E-commerce and Export Performance By Munib Karavdic

Four theoretical perspectives have emerged that explain the relationship between export marketing strategy and export performance influenced by e-commerce: the theory of internationalisation (TI), the industrial organisation (IO) theory, the resource-based view (RBV), and transaction cost economics (TCE). For each of these perspectives, the main theoretical approach is described, the relevant sources related to exporting and e-commerce business are exposed, and the theoretical implications of the emergence of e-commerce in export business are discussed.

2.2.1 Theory of internationalisation (TI)

The proposition that firms typically adapt to international marketing via an evolutionary approach has much support in the literature. Two models relevant to this study are the Uppsala and the Innovation models.

The Uppsala Model describes how firms experience several logical stages of increasing international commitment through acquisition, integration and use of foreign market knowledge (Johanson and Vahlne 1977). This model explores why and how firms increase international commitment as they gain experience. The process begins with consideration of: (a) market knowledge possessed by the firm about specific foreign markets and (b) market commitment of resources to those markets (Knight and Cavusgil 1996). The Uppsala Model assumes that learning about foreign markets occurs primarily through personal, on-site experience, that management will not commit higher levels of resources to the market until it has acquired an increased level of experiential knowledge, that such learning is time-consuming, and that, as a result, internationalisation evolves stepwise at a relatively slow pace (Johanson and Finn 1975; Johanson and Vahlne 1977). Therefore, this model assumes that companies target markets they understand best (Johanson and Vahlne 1977, 1990).

The Innovation Model focuses upon the learning sequence involved in making innovation decisions (Bilkey and Tesar 1977; Czinkota 1982; Reid 1982; Andersen 1993). The model suggests that internationalisation results from a series of management innovations that occur within the firm. It introduces the notion of an experience curve by suggesting that each stage of internationalisation represents more experience and international involvement than at lower levels. Exporting is usually the first major step to foreign expansion. Furthermore, internationalisation is seen as a gradual process, progressing in incremental stages over a relatively long period of time. Each stage reflects increasing commitments of resources and managerial talent (Knight and Cavusgil 1996).