Marketing Strat and Marke Competition

AMERICAN MARKETING
ASSOCIATION
Marketing Strategy and its Relationship with market competition towards Business
performance:An Investigation of the Empirical Link in Export Market Ventures
Author(s):S.Tamer Cavusgil and Shaoming Zou
Source:Journal of Marketing,Jan.,1994,Vol.58,No.1(Jan.,1994),Pp.1-21
Published by:Sage Publications,Inc.on behalf of American Marketing Association
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S.Tamer Cavusgil &Shaoming Zou
Marketing Strategy and its

Relationship with market
competition towards Business
performance:An Investigation
of the Empirical Link in
Market Ventures
The relationship between marketing strategy and performance has been well documented in the domestic market-
ing context.However,empirical work in the context of export marketing has been fragmented.The authors investi-
gate the marketing strategy-performance relationship in the context of export ventures.The study differs from pre-
vious export marketing studies in that(1)a comprehensive set of potential determinants of export market perfor-
mance is considered;(2)the unit of analysis is the individual product-market export venture,rather than the firm or
a business division;and (3)the analysis is based on in-depth personal interviews.The authors propose a concep-
tual framework of export marketing strategy and performance and test it by path analysis.The results support the
contention that export marketing strategy,firm's international competence,and managerial commitment are the key
determinants of export performance.Export marketing strategy is influenced by internal (firm and product charac-
teristics)and external factors (industry and export market characteristics).They then discuss implications for man-
agement and further research.
hough empirical support for the marketing strategy- With globalization of markets and competition,foreign
performance relationship has been provided by a num- markets have become increasingly viable and natural oppor-
ber of studies,most of these studies have been based on the tunities for growth-oriented domestic firms.Therefore,it is
PIMS Project and focused on company performance in the of practical as well as theoretical importance to address
domestic marketing context (e.g.,Buzzell and Gale 1987; such strategy questions as (1)Can the marketing strategy-
Land 1978;Philips,Chang,and Buzzell 1983;Robinson performance relationship be empirically verified in the con-
and Fornell 1986;Schoeffler 1977).In the international mar- text of export ventures?(2)To what extent is export market
keting context,a handful of studies (e.g.,Bilkey 1982;Chris- performance influenced by deliberate marketing strategy im-
tensen,da Rocha,and Gertner 1987;Cooper and Klein- plementation?and(3)What are the factors that contribute
schmidt 1985;McGuinness and Little 1981;Rosson and to success in export market ventures?These questions pro-
vide the rationale for the empirical investigation of export
Ford 1982)have suggested that export performance is influ- marketing strategy and performance reported here.
enced by export marketing strategy.Because of conceptual
and methodological problems associated with these studies, Specifically,our purpose is threefold:(1)to substantiate
however,their results are fragmented and the relationship be- the empirical link between marketing strategy and perfor-
tween export marketing strategy and export performance re- mance in the context of export ventures;(2)to contribute to
mains an unresolved issue(Aaby and Slater 1989;Madsen a more comprehensive understanding of the variables im-
1987). pinging on export marketing strategy and performance;and
(3)to lay a theoretical foundation on which further inquir-
ies can be based.Three distinctive features should be noted
S.Tamer Cavusgilis Professor of Markeling and lntemational Business, at the outset.First,the unit of analysis is an individual prod-
and Executive Director of the Center for International Business Education uct-market export venture of firm,which is defined as mar-
and Research (CIBER)at Michigan State University.Shaoming Zou is a keting of a specific product in a specific export market.The
doctoral candidate in Marketing and International Business at Michigan case in which a product is marketed in two markets or two
State University.The authors gratefully acknowledge the assistance of Pro- products are marketed in the same market is considered two
fessor G.M.Naidu of the University of Wisconsin Whitewater with the col
export ventures.Second,incorporated in the proposed frame-
lection of data on some of the export ventures.They also thank Dale
Duhan,Thomas Page,Catherine Axinn,Masaaki Kotabe,Roger Calan-
work is a theoretical conceptualization that export perfor-
tone,and Comelia Droge for their comments on an earflier version of this mance is determined by the coalignment between export
article.Finally,they are gratetul to three anonymous JM reviewers and marketing strategy and internal and external environments
Thomas Kinnear for their insightul and construclive reviews. of the firm.Furthermore,export performance is conceived
as the accomplishment of strategic as well as economic ob-
Journal of Marketing
Vol.58(January 1994),1-21
Marketing Strategy-Performance Relationship 11
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jectives.Third,data have been collected through in-depth nalize the firm-specific advantages,both tangible and intan-
personal interviews with marketing managers directly in- gible,to extract maximum economic rent.Because firm-
volved in the export ventures studied.This is regarded to be specific advantages are derived not only from the develop-
a superior alternative to a mail survey in terms of collecting ment and marketing of a particular product but also from
reliable venture-specific data. the total learning process of the firm,export performance
could be investigated at the firm level.
