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

•We map the evolution of foreign market entry (FME) research over time (1970–2013).•We examine the contribution of most impactful FME studies.•We provide a critical appraisal of the current theoretical diversity in FME research.•The results underscore the need for a multi-theoretical approach in the study of FME.

This paper reviews the theoretical foundations of the equity based foreign market entry (FME) decisions literature. We analyse 1055 academic FME papers published over four decades (1970–2013). We identify and analyse the theories that informed and guided FME research over time. Our review indicates that scholars have recently started to challenge some of the core assumptions of established theories, draw on and integrate insights from multiple theoretical perspectives which, in turn, generated a multiplicity of approaches for studying FME decisions and their performance outcomes. The paper discusses the explanatory power of the different theories, assesses the relevance of the different theoretical perspectives to our understanding of current FME phenomena and recommends directions for further research.