International market exit by firms: Misalignment of strategy with the foreign market risk environment

International market withdrawals by firms continue to persist regardless of geography, industry, firm experience, and national origin. The extant literature argues that a host of factors, such as firm characteristics, organizational capabilities, host country environment, international business risks, strategy and strategic choices are among the likely reasons for firms to prematurely exit the markets they have entered. Drawing from the contingency theory, we contend that underlying most market exit events is the misalignment of firm strategy with the foreign market risk environment. This happens when managers fail to optimize strategy formulation and implementation in view of the foreign market risk environment. Based on an in-depth examination of 62 cases of foreign market exits via pattern coding using NVivo 12, we delineate common patterns accounting for market withdrawals. We then formulate propositions with respect to how misalignment between strategy and risk environment interferes with foreign market exits in accordance with the contingency theory. We conclude with a discussion of theoretical implications, managerial recommendations, and suggestions for future research and limitations.     

The determinants of foreign giving: An exploratory empirical investigation of US manufacturing firms

To date, there is ample evidence on the determinants of domestic charitable contributions made by US firms. However, to the best of our knowledge, no one has investigated the determinants of foreign charitable contributions made by US firms. Using the Socrates KLD database and the US M&A data for the 2004–2010 period, we find evidence that foreign giving by US manufacturing firms is linked to certain key variables. Specifically, we find evidence that variables found significant in the domestic giving literature (pre entry return on assets, size, debt to asset ratio, market to book ratio, and research and development expense as a function of sales) are also found significant for foreign giving. However, and notably, cultural distance and foreign sales percentage have been found to be important discriminators between manufacturing firms who give abroad and those who do not. It appears that high international business experience (proxied by the foreign sales ratio) and operations in culturally distant countries motivate foreign giving. Finally, subsample analysis involving developed and developing countries suggests that cultural distance matters for developing countries, but does not for the developed country subsample. Firm level profitability matters for developed countries, but not for developing countries. Future research may be expanded to include the dollar amounts of giving and a bigger sample size. Differences in foreign giving patterns between manufacturing and non-manufacturing firms, and by firms in countries other than the US, may also be explored.     

Competitive position effects and market share: An exploratory investigation

This paper investigates the relative competitive position of a firm with a view toward determining those marketing effort dimensions that significantly influence market share. The study differs from previously published reports in that it utilizes the Profit Impact of Marketing Strategy (PIMS) data base on relative marketing effort to identify key marketing effort variables for two broad classes of goods: consumer nondurables and capital goods. The framework for a competitive positive effects model is developed in terms of nine relative marketing effort dimensions expressed along categories roughly corresponding to competitive superiority, parity, or inferiority. Hypotheses for the two classes of goods, gleaned from the available marketing literature, were empirically tested with use of linear regression models. Though the sets of coefficients relating to the nine marketing decision variables significantly differed ac across industries, similar patterns were found in both groups with respect to the relative breadth of product line and relative product quality dimensions. The results also tended to (a) support the claim of Buzzel et al. [Product Quality, Strategic Planning Institute, Cambridge, 1978] that for product quality to matter, improvements relative to competition must be substantial, and (b) show that for certain effort dimensions striving for competitive superiority may not generate sizable increases in relative market share.     

Deciding to export: An exploratory study of Singaporean entrepreneurs

This paper confirms a mapping between a taxonomy of entrepreneurs and what triggered Singaporeans to become exporters. The study involved interviews with 47 new exporters based in Singapore. Entrepreneurs were classified as either ‘opportunity seeking’ or ‘reactive’. Export triggers were either ‘pull’, negative ‘push’, or positive ‘push’. We find that those who were opportunity seeking at start-up were more likely to have responded to export ‘pull’ forces. It was rare indeed for a reactive founder to have been ‘pulled’ into exporting. Among this group of entrepreneurs, ‘push’ forces dominated the decision to export. The paper concludes with some implications for policy targeting and suggestions for further research.     

The relationship between Arab values and work beliefs: An exploratory examination

In this study, 365 employees from three Middle Eastern countries (Saudi Arabia, Kuwait, and Oman) are queried about their cultural values and work‐related beliefs. This analysis is unique both in its sample and its focus on the relationship between individual cultural values and beliefs about work. Results suggest that the cultural value dimensions individualism (p < .001) and masculinity (p < .001) are related to both an individual's beliefs about organizational commitment and work ethic. Additional findings reveal patterns between cultural values and humanistic and political beliefs. Future research directions and managerial implications are also discussed. © 2002 Wiley Periodicals, Inc.     

