From a managerial perspective, our results provide export managers with various directions for action. Preliminary interviews showed that exporters have a limited understanding of internal competition. Indeed, it is important to distinguish internal competition from external
competition which is based on competing offers in the foreign market place. Internal competition has a significant influence on the performance of firms that rely on foreign
intermediaries in their exporting activities. Importers take advantage of internal competition
to promote product ranges which offer them additional revenue and neglect other brands in
their portfolio where this is not the case. They compose a portfolio of favorite items that are
actively promoted. The remaining products are often left unattended. This behavior denotes
an additional manifestation of the goal divergence that exists between supplier and reseller.
Because the importer maximizes its profit and minimizes its effort, the exporter cannot
achieve its sales objectives for all its products ranges. This study shows that to secure
adequate performance, exporters can overcome internal competition issues with a welldesigned
pricing policy. In particular, we highlight the effectiveness of higher margins.
Our findings indicate the strong role of the foreign intermediary in the effectiveness of a
pricing policy. Price manipulations should be crafted to provide importers with enough
supplemental benefits so they will dedicate appropriate efforts to promote the exporter’s
brand. It is essential that suppliers understand that not all pay-per-performance schemes are
incentives. Indeed, in a situation of internal competition only the compensation schemes that
offer more than the other suppliers of the distributor are effective.
Our study shows that this holds particularly true for superior margins, which seem to work
well in the context of internal competition, while other common price manipulations failed to
reach their goal. Exporters need to carefully consider their incentive schemes, when they want
to motivate their distributors, so as not to waste their resources.
In addition, a shift in perspective from the importer being a passive recipient of the exporter’s
strategic decisions to being an active partner in a balanced business relationship will support a
more effective export pricing policy and ultimately export performance.