Foreign market channel integration decisions of Canadian computer software firms
Firms that enter foreign markets must decide on the extent to which they will internalize their distribution channels. There is a continuum of choice, ranging from one extreme where the firm performs all marketing and distribution functions itself, to the other where intermediaries take title to goods for resale to foreign wholesalers or customers. The integration decision is a strategic one as the right balance between hierarchy and market can make the difference between success or failure in a foreign market. This paper reports the results of an empirical test of a transaction cost model of channel integration decisions among Canadian computer software exporters. The software industry provides a variety of experiences with respect to product customization and distribution channels within the same aggregate product category. Data on channel choice, channel volume, asset specificity, and external uncertainty were collected from Canadian computer software exporters via a mail survey. The results suggest that channel volume, asset specificity, volatility, and product customization have a significant effect on channel choice.
Volume (Year): 5 (1996)
Issue (Month): 1 (February)
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