A model for the degree of integration of international channel structures : the case of exporters from newly industrialised countries (NICs) with special reference to Taiwan

• Main Author: Ming-Sung Cheng, Julian
• Published: Kingston University 1999
• Subjects: 382; Business and management studies
• Online Access: https://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.285930

This research attempted to contribute to the development of knowledge within the domain of international channels of distribution and especially the degree of integration of such channel structures. Through an intensive literature review, four main theories have been identified as potential bases for the study of the subject matter, these are the functional approach, IPA, the financial consideration approach and TCA. Of these four theories, the author argues that, currently, TCA occupies a dominant position within related academic research. Consequently, TCA has been utilised as the theoretical basis of the study, the main aim of which has been the development and testing of a proposed model for the design of international channel structures for newly industrialised countries. Following an extensive review of relevant material, the model developed by Bello and Lohtia (1995) has been identified as offering a robust and systematic insight into the application of the TCA propositions into the subject matter. Nevertheless, the author has identified a number of limitations associated with Bello and Lohtia's model, and consequently, on the strength of related literature, has proposed a modified/extended model. In order to test the modified extended model, appropriate research constructs were operationalised. Through a self-completion questionnaire, the proposed model was applied/ tested in the IT -related sector of the Taiwanese economy. Sufficient data were collected and advanced multivariate techniques (in particular, structural equation modelling) were/utilised. Examination of the model fit led to a revised model. The pathways/ causal relationships within the revised proposed model can be categorised under four main types: 1. Constructs as second-order factors: H[sub]2[sub]a : "Transaction-specific Assets' is a second-order factor of "Human TSA", "Product TSA", "Physical TSA", "Dedicated TSA" and "Brand Name TSA". Partially supported H[sub]5[sub]a : 'Business Strengths of Principals' is a second-order factor of "Firm's Size", "Firm's Exporting Experience", "Firm's Financial Ability", "Familiarity with Foreign Markets" and "Firm's Core Business". Tentatively supported 2. Hypothesised pathways/causal relationships related to the decisions regarding 'integration of international channel structures: 'H[sub]1: The higher the 'Transaction Frequency', the greater the likelihood to integrate international channel structures. Supported H[sub]2: The higher the 'Transaction-specific Assets', the greater the likelihood to integrate international channel structures. Supported H[sub]3[sub]a: HJ. : The lower the degree of 'Environmental Diversity', the greater the likelihood to integrate international channel structures. Opposite H[sub]3[sub]b: The greater the degree of 'Environmental Volatility', the greater the likelihood to integrate international channel structures. Not supported H[sub]4: The lower the 'Channel Production Costs', the greater the likelihood to integrate international channel structures. Not supported H[sub]5[sub]a: The greater the magnitude of 'Business Strengths of Principals', the greater the likelihood to integrate international channel structures. Supported 3. Secondary hypotheses relevant to 'Business Strengths of Principals': H[sub]6[sub]a : The higher the degree of 'Environmental Diversity', the higher the magnitude of 'Business Strengths of Principals'. Supported H[sub]6[sub]b : The higher the degree of 'Environmental Volatility', the lesser the magnitude of 'Business Strengths of Principals'. Supported H[sub]7 : The greater the magnitude of 'Business Strengths of Principals', the lower the 'Channel Production Costs'. 4. Additional significant causal pathways added following data analysis: AH[sub]1: The higher the 'Channel Production Costs', the greater the magnitude of 'Business Strengths of Principals'. AH[sub]2: The higher the 'Transaction Frequency', the higher the magnitude of 'Business Strengths of Principals' . Finally, it is believed that the research presented in this thesis has made an original contribution to the scholarly study and literature on international channel structures, and more specifically: 1. offered a new conceptualisation of the 'Business Strengths of Principals' and 'Transaction-specific Assets' constructs; 2. expanded the conceptualisation of TCA through the addition of the 'Business Strengths of Principals' construct; 3. offered - some initial evidences to suggest that transaction costs, rather than production costs, are more important determinants of international channel structures; 4. expanded the boundary condition of TCA, as applied to the subject matter, by successfully applying the theory in a new environment; 5. introduced the 'channel functional measure approach' as a measure of degree of channel integration; and 6. provided a set of prescriptive guidelines for the design of international channel structures.