Australian businesses in China : examining motivations and influences on entry modes for service providers

Purpose : The purpose of this paper is to examine the explanatory power of internationalisation theory for service firms internationalising into China.

Design/Methodology/Approach : Interviews were conducted with Australian based 23 service businesses that had entered China. Internationalisation theory was examined in this research. A number of constructs were investigated, which included the type of service (hard or soft), internationalisation motivation/pathways, previous international experience and whether companies plan or not. A number of propositions were tested in relation to these constructs.

Findings : The research found that soft services were more likely to choose full control modes, and hard services choose lower control modes. The most common motivation for entering China was to seek markets there, and these resulted in lower involvement modes. There was no relationship found between having international experience and entry mode, and it was found that businesses with low levels of planning still engaged high control modes. Internationalisation theory was partially supported in the research and was found to correctly predict the progression of equity in Chinese businesses owned by Australian companies.

Research Limitations/Implications : The limitation of the research was the small sample size, and future research should consider the constructs over a larger sample.

Practical Implications : The implications for other Australian service businesses is they should consider the type of service they have (hard or soft), and then make appropriate entry mode choices.

Originality/Value : There is limited research on the internationalisation of service businesses, and no other research has examined Australian service providers going to China.