The Impact of MNE Market Entry on the Host Country: An exploration of host country perception of Amazon’s entry into Australia

Research Question(s)

Clearly state the research question(s). The research question should be clear and focused and summarises the issue you will investigate.

“How are MNE’s entry into developed markets perceived to impact host country industries: The case of Amazon’s entry into Australia.”

Abstract/Summary: (100 words or fewer)

A brief summary of the research to be undertaken, written in non-technical language so that a non-specialist in the discipline will know what the proposal involves.

The primary aim of this study is toexplore the local perception of MNE entry into a new market, focusing on host- countryperceptions of Amazon’s entry into the Australian market. Although research has been conducted on entry strategies in International Business (IB),  and spillover impact in terms of technology transfer and economic and employment bnefit,there is scantresearch regarding the broader impact on host countries, in particular, the way in which the entry is perceived within the host country. Previous research has tended to focus on firm performance after entry, or on the technology transfer and other spillover effects. Theresearch will adopt a post-positivist qualitative approach, focusing on the case study of Amazon’s entryintoAustralia. The study will analysessecondary data obtained from sources such as media articles, discussion papers from Australian government websites and industry publications.

Literature/Past Research Review

A summary of the literature you have reviewed which will provide the context in which the research is to be undertaken.This should include a brief account of how the proposed project relates to existing knowledge and literature within the appropriate field.

International business research affirms that businesses grow through expansion beyond the borders (Han,2016).Before making entry decisions, many factors must be taken into play (Al-Habash,Mmieh&Cleeve, 2015), such as potential returns (Papanastassiou, 2009), and the ability to finance and establish the new business, in acontext containing different market policies (Ayden,Demirbag&Tatoglu, 2017). Researchers have identified that making entry decisionsregarding both country choice and choice of entry mode also requires proper understanding of market forces. MNE’s can enter the market in either indirect or FDI modes. International Business (IB) researchers have used OLI to explain whether firms enter through FDI (Rathert, 2016). FDI is impacted by the differences in the political environment (Rathert, 2016). According to Beleska-Spasova, (2016), strategic planning is the primary ingredient in surviving unpredicted market forces.As described by Ayden, Demirbag and Tatoglu, (2017),a company needs a competitive advantage in each market that they operate. There are some dominant theories regading the way in which international Businesses expand, including the staged (Upsalla) model, and elective paradigm (OLI).Uppsala is one of the most dynamic theories discussed in the international trade market (Hodnett& Hsieh, 2012). It details sequential steps which should be taken before resorting to new markets (Ito &Komoriya, 2015). According to the proposition of Uppsala, expansion should start in the nearby psychic place (Jones, 2014). After continuous growth, the business can then seek a distant investment (Zekos, 2003). Furthermore, OLI model suggests that the business should consider ownership, location and internalisation advantages (Jones, 2014)

Improvement of information technology has assisted businesses to explore global markets. Online platforms have facilitated entry of new markets (Herrmann, 2005). To have the proper guideline on how to expand the business, there are some theories which direct the process. Previousliteraturehas tried to focus on the entry of new market (Han, 2016; Hennart, 2009). They indicate the opportunities which foreign business can tap into in other nations. Previous research also shows the importance of MNEs entering the new market (Kabiraj& Sinha, 2014). According to the authors, some of the advantages are increased profit resulting from low competition and therefore control of significant market share (Dikova& Van, 2007). Additionally, the business spreads risks to other areas. Instead of operating in one area, the business benefits from diverse culture and tastes (Manea& Pearce, 2006). These are traditional ways IB researchers think about expansion and market.

There is significant research on the factors, which affect MNEs once they enter the new market (Staning, 2011). Additionally, there is more coverage on emerging market and technology, and other spillover effects. According to Blomkvist, Kappen and Zander, (2010), political factors are instrumental in ensuring the success of market entry. In areas where political instability is witnessed, the chances of business thriving are very minimal (Chen & Johnson, 2015).Chang, (2006) also affirms that technological changes contribute to business performance in new markets. Information technology infrastructure and technical capabilities determine the prosperity of a new entrant in the market (Duanmu, 2006).Social factors such as religion and wealth also have a crucial role in securing demand for goods and services (Duanmu, 2006).

However, when a multinational enterprise entersa new market, it also has implications for the host country businesses and industries (Durnev, 2010). According to Ernes, (2003), a dominant company affects the host nation’s business operating in the same field. The weaker businesses find it hard to survive due to stiff competition in the market (Dikovas& Van, 2007). Although it is beneficial to the country regarding tax collected, the host businesses and industries are forced to use more funds in marketing (Dimitropoulou, Pearce & Papanastassiou, 2009).

Some researchers have highlighted advantages for the host country. Firstly, the country benefits from the skilled foreignlabour (Morgan, 2009). Additionally, new technologies are introduced in the country, which is used to boost other sectors of the economy (Morgan, 2009). Moreover, the new businesses create employment, improving the living standards of the locals. Finally, the government collects more returns due to the high circulation of money in the economy.However, there are those who signal disadvantages of foreign companies’ entry into the market (Morgan, 2009).However, there is little research which empirically explores the wider impacts (Papanastassiou, 1997). A recent example of MNE entry which has been given significant public attention is the entry of Amazon into Australia. Currently, there is little scholarly work exploring this example, but there are commentaries in the media and political sources about the impact (Ogendo, 2017). Therefore, this study will explore the host country perception of an MNE entering a developed market, by analysing the case of Amazon’s entry into Australia.

