The costs of paperwork and delays needed to clear international customs are generally perceived as a time-consuming impediment to international trade. However, few studies have empirically examined the determinants and the impact of this type of government-imposed transaction costs. This paper analyses the role of firm size as a determinant of customs-related transaction costs, as well as the effect of firm size on the relationship between these costs and the international trade intensity of firms. We submit that economies of scale should be related to the size of the activities the firm is specialised in, and not directly linked to the size of a firm per se. The results of this study indicate that customs-related transaction costs repress international trade activities of firms, even at low levels of these costs. The paper identifies transaction-related economies of scale, simplified customs procedures and advanced information and communication technology as main determinants of customs-related transaction costs. When these factors are taken into account, firm size has no effect on customs-related transaction costs. Policy implications are considered for firm strategy and public policy.

firm size, international business strategy, international trade intensity, trade barriers
Statistical Decision Theory; Operations Research (jel C44), Models of Trade with Imperfect Competition and Scale Economies (jel F12), Firm (jel H32), Business Administration and Business Economics; Marketing; Accounting (jel M), Marketing (jel M31)
Erasmus Research Institute of Management
ERIM Report Series Research in Management
Copyright 2001, E. Verwaal, B. Donkers, This report in the ERIM Report Series Research in Management is intended as a means to communicate the results of recent research to academic colleagues and other interested parties. All reports are considered as preliminary and subject to possibly major revisions. This applies equally to opinions expressed, theories developed, and data used. Therefore, comments and suggestions are welcome and should be directed to the authors.
Erasmus Research Institute of Management

Verwaal, E, & Donkers, A.C.D. (2001). Customs-Related Transaction Costs, Firm Size and International Trade Intensity (No. ERS-2001-13-MKT). ERIM Report Series Research in Management. Erasmus Research Institute of Management. Retrieved from