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The Internet And Foreign Market Expansion By Firms

Author

Listed:
  • Petersen, Bent

    (Department of International Economics and Management, Copenhagen Business School)

  • Welch, Lawrence S.

    (Mt. Eliza Business School)

  • Liesch, Peter

    (University of Queensland)

Abstract

The Internet has the potential to improve the efficiency of market transactions. By use of the Internet companies can reduce their search costs significantly and increase their ability to respond flexible to new market opportunities as a result of reduced sunk costs. On the basis of internationalization theory and agency/transaction cost theory the paper examines the effects of the Internet on foreign market expansion by firms. These theoretical issues and possible effects on internationalization are illustrated through the presentation of three general predictions regarding possible outcomes. The predictions demonstrate that a range of foreign expansion effects of the Internet is likely: from limited impact to rapid, widespread global expansion in many cases. The Internet may contain a challenge to mainstream internationalization theory in regard to the role of knowledge: instead of acting as an initial constraint it may be a factor that propels firms into foreign market expansion.

Suggested Citation

  • Petersen, Bent & Welch, Lawrence S. & Liesch, Peter, 2002. "The Internet And Foreign Market Expansion By Firms," Working Papers 7-2002, Copenhagen Business School, Department of International Economics and Management.
    • Handle: RePEc:hhb:cbsint:2002-007
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    File URL: http://openarchive.cbs.dk/cbsweb/handle/10398/6565
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    References listed on IDEAS

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    Keywords

    Internet; Market transactions; Internationalization; market expansions;
    All these keywords.

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