This research paper evaluates transaction cost theory and its impact on international business decisions of firms by evaluating Import/export vs FDI as market entry strategies. In this regard, this paper will adopt secondary data collection approach and identify a number of sources for collecting data from published sources. This research aims to successfully identify the efficiency of transaction cost theory for market entry decisions. By the end of this paper, it is expected that secondary sources will allow researcher to identify whether transaction cost theory is applicable for identifying effectiveness of market entry strategies and if it is effective, so which market entry strategy is appropriate out of FDI and Import/Export.

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