The decision of choosing the market entry strategies is a very important decision to any firm, because it affects the firm in the terms of international success, and will determine to a large extent the future performance of the firm in the internationalization process.
The choice of the market entry strategy has always been an interesting topic for researchers to discuss, and the issue of choosing the entry mode is always taking place in the papers and articles that discuss the internationalization process. Consequently, a lot of theories that discuss and analyze the issue of choosing the market entry started to take place in the marketing literature to study the strengths and weaknesses of market entry modes, and to cover the gaps and issues of the market entry choice.
The fact that not all the theories succeeded to cover the weaknesses of the market entry choice, in the same time, even the theories that succeeded to discuss this issue weren’t able to cover the entire issue. In other words, it’s preferred to use more than one theory to reach the integration in discussing the choice of market entry issue, and to be able to analyze it from all possible dimensions.
In this project we decided to discuss the market entries from a theoretical and methodological perspective by analyzing the eclectic theory of Dunning( 1977, 1979, 1988, 2000) with the attempt to solve a real international problem in this 1st Semester Project by applying the research on the study case of Jarlsberg brand, who entered the market of USA and we seek to explain this decision of their market entry form, from a theoretical-methodological perspective. Further down it will be discussed in various ways in which it may be understood, analyzed and solved.
We are expecting that using the eclectic theory will help us understand and analyze the market entry choice from a broader perspective; however, we’ll try to find out if the eclectic theory is the integrated theory of explaining the market entry choice by studying and analyzing it in the paradigm of Burell & Morgan (1979) with 4 forms of assumptions (ontological, epistemological, methodological and human nature assumptions).
2. Problem definition
Jarlsberg is a Norwegian cheese company that belongs to TINE SA which is one of the big producers, distributors and exporters of dairy products in Norway. Jarlsberg has been developed in the 1950’s. It was based on traditions from Swiss cheese makers who developed cheese with holes in the 1830’s. Jarlsberg cheese arrived to the United States in 1963. Its management did a lot of work to demonstrate how the cheese could be used for daily meals and parties. It has been well received in the US market and within 50 years after entering the US market it has become the imported cheese with the biggest market share of its category in the US supermarkets.
As for the US cheese market, the total US market for hard cheese is approximately 400,000 tons, but the market consumes a lot of soft cheese as well. Though Jarlsberg only a small market share in the total hard cheese market (in 2008 Jarlsberg sold 12,600 tons to the US market) this represents the largest market share in the Swiss like cheese category. In 2008 the total export of Norwegian cheese to the United States was approximately 8000 tons of which the majority was Jarslberg.
Jarlsberg faced some problems to increase its sales in the US market due to following the quota which the WTO has set up between Norway and the US. This quota states that Jarlsberg can only sell a limited amount of cheese from Norway to the US. To increase sales, a licensed production was set up in Ohio in 2000 with an annual production of approximately 5,000 tons.
TINE founded Norseland Inc. a wholly owned subsidiary in 1978 for the purpose of marketing and distributing Jarlsberg in the United States market.
2.1 Problem statement
The market entry in the internationalization process is a very interesting and important topic that attracts the attention of researchers to discuss and try to understand it more. We found that choosing this topic will help us gain more knowledge about market entries, and a broader view based on a theoretical perspective. Specially that the market entry is considered a major problem due to its complexity and due to the variety of factors and determinants that firms take in consideration during new market entry.
We chose Jarlsberg to be our case study so we can apply the used theory to understand the depth of market entry as a problem. Our research question is:
“How can we explain Jarlsberg entry to the U.S. by the use of OLI? “
2.2 Choice of theories
The choice of market entry strategies is considered the most important stage in the internationalisation process in the literature of international marketing and management according to the Czincota R(2011). This determines the organizational structure, as well as the height of the risk engaged in the process, along with the size of the resources invested in the foreign country.
