The hidden costs of going global: insights from firms' entry into foreign markets

Alessandra Perri, Francesca Checchinato and Cinzia Colapinto ()

No 26, Working Papers from Venice School of Management - Department of Management, Università Ca' Foscari Venezia

Abstract: Recent literature on strategic decision-making highlights the role of hidden costs, i.e. costs that firms are not able to predict ex-ante (Larsen et al., 2012). This paper analyses the hidden costs of going global, i.e. unanticipated costs that emerge in the implementation of market entry strategies. Foreign market entry requires firms to assess the potential attractiveness of different locations, select an appropriate entry mode, and organize their international value chain. When taking such decisions, firms can make evaluation mistakes. We propose that cultural distance is one factor that generates Òblind spotsÓ in a firmÕs strategic analysis, thus affecting its ability to evaluate the actual challenges of entering foreign markets. Firms can offset distance-driven hidden costs by building international experience and relational capability.

Keywords: Hidden costs; estimation; internationalization; distance (search for similar items in EconPapers)
JEL-codes: M16 (search for similar items in EconPapers)
Pages: 11 pages
Date: 2013-11
New Economics Papers: this item is included in nep-cse and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://virgo.unive.it/wpideas/storage/2013wp26.pdf First version, 2013 (application/pdf)
Our link check indicates that this URL is bad, the error code is: 500 Can't connect to virgo.unive.it:80 (A connection attempt failed because the connected party did not properly respond after a period of time, or established connection failed because connected host has failed to respond.)

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:vnm:wpdman:62

Access Statistics for this paper

More papers in Working Papers from Venice School of Management - Department of Management, Università Ca' Foscari Venezia Contact information at EDIRC.
Bibliographic data for series maintained by Daria Arkhipova ().