##plugins.themes.bootstrap3.article.main##

The main objective of this study was to establish the influence of firm characteristics on the relationship between foreign market entry strategies and the financial performance of multinational firms in Kenya. The study was hinged on Resource-Based View as a theoretical foundation. The literature revealed that numerous studies had been conducted on the influencing factors of firm characteristics such as Size and Age on the financial performance of multinational firms. However, these studies did not put into consideration of other possible factors such as firm characteristics and indicators such as liquidity and leverage. More so, the studies did not consider firm characteristics as a possible influencer of the direct relationship between choice of entry strategies and financial performance of multinational firms. The study utilized a cross-sectional study design which adopted both analytical and descriptive type of studies. Secondary data was used to obtain the desired information from the multinational firms’ annual reports for the financial years 2017, 2016, 2015, and 2014. The study focused on only the publicly listed multinational firms in the Nairobi Security Exchange. Data were obtained from all the 62 listed firms. The study used Sales Growth, ROA, ROE, and ROCE to measure financial performance. Age, Liquidity, and Leverage were used as indicators of firm characteristics with leverage and liquidity further measured as Debt-Equity ratio and Current Assets Ratio respectively. Foreign market entry strategies were measured using Franchising, wholly-owned subsidiaries, Acquisition, and Joint Ventures. The results of the study showed that an interaction between firm characteristics and foreign market entry strategy significantly affected the direct relationship between foreign market entry strategies and the financial performance of multinational firms. The study concludes that firm characteristics have a positive effect on the financial performance of multinational firms through the influence of their choice of entry into foreign markets. It is recommended that multinational firms with desires to expand globally should use their global footprint to maximize on their international operations through leverage activities. In addition, policies governing the liquidity of companies to be revised in order to increase financial performance if previously they affected it. For the study was only limited to the publicly listed multinational institutions, future researchers should consider studying all the multinational firms operating in Kenya. The study provided a contextual understanding of the Resource-Based View. This theory tried to bring in views on choosing the right entry strategy into foreign markets based on the familiarity or unfamiliarity of a foreign market setting given the resources available to a firm. Findings also provided key ingredients for policymakers to embark on an integrated policy formulation in the full understanding of the interplay of a firm’s unique characteristics as far as multinational firms are concerned. And in practice, global business management should be in a better position to identify the right entry strategies into new markets that would yield them great financial profits.

Downloads

Download data is not yet available.

