Influence of International Trade Agreements on Entry Strategy

Abstract

International trade agreements (TAs), which include custom unions, free trade agreements, preferential trade agreements and regional trade agreements, are increasing in number and importance. This thesis explores the influence of TAs on firms’ international market entry strategies, investigating the influence of TAs as a whole, and the New Zealand China Free Trade Agreement (NZCFTA) in particular, on the international market entry strategies of New Zealand firms. The thesis is the first to explore the influence of TAs on the international market entry strategies of New Zealand firms.

This work has adopted a mixed-method research approach. Quantitative analysis provided the necessary familiarity and validation to form a foundation for the qualitative component. The key data for the thesis are derived from information received from 45 one-on-one interviews with top-level executives in New Zealand firms and organisations.

The findings indicate that the influences of TAs are industry-specific. The market entry strategies of firms in larger, export revenue-generating industries are more likely to be affected by TAs and the NZCFTA. It appears that, as export revenues decline, so too do the influences of TAs and NZCFTA on market entry strategy. TAs influence both institutional conditions and industry-based competition, which ultimately influence the strategic entry decisions (where, when and how to enter). This empirical study extends the theoretical framework of how TAs influence foreign market entry strategies. The resulting model provides a basis for international business researchers to further explore this connection.