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The research of Ninerola et al., (2017) whose objective is to analyze the entry modes & barriers for Spanish Firms seeking to enter the Chinese market is unique for two reasons. Firstly, it indicates factors impacting entry mode in China, specifically for Spanish firms. According to Root (1987), entry mode is the most important decision made by any firm as it determines all subsequent business strategy in foreign markets. However, the challenge in any strategy of internationalization is to determine that entry mode that will provide the firm with a competitive edge in the foreign market. Dunning (2008) points out that the choice of entry mode is impacted by various factors. Thus, by providing an overview of the factors and challenges impacting entry mode for foreign firms in China, this research makes a valuable and unique contribution to the literature on entry mode strategies for Spanish firms seeking to penetrate the large, high-potential Chinese market. Secondly, the insights pertaining to entry mode factors are analyzed from primary data obtained through interviews of consultants specialized in international operations in China. Hitherto, entry mode strategies in China have not been examined from the perspectives of management consultants who are familiar with the Chinese market. Hence, the choice of methodology in this research has resulted in a valuable and new contribution to the literature on entry mode strategy. This is in accordance with the purpose of research which according to Kothari (2004) is a systematic investigation to gain new knowledge. In other words, the methodology adopted has successfully yielded new insights into the phenomenon of entry mode strategy in China. A detailed analysis of the methodology which is being attempted in this paper will not only yield insights as to how the phenomenon of entry mode strategies into China must be appropriately analyzed but uncover possible flaws in the methodology design that can be avoided to yield better insights in all future research on the phenomenon.
The research of Ninerola et al., (2017) adopts a holistic interpretivist rather than a reductionist positivist paradigm. A paradigm according to Mackenzie and Knipe (2006), is a collection of assumptions, concepts and propositions that form the overall theoretical research framework. Ninerole et al., (2017) have based their study on the perceptions of management consultants. In other words, the researchers have analyzed and interpreted the social reality of an ‘entry mode strategy’ through the perspectives of multiple people familiar with the phenomenon. According to Ernest (1994), the interpretivist paradigm indicates how meaning may be constructed from data about the phenomenon being examined. Interpretivism states that new knowledge about a social reality has to be based on subjective interpretations and perceptions of human beings who interact with that reality. Ninerole et al., (2017) have stated that what makes this research unique is that it is based on the views and perceptions of management consultants familiar with internationalization processes in China. The researchers also have indicated that they wanted to study the process of internationalization in depth, based on client experiences and to that end, have processed data collected from 6 different management consultants who provided more than 140 case studies of internationalization. Here again is the implication that the factors impacting entry mode and challenges faced by foreign firms in China is examined through the views of the participants rather than those of the researcher. This is in accordance with the views of Blumer (1969) who observed that interpretivist paradigms interpret social realities based on people’s activities and relationship with that reality. The requirement for an in-depth analysis indicates the preference for a holistic approach which is as comprehensive as possible in comparison to a reductionist approach which is simple but would leave many important elements of an entry mode strategy out of the analysis.
The research of Ninerola et al., (2017) does not follow a positivist paradigm because there are no hypotheses to be proved or disproved or cause and effect relationships being examined (Cohen et al., 2007). Nowhere, in the paper there is mention of statistical analysis, experiments, control / experimental groups and pre / post-test methods all of which characterize a positivist paradigm (Grix, 2004). The use of an experiment indicates an intervention made by the researcher. However, the social phenomenon of market entry strategy has been examined without any attempt by the researchers to intervene or manipulate the respondents. The research proceeds from the premise that because individual views are unique and non-generalizable, the views of the consultants will provide multiple interpretations and perspectives on the same phenomenon. An interpretation of these multiple views would fulfill the key objective of Ninerola et al.,(2017)’s research which is to conduct an in-depth and detailed study of factors & challenges related to entry mode strategies in the Chinese market.
A paradigm is composed of ontological and epistemological assumptions (Guba and Lincoln, 1999). Crotty (2003) defined ontology as the study of being, the structure of reality and the nature of existence. The research of Ninerola et al., (2017) is based on the ontological objective of trying to understand the nature of the reality of the factors and challenges that impact entry mode strategies in China. Here the researchers proceed from the assumption that the factors impacting entry mode can be best understood from the persons who populate the world that they are investigating and from their opinions, feelings, thoughts, interpretations and meanings. The insights related to entry mode in this research are indirectly constructed based on the ontological assumptions that (i) entry modes can be understood from interpretations and subjective meanings ascribed to them by management consultants (ii) entry mode for Spanish firms is a distinctive phenomenon, involving its own unique set of factors and challenges and hence cannot be generalized and (iii) a comprehensive, holistic view of the challenges of doing business in China can only be understood through an examination of multiple perspectives and that (iv) the realty of entry modes in China is a complex phenomenon compose of many different realities (Creswell, 2009). This is opposed to the realist ontological approach according to which the object being examined is a single reality that exists independent of human beliefs, thoughts, feelings and constructions.
