Entrepreneurship in International Trade

Posted: 24 Nov 2009

See all articles by Joel Watson

Joel Watson

University of California, San Diego (UCSD) - Department of Economics

James E. Rauch

University of California, San Diego (UCSD) - Department of Economics; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: 2002

Abstract

One informal barrier to international trade is lack ofinformation about international trading opportunities.This informationcan be supplied by export trading companies who have knowledge about buyers andsellers.Employees working in production or sales cultivate networks offoreign contacts; eventually these employees can change role and becomeentrepreneurs/intermediaries, selling access to their networks of contacts.This is a major mode of entrepreneurship in international trade. A pilot survey sent in 2001 to 220 international trade intermediaries whorepresented organizations belonging to the World Trade Centers Association,supports this hypothesis regarding the supply of network intermediation. Amathematical model of network-based international trade entrepreneurship in apure matching market is also introduced. This general-equilibrium model showsthat there can be too much or too little intermediation, depending on theintermediaries' bargaining power and the technology of intermediation.Equilibrium depends on various parameters, including the cost of maintaining anetwork and the distribution of network sizes in the population. Because theoptimal level of intermediation can be achieved by manipulating the power thatintermediaries have in negotiation, policies that encourage intermediaries tomaintain large networks are commendable. (SAA)

Keywords: Social networks, International trade, Opportunity recognition, Consultants

Suggested Citation

Watson, Joel and Rauch, James E., Entrepreneurship in International Trade (2002). University of Illinois at Urbana-Champaign's Academy for Entrepreneurial Leadership Historical Research Reference in Entrepreneurship, Available at SSRN: https://ssrn.com/abstract=1510602

Joel Watson

University of California, San Diego (UCSD) - Department of Economics ( email )

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La Jolla, CA 92093-0508
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James E. Rauch

University of California, San Diego (UCSD) - Department of Economics ( email )

9500 Gilman Drive
La Jolla, CA 92093-0508
United States
619-534-2405 (Phone)
619-534-7040 (Fax)

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
United States

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