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Export mode portfolio: transaction cost economics and real options perspectives

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thesis
posted on 19.06.2018, 15:34 by Nahid M. Yazdani
Exporting plays an imperative role in many firms growth and survival. For that reason, a profound understanding of export operations is of interest to researchers as well as practitioners. Choosing the export mode is one of the most important strategic decisions a firm makes when exporting to its foreign markets. This decision may affect the firm s resource allocations and shape the possibility of future foreign expansion, and thus has potential performance implications. This study acknowledges that export mode choices should contribute to the firm success initially and on a continuous basis. Hence, it recognises the interlinked nature of export mode operations, and, for the first time, adapts a holistic view on export operation modes. Introducing the portfolio logic, this study investigates antecedents of the export mode portfolio and its performance implications. Two different theoretical approaches of transaction cost economics (TCE) and real options (RO) were used to distinguish different possible export mode portfolios of a firm. The study model is empirically tested using data from 250 Chinese export firms. From the TCE perspective, the finding suggests that firms' levels of investment uncertainty and export marketing capability are the main drivers of an internalised export mode portfolio. From the RO theory viewpoint, on the other hand, the result indicates that firms' levels of endogenous uncertainties (i.e. cultural uncertainty and technological uncertainty) are positively related to the intensity of use of Joint-Investment export modes in the portfolio of firms. In ddition, as expected, the greater the preponderance of exogenous uncertainties (i.e. investment uncertainty and demand uncertainty) the higher the proportion of No-Investment export modes in the portfolio of the firm. Further analysis of firms' export performance reveals that firms shaping their export mode portfolios according to the predictions of real options out-perform firms that shape their export mode portfolio based on TCE considerations. More specifically, firms that reduce their endogenous uncertainty, by engaging more in Joint- Investment modes of export operation across their portfolio, benefit from higher profit performance. The new model developed in this study provides a tool that enables scholars to give better advice to exporters on how they can structure their export mode portfolio for enhanced export profit.

History

School

  • Business and Economics

Department

  • Business

Publisher

© Nahid Yazdani

Publisher statement

This work is made available according to the conditions of the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International (CC BY-NC-ND 4.0) licence. Full details of this licence are available at: https://creativecommons.org/licenses/by-nc-nd/4.0/

Publication date

2017

Notes

A Doctoral Thesis. Submitted in partial fulfilment of the requirements for the award of Doctor of Philosophy of Loughborough University.

Language

en