Market information: Selling intensity and the dynamics of international economic integration

Summary We may assume the more a firm has traded previously with a particular party, or a particular country, the lower the costs of market information will be. When a firm starts to trade with a new country, we may further assume that the greater the cultural distance is between this country and its own country, the larger the information costs will be.A statistical study of the Swedish imports of selected consumers goods after the establishment of EFTA indicates that these assumptions hold true for non-selling intensive commodities, but not for selling intensive commodities.The research on which this paper is based is a part of a more general study of how various knowledge factors influence international business decisions, which will be published in a forthcoming bookHow Foreign is Foreign Trade? A first draft of the paper was written during a stay at the International Institute of Management in Berlin, and I am grateful for the aid which I recieved from the Institute's staff during its preparation. I am also most grateful Michal Groniewitz at the Institute of Business Studies in Uppsala whose time-consuming and tedious task it has been to prepare the tables on Swedish imports, on which the statistical part of the study has been based.