It should be noted that the context of this study can be
categorized as “expansion of national markets”in Douglas Though these studies have contributed to our knowledge
and Craig's (1989)three-stage evolution framework (i.e.,in- of export behavior,there are notable limitations associated
itial foreign market entry,expansion of national markets, with firm-level investigations of export marketing strategy
and global rationalization).Firms at different stages differ and performance.Considerable variations in export market-
in their international experience,extent of international in- ing strategy and performance often exist across various prod-
volvement,strategic thrust,international levers,and strate- uct-market export ventures of the same firm.It is unrealis-
gic decisions (Douglas and Craig 1989).The rest of the ar- tic to expect that the same marketing strategy can lead to
ticle is organized into six sections:First,key areas in which the same results in all export market ventures (Douglas and
the present study extends the previous literature on the ex- Wind 1987).Consequently,if the export marketing strategy-
port marketing strategy-performance relationship are high- performance relationship is investigated at the overall firm
lighted;second,a broad conceptual framework of export ievel,aggregating all product-market export ventures,con-
marketing strategy and performance is proposed;third,the founded findings are likely to result (Madsen 1987).There-
design of the study and the methodological procedures are fore,the position taken in this research is that the individual
described;fourth,the broad framework is operationalized product-market export venture must be taken as the unit of
into a testable model,and research hypotheses are devel- study to obtain a more precise measurement of the export
oped;fifth,the findings of the study are presented and dis- marketing strategy-performance relationship.
cussed;and finally,a set of managerial implications are The second issue is the failure of previous studies to in-
drawn. corporate strategic considerations in exporting.Previous
studies have viewed exporting simply as a means of realiz-
ing the economic goals of the firm.Performance has been
Issues in Export Marketing Strategy measured in terms of sales or profits,with no deliberate at-
and Business tempt to relate it to a firm's strategic and competitive goals,
such as gaining a foothold in foreign markets or neutraliz-
Performance ing competitive pressure the firm faces in the domestic mar-
The link between export marketing strategy and perfor- ket.Furthermore,these studies have posited that firm,prod-
mance has been investigated as part of a stream of export- uct,industry,and export market factors determine export per-
ing literature involved with explaining the success or fail- formance directly.The central role of proactive marketing
ure of a firm's exporting activities.These studies typically strategy in determining export performance has not been em-
attempt to identify key factors that contribute to successful phasized.As a result,research on exporting is becoming in-
export marketing.Among the key success factors high- creasingly isolated,with inquiries consisting of a“mosaic”
lighted are export marketing strategy;management atti- of autonomous endeavors(Aaby and Slater 1989).
tudes;and other firm,industry,product,and export market
factors(Aaby and Slater 1989;Bilkey 1982;Cavusgil The need for strategic considerations in marketing theory
1983;Christensen,da Rocha,and Gertner 1987;Cooper has been emphasized by Day and Wensley(1983),
and Kleinschmidt 1985;McGuinness and Little 1981;Ros- Lambkin and Day (1989),and Wind and Robertson (1983).
son and Ford 1982).In their review article,Aaby and Slater Increasingly,firms have treated export markets as strategic
as well as economic opportunities.Given intense interna-
(1989)suggest that export performance is directly influ- tional competition,it is believed that export marketing re-
enced by a firm's business strategy.Using factor analysis, search can be enriched if exporting inquiries incorporate stra-
Cavusgil (1983)demonstrates that marketing decision varia- tegic considerations.This implies that exporting should be
bles influencing successful export marketing can be reviewed as a firm's strategic response to the interplay of in-
duced to(1)basic company offering,(2)contactual link ternal and external forces,export marketing strategy should
with foreign distributors/agents,(3)export promotion,and be emphasized as a key determinant of export performance,
(4)pricing and the strategic dimensions of export performance must be
Though past research points to a link between export mar- tapped.
