Book Description
Abstract: International expansions offer retailers not only opportunities but also new challenges in complex and different international markets. Since the 1990s, retailers have moved to the international markets (Alexander, 1997; Goldman, 2001; Moore and Fernie, 2004) due to rapid globalization, the reduction of international trade barriers, technological improvement in worldwide transportation infrastructure and communication, and the accretion of wealth in developing countries (Moon and Park, 2011). However, few international retailers performed well in foreign markets (Burt, Dawson, and Sparks 2004). Swoboda et al (2005) contended that achieving good performance in the international markets is not easy. Thus, in order to understand the internationalization process of international retailers, the investigation of factors influencing their performance is needed for both retail researchers and international retailers. The objectives of this research are to examine the nonlinear relationship between market distance, via cultural distance and geographical distance, and performance, via return on sales and sales growth rate. In addition, this research investigates how international experience, via international age and the number of foreign countries in which a retailer operates, influences performance and further how international experience and retail format (generalists and specialists) moderate the relationship between market distance and performance respectively, relying on the internationalization process theory and resource based theory. The secondary data of 250 largest retailers from around the world published in the 2011 Deloitte "Global Retail Power" report were analyzed with hierarchical multiple regressions. The findings from part one of the study revealed that there were no significant nonlinear relationships between 1) cultural distance and return on sales, 2) geographical distance and return on sales, 3) cultural distance and sales growth rate, and 4) geographical distance and sales growth rate. However, cultural distance has a statistically significant negative relationship with sales growth rate. The findings from part two showed that international age influenced neither return on sales nor sales growth rate. However, the number of foreign countries which a retailer entered has a significant positive relationship with sales growth rate but not with return on sales. In addition, both international age and the number of foreign countries did not moderate the relationship between 1) cultural distance and return on sales, 2) geographical distance and return on sales, 3) cultural distance and sales growth rate, and 4) geographical distance and sales growth rate. Lastly, the moderating effects of retail format on the relationships between 1) cultural distance and return on sales, 2) geographical distance and return on sales, 3) cultural distance and sales growth rate, and 4) geographical distance and sales growth rate were insignificant. The findings of this study add to the extant literature by including not only international experience but also retail format in explaining the relationship between market distance and performance in the international retail markets. By investigating international experience and retail format as competitive resources of international retailers, this research will be able to provide information to retail researchers and international retailers regarding foreign market selection strategy.