Overcoming African institutional voids: Market entry with networks

Purpose: Literature on modes of entry has focussed on firm-level strategies. The predominant theories used are Institutional Theory and the resource based view. Using an alternate approach, network theory, the paper demonstrates an additional mode of entry: multiple firms entering together as an extension of an existing loose network, known as a bridging network. The extension of an external network across borders is an appropriate mode of entry in emerging markets with no preexisting networks or existing networks within a market that are weak, immature or missing. Approach: A conceptual review, which develops four propositions, demonstrating that market entry with bridging networks may be the preferred mode of entry in the presence of institutional voids. Alternative modes may not be viable due to costs and risks associated with overcoming such voids. Findings: Existing theory and case examples supports the contention that market conditions facilitate firms to enter as networks rather than as singular entities. These conditions are found in markets with institutional voids and explain the dominant form of business groups in many countries and the operation of loose strategic alliances in emerging markets. Network entry facilitates market access speed may allow for local ties to remain undeveloped or be a first step in building in-country networks. Originality: This paper heeds to the call for a network ecosystem approach to market entry, arguing that firms may enter as a collective in subsistence and emerging markets which would explain the preponderance of business groups and loose alliances found