Optimising international trade: the examination of Incoterms selection by exporters and importers
Review of International Business and Strategy
ISSN: 2059-6014
Article publication date: 19 June 2024
Issue publication date: 28 June 2024
Abstract
Purpose
This study aims to gain a deep understanding of the process of international commercial terms (Incoterms) selection by small and medium enterprises (SMEs) in Bangladesh and identify the key factors that influence their choices. The study also intends to explore the discrepancy between the literature and the actual industry practice so that policymakers and traders can make more informed decisions in this respect.
Design/methodology/approach
The study adopts a mixed methodology. Initially, 20 factors under five principle components were identified by reviewing the literature. The semi-structured one-to-one interview method has been used to gather expert opinions on the factors and to identify the discrepancy between literature and actual industry practices. Finally, eight factors have been identified and surveyed using the best-worst method (BWM) to determine their relative significance or weights in Incoterm selection.
Findings
The study has found that government policies, the influence of banks and currency fluctuations are the top three influential factors in selecting Incoterms by SMEs in Bangladesh. As a result, the most commonly used Incoterms are free on board (FOB) for the exporters and cost and freight (CFR) for the importers. However, discrepancies have been identified between the selected and the actual application of the Incoterms.
Originality/value
To the best of the authors’ knowledge, this is the first study to identify and analyse the factors that influence the selection of Incoterms by the SMEs in the context of a developing nation. The study has identified the factors from both importers’ and exporters’ perspectives that have not been done by any previous studies. Moreover, this study explores the discrepancies between the agreed Incoterm and the actual industry practices which is a unique contribution to the literature.
Keywords
Acknowledgements
The authors have selected their publishing license as ‘closed access’ for the time being. However, they have applied to their university for APC to make their article open access. If they receive the APC from their university, they will inform the journal authority and according acknowledge the funder.
Citation
Sheikh, W., Miah, S.M.A.N., Hasan, M.T., Zitu, K.K. and Hosain, J. (2024), "Optimising international trade: the examination of Incoterms selection by exporters and importers", Review of International Business and Strategy, Vol. 34 No. 4, pp. 562-583. https://doi.org/10.1108/RIBS-08-2023-0093
Publisher
:Emerald Publishing Limited
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