THE BANDWAGON EFFECT OF LEADERS' ENTRY STRATEGIES ON FOLLOWERS' ENTRY STRATEGIES

Year 2017, Volume: 8 , 64 - 72, 10.12.2017

Tugba Kaplan

Abstract

Firms, which
have to compete with global firms in domestic market, try to internationalize
for gaining competitive advantage. The aim of this study is to recommend a conceptual framework to explain the
dynamics of internationalization process of leader and follower firms that
internationalize from an emerging country. In this study, author tries to
figure out the determinants of entry
mode decisions of follower firms. In addition, bandwagon effect of leaders'
entry mode strategies on followers' entry mode decisions should be investigated
in this study. Multiple theories are used to explain the internationalization
process of developing countries. Prepositions are given to present the
bandwagon effect of leaders' entry strategies on followers' entry strategies.
According to the conceptual model, leaders' entry strategies create a bandwagon
effect on followers' entry strategies. Especially
follower firms follow leader firms that form the reference group and learn from
them. Other than previous studies, in the study this mechanism is explained
with bandwagon effect. It is hoped that this study is helpful
to enlighten the problem of determining the dynamics of internationalization
process of emerging country firms. Moreover, this study integrates the
international business and institutional theory literature with bandwagon
effect and reference groups. The conceptual framework that is given in this
study is beneficial for follower firms, which have to learn from leaders and
provides academic contribution.

 

Keywords

Foreign direct investments, entry mode, bandwagon effect, emerging country

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