Title: Foreign operation entry mode of wholly-owned subsidiary as the choice of Finnish hard-service firms in Spain: a grounded theory approach

Authors: Dafnis N. Coudounaris; Antti Valtonen

Addresses: School of Economics and Business Administration, Aalborg University Business School, Aalborg University, Aalborg, Denmark, University of Tartu, Tartu, Estonia ' School of Marketing and Communication, University of Vaasa, Vaasa, Finland

Abstract: The purpose of this study is to investigate wholly-owned subsidiary (WOS) vs. exporting as the choice of foreign operation modes of Finnish hard-service firms in Spain, and the relations between the selected entry and operation modes based on objectives set for the Spanish markets. The methodology uses the grounded theory approach in IB. The data was collected by interviewing seven managers from four Finnish hard-service firms operating in Spain and the CEO of the Finnish Chamber of Commerce in Spain. The findings reveal that Finnish hard-service firms should establish a WOS in Spain if aiming to increase their global market share, and profit. Finnish subsidiaries in Spain should focus on the local business culture i.e., knowledge of the local language and business practices. The study offers various contributions for example, with methodology, in using the rarely employed grounded theory approach in IB; it reveals insights into the WOS and exporting choices as appropriate operation modes of hard-service Finnish firms in Spain.

Keywords: foreign operation modes; wholly-owned subsidiary; grounded theory approach; internationalisation; hard-service firms; transaction cost theory; TCT; Uppsala model II; born global phenomenon; Spain.

DOI: 10.1504/IJGSB.2021.120476

International Journal of Globalisation and Small Business, 2021 Vol.12 No.4, pp.341 - 368

Received: 27 Nov 2020
Accepted: 27 Jul 2021
Published online: 21 Jan 2022 *

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