Influences of Cognitive Dimensions on the Collaborative Entry Mode Choice of Small and Medium-Sized Enterprises

Purpose – Our paper addresses internationalisation of small and medium-sized enterprises (SMEs) by specifically focusing on collaborative entry modes. Despite significant research done on market entry strategies of firms, the use of collaborative entry modes by SMEs during internationalisation has not received a lot of attention. We contribute to foreign market entry literature by analysing the influences of cognitive dimensions on collaborative entry mode choice (equity vs. non-equity modes) of SMEs in their international markets. Design/methodology/approach – We analyse the influences of cognitive dimensions on the choice between equity-based vs. non-equity-based collaborative entry modes. Our empirical sample consists of 345 Italian SMEs, where we used a questionnaire to collect the data. We use structural equation modelling (SEM) to analyse influences of factors like asymmetric information, informal institutional distance, time trends of country, perception of size and resources of potential host country partners, and perception of host country partners’ power on this important market entry mode. Findings – Our results show that high informal institutional distance leads to preference of non-equity-based collaborative entry mode by Italian SMEs. We also find that positive time trends of the host country, positive perception of size and resource of the local partner, as well as the local partners’ power leads to preference of equity-based collaborative entry mode by Italian SMEs. Originality/value – This study focuses on an ignored aspect of market entry strategies, i.e., equity vs. non-equity collaborative entry mode choice of SMEs. We use insights from resource based view and cognitive dimensions literature, to address the influences of five cognitive dimensions on the collaborative entry mode choice of SMEs during their internationalisation.