The entry mode evolution in a transitioning economy

This study investigates the relationship between parent capacity and entry mode evolution and the moderating effects of industry relatedness and external environment on the relationship by using the panel data from 318 entry mode cases. On the basis of the resource-based view, the results indicate that parent capacity, in terms of absorptive capacity and subsidiary density, plays an important role in affecting entry mode evolution. In addition, industry relatedness and external environment, in terms of infrastructure quality and industrial growth, positively moderate the relationship between absorptive capacity and entry mode evolution, while negatively affect the relationship between subsidiary density and entry mode evolution. This study extents our knowledge about the impact of parent capacity on entry mode evolution under the contingency of industry relatedness and external environment. Managerial implications and future research directions are discussed.