Internationalization and the Dynamics of Product Adaptation—An Empirical Investigation

Firms competing in foreign markets can choose to make no changes to the physical product and packaging, called a product standardization policy, which keeps costs low. The main drawback of such a policy is that the product might not satisfy customers. Conversely, firms may choose to modify, or to adapt, the physical characteristics or attributes of a product and its packaging to fit the needs and desires of consumers in different countries better, but this increases development, manufacturing, marketing, packaging, and distribution costs. Though product adaptation is a core aspect of customizing an export market offering, little research has investigated modifying the physical product and packaging. To be successful, an adapted product must add sufficient incremental revenue (through increased sales due to better satisfying customer needs and wants relative to competitive product offerings) such that the additional manufacturing and marketing costs that result from adapting the product are recovered. In this article, a model of the product adaptation process is developed. Using mail surveys, information is gathered from managers in 239 U.S. organizations and 302 South Korean organizations, all of which export products. The goal was to understand better the motivation of firms to adapt their products for export markets as well as the performance implications of adapting products. Furthermore, the model was tested in these two countries to determine if the model is robust and to uncover differences between the United States and South Korea. Using structural equation modeling to analyze the data, a positive association was found between the level of product adaptation and profitability at the project level. Second, U.S. firms appear to be more reactive when adapting products for export markets, doing so when laws and regulations in the export market mandate changes relative to the U.S. market. Conversely, South Korean firms appear to be more proactive and to adapt products even when not required by the governments of export markets. Third, greater international product adaptation is linked to a more responsive marketing organization with customer‐focused practices. Fourth, while a positive link was expected between business unit experience and the extent of international product adaptation, inconsistent results were found between the two country samples. For U.S. firms, it was found that greater experience in international business and product design capability is linked to a higher level of international product adaptation. For South Korean firms, however, a negative relationship was found. Greater international product adaptation occurred with less international business and product design experience. These findings are discussed, and areas for future research are noted.     

Export intensity and marketing in transition economies: Evidence from China

Firms in transition economies face a common adaptation problem of having to compete within increasingly marketized environments. This creates a need for managers to learn skills associated with marketing, such as those pertaining to the development of new and better products. Although distance is usually a barrier to learning, we propose that in exchange situations involving transition economy firms, the benefits of long-distance trade may outweigh the costs of knowledge acquisition. We find support for this proposition in this study by establishing a link between the export intensity of Chinese exporters and their acquisition of marketing know-how. We also find evidence that the marketing knowledge of transition economy firms has a positive effect on overall performance.     

A Product and Process Model of the Technology-Sourcing Decision

The technology‐sourcing decision traditionally has examined the choice either to innovate internally or to acquire technology from outside sources. The increasing complexity of this decision requires a move beyond the simple “make‐versus‐buy” dichotomy. We seek to test factors that influence the technology decision of subsidiaries for product and process technology across the continuum of options from internal development to outsourcing. We also explore concordance between the research streams of new product development and technology sourcing. Regression models are used to analyze data from 187 subsidiaries that suggest product and process technology development decisions sometimes are associated with similar factors and at other times they diverge. In particular, we find that external product and process technology acquisition decisions are associated negatively with differentiation goals and associated positively with product dynamism. While external product acquisition is associated negatively with a low cost goal and positively with increasing distance between primary marketing and R&D operations, external process technology acquisition is associated positively with high competitive intensity. Implications include the following: (1) While external product technology acquisition may provide quicker or even less expensive initial solutions, external reliance makes it difficult to maintain a long‐term positional advantage; (2) When greater distances separate key functional activities, external partners may provide solutions that are more responsive to local consumer needs, and the potential for improved communication may allow for quicker adaptation and increased flexibility; (3) In highly dynamic product situations, internal development, while providing greater control, can be expensive and can result in technologies that are not accepted by the marketplace; and (4) As competitive intensity increases, strategic imperatives may reduce the focus on product design and development and may require increasing concentration on manufacturing costs and efficiencies.     

The role of corporate image in business-to-business export ventures: A resource-based approach

Although a growing body of studies suggests that good corporate images have strategic value for the firms that possess them, no research to date has looked at the role of corporate image in export markets. To fill this gap in the extant literature, this study draws on the resource-based view and insights from qualitative interviews to develop a model that links an exporter's financial resources and relationship management capabilities with its corporate image advantage and its performance in the export market. Findings reveal that both financial resources and relationship management capabilities are significant contributors of corporate image advantage, which, in turn, is an important determinant of superior export performance. The study concludes with a discussion of the implications of the findings for marketing theory and practice and suggestions for future research.     

