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Robert E. Morgan: Professor of Marketing and Strategic Management, School of Management and Business, University of Wales, Aberystwyth.
Background and introduction
The importance of the domestic market environment, as an influence upon export behaviour, has only been addressed to a limited extent within the relevant literature (cf. Raven et al., 1994) but is still, nonetheless, an important factor in the export decision-making process (Kaynak and Kothari, 1984; Reid, 1984; Pak, 1991). A particularly cogent reason for considering the significance of the domestic market environment, in this context, is suggested by the following point:"Foreign expansion occurs because firms see this alternative as satisfying their requirements, in contrast to the continued pursuit of domestic expansion using the same resources (Reid, 1984, p. 199)."
The domestic market environment captures those uncontrollable market forces and conditions outside the firm's organizational boundaries but within the home country of operations which affect, and are also affected by, the firm's action (Yeoh, 1994). Despite the fact that much attention has been given to the role of the overseas market environment in foreign market entry (Hill et al., 1990; Kwon and Konopa, 1993; Whitelock and Jobber, 1994; Ali and Camp, 1994) and export decision-making research (Albaum and Peterson, 1984; Davis et al., 1991; Raven et al., 1994), the focus of this discussion will centre upon the domestic market environment as it is this setting where the key influences pertain to pre-export behaviour (Wiedersheim-Paul et al., 1978; Piercy, 1981; Cavusgil, 1984).
The effect of domestic market conditions on the process of internationalization has received scant attention in the empirical literature (Tyebjee, 1994), with the natural exception of stimuli variables such as diminishing sales and market saturation at home (Eshghi, 1992; Jaffe and Pasternak, 1994). Furthermore, specifically within the export marketing literature, the areas comprising the domestic market environment are those elements which have a bearing upon the level of competitive intensity, prevailing market opportunities facing the firm and key challenges confronting the industry (Cavusgil, 1984).
The level of competition can be conceived as the degree of encroachment on a firm's market (Kim, 1987) and certain studies have suggested that increasing competition in the domestic market is a significant determinant of the firm's intent to enter, or expand, foreign market activities (Sullivan and Bauerschmidt, 1988)...