References

  1. O. Andersen and A. Buvik, ‘‘Firms’ internationalization and alternative approaches to the international customer/market selection’’. International Business Review, 11(3), 347-363, 2002
     Google Scholar
  2. E. Anderson and H. Matignon, ‘‘Modes of Foreign Entry: A Transaction Cost Analysis and Propositions’’. Journal of International Business Studies. September 1986, 17 (3), 1-26, 1986
     Google Scholar
  3. H. Arnstorp, ‘‘Foreign market entry strategies in developed and emerging economies. A case study of entry strategies of Norwegian oil service firms’’, Unpublished master’s thesis of the Norwegian University of Science and Technology, 2013
     Google Scholar
  4. P. S. Aulakh, M. Rotate, and H. Teegen, ‘‘Export strategies and performance of firms from emerging economies: Evidence from Brazil, Chile, and Mexico’’. Academy of Management Journal, 43(3), 342–361, 2000
     Google Scholar
  5. J.B. Barney, ‘‘Is the Resource Based View a useful perspective for Strategic Management Research? Yes’’, Academy of Management Review, 26 (1), pp 41-56, 2001
     Google Scholar
  6. C. A., Bartlett and S. Ghoshal, “Tap Your Subsidiaries for Global Reach” Harvard Business Review (November-December), pp 87-94, 1989
     Google Scholar
  7. A, D. Bhunia, ‘‘A trend analysis of liquidity management efficiency in selected private sector Indian steel industry’’, International Journal of Research in Commerce and Management, 1 (5), Sep, 2010.
     Google Scholar
  8. W. Birger, ‘‘A Resource Based-View of the Firm’’. Strategic Management Journal, vol 5, No. 2 pp 171-180, 1984
     Google Scholar
  9. D. Domke-Damonte, “Interactive effects of International Strategy and Throughput Technology on Entry strategies for Service Firms”, Management International Review, 40(1), 41-59, 2000
     Google Scholar
  10. H.P. Dong and J. Su, ‘‘The relationship between Working Capital Management and profitability: A Vietnam case’’, International Research Journal of finance and Economics, 49(3), 62-70, 2010
     Google Scholar
  11. J. Dunning, ‘‘Some antecedents of internalization theory’’, Journal of International Business Studies, 34(1): 108–115, 2003
     Google Scholar
  12. V. C. Ehiedu, ‘‘The impact of liquidity on profitability of some selected companies: The financial statement analysis (FSA) approach’’, Research Journal of Finance and Accounting, 5(5), 81-90, 2014
     Google Scholar
  13. E. Golan, B. Krissoff, F. F. Kuchler, K. Nelson, G. Price, and L. Kelvin, ‘‘Traceability in the US food supply chain: dead end or superhighway’’? In Choices Vol. 2nd quarter, 2003.
     Google Scholar
  14. J. Hennart, and A. H. L. Slangen, ‘‘Yes, we really do need more entry strategies studies! Commentary on Shaver’’, Journal of International Business Studies, 46(1), 114-122, 2015
     Google Scholar
  15. C. W. Hills and R.G. Jones, ‘‘Theory of Strategic Management with cases, CENTAGE Learning, South-West.’’3rd ed., McGraw Hill Co, 2009.
     Google Scholar
  16. A. Jantunen, K. Puumalainen, S. Saarenketo, and K. Kylaheiko, ‘‘Entrepreneurial orientation, dynamic capabilities and international performance’’, Journal of International Entrepreneurship, 3(3), 223-243, 2005.
     Google Scholar
  17. M. Kisengo and K, Kombo, ‘‘Effect of Firm Characteristics on Performance of Microfinance Institutions in Nakuru, Kenya’’, International Journal of Science and Research, 3(10) 1791-1799, 2012
     Google Scholar
  18. Z. Kisengo and S. Kachumber, ‘‘Impact of Structure Related Firm Characteristics on Performance of Microfinance Institutions in Nakuru, Kenya’’. International Journal of Science and Research (IJSR), Vol, (5) Issue, 6, 2013.
     Google Scholar
  19. L. F. Lages, G. Silva, C. Styles, and Z. L. Pereira, ‘‘The NEP Scale: A measure of network export performance’’, International Business Review, 18, 344-356, 2009.
     Google Scholar
  20. C. Lederer and U. Wealthily, ‘‘Firm Age and Performance’’, Working Paper, University of Bern, 2009
     Google Scholar
  21. J. W. Lu, and P. W. Beamish ‘‘The internationalization and performance of SMEs’’, Strategic management journal, 22(6‐7), 565-586, 2001.
     Google Scholar
  22. M. Madang, K. Lee, and G. J. Castrogiovanni, ‘‘Franchising and firm financial performance among US restaurants’’, Journal of Retailing, 87(3), 406-417, 2011.
     Google Scholar
  23. A.J. Mauri and M.P. Michaels, ‘‘Firm and Industry Effects within Strategic Management: An Empirical Examination’’, Strategic Management Journal, Vol., 19, pp. 211-219, 1998
     Google Scholar
  24. H. Mejlumyan, ‘‘Performance of multinational company’’. Unpublished Diploma Thesis, Masaryk University, 2016.
     Google Scholar
  25. K. E. Meyer, S. Estrin, S. K. Bhaumik, and Peng, M. W. Peng, ‘‘Institutions, resources, and entry strategies in emerging economies’’, Strategic management journal, 30(1), 61-80, 2009
     Google Scholar
  26. R. G. P. McMahon, ‘‘Growth and performance of manufacturing SMEs: The influence of financial management characteristics’’, International Small Business Journal, 19(3), 10-28, 2001.
     Google Scholar
  27. S. E. Ogundipe, A. Idowa, Lawrencia, ‘‘Working Capital Management, Firms’ Performance and Market Valuation in Nigeria. World Academy of Science, Engineering and Technology, 1196-1200, 2012.
     Google Scholar
  28. B. M. Oviatt, and McDougall, P. P. McDougall, ‘‘Defining international entrepreneurship and modeling the speed of internationalization’’, Entrepreneurship Theory and Practice, 29(5), 537-553, 2005
     Google Scholar
  29. L. Pastor and P. Veronesi, ‘‘Stock Valuation and Learning about Profitability’’, Journal of Finance, Vol., 58, pp. 1749-1789, 2003
     Google Scholar
  30. R. P. Rumelt, D. E. Schendel and D. J. Teece, ‘‘Fundamental Issues in Strategy’’. Harvard University Press, pp. 9-54, 1994.
     Google Scholar
  31. V. M. Sharma, and M. K. Erramilli, ‘‘Resource-based explanation of entry mode choice’’. Journal of Marketing Theory and Practice, 12(1), 1-18, 2004
     Google Scholar
  32. M. C. Stoian, A. Rialp, and J. Rialp, ‘‘Export performance und the microscope: A glace through Spanish lenses’’, International Business Review, 20, 117-135, 2011
     Google Scholar
  33. W. Sukali, ‘‘International Market Entry Strategies Organizational Characteristics and the Performance of Manufacturing firms in Kenya’’. Unpublished Master’s Thesis of University of Nairobi, 2013.
     Google Scholar
  34. M. Theodosiou, and L. C. Leonidou, ‘‘Standardization versus adaptation of international marketing strategy: an integrative assessment of the empirical research’’. International Business Review, 12(2), 141-171, 2003
     Google Scholar
  35. T. Ural and S.K. Acracy (2006), ‘’Effects of firm strategic factors on exports and firm performance: a comparison of permanent and sporadic exporters’’, Problems and Perspectives in Management, Vol., 4, No.4, pp. 42-62, 2006
     Google Scholar
  36. G. Usman and M. Zahid, ‘‘Factors Influencing Performance of Microfinance Firms in Pakistan: Focus on Market Orientation International’’. Journal of Academic Research Vol. 3. No. 5, 2011.
     Google Scholar
  37. A. Vlachvier and O. Notta, ‘‘Firm Growth, Size and Age in Greek Firms’’, Proceedings of the International Conference on Applied Economics, 2008.
     Google Scholar
  38. J. Wakaisuka, ‘‘Corporate Governance, Firm Characteristics, External environment and Performance of Financial Institutions in Uganda’’. Unpublished Ph.D. Dissertation of University of Nairobi, 2017.
     Google Scholar
  39. Y. Yamakawa, M. W. Peng, and D. L. Deeds, ‘‘What drives new ventures to internationalize from emerging to developed economies’’, Entrepreneurship Theory and Practice, 32(1) 59-82, 2008.
     Google Scholar