The effect of transaction cost antecedents on control mechanisms: Exporters’ psychic distance and economic knowledge as moderators

The purpose of this research is to determine how a manufacturer's reduction in export involvement barriers may moderate the effect of transaction cost drivers on control mechanisms (monitoring and information sharing). Utilizing Transaction Cost Analysis and internationalization literature, asset specificity and environment diversity are the transaction cost drivers and economic knowledge and psychic distance are the moderators. The results indicate that as manufacturers increase export involvement through reduction in economic knowledge differences it strengthens the positive relationship between asset specificity and monitoring and diversity and monitoring and weakens the corresponding relationships with information sharing. Psychic distance reduction weakened the positive effect between asset specificity and information sharing only. The results of the other three hypotheses were in the direction hypothesized but non-significant. Manufacturers may continue export involvement through intermediary usage provided they regulate their monitoring and information sharing practices in accordance with the overall influence of asset specificity, diversity, economic knowledge, and psychic distance.