Dual distribution channels in foreign markets: A capability-based analysis

Abstract

Exporting manufacturers often choose both integrated and independent channels to sell a product in a foreign market. This is called dual distribution channels in foreign markets or dual export channels. The purpose of this study is to employ capability theory and examine the effects of two capability factors, namely export market orientation (EMO) capability and export entrepreneurial orientation (EEO) capability, on the choice to use dual export channels. This study also examines the moderating effects of cultural distance on the relationship between these two capability factors and the dual channel choice. Empirical testing was conducted using survey data collected from 196 industrial exporting manufacturers. The results show that exporting manufacturers with strong EEO capabilities are likely to choose dual channel instead of independent channels. Moreover, empirical evidence reveals that exporting manufacturers with strong EMO capabilities are less likely to choose dual channels, but cultural distance moderates its negative effects. The current study contributes to improving understanding of international channel management by identifying the driving factors of dual export channels.