Developing a Model that Explains Export Success: A Focus on Market Structure, Competitive Advantage, and Price Bargaining Study on the Conditions of Innovation in Countries

Abstract

Purpose The present study aimed to develop a model that explains an export success. This new model was developed by underlying a model of constant market share and a model of price index. Design/Methodology/Approach Changes in an export product’s competitive advantage were viewed as a driver of the success. In addition, the negative impact of production costs was considered to analyze these changes. Moreover, the effects of an exporter’s power of price bargaining were highlighted under a circumstance of asymmetric information. Findings It is proposed that the increasing costs of labor have a gradually negative impact on price advantage. In addition, it is proposed that the contribution of competitiveness of the export product to the export success could rapidly deteriorate. Furthermore, it is proposed that both an importer’s and the exporter’s level of information have a critical effect on the decisive price of the export product even though the importer possesses a higher level of information and stronger bargaining power of price than the exporter. Research Implications According to these proposals, several suggestions were developed. First, an exporter should optimize the structure of its export product(s). Second, an exporter needs to bolster the quality of its export product(s). Third, an exporter should diversify its promotional types. Fourth, an exporter needs to nurture its bargaining power by tapping fortuitous environments and drivers of bargaining to fulfill the needs of the changes and development of a market.