Modeling the Country Selection Decision in Retail Internationalization
This paper aims to develop a model that assists the
international retailer in selecting the country that maximizes the
degree of fit between the retailer-s goals and the country
characteristics in his initial internationalization move. A two-stage
multi criteria decision model is designed integrating the Analytic
Hierarchy Process (AHP) and Goal Programming. Ethical, cultural,
geographic and economic proximity are identified as the relevant
constructs of the internationalization decision. The constructs are
further structured into sub-factors within analytic hierarchy. The
model helps the retailer to integrate, rank and weigh a number of
hard and soft factors and prioritize the countries accordingly. The
model has been implemented on a Turkish luxury goods retailer who
was planning to internationalize. Actual entry of the specific retailer
in the selected country is a support for the model. Implementation on
a single retailer limits the generalizability of the results; however, the
emphasis of the paper is on construct identification and model
development. The paper enriches the existing literature by proposing
a hybrid multi objective decision model which introduces new soft
dimensions i.e. perceived distance, ethical proximity, humane
orientation to the decision process and facilitates effective decision
making.
[1] J. C. Climaco, "A critical reflection on optimal decision ", European
Journal of Operational Research, vol. 153, pp. 506-516, 2004.
[2] A. M. Doherty, "Explaining international retailers- market entry mode
strategy: Internationalization theory, agency theory and the importance
of information asymmetry", International Review of Retail Distribution
and Consumer Research, vol. 9, no.4, pp. 379-402, 1999.
[3] G. Grisprud and G. Benito, "Internationalization in retailing: Modeling
the pattern of foreign market entry", Journal of Business Research, vol.
58, pp.1672- 1680, 2005.
[4] B. Swoboda, S. Schwarz and F. Halsig, "Towards a conceptual model of
country market selection: Selection processes of retailers and C&C
wholesalers", International Review of Retail, Distribution and Consumer
Research, vol. 17, no.3, pp. 253-282, 2007.
[5] I. Vida, "An empirical inquiry into international expansions of US
retailers", International Marketing Review, vol. 17 , no. 4/5, pp. 454-
475, 2000.
[6] H. Myers and N. Alexander, "European food retailers evaluation of
global markets ", International Journal of Retail and Distribution
Management, vol. 24, no. 6, pp. 34-43, 1996.
[7] J. Evans, A. Treadgold and F.T. Mavondo, "Psychic distance and the
performance of international retailers-A suggested theoretical framework
", International Marketing Review, vol. 17, pp. 373-391, 2000.
[8] P.Ghauri, U. Elg and R. Sinkovics, "Foreign direct investment-location
attractiveness for retailing forms in the European Union" in P.N. Ghauri
and L. Oxelheim (Eds) European Union and the Race for Foreign Direct
Investment in Europe. Oxford: Pergamon, 2004, pp. 407-428.
[9] J. Dunning, "The eclectic paradigm as an envelope for economic and
business theories of MNE activity" , International Business Review, vol.
9, pp. 163-90, 2000.
[10] O. Andersen, "On the internationalization process of firms: a critical
analysis", Journal of International Business Studies, vol. 24, no. 2, pp.
209-232, 1993.
[11] N. Papadopoulos , H. Chen and D.R. Thomas, "Toward a tradeoff model
for international market selection", International Business Review, vol.
11, pp.165-92, 2002.
[12] J. Hoffman, "Evaluating international ethical climates: A goal
programming model", Journal of Business Ethics, vol. 17, pp. 1861-
1869, 1998.
[13] G. Hofstede, Culture-s Consequences: International Differences in
Work-related Values. Beverly Hills CA: Sage, 1980.
[14] G. Benito and L.S. Welch, "Foreign market servicing: Beyond choice of
entry mode", Journal of International Marketing, vol. 2, no. 2, pp. 7-27,
1994.
[15] A. Treadgold, "The emerging internationalization of retailing: Present
status and future challenges", Irish Marketing Review, vol. 5, no. 2, pp.
11-27, 1990.
