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Transaction Cost Economics in International Marketing: A Review and Suggestions for the Future

Published on Jun 1, 2012in Journal of International Marketing 3.38
· DOI :10.1509/jim.11.0119
Steven H. Seggie10
Estimated H-index: 10
(Özyeğin University)
Abstract Transaction cost economics (TCE) has received much attention in the international marketing literature over the past 25 years. Many key issues in international marketing have been examined through the lens of TCE, including entry mode choice, the governance of international distribution channels, propensity to franchise, international pricing control, and the governance of international buyer–supplier relationships. The author presents a review and analysis of 43 empirical TCE international marketing studies from 1987 to the present day. The results from this review and analysis indicate that the extant international marketing TCE studies demonstrate some support for the TCE propositions. In addition to these findings, the author also notes some key measurement issues, issues involving the dominance of U.S.-based studies, and some data equivalence issues. He builds on the results of the analysis to lay out important future research directions in the TCE international marketing domain.
  • References (86)
  • Citations (13)
Published on Jan 1, 2012in Journal of International Business Studies 7.72
O. Schenkar44
Estimated H-index: 44
(Max M. Fisher College of Business)
My 2001 article provided a critical review of one of the most popular constructs in international business, and in the management and business literature as a whole, namely cultural distance. It listed various illusions, implicit yet unsubstantiated and refutable assumptions that underpinned a construct set to capture the essence of cultural differences. The paper questioned the validity of the measure; the resultant findings obtained in such international business applications as foreign direct...
86 Citations Source Cite
Published on Jan 1, 2012in Journal of International Business Studies 7.72
Srilata Zaheer27
Estimated H-index: 27
(UMN: University of Minnesota),
Margaret Spring Schomaker3
Estimated H-index: 3
(Laval University),
Lilach Nachum22
Estimated H-index: 22
(Baruch College)
In this commentary we build on Shenkar's (2001) award-winning critique of cultural distance, arguing that most distance constructs, in fact, suffer the same flaws because they oversimplify the relationship between countries, overlook their subjective and context-specific nature, and pay insufficient attention to the mechanisms through which distance operates. The idea of distance, however, has intrinsic value. Moreover, its considerable appeal and undeniable effectiveness have made it a well-ent...
195 Citations Source Cite
Published on Dec 1, 2010in Management International Review 2.69
Mehmet Demirbag25
Estimated H-index: 25
(University of Sheffield),
Ekrem Tatoglu33
Estimated H-index: 33
(BAU: Bahçeşehir University),
Keith W. Glaister31
Estimated H-index: 31
(University of Sheffield)
This paper considers the determinants of foreign affiliate structure in the context of foreign equity ventures in Turkey. Institutional variables and transaction costs variables are examined as determinants of choice between wholly owned subsidiary, dyadic joint venture and multi-partner joint venture. The findings support the majority of the hypotheses. We find that research and development (R&D) intensity, cultural distance, location of affiliate, affiliate size, political risk and corruption ...
23 Citations Source Cite
Published on Jun 1, 2010in Journal of International Business Studies 7.72
Kevin Zheng Zhou34
Estimated H-index: 34
(HKU: University of Hong Kong),
Laura Poppo19
Estimated H-index: 19
(KU: University of Kansas)
Building on institutional and transaction cost economics, this article proposes that legal enforceability increases the use of contract over relational reliability (e.g., beliefs that the other party acts in a non-opportunistic manner) to safeguard market exchanges characterized by non-trivial hazards. The results of 399 buyer–supplier exchanges in China show that: (1) when managers perceive that the legal system can protect their firm's interests, they tend to use explicit contracts rather than...
185 Citations Source Cite
Published on May 1, 2010in Journal of International Business Studies 7.72
Preet S. Aulakh24
Estimated H-index: 24
(York University),
Marshall S. Jiang7
Estimated H-index: 7
(Brock University),
Yigang Pan24
Estimated H-index: 24
(York University)
As firms increasingly use licensing to exploit knowledge-based assets in global technology markets, appropriate structuring of these agreements has become an important line of research inquiry. One area that has received less attention is the nature of rights granted in inter-firm licensing relationships, although it is an important clause that has implications for profit generation from licensing of proprietary assets. Conceptualizing licensing rights in terms of number of licenses granted and ...