Many theories try to explain the best way enterprises internationalise. Unfortunately, there is no super theory that which can give comprehensive understanding of why companies choose to internationalize.
Therefore, we considered that in the internationalisation process, the selection of market entry strategies is a challenge for every firm; the theory that can give us a general overview and an understanding to the problem about this challenging decision is the eclectic paradigm (Duninng 2000). The reason of selecting this theory is that explains in the terms of internationalization the best of selecting market entry and combines economic theories on international trade and neo-institutional theory on market imperfection in order to develop and ‘eclectic’ framework for understanding.
Chapter 1: Introduction2.3 Structure of the project
Chapter 2: Problem Definition
Choice of Theories
Chapter 3: Methodology
Burell & Morgan
Abnor & Bjerke
Selected Paradigm Framework
Chapter 4: Theory
The Eclectic Theory (OLI)
Chapter 5: Analysis of the meta-theoretical level
Chapter 6: Discussion & Conclusion
Chapter 7: Reflections
In order to solve the problem formulation, this project goes through 7 chapters (see project structure). Chapter 1 is a briefly introduction about the research background. Chapter 2 mainly focuses on the presenting of problem formulation. Thereafter, problem formulation and one research questions are put forward. Chapter 3 is the methodology chapter. In order to make our research strategy more convincing, we commit ourselves to develop strong arguments and justifications for the selection of methodological approach. Two commonly accepted paradigmatic assumptions frames, i.e. Abnor&Bjerke as well as Burrell&Morgan, are brought into the discussion, through which one can get a comprehensive understanding on the level of contrast and level of similarity in both frames. Thereafter, we get the best choice that guides us to establish our own research strategy. Chapter 4 illustrates a short review about the theory we choose to answer the best the research question and theory’s underlying assumptions. Chapter 5 deals with the analysis at a meta-theoretical level, where the theory is analyzed in terms of ontological, epistemological and human nature. The conclusion and discussion is built in chapter 6 where we submit ourselves and offer our research understanding, where we comprehended the theoretical knowledge and the analysis will be narrow to the final conclusion. Chapter 7 provides a further and deeper understanding of our research project from both theoretical and practical perspectives, in which we will discuss the issues such as whether the applied theories in this research fit our realities, an objective evaluation/critique on the defects of the applied theories, as well as the possibility of revision on our previous framework.
The following chapter will contain discussion and description of different methodology models and the assumptions which determine this project. There are many theoretical approaches to methodology and we will focus on two commonly accepted, respectively G. Burell & G. Morgan’s (Burell&Morgan) and Abnor & Bjerke’s (Abnor&Bjerke). It starts with explanations of the concept of paradigm and followed by elaborations of the terminologies in both Burell&Morgan and Abnor&Bjerke’s approaches. Thereafter, the different approaches for creating knowledge in both works and comparison of Abnor&Bjerke with Burell&Morgan’s approach to methodology will be discussed. The choice of systems approach from Abnor&Bjerke’s framework to be used in this project will be the conclusion of this section.
The reasons for the uses of paradigms in research carry the reliability for the readers into on which foundation of belief the research is done, so that the gap between the researcher and the research results becomes smaller. If two researchers did the same type of research and achieved similar results, the interpretation of these could still be different because of their individually different ways of viewing the world. By explicitly stating the paradigmatic view of the research and how the researcher approaches the problem of research, it is easier for people to reject or approve the research. The premise upon which the research is built is for that reason important. To begin with, we have to know what paradigm refers to and make sure that we share the same opinion towards it. Here in the definition of paradigm will be presented. Many scholars have written about the concept of paradigm, which was firstly defined as “cluster of beliefs, which guides researchers to decide what should be studied and how results should be interpreted” by Thomas Kuhn (Kuhn, 1962, p. 10). As a scientist of natural science, he claims that the old paradigm will be replaced by the new paradigm when the “revolution” happens whose research area is social and economic science, posits that the knowledge accumulates over a period of time and the formation of new paradigm is based on the old paradigm, they do not exclude the new one. Moreover, the old paradigm usually survives even though the new paradigm is created (Abnor & Bjerke, 1997, pp. 12-13). G. Ritzer defines a paradigm as “the basic conceptions of a science of what its subject is. On this basis it is defined, what is to be studied, which questions are to be raised, how they shall be raised and which rules shall be observed when interpreting the obtained answers. The paradigm is the most comprehensive unit about which there is agreement within a sciencebranch and which serves to separate a scientific community (or sub-community) from another. It arranges, defines and connects the examples, theories, methods and instruments of a given science.” Therefore, a paradigm is more a set of rules, which could help scientists conduct researches within the examples, theories, methods and instruments.
