Though international entry mode choice largely depends on a firm’s resource base, host country governments make efforts to promote policy relaxation with incentives in order to attract more FDI inflow. Here, we establish a consolidated framework with the widely used theoretical perspectives of transaction cost economies (TCE), network theory, and institutional theory for small and medium enterprises (SMEs) as a direct response to Laufs and Schwens (2014)’s call to examine the factors that contribute to the effectiveness of entry mode choice in driving their international performance. From home-host country dyads, our study is based on the statistical analysis of 242 surveys given to SMEs that have expanded from a single home country, Taiwan, into various host countries, such as China, Vietnam, Indonesia, Singapore, and India. Our results demonstrate that SMEs’ entry mode choice is favorably influenced by the degree of reinforcement of SMEs’ commitment to foreign market entry and further establish that the reduction of perceived uncertainty positively impacts international performance. We also found that while network capability was the essential determinant for SMEs’ entry mode choice, favorable change to the host institution does matter when SMEs choose greenfield as foreign market entry mode compared with other non-equity modes. Such change to the host institution will also trigger in specific context, such as for Taiwanese SMEs’ entry to India.

Keywords: Small and Medium Enterprises, Network Capability, Home-host Country Dyads, Entry Mode Choice, Performance.