Signalling Strategies of Exporters on Internet Business‐to‐Business Platforms

Abstract

AbstractThe emergence of Internet business‐to‐business (B2B) platforms offers exporters an effective and low cost means to meet the needs of their foreign buyers. However, the online marketplace is noisy and crowded, and the information asymmetry between exporters and foreign buyers is significant. Little research has been done to investigate how exporters can best use these different platform services and their boundaries and conditions. Drawing on signalling theory, we categorize an exporter’s use of platform services as marketing‐ and trade‐risk‐focused services (less and more credible signals, respectively). We further investigate how these platform services influence export sales in different institutional environments, specifically exploring the moderating roles of formal and informal institutional distance between the home and host countries. We test our hypotheses using a unique dataset made up of survey and archival data on Chinese exporters’ using Alibaba.com. Findings indicate that using marketing‐ and trade‐risk‐focused services positively affect export sales performance. The effect, however, is contingent on the differences in the formal and informal institutional environments between home and host countries. Trade‐risk‐focused services are more pronounced under greater formal and informal institutional distance. In contrast, marketing‐focused services are less pronounced under greater informal institutional distance. Taken together, our findings extend signalling theory to an online and international context. We deepen our understanding of how firms can utilize online signals with different levels of credibility and of how differences of institutional environments differently impact their effectiveness. We also advance corporate strategy literature by highlighting the importance of geographic markets and institutional differences in shaping firm’s online signalling strategies.