Epistemology has been defined by Crotty (2003) as the philosophy of trying to understand what kinds of knowledge are possible about the phenomenon being examined. The epistemological approach used by Ninerola et al., (2017) is constructionism which according to Mertens (2010) is the view that all knowledge about a reality is dependent on human practices and is constructed out of the interactions between human beings and the social context / world in which they operate. Essential to a constructivist approach is that meaning is constructed rather than being discovered. Ninerole et al., (2017) have tried to construct knowledge related to entry modes in China by (i) following a strategy that attempts to grasp the subjective meaning inherent with each management consultants experience of working in the Chinese market, (ii) by building inductively on each individual’s opinion to build comprehensive theory related to unique factors and challenges inherent in operating in China, (iii) understanding that China holds potential to be a big investment market for Spanish firms. However, there are differences between the Chinese market and the European and South American markets where Spanish firms traditionally invest in and (iv) using the human being as the source of data and not experiments. An understanding of the complexities of the Chinese market can be obtained, not through simplistic experiments or interpretations but through analyzing particular situations personally experienced by management consultants in China. Such views, constructed from personal experience, according to Ninerola et al., (2017) will act as the best possible advice for Spanish firms seeking to enter China.
Another characteristic of constructivist epistemology is that the findings are not fully conclusive but open to reinterpretation and further investigation (Denizen and Lincoln, 2011). This aspect is indicated in Ninerola et al., (2017)’s own admission that their research is limited only to Spanish firms and even here their findings can be added to in future through more in-depth data collection from internationalized companies operating in China. Hence it maybe concluded that the ontological ‘social world of meaning’ approach and the constructivist epistemological approach and their respective assumptions together define the interpretivist paradigm used in the research of Ninerola et al., (2017).
The main advantage of using the interpretivist paradigm is that it fulfills the objective of conducting an in-depth and detailed analysis of entry mode phenomenon. Lincoln and Guba (1985) point out that the interpretivist paradigm yields holistic and comprehensive knowledge about the phenomenon being considered as it is based on the interpretations of multiple constructed realities. This is also suggested by Ninerola et al., (2017) who point out that their research is based on more than 140 case studies which is representative of the total number of Spanish firms that are currently directly investing in China.
A key disadvantage of the interpretivist paradigm is that it does not employ scientific procedures of verification that is done by a positivist paradigm and hence the findings of this research cannot be generalized (Green, 2000). Ninerola et al., (2017) indicate this as a limitation with the research focusing only on Spanish companies and not on firms from other Western European countries. Another disadvantage of interpretivism is that it is subjective. This is because it suffers from the bias, prejudice, pre-conceptions, political and ideological influences not just of the researcher but also of the 6 respondents each of whom interpret entry modes according to their subjective experiences and perspectives (Charmaz, 2006). Ninerola et al., (2017) acknowledge this limitation by stating that their research could have been more generalized. This implies that the results of this research are subjective whereas there is a need for more objective results which could be generalized.
According to Crotty (2003), methodology refers to those strategies, actions and processes that determine the choice and use of specific methods and linking these methods to desired objectives. Grix (2004) stated that the appropriate method of conducting research is to identify ontological assumptions which indicates what can be researched, linking this with the epistemological assumptions that indicates what we can know about the phenomenon being examined which in turn leads to a better understanding of how to go about acquiring information about the phenomenon which is the methodological approach. Section 2 identified that the key ontological assumption in the research of Ninerola et al., (2017) is that the phenomenon of entry modes into China is comprised of multiples realities as perceived through the experiences of those involved in the phenomenon, i.e. the management consultants. This ontological assumption has in turn shaped the epistemological assumption that the reality of entry modes in China is best comprehended through individual experiences and is constructed through interactions between the researchers and the management consultants. Both the ontological and epistemological assumptions suggest that an appropriate methodology would be one where human beings form the source of data and where theory about entry modes and challenges of doing business in China is inductively constructed by understanding individual experiences of the management consultants. It is this inference that has led to the qualitative rather than the quantitative methodology being used by Ninerola et al., (2017). Qualitative research is more appropriate for an in-depth understanding of the underlying motives and desires for human action. Quantitative research is based on statistical and mathematical measurements of quantity or amount and cannot indicate factors impacting human behaviour, human feelings, attitudes and opinions (Kothari, 2004). Since the objective of Ninerola et al., (2017) is to understanding perception, attitude and opinion related to entry modes and challenges of operating in Chinese markets, the choice of the qualitative rather than the quantitative method is appropriate. The qualitative methodological approach used by Ninerola et al., (2017) is the case study. The case study is defined by Adelman et al., (1980) as the study of a particular instance. The implication is that several case studies will provide views on several particular instances. Given the ontological assumption that entry modes into China is a complex and multi-faceted phenomenon, the case study approach that provides insights into as many aspects of entry modes as possible is appropriate. According to Cohen (2000), case studies indicate how real people, behave in real situations. They provide researchers with an in-depth, detailed and clear understanding of the phenomenon being studied. Yin (1984) states that case studies enable evaluative processes including explaining and judging that help build knowledge about the reality being considered. These views reflect the epistemological assumption in this research that knowledge about entry modes into China and challenges thereof is constructed through analyses of several individual opinions and perspectives. It is evident that the epistemological assumptions of this research has led to the use of Yin (1984)’s case study approach as a means of fulfilling the objective of Ninerola et al., (2017) which is to explore in depth the aspects of the internationalization process of Spanish firms in China.
