13. Zacharakis, A. L. (1997). Entrepreneurial entry into foreign markets A transaction cost perspective. Entrepreneurship Theory and Practice

Question 1

What should entrepreneurial firms do as a result of them being resource constrained?

Answer 1

They must leverage their resources in order to succesfully enter an international market.

Question 2

What does international expansion involve?

Answer 2

Risk (political instability, social unrest etc)

Question 3

What is transaction cost economics (TCE)

Answer 3

A framework for analyzing the costs associated with conducting international business. It is used to assess the potential for international expansion by looking at the potential costs and benefits of conducting business in different countries.

Question 4

Why can asymmetric information have positive implications?

Answer 4

If each party possesses specialized skill and each party’s assymetric knowledge complements that of the party, entry success is apt to be greater.

Question 5

What will reduce the chance of adverse selection?

Answer 5

Securing a reputable agent

Question 6

When does adverse selection occur?

Answer 6

When one party misrepresents her or his abilities to the other.

Question 7

Who (agent/enterpreneur) has an incentive to mispresent their respective abilities?

Answer 7

Both

Question 8

What does an outcome based contract lead to?

Answer 8

Alignment of the principal’s and agent’s interest

Question 9

For which party is an outcome based contract preferable?

Answer 9

Entrepreneur