Does transaction cost analysis explain virtual export channel choice?

Abstract

Transaction cost analysis (TCA) has long been a dominant theoretical framework for understanding export channel decisions, particularly in traditional contexts. However, limited research has explored whether TCA remains applicable in the context of virtual export channels (VECs), such as building corporate websites, leveraging social media, or using digital platforms. This study investigates whether TCA remains a valid lens in the virtual export context. Using 148 U.S. SMEs, we find that internal uncertainty increases the likelihood of selecting the low-control VEC (social media and digital platforms) relative to the high-control VEC (corporate website), while asset specificity and external uncertainty do not predict the high−/low-control choice. Among low-control options, only asset specificity is significant and shows a negative relationship with using social media rather than digital platforms, while internal and external uncertainty are not significant. Thus, TCA has only partial relevance in virtual contexts. We call for adapting TCA to account for virtual export channels.