Every type of research is characterized by a common understanding of what is being studied, the questions that should be asked, how researchers should structure their approach, and how the results should be interpreted. Kuada also argues that science is developed in overlapping waves, which create new ideas and may alter the perception of what is considered to be facts. There is generally consensus among scholars that a paradigm is defined in terms of four different types of assumptions: ontological, epistemological, methodological assumptions, and assumptions about human nature (Kuada 2011).
Burell&Morgan (1979) define a paradigm in the forms of four assumptions which are ontological, epistemological, methodological, and assumptions on human natures. They understand social science mainly from three levels. First of all, they view the paradigm as alternative realities and it is the fundamental step to understand social science. Schools of thoughts are developed based on the reality one observes. And then people who have different school of thoughts use different tools and methods to solve the specific problems.
Abnor&Bjerke define a paradigm as “any set of general and ultimate ideas of the constitution of reality, the structure of science, scientific ideals and has an ethical/aesthetical aspect” (Abnor& Bjerke, 1997, p. 14). Quite similar to Burell&Morgan’s (1979) three levels understanding of social science, Abnor&Bjerke also have their terminologies. Abnor&Bjerke define methodological approach where Burell&Morgan use the term schools of thought.
The operative paradigm is used in Abnor&Bjerke where Burell&Morgan view is as a puzzle solving areas.
Ontology describes the nature of the research object. It concerns whether reality is external to the human being or if the individual creates his own social world (Objective and subjective dimensions).
Epistemology describes the nature of knowledge. It deals with the question if the researcher can know the truth about an external world or if he needs to be part of that world to be able to understand it.
Methodology describes the way knowledge is acquired and can thus be characterized as a plan for the research. By being conscious about the circumstances in which the research is done as well as the choice of methodology, the researcher may be able to get more valid results and be acknowledged by other scholars in the field.
Human nature describes the researcher’s view of the relationships between human beings and their environment. It considers if the researcher sees the social environment as something external to the observer or if he is part of the social world.
Figure The subjective – objective dimension
Created from J. Kuada (2011)
Realism means that the social world is real and external to the observer and his cognition. On the contrary, nominalism assumes that reality is constructed by individuals and their interaction.
Positivism often looks at causalities and regularities: the researcher can investigate the social world as an external observer. In contrast, anti-positivism assumes that the social world can only be investigated from the perspective of individuals involved in the research matter.
Determinism is based on the assumption that individuals are determined by their environment whereas voluntarism supports the notion that individuals can act according to their free will.
The nomothetic approach usually uses quantitative survey methods: the approach to data collection and analysis is structured. For the idiographic approach symbols and ideas are predominant and it is typically related to anthropological approach: the researcher will typically use qualitative methods (Burrel & Morgan 1979).
3.2 Paradigmatic frameworks
In social science, different typologies of paradigms had appeared due to objective-subjective debate. We will briefly present two typologies of paradigms with the roots in classical sociological studies (Kuada, 2011).
RRIF classification is the short form from that cover Radical humanism, Radical structuralism, Interpretivism and Functionalism. All this four paradigms creates the framework by Burell&Morgan. They make a distinction between objectivity and subjectivity. All of these paradigms are apprehensive with the social order and the nature of changes in society found in critical research studies.