[16] S.T. Cavusgil, "On the internationalization process of firms" , European
Research, vol. 8, no. 6, pp.273-81, 1980.
[17] A. Hortacsu and A. Tektas, "A decision tool for internationalization of
retailers", presented at the EURO XXII Conference, Prague,
Czechoslovakia, July 2007.
[18] A. Crane and D. Matten, Business Ethics. New York: Oxford University
Press, 2004.
[19] M.G. Velasquez, Business Ethics: Concepts and Cases. New Jersey:
Prentice Hall, 2002.
[20] S.R Ackerman, Corruption: A Study in Political Economy, NewYork :
Academic Press, 2002.
[21] Transparency International Global Corruption Barometer 2006-
Report.Available: http://www.tikenya.org/documents/GCB_2006.pdf.
[22] D. Vinod, "Open economy and financial burden of corruption: Theory
and application to Asia", Journal of Asian Economics, vol. 13, pp. 873-
890, 2003.
[23] R. J. House, P. J. Hanges, M. Javidan, P.W. Dorfman and V. Gupta
(Ed.s) , Culture, Leadership and Organizations: The GLOBE Study of 62
Societies. Thousand Oaks: Sage Publications, 2004.
[24] H. Kabasakal and M. Bodur, "Human orientation in societies,
organizations, and leader attributes ", pp.564-601 in R.J. House, P.J.
Hanges, P.J. Javidan and V. Gupta (Eds), Culture, Leadership and
Organizations: The GLOBE Study of 62 Societies. Thousand Oaks: Sage
Publications, 2004.
[25] B. Scholtens and D. Lammertjan, "Cultural values and international
difference in business ethics", Journal of Business Ethics, vol. 75, pp.
273-284, 2007.
[26] W.H. Davidson, "The location of foreign direct investment activity:
Country characteristics and experience effects", Journal of International
Business Studies, vol. 12 fall, pp. 9-22, 1980.
[27] P.Morosini, S. Shane and H. Singh, "National cultural distance and
cross-border acquisition performance", Journal of International
Business Studies, vol. 29, no. 1, pp. 137-158, 1998.
[28] J.R Lincoln, M. Hanada and J. Olson, "Cultural orientations and
individual reactions to organizations: A study of employees of Japanese
owned firms", Administrative Science Quarterly, vol. 25, pp. 93-115,
1981.
[29] F.T. Rothaermel, K. Suresh and H. S. Kevin, "International market entry
by U.S. internet firms: An empirical analysis of country risk, national
culture, and market size," Journal of Management, vol. 626, 2006.
[30] G. Hofstede, "National cultures in four dimensions: A research theory of
cultural dimensions among nations", International Studies of
Management and Organization, vol. 13, no. 52, 1983.
[31] M. de Mooij and G. Hofstede, "Convergence and divergence in
consumer behavior: Implications for international retailing", Journal of
Retailing, vol. 78, pp. 61-69, 2002.
[32] G. Hofstede, "The cultural relativity of the quality of life concept ", The
Academy of Management Review, vol. 9, pp. 389-398, 1984.
[33] B. Kogut and H. Singh, "The effect of national culture on the choice of
entry mode ", Journal of International Business Studies, vol. 19, pp.
411-32, 1988.
[34] V. Kreacic and P. Marsh, "Organization development and national
culture in four countries ", Public Enterprise, vol. 6, pp. 121-34, 1986.
[35] M. Brossard and M. Maurice, "Is there a universal model of organization
structure?", International Studies of Management and Organization, vol.
6, pp. 11-45, 1976.
[36] G. Hofstede and J-C. Usunier, "Hofstede-s dimensions of culture and
their influence on international business negotiations", pp. 119-129. in
P.N. Ghauri and Usunier,J-C., International Business Negotiations,
Elsevier Science Ltd., 1996.
[37] A. F. Arnold, R.A. Bernardi, P. E. Neidermeyer and J. Schmee, "The
effect of country and culture on perceptions of appropriate ethical
actions prescribed by codes of conduct: A Western European perspective
among accountants", Journal of Business Ethics, vol. 70, pp. 327-340,
2007.
