargement of the scope of a

  

in not only commercial activities, but also in all

activities related to its value chain (Mendoza and



     -



services across the borders of global regions and

countries into different geographic locations or

markets (Hitt, Ireland and Hoskisson, 2007).

     

      

force that has accelerated the development of

global changes in international economic acti-

vity (Dicken, 1992) that can be characterized by

the existence of a set of interrelationships be-

  

(Hitt, Hoskisson and Shimizu, 2006). Many of the

-

tinationals (Dastidar, 2009). The MNE consider

international expansion as a key strategy to suc-

cessful competition (Aguilera et al., 2001) and fo-

reign markets as an obligatory reference in their

decision making (Mendoza and Vives, 2008).

Considering the last, we can argue that MNE

have played a central role in the global econo-

mic, social and political changes commonly re-

ferred to as globalization (Held and McGrew,

2000). The globalization of economic activity has



search for new markets (Bobillo, López-Iturriaga

and Tejerina-Gaite, 2008). Hill (2001) refers to

globalization as a change towards a world eco-

nomy with a higher degree of integration and

interdependence.

Given this, during the past decade the pheno-

menon of globalization has received considerable

attention (Burgel and Murray, 2000). In fact, some

scholars have argued that the phenomenon of

globalization has induced many companies to in-

ternationalize themselves MNE, as a way of being

more competitive (Oviatt and McDougall, 1994).

With greater international competition and

the rise of emerging market economies, the MNE

increasingly face highly uncertain foreign envi-

ronments in which to do business (Cuypers and

-

cause certain economic conditions and proprie-

tary advantages make it advisable and possible



good or service in a foreign location (Guillén and

García-Canal, 2009).

Besides, one of the most visible signs of impro-



number and the relevance of its MNE (Camisón,

2007). In that respect, empirical studies conclude

that MNE are on average more productive than

ARTÍCULOS

LUIS ARAYA-CASTILLO, NICOLÁS BARRIENTOS ORADINI, VÍCTOR MANUEL YÁÑEZ-JARA, ÁNGEL ACEVEDO DUQUE

Revista Perspectiva Empresarial, Vol. 6, No. 1, enero-junio de 2019, 7-20

ISSN 2389-8186, E-ISSN 2389-8194

      

respond better to the changes in the competitive

environment of global markets (Andersen, 2012).

Also, MNE contribute to the economic develop-

ment of countries in which they operate (Bellak



the transfer and diffusion of technology and at the

same time promoting international trade (Keller,

2000).



we have witnessed a growing amount of research

     

Hoskisson and Lee, 2015). Evidently, this expan-

     -

 

Vahlne, 1990).

The research in international business has

shown an increasing interest in the study of the in-



1990), and the scholars have given answers to ba-

sically three questions: Why, where, and how do

companies internationalize.

Different factors have been proposed in order

      -

ze their operations, such as the liberalization of

capital markets, the acceleration of information



the decline in transportation costs and a relative

global regulatory harmonization (Dunning, 2001,

2002; Gatignon and Kimberly, 2004). In this same

point, increases in the homogeneity of the mar-

      -

nication and international transport are a more

     -

ternationalize themselves (Bloodgood, Sapienza

and Almeida, 1997).

Furthermore, in the literature it is important

       -

tionalize their operations. Flores and Aguilera

(2007) argue that some of the key determinants

-

racteristics (Horst, 1972; Terpstra and Yu, 1988;

      

linkages (Chen and Chen, 1998), as well as coun-

try level home (Henisz and Delios, 2001; Harzing



(Loree and Guisinger, 1995; Dunning, 1998).

The modes of “how” to enter foreign markets

can be manifested in the establishment of foreign

subsidiaries, in international joint ventures, in li-

censing agreements, in international advertising

campaigns, in international trade, exhibitions and

a multitude of other events and actions (Johanson

and Vahlne, 1990). This decision is crucial in the

internationalization process, because choosing

one or another entry mode can have enormous

      

Rosenzweig, 2001).

Finally, we can argue that research area of in-

ternational business has been studied from diver-

se perspectives, developing theories that attempt

to explain how the process of internationalization

is produced in companies. The majority of theo-

ries point to the process used by companies to en-

     

or in other words, the input mode.

Thus, the present research has as objective to

analyze the entry mode choice from the perspec-

tive of both transaction costs and resource based

theory. This is how the researchers have found

      

choice from both international business and in-

ternational entrepreneurship approaches, becau-

se these perspectives used different assumptions

and consider different assumptions.