30 Citations Source Cite
Published on Apr 1, 2010in Journal of the Academy of Marketing Science 9.36
Ning Li6
Estimated H-index: 6
(GMU: George Mason University),
William Boulding23
Estimated H-index: 23
(Duke University),
Richard Staelin44
Estimated H-index: 44
(Duke University)
Drawing from transaction cost economics (TCE), the knowledge-based view (KBV), and real options theory (ROT), we propose that the general alliance experience of alliance partner firms moderates the impact of market uncertainty and alliance-specific uncertainty on the benefits and costs of the two marketing alliance governance modes, i.e., non-equity alliances and joint ventures. Based on our systematic study of 18,616 marketing alliances occurring in 48 industries across 164 countries between 19...
54 Citations Source Cite
Published on Jul 1, 2009in Journal of World Business 5.79
David A. Griffith44
Estimated H-index: 44
(MSU: Michigan State University),
Nukhet Harmancioglu13
Estimated H-index: 13
(Koç University),
Cornelia Droge52
Estimated H-index: 52
(MSU: Michigan State University)
This study addresses how buyers organize their offshore outsourcing new product development relationships. Building on transaction cost economics and resource dependence theories, we propose a model of the influence of key new product development offshore outsourcing factors on two important buyers' governance decisions (i.e., supply concentration and degree of supplier involvement). The antecedents, drawn from the marketing, management, and international business literatures, include: three sou...
52 Citations Source Cite
Published on Apr 1, 2009in Journal of International Business Studies 7.72
Jonas F. Puck15
Estimated H-index: 15
(FAU: University of Erlangen-Nuremberg),
Dirk Holtbrügge19
Estimated H-index: 19
(FAU: University of Erlangen-Nuremberg),
Alexander T. Mohr15
Estimated H-index: 15
(University of Bradford)
While there is a vast amount of research on firms’ choice of ownership form when entering a foreign market, little attention has been paid to changes in ownership forms of operation abroad after initial entry. Using transaction cost economics and institutional theory we identify a number of factors that may help to explain the likelihood of foreign firms’ converting their joint venture with a local firm into a wholly owned subsidiary. We formulate a number of hypotheses and test them against dat...
116 Citations Source Cite
Published on Dec 1, 2008in Business and Politics
Alfred A. Marcus23
Estimated H-index: 23
Mazhar Islam3
Estimated H-index: 3
(UMN: University of Minnesota),
John Moloney1
Estimated H-index: 1
(UMN: University of Minnesota)
To ascertain whether youth bulges are related to violent conflict and whether violent conflict falls off when youth bulges are followed by busts, we analyzed data from 1998-2005 covering 127 nations. Controlling for variables representing such factors as socio-development, macroeconomics, technology advancement, government capacity, and geo-politics, we find that youth bulges are related to violent conflict, but when youth bulges are followed by busts violent conflict grows rather than diminishe...
7 Citations Source Cite
Published on Sep 1, 2008in Journal of International Business Studies 7.72
G. Tomas M. Hult60
Estimated H-index: 60
(SPbU: Saint Petersburg State University),
David J. Ketchen54
Estimated H-index: 54
(AU: Auburn University)
+ 6 AuthorsS. Tamer Cavusgil60
Estimated H-index: 60
(SPbU: Saint Petersburg State University)
Data equivalence refers to the extent to which the elements of a research design have the same meaning, and can be applied in the same way, in different cultural contexts. Failure to establish data equivalence in cross-cultural studies may bias empirical results and theoretical inferences. Although several authors have encouraged researchers to ensure high levels of data equivalence, no study has assessed the status of the field in relation to compliance with data equivalence standards. Accordin...
185 Citations Source Cite
Cited By13
Published on Oct 26, 2017
Guillaume Chanson1
Estimated H-index: 1
(University of Paris)
Purpose Through the literature, the effect of macro-environment on onshore outsourcing decisions appears rather unexplored, despite empirical evidence. The purpose of this paper is to address this gap through an extension of Transaction Cost Economics (TCE) (the main theory of domestic outsourcing). Design/methodology/approach This paper develops a framework based on a literature review. It applies this body of knowledge on a new question and provides detailed illustrations (with primary and sec...
