Institutional theory and international market selection for direct selling

Abstract

Purpose – The purpose of this paper is to use a theoretical framework (institutional theory) to predict international market selection (IMS) for the direct selling industry. Design/methodology/approach – The authors use independent variables taken from institutional theory to predict IMS for the direct selling industry, allowing the authors to show the relationship between institutional theory – defined independent variables and the relative attractiveness of international markets. The model is applied to a broad sample of 51 developed and emerging nations that comprise 91 percent of worldwide GDP. Findings – The authors found that the hypotheses were confirmed. Institutional theory – defined independent variables did a good job of predicting the relative attractiveness of international markets. Research limitations/implications – The authors used cross sectional country level data to validate their model. One major implication: institutional theory appears to do an excellent job of predicting IMS in contrast to geographic proximity or cultural similarity for the direct selling industry. Practical implications – Managers should consider formal and informal aspects of the institutional environment, when selecting new international markets. Originality/Value – In contrast to most IMS papers, the authors apply a theory to predict IMS outcomes, helping to provide greater potential generalizability. The authors show that selected dimensions of institutional theory do a good job of predicting IMS for the direct selling industry. Future efforts may wish to apply institutional theory to new IMS contexts. The authors conclude with managerial implications.