International Entrepreneurship

Adaman and Devine (2002) suggest that in

      

concept is used almost exclusively to refer to inno-

vation or activities that balance markets and are

executed by individuals or companies in uncer-

tain conditions. This is how it can be argued that,

traditionally, the concept of entrepreneurship has

been associated with a business-entrepreneur

that possesses certain personal characteristics

that contribute to a determined form of behavior.

Nevertheless, the concept of entrepreneurs-

hip has been carried into the ambit of the organi-

zation as a total, and has developed a concept that

represents a form of entrepreneurial acting of the

organizations, called entrepreneurial orientation.

This dimension is formed by three fundamental

ARTÍCULOS ORIGINALES

LUIS ARAYA-CASTILLO, NICOLÁS BARRIENTOS ORADINI, VÍCTOR MANUEL YÁÑEZ-JARA, ÁNGEL ACEVEDO DUQUE

Revista Perspectiva Empresarial, Vol. 6, No. 1, enero-junio de 2019, 7-20

ISSN 2389-8186, E-ISSN 2389-8194

variables: Innovation, risk taking and proactivity



Jennings and Young, 1990; Miles and Arnold,

      

Morris and Vella, 1998).

In addition to the three dimensions previously

mentioned, other authors have incorporated two

additional dimensions. Knight (2000) suggests

that the concept of entrepreneurial orientation

-

novative, proactive and risk-taking behavior, fur-

ther incorporating the dimensions of autonomy

and competitive aggression in order to reach stra-

tegic objectives (Dess, Lumpkin and Covin, 1997;

Miller and Friesen, 1984).

With this, the concept of entrepreneurship

oriented to organizations is analyzed in this re-

search, which is directly related to the decision

      

Entrepreneurship helps to facilitate economic

growth in several countries which include former-

ly planned economies (Chow and Fung, 1996).

On the other hand, Welch and Luostarinen

(1988) hold that the internationalization of a com-

pany is a part of, or a consequence of, the strategy



-

ned as an entrepreneurial act, such as Schumpeter

(1944) mentioned.

Given this, it could be argued that the theory

of entrepreneurship can be used to analyze the in-



In fact, over the past decade, there has been a

growing body of work on international entre-

preneurship which has pushed our envelope of

knowledge about internationalization of busines-

ses (Rashid, Aziz and Wong, 2010).

Then, it is possible to argue that in recent



international business have intersected creating

a nascent area of study called international en-

trepreneurship (Gamboa and Brouthers, 2008).

McDougall and Oviatt (2000) have been pioneers

      -

trepreneurship as a combination of innovative,

proactive and risk-taking conduct that crosses na-

tional borders and intends to create value in orga-

nizations. Likewise, Dimitratos and Plakoyiannaki

-

hip is an ample organizational process included in



to generate value by exploiting opportunities in

an international market.

Then, we can argue that international entre-

preneurship has recognized the emergence of

the new international ventures (McDougall and

Oviatt, 2000) due to the traditional theories of in-

ternationalization are focused principally on lar-



     -

preneurship is important, not only for small and

medium sized companies, but also for large com-

panies (Prokesch, 1997; Zahra and Garvis, 2000).

Since internationalization is a complex, cha-

llenging and expensive process, the success of the

-

-

ses cannot simply export their domestic business

practices to foreign markets and wait to reap the

     

global markets requires companies that are en-

trepreneurial to decide when, how and where to

grow internationally.

Internationalization, then, proportions an

important opportunity to study the activities of

corporate entrepreneurs and their connection to

performance, in new ventures as well as in esta-

blished companies (Zahra and Garvia, 2000).

Research Proposition

The choice of entry model constitutes one of

the most critical decisions for international stra-

tegy success (Pla-Barber, Sánchez and Madhok,

2010; Sanchez-Peinado, Pla-Barber and Hébert,



as an institutional arrangement that makes possi-

-

man skills, management, or other resources into a

foreign country.

Pla-Barber, Sánchez and Madhok (2010) ar-

gue that the previous research in international

business explains the choice of entry mode from

either a sequential or a comparative perspective.