1 Citations Source Cite
Published on Aug 1, 2017in Industrial Marketing Management 4.78
Jeanine Chang1
Estimated H-index: 1
(SZU: Shenzhen University)
Abstract Drawing on marketing and management literature, this study investigates integration mechanisms between channel members. Specifically, the research framework is built upon the buyer-supplier gray-box integration approach, knowledge-based view, and agency theory. This study identifies and compares the effects of two gray-box integration mechanisms, namely supplier task involvement and joint planning, on two kinds of knowledge acquisition. I find that both supplier task involvement and joi...
9 Citations Source Cite
Published on Jun 19, 2017in Journal of Strategic Marketing
Michael Schellenberg1
Estimated H-index: 1
Michael Harker8
Estimated H-index: 8
Aliakbar Jafari12
Estimated H-index: 12
AbstractThis wholly conceptual paper examines the breadth of literature on Market Entry Modes, a fundamentally important and strategic issue for managers in growing organisations of all sizes in all sectors. Key concepts and terms are defined and then a set of key Internationalisation Theories are systematically and critically reviewed, these being: the Transaction Cost Approach, Institutional Theory, the Eclectic Paradigm, the Uppsala Internationalisation Model and the Resource Based View. The ...
2 Citations Source Cite
Published on May 9, 2016in European Journal of Marketing 1.72
Jesper Wulff2
Estimated H-index: 2
Purpose The purpose of this paper is to systematically assess the empirical support for central relationships in the empirical literature on foreign market entry mode. The reviewing method overcomes methodological limitations in past reviews. Design/methodology/approach This review provides a systematic assessment of empirical support through a simple quantitative procedure using transparent criteria for article selection. In total, 1,217 statistical tests from 119 studies published in 44 differ...
1 Citations Source Cite
George S. Spais5
Estimated H-index: 5
(Hellenic Open University),
Hans Ruediger Kaufmann12
Estimated H-index: 12
(University of Nicosia)
The starting points of this initial exploratory study are two research questions: (1) could marketing relationships in international marketing channels be predicted by international marketing managers’ behavior reflected by “honorable merchants’” key concepts (ethics and trust) and experiential learning key concepts such as capability and competence?; and (2) can we measure the progress of this research theme in the international marketing literature and understand the nature of this phenomenon?...
1 Citations Source Cite
Published on Jan 1, 2016
Sebastian Ludorf (GAU: University of Göttingen)
Transaction cost economics (TCE) is one of the most dominant theories in contemporary business-to-business research and is frequently used in marketing. However, the high amount of academic attention has also led to some criticisms. This paper focuses primarily on the missing dimension of time and the neglected social embeddedness of transactions. It presents an approach to resolve these criticisms by integrating social capital as a new variable into TCE. For this purpose, a dynamic transaction ...
Source Cite
Published on Sep 1, 2015in Journal of International Marketing 3.38
David A. Griffith44
Estimated H-index: 44
(Lehigh University),
Yanhui Zhao1
Estimated H-index: 1
(MSU: Michigan State University)
Abstract This work examines contractual governance in international buyer–supplier relationships by investigating the linkages between contract specificity, contract violation, and relationship performance as well as the roles of contract monitoring and a country's institutional factors (i.e., country business risk and country globalization). The findings, based on a survey of international buyer–supplier relationships, provide new insights into a contract specificity → contract violation → rela...
31 Citations Source Cite
Published on Sep 1, 2014in Journal of International Marketing 3.38
Lee Li11
Estimated H-index: 11
(York University),
Gongming Qian17
Estimated H-index: 17
(CUHK: The Chinese University of Hong Kong),
Zhengming Qian2
Estimated H-index: 2
(XJU: Xinjiang University)
Abstract This article explores two unresolved issues in the international business literature. First, it is not clear why high-tech firms should standardize their product strategies across countries. Second, the rationale for high-tech firms to forge international strategic alliances (ISAs) is unknown. Drawing on organizational ecology and structural inertia theories, this study proposes that the interactions between a firm's structural inertia and environmental hostility are hazardous to firm p...
11 Citations Source Cite