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Why Service and Manufacturing Entry Mode Choices Differ: The Influence of Transaction Cost Factors, Risk and Trust*
Author(s) -
Brouthers Keith D.,
Brouthers Lance Eliot
Publication year - 2003
Publication title -
journal of management studies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 4.398
H-Index - 184
eISSN - 1467-6486
pISSN - 0022-2380
DOI - 10.1111/1467-6486.00376
Subject(s) - transaction cost , asset specificity , business , mode (computer interface) , service (business) , investment (military) , asset (computer security) , database transaction , industrial organization , marketing , finance , computer science , computer security , politics , political science , law , programming language , operating system
In this study, we suggest that disparities between service and manufacturing firms’ international entry mode choices can be explained by differences in their reaction to transaction cost based variables and by the influence of risk and trust propensity. We find that: (1) due to the investment intensive nature of manufacturing, environmental uncertainties and risk propensity influence manufacturers’ mode choices; while (2) behavioural uncertainties, trust propensity and asset specificity influence service providers’ entry mode choices because of the people‐intensive nature of services. Implications for future research are discussed.