keting strategy and performance,there are at least three is-
The third issue relates to the diversity of conceptualiza-
sues in previous studies that undermine their findings re-
ion and measurement of export marketing strategy and per-
garding the nature and strength of the relationship between
formance and the simplistic nature of research approaches
export marketing strategy and performance.The first is the
employed in some previous studies.Both Madsen(1987)
level of analysis.With few exceptions,previous studies
and Aaby and Slater(1989)observe that export marketing
have been conducted at the overall firm level.As a result,ex-
strategy and performance were conceptualized and operation-
port marketing strategy and performance were conceptual-
alized in many different ways by different researchers.
ized as firm-specific characteristics.An underlying theoret-
They point out that researchers previously have made little
ical justification for firm-level studies is the theory of inter-
effort to identify measurement difficulties,sampling,va-
nalization(Buckley and Casson 1985;Rugman 1981),
which states that,in an imperfect market,firms should inter-
21Joumal of Marketing,January 1994

lidity,or particular technical problems.Data collection meth- management.The particular theoretical perspective adopted
ods have ranged from unstructured personal discussions to here is the principle of strategy-environment coalignment
structured mail surveys to in-depth interviews,and analyti- (Aldrich 1979;Porter 1980;Venkatraman and Prescott
cal approaches have ranged from simple frequencies to so- 1990),which states that the“fit”between strategy and its
phisticated multivariate techniques.As a result,confusing context—whether it is the external environment (Anderson
and even contradictory findings have surfaced in the litera- and Zeithaml 1984;Hofer 1975)or organizational character-
ture(e.g.,the effect of firm size on export performance). istics(Chandler 1962;Gupta and Govindarajan 1984)—has
These discrepant findings hinder not only practice,but also significant positive implications for firm performance.The
theory development in export marketing.Hence,there is an principle has its roots in the structure-conduct-performance
urgent need for an integrated approach to export marketing framework of industrial organization(cf.Scherer and Ross
inquiry.Such an approach must explicitly deal with the 1990)and rests on two premises:(1)Organizations are de-
measurement as well as conceptualization of export market- pendent on their environments for resources (Pfeffer and Sal-
ing strategy,export performance,and factors internal and ex- ancik 1978)and (2)Organizations can manage this depend-
ternal to the firm. ence by developing and maintaining strategies (Hofer and
Schendel 1978).
A Proposed Conceptualization of A conceptual framework of export marketing strategy
and performance based on the coalignment principle is pro-
Export Marketing Strategy and posed in Figure 1.The framework postulates that marketing
Export Performance strategy in an export venture is determined by(or aligned
Exporting can be conceptualized as a strategic response by with)internal forces such as firm and product characteris-
management to the interplay of internal and external forces. tics and external forces such as industry and export market
As such,the strategy and performance of export marketing characteristics.The performance of the export venture,in
can be analyzed within the general framework of strategic turn,is determined by export marketing strategy and firm
FIGURE 1
Marketing
Strategy
• Sales force
effectiveness
• Customer
Service quality
Business Performance
• Net profit Margin
Market
Competition
• Profitability
• Customer
Satisfaction
TABLE 1
Business Pertormance Measures Used in Previous Research
Performance Measure lllustrative Studies
Export sales level Bello and Wiliamson (1985);Bilkey (1985);Cavusgil (1984a);Cooper and Klein-
schmidt (1985);Fenwick and Amine (1979);Madsen (1989);McGuinness and Little
(1981);Sood and Adams (1984);United Kingdom Awards (U.K.Awards)
Export sales growth Cooper and Kleinschmidt (1985);Kirpalani and Maclntosh (1980);Madsen(1989);
U.K.Awards
Export profits Bilkey(1982,1985);Madsen (1989);U.K.Awards
Ratio of export sales to total sales Axinn (1988);U.K.Awards
Ratio of export profits to total profits U.K.Awards
Increase of importance of export to U.K.Awards
total business
Overcoming barriers to export Bauerschmidt;Sullivan;and Gillespie(1985);Sullivan and Bauerschmidt (1987)
U.K.Awards
Propensity to export Bilkey(1985);Cavusgil (1984b);Denis and Depelteau (1985);Kaynak and Kothan
(1984);Piercy(1981a);Reid (1986);Rosson and Ford (1982
Acceptance of product by export dis- Angelmar and Pras (1984)
tributors
Export involvement Diamantopoulos and Inglis (1988
Exporter internationalization Piercy(1981b)
Attitudes toward export Brady and Bearden (1979);Johnston and Czinkota (1982
characteristics (e.g,,a firm's capability to implement the cho- into a foreign market,are achieved through planning and ex-
