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Incidents of Gray Market Activity Among U.S. Exporters: Occurrences, Characteristics, and Consequences

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  • Matthew B Myers

    (University of Oklahoma)

Abstract

Each year, the value of gray market products sold throughout the world runs into the billions of dollars. Past research has stated that exporters of manufactured goods can hardly afford to ignore the possibility of this phenomenon due to the often severe effects on their sales volume, margins, and relationships with distributors and end-users. Through a survey of export managers of manufacturing firms, coupled with a series of qualitative interviews, this study investigates how organizational specific, control specific, and market specific factors drive gray market activity, and in turn explores the effects of unauthorized distribution on export performance. Several factors are shown to evaluate the potential of unauthorized distribution in their export markets, namely the centralization of decision making, the degree to which the product is standardized, channel integration, and channel control. International experience, market volatility, and the number of markets served were found to have no effect on gray market activity, this contrary to traditional thinking. Furthermore, the effects of gray market activity on strategic versus economic performance is shown to be significantly different. Each of these issues is discussed in detail, along with the implications for export managers.© 1999 JIBS. Journal of International Business Studies (1999) 30, 105–126

Suggested Citation

  • Matthew B Myers, 1999. "Incidents of Gray Market Activity Among U.S. Exporters: Occurrences, Characteristics, and Consequences," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 30(1), pages 105-126, March.
    • Handle: RePEc:pal:jintbs:v:30:y:1999:i:1:p:105-126
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    Citations

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    Cited by:

    1. Sousa, Carlos M.P. & Bradley, Frank, 2008. "Antecedents of international pricing adaptation and export performance," Journal of World Business, Elsevier, vol. 43(3), pages 307-320, July.
    2. Myers, Matthew B. & Droge, Cornelia & Cheung, Mee Shew, 2007. "The fit of home to foreign market environment: An exploratory study of the relationship of congruence to performance," Journal of World Business, Elsevier, vol. 42(2), pages 170-183, June.
    3. Zhongju Zhang & Juan Feng, 2017. "Price of Identical Product with Gray Market Sales: An Analytical Model and Empirical Analysis," Information Systems Research, INFORMS, vol. 28(2), pages 397-412, June.
    4. Qun Tan & Carlos M. P. Sousa, 2013. "International Marketing Standardization," Management International Review, Springer, vol. 53(5), pages 711-739, October.
    5. Foad Iravani & Hamed Mamani & Emisa Nategh, 2020. "External Reference Pricing and Parallel Imports of Pharmaceuticals: A Policy Comparison," Production and Operations Management, Production and Operations Management Society, vol. 29(12), pages 2716-2735, December.
    6. Stavroula Spyropoulou & Constantine S. Katsikeas & Dionysis Skarmeas & Neil A. Morgan, 2018. "Strategic goal accomplishment in export ventures: the role of capabilities, knowledge, and environment," Journal of the Academy of Marketing Science, Springer, vol. 46(1), pages 109-129, January.
    7. Romana L. Autrey & Francesco Bova & David A. Soberman, 2014. "Organizational Structure and Gray Markets," Marketing Science, INFORMS, vol. 33(6), pages 849-870, November.
    8. Kim, Bosung & Park, Kun Soo, 2016. "Organizational structure of a global supply chain in the presence of a gray market: Information asymmetry and valuation difference," International Journal of Production Economics, Elsevier, vol. 175(C), pages 71-80.
    9. Xueying Liu & Amit Pazgal, 2021. "The Impact of Gray Markets on Product Quality and Profitability," Customer Needs and Solutions, Springer;Institute for Sustainable Innovation and Growth (iSIG), vol. 7(3), pages 62-73, October.
    10. Xueying Liu & Amit Pazgal, 2020. "The Impact of Gray Markets on Product Quality and Profitability," Customer Needs and Solutions, Springer;Institute for Sustainable Innovation and Growth (iSIG), vol. 7(3), pages 62-73, October.
    11. Maria Alejandra Gonzalez-Perez & Eva Cristina Manotas & Luciano Ciravegna, 2016. "International SMEs from emerging markets—Insights from the Colombian textile and apparel industry," Journal of International Entrepreneurship, Springer, vol. 14(1), pages 9-31, March.
    12. Evelyn O. Smith & Jeffrey D. Shulman, 2022. "Product diversion by vertically differentiated firms," Production and Operations Management, Production and Operations Management Society, vol. 31(5), pages 1928-1939, May.
    13. Iravani, Foad & Dasu, Sriram & Ahmadi, Reza, 2016. "Beyond price mechanisms: How much can service help manage the competition from gray markets?," European Journal of Operational Research, Elsevier, vol. 252(3), pages 789-800.
    14. Nuno Calheiros-Lobo & José Vasconcelos Ferreira & Manuel Au-Yong-Oliveira, 2023. "SME Internationalization and Export Performance: A Systematic Review with Bibliometric Analysis," Sustainability, MDPI, vol. 15(11), pages 1-36, May.
    15. Wang, Yingjia & Lin, Jiaxin & Choi, Tsan-Ming, 2020. "Gray market and counterfeiting in supply chains: A review of the operations literature and implications to luxury industries," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 133(C).
    16. Myers, Matthew B. & Griffith, David A., 1999. "Strategies for combating gray market activity," Business Horizons, Elsevier, vol. 42(6), pages 2-8.
    17. Zhao, Kexin & Zhao, Xia & Deng, Jing, 2016. "An Empirical Investigation of Online Gray Markets," Journal of Retailing, Elsevier, vol. 92(4), pages 397-410.

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