1. ¹School of Management, University of Texas at Dallas, Richardson, TX, USA
2. ²Manchester Business School, The University of Manchester, Manchester, UK
3. ³Department of Marketing and Supply Chain Management, Michigan State University, East Lansing, MI, USA
4. ⁴Division of Marketing and Supply Chain Management, The University of Oklahoma, Norman, OK, USA

Correspondence: S Tamer Cavusgil, Department of Marketing and Supply Chain Management, Michigan State University, N370 Business Complex, East Lansing, MI 488241122, USA. Tel: +1 517 432 4320; Fax: +1 517 432 4322; E-mail: cavusgil@msu.edu

Received 18 February 2004; Revised 27 March 2006; Accepted 21 May 2006.

Abstract

Learning and acquiring local market knowledge from foreign distributors are central to manufacturers' export market performance. Drawing from the resource-based view, we propose that manufacturers need to develop stronger local market competence while simultaneously minimizing the costs of distributor opportunism in order to compete successfully in the export market. Cultural distance and other barriers, however, may hinder the development of local market competence for the manufacturer while contributing to the occurrence of distributor opportunism. In order to overcome these barriers, we examine the impact of three alternative forms of manufacturer governance – trust, knowledge sharing, and contract-based relationship – in export channels. Findings suggest that all three governance mechanisms contribute to enhancing the manufacturer's competence to exploit local market opportunity. However, of the three, trust seems to be the only effective way to curtail distributor opportunism.