[38] S. Shane, "Cultural influences on national differences on rate of
innovation", Journal of Business Venturing, vol. 8, no.1, pp.59-74, 1993.
[39] R. McGrath, I. MacMillian, E. Ai-Yuan Yang and W. Tsai, " Does
culture endure or is it malleable? Issues for entrepreneurial economic
development ", Journal of Business Venturing, vol. 7, pp. 441-58, 1992.
[40] N. Alexander, International Retailing. Oxford: Blackwell Press, 1997.
[41] S. Burt, "Temporal trends in the internationalization of British retailers",
International Review of Retail Distribution and Consumer Research,
vol. 3, no. 4, pp. 391-410, 1993.
[42] A. Treadgold, "Retailing without frontiers", Retail and Distribution
Management, vol. 16, pp.8-12, 1988.
[43] P. Brewer, "Psychic distance and Australian export market selection" ,
Australian Journal of Management, vol. 32, pp. 73-94, 2007.
[44] J. Johanson and F. Wiedersheim-Paul, "The internationalization of the
firm: Four Swedish case studies", The Journal of Management Studies,
vol. 12, pp. 305-22, 1975.
[45] M. Dupuis and N. Prime, "Business distance and global retailing: A
model of analysis of key success/failure factors", International Journal
of Retail and Distribution Management, vol. 24, no. 1, pp. 30-38, 1996.
[46] S. O-Grady, and H. Lane, H. "The psychic distance paradox", Journal of
International Business Studies, vol. 27, no. 2, pp. 309-333, 1996.
[47] D.J. Lee, "The effect of cultural distance on the relational exchange
between exporters and importers: The case of Australian exporters",
Journal of Global Marketing, vol. 11, no.4, pp. 7-22, 1998.
[48] S. Klein and V.J. Roth, "Determinants of export channel structure: The
effects of experience and psychic distance reconsidered", International
Marketing Review, vol. 7, no. 5, pp.39-44, 1990.
[49] E. Katsikea, M. Theodosiou, and R. E. Morgan, "Managerial,
organizational and external drivers of sales effectiveness in export
market ventures", Journal of the Academy of Marketing Science, vol. 35,
pp. 270-83, 2007.
[50] J. McGoldrick and D. Blair, "International market appraisal and
positioning", pp. 168-190. in P.J. McGoldrick and G. Davies (Eds.),
International Retailing: Trends and Strategies. Pearson Professional
Limited, 1995.
[51] A. Godley and S. Fletcher, "Foreign entry into British retailing ",
International Marketing Review, vol. 17, pp. 392-400, 2000.
[52] World Economic Forum, Global Competitiveness Index,
2006.Available:
http://www.weforum.org/pdf/Global_Competitiveness_Reports/Reports/
gcr_2006/gcr2006_rankings.pdf
[53] A.T. Kearney, 2006, Global Retail Development Index, available:
http://www.atkearney.com/index.php/Publications
[54] J. P. Brans, "Ethics and decision" , European Journal of Operational
Research, vol. 136, pp. 340-352, 2002.
[55] S.P. Douglas and C.S. Craig, International Marketing Research. NJ:
Prentice Hall, Englewood Cliffs, 1983.
[56] T. Saaty, The Analytic Hierarchy Process. New York: McGraw-Hill,
1980.
[57] G.A. Miller, "The magical number seven, plus or minus two: Some
limits on our capacity for processing information", The Psychological
Review, vol. 63, no. 2, pp. 81-97, 1956.
[58] J. P. Brans, "The management of the future ethics in OR: Respect, multi
criteria management and happiness", European Journal of Operational
Research, vol. 153, pp 466-467, 2004.
[59] Yih-Long Chang, WinQsb: Decision support software for MS/OM.
NewYork: John Wiley and Sons, 1998.
[1] J. C. Climaco, "A critical reflection on optimal decision ", European
Journal of Operational Research, vol. 153, pp. 506-516, 2004.
