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The Internet And Foreign Market Expansion By Firms

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Author Info

  • Petersen, Bent

    (Department of International Economics and Management, Copenhagen Business School)

  • Welch, Lawrence S.

    (Mt. Eliza Business School)

  • Liesch, Peter

    (University of Queensland)

Registered author(s):

    Abstract

    The Internet has the potential to improve the efficiency of market transactions. By use of the Internet companies can reduce their search costs significantly and increase their ability to respond flexible to new market opportunities as a result of reduced sunk costs. On the basis of internationalization theory and agency/transaction cost theory the paper examines the effects of the Internet on foreign market expansion by firms. These theoretical issues and possible effects on internationalization are illustrated through the presentation of three general predictions regarding possible outcomes. The predictions demonstrate that a range of foreign expansion effects of the Internet is likely: from limited impact to rapid, widespread global expansion in many cases. The Internet may contain a challenge to mainstream internationalization theory in regard to the role of knowledge: instead of acting as an initial constraint it may be a factor that propels firms into foreign market expansion.

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    File URL: http://openarchive.cbs.dk/cbsweb/handle/10398/6565
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    Bibliographic Info

    Paper provided by Copenhagen Business School, Department of International Economics and Management in its series Working Papers with number 7-2002.

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    Length: 28 pages
    Date of creation: 01 Jul 2002
    Date of revision:
    Handle: RePEc:hhb:cbsint:2002-007

    Contact details of provider:
    Postal: Department of International Economics and Management, Copenhagen Business School, Howitzvej 60, DK-2000 Frederiksberg, Denmark
    Phone: +45 3815 2515
    Fax: +45 3815 2500
    Email:
    Web page: http://www.cbs.dk/departments/int/
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    Related research

    Keywords: Internet; Market transactions; Internationalization; market expansions;

    This paper has been announced in the following NEP Reports:

    References

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    1. Sullivan, Jeremiah, 1999. "What are the functions of corporate home pages?," Journal of World Business, Elsevier, vol. 34(2), pages 193-210, July.
    2. Akerlof, George A, 1970. "The Market for 'Lemons': Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, MIT Press, vol. 84(3), pages 488-500, August.
    3. Reid, Stan, 1984. "Information acquisition and export entry decisions in small firms," Journal of Business Research, Elsevier, vol. 12(2), pages 141-157, June.
    4. J. Yannis Bakos, 1997. "Reducing Buyer Search Costs: Implications for Electronic Marketplaces," Management Science, INFORMS, vol. 43(12), pages 1676-1692, December.
    5. Ursic, Michael L. & Czinkota, Michael R., 1984. "An experience curve explanation of export expansion," Journal of Business Research, Elsevier, vol. 12(2), pages 159-168, June.
    6. Sivadas, Eugene & Grewal, Rajdeep & Kellaris, James, 1998. "The Internet as a Micro Marketing Tool: Targeting Consumers through Preferences Revealed in Music Newsgroup Usage," Journal of Business Research, Elsevier, vol. 41(3), pages 179-186, March.
    7. Sarkar, Mitrabarun & Butler, Brian & Steinfield, Charles, 1998. "Cybermediaries in Electronic Marketspace: Toward Theory Building," Journal of Business Research, Elsevier, vol. 41(3), pages 215-221, March.
    8. Finn Wiedersheim-Paul & Hans C Olson & Lawrence S Welch, 1978. "Pre-Export Activity: The First step in Internationalization," Journal of International Business Studies, Palgrave Macmillan, vol. 9(1), pages 47-58, March.
    9. Robert G Cooper & Elko J Kleinschmidt, 1985. "The Impact of Export Strategy on Export Sales Performance," Journal of International Business Studies, Palgrave Macmillan, vol. 16(1), pages 37-55, March.
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    Citations

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    Cited by:
    1. Petersen, Bent & Welch, Lawrence S., 2002. "International Business Development And The Internet, Post-Hype," Working Papers 8-2002, Copenhagen Business School, Department of International Economics and Management.
    2. Glavas, Charmaine & Mathews, Shane, 2014. "How international entrepreneurship characteristics influence Internet capabilities for the international business processes of the firm," International Business Review, Elsevier, vol. 23(1), pages 228-245.
    3. Pezderka, Noemi & Sinkovics, Rudolf R., 2011. "A conceptualization of e-risk perceptions and implications for small firm active online internationalization," International Business Review, Elsevier, vol. 20(4), pages 409-422, August.
    4. Reuber, A. Rebecca & Fischer, Eileen, 2011. "International entrepreneurship in internet-enabled markets," Journal of Business Venturing, Elsevier, vol. 26(6), pages 660-679.
    5. Loane, S. & Bell, J.D. & McNaughton, R., 2007. "A cross-national study on the impact of management teams on the rapid internationalization of small firms," Journal of World Business, Elsevier, vol. 42(4), pages 489-504, December.
    6. Yamin, Mohammad & Sinkovics, Rudolf R., 2006. "Online internationalisation, psychic distance reduction and the virtuality trap," International Business Review, Elsevier, vol. 15(4), pages 339-360, August.

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