A gravitational model of international retail market selection

Abstract

Purpose The increasingly important role of international retail companies in the distribution and marketing of goods highlights important gaps in the literature. One of these gaps concerns a scientifically based understanding of the key, underlying drivers in the market selection process of such companies. The purpose of this paper is to establish a more robust understanding of international retailers' market selection process. Design/methodology/approach This paper econometrically tests hypotheses derived from recent literature and models the international actions of retailers based in 13 home and ten host markets. Findings The results highlight the importance of host market characteristics and the importance of understanding host market selections in the context of home market retail structural development and, by implication, the relative lack of importance of secondary managerial input factors. Research limitations/implications The model presented here fundamentally challenges assumptions concerning the role of managers in market selection decisions in the light of sustainable patterns of international activity. Practical implications These findings suggest that managers responsible for international market selection decisions do not have the freedom of action implied in the marketing literature and that their actions are constrained by structural market conditions. Originality/value The relationships identified explain six‐ to seven‐tenths of the pattern of expansion in the markets considered. This would suggest that managerial input is important in the process of marketing activity but that it is important within a broader framework.

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