This section indicates whether ontological, epistemological and methodological approaches used by the researchers has led to the objective of a comprehensive understanding of the issues related to entry modes in China. The literature review conducted by Ninerola et al., (2017) identified that entry mode strategies may be analyzed using a framework comprising internal and external factors, cross-cultural factors and barriers to entry. Furthermore, the literature review indicated that the entry mode phenomenon specifically in China is essentially a multifaceted social reality and not a single objective reality that can be quantified.
This assumption is suggested by Fung et al., (2004)’s observation that all foreign firms must identify a local partner to invest in China. The key internal factor impacting entry modes in China is market knowledge and this can be provided only by local partners who are familiar with the culture, economic systems and business practices (Gracia and Fernandez, 2009). This is particularly important for Spanish firms who have scarce knowledge of operating in Chinese markets as it reduces uncertainty and transaction costs. An analysis of external factors also indicates that because of the restrictions on foreign firms imposed by the Chinese Government, it is obligatory to have a local partner to start any business in the country (China Ministry of Commerce, 2015). The cross-cultural factor analysis indicates that the socio-cultural distance between China and Spain is vast (Parola et al., 2013; Wei et al., 2005). In this scenario, tying up with local partners becomes very important to reduce cultural distances. The entry barriers also indicate that the cultural barrier is the most important in the Chinese markets. These particularly relates to the fact that China is a high context culture with communications having to be understood against the background and values of Chinese culture and the language barriers between the Spanish investors and the Chinese people (Hofstede, 1994; Nair and Stafford, 1998).
The assumption arising from the analysis of the literature review is that entry mode strategies in China are highly dependent on social interactions between human beings. A misunderstood communication arising due to language problems, can negatively influence the outcome of a deal. The reality of the entry mode phenomenon is that it is a social world of meanings. Entry modes in China cannot be examined without analyzing the human factors involved. This suggests that an interpretivist ontological approach would be more appropriate to investigate entry modes in China than a positivist ontological approach. Holloway (1997) recommended an interpretivist ontology wherever the reality being examined can only be understood in its context – such as the high context Chinese culture in which Spanish firms will have to operate in. Given the human factors that have to be considered in Spanish firms, a positivist approach would not have been appropriate in Ninerola et al., (2017)’s research. This is because people’s actions do not follow the general laws of nature which can be examined through scientific experiments in positivist research. People are highly complex beings who respond in terms of the context in which they operate, their habits, beliefs, emotions and background. This assumes that the Chinese markets can respond in multiple ways to the stimulus of an entry attempt by a Spanish firm according to the subjective meanings ascribed to such an attempt by Chinese firms / consumers. Here Orlikowski and Baroudi (1991) state that interpretive research seeks to understand phenomena through meanings ascribed to them by research participants. The reality being examined is subject to multiple interpretations according to meanings ascribed to it by human beings. Ninerola et al., (2017) have therefore correctly assumed that the entry mode strategy can best be understood through expert’s familiar with the Chinese markets. Their assumption of the ontological approach is indicated by assuming that entry mode choices in China does not depend on size, investment capacity and international experience of the firm but the capability of the firm to manage human / social factors related to culture, language and trust.
Having justified the interpretivist ontology in Ninerola et al., (2017), the constructivist epistemological approach used by the researchers to derive knowledge about entry mode strategies in China may also be justified. Ninerola et al., (2017) have indicated that the data collected through the interviews was first codified using a computer program and then analyzed to establish patterns of similarities emerging from the data. That is, the words and terms used by the management consultants were used to construct the key findings emerging from the research.