ARTÍCULOS

LUIS ARAYA-CASTILLO, NICOLÁS BARRIENTOS ORADINI, VÍCTOR MANUEL YÁÑEZ-JARA, ÁNGEL ACEVEDO DUQUE

Revista Perspectiva Empresarial, Vol. 6, No. 1, enero-junio de 2019, 7-20

ISSN 2389-8186, E-ISSN 2389-8194

Both approaches consider all entry modes simul-

taneously and all factors as being equally relevant

at the same time in determining the most suitable

entry mode. The broad argument is that modes

entailing greater commitment of resources face

-

des offering more control to compensate for such

risk (Anderson and Gatignon, 1986).

From the sequential perspective, the process

of adopting modes of entry into foreign markets



resource commitment, risk exposure, control and

 -

dge and experience in international business. In

contrast, the comparative model analyses multi-

ple entry modes holding one of these as a baseline

against which other modes are compared (Pla-

Barber, Sánchez and Madhok, 2010).

Furthermore, in the current dynamic and

competitive environment the entry mode choi-

 

value based considerations, but also on other as-

pects, such as strategic motives of internationa-

       

global environment (Sanchez-Peinado, Pla-Barber

and Hébert, 2007).

The internationalization process is manifes-

ted in a number of different ways. Johansen and

Vahlne (1990) hold that this internationalization

process can be seen in the establishment of fo-

reign subsidiaries, in international joint ventures,

in licensing agreements, in international adverti-

sing campaigns, in international trade, exhibitions

and a multitude of other events and actions.

The choice of entry mode in foreign direct

     

involves ownership and confers effective ma-

nagement control. Other forms of international

expansion, including exporting, licensing and

non-equity alliances, do not constitute FDI (Chang

and Rosenzweig, 2001).

In this point, Li and Li (2010) hold that MNEs

can commit to the market by establishing wholly

     



-

cal partners, or taking lower equity shares.



about entry mode choice are different depending

if the researchers consider either internationali-

zation business or international entrepreneurs-

hip approach, since these perspectives consider

different assumptions. It is because the bulk of

research on foreign operation modes on interna-

tional business have more or less explicitly assu-

med that companies internationalize on the basis

of market seeking rather than sourcing motives

      

literature on international entrepreneurship has

conceptualized market entry as an innovative

entrepreneurial act (Jones and Coviello, 2005;

Simmonds and Smith, 1968) and builds on mains-

tream entrepreneurship theory in which opportu-

nity is the central focus (Shane and Venkataraman,

2000).

Thus, I assume that the literature about entry

-

ding of the assumptions considered. Given this, I

emphasize the need for studying the entry mode

choice from different theories and I propose the

following proposition:

Proposition 1: The analysis of entry mode

choice could be enriched if is realized from diffe-

rent theories (both transaction costs and resource

based theories) rather than from both internatio-

nal business and international entrepreneurship

perspectives.

Theories of Entry Mode Choice

Scholars have made several attempts at deve-

loping entry mode choice explanations over the

last four decades (Sharma and Erramilli, 2004).



international business has been divided histori-

cally into two very different currents of research:

The economic vis ion and the emerging theories.

The term international theory based on eco-

nomic decisions is an umbrella that incorporates

traditional theories and the internationalization

       -

       

internationalization and transaction costs, the

monopolistic advantage theory and the theory of

ARTÍCULOS ORIGINALES

LUIS ARAYA-CASTILLO, NICOLÁS BARRIENTOS ORADINI, VÍCTOR MANUEL YÁÑEZ-JARA, ÁNGEL ACEVEDO DUQUE

Revista Perspectiva Empresarial, Vol. 6, No. 1, enero-junio de 2019, 7-20

ISSN 2389-8186, E-ISSN 2389-8194

oligopolistic reaction, as well as the resource-ba-



the emerging theories are those of Uppsala model,

model of innovation and model of networks.

Transaction Costs Theory

Li and Li (2010) hold that existing research

has extensively examined MNE ownership stra-

      



from Anderson and Gatignon (1986) application



       

Erramilli, 2004).

Transaction cost research theory typically

uses market mediated exchange as the default

    

failures stemming from ex post opportunism to

justify hierarchical governance structures (Reuer

and Ragozzino, 2011). In its application, transac-

tion costs theory is concerned with comparing

different institutional arrangements for carrying

out economic activity (Williamson, 1985).

Given this, the transaction costs theory provi-

des a decision rule with regard to individual entry

decisions (Burgel and Murray, 2000), because its

central tenet is to align transactions that differ in

their attributes with ownership structures in a

way that minimizes transaction costs (Williamson,

1985).

