The hierarchical model of market entry modes

In this study, we propose and test a hierarchical model of market entry mod es. Entry modes can first be viewed as equity-based versus non-equity-based . Within equity-based modes, the choice is between wholly owned operations and equity joint ventures, while within non-equity-based modes, the choice is between contractual agreements and export. Empirically, we demonstrate t hat there are factors that exert substantial influences at the equity versu s non-equity level, but rather weak influences at the lower level of choice hierarchy. The empirical results are based on a sample of over 10,000 fore ign activities into China between 1979 to 1998. The findings provide suppor tive evidence for the hierarchical model of market entry modes.