Research Question/Design/Plan of the Study:

Provide a research question and brief outline of the potential methodology and methods/research technique(s) to be employed in the study.

Research Question: “How are MNE’s entry into developed markets perceived to impact host country industries: The case of Amazon’s entry into Australia.”

Methodology

Underpinned by a post-positivist paradigm, this research will utilise a secondary qualitative methodology, using a case-study approach to explore perceptions of Amazon’s entry into Australia. Case-study research allows the use of different sources of data to build a deep understanding of the research context (Sartor &Bearnish, 2014). To achieve an in-depth understanding of the research question, the paradigm will be post-positivist one because this paradigm highlights the importance of thecontext of the phenomena(Eriksson & Kovalainen,2015).Along with qualitative case study approach, which is useful for achieving a contextual and detailed understanding of the area by using various sources of information (Regner & Edman, 2013).Case Research allows access to a wide range of data from various case studies that will be used for more understanding.Also, the incorporation and contrasting of diverse opinions involved in case study approach can support and form a rich and thorough understanding of a perspective (Gray, 2009).As the the reserchs design is exploratory in nature,case-study is an appropriate choice(Flyvbjerg,2011).

Methods

The research will use secondary data gathered from media sources, government and industry publications related to entry of Amazon into the Australian market. The use of multiple sources allows for in-depth analysis and triangulation. The first stage will be the review of extant literature from scholarly journal articles. The second stage of data collection will be from the quality national media sources. I will then use thematic analysis to analyse the data.

Literature review

Search terms Results
Strategic Heterogeneity in MNEs 1,967
Market entry strategies 175,264
MNEs centric theories 500
MNEs expansion in developed countries 9290
Foreign entry of MNE 45,290
Impact of MNEs 15,310
Market orientation 305,242
MNE institutional 10,785
MNEs globalization 11,086
Multinational enterprises and developed markets 146,441

Secondary data sources – Amazon in Australia

Data Sources
Media Article Sources will be selected based on national coverage, restricted to 2015-2017.   The Australian, The Age, Herald Sun, Sydney Morning Herald and The Daily Telegraph.
Business Press Restricted to 2015-2017 Business Review Australia www.businessreviewaustralia.com
Government publications Used to gain industry statistics, regulatory information, government discussion documents relating to Amazon entry. Australian Bureau of statistics www.australia.gov.au/directories/australia/abs Business and Industry https://www.australia.gov.au/information-and-services/business-and-industry Department of Foreign Affairs and Trade https://dfat.gov.au/pages/default.aspx  

Analytical Strategy

Thematic analysis will be used in this research. According to Sartor&Bearish, (2014), thematic analysis helps to identify ideas (themes) from the data. Moreover, thematic analysis can support researcher’s interpretation of themes by data. My analytical approach will be grounded in nature, involving open coding in the first instance (Sartor& Bearish, 2014).After open coding, I will group themes with emerge, in an iterative process, consulting the literature.

Ethics

The key ethical considerations to be addressed in the research. Indicate whether ethical approval will be required. If ethical approval is not required, please include a statement identifying the reasons why the approval is not required.

The current study does not require ethical approval since secondary sources will be used in this. However, the work will be conducted ethically along with the guidelines of Auckland University of Technology (AUT) ethics procedure.

Resources and Budget

Indicate what resources (if any) you will need to complete your research which are over and above those that are readily available in the library, computer centre, laboratories etc. Indicate a planned budget for your research. Please indicate how you intend to fund your research,e.g. -through scholarships, personal expenses, etc. If the resources required are higher than that which might be provided by your faculty please state how this will be funded.

There are no other additional resources required to complete this work, side from the usual study resources provided by Auckland University of Technology (AUT) to postgraduate students.

Location

Indicate where the research will be conducted, and if not at AUT, provide a brief justification and indicate how communication and resource issues will be addressed.

The research work will be conducted and completed on Auckland University of Technology (AUT) city campus.

Timetable for Completion

Provide an outline of the major activities required to complete your research and write up your thesis/dissertation (including activities already completed or partially completed), and indicate the date by which you expect to complete each activity

Date Task
Feb 26-March 11   March 16   March 17-April 15   April 16   April 16- May07   May 18   May 19-02 June   03 June   04 June -16 June   17 June   25 June-02 July   02 July-23 July   27 July         Literature seaeching,Draft Literature review preparation   Draft Literature Review Chapter to Supervisor   Secondary Data Collection, Draft Methodology Chapter   Draft Methodology Chapter to Supervisor   Data Analysis   Draft Findings Chapter to Supervisor   Draft Discussion Chapter   Draft Discussion Chapter to Supervisor   Draft Conclusion/Introduction   Full Draft to Supervisor   Amendments to Draft   Proofreading, Editing   Submission.

References

A list of sources referred to in the proposal.

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Beleska-Spasova, E., Loykulnanta, S., & Nguyen, Q. (2016). Firm-specific, national and regional competitive advantages: The case of emerging market MNEs—Thailand. Asian Business & Management15(4), 264-291. doi:https://dx.doi.org/10.1057/s41291-016-0009-8

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