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International Market Entry by U.S. Internet Firms: An Empirical Analysis of Country Risk, National Culture, and Market Size

Frank T. Rothaermel

College of Management, Georgia Institute of Technology, 800 West Peachtree St., NW, Atlanta, GA 30308-1149, frank.rothaermel{at}mgt.gatech.edu

Suresh Kotha

Department of Management and Organization, UW Business School, University of Washington, Seattle, WA 98195-3200

H. Kevin Steensma

Department of Management and Organization, UW Business School, University of Washington, Seattle, WA 98195-3200

Internet firms face somewhat unique challenges when expanding abroad. On what basis do U.S. Internet firms choose the international markets they enter? The authors posit that international market entry decisions are based on balancing perceived risks and returns inherent in a foreign target market. Drawing on a sample of almost 7,000 country entry decisions by 179 U.S. Internet firms, they find that country risk, cultural distance, and uncertainty avoidance reduce the likelihood of international market entry, whereas individualism and masculinity increase it. International market size, however, moderates these relationships by weakening the negative effects, while strengthening the positive effects.

Key Words: international market entry • international entrepreneurship • foreign direct investment • country risk • national culture • Internet

Journal of Management, Vol. 32, No. 1, 56-82 (2006)
DOI: 10.1177/0149206305277793
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