Workshop Series: Lars Håkanson
Abstract: The continuing and possibly rising importance of distance as an impediment to international trade has recently become recognized as an empirical fact in need of explanation. A number of plausible but partly competing hypotheses have been advanced as possible explanations. According to one line of argument - the 'networks view' - the increasing distance sensitivity may be caused by a shift in the composition of trade towards goods requiring more extensive information exchange and personal interaction between buyers and sellers. This shift may have nullified the effect of falling transportation costs. An alternative explanation - 'the markets view' - contends that improved availability of information and increasing transparency of markets have facilitated the matching of geographically more proximate buyers and sellers. If this is the case, the observed decline in average transportation distances would be a reflection of increasingly efficient markets. This paper examines empirically the relative merits of the two arguments based on a longitudinal analysis of bilateral trade between 25 major trading nations for the period 1962- 2008. It compares the development of the relative importance of 'psychic distance' - a proxy for information related transaction costs - and geographic distance - a proxy for transportation costs - in three categories of goods. The results are generally in support of the 'market view'. They confirm that the distance sensitivity of trade has generally increased and demonstrate that this increase is associated with a growing importance of geographic distance. The role of 'psychic' distance has declined - dramatically in the case of standardized goods, somewhat less so for differentiated goods.
Lars Håkanson is currently a visiting Professor in Strategy at the University of Queensland Business School. He is Professor in International Business and formerly Head of the Department of International Economics and Management at Copenhagen Business School. He received his basic and Ph.D. training at the Stockholm School of Economics, where he worked for many years as a Senior Research Associate at the Institute of International Business (IIB). In 1990, he moved to Austria, where he was director of Austria's first executive MBA program at Krems and, later, professor in International Management at the Johannes Kepler University Linz. He has held visiting appointments at Instituto de Estudios Superiores de la Empresa (IESE), Vienna University of Economics and Business, UQ Business School and was a Visiting Academic at the Judge Business School, University of Cambridge. For many years, his research and consulting activities centered on problems concerning the international management of technology and R&D; more lately, his research has focused on the role of epistemic communities in the development of firms, industries and regions. His teaching focuses on these and other questions relating to international strategy, organization, and entrepreneurship. Professor Håkanson has written two books, edited volumes, is a regular presenter at international conferences and had a large quantity of his work published in reputable journals. He is a member of the Editorial Boards of the Journal of World Business, Journal of Managements Studies, International Business Review and the European Journal of Innovation Management. Håkanson has worked as a management consultant (authorised by the Austrian Chamber of Commerce) to various European multinational firms, especially in the area of international research and development management and post-merger integration. He has also been a partner and board member of a small Austrian electronics company. He has extensive experience in the design, organisation and teaching of executive training programs at the Copenhagen Business School Executive Education, the Swedish Institute of Management, Chalmers Advanced Management Program, Executive Education at the Stockholm School of Economics, Linz International Management Academy and the Danube University Krems.