The importance of focus to market entrants: A study of microbrewery performance

One of the most difficult questions facing entrepreneurs is how broadly to serve a heterogeneous market. That is, whether it is better to serve a narrow segment of the market, hoping to flourish by gaining a relatively high and increasing market share within that segment, or whether it is better to attempt to appeal to a broader cross-section of the market, thereby allowing the firm to succeed with a lower market share among the customers whom it is targeting. A narrower focus permits more concentrated use of fixed resources, facilitates the building of customer loyalty, and lowers the threat of retaliation from generalist incumbents but requires a much higher market share within the firms' target market to succeed.Porter (1980) has identified three generic strategies available to firms: low cost, differentiation, and focus. By focus he means that the firm should develop the ability to serve a particular target customer group very well (often at the expense of other potential customer groups). Implicit in the firm's choice to adopt a focus strategy is that it must address the question of how broadly to focus in terms of any given product attribute, given its resources and opportunities. A fundamental element of the firm's choice of focus is that it is affected by and in turn affects that of its rivals. That is, focus is a strategic variable in the sense of the word “strategic” meant by game theorists—each firm's optimal choice of action depends on the actions taken by other firms.The literature on the optimal degree of focus for new ventures has reached very mixed conclusions. The early authors looking at the question were fairly consistent in their recommendation that a highly focused or niche strategy was generally most appropriate. Later authors recommended that new ventures should enter markets aggressively, facing larger incumbents head on. The latest studies develop what we describe as a contingency approach, arguing that the best approach depends on industry conditions.We think that this literature is now at a point where we can advance our understanding by looking at specific industries in some detail. As our understanding expands, broader empirical work is becoming increasingly difficult because of the number of factors that must be built into any cross-sectional model of new venture performance. We hope, then, to develop an understanding of one industry that is generally similar in nature to many other industries. From this understanding, conclusions of interest to both researchers and practitioners can be drawn. Future studies of other industries with different fundamental structures will provide similar benefits.More specifically, this paper is an empirical inquiry into the microbrewery segment of the U.S. brewing industry, designed to investigate the relative merits of specialist firms' different degrees of focus. The question addressed is whether focus affects specialist firms' short-run performance in an industry where there are entrenched generalists as well as many new, entrpreneurial specialist entrants.The analysis confirms several widely held beliefs of industry participants and observers: that microbreweries are far more likely to attempt to serve too broad a market segment than to focus too narrowly; that microbreweries are in direct competition with imports; and that microbreweries benefit from having many microbrewery rivals within the same state. Furthermore, there appear to be some small learning and/or reputation effects in the operation of microbreweries as well as a minor novelty factor that benefits recently opened establishments.We must note, however, that the majority of the variation in the performance of microbreweries stems from differences in the management, organization, or market of individual breweries not captured explicitly by other variables included in the study. This finding, perhaps, should not be surprising, given the huge variation in the backgrounds, skills, and outlooks of microbrewery owners during the segment's early days.The lessons learned from this research are of obvious importance to entrepreneurs in many industries. It is a very common situation for an entrepreneur to enter a stable industry in which established firms are already in place, serving a broad cross section of the market. Our findings show that in such circumstances a narrowly focused approach to the market is best.We can think of numerous examples of where entrepreneurs have either succeeded by focussing on a particular segment of the market or failed by not doing so. In fact, there are many cases in which firms have done first one and then the other. For example, and People Express Airlines at first flourished by focussing on the needs of budget-conscious leisure travellers and then collapsed, in part because it began to try to serve business travelers and others who are less price sensitive on certain routes.One of the hallmarks of an entrepreneurial business is that it suffers severe resource constraints. Because the entrepreneur's choice of breadth of focus will have profound effects on the resource requirements of the business, it is clear that the choice of which segment or segments of the market on which to focus is a fundamental decision made by all entrepreneurs. This paper serves to illustrate the importance of this focus decision and to provide some guidance for entrepreneurs concerning the appropriate degree of focus to adopt in entering an established market.     

How professional service firms compete in the market: an exploratory study

Abstract

This study investigates how professional service firms (PSFs) compete in the market. Drawing on strategic marketing literature, a managerial rather than customer perspective is adopted. The study investigates the competitive positions sought by professional service providers and the specific marketing activities actually undertaken to achieve these positions. Thirty-seven depth interviews with senior management from a range of PSFs indicate that firms seek to differentiate themselves by developing long-term relationships, providing better service quality and greater value, and developing brands with strong reputations. Organisations typically seek such interrelated competitive positions simultaneously. A list of marketing activities used by the PSFs to achieve these competitive positions offers practical insights into the specific activities needed to achieve the various competitive positions sought.     