Abnor & Bjerke’s classification describe the six paradigms and three methodological approaches
The terminologies from B&M and A&B will be described respectively in the following section, thereafter the comparison of both will be provided.
3.2.1 Burrell and Morgan
Burrell and Morgan’s assumptions about the social science are gathered in a subjective-objective dimension (see Fig. 2) while assumptions about the nature of society are assembled a second dimension comprising sociology of regulation and sociology of radical change (see Fig. 3)
The subjective-objective dimension
Burell&Morgan have a straightforward approach towards social science, namely, either subjective or objective. Their paradigmatic assumptions are also developed in two directions which are shown as the above figure.
Ontology: ontology has its roots in philosophy and is described as the study of the nature of being existence or reality. In social science, ontology is dealing with the conception of reality; whatever reality is independent from human beings or it is a product of the human mind. “The ontological debate” of Burrell and Morgan is between nominalism (subjective view) and realism (objective view).
The nominalist does not recognize a”real structure”of the world: “the social world external to individual cognition is made up of nothing more than names, concepts and labels which are used to structure reality” (Burrell and Morgan 1979, 4).
The realist, contrary to the nominalist, “postulates that the social world external to individual cognition is a real world made up of hard, tangible and relatively immutable structures” (Burrell and Morgan 1979). For the realist, the social world exists and has always existed in itself, not created by human beings, and it is independent of human beings who cannot influence it.
Epistemology: Epistemology is the study of the nature and scope of knowledge in philosophy. While in social science, epistemological discussion copes with any knowledge that can be obtained throughout observation or to be experienced. Burrell and Morgan draw on their paradigmatic assumptions by identifying anti-positivism and positivism as dualistic characterization of the “epistemological debate” (see Fig. 1). The anti-positivists reject observation as way of gathering knowledge. In order to “understand” individuals have to “participate”.
For the positivists, the traditional approaches which dominate the natural science (“verificationists” and “falsificationists”) are the background for thinking that knowledge is a cumulative process. The positivists are keen to explain by looking for patterns to be verified and hypothesis to be falsified.
Human nature: The “human nature” assumption debate in Burell&Morgan’s paradigms is between voluntarism and determinism (see Fig. 4), between human beings as creators of their environment and human beings as determined by the environment. The two extreme terms reflect the relationship between man and society. The voluntarist is independent and has free will while the determinist’s actions depend on what is happening around him. From human nature perspective it could be mentioned that Western companies would fit into the deterministic assumption.
Methodology: According to Burrell&Morgan, researchers can understand the social world by having an ideographic or nomothetic approach (see Fig. 1) to the area of study. The ideographic approach is based on the belief that researchers can get to new knowledge through the analysis of the subjective which can only be achieved during the process of investigation by “getting inside” situations. The nomothetic approach is characterized by the objective view of reality. Knowledge can be created by “systematic protocol and technique by testing hypothesis in accordance with the cannons of scientific rigor” (Burrell & Morgan, 1979, p. 6).
The regulation change dimension
In the sociology of regulation researchers are concerned with explaining and understanding society as a unity and its cohesiveness. On the contrary, the sociology of radical change is concerned with conflicts, domination and contradiction in the figure below. Radical change is characterized by visions and utopian ideas concerned with what “is possible” and not what actually “is”.
Figure The regulation-radical change dimension
Adapted from Burell&Morgan (1979)
In spite of criticism, Burrell & Morgan in Social paradigms and organizational analysis have really advanced the field of social sciences. Burrell and Morgan focus on two main issues to group theories: the first one is based on assumptions about the nature of social sciences and the second one is based on assumptions about the nature of societies. They have developed a matrix with four paradigms as outcome of the assumptions in the subjectivist-objectivist dimension and the regulation-radical change dimension by analyzing the relationship between the two (see Fig. 3).
