Research On Firms’ Strategic Decision Making Patterns Of Market Entry Based On The Problem-Solving View

In the context of current business environment, the increasingly emerging new markets bring both opportunities and challenges for the survival and development of all types of firms that how to entry the corresponding market at the right time should be considered by both incumbent firms or potential start-up firms, while these strategic decisions are important source of the competitive advantages for them. The previous studies using the RBV perspective have focused on the specific content of market entrants’strategic decisions that how the performance differences of different types of market entrants are caused by the selection of entry timing and the use of pre-entry experience. However, there are so many variables involved that the empirical results of these studies are lack of universality. As a result, this article made the behavioral decision theory (BDT) as the theoretical foundation to integrate and expand the research of market entry, while took the effect on organizational performance by strategic decision making process of entrants as the main line of analysis. Meanwhile, the firm’s knowledge base associated with pre-entry experience and the environmental characteristics related to entry timing were used as the antecedent variable and the moderate variable of this interaction respectively. Then we gradually conducted a series of interdependence studies from theoretical exploration to empirical verification.Under the problem-solving perspective of behavioral decision theory, the theoretical framework proposed in this article interpret the strategic decision making process of market entrants with the "heuristics" which is the core concept of human problem solving. Accordingly, two classifications of heuristics were identified based on the research paradigms of cognitive psychology, and then respectively related to the decision making processes based on "habit-centered logic" and "rational logic" at the organizational level. And these processes were assumed to be affected by both the declarative memory and procedural memory based on firms’ pre-entry experience as well as the corresponding types of knowledge.Study1was a simulation study that based on the theoretical framework above. The author divided the market entrants into four categories according to different processes of problem solving, and used Gavetti and Levinthal’s(2000) model to simulate the declarative memory and procedural memory of organizational level as well as the heuristic decision making processes driven by these two memory systems. The results showed that different type of market entrants would achieve different performance level in the same market. In the short term, the order is expert, theorist, veteran and novice according to the performance from high to low; while in the long term, the order is theorist, expert, novice and veteran.Study2was a case study that viewed the strategic decision making of market entrants as a two stages’process which is composed of problem representing and solution searching. The author used the exploratory case study method to make the in-depth interviews with two firms and obtain seven case samples of market entry. Through the comparison and analysis of these multiple cases, it revealed the dimensions of the strategic decision making process, including perceptual representing, analytical representing, intuitive searching and systematic searching, which were related to different classifications of heuristics. This article thus identified four strategic decision making patterns each of which was made up of two dimensions mentioned above.Study3was a questionnaire study. Firstly, for the purpose of integrating studies, an empirical model was established to verify the relationship among market entrants’ knowledge base, strategic decision making patterns, characteristics of market environment and organizational performance by extracting related variables from the two studies above, and corresponding theoretical hypotheses were then proposed. Secondly, the author designed the scales of market entrants’strategic decision making patterns based on the theoretical framework of this article, and combined with the mature scales of other variables to conduct the questionnaire survey and data analysis of the market entry behavior of259firms. The result showed that the width, depth and concentration of market entrants’knowledge base would influence their organizational performance in the market by acting on the selection of strategic decision making patterns, while the dynamic, complexity and munificence of the market environment had a moderating effect between strategic decision making patterns and organizational performance.