Determinants of Entry Modes Choice for MNEs: Exploring Major Challenges and Implications for Saudi Arabia

The purpose of this paper is to examine the determinants that affect the choice of entry modes of Multinational Enterprises (MNEs) located within the Kingdom of Saudi Arabia (KSA). Its aim is to further our understanding of the features of the contexts for managing MNEs in Saudi Arabia and shed light on the different policy management approaches. This study is explorative and descriptive in nature. Secondary data are the main source of data collection. Data were obtained from reliable and authoritative sources such as SAGIA, other government agency publications, newspapers, international business journals and other related periodicals. Results from previous and current studies on similar topics were also critically reviewed. The findings of this paper will reinforce the importance of foreign direct investment as a main strategy among the policy‐making bodies in Saudi Arabia in alignment with the current development goals of the Saudi Vision 2030. Although Saudi Arabia advocates the policy of economic diversity maintaining its unique structure of governance, the paper makes a case that such structure should be applied to support and achieve socio‐economic growth through supporting foreign direct investment. It is original in the sense that the authors provide reasoned interpretations of Saudi Arabia’s strategy on foreign market entry by the MNEs and the role that the government incentives of the international players can play in achieving balanced socio‐economic growth, diversity and sustainability.