Isomorphic pressures, peripheral product attributes and emerging market firm export performance.
| Verfasser | Brouthers, Lance Eliot |
| Posten | RESEARCH ARTICLE - Abstract |
Abstract:
* Drawing upon the neo-institutional theory of mimetic isomorphism and the concept of the extended product, we identify and empirically evaluate two potential product strategies that emerging market firms (EMFs) may use to improve their export performance while also addressing the financial, managerial expertise, and international experience limitations that they frequently face.
* Hierarchical regression is used to test our proposed peripheral product adaptation strategies on a unique dataset of 106 Chinese and Romanian exporters.
* We find that EMFs that change either of two visible peripheral product attributes (the brand name or the packaging) to conform to local market norms, on average, are more satisfied with their export performance than those that pursue other strategies. Our results also suggest that changing the brand name to conform to local market norms has more than twice the impact on EMF performance than does changing the packaging.
* Consistent with the tenets of neo-institutional theory, EMFs managers may be able to improve their firms' export performance by changing the peripheral attributes of their products to conform to local market norms.
Keywords: Export performance * Branding * Packaging * Strategy Emerging market firms
Introduction
Firms frequently face unfamiliar institutional environments when entering new international markets. This creates isomorphic pressures that affect their legitimacy and ability to succeed. To improve their success in new foreign markets, firms need to conform to new institutional norms (Brouthers et al. 2008a) which place greater demands on managerial and financial resources. Abrahamson and Rosenkopf (1993) suggest that one way for firms to address the demands imposed by international expansion is to employ a mimetic isomorphism strategy by imitating the successful strategies of host country firms. Such strategies include reinforcing national generic product stereotypes (Brouthers et al. 2000) or global branding (Samiee and Roth 1992). Each of these strategies has been used by multinational enterprises (MNEs) as a means of conforming to new institutional demands resulting in improved firm performance. Can such strategies also work for emerging market firms (EMFs)?
Unlike MNEs, EMFs typically do not have well-recognized global brands, nor are they identified with well-known generic product strategies. In addition, EMFs often lack the financial prowess, international market experience, resources, and managerial expertise (Hitt et al. 2000; Steensma et al. 2005) needed to make product changes (such as the substantial investment required to customize products on a market-by-market basis) that would allow their products to be perceived as legitimate in new host countries. For this reason, changing the product to meet local norms, a common strategy used by MNEs to improve host country market penetration, may not even be attempted by EMFs because of their financial and resource limitations and the higher product costs (Waiters and Toyne 1989) associated with designing products for specific, differentiated national markets.
Given their resource constraints, we asked whether there was a way for EMFs to improve export performance by adapting products without dramatically increasing costs. To answer this question we invoke the concept of the extended product. The extended product deals with the item the firm is actually selling. First developed by Peter and Donnelly (1991), the extended product represents an expanded view of what is actually being sold. The extended product contains the actual physical elements of the product, the credence aspects of the product like warranties, and psychological elements of the product like its packaging or brand names.
Integrating mimetic isomorphism with the concept of the extended product, we developed a new theory. Our theory suggests that consumers respond to visible external cues in making purchase decisions (Garber 1995; Underwood 2003; Underwood and Ozanne 1998) and that such cues that correspond to local market norms (mimetic isomorphism) increase firm legitimacy (Carson et al. 2007; Creusen and Schoormans 2005; Veryzer and Hutchinson 1998) resulting in better export performance. Based on this theoretical reasoning, we propose that by adapting two visible external attributes (the packaging and the brand name) to conform to local expectations, EMFs can cost effectively adapt their products, resulting in improved export performance.
In this paper we attempt to make theoretical and managerial contributions. Scholars have called for increased attention to explaining how resource-deficient EMFs can catch up to and compete with established incumbents (Li and Kozhikode 2008), particularly in ways that minimize changes to product quality (Tantong et al. 2010). Of particular note is the lack of available international marketing research that offers theoretically-grounded explanations and recommendations regarding product adaptation strategies (Schmid and Kotulla 2011).
