Turbulence, discovery and foreign market entry: A longitudinal study of an entry into the Russian market

Abstract

■ Firms entering transition markets are typically ignorant about those markets, and the markets, owing to the transition from a planned to a market economy, are typically turbulent. Consequently the entry process involves discoveries that could not have been predicted in advance. This position is supported by a longitudinal study in real-time of a Swedish firm's entry into the Russian market between 1987 and 1993.■ The paper distinguishes between three types of activity that form part of the entry process, namely search, routines and improvisation, and it discusses how they relate to operative and strategic discoveries made and the characteristics of the entry process. Key Results■ The paper offers a conceptual framework for studying the role of discovery in the process of entering turbulent foreign markets. A longitudinal case study of a Swedish firm's entry into Russia demonstrates that discoveries were important in the entry process. It shows also that strategic discoveries tend to be a result of either search or improvisation, while operative discoveries are usually made in the course of routine activities performed by the entering firm.

Theoretical foundations of equity based foreign market entry decisions: A review of the literature and recommendations for future research

“…It is advocated that the stage model should be extended to incorporate the importance of knowledge about host market policy environments as well as the role of home country contexts in choosing the optimal investment timing (see Delios & Henisz, 2003). In their longitudinal study, Johanson and Johanson (2006) found that firms also made new knowledge discoveries throughout the FME process, particularly in transition economies with high degrees of uncertainty.…”

Institutions and business networks: A comparative analysis of the Chinese, Russian, and West European markets

“…Russian firms tend to prefer to terminate relationships rather than changing activities within the relationships (Hallén & Johanson, 2004b, Johanson, 2004a. This development is strengthened by the fact that during the transition knowledge about how to do business becomes obsolete and no longer valid, and firms have to find new ways of doing business, which often also tends to mean finding new customers and suppliers (Johanson, 2004b;Johanson and Johanson, 2006).…”

Strategy under Uncertainty: Empirical Evidence from Swedish Companies Operating in Russia

“…The question of what happens when the situation suddenly deteriorates, and 'contingent uncertainty' increases, needs further analysis and empirical testing. There is some evidence that unstable (and uncertain) environments require a tenuous compromise between knowledge and commitment decisions (Johanson & Johanson, 2006).…”