“The opportunities for channel researchers to contribute to knowledge creation in the marketing discipline and, at the same time, affect business practice are almost endless” (Frazier 1999, p.238). While the theoretical understanding of the internationalization and international marketing strategies of large firms has been in the focus of research since a long time, attention has been given only recently to investigate the same questions for small and medium-sized enterprises (SMEs). Exporters need to question their export channel structure every day in order to remain successful. Should the product be distributed directly or indirectly? Which way is more efficient, effective and/or profitable? Should export channels be changed? (John & Weitz 1988, Huan & Hsu 2003). The decision on channel integration, the extent to which the export channel is performed by the exporting firm without intermediaries, is extremely important, as it affects revenues, investments and costs (Shervani, Frazier & Challagalla 2007). As a research field, export channel structure is vital for two groups. First, there are scholars trying to find evidence for applied theories, and second, managers attempting to reduce risks and improve export performance. Wrong decisions in export channel choice may incur high costs and long-lasting difficulties, particularly for SMEs. These firms, if active in international exporting, tend to rely on one or few export channels. At the same time, SMEs operate the majority of export channels worldwide and are more inclined to switch their export channels than multinational firms.
The first export channel research started in the 70s. Since then considerable progress has been made. Especially in the late 80s and early 90s researchers have focused on the structure of international distribution channels with increasing attention to SMEs. Several theories (Transaction Cost Economics (TCE), Internationalization Theory, and Resource-based View (RBV)) have been developed and applied to assess and explain the reasons of different export channel integration strategies. Within the research scope, although TCE is not complete to explain the different strategies with regard to the degree of channel integration, it has been by far the most popular theory applied to this question. The results of the relevant empirical studies point out that channel structure control, knowledge and experience are the most important factors.
Table of Contents
1 Introduction
2 Definitions
2.1 Exporting
2.2 Definition and Characteristics of Small and Medium-Sized Enterprises
3 Theories Explaining Export Channel Choice of Small- and Medium-Sized Enterprises
3.1 Transaction Cost Economics (TCE)
3.2 Internationalization Theory (Uppsala Model)
3.3 Resource-based View (RBV)
3.4 Minor Theories
3.4.1 Production (Cost) Theory
3.4.2 Agency Theory
3.4.3 Eclectic Paradigm Model
3.4.4 Institutional Theory
3.4.5 Psychic Distance
4 Discussion
4.1 Dependent Variables [Direct (integrated) vs. Indirect (independent)]
4.2 Independent Variables
4.2.1 External Uncertainties
4.2.2 Asset Specificity
4.2.3 Channel Volume and Export Intensity
4.2.4 Existing Channel
4.2.5 Market Similarity and Industry Characteristics
4.2.6 Firm Size and Characteristics (Sales/Employees)
4.2.7 Internal Uncertainties
4.2.8 Decision Makers
4.2.9 International Experience
4.2.10 Customer Service (Intensity) and Non-Selling Activities
4.3 Control Variables
4.3.1 Distribution of Multiple Product Lines
4.3.2 Distribution Costs
4.3.3 Ownership Mode
4.4 Moderator Variable
4.4.1 Market Power of the Firm
5 Conclusion and Implications
Research Objectives and Focus
This bachelor thesis provides a systematic literature review to identify and analyze the theories explaining the export channel selection of small and medium-sized enterprises (SMEs) and to determine the most significant factors influencing these strategic decisions.
- Theoretical framework analysis (TCE, RBV, Internationalization Theory)
- Evaluation of empirical findings and consistency among scholarly articles
- Identification of critical independent variables (e.g., Asset Specificity, Channel Volume)
- Analysis of the impact of firm size and market characteristics on export channel integration
Excerpt from the Book
External Uncertainty
External uncertainty refers to unanticipated changes surrounding the exchange in the export-channel structure (Williamson 1979). Since unexpected environmental changes (e.g. political instability, economic fluctuation or market uncertainty) in the future cannot be contracted for (in advance), TCE logic implies integrated (high-control) governance, as hierarchical structure mode permits adjustments at minimal transaction costs (Klein, Frazier and Roth. 1990, Bello/Briggs 2009, p. 402 in SAGE P. of Int’l Marketing).
In particular, TCE can play an important role for the development of an SME. Above all, fixed transaction costs can influence SMEs which do not have as many cost units as MNEs and therefore less fixed costs degression. In general, SMEs face higher costs of legal enforcement and prevention causing disadvantages in creating business relationships.
In the long view, TCE proposes to convert single market transactions (and the adherent “variable” costs) into “fixed” continuous transactions through cooperation. This also encourages lower costs, trust and common goals with partners (Rößl, p.80 1996 in Mugler 2008, Mugler 2008). According to Eramilli & Rao (1993) cost-control logic becomes higher when: 1. Cost of integration is low; 2. Non-TCE benefits of control are considered; 3. Ability to integrate is high.
Summary of Chapters
1 Introduction: Provides an overview of the importance of export channel structure for SMEs and outlines the research questions and methodology of the literature review.
2 Definitions: Defines key concepts such as exporting and the characteristics that distinguish small and medium-sized enterprises from larger multinational organizations.
3 Theories Explaining Export Channel Choice of Small- and Medium-Sized Enterprises: Details the primary theoretical frameworks used in research, specifically Transaction Cost Economics, Internationalization Theory, and the Resource-based View, alongside various minor supporting theories.
4 Discussion: Offers an in-depth analysis and synthesis of empirical findings regarding dependent and independent variables, control variables, and moderator variables affecting channel integration.
5 Conclusion and Implications: Synthesizes the overall results, highlights limitations of current research, and provides recommendations for future academic investigations.
Keywords
Export Channel Integration, SMEs, Transaction Cost Economics, Resource-based View, Uppsala Model, Channel Volume, Asset Specificity, External Uncertainty, International Marketing Strategy, Channel Choice, Distribution Channels, Export Intensity, Market Power, Firm Size, Literature Review
Frequently Asked Questions
What is the primary focus of this thesis?
The thesis focuses on analyzing existing literature regarding the export channel integration decisions of small and medium-sized enterprises (SMEs).
What are the central theoretical frameworks discussed?
The work primarily examines Transaction Cost Economics (TCE), the Internationalization Theory (Uppsala Model), and the Resource-based View (RBV).
What is the main objective of this study?
The objective is to identify and synthesize factors that influence SMEs in their selection between integrated (direct) and independent (indirect) export channels.
Which methodology is employed in this research?
The research is a systematic literature review, identifying, evaluating, and synthesizing empirical and theoretical peer-reviewed articles.
What topics are covered in the main body?
The main body discusses theories of export choice and critically evaluates independent variables such as asset specificity, market volatility, channel volume, and firm size.
Which keywords best characterize the work?
Key terms include Export Channel Integration, SMEs, Transaction Cost Economics, Asset Specificity, and International Marketing Strategy.
How does Transaction Cost Economics (TCE) apply to SMEs specifically?
TCE is used to explain how SMEs minimize transaction costs through organizational configuration, though its applicability can be influenced by the firm's level of market power.
Are there specific findings regarding Market Similarity?
Yes, the literature review identifies that market similarity is often not considered a significant factor for channel integration by many decision-makers, contradicting some prior assumptions.
- Quote paper
- Alexander Zuber (Author), 2013, Export Channel Integration Decisions of Small and Medium-sized Enterprises. A Literature Review, Munich, GRIN Verlag, https://www.hausarbeiten.de/document/284626
