Internationalization in retailing: modeling the pattern of foreign market entry

This article investigates retailers' choice of foreign markets using a spatial-interaction model that takes into account factors related to the attractiveness of a given market as well as distance to that market. While gravity and spatial-interaction models have a long tradition in retailing research, such models have not been applied to foreign market entry before. Data on UK retailers' cross-border operations provide good support for the model. Its explanatory power is particularly strong for the initial set of entries made by the retailers, which suggests that experience effects as well as firm-specific internationalization strategies eventually override the common effects of distance and market attractiveness on the choice of which foreign markets to enter.