Direct search or remote search? Export market expansion path for firms in underdeveloped areas - evidence from the five cities of the Hexi Corridor, China

ABSTRACT

The expansion of firms’ export markets is crucial for their own growth and local economic growth. Studies suggest two market expansion modes: direct search and remote search. However, research often overlooks underdeveloped areas and the influence of firm heterogeneity. Using data from China Customs Database and CEPII Database, this article investigates the export market expansion patterns of firms in underdeveloped regions. The study focuses on five specific cities in the Hexi Corridor, a representative underdeveloped region in western China. The results show that firms in underdeveloped areas mainly follow the remote search path during their export market expansion. The likelihood of success in entering new target markets is significantly influenced by the similarity between the target market and their existing markets, while the geographical distance between trade partners has little effect. Additionally, there are significant differences in the market expansion path of different types of firms. Private-owned enterprises demonstrated a greater reliance on the remote search mode than state-owned enterprises, collective-owned enterprises and Sino-foreign joint ventures. It may stem from their limited ability to access resources and policy support.

KEYWORDS:

• Export market expansion
• direct search
• remote search
• market similarity
• Hexi corridor (China)

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

The work was supported by the Major Projects of the National Social Science Foundation of China [grant number 23&ZD330], the Fundamental Research Funds for the Central Universities [grant number 2023ECNU-YYJ006; 2021ECNU-HLYT020].