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Host country institutional pressures and cross-border relationship governance

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  • Svendsen, Mons Freng
  • Haugland, Sven A.
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    Abstract

    This study examines the effects of transaction cost, strategic positioning and institutional factors on the governance of international relationships. A firm's product differentiation strategy and export market ethnocentricity are identified as antecedents to specific investments, whereas state influences in the export market are identified as an antecedent to relationship governance. The hypotheses are empirically tested on a sample of 160 international business-to-business relationships. The results show that both product differentiation and export market ethnocentricity impact the level of specific investments, and state influences make it difficult to use both formal contracting and relational norms as governance mechanisms. Furthermore, specific investments made by the supplier are positively related to formal contracting, and product differentiation is positively related to relational norms.

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    Bibliographic Info

    Article provided by Elsevier in its journal International Business Review.

    Volume (Year): 20 (2011)
    Issue (Month): 3 (June)
    Pages: 324-337

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    Handle: RePEc:eee:iburev:v:20:y:2011:i:3:p:324-337

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    Related research

    Keywords: Governance Institutional theory International relationships Marketing strategy;

    References

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    1. Gatignon, Hubert & Anderson, Erin, 1988. "The Multinational Corporation's Degree of Control over Foreign Subsidiaries: An Empirical Test of a Transaction Cost Explanation," Journal of Law, Economics and Organization, Oxford University Press, vol. 4(2), pages 305-36, Fall.
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    8. De Clercq, Dirk & Danis, Wade M. & Dakhli, Mourad, 2010. "The moderating effect of institutional context on the relationship between associational activity and new business activity in emerging economies," International Business Review, Elsevier, vol. 19(1), pages 85-101, February.
    9. Peter S Davis & Ashay B Desai & John D Francis, 2000. "Mode of International Entry: An Isomorphism Perspective," Journal of International Business Studies, Palgrave Macmillan, vol. 31(2), pages 239-258, June.
    10. Erin Anderson, 1985. "The Salesperson as Outside Agent or Employee: A Transaction Cost Analysis," Marketing Science, INFORMS, vol. 4(3), pages 234-254.
    11. Cheng, Hsiang-Lin & Yu, Chow-Ming Joseph, 2008. "Institutional pressures and initiation of internationalization: Evidence from Taiwanese small- and medium-sized enterprises," International Business Review, Elsevier, vol. 17(3), pages 331-348, June.
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    13. C Zhang & S T Cavusgil & A S Roath, 2003. "Manufacturer governance of foreign distributor relationships: do relational norms enhance competitiveness in the export market?," Journal of International Business Studies, Palgrave Macmillan, vol. 34(6), pages 550-566, November.
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