drivers to success
Joseph Johnson & Gerard J. Tellis
Drivers of Success for Market Entry into China and India
China and India are the fastest-growing major markets in the world and the most popular markets for foreign entrants. However, no study has examined the success or failure of these entries. Using a new definition of success and a uniquely compiled archival database, the authors analyze whether and why firms that entered China and
India succeeded or failed. The most important findings are rather counterintuitive: Smaller firms are more successful than larger firms, and firms entering more open emerging markets have less success. Other findings are that success is greater with earlier entry, greater control of entry mode, and shorter cultural and economic distances between the home and the host countries. Importantly, with or without control for these drivers, firms have less success in India than in China. The authors discuss the reasons for and implications of these findings.
Keywords: market entry, India, China, success factors despite almost three decades of history, it is unclear how firms should enter such emerging markets. Examples of unexplained success and failure abound. Unilever launched
14 joint ventures in China from 1986 to 1999 (Dasgupta and Dutta 2004) and was in the red for most of the time. On the contrary, Procter & Gamble (P&G) ended up as the market leader in almost all categories it introduced in China
(Tunistra 2000).
Although the few empirical studies on entry success
(e.g., Gielens and Dekimpe 2007; Luo 1998; Pan, Li, and
Tse 1999) have made important contributions to the topic, they suffer from at least one of the following limitations:
First, the studies focus on a single country—China in most cases. Second, the studies use a restrictive definition of success, such as market share, which does not encapsulate degrees of success and failure. Third, the studies often focus on one particular industry. Fourth, the studies do
Drivers of Success for Market Entry into China and India
China and India are the fastest-growing major markets in the world and the most popular markets for foreign entrants. However, no study has examined the success or failure of these entries. Using a new definition of success and a uniquely compiled archival database, the authors analyze whether and why firms that entered China and
India succeeded or failed. The most important findings are rather counterintuitive: Smaller firms are more successful than larger firms, and firms entering more open emerging markets have less success. Other findings are that success is greater with earlier entry, greater control of entry mode, and shorter cultural and economic distances between the home and the host countries. Importantly, with or without control for these drivers, firms have less success in India than in China. The authors discuss the reasons for and implications of these findings.
Keywords: market entry, India, China, success factors despite almost three decades of history, it is unclear how firms should enter such emerging markets. Examples of unexplained success and failure abound. Unilever launched
14 joint ventures in China from 1986 to 1999 (Dasgupta and Dutta 2004) and was in the red for most of the time. On the contrary, Procter & Gamble (P&G) ended up as the market leader in almost all categories it introduced in China
(Tunistra 2000).
Although the few empirical studies on entry success
(e.g., Gielens and Dekimpe 2007; Luo 1998; Pan, Li, and
Tse 1999) have made important contributions to the topic, they suffer from at least one of the following limitations:
First, the studies focus on a single country—China in most cases. Second, the studies use a restrictive definition of success, such as market share, which does not encapsulate degrees of success and failure. Third, the studies often focus on one particular industry. Fourth, the studies do
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