Market Entry Strategies, Marketing Channel Dynamics, Psychic Distance and Performance of Multinational Corporations in Kenya

Abstract

This quantitative inquiry was conducted to ascertain the influence of marketing channel Dynamics and psychic distance on the relationship between strategies of entry into the market and performance of Kenya’s multinational corporations. Specifically, the study purposed to analyse the correlation of market entry strategies with firm performance, to investigate the effect of market channel dynamics on the relationship between firm performance and market entry strategies, to establish the effect of perceived psychic distance on the relationship between market entry strategies and performance and to determine the joint effect of marketing channel dynamics, psychic distance, and market entry strategies on corporate performance of Kenya’s multinational corporations. This descriptive cross-sectional study was performed on 139 multinational corporations operating in Kenya using stratified sampling approach representing corresponding strata. The study established that market entry strategies explained 43.1% of the change in firm performance of multinational companies measured using financial performance parameters and 52.5% of the change in corporate performance measured using non-financial parameters. The postulation that a significant connection between market entry strategies and firm performance exists was thus reinforced. The study established that marketing channel dynamics and psychic distances moderates the relationship between strategies of entry into new markets and the performance of the firm. Strategies of entry into the market, perceived psychic distance and dynamics of marketing channel explained 57.6% of change in organizational performance measured using financial performance indicators. The study also established that market channel dynamics, perceived psychic distance and market entry approaches explained 66.4% of change in performance of multinational corporations in Kenya measured using non-monetary indicators. The research work makes recommendation that before setting foot in overseas markets, multinational corporations should gather enough information on market entry strategies. This will allow them to select a suitable entry strategy that improves their performance. Additionally, the study recommended that top management officials should assess determinants of market entry strategies into the market to choose the appropriate one. The study recommends that marketing channel dynamics should be considered when going international; this will enhance the performance of the organization.