INITIATING AND MAINTAINING EXPORT CHANNEL INTERMEDIARY RELATIONSHIPS

Firms exporting via foreign channel intermediaries, such as import age nts or distributors, trade off a lack of control of the foreign channe l for a low-risk market entry Agency theory and transaction cost analy sis suggest that a lack of control manifests itself in the foreign cha nnel intermediary (FCI) having opportunities to behave in its own inte rests, rather than those of the exporter. Even so, management strategi es that result in an alignment of the exporter's and FCl's goals are m ore likely to result in a perception of satisfaction in the relationsh ip than if only one party's goals were met. Such management strategies should commence with an extensive pre-contractual screening step to f ind an intermediary whose goals are complementary to those of the expo rter. After forming a trading relationship, an exporter can better coo rdinate the relationship by noncoercive monitoring of the exporter, an d reduce the potential for opportunistic behavior and achieve a relati onship that performs to the satisfaction to both parties. Greater moni toring is also likely to maintain a state of goal congruence between t he parties. Conditions of environmental uncertainty may, however, crea te difficulties in precontractual screening by the exporter. A concept ual framework explaining the interaction between these variables has b een presented, along with nine testable propositions and directions fo r future research.