The role of networking and commitment in foreign market entry process: Multinational corporations in the Chinese automobile industry

This study addresses the role of business networking and commitment to local market when MNCs enter an emerging market. We investigate the reasons for variations in the speed of MNCs’ foreign market entry. Particularly, we examine whether MNCs’ networking with the key local actors facilitates MNCs’ entry and whether learning and commitment in the context of networking affects the speed of MNCs’ entry process in the Chinese automobile market. The study is based on the experiences of three MNCs, a U.S.-based firm, a European firm, and a Korean firm. Data is collected through in-depth interviews and through secondary sources related to the entry process of these cases. The cases illustrate that speed of foreign market entry is significantly influenced by business networking between MNCs and the key business and socio-political actors, since different types of business networking determine the level of learning and commitment. Our cases also show that the effects of business networking generated during the initial foreign market entry by the MNC may be different than those during sequential entries.

► The paper examines the role of MNCs’ business networking and commitment to the Chinese automobile market.
► This study points out that how networking with the key local actors facilitates the speed of market entry process.
► The speed of market entry is significantly dependent on networking between MNCs and local key business actors.
► The cases studied illustrate how different types of networking determine the level of learning and commitment.
► The study also points out that different type of networking is required during initial market entry than during subsequent expansion.