Figure Radical change vs. Regulation
Radical Humanist (Change-Subjective)
Theorists in the radical humanist paradigm are concerned with releasing social constraints that limit human potential. They see society as anti-human and try to find ways in which social opportunities and ideologies are controlled by large social institutions, often leaving people marginalized, voiceless and disempowered, leading to widespread alienation and the breakdown of communities. Interventions are aimed at concrete individuals and groups, establishing mutual-aid and consciousness-raising networks that will lead to eventual changes in social and economic structures.
The functionalist paradigm represents the perspective rooted in the sociology of regulation, seen from an objective point of view. Functionalist theorists are concerned with explaining the status quo, social order, consensus, social integration, solidarity, need satisfaction and actuality from a standpoint characterized by realism, positivism, determinism and nomothetic. This perspective is highly pragmatic oriented because of the researcher’s desire of rational explanation. Functionalists are looking to create knowledge which can be used by providing practical solutions to practical problems.
Radical Structuralist (Change-Objective)
Fundamental underlying contradictions and regularities make the way of living unjust and untenable. Distressed individuals and groups can be helped to soothe the impact of structural problems, but lasting change can only be achieved by a complete transformation of the society. Intervention must be integrated across political, regional, community and interpersonal levels.
The Interpretive paradigm represents the perspective rooted in the sociology of regulation, seen from a subjective point of view. Interpretive theorists are concerned with understanding the fundamentals of the social world in a subjective way by seeking explanations in the form of individual consciousness and subjectivity. The interpretive seeks to participate, not to observe.
3.2.2 Abnor and Bjerke
As it is mentioned above, Abnor&Bjerke make their assumptions from philosophical perspective and can be classified into conception of reality, conception of science, scientific ideals and ethics/aesthetics. They have developed six paradigms based on those assumptions which are shown in (Fig. 3). Unlike Burell&Morgan who explain directly the base of their assumptions, Abnor&Bjerke are more intuitive, giving space for different interpretations.
Conception of reality, in the same way as ontology deals with the way reality is constructed. At the same time it also refers to the human nature in Burell&Morgan’s paradigmatic assumption view. More precisely, conception of reality involves as well the human interaction with the environment: does reality exist in itself or can human beings influence it?
Conception of science has to do with how knowledge gained through education is reflected in the concepts and beliefs a researcher/investigator have. The conception of science assumption is in some ways similar to epistemology and human nature in Burell&Morgan’s assumptions.
Scientific ideals refer to personal desires of the researcher/investigator regarding to his/her studies. Burell&Morgan talk about epistemology and methodology assumptions which can be seen as corresponding to scientific ideals in Abnor&Bjerke’s assumptions.
Ethical/aesthetical aspects are assuming if requests made by researcher during the investigation process are moral or not.
Abnor & Bjerke have defined six paradigms and three methodological views that overlap each other. They depict paradigms as a continuum (similar to Morgan and Smircich) between subjectivity (far right) and objectivity (far left). The paradigms describe different perspectives on reality, in other words the ontological assumptions. Departing from the paradigms they have identified three methodological approaches, which are the analytical, the systems, and the actors approach.
The analytical approach
The analytical approach is based on beliefs that the only true knowledge is science knowledge. It means that the fundamentals of this approach are the facts empirically verifiable. The reality is objective, and objective reality exists independently, without any influences from anyone’s consciousness. The knowledge creator observes the reality as a group of components, and the total sum of these parts is equal to the whole. To sum up, the analytical approach means: to divide reality into the smallest parts, change those parts into concepts and try to disclose cause-effect relation among them by verifying hypothesis or falsifying thesis.
In the systems approach, dividing reality into smaller components is not enough. The reality is more complex in this approach than that in analytical approach; every component can be named as a subsystem and functioned as a system of its own. Knowledge in this approach is dependent on systems; observer is not allowed to use generalized models appropriate to every subject. The knowledge depends on environment in which components are interacting. That is why the knowledge should be contextual not universal like that in the analytical approach.
