SME entry mode choice and performance: A transaction cost perspective

Abstract

Although small and medium sized enterprises (SMEs) account for a significant portion of international trade, little is know about how they make international entry mode decisions. In this paper we start to investigate this issue by (1) examining the applicability of transaction cost theory to the SME international entry mode decision and (2) exploring the normative implications of using transaction cost based mode choices. We found that transaction cost theory did a good job of explaining SME mode choice and that SMEs that used transaction cost predicted mode choices performed better than firms using other mode choices