Distance Dimensions and Entry Mode Choices: An Empirical Study of Multinational Firms in South Korea

After becoming a member of the OECD, South Korea has welcomed several foreign investments into their nation. The way in which multinational firms enter international markets often varies according to geography and culture. This study aims to identify the effect of different dimensions of distance (cultural distance, administrative distance, geographic distance, and economic distance) on the entry mode choices of multinational firms operating in Korea and the moderating role of the firm’s international experience. By analyzing and validating the data from 125 valid surveys of KOTRA registered firms and other secondary data, it was discovered that cultural, administrative, and geographical distance have an effect on the entry mode choice, while economic distance has no influence on the entry mode choice. In addition, firms’ international experience can weaken the negative impact of the four dimensions of distance on firms’ entry mode choice. These findings provide meaningful insights on the overseas business management of firms, and the results of the study will be helpful for new or potential investors in South Korea.