Refinements in the Model of Internal/External Market Exchange
Marketing, as an evolving discipline, has recently begun to extend the boundaries of the traditional and widely accepted exchange paradigm. Authors such as Houston and Gassenheimer ( 1987), Hirschman ( 1987b), and others have attempted to refocus existing research streams toward understanding exchange on a broader basis. Consistent with the broadening theme, we have recently suggested ( Lusch, Brown, and Brunswick 1992) that marketers, in part, are ignoring the complete scope of exchange phenomena by focusing only on the traditional process of marketing, which occurs in external markets. We have suggested that marketing scholars and practioners need to recognize further the important role of internal market exchanges. 1 The internal market represents a potent "competitor" to external market exchanges since it is essentially self-production, and therefore needs to be better incorporated into marketing thought, theory, research, and practice.
The role of this chapter, therefore, is to extend our initial work, and to expand on a number of topics that are recognized in the Lusch, Brown, and Brunswick EME/IME model ( 1992). Consequently we begin with a review of the model of Internal Market Exchange/External Market Exchange (IME/EME) and in so doing draw heavily from our 1992 article in the Journal of the Academy of Science (see Lusch, Brown, Brunswick 1992) since the approach taken in this chapter assumes a familiarity with this model. Figures 5.1 and 5.2 represent the basic model and the notion of the market/exchange/value creation continuum.
The topics presented in this chapter are an attempt to venture, conceptually, well beyond the initial presentation of the IME/EME model in an effort to prompt further thinking and research in the area of exchange theory and market choice behavior (i.e., the choice between external and internal markets). Specifically, then, four areas of exploration are considered in this chapter: (1) the concept of switching costs as they relate to internal versus external market exchanges, (2) the critical role of several key model constructs in determining market choice, (3) the moderating role of contextual issues such as the longivity of an internal market