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The Change of Sales Modes in International Markets: Empirical Results for German and British High-Tech Firms

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  • Fryges, Helmut
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    Abstract

    The choice of the appropriate sales mode belongs to the firm?s most important strategic decisions after entering into a foreign market. Thus, it is important that the selected foreign sales mode best suits a firm?s available resources and capabilities. However, these resources and capabilities change over time. Therefore, it might be necessary for a firm to adjust its foreign sales mode to these changing firm-specific conditions. Using a longitudinal data set of newly founded technology-based firms in Germany and the UK, this paper applies logistic regressions and analyses empirically the probabilities of changing between the two sales modes most frequently used by the sampled exporters: direct exports and exporting via an intermediary. The estimation results confirm the importance of the firm?s physical and intangible resources as well as the influence of transaction-specific assets on a sales mode change. However, the effects of the latter factors might be dominated by strategic considerations that are not covered by our data. For example, a young high-tech firm will resort to an intermediary regardless of its resources and transaction-specific assets if this is the only way of coming into contact with foreign customers. --

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    Bibliographic Info

    Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 05-82.

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    Date of creation: 2005
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    Handle: RePEc:zbw:zewdip:4565

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    Keywords: High technology industries; internationalisation; sales modes;

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    1. Jean-François Hennart, 1991. "The Transaction Costs Theory of Joint Ventures: An Empirical Study of Japanese Subsidiaries in the United States," Management Science, INFORMS, INFORMS, vol. 37(4), pages 483-497, April.
    2. Nguyen Van P. & Laisney F. & Kaiser U., 2004. "The Performance of German Firms in the Business-Related Service Sector: A Dynamic Analysis," Journal of Business & Economic Statistics, American Statistical Association, American Statistical Association, vol. 22, pages 274-295, July.
    3. Andrew Bernard & Joachim Wagner, 2001. "Export entry and exit by German firms," Review of World Economics (Weltwirtschaftliches Archiv), Springer, Springer, vol. 137(1), pages 105-123, March.
    4. Dixit, Avinash K, 1989. "Entry and Exit Decisions under Uncertainty," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 97(3), pages 620-38, June.
    5. Fryges, Helmut, 2004. "Stepping In and Out of the International Market: Internationalisation of Technology-Oriented Firms in Germany and the UK," ZEW Discussion Papers, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research 04-65, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    6. Warren J Bilkey, 1978. "An Attempted Integration of the Literature on the Export Behavior of Firms," Journal of International Business Studies, Palgrave Macmillan, vol. 9(1), pages 33-46, March.
    7. J Bradford Jensen & Andrew B Bernard, 2001. "Why Some Firms Export," Working Papers 01-05, Center for Economic Studies, U.S. Census Bureau.
    8. Roberts, Mark J & Tybout, James R, 1997. "The Decision to Export in Colombia: An Empirical Model of Entry with Sunk Costs," American Economic Review, American Economic Association, American Economic Association, vol. 87(4), pages 545-64, September.
    9. Keith D. Brouthers & Lance Eliot Brouthers, 2003. "Why Service and Manufacturing Entry Mode Choices Differ: The Influence of Transaction Cost Factors, Risk and Trust," Journal of Management Studies, Wiley Blackwell, Wiley Blackwell, vol. 40(5), pages 1179-1204, 07.
    10. David K Tse & Yigang Pan & Kevin Y Au, 1997. "How MNCs Choose Entry Modes and Form Alliances: The China Experience," Journal of International Business Studies, Palgrave Macmillan, vol. 28(4), pages 779-805, December.
    11. Masahiko Itaki, 1991. "A Critical Assessment of the Eclectic Theory of the Multinational Enterprise," Journal of International Business Studies, Palgrave Macmillan, vol. 22(3), pages 445-460, September.
    12. Erin Anderson & Hubert Gatignon, 1986. "Modes of Foreign Entry: A Transaction Cost Analysis and Propositions," Journal of International Business Studies, Palgrave Macmillan, vol. 17(3), pages 1-26, September.
    13. Calof, Jonathan L. & Beamish, Paul W., 1995. "Adapting to foreign markets: Explaining internationalization," International Business Review, Elsevier, Elsevier, vol. 4(2), pages 115-131, June.
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