Theory and Practice
Chapter 4: Strategic Motives and Market Entry
INTRODUCTION Casson (1990) argues that economic theory of the MNB is a special case of a general approach to economic theory in which the emphasis is on the selection, through competition and rational evaluation of alternatives, of the most eﬃcient organizational form for coordinating a division of labor between related activities. This approach helps to identify a small number of possible motivations for multinational banking which are analogous to similar motivations operating in manufacturing but which manifest themselves diﬀerently due to the diﬀerent nature of the banking industry. This chapter examines strategic motivations of foreign banks as well as their entry mode choice, and how motives and entry mode evolve over time given the change of the Chinese banking market conditions. The rest of the chapter is set out in the following way: literature relating to market entry of MNBs and research questions are discussed in the following section. Section 3 discusses the research methods. Section 4 presents a discussion of the ﬁndings. Conclusions are in the ﬁnal section. LITERATURE REVIEW AND DEVELOPMENT OF RESEARCH QUESTIONS Strategic Motives Drawn from manufacturing MNEs, existing research has identiﬁed many strategic motives for FDI (see, for example, Dunning, 1988, 1993a; Young et al., 1989). These motives include: 1. 2. 3. 4. 5. 6. Market seeking Eﬃciency seeking Strategic asset seeking Natural resource seeking Risk diversiﬁcation Coalitions 44 Strategic motives and market entry 45 7. 8. Collaborations Co-partnerships. The nature of banking products determines that strategic motives pursued...
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