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NATIONAL BOUNDARIES, BORDER ZONES, AND Marketing STRATEGY: A CONCEPTUAL FRAMEWORK AND THEORETICAL MODEL OF SECONDARY BOUNDARY EFFECTS

Although national boundaries figure centrally in the definition of international marketing, the topic has not been explored fully. The author attempts to remedy this by surveying national boundary concepts and introducing a theoretical model and propositions describing the influence land boundaries have on actors in their immediate vicinity, the border zone. Dynamic national systems meet at national boundaries, and the resulting discontinuities produce spatial complexities critically important to marketing behavior in the border zone. Implications for market strategies and government policy are provided.
National boundaries affect the economies of nations at two levels. At the primary level, boundaries are abstractions of the lines on the ground, reflecting the nation's trade policies, with macroeconomic consequences for the entire economy. Although rarely mentioned explicitly, primary effects are subsumed in the international trade literature, in which they are discussed under the rubric of trade barriers and economic integration. At the secondary level, national boundaries have localized effects (in the border zone) related explicitly to the course of the boundary line on the ground, with microeconomic consequences in the economic calculation of border zone residents. Whereas everyone in a nation is subject to primary boundary effects, only those in border zones are influenced by secondary effects. My focus here is the relationship between these secondary effects and marketing decision making.
Consider the following data on some secondary effects of the U.S./Canadian boundary. Because 80% of Canadians live within 100 miles of the United States, the U.S./Canadian boundary is important in Canadian economic life. Estimates of the leakage from the Canadian economy due to"cross-border shopping" (the value of merchandise purchased by Canadians on same-day trips to the United States) go from CN$4.8 billion (Econoscope 1992) to as high as CN$10 billion (Cleroux 1992). The average associated loss in sales runs at CN$103,265 per year per Canadian retailer located less than a half hour drive from the boundary and about half that when driving time is over two hours. Cleroux (1992) estimates some 248,000 Canadian jobs are lost in the process.
This flood of Canadian cross-border shoppers creates numerous marketing opportunities and problems for U.S. finns in the border area, including, for example, (1) finding optimal border zone locations, (2) identifying and estimating cross-border market area and target markets, and (3) pricing when costs and revenues are in different currencies. However, the U.S./Canadian case is not unique--it reflects a globally general phenomena. And though there is no comparable data for most of the world's border zones, wherever minimal conditions exist (populations living close to a national boundary, real price differences across the boundary, and some freedom of movement), these marketing opportunities and problems will pose a significant challenge.
National boundaries are central to most definitions of international marketing, yet they have received little attention in the literature (see Boddewyn 1991; Fayerweather 1969; Kindleberger 1975 for some rare exceptions). Primary effects have received some attention in the marketing literature's discussion of trade barriers