This is how the transaction costs theory sees

the internationalization of businesses as a deci-

sion based on economic aspects. This theory des-

cribes internationalization as a strategic decision

that a company makes to select particular mar-

kets, input modes of those markets, and to localize

commercial activities.

It is because the transaction costs theory as-

-

tionalize according to certain aspects, choosing

between a set of discreet alternatives based on ra-

tional and economic criteria such as cost, risk and

capacity for control (Jones and Coviello, 2002).

      -

nance or entry mode that minimizes the costs of

carrying out particular transactions. Thus, I for-

mulate the following proposition:

Proposition 2: The transaction costs theory

applied to the internationalization of business at-

tempts to explain the selection process of how a

business project itself in international markets by

comparing the derived costs of the imperfections

of the markets which would manifest when the

business externalizes the activity as well as the

cost of internationalizing the activities.

Li and Li (2010) hold that according transac-

tion costs theory, for investments characterized by

-

tures, such as WOSs, should be used to enhance

MNE strategic and operational control over the

assets (Anderson and Gatignon, 1986) and to pro-

tect MNE from the risk of knowledge dissemina-

tion to their partners (Davidson and McFetridge,

1985; Hill, Hwang and Kim, 1990).

Resource-based Theory

Sharma and Erramilli (2004) argue that in line

with the entry mode literature tradition, the re-

source based theory -RBT- offers a unique oppor-

tunity for the development of entry mode choice

explanations from the resource perspective of the



superior administrative orientations, and other

capabilities and resources, can serve as important

competitive advantages, particularly for small and

medium-size businesses that decide to venture in

to international markets (Knight, 2001).

Barney (1991) holds that the advantage deri-

     

capabilities that are valued, rare, imperfectly imi-

table and not substitutable. These resources and

capabilities can be seen as the set of tangible and

intangible resources, including administrative

skills of a company, routines and their organiza-

tional processes, and the information and knowle-

dge that is in control.

ARTÍCULOS

LUIS ARAYA-CASTILLO, NICOLÁS BARRIENTOS ORADINI, VÍCTOR MANUEL YÁÑEZ-JARA, ÁNGEL ACEVEDO DUQUE

Revista Perspectiva Empresarial, Vol. 6, No. 1, enero-junio de 2019, 7-20

ISSN 2389-8186, E-ISSN 2389-8194

Thus, what resource based has done is that it

further relaxed the assumption of competition to

make it “dynamic competition” in order to address

the currently prevailing competitive conditions

(Sharma and Erramilli, 2004). Several leading

scholars in international business including,

     

Fusari (1996), and Prahalad and Lieberthal (1998)



dynamic competition due to several factors such

as the spread of globalization, proliferation of in-

formation technologies, and emergence of highly

knowledgeable global customers (Sharma and

Erramilli, 2004).

Furthermore, the establishment of a sustai-

nable competitive advantage to reap above nor-



resource based theory. Since the exploitation of

an existing advantage is also central to the entry

mode choice literature, the resource based theory

seems to be a good candidate for developing re-

asonably sound explanations of entry mode

choices. By virtue of its assumption of dynamic

competition and that of resource heterogeneity,

the resource based theory can do so by aligning

the entry mode decisions with business strategy

and by focusing on the notion of competitive ad-

vantage (Sharma and Erramilli, 2004). Given this,

I formulate the following proposition:

     

empowers the explanation of entry mode choices

based not only upon the exploitation of existing

advantages (as done in the traditional views) but

also those modes deployed for the generation of

new advantages.

Thus, we can argue that the internationaliza-

-

ms that possess some unique capabilities that can



Analysis of the Entry Mode Choice

from Both Transaction Costs and

Resource Based Theories

Peng (2001) refers to entries into markets

(entry mode choice) as a classic strategic problem

     

the transaction costs theory, traditional studies

treat each particular entrance as a transaction,

and the important concern is to trust the measu-

res of the external market.

This is how, considering the discussion reali-

zed about the transaction costs theory and resour-



Proposition 4: In the entry mode choice the

resource based theory plays an important role,

because it increases the level of analysis from

the transaction of the company, suggesting that a

particular entry decision cannot be seen as an iso-

lated event, since strategic global posture of the

company should also be considered.