[2] A. M. Doherty, "Explaining international retailers- market entry mode
strategy: Internationalization theory, agency theory and the importance
of information asymmetry", International Review of Retail Distribution
and Consumer Research, vol. 9, no.4, pp. 379-402, 1999.
[3] G. Grisprud and G. Benito, "Internationalization in retailing: Modeling
the pattern of foreign market entry", Journal of Business Research, vol.
58, pp.1672- 1680, 2005.
[4] B. Swoboda, S. Schwarz and F. Halsig, "Towards a conceptual model of
country market selection: Selection processes of retailers and C&C
wholesalers", International Review of Retail, Distribution and Consumer
Research, vol. 17, no.3, pp. 253-282, 2007.
[5] I. Vida, "An empirical inquiry into international expansions of US
retailers", International Marketing Review, vol. 17 , no. 4/5, pp. 454-
475, 2000.
[6] H. Myers and N. Alexander, "European food retailers evaluation of
global markets ", International Journal of Retail and Distribution
Management, vol. 24, no. 6, pp. 34-43, 1996.
[7] J. Evans, A. Treadgold and F.T. Mavondo, "Psychic distance and the
performance of international retailers-A suggested theoretical framework
", International Marketing Review, vol. 17, pp. 373-391, 2000.
[8] P.Ghauri, U. Elg and R. Sinkovics, "Foreign direct investment-location
attractiveness for retailing forms in the European Union" in P.N. Ghauri
and L. Oxelheim (Eds) European Union and the Race for Foreign Direct
Investment in Europe. Oxford: Pergamon, 2004, pp. 407-428.
[9] J. Dunning, "The eclectic paradigm as an envelope for economic and
business theories of MNE activity" , International Business Review, vol.
9, pp. 163-90, 2000.
[10] O. Andersen, "On the internationalization process of firms: a critical
analysis", Journal of International Business Studies, vol. 24, no. 2, pp.
209-232, 1993.
[11] N. Papadopoulos , H. Chen and D.R. Thomas, "Toward a tradeoff model
for international market selection", International Business Review, vol.
11, pp.165-92, 2002.
[12] J. Hoffman, "Evaluating international ethical climates: A goal
programming model", Journal of Business Ethics, vol. 17, pp. 1861-
1869, 1998.
[13] G. Hofstede, Culture-s Consequences: International Differences in
Work-related Values. Beverly Hills CA: Sage, 1980.
[14] G. Benito and L.S. Welch, "Foreign market servicing: Beyond choice of
entry mode", Journal of International Marketing, vol. 2, no. 2, pp. 7-27,
1994.
[15] A. Treadgold, "The emerging internationalization of retailing: Present
status and future challenges", Irish Marketing Review, vol. 5, no. 2, pp.
11-27, 1990.
[16] S.T. Cavusgil, "On the internationalization process of firms" , European
Research, vol. 8, no. 6, pp.273-81, 1980.
[17] A. Hortacsu and A. Tektas, "A decision tool for internationalization of
retailers", presented at the EURO XXII Conference, Prague,
Czechoslovakia, July 2007.
[18] A. Crane and D. Matten, Business Ethics. New York: Oxford University
Press, 2004.
[19] M.G. Velasquez, Business Ethics: Concepts and Cases. New Jersey:
Prentice Hall, 2002.
[20] S.R Ackerman, Corruption: A Study in Political Economy, NewYork :
Academic Press, 2002.
[21] Transparency International Global Corruption Barometer 2006-
Report.Available: http://www.tikenya.org/documents/GCB_2006.pdf.
[22] D. Vinod, "Open economy and financial burden of corruption: Theory
and application to Asia", Journal of Asian Economics, vol. 13, pp. 873-
890, 2003.
[23] R. J. House, P. J. Hanges, M. Javidan, P.W. Dorfman and V. Gupta
(Ed.s) , Culture, Leadership and Organizations: The GLOBE Study of 62
Societies. Thousand Oaks: Sage Publications, 2004.