Marketing Hype: A New Perspective for New Product Research and Introduction

Marketing research procedures typically used to support new product development activities often emphasize the collection of data from potential customers, even when the product success depends on the decisions of a number of key stakeholders such as distributors, media, etc. Consequently, most conventional product introduction efforts focus on a target customer segment and ignore the needs of other stakeholders. These narrowly concentrated research efforts can lead to unfounded expectations regarding the product performance. Similarly, the lopsided focus on consumers can lead to reduced marketing effectiveness. Jerry Wind and Vijay Mahajan argue for the recognition of the process of "marketing hype," a set of prelaunch activities leading to the creation of a supportive market environment. This can lead to the creation of broader strategies that focus on the key stakeholders as subjects for new product research, and targets for the introductory marketing programs. This could lead to a richer understanding of the intergroup influences on the adoption of the new product and increase the chances of a successful new product launch.     

The effect of strategic alliance resource accumulation and process characteristics on new product success: Exploration of international high-tech strategic alliances in China

This paper examines two research questions: (1) how do strategic alliance resources influence new product outcomes, and (2) how do these effects differ under different NPD process characteristics. By integrating resource-based view and coordination literature, the authors argue that both marketing and technology resources demonstrate independent and interactive effects on new product innovativeness, speed to market, and market performance. Further, the individual effects of marketing and technology resources are moderated by the process characteristics of partner interdependence, while the interactive effect between marketing and technology resources is moderated by the development process characteristic of task interdependence. Using primary dyadic data collected from 142 international high-tech strategic alliances in China, we test and find general support for these arguments. The results provide significant theoretical implications for a variety of research streams, as well as managerial implications for strategic alliances with Chinese firms.     

Resources and capabilities driving competitive advantage in export markets: guidelines for industrial exporters

In the context of the quest for the factors that determine competitive advantage, this study adopts a resource-based view and applies it to industrial goods' manufacturers engaged in exporting activities. The notion of organizational process is used as a filtering mechanism for the development of a classificatory scheme for firms' sources of competitive advantage in export markets. Different combinations of export-related resources and capabilities are identified as drivers of cost, service, and product advantage. Nonetheless, the capability to build enduring relationships with customers emerges as essential in achieving all three types of export competitive advantage. The findings of this inquiry have important implications for business practitioners in export manufacturing firms of industrial products. Limitations of the study are considered, and future research directions are identified.     

The effect of export marketing capabilities on export performance: Moderating role of dysfunctional competition

This study utilizes multiple-informant and time-lagged primary data from 162 industrial exporting firms in Sub-Saharan Africa to contribute to an understanding of when export marketing capabilities can be deployed to drive export performance. The study finds that market responsiveness capability drives export performance when it is deployed together with a product innovation capability. The joint effect of both capabilities on export performance is weakened at high levels of dysfunctional competition in export market environment. The findings suggest that a stronger capability to respond to export market needs and a greater competence in introducing new products in export markets are not always beneficial in Sub-Saharan African markets as the resulting export performance outcome is dependent upon degrees of dysfunctional competition.     

The role of international design orientation and market intelligence in the export performance of US machine tool companies

This paper looks at the role of product design in the export performance of US manufacturing firms in the machine tool (MT) industry. Evidence from a survey of 173 MT companies points to stronger export results among firms that initiate the design process with respect to the needs of foreign buyers. In contrast, firms that enter foreign markets with products that were originally designed for domestic clients typically exhibit weaker export sales. Firms in the latter category spend less on market intelligence than their more internationally-oriented counterparts. For both groups of firms, however, a common finding is that recent interest in export expansion has been driven by rising import penetration (loss of domestic market share). The paper concludes with a brief discussion of the implications of the empirical results for future research on export marketing.     

Factors facilitating and impeding the development of export market-oriented behavior: A study of Hong Kong manufacturing exporters

We test a model of the antecedents to market-oriented behavior in firms' export operations (i.e., export market-oriented [EMO] behavior). Using data from Hong Kong-based industrial manufacturing exporters, we explain 73% of the variance in EMO activity. Our findings confirm the importance of variables such as export coordination, export experience, and the export environment in determining EMO behavior levels. However, several hypotheses are refuted, contradicting previous research findings. For instance, in our sample, centralized decision-making generally is positively related to EMO activity—particularly under conditions of high environmental turbulence: this contradicts findings of studies in Western exporting businesses where centralization generally inhibits EMO behavior. Furthermore, unlike their Western counterparts, market-based reward and training systems and managers' export commitment and emphasis on market orientation do not predict EMO behavior. We suggest that these unexpected findings may be due to differences in culture between Asian and Western businesses.