The value of food waste: An exploratory study on retailing

Retailers are increasingly concerned with the sustainability of their business. Food waste is a major sustainability issue: 90 million tons of food are wasted in the EU every year. The production of much of this waste is directly linked to the food chain operations, included those performed at the retail stage. The literature on food waste has mainly focused so far on the quantification of the total food lost along the supply chain. However, the stage of retail has long been neglected. This paper attempts to partly fill this research gap, with the aim of measuring the extent of food waste in retailing as well as its environmental, social and economic value. To do so, we analyse the results of a food waste recovery project held in an Italian supermarket and, by drawing on the data collected in this case study, we perform an evaluation of the value of the food wasted. The results show that the extent of food waste in retailing is certainly considerable, both in terms of quantity and economic value. Moreover, we found evidence that it may be greatly reduced, with a significant limitation of its environmental impact and, through the mechanism of recovery, it may even generate social benefits. Despite the many limitations of such preliminary research, the results provide useful information for retailers aiming to develop strategies against food waste in the context of improving the sustainability of their business.     

SME foreign market entry mode choice and foreign venture performance: The moderating effect of international experience and product adaptation

Firms’ foreign market entry mode choice attracts considerable research attention. However, the performance implications of this choice remain inconclusive, particularly in the context of small and medium-sized enterprises (SMEs). The present paper draws on the resource-based view (RBV) and develops a theoretical model specifically tailored to the context of SMEs in order to study the relationship between entry mode choice and foreign venture performance. Testing hypotheses on 133 German SMEs, we show that international experience as a resource and product adaptation as a capability improve the performance of non-equity entry modes by mitigating liabilities of smallness inherent to SMEs. We furthermore find empirical support for the joint moderating effect of international experience and product adaptation on the focal relation. Our findings contribute to the SME foreign market entry mode literature and have implications for practitioners and future research.     

Retailers’ foreign market entry decisions: An institutional perspective

Institutional theory emphasizes the relationship between organizations and the environment. Institutions consist of political, cognitive and sociological elements that form the external and internal environment of a firm. Both external and internal environments affect firm decisions and behaviors. This paper introduces institutional theory as a complementary framework to explain international retailers’ foreign market entry choices and suggests propositions for further research. We also consider managerial implications in relation to this theoretical perspective as an explanation for retailers’ internationalization.     

Metaphors of hospitality organizations: An exploratory study

Metaphors are used by organizational members to characterize their employing firm and to filter their experiences in them. Metaphors thus become an important source of diagnostic information for management. This exploratory study surveyed a large number of hospitality workers to discover the metaphors they held about their employing organizations. Seven different categories were found, about a third reflecting the organizations' structure. Among the tentative findings were the prevalence of negative metaphors and that longer-term, male, and managerial employees were more likely to hold them—perhaps because of managerial concerns for control and predictability.     

Brand value chain in practise; the relationship between mindset and market performance metrics: A study of the Swedish market for FMCG

For decades, managers have analysed, planned and implemented long-term brand strategies based on customer mindset metrics (MSMs). Typically, such MSMs are customer satisfaction, liking, brand preference and Net Promoter Score (NPS). One of the core pillars, in brand management literature, is the assumed link between certain customer-based brand assets, often operationalized as MSMs, and future long-term market performance. However, few studies have systematically and broadly evaluated how the most common MSMs relate to actual performance data. This study investigates the link between the customer MSMs, most commonly used by practitioners, and their relationships with actual market performance. The paper explores 10 MSMs and 14 market performance metrics, in 10 categories, in the Swedish fast-moving consumer goods (FMCG) market. The study is based on survey data from 2007 that is compared to purchase panel household data from 2007 and 2010. Although MSMs are highly correlated to each other, their relations to brands' long-term market performance differ. A more nuanced approach to the MSM-market performance link is proposed, as there appears to be no single “silver bullet” MSM to rely on. Using a cash flow-oriented framework, the authors recommend opting for different MSMs depending on which of the three generic types of market performance (enhanced, sustained or accelerated) are targeted.     

How to give and receive: An exploratory study of charitable hybrids

Most charitable organizations can only rely on appeals to purely philanthropic motivations in attempting to solicit donor contributions. The decision processes exhibited by the targets of charitable solicitations are very different from those the same individuals use in making daily purchase decisions. Although both charitable giving and purchase contexts have been studied extensively, there are numerous organizations that require targeted customers to use a decision process that merges elements of both domains. Charitable hybrids, such as museums and universities, are such organizations, supplementing traditional revenue streams by soliciting charitable contributions, thus evoking a complex consumer decision process. For these firms, giving good service may yield an added benefit of maximizing charitable contributions received. Drawing on both the services and charitable giving literatures, a model of the consumer decision process is developed in this hybrid situation. In an exploratory test of the model, initial evidence is found that both classes of effects have significant influence on donors' intentions to give. However, in charitable giving contexts, organizational identification appears to fill a central role in influencing decision outcomes, which diminishes the role of satisfaction. The findings provide provocative evidence that further research in this setting is warranted. © 2002 Wiley Periodicals, Inc.     