In response to these concerns we make a theoretical contribution by combining the concept of the extended product with the theory of mimetic isomorphism which leads to a set of predictions on how to improve firm export performance by (1) focusing on extended product attributes rather than on physical product attributes in product adaptation; and (2) using mimetic isomorphism to guide the choice of exactly how to adapt the extended product. Thus, we use this combined theoretical perspective to aid in determining what attributes to adapt and how to adapt them. Previous efforts, to the best of our knowledge, have not provided theoretical a priori guidance regarding which attributes to adapt or how to adapt them.
Additionally, as Barreto and Baden-Fuller (2006) conclude, legitimacy-driven imitation may be more relevant in certain strategic contexts than in others. Their findings imply that not all mimetic isomorphism necessarily results in a positive impact on financial performance. This study builds upon this notion and extends isomorphism theory by identifying specific conditions whereby utilizing mimetic isomorphism to adapt extended product attributes can improve the export performance of emerging market firms.
We also make a contribution to managerial practice by providing a new and practical method for improving firm export performance. Managers may assume that specific firm experience is required to be able to effectively adapt product offerings to new markets (Hultman et al. 2009). For this reason firms that lack significant specific experience and only have nonspecific general exporting experience may be driven toward standardization strategies by default. Previous research (Brei et al. 2011; Calantone et al. 2004) suggests that finding new product adaptation strategies and determining their impact on export performance represents an important advancement to the product adaptation-standardization literature. Our paper attempts to do just this. We test our proposed strategy on a sample of Chinese and Romanian exporters.
Theory and Hypotheses
Neo-institutional theory recognizes that the structure and behavior of a firm is not always based on pure economic rationality, but instead may be more socially constructed, a reflection of the organization's institutional environment (Meyer and Rowan 1977). The institutional environment consists of both formal institutions, such as rules and regulations, as well as informal institutions, such as cultural norms and other "unwritten" standards of behavior (North 1990). Formal and informal institutional alignment is important to firm success and even survival because "incorporating externally legitimated formal structures increases the commitment of internal participants and external constituents" (Meyer and Rowan 1977, p. 349). Firms have a variety of strategic responses they may employ to respond to these institutional pressures (Oliver 1991).
One key element of the neo-institutional perspective is the pursuit of legitimacy. Legitimacy is defined as "a generalized perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs, and definitions" (Suchman 1995, p. 574). Firms desire to be seen as being appropriate to their key constituents. The institutional environment defines a range of acceptable behavior (Lee and Paruchuri 2008), and firms strive to satisfy these institutional expectations to gain legitimacy and maintain their ability to acquire resources, compete effectively, and survive (Kostova et al. 2008).
Overcoming the liabilities of foreignness to gain and maintain acceptance is difficult for firms operating in multiple countries because of the potential complexity of dealing with multiple institutional environments (Kostova and Zaheer 1999). The process of obtaining legitimacy can be particularly challenging for EMFs, because most international EMFs tend to be relatively small, young, and/or recently privatized (Brouthers et al. 2005; Contractor et al. 2007; De Castro and Uhlenbruck 1997). Achieving legitimacy may be even more important for EMFs than for firms from developed markets (Hitt et al. 2000) because (1) they tend to be less well known (Pangarkar 1998; Ramamurti 2012) and (2) they suffer from negative country of origin effects (Aulakh et al. 2000; Brouthers et al. 2008b; Kumar and Singh 2008).
Suchman (1995) points out there are two distinct perspectives from which to consider organizational legitimacy: Institutional legitimacy and strategic legitimacy. Institutional legitimacy focuses on how coercive and cultural pressures inherent in the institutional environment ultimately influence firms' ways of thinking, decision making, and subsequent actions. In this paper we adopt a strategic legitimacy perspective. Strategic legitimacy reflects a more deliberate use of external institutional cues...
Um weiterzulesen
FORDERN SIE IHR PROBEABO ANCOPYRIGHT GALE, Cengage Learning. All rights reserved.
