Foreign operation methods and switching costs: conceptual issues and possible effects |
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| Affiliation: | 1. Department of Strategy, Norwegian School of Management BI, Elias Smiths vei 15, N-1300 Sandvika, Norway;2. Department of International Economics and Management Copenhagen Business School, Nansensgade 19, DK-1366 Copenhagen K, Denmark;1. Department of Orthopedic Surgery, Hadassah-Hebrew University Medical Center, Jerusalem, Israel;2. Department of Orthopedic Surgery, Thammasat University, Pathumthani, Thailand;1. Crowell School of Business, Biola University, 13800 Biola Ave., La Mirada, CA 90639, United States;2. London School of Economics and Political Science, Department of Accounting, Room OLD 2.17, Houghton Street, London WC2A 2AE, United Kingdom;3. Culverhouse College of Commerce and Business Administration, University of Alabama, 334 Alston Hall, Tuscaloosa, AL 35111, United States |
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| Abstract: | Although the issue of switching costs does appear in some of the frameworks for choosing modes of foreign operation, the treatment of these costs is fairly cursory. In this article we propose a simple classification of switching costs which distinguishes between “take-down” costs and “set-up” costs. A distinction is also made between measurable and perceptual switching costs. The article outlines the assumptions regarding switching costs that are embedded in current theoretical approaches to the internationalization of firms, and discusses the possible effects of such costs on the choice and timing of foreign operation methods. |
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