KERRI OSBORNE IS A LECTURER IN international and strategic marketing at Victoria University of Wellington, New Zealand. The main purpose of this paper is to use the qualitative method on a small sample to determine the key factors that influence the degree and nature of channel integration in the smallto medium-sized manufacturing exporting environment. The main theoretical model used was transaction cost analysis (TCA) first postulated by Williamson (1975) and later developed in the exporting literature by Anderson and Coughlan (1987), Klein, Frazier and Roth (1990) and Kim and Daniels (1991) but only in the multi-national environment. This exploratory research attempts to validate the TCA model in the small-to medium-sized exporting environment and suggests additional variables outside the TCA framework that determine the decision to channel integrate. This research confirms the role of TCA factors in the channel integration decision but suggests that sales volume, market characteristics and strategic factors play a large part in the decision to integrate the distribution channel. Management implications of the findings are provided and further empirical work is suggested for future research.
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