Change of Foreign Operation Method: Impetus and Switching Costs

This paper explores what factors motivate exporters to change their foreign market servicing mode from using independent distributors and agents to setting up their own local sales organization, and what factors impede such changes (switching costs). Using data from a sample of 214 Danish exporters, of which 32 had changed their foreign operation method between 1992 and 1997, the analysis shows that switching cost factors are indeed of particular importance in order to explain the incidence of such changes.