The Internet And Foreign Market Expansion By Firms
AbstractThe 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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Bibliographic InfoPaper provided by Copenhagen Business School, Department of International Economics and Management in its series Working Papers with number 7-2002.
Length: 28 pages
Date of creation: 01 Jul 2002
Date of revision:
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
Web page: http://www.cbs.dk/departments/int/
More information through EDIRC
Internet; Market transactions; Internationalization; market expansions;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-05-18 (All new papers)
- NEP-COM-2003-05-18 (Industrial Competition)
- NEP-MAC-2003-05-18 (Macroeconomics)
- NEP-NET-2003-05-18 (Network Economics)
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