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The Internet And Foreign Market Expansion By Firms

Listed author(s):
  • 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):

    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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    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
    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
    Web page:

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    References listed on IDEAS
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    1. 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;Academy of International Business, vol. 9(1), pages 47-58, March.
    2. 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.
    3. 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.
    4. Sullivan, Jeremiah, 1999. "What are the functions of corporate home pages?," Journal of World Business, Elsevier, vol. 34(2), pages 193-210, July.
    5. Robert G Cooper & Elko J Kleinschmidt, 1985. "The Impact of Export Strategy on Export Sales Performance," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 16(1), pages 37-55, March.
    6. 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.
    7. J. Yannis Bakos, 1997. "Reducing Buyer Search Costs: Implications for Electronic Marketplaces," Management Science, INFORMS, vol. 43(12), pages 1676-1692, December.
    8. Reid, Stan, 1984. "Information acquisition and export entry decisions in small firms," Journal of Business Research, Elsevier, vol. 12(2), pages 141-157, June.
    9. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, Oxford University Press, vol. 84(3), pages 488-500.
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