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Transaction cost economics in international marketing: a review and suggestions for the future
Abstract
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.

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  • References (86)
  • Cited By (13)
John K. Ryans2
Estimated H-index: 2
(College of Business Administration),
David A. Griffith44
Estimated H-index: 44
(Saint Petersburg State University),
D. Steven White11
Estimated H-index: 11
(University of Massachusetts Amherst)
For over 40 years academicians and practitioners have debated the standardization versus adaptation of international marketing strategy. Despite the importance of, and tremendous interest in the topic, and the volume of scholarly activity this topic has generated, the debate remains unresolved. Why? Here, it is argued that the last 40 years of scholarly research has advanced without a strong underlying theoretical framework. The historical foundations of the standardization/adaptation perspectiv...
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Benjamin Gomes-Casseres8
Estimated H-index: 8
(Harvard University)
Abstract This paper explains how multinational enterprises (MNEs) select ownership structures for their foreign manufacturing subsidiaries. It extends the literature on the economics of the MNE and provides new statistical tests of its theoretical predictions. MNEs are found to prefer a joint venture with a host-country firm over a wholly owned subsidiary when: (I) the capabilities of the local firm complement those of the MNE; (2) the contributions of both firms are costlier to transfer contrac...
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Hubert Gatignon26
Estimated H-index: 26
(University of Pennsylvania),
Erin Anderson16
Estimated H-index: 16
(University of Pennsylvania)
Should a business function be vertically integrated? Increasingly, economists have acknowledged that this is the wrong question. The right question is to what degree a function should be integrated, whereby integration is a continuum anchored by the options of market and hierarchy (Williamson, 1985). Movement along the continuum from market contracting to unified governance is accompanied by an increased degree to which resources are placed at hazard. The firm is compensated for this by an incre...
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Yadong Luo63
Estimated H-index: 63
(University of Miami)
Building on economic and social exchange theories, this study develops an integrated model in which curtailing opportunism in international joint ventures (IJVs) requires four interrelated sets of suppressing forces: (1) contractual ordering (contractual inclusiveness and contractual obligatoriness); (2) structural ordering (managerial governance and equity captiveness); (3) relational ordering (interparty attachment and boundary-spanner ties); and (4) justice ordering (procedural justice and di...
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Matthew B. Myers15
Estimated H-index: 15
(University of Tennessee),
Michael Harvey34
Estimated H-index: 34
(University of Mississippi)
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Yigang Pan20
Estimated H-index: 20
(University of Hong Kong),
David K. Tse28
Estimated H-index: 28
(University of Hong Kong)
In this study, we propose and test a hierarchical model of market entry modes. Entry modes can first be viewed as equity-based versus non-equity-based. Within equity-based modes, the choice is between wholly owned operations and equity joint ventures, while within non-equity-based modes, the choice is between contractual agreements and export. Empirically, we demonstrate that there are factors that exert substantial influences at the equity versus non-equity level, but rather weak influences at ...
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1993 in Journal of Marketing [IF: 7.34]
David M. Szymanski13
Estimated H-index: 13
(College of Business Administration),
Sundar G. Bharadwaj21
Estimated H-index: 21
(Emory University),
P. Rajan Varadarajan30
Estimated H-index: 30
(College of Business Administration)
An issue debated frequently in the international marketing literature centers on whether a business should pursue a strategy that is standardized across national markets or adapted to individual national markets. Of the two aspects relating to standardization of marketing strategy across national markets-(1) standardization of the pattern of resource allocation across marketing mix variables integral to a business's marketing strategy and (2) standardization of the strategy content with respect ...
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Oliver Bürgel5
Estimated H-index: 5
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Gordon Murray18
Estimated H-index: 18
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Luai Jraisat4
Estimated H-index: 4
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Estimated H-index: 14
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Michael Bourlakis22
Estimated H-index: 22
(Brunel University London)
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George S. Spais5
Estimated H-index: 5
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Estimated H-index: 10
(University of Nicosia)
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David A. Griffith44
Estimated H-index: 44
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Hannah S. Lee4
Estimated H-index: 4
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Estimated H-index: 1
(Michigan State University)
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Purpose – The purpose of this paper is to explore the marketing “processes” of governing multiple export relationships under the theoretical framework of governance value analysis (GVA). Specifically, this work examines the internal exchange attributes of transaction-specific investments and psychic distance on the adaptation/standardization of relational behavior and detailed contracting and how process adaptation/standardization influences new product outcomes and jointly created value in the ...
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Steven H. Dahlquist1
Estimated H-index: 1
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David A. Griffith44
Estimated H-index: 44
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David A. Griffith44
Estimated H-index: 44
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Yanhui Zhao3
Estimated H-index: 3
(Michigan State University)
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 → relationship ...
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Lee Li9
Estimated H-index: 9
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Gongming Qian16
Estimated H-index: 16
(The Chinese University of Hong Kong),
Zhengming Qian2
Estimated H-index: 2
(Xinjiang University)
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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...
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Sebastian Ludorf (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 ...
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