Ninerola et al., (2017) stated that they constructed their findings by considering and building on quotes given by the respondents. Thus, whereas the literature may suggest that a JV is the best entry mode to enter China, Ninerola et al., (2017) found that the best way to make an initial foray into the Chinese market is to partner with a Representative Office or RO, to first gain market knowledge and decide whether to invest in a wholly owned foreign enterprise (WFOE) or a JV. Similarly, while researchers such as Chen and Hu (2002) and Demirbag et al., (2010) recommend that firms that seek to enter unstable environments or in an environment of uncertainty / unfamiliarity, use a high control entry mode, there is concurrence amongst the management consultants that in China a low control entry mode would be preferable. The respondent’s views corroborated and extended the findings from the literature that collaboration with local people is essential in China if a firm is to overcome challenges related to legal, bureaucratic, cultural, language, trust and human resources. For example, the finding that ‘language’ is a big hurdle to be overcome was constructed out of quotes such as “Language is a major barrier. You do not speak Chinese and they do not speak English” and “It is difficult to understand each other because they do not speak English”. In a similar way, the various other unique findings of this research were constructed from the individual views of the management consultants. Moreover, they extend the findings of the literature and hence provide a holistic view of the phenomenon of an entry strategy. This is in accordance with the views of Crotty (2003) who pointed out that meaning in social phenomena is not discovered but constructed. Hence the constructivist epistemological approach used by Ninerola et al., (2017) to derive insights regarding entry mode strategies is an appropriate one.
A constructivist epistemology implies that the findings and conclusions reached by Ninerola et al., (2017) have been constructed by individual instances of individual views given by various management consultants. This is in accordance with the methodological approach of qualitative research according to which knowledge building is an inductive process that is built from the ground up leading to the formation of theory (Denzin, 1989). It can be inferred therefore that a constructivist epistemology has justifiably led to the selection of a qualitative methodological approach rather than a quantitative approach. Ninerola et al., (2017) have used the case study method with which to collect primary data. The case study method may be justified on the grounds that the inductive qualitative approach means that individual cases must be examined in depth with several individual views being considered to build theory related to entry strategy modes in China.
The interview was the methodological tool used to collect primary data from each case study. This method involves the researcher meeting with the respondents in person, administering an interview schedule to them and collecting primary data. Crotty (2003) indicates that knowledge about a reality gets constructed through interactions between human beings which occur in a social context. Berlin (1987) extended this view by stating that truth gets constructed through interactions of the researcher with respondents and is also the product of the researcher’s interpretations. The researcher proceeds with the view that the psychological world of the respondents is unknowable and his/her task is to construction the truth from the perspectives of the respondents. Lincoln and Guba (1985) observed that in qualitative research, the researcher and the object of research are interactively linked with the findings being created as the research progresses. It may be inferred therefore that the use of an interview as the primary data collection tool is justified.
The sample of respondents include management consultant’s familiar with the Chinese market. This is in accordance with the views of Charmaz (2006) who said that because knowledge is gathered from the subjective experiences of the respondents it becomes important to conduct research in the world where the respondents operate. This provides the context for understanding the respondent’s views. In this way, Wolcott (2009) observes that the researcher minimizes the distance with the reality being studied. Hence the choice of respondents made by Ninerola et al., (2017) may also be justified given their experience in the Chinese market. To that extent, their views maybe considered to be accurate and more valid in advising Spanish firms on the correct mode of entering the Chinese markets. Ninerola et al., (2017) also point out that what makes their research unique is that findings are based on the views of consultant’s familiar with the Chinese market and that this methodological approach has not been attempted before.
Stake (2005) observes that the key limitation of a case study is that it is highly specific and its findings cannot be generalized. This limitation acknowledged by Ninerola et al., (2017) that the findings of their research may be not generalizable to other Western European firms. However, the objective of this research was only to ascertain the issues that Spanish firms might encounter whilst attempting to enter the Chinese markets and not non-Spanish firms. It may be inferred that the choice of a case study as the research method has effectively highlighted the particular issues Spanish firms will encounter in China and its use in Ninerola et al., (2017)’s research is therefore justified.
Grix (2004) states that if research is to be clear and precise, there is a need to understand the philosophical underpinnings that govern the constructs of the reality being examined and the methods used to uncover knowledge about the reality. Accordingly, the objective of this paper was to analyze and justify the research methodology adopted by Ninerola et al., (2017). It was found that the reality of ‘entry modes’ in China is a multifaceted, social reality rather than a single, objective reality suggesting an interpretivist ontology. This ontology indicates that entry modes may be best examined by constructing meaning out of interactions with management consultants familiar with the Chinese market. Thus, the epistemological approach followed by Ninerola et al., (2017) is constructivist. For knowledge to get constructed inductively, a qualitative approach was adopted with the case study as the qualitative method and the interview as the data collection tool / instrument. The paper of Ninerola et al., (2017) clearly sets out the links between what can be researched (or the interpretivist ontological position), what can be known about the phenomenon (the constructivist epistemological position) and how to do about acquiring knowledge about the phenomenon (the qualitative and case study methodological position). The validation of the method used by Ninerola et al., (2017) indicates how ontological assumptions determine epistemological assumptions which in turn determines the methodology and the methods used to collect data.
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