International market selection: measuring actions instead of intentions

This paper aims to consider factors that determine the direction of international market selection. It does this with specific reference to service companies operating in the retail sector.

The paper draws on general, services and retail specific literature and considers the debate surrounding market selection issue. Hypotheses are formulated and econometrically tested using an extensive database of retailers' international activity within Western European markets.

The results show that previously identified determinants of market selection are valid. However, the results clearly indicate that some factors are more important than the literature has suggested and that the selection of markets is determined in great part by relatively few but crucially important factors.

The paper shows that language and hence, by implication, culture plays a fundamental role in determining direction of expansion. This has important implications for the way psychic distance is understood and service company response to psychic distance.