An Empirical Study on Global Distribution Strategies after Initial Market Entry: The Case of the Korean Online Game Industry

Foreign market entry modes are decided based on a company's competency and the characteristics of the target market. As a company's competency Increases, the company prefers more controllable distribution methods However, the Korean online game industry consistently reports changes to less controllable distribution methods after the initial market entry even without major changes to competency or the target market. Despite this trend, most studies on global distribution strategies have focused on the initial entry mode of global distribution and the choice of foreign target markets. Scholars have placed less attention on the dynamics of global distribution strategies after the initial market entry. This paper investigates the key factors behind changes in decisions about global distribution in the Korean online game industry after initial market entry. It follows the premise that product-level variables like product quality, technology uncertainties in development, and market uncertainties may affect global distribution strategies. To effectively reflect the categorical characteristics of global distribution strategies, we used ordered logit regression, and additionally used multinomial logistic regression. This study is based on 252 cases of foreign market distribution by major Korean publishers from 1997 to 2009. The regression result shows that the quality of products, technology uncertainties, and market uncertainties are significant in global distribution decisions. Products with high uncertainties in technology and markets prefer less controllable distribution methods, whereas high quality products prefer more controllable ones. The reputation of the development team does not directly affect the entry mode decision, but is controlled by market uncertainties Traditional decision factors like firm experience, market size, and IP's level of protection are also supported and controlled in our study.