Paths to foreign markets: Does distance to market affect firm internationalisation?

Paul D. Ellis

International Business Review, 2007, vol. 16, issue 5, 573-593

Abstract: An idea widely shared among international business scholars, economists and geographers is that geographic, cultural and psychic distance to market affects firm internationalisation in a number of ways. However, evidence for this broad proposition remains inconclusive. This study provides a comprehensive assessment of four separate hypotheses pertaining to the location of markets, the sequence of market entry, the rate of international expansion, and the relationship between sequentially-linked markets. In contrast with previous studies, the analysis is based on a large sample of non-repetitive foreign market entries (n=1132) made by diverse exporters in dissimilar locations within a single country (China). Market entry data thus exhibit substantial variation on the constructs of interest. The results reveal virtually no support for three traditional hypotheses linking distance to market with the sequence of markets entered and the rate of foreign expansion. This study challenges the long-held notion that there is a simple link between distance and market entry sequence. However, this study provides arguably the first demonstration of the "near-market effect" in the context of low-risk entry modes such as exporting. Specifically, the results show that consecutive export locations tend to be culturally related suggesting that exporters are able to transfer learning between similar markets.

Keywords: Internationalisation; Foreign; market; entry; Geography; Psychic; distance; China (search for similar items in EconPapers)
Date: 2007
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (30)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0969593107000790
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:iburev:v:16:y:2007:i:5:p:573-593

Ordering information: This journal article can be ordered from
http://www.elsevier.com/wps/find/journaldescription.cws_home/133/bibliographic
http://www.elsevier. ... me/133/bibliographic

Access Statistics for this article

International Business Review is currently edited by P. Ghauri

More articles in International Business Review from Elsevier
Bibliographic data for series maintained by Catherine Liu ().