Learning orientation, firm innovation capability, and firm performance

Contemporary organizations require a strong learning orientation to gain competitive advantage. Based on in-depth interviews with senior executives and a review of the literature, the present investigation delineates four components of learning orientation: commitment to learning, shared vision, open-mindedness, and intraorganizational knowledge sharing. A framework is tested using data from a broad spectrum of US industries. Learning orientation is conceptualized as a second-order construct. Its effect on firm innovativeness, which in turn affects firm performance, is examined. The results generally support theoretical predictions, and some interesting findings emerge.     

Bounds for best response functions in binary games

This paper studies the identification of best response functions in binary games without making strong parametric assumptions about the payoffs. The best response function gives the utility maximizing response to a decision of the other players. This is analogous to the response function in the treatment-response literature, taking the decision of the other players as the treatment, except that the best response function has additional structure implied by the associated utility maximization problem. Further, the relationship between the data and the best response function is not the same as the relationship between the data and the response function in the treatment-response literature. We focus especially on the case of a complete information entry game with two firms. We also discuss the case of an entry game with many firms, non-entry games, and incomplete information. Our analysis of the entry game is based on the observation of realized entry decisions, which we then link to the best response functions under various assumptions including those concerning the level of rationality of the firms, including the assumption of Nash equilibrium play, the symmetry of the payoffs between firms, and whether mixed strategies are admitted.     

Competitive price-matching guarantees under imperfect store availability

This paper analyzes the role of verification of product availability in the context of competitive price-matching guarantees (PMGs). PMGs involve a retailer matching any lower price offered by competition for an identical item. Until now, researchers focused on the scenario where customers can receive the lower price with a simple proof (e.g., weekly flyers). However, in reality, retailers reserve the right to verify the availability at the competitor location; if the product is not available there, then the price-match request might be declined. We develop a price competition model to investigate the effects of verification of availability on price decisions and profit levels of competing retailers. In our model, demand is driven by the availability levels of retailers as well as the price-search cost and store-switching cost incurred by customers. Price-search cost leads to two customer segments: uninformed ones who have no knowledge about prices, and informed ones who are knowledgeable about prices. On the other hand, store-switching cost determines how many customers search for the product at an alternative location because of high price or unavailability at their preferred retailers. Our analysis reveals, among others, that the outcome of availability verification is linked to three factors: price-search cost, store-switching cost, and the reservation prices of customer segments. Verification of availability allows retailers to price discriminate customers who could not be discriminated otherwise, specifically those belonging to the informed customer segment. Furthermore, it is a significant profit-enhancing mechanism only if there are switching customers in the market. Interestingly, even though customers view the verification of availability as a hassle, it can actually result in them paying lower retail prices by increasing the level of retail price competition.     

Complementary approaches to preliminary foreign market opportunity assessment: country clustering and country ranking

Companies seeking to expand abroad are faced with the complex task of screening and evaluating foreign markets. How can managers define, characterize, and express foreign market opportunity? What makes a good market, an attractive industry environment? National markets differ in terms of market attractiveness, due to variations in the economic and commercial environment, growth rates, political stability, consumption capacity, receptiveness to foreign products, and other factors. This research proposes and illustrates the use of two complementary approaches to preliminary foreign market assessment and selection: country clustering and country ranking. These two methods, in combination, can be extremely useful to managerial decision makers in the early stages of foreign market selection.     

Marketing supplementary food products in LDCs: A case study in Morocco

Developing country governments as well as a number of international agencies have become directly involved in the past two decades in the production and marketing of supplementary food products. This article discusses the Moroccan government's involvement in introducing a weaning food targeted for elaborates on the factors which contributed contributedm to the failure of this and other similar ventures, while drawing attention to the important low-income Moroccan children. It role that marketing plays in launching socially desirable food products in developing country environments.     

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.     

Why do over-deviated firms from target leverage undertake foreign acquisitions?

This paper examines how deviation from firms’ target leverage influences their decisions on undertaking foreign acquisitions. Using a sample of 5746 completed bids by UK acquirers from 1987 to 2012, we observe that over-deviated firms are more likely to acquire foreign targets. Consistent with co-insurance theory, we find that over-deviated firms engage in foreign acquisition deals to relieve their financial constraints and to mitigate their financial distress risk. We also note that foreign acquisitions enhance over-deviated firms’ value and performance, measured by Tobin’s q and return on assets (ROA) respectively. These findings support the view that over-deviated firms pursue the most value-enhancing acquisitions. Overall, this paper suggests that co-insurance effects, value creation and performance improvements are the main incentives for over-deviated firms’ involvement in foreign acquisitions.     

Differences among exporting firms based on their degree of internationalization

An overwhelming majority of the investigations of company export behavior have utilized data obtained from all types of firms in a sample. An alternative approach would involve disaggregating the sample into some meaningful groups and contrasting company characteristics across the subsamples of firms. This study attempts to delineate differences among exporting firms when firms are classified by their degree of internationalization. Three types of exporters are identified in light of the internationalization hypothesis: experimental exporters, active exporters, and committed exporters. These firms are then contrasted with each other with respect to measurable company characteristics, domestic market environment, nature of international business involvement, marketing policy aspects, and export market research practices. The analysis in the paper is based upon data gathered through personal interviews with the executives of 70 midwestern manufacturers. The study reveals significant differences among the three types of exporters and provides further insights into the export marketing behavior of firms.