Nature of the relationship between international expansion and performance: The case of emerging market firms

Internationally expanding companies would like to see how they compare with rivals in terms of the effect of internationalization on financial performance (for their sector and their firm). Virtually all such studies have focused on advanced nations. This study, on internationalization of firms based in an emerging economy (India), provides a unique research setting and sheds additional light on this relationship. It tests for the shape of the internationalization–performance curve for emerging market firms, and investigates differences between service firms and manufacturers in the threshold effect between the initial and later stages of internationalization. We find a U-shaped curve depicting the internationalization–performance relationship of Indian firms. Service sector firms tend to gain the positive benefits of internationalization sooner than manufacturing companies.     

The role of the Internet on free-riding: An exploratory study of the wallpaper industry

This study discusses the role of the Internet on possible free-riding activities for product categories where retail services are a critical part of the completed consumer purchase transaction. The study investigates free-riding in terms of consumer pre-purchase activities during the information search stage (how they process shopping information) and actual purchase decisions with a literature review. The study's empirical findings indicate that full-service retailers’ beliefs about online consumers’ choice of purchase outlet are predominantly influenced by online retailer prices rather than availability of a variety of products (place) on the Internet. This, in turn, indicates the possibility of strong free-riding opportunities in the sample wallpaper market. The study, in this context, proposes strategies and policies to eliminate many of the destructive effects of the opportunities for free-riding provided by the Internet for long-lasting channel and market effectiveness and efficiency.     

Language and cross-border acquisitions: An exploratory study

The aim of this study is to examine the effects of language on post-acquisition performance of US based cross-border acquisitions. In this study we attempt to show that post-acquisition performance is explained by the linguistic distance between the acquirer and target country of the acquisition. In addition, this study explains the moderating role of acquisition experience in the linguistic distance-acquisition performance relationship. An analysis of 1120 US acquisitions in 33 target countries over a period of 6 years (2007 to 2012) demonstrates that linguistic distance has explanatory value in post-acquisition performance. Our analysis also demonstrates that the acquirer’s cross-border acquisition experience plays a significant role as a moderator of this linguistic distance—acquisition performance relationship. In addition, our analysis of lingua franca proficiency also lends support to our hypothesized relationships and demonstrates the robustness of our findings.     

Upstream internationalization process: Roles of social capital in creating exploratory capability and market performance

This paper investigates to what extent resource governance of international ventures affects dynamic capability and market performance in the high-tech firms’ internationalization process. We examine the non-equity-based international network collaborations of high-tech firms as forms of strategic resource seeking within the internationalization process. Within the context of upstream technology collaborations by international software and hardware firms, this paper proposes and empirically examines the impact of resource governance mechanisms (i.e. trust-building and behavioral monitoring) on the exploratory capabilities of firms. The findings indicate that building trust in the internationalization process of network ventures contributes to the firm-level exploratory capabilities and, in turn, market performance. Furthermore, this paper tests the moderating effects of structural capital on the capability–performance relationship. The relationship is stronger when network relationships existed before the inception of the international technology alliance. We also find a negative moderating effect from the existence of an actual alliance and from network duration on the relationship between exploratory capability and market performance. To this end, the longevity of the alliance may not always be something firms should aim for. The paper highlights the criticality of relational and structural capital in the internationalization process and the importance of exploratory capability for creating radical innovation in high-tech industries.     

What happens to international new ventures beyond start-up: An exploratory study

Since its inception, research in international entrepreneurship has focused mainly on how and why international new ventures internationalize early on. To date, there has been hardly any research regarding the issue of continuing corporate growth in such ventures beyond their start-up phase or initial internationalization. Theoretically, we ground our study within the dynamic capabilities view of the firm and through an inductive theory building research explore how and whether international new ventures made-it beyond the start-up phase, aiming to generate early theoretical constructs to guide international entrepreneurship research in this substantive area. Grounded in data, we develop the following constructs related to made-it points: strategic experimentation, tensions in organizational gestalt, and legitimacy lies. To get to a made-it point, entrepreneurs experiment with their venture at several levels: organizational, business model, and operational. These experimentation efforts are fueled by tensions that exist in the organizational gestalt, such as ownership structure, business proposition to the market, and product development process. To legitimate themselves and their venture in the stakeholders’ eyes, entrepreneurs may tell legitimacy lies. We maintain that international new ventures do not reach a made-it point if they only manage to develop substantive capabilities to produce desired outputs at various levels within the venture but fail to create dynamic capabilities to change and reconfigure existing substantive capabilities.