۱- Introduction

۲- Literature review and hypotheses

۳- Methodology

۴- Results

۵- Conclusions and discussions

۶- Limitations

References

Abstract

This study uses an organizational change perspective to analyze firms’ export market selection (EMS) to adapt to home country market pressures. We argue that firms’ strategic objectives influence whether they will enter institutionally proximal or distal markets. A model with two curvilinear (U-shaped and inverted U-shaped) relationships is found by testing 1940 Taiwanese export firms based on two official datasets. The model shows that firms are more likely to increase their exports to institutionally proximal markets and to decrease their exports to institutionally distal markets if they have an increasing but still controllable degree of competitive and marketing pressures in the home country. This response represents an incremental change by exporting firms. However, firms increase their exports to institutionally distal markets while decreasing their exports to institutionally proximal markets if they have an excessively increasing degree of competitive and marketing pressures in the home country. This response represents a radical change by exporting firms. We find that export firms’ strategic objectives in choosing different organizational change styles (incremental or radical) are highly related to this trade-off in their EMS decision making.

Introduction

For native firms in a small country, exporting is an easy non-entry mode to quickly pursue foreign markets (Krammer, Strange, & Lashitew, 2018). Firms can use business-to-business (B2B) arrangements (e.g., their outsourcing supply chains and intermediary channels) to export, or they can serve only B2B foreign customers (Lindsay, Rod, & Ashill, 2017; Narula, 2002; Peng, Wang, & Jiang, 2008). In both cases, export market selection (EMS) is a critical marketing issue for the firms (Brewer, 2007; He, Lin, & Wei, 2016). Many studies have examined the impact of differences in institutional profiles between the home and host countries, i.e., the impact of institutional distance on firms’ EMS decision making (Hernández & Nieto, 2015; Magnani, Zucchella, & Floriani, 2018). Institutional distance can raise strategic concerns regarding the liability of foreignness and transaction costs that create barriers to exporting to an unknown foreign market (Hutzschenreuter, Kleindienst, & Lange, 2016). While most studies emphasize that firms should accumulate the necessary resources to satisfy the customized demands of markets at different institutional distances (Papadopoulos & Martin, 2011), few studies analyze the strategic meaning of institutional distance for firms’ EMS decisionmaking from the perspective of B2B marketing management (Beugelsdijk, Kostova, Kunst, Spasafora, & van Essen, 2018). This study argues that the meaning of institutional distance for exporting firms should be analyzed by understanding how the firms’ managers “subjectively” evaluate the institutional distance of different markets, which will influence the firms’ strategic objective in choosing different export markets (Williams & Grégoire, 2015).