Abstract
Learning and acquiring local market knowledge from foreign distributors are central to manufacturers’ export market performance. Drawing from the resource-based view, we propose that manufacturers need to develop stronger local market competence while simultaneously minimizing the costs of distributor opportunism in order to compete successfully in the export market. Cultural distance and other barriers, however, may hinder the development of local market competence for the manufacturer while contributing to the occurrence of distributor opportunism. In order to overcome these barriers, we examine the impact of three alternative forms of manufacturer governance – trust, knowledge sharing, and contract-based relationship – in export channels. Findings suggest that all three governance mechanisms contribute to enhancing the manufacturer's competence to exploit local market opportunity. However, of the three, trust seems to be the only effective way to curtail distributor opportunism.
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Notes
During initial analysis, we found the industry effects were not significant. Consequently, the data set was pooled for the final analysis.
An appendix detailing the source and operationalization of each construct is available upon request.
Thanks are due to one of the reviewers for this suggestion.
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We gratefully acknowledge the comments of JIBS Editor-in-Chief Professor Arie Y Lewin, Mike W Peng and anonymous JIBS reviewers.
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Accepted by Arie Y Lewin, Editor-in-Chief, 21 May 2006. This paper has been with the authors for three revisions.
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Wu, F., Sinkovics, R., Cavusgil, S. et al. Overcoming export manufacturers’ dilemma in international expansion. J Int Bus Stud 38, 283–302 (2007). https://doi.org/10.1057/palgrave.jibs.8400263
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DOI: https://doi.org/10.1057/palgrave.jibs.8400263