Pricing to manage export channel relationships

• Export pricing helps manufacturers manage channel relationships with foreign distributors.
• Framed as incentives, export price manipulations trigger importer role performance which in turn increases exporter economic performance.
• Superior margins to the importer represent the most effective incentive.

In a novel approach using agency theory, we conceptualize export pricing as price manipulations an exporter initiates to cope with the distributor-level, internal competition with the other product lines the distributor carries. We argue that suppliers can influence foreign resellers’ behaviors and therefore manage export channel relationships with prices. Using a sample of 283 exporter–importer relationships, we uncover the export price manipulations used to cope with internal competition, and we examine their impact on the exporter economic performance. We show that the performance effect of this pricing policy is achieved through the adequate role performance of the importer. Moreover, using a small but rare dyadic data set, we offer an additional test of the effectiveness of this form of pricing. Finally, by comparing the results of our study to exporters’ practice we show how they tend to overuse price discounts to motivate their overseas distributors.