[24] H. Kabasakal and M. Bodur, "Human orientation in societies,
organizations, and leader attributes ", pp.564-601 in R.J. House, P.J.
Hanges, P.J. Javidan and V. Gupta (Eds), Culture, Leadership and
Organizations: The GLOBE Study of 62 Societies. Thousand Oaks: Sage
Publications, 2004.
[25] B. Scholtens and D. Lammertjan, "Cultural values and international
difference in business ethics", Journal of Business Ethics, vol. 75, pp.
273-284, 2007.
[26] W.H. Davidson, "The location of foreign direct investment activity:
Country characteristics and experience effects", Journal of International
Business Studies, vol. 12 fall, pp. 9-22, 1980.
[27] P.Morosini, S. Shane and H. Singh, "National cultural distance and
cross-border acquisition performance", Journal of International
Business Studies, vol. 29, no. 1, pp. 137-158, 1998.
[28] J.R Lincoln, M. Hanada and J. Olson, "Cultural orientations and
individual reactions to organizations: A study of employees of Japanese
owned firms", Administrative Science Quarterly, vol. 25, pp. 93-115,
1981.
[29] F.T. Rothaermel, K. Suresh and H. S. Kevin, "International market entry
by U.S. internet firms: An empirical analysis of country risk, national
culture, and market size," Journal of Management, vol. 626, 2006.
[30] G. Hofstede, "National cultures in four dimensions: A research theory of
cultural dimensions among nations", International Studies of
Management and Organization, vol. 13, no. 52, 1983.
[31] M. de Mooij and G. Hofstede, "Convergence and divergence in
consumer behavior: Implications for international retailing", Journal of
Retailing, vol. 78, pp. 61-69, 2002.
[32] G. Hofstede, "The cultural relativity of the quality of life concept ", The
Academy of Management Review, vol. 9, pp. 389-398, 1984.
[33] B. Kogut and H. Singh, "The effect of national culture on the choice of
entry mode ", Journal of International Business Studies, vol. 19, pp.
411-32, 1988.
[34] V. Kreacic and P. Marsh, "Organization development and national
culture in four countries ", Public Enterprise, vol. 6, pp. 121-34, 1986.
[35] M. Brossard and M. Maurice, "Is there a universal model of organization
structure?", International Studies of Management and Organization, vol.
6, pp. 11-45, 1976.
[36] G. Hofstede and J-C. Usunier, "Hofstede-s dimensions of culture and
their influence on international business negotiations", pp. 119-129. in
P.N. Ghauri and Usunier,J-C., International Business Negotiations,
Elsevier Science Ltd., 1996.
[37] A. F. Arnold, R.A. Bernardi, P. E. Neidermeyer and J. Schmee, "The
effect of country and culture on perceptions of appropriate ethical
actions prescribed by codes of conduct: A Western European perspective
among accountants", Journal of Business Ethics, vol. 70, pp. 327-340,
2007.
[38] S. Shane, "Cultural influences on national differences on rate of
innovation", Journal of Business Venturing, vol. 8, no.1, pp.59-74, 1993.
[39] R. McGrath, I. MacMillian, E. Ai-Yuan Yang and W. Tsai, " Does
culture endure or is it malleable? Issues for entrepreneurial economic
development ", Journal of Business Venturing, vol. 7, pp. 441-58, 1992.
[40] N. Alexander, International Retailing. Oxford: Blackwell Press, 1997.
[41] S. Burt, "Temporal trends in the internationalization of British retailers",
International Review of Retail Distribution and Consumer Research,
vol. 3, no. 4, pp. 391-410, 1993.
[42] A. Treadgold, "Retailing without frontiers", Retail and Distribution
Management, vol. 16, pp.8-12, 1988.
[43] P. Brewer, "Psychic distance and Australian export market selection" ,
Australian Journal of Management, vol. 32, pp. 73-94, 2007.
[44] J. Johanson and F. Wiedersheim-Paul, "The internationalization of the
firm: Four Swedish case studies", The Journal of Management Studies,
vol. 12, pp. 305-22, 1975.
