The influence of the Internet on channel directness of export SMEs

This study examines small and medium-sized enterprises' (SMEs') choices of export distribution channels (direct vs. indirect exporting) when the Internet is used as an information and communication tool in the international environment. Two main theories, internationalization theory and transaction cost theory, were used to explain how the Internet capabilities and use could impact on the exporting choices of SMEs. The survey method was used to collect sample data from food exporting and manufacturing SMEs in two countries, the United States and Thailand.; Research results have provided valuable implications and suggestions. The Internet capabilities of sample SMEs significantly and positively affected the Internet use by the SMEs. Also, more use of the Internet would encourage the SMEs to conduct more direct exporting. Based on internationalization theory, SMEs would gain more foreign market knowledge through more use of the Internet for their business activities. Greater foreign market knowledge would result in the reduction of perceptions concerning the uncertainty about foreign markets. Finally, less perceived uncertainty would stimulate the direct exporting choice by the SMEs. This theoretical explanation has been strongly supported by the survey data.; However, using transaction cost theory to explain the business phenomenon in question resulted in partial support. According to transaction cost theory, increased use of the Internet by SMEs would help reduce foreign partners' performance uncertainty perceived by the SMEs. This reduced perception would, in turn, lower costs of performance evaluation and monitoring. Furthermore, due to the lower costs, SMEs would be willing to export their products directly rather than indirectly. The sample data were supportive of the last two relationships as explained by transaction cost theory while the first mentioned relationship between the Internet use and the perceived uncertainty of foreign partners' performance was not supported by the data.; It was found that the interaction effect of country differences has a strong impact on the relationship between the Internet use and perceived performance uncertainty. In addition, the research results have shown that country differences can influence the degree of the Internet used and the amount of foreign market knowledge gained by SMEs.