Foreign market entry modes for servitization under diverse macroenvironmental conditions: taxonomy and propositions

Abstract

PurposeThe article explores how servitization influences firms' foreign market entry mode decisions. This relationship is researched under the contingent effect of macroenvironmental factors in the host country, namely, market attractiveness, institutional environment and national culture differences between the home and host country.Design/methodology/approachThe study employs a conceptual framework typology that interrelates, contextualizes and conceptualizes extant knowledge to develop explicit propositions.FindingsBased on the extant literature, using a 2 × 2 matrix, the authors delineate the influence of two dimensions of servitization on entry mode decisions: customer relationship focus and digitalization focus. They conceptualize that relationship management and digitalization-based servitization have an antagonistic effect on the need for entry mode resource commitments, and macroenvironmental factors' favorability moderates this tension.Research limitations/implicationsThe study extends and incorporates the servitization literature into the context of international marketing by exploring the combined effect of the two most significant dimensions of servitization, i.e. investment in customer relations versus investment in digitalization on entry mode, thus delivering valuable new insights and perspectives, as well as explicit propositions toward empirical testing.Practical implicationsThe authors’ framework increases foreign market managers' awareness of how servitization drives entry mode decisions of firms in international markets. Also, the framework explicates how the host country's market attractiveness, institutional environment and difference with the home country's national culture tangibly influence the relationship.Originality/valueThe study provides novel insights into the implications of servitization on international marketing, particularly regarding foreign market entry mode. The study also elucidates the combined effect of two servitization dimensions, i.e. customer relations and digitalization – a critical research area in which the literature is scant.

Digital technologies and knowledge processes: new emerging strategies in international business. A systematic literature review

“…Agnihotri et al (2022) propose a taxonomy and put forward several propositions based on macroenvironmental conditions that influence the choice of entry mode, shifting from product-centric to service-centric business models (servitization). Through a conceptual approach, the authors introduce a taxonomy that categorizes foreign market entry modes for servitization, likely based on factors like market characteristics, industry type and firm-specific variables.…”

“…Moreover, practitioners may find it useful to understand better the exploration vs exploitation debate and how digitalization can allow them both. From a practical point of view, as companies seek to expand their global reach and adopt service-oriented business models, Agnihotri et al (2022) provide valuable insights into effective foreign market entry strategies. Managers and decision-makers can use the taxonomy and propositions to make informed choices when entering new markets and undergoing servitization.…”

“…Through a qualitative study of a highly innovative MNE in an emerging market,Malik et al (2021) demonstrate that the use of sophisticated AI-based technology for talent-specific KM supports the firm's innovation strategy and, at the same time, is enabled by the firm's innovation orientation and culture. Moreover, talent-focused knowledge sharing results in increased job satisfaction and reduced turnover intentions among talents, therefore, supporting the company's innovation strategy in the long term.5.5.3 Internationalization.Two recent studies focus on SMEs internationalization and how their modes of entry in foreign markets are affected by digital technologies by focusing on servitization(Agnihotri et al, 2022) and business model innovation(Anwar et al, 2022).Business model innovation (BMI) is studied byAnwar et al (2022), focusing on the significance of digital capabilities in driving BMI within SMEs. It highlights that SMEs with strong digital capabilities are more likely to engage in innovative business model practices, enabling them to adapt to market changes and customer needs more effectively.…”

Exploring the influence of hybrid product–service offerings on firm internationalization strategies: an international perspective

“…In Agnihotri et al . (2022), the focus is on assessing the influence of customer management on the potential for international sales.…”

“…2.2 Theme 2: customer involvement, co-creation and distribution channels In Agnihotri et al (2022), the focus is on assessing the influence of customer management on the potential for international sales. Chatterjee et al (2023) emphasizes the indispensability of product support and customer support services within hybrid offerings.…”