However the difference is that the goal of the systems approach is trying to improve the system recognized in the reality, while the analytical approach is to verify hypothesis or falsified thesis. Another difference between these two approaches is vision of the whole. The analytical totality has a summative character while the systematical has not. The latter concerns on the full-rounded systematic view and the synergies are expected if all the components work well, otherwise the result will be small the sum of each component.
Ultimate reality presumptions
Reality as concrete and conformable to law from a structure independent of the observer
Reality as a concrete determining process
Reality as mutually dependent fields of information
Reality as a world of symbolic discourse
Reality as a social construction
Reality as a manifestation of human intentionality
Stipulations about human nature
Man as stimulus-receiver and responder
Man as social fact
Man as information transformer
Man as role-player and symbol-user
Man as active creator of symbols
Man as intentional conscience
Ambitions for creating knowledge
To reconstruct external reality-the empirically general one
To explain entireties in their regularities and breaks
To reconstruct contexts in terms of information
To understand patterns of social interaction in terms of symbolic discourse
To understand how social reality is constructed, maintained, and defined
To develop eidetical insight instead of an empirical one
Some common metaphors, pictures, and descriptions
Machine; mathematics; logic
Organism; “natural selection”
Cybernetics; network of information
Role-playing; theatre; culture
Language games; typifications; network of meanings
Some techniques for creating knowledge
Surveys; operational definitions
Variations of free imagination; to bracket (epoche) appearances
THE ANALYTICAL APPROACH
THE SYSTEMS APPROACH
THE ACTORS APPROACH
Created from Abnor and Bjerke (1997)
The actors approach sees reality as a social construction constituted by individuals. Observers of social action can never stand outside of the area that they are studying. They are part of the reality. The approach is consequently highly subjective, and the purpose is to understand and create new meanings rather than to explain them. According to Abnor & Bjerke, it is important to talk about actors in the actors view, because it indicates an interest in people as being intentional which means that they are active, reflective, and creative individuals11.
As stated above, Abnor and Bjerke subscribe to the concept of a paradigm as outlined by Tornebohm. According to him a paradigm consists of:
1. A conception of reality – What does the business look like?
2. A conception of science – How do we look at business as a science?
3. A scientific ideal – What do we want from business as a science?
4. Ethical/aesthetical aspects – What attitude should the business creators of knowledge take towards what is done?
As a consequence of the ambiguity of the reality, the knowledge creator recognizes opposite mechanisms that are fundamental drivers of development and progress of world:
“The Reality is not independent of us but consist of an interaction between our own experiences that we have over time created together with others” (Abnor & Bjerke, 1997, p. 175).
3.3 Comparison between paradigmatic frameworks
Burell&Morgan and Abnor&Bjerke use different angles from which they draw their paradigmatic assumptions. Their assumptions about social science carry some similarities and differences which are discussed below. Burell&Morgan make paradigmatic assumptions about society and its status from the researcher’s point of view. They make a distinction between a conflict society and a harmony society. These assumptions are not present in the second paradigm’s work. For instance, there are various dimensions for theoretical and methodological choices, most of which have been well captured by Burrell and Morgan (1979) whose abstract classi¬?cation schema for understanding broad streams of social science approaches to empirical research has inspired many scholars (Chua, 1986; Laughlin, 1995).
Furthermore, Borell&Morgan make assumptions about the relationship between human nature and the environment, and the influence of human beings on the environment is essential in the way researchers view reality. From our point of view, Burell&Morgan’s are much clear for us to define the reality and the way we obtain knowledge, the desire or the goals to achieve.
As mentioned in the choice of theories chapter, we will be looking at the assumption of OLI framework, although we know that the best value of a research is by comparison of two or more theories. Starting from this point, we considered that OLI’s theoretical bases are Transaction Cost Theory, International Trade Theory and Resource – based Theory. OLI’s essential fields of focus is on the examination of multinat