Which export channels provide real options to SMEs?

Introduction

This marketing academic paper aims to explore the export channel choices of small and medium-sized enterprises (SMEs) and the potential for these choices to create real options.

The study investigates the impact of demand uncertainty and strategic flexibility on the selection of export channels, with a focus on the value-efficiency trade-off.

The study proposes three types of export channels:

1. Simple option channels: Involve using company personnel located in the exporter's home country to deal with export transactions with regular travel to the export market to meet clients.
2. Shared option channels: Involve using foreign or domestic intermediaries such as agents, joint ventures, or independent distributors.
3. Complex option channels: Involve establishing a wholly-owned sales subsidiary in the foreign country or using multiple export channels.

Paper Details

• Title: Which export channels provide real options to SMEs?
• Authors: E. Ipsmiller et al.
• Publishing Year: 2021
• Published in: Journal of World Business, 56, 101245

Literature Reviews

The literature review highlights the limited understanding of how SMEs make export channel decisions.

It discusses the use of non-SME-specific samples in past studies and the prevalence of simple binary classifications of export channel choices.

The review also emphasizes the application of transaction cost economics (TCE) theory in explaining export channel choices and the need to incorporate a real options perspective to address the value-efficiency trade-off.

Additionally, it introduces the concept of strategic flexibility as an important factor in export channel choice, emphasizing the role of prior exporting experience in creating strategic flexibility.

Conclusion

The paper's findings reveal that demand uncertainty has a significant positive effect on the selection of simple option export channels, while strategic flexibility negatively moderates this relationship.

The study also demonstrates that the preference for simple and shared option export channels is attenuated by the level of strategic flexibility an SME possesses.

However, the moderating effect of strategic flexibility is stronger for shared option export channels than for simple option export channels.

Suggestions for Enhancing Marketing Role

1. Consider Real Options: Understand the potential for export channel choices to create real options, especially in the face of demand uncertainty.
2. Prioritize Strategic Flexibility: Invest in building strategic flexibility through prior exporting experience to mitigate the impact of demand uncertainty on export channel choices.
3. Diversify Export Channels: Explore a mix of export channels that offer a balance between value creation and efficiency, considering the level of strategic flexibility.