Transaction cost economics in international marketing: a review and suggestions for the future

Abstract

Transaction cost economics (TCE) has received much attention in the international marketing literature over the past 25 years. Many key issues in international marketing have been examined through the lens of TCE, including entry mode choice, the governance of international distribution channels, propensity to franchise, international pricing control, and the governance of international buyer–supplier relationships. The author presents a review and analysis of 43 empirical TCE international marketing studies from 1987 to the present day. The results from this review and analysis indicate that the extant international marketing TCE studies demonstrate some support for the TCE propositions. In addition to these findings, the author also notes some key measurement issues, issues involving the dominance of U.S.-based studies, and some data equivalence issues. He builds on the results of the analysis to lay out important future research directions in the TCE international marketing domain.