Drivers of Success for Market Entry into China and India

Abstract

China and India are the fastest-growing major markets in the world and the most popular markets for foreign entrants. However, no study has examined the success or failure of these entries. Using a new definition of success and a uniquely compiled archival database, the authors analyze whether and why firms that entered China and India succeeded or failed. The most important findings are rather counterintuitive: Smaller firms are more successful than larger firms, and firms entering more open emerging markets have less success. Other findings are that success is greater with earlier entry, greater control of entry mode, and shorter cultural and economic distances between the home and the host countries. Importantly, with or without control for these drivers, firms have less success in India than in China. The authors discuss the reasons for and implications of these findings.