International Business Review 11 (2002) 347–363 www.elsevier.com/locate/ibusrev

Firms’ internationalization and alternative approaches to the international customer/market selection O. Andersen a,∗, A. Buvik b a

Faculty of Economics and Social Science, Agder University College, Servicebox 422, N-4604 Kristiansand S., Norway b Molde University College, Box 308, N-6401 Molde, Norway Received 1 January 2000; received in revised form 1 January 2001; accepted 1 March 2001

Abstract While the theoretical development and empirical studies on exchange transaction modality to international markets have been impressing, relatively few researchers have focused on the process by which firms select where or with whom the transactions should be performed. This paper is an attempt to establish a research agenda on the selection of foreign market or customer. The characteristics of the ‘traditional’ approaches—systematic and non-systematic— are examined and compared with a relationship approach. Furthermore, this paper emphasizes the interrelationship between the choice of entry mode and choice of foreign market/customer. The authors develop research propositions suggesting circumstances under which a relationship approach is more likely than a traditional approach. Future research directions are illuminated.  2002 Elsevier Science Ltd. All rights reserved. Keywords: International market selection; International customer selection; Systematic and non-systematic approaches; Relationship approach; Transaction cost analysis

1. Introduction Internationalization can be perceived as a part of the ongoing strategy process of most business firms (Melin, 1992). The main differences between internationalization ∗

Corresponding author. Tel.: +47-38-141-51; fax: +47-38-141-061. E-mail addresses: [email protected] (O. Andersen); [email protected] (A. Buvik).

0969-5931/02/$ - see front matter  2002 Elsevier Science Ltd. All rights reserved. PII: S 0 9 6 9 - 5 9 3 1 ( 0 1 ) 0 0 0 6 4 - 6