The Development of Cross-Border Economic Relations, A theoretical and empirical study of the influence of the state border on the development of cross-border economic relations between firms in border regions of the Netherlands and Belgium

Abstract

This dissertation investigates the influence of a state border on the development of cross-border economic relations in the European Union. The focus is on the frequency, number, and success of cross-border relations between firms in the border regions of the Netherlands and Belgium. The study fills a gap in the established literature on the internationalisation of firms by measuring the impact of the cognition and affection of entrepreneurs towards enterprise and entrepreneurs on the other side of the border. To gain insight into the development and success of cross-border economic relations a model is developed, the INTERFACE model (INTERnational Formation of Autonomous Cooperation between Enterprises). This model distinguishes between the following phases of economic relationship-building: contact (the encounter), attraction (the choice of a partner), interaction (the negotiation), transaction (the realisation of the contract), relationship (continuity) and success (intensity and evaluation). The study shows that a key factor in the explanation of the frequency and number of cross-border economic relations is 'mental distance' between the home and a foreign country. Furthermore, the findings in this dissertation suggest that trust and similarity between partners are crucial factors in determining the success of a cross-border economic relation.