It is because the resource based theory at-

tempts to explain internationalization as a stra-

tegic decision that depends upon the capabilities

and restrictions that arise from the possession

of certain resources on the part of the company,

such as human capital, directive skills, the indus-



capital (Westhead, Wright and Ucbasaran, 2001).

The same Peng (2001) makes reference in his

article to the fact that the resource based theory

differs from the transactions costs theory in three

important dimensions. First, considering that the

transaction costs theory predicts the failure of

the input mode in the external market, like the

licenses, under the assumption of opportunism,

the resource based theory attributes this failure

to the heterogeneity of the resources of the com-

panies (Capron, Dussauge and Mitchell, 1998). A

second difference is that while the transactions

costs theory generally focuses on the entries of

just one time based on a play of relatively static

conditions, the resource based theory highlights

a dynamic process, longitudinal in that multiple

entries have a place in the capabilities and lear-

ning of the previous experience of the company

(Chang, 1995; Chang and Rosenzweig, 2001).

Finally, the third difference is related to the spe-

      

the transaction costs theory is focused on its ex-

ploitation, the resource based theory in addition

to the exploitation incorporates the development

(Madhok, 1997).

ARTÍCULOS ORIGINALES

LUIS ARAYA-CASTILLO, NICOLÁS BARRIENTOS ORADINI, VÍCTOR MANUEL YÁÑEZ-JARA, ÁNGEL ACEVEDO DUQUE

Revista Perspectiva Empresarial, Vol. 6, No. 1, enero-junio de 2019, 7-20

ISSN 2389-8186, E-ISSN 2389-8194

Conclusions



that has elicited a great level of interest in recent

years (Laanti, Gabrielsson and Gabrielsson, 2007;



-

pansion as a key strategy for competing success-

fully (Aguilera et al., 2011) and thus the presence

in foreign markets becomes a necessary reference

in their strategic decision-making (Mendoza and

Vives, 2010).

-

ms are not only concerned about what foreign

markets to enter, and what activities to perform

in those markets, but how to enter them (Chang

and Rosenzweig, 2001). This situation is relevant,

since the mechanisms of the internationalization

process have been one of the most widely adop-

ted concepts in international business (Reid and

Rosson, 1987), and they affect all the future deci-

-

ket (Pla-Barber, Sánchez and Madhok, 2010).

This decision is crucial in the internationali-

zation process, because choosing one or another

entry mode can have enormous strategic con-

      

2001). This decision has an impact on the possi-

bility of MNE to achieve competitive advantages.

The annals of business history report that, for

every successful market entry, about four entries

fail (Horn, Lovallo and Viguerie, 2005). That is

how inexperienced start-ups suffer from some of

these disappointments, but so do many sophis-

ticated corporations (Pla-Barber, Sánchez and

Madhok, 2010).

Moreover, although previous studies have

shed light on various factors underlying entry

mode choice, including both macro-level (country

risk, cultural distance, market potential) and mi-

cro-level (marketing intensity, nature of knowhow,

strategy, experience, etc.) variables, the overall un-

derstanding of how managers make entry mode

selection decisions and what is the underlying

heuristic decision as yet remains somewhat un-

clear (Pla-Barber, Sánchez and Madhok, 2010).

Considering this situation, the international

business literature needs to unify the theoretical

framework about the entry mode choice. This is

due to the introduction of strategic dimensions

into the analysis of entry mode choice, which is

essential in a world characterized by increasing

globalization and the proliferation of cross-bor-

der collaborative alliances (Hill, Hwang and Kim,

    

Barber and Hébert, 2007).

In conclusion, the present research analyzes

the entry mode choice from the perspective

of both transaction costs and resource based

theory. Based on this, four theoretical proposi-

tions are formulated about the entry modes of the

companies that decide to internationalize their

operations.

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ARTÍCULOS

LUIS ARAYA-CASTILLO, NICOLÁS BARRIENTOS ORADINI, VÍCTOR MANUEL YÁÑEZ-JARA, ÁNGEL ACEVEDO DUQUE

Revista Perspectiva Empresarial, Vol. 6, No. 1, enero-junio de 2019, 7-20

ISSN 2389-8186, E-ISSN 2389-8194

International Studies of Management and Organi-

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ARTÍCULOS ORIGINALES

LUIS ARAYA-CASTILLO, NICOLÁS BARRIENTOS ORADINI, VÍCTOR MANUEL YÁÑEZ-JARA, ÁNGEL ACEVEDO DUQUE

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