Editing Internationalization (section)

=== Transaction cost theory ===
{{Main|Theory of the firm|Transaction cost}}
The theory of the firm consists of a number of [[economic theory|economic theories]] which describe the nature of the firm, company, or corporation, including its existence, its behaviour, and its relationship with the market.

[[Ronald Coase]] set out his transaction cost theory of the firm in 1937, making it one of the first ([[neo-classical economics|neo-classical]]) attempts to define the firm theoretically in relation to the market.<ref name="Coase">Coase, Ronald H., "The Nature of the Firm", ''Economica'' 4, pp 386–405, 1937.</ref> Coase sets out to define a firm in a manner which is both realistic and compatible with the idea of substitution at the margin, so instruments of conventional economic analysis apply. He notes that a firm’s interactions with the market may not be under its control (for instance because of sales taxes), but its internal allocation of resources are: “Within a firm, ... market transactions are eliminated and in place of the complicated market structure with exchange transactions is substituted the entrepreneur ... who directs production.”  He asks why alternative methods of production (such as the [[Supply and demand|price mechanism]] and [[economic interventionism|economic planning]]), could not either achieve all production, so that either firms use internal prices for all their production, or one big firm runs the entire economy. <!-- [[see john erdman, 2006]] --> More recent work has added managerial cognition into the transaction cost theory framework to internationalization—for example, a 2025 study of Chinese SMEs found that top managers’ global mindset significantly influences their choice of export channel in conjunction with TCE considerations.<ref>{{cite journal |last1=Brouthers |first1=Keith D. |last2=Nakos |first2=George |last3=Lindlbauer |first3=Niklas |last4=Kalinić |first4=Igor |year=2025 |title=Export Channel Choice for SMEs: A Cognitive Perspective |journal=Thunderbird International Business Review |doi=10.1002/tie.22436 |url=https://onlinelibrary.wiley.com/doi/full/10.1002/tie.22436 |url-access=subscription }}</ref>