TCE as a framework for IEE. Survival. Moral Hazard. . Conclusion. The Hybrid Relationship. The International Challenge. Information Asymmetry.           Introduction. Adverse Selection. Past Research. Transaction Cost Economics(TCE).

Export Agent is different from all the other three strategies. when entering the international environment. d) Strategic Alliances.      The best opportunity for growth is often overseas. b) Licensing. This article focuses completely on Foreign Export Agents. Transaction Cost Economics(TCE) plays a role of ideal lens. c) Joint Ventures. a) Export Agent. They are. Partnership includes HYBRID Entry Strategies. even for smaller entrepreneurial firms. . Small entrepreneurial organization finds more difficult potentially.

1) A review of past research into entrepreneurial entry strategies.The paper proceeds as follows. 5) Implication for the entrepreneur. 3) Problems that firms face in international markets. . and impacts of these problems in smaller businesses. which is closely related to TCE. 4) Agent theory. 2) Why firms are motivated to expand internationally.

. 1) Success factors. Researches are basically regarding the following. 3) variation in behaviour. 2) Motivating Factors.

g) Differing languages. d) poor infrastructure.  MNE have Strong n/w.International expansion involves risks which includes. a) Politically instability in target market expropriation. c) fluctuating exchange rates. h) Norms. e) host government regulations. and entrepreneur don’t have the same. i) Religion.  . b) Social unrest. j) Legal System.

. TCE provides a framework on how entrepreneur should structure their expansion efforts.  Problems in getting ally with other parties are. 1) Information Discrepancy. 2) Information Asymmetry.

   .It focuses on the structure for transactions between two parties. Asset Specificity – the two parties involved in the transaction each possess some attribute that makes them valuable to the other in regards to an international entry strategy.  Market governance structure – transaction in open market  Hierarchy governance structure – transaction within the firm Primary Assumptions People are opportunistic People are boundedly rational Asset specificity affects the nature of transaction.

TCE used in studying international business. Basic decision of choosing joint venture over FDI  Firm’s first entry into the country. Whether the MNE’s should directly enter the target market as wholly owned subsidiary or pursue some other entry strategy (Joint Venture.  Firm need to gain control of complementary inputs. licensing).  The cultural distance between the firm and target country is high  .

 Pure market entry.entrepreneurs directly contacts foreign buyers and transaction based on the prevailing market price.  Hybrid entry modes with special emphasis on foreign export agents. TCE model fails to examine in small entrepreneurial firms. . TCE as a framework for international expansion  Entrepreneur enter foreign markets by pure market and hierarchy (FDI) continuum.

 Entrepreneur assumes that they have access to the appropriate customers in target market.pure hierarchy .  Short term . Using a Export agent.  Hierarchy method is more suitable for small size entrepreneurs. which is very tenuous. Minimizes costs and threat of opportunities.  Small entrepreneurial firms use the hybrid entry end  Longer perspective .

. Proposition 3 : All else equal. Proposition 2 : All else equal. opportunistic behavior on the part of either party is greater in an entrepreneur / export agent relationship than a MNE / export agent relationship. a hybrid economic transaction relationship between parties headquartered in different countries is established when the parties have complementary resources that have an intermediate level of specificity. the export agent’s greater bargaining position shifts more transaction costs to the entrepreneur.Proposition 1: All else equal .

the prevalence of misrepresentation by the agents in international hybrid relationships is greater when agents are dealing with entrepreneurial firms versus established MNEs.Proposition 4a :All else equal . the prevalence of misrepresentation by the entrepreneur in international hybrid relationships is greater among entrepreneurial firms going international than among established MNEs. Proposition 4b :All else equal . .

Proposition 5b  All else equal . entrepreneurial firms entering international hybrid relationships with export agents are more inclined to minimize ex ante costs than are MNEs.Proposition 5a:  All else equal . export agents entering international hybrid relationships with entrepreneurs are more inclined to incur ex ante costs to protect against moral hazard than when dealing with established MNEs. .

Proposition 6  The prevalence of outcome based contracts in international hybrid relationships is greater among entrepreneurial firms going international than among established MNEs Proposition 7  The prevalence of behavior based contracts in international hybrid relationships is greater among entrepreneurial firms going international than among established MNEs .

most contracts will include bonding stipulations which reconcile a behaviororiented contract with an outcome-oriented contract.Proposition 8  Since entrepreneurs and agents have different contract desires . .

Sign up to vote on this title
UsefulNot useful