Date of Award
1994
Degree Type
Dissertation
Degree Name
Doctor of Philosophy
Abstract
Two of the most important decisions that a multinational enterprise (MNE) or internationalizing firm face are: (1) Where should production be located to serve a specific market? and (2) How should this market be served--through exports, wholly-owned subsidiary production, joint venture, or licensing? These two questions have been studied at length in the international business literature. In these studies, however, the emphasis has been on the comparative costs of alternative country sites and market servicing modes. The product pricing side of these questions has been relatively neglected. This dissertation studies the effects of different production countries-of-origin and market servicing modes on prices of 445 products being sold in an informal economy smuggler's market in the Philippines. Firm-specific effects were controlled for by comparing products made by the same MNE. In addition, interviews were conducted with managers of eight MNEs and a non-MNE in the Philippines to discuss qualitative managerial issues on location and mode.;The international marketing literature has shown that buyers exhibit country-of-origin preferences. Most of these studies used hypothetical products and hypothetical buying situations. This dissertation uses prices of real products in a real market to test the hypothesis that buyers prefer products produced in more developed countries, over products produced in lesser developed countries.;Some MNE scholars have suggested that product quality can be affected by the choice of mode in servicing a foreign market. However, this hypothesis has not been empirically tested. This dissertation tests the hypothesis that buyers will prefer products produced by more internalized modes of production. It is assumed that preference for higher product quality will be reflected in the price premiums of preferred goods.;The price premium data collected for this dissertation is analyzed using OLS regression. The results support the hypotheses that buyers prefer products produced from more developed countries over lesser developed countries, that branding decreases these price premiums, that purchase risk increases the price premiums, and that goods produced through more internalized modes are preferred.;The interviews with the managers generally supported the findings of the price analysis. Finally, a number of managerial implications was drawn from the results.
Recommended Citation
Todino, Honorio S., "Effects Of Production Location And Internationalization Mode On Product Prices: A Real Market Test" (1994). Digitized Theses. 2419.
https://ir.lib.uwo.ca/digitizedtheses/2419