Mimetic isomorphic pressure on foreign distribution entry mode choice

Purpose This study aims to examine how the practices of companies from the same home country as a focal firm create mimetic isomorphic pressure on that firm’s choice of foreign distribution entry mode within the same host country industry. Design/methodology/approach Analysis was based on 3,023 cases of foreign direct investment in distribution by 916 Spanish firms. These cases were spread across 100 countries and 62 industries between 1997 and 2008. Binomial probit models with random coefficients were used to control for the existence of unobserved heterogeneity due to interorganisational relationships. Findings Foreign entry by a focal firm through full control of the distribution channel is positively related to the frequency of previous full control entry by home country competitors in the same host country industry. The results support the idea that a focal firm experiences mimetic isomorphic pressure when choosing its foreign distribution entry mode. Furthermore, the study shows that this relationship is moderated by the regulatory quality of the host country. Originality/value Despite the relevance of institutional theory, little research has studied whether companies choose shared or full control of the foreign distribution channel to stay competitive and gain legitimacy. This study extends the literature by showing that firms display mimetic behaviour in relation to foreign distribution mode choices and that the regulatory quality of the host country moderates this behaviour.