Explaining international retailers' market entry mode strategy: internalization theory, agency theory and the importance of information asymmetry

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Abstract

Research on the internationalization of retailing has focused on descriptive and empirical studies centring on issues such as motivations for retail internationalization and individual company experiences of the internationalization process. One particular aspect of the retail internationalization process that has remained relatively underresearched, and consequently under theorized, is market entry mode strategy. Furthermore, with a few notable exceptions, potentially interesting research from the economics of international production and corporate finance literatures has been virtually ignored in the international retailing domain. This paper represents an initial step in rectifying these deficiencies by exploring some of the issues associated with the economics-based internalization and agency theories, in the context of international retailers' market entry mode strategy. By combining market transaction costs (associated with internalization theory), together with information and monitoring costs (associated with agency theory), and thus highlighting the interlinking issue of information asymmetry, a more coherent basis is established for analysing international retailers' entry mode choice decision.
LanguageEnglish
Pages379-402
Number of pages24
JournalInternational Review of Retail, Distribution and Consumer Research
Volume9
Issue number4
DOIs
Publication statusPublished - 1999

Fingerprint

Internationalization process
Retail internationalization
Economics
Asymmetry of information
Market entry mode
Retailers
Agency theory
Internalization theory
Information costs
Entry mode choice
Empirical study
Monitoring costs
Internationalization
Transaction costs
International retailing
Retailing
Corporate finance

Keywords

  • international retailers
  • information asymmetry
  • market entry mode strategy
  • internalization theory
  • agency theory
  • retail internationalization

Cite this

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abstract = "Research on the internationalization of retailing has focused on descriptive and empirical studies centring on issues such as motivations for retail internationalization and individual company experiences of the internationalization process. One particular aspect of the retail internationalization process that has remained relatively underresearched, and consequently under theorized, is market entry mode strategy. Furthermore, with a few notable exceptions, potentially interesting research from the economics of international production and corporate finance literatures has been virtually ignored in the international retailing domain. This paper represents an initial step in rectifying these deficiencies by exploring some of the issues associated with the economics-based internalization and agency theories, in the context of international retailers' market entry mode strategy. By combining market transaction costs (associated with internalization theory), together with information and monitoring costs (associated with agency theory), and thus highlighting the interlinking issue of information asymmetry, a more coherent basis is established for analysing international retailers' entry mode choice decision.",
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