This paper aims to provide a transaction cost analysis (TCA) perspective to exporting firms' selection of foreign markets and the performance consequences of this international market selection (IMS) decision. This paper proposes a conceptual framework that hypothesizes the relationship between transaction cost factors, IMS and export performance.
This paper tests the proposed framework with a database of Chinese manufacturing firms using regression models and controlling for possible endogeneity. The endogeneity issue may arise due to IMS being influenced by unobserved industrial/firm attributes.
The results show that transaction cost factors are able to explain IMS. Furthermore, firms whose decisions have incorporated transaction cost factors perform significantly better than their rivals.
Understanding transaction costs helps decision-makers formulate more efficient IMS strategy to achieve superior export performance. Future research on IMS may examine “passive exporting”, i.e. exporting initiated by overseas buyers, consider the role of institutional distance and use other approaches toward cultural distance-based IMS.
This study adds a new theoretical underpinning for IMS by developing a framework based on TCA, and thus broadens the applications of TCA into IMS. Our empirical results support this extension.
The authors would like to thank participants at the Academy of International Business (UK & Ireland Chapter) 2012 Conference (Liverpool University) for helpful suggestions. A version of this paper was awarded Best Paper in International Marketing Track at Academy of Marketing 2012 Conference (Southampton University). The authors would also like to thank D. Dave Wesson and Kirk Dodds for proofreading the manuscript.
He, X., Lin, Z. and Wei, Y. (2016), "International market selection and export performance: a transaction cost analysis", European Journal of Marketing, Vol. 50 No. 5/6, pp. 916-941. https://doi.org/10.1108/EJM-02-2013-0083Download as .RIS
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