[45] M. Dupuis and N. Prime, "Business distance and global retailing: A
model of analysis of key success/failure factors", International Journal
of Retail and Distribution Management, vol. 24, no. 1, pp. 30-38, 1996.
[46] S. O-Grady, and H. Lane, H. "The psychic distance paradox", Journal of
International Business Studies, vol. 27, no. 2, pp. 309-333, 1996.
[47] D.J. Lee, "The effect of cultural distance on the relational exchange
between exporters and importers: The case of Australian exporters",
Journal of Global Marketing, vol. 11, no.4, pp. 7-22, 1998.
[48] S. Klein and V.J. Roth, "Determinants of export channel structure: The
effects of experience and psychic distance reconsidered", International
Marketing Review, vol. 7, no. 5, pp.39-44, 1990.
[49] E. Katsikea, M. Theodosiou, and R. E. Morgan, "Managerial,
organizational and external drivers of sales effectiveness in export
market ventures", Journal of the Academy of Marketing Science, vol. 35,
pp. 270-83, 2007.
[50] J. McGoldrick and D. Blair, "International market appraisal and
positioning", pp. 168-190. in P.J. McGoldrick and G. Davies (Eds.),
International Retailing: Trends and Strategies. Pearson Professional
Limited, 1995.
[51] A. Godley and S. Fletcher, "Foreign entry into British retailing ",
International Marketing Review, vol. 17, pp. 392-400, 2000.
[52] World Economic Forum, Global Competitiveness Index,
2006.Available:
http://www.weforum.org/pdf/Global_Competitiveness_Reports/Reports/
gcr_2006/gcr2006_rankings.pdf
[53] A.T. Kearney, 2006, Global Retail Development Index, available:
http://www.atkearney.com/index.php/Publications
[54] J. P. Brans, "Ethics and decision" , European Journal of Operational
Research, vol. 136, pp. 340-352, 2002.
[55] S.P. Douglas and C.S. Craig, International Marketing Research. NJ:
Prentice Hall, Englewood Cliffs, 1983.
[56] T. Saaty, The Analytic Hierarchy Process. New York: McGraw-Hill,
1980.
[57] G.A. Miller, "The magical number seven, plus or minus two: Some
limits on our capacity for processing information", The Psychological
Review, vol. 63, no. 2, pp. 81-97, 1956.
[58] J. P. Brans, "The management of the future ethics in OR: Respect, multi
criteria management and happiness", European Journal of Operational
Research, vol. 153, pp 466-467, 2004.
[59] Yih-Long Chang, WinQsb: Decision support software for MS/OM.
NewYork: John Wiley and Sons, 1998.
@article{"International Journal of Business, Human and Social Sciences:54576", author = "A. Hortacsu and A. Tektas", title = "Modeling the Country Selection Decision in Retail Internationalization", abstract = "This paper aims to develop a model that assists the
international retailer in selecting the country that maximizes the
degree of fit between the retailer-s goals and the country
characteristics in his initial internationalization move. A two-stage
multi criteria decision model is designed integrating the Analytic
Hierarchy Process (AHP) and Goal Programming. Ethical, cultural,
geographic and economic proximity are identified as the relevant
constructs of the internationalization decision. The constructs are
further structured into sub-factors within analytic hierarchy. The
model helps the retailer to integrate, rank and weigh a number of
hard and soft factors and prioritize the countries accordingly. The
model has been implemented on a Turkish luxury goods retailer who
was planning to internationalize. Actual entry of the specific retailer
in the selected country is a support for the model. Implementation on
a single retailer limits the generalizability of the results; however, the
emphasis of the paper is on construct identification and model
development. The paper enriches the existing literature by proposing
a hybrid multi objective decision model which introduces new soft
dimensions i.e. perceived distance, ethical proximity, humane
orientation to the decision process and facilitates effective decision
making.", keywords = "Analytic hierarchy process, culture, ethics, goal
programming, retail foreign market selection.", volume = "3", number = "7", pages = "1494-8", }
