International exchange partner identification : methods, antecedents and consequences

Abstract

The internationalization of the firm is the cumulative result of the firm's entry into, and penetration, of foreign markets. The identification of international exchange partners foreign agents, distributors, joint venture partners is critical in this process. An extensive review of the international business, international marketing, and international entrepreneurship literatures reveals several knowledge gaps surrounding partner search. These gaps provide the rationale for the current study. By drawing from managerial decision-making and information economics theories, I develop a number of hypotheses pertaining to the antecedents and outcomes of various methods for international exchange partner identification. Based on findings from a pilot study, I identify and define four mutually exclusive methods for partner search; tie-based search, fair-based search, advertising-based search, and formal search. Hypotheses are tested using primary data pertaining to 546 partner searches made by 222 Chinese textile-makers. The results of this study reveal that social ties are more likely to be used by entrepreneurs searching for partners in political risky markets; trade fairs are preferred by uncertainty avoiding entrepreneurs; and advertising-based search is more likely to be adopted by inexperienced entrepreneurs. The results further reveal that trade fair-based searches lead to exchanges characterized by better sales growth, while exchanges arising from tie-based search tend to be characterized by lower levels of linguistic distance and higher levels of trust and satisfaction. The substantive significance of the study's findings is interpreted with reference to the underlying effect size estimates and a number of implications for managers and researchers are identified. Collectively the results of this study provide rich and original insights into an important, but previously under-studied part of the larger internationalization process.