sen strategy).In contrast to previous exporting studies that ecution of export marketing strategy.A firm usually initi-
postulate direct links from product,industry,and export mar- ates an export venture with a number of objectives,which
ket characteristics to export performance (e.g.,Cooper and can be economic (i.e.,profits,sales,or costs)and/or strate-
Kleinschmidt 1985;Madsen 1989),the proposed conceptu- gic(ie,market expansion,competitive response,gaining a
alization posits that these links are mediated by export mar- foothold in foreign market,or increasing the awareness of
keting strategy,highlighting the central role of marketing the product/firm).Subsequent to formulation and implemen-
strategy in determining performance.This is because for var- tation of export marketing strategy,some objectives can be
ious states of the export venture's context as defined by prod- achieved fully,others only marginally.The extent to which
uct,industry,and export market characteristics,export mar- a venture's strategic and economic objectives are achieved
keting strategy must be adapted so that strategy-environ- is therefore a gauge of the performance in the export
ment coalignment and subsequent positive performance can venture.
be achieved. There is no uniform definition of export performance in
The proposed framework incorporates three key features. the literature.Table 1 illustrates a variety of export perfor-
First,the unit of analysis underlying the framework is the in- mance measures adopted by previous researchers as well as
dividual product-market export venture,rather than the total the criteria employed by govermment agencies.The most fre-
export activity of the firm.Second,the framework posits quently used performance measures appear to be economic
that export performance involves both strategic and ec- in nature—such as export sales,export growth,and profits
onomic considerations.Third,the framework is presented from exports—and taken at the firm level,making it impos-
in general terms,with export marketing strategy,internal sible to precisely express the export marketing strategy-
forces,and external forces representing broad categories of performance relationship.Here,the export performance
variables.This is because the existing exporting literature is measure(1)is expressed at the product-market export ven-
not very helpful in terms of suggesting specific constructs ture level,(2)incorporates both economic and strategic di-
or measures for the proposed conceptualization.Therefore, mensions,and (3)includes both objective and subjective
no a priori testable model is assumed and further operation- measures.
alization of the framework is sought through the empirical Export marketing strategy.Export marketing strategy is
research reported in this article.
the means by which a firm responds to the interplay of in-
ternal and external forces to meet the objectives of the ex-
Key Components and Relationships port venture.It involves all aspects of the conventional mar-
Export marketing performance.Export performance is de- keting plan,including product,promotion,pricing,and dis-
fined as the extent to which a firm's objectives,both eco- tribution.In international marketing,the key consideration
nomic and strategic,with respect to exporting a product is whether the marketing strategy should be standardized or
mand potential,cultural similarity to home market,familiar-
ty with the product,brand familiarity of export customers,
4/Joumal of Marketing,January 1994 and similariy of legal and regulatory frameworks.
Research Design
adapted to the conditions of the foreign market
(Douglas and Craig 1989).The degree of marketing Overall Design
adaptation versus standardization is a function of
product,industry,market,organization,and Because there is no well-established conceptualization or
environmental characteristics (Buzzell measures of relevant constructs in the export marketing lit-
1968;Cavusgil,Zou,and Naidu 1993;Jain 1989; Walters erature (Aaby and Slater 1989),a parsimonious multi-phase
1986).Therefore,we evaluate export marketing strategy research design is adopted here to operationalize and test
along the standardization-adaptation continuum. the proposed conceptual framework in Figure 1.First,data
pertinent to potentially significant variables (see Appendix
Firm characteristics.Firms'capabilities and constraints B)uncovered by the exporting and standardization litera-
profoundly influence their choice of marketing strategy and ture are collected.Second,the sample is split into two
ability to execute the chosen strategy(Aaker 1988;Porter subsamples and an exploratory factor analysis (EFA)is per-
1980).Key assets and skills of a firm constitute its sources formed on the analysis subsample to uncover the underly-
of sustainable competitive advantage (Day and Wensley ing factor structure of each category of explanatory varia-
1988;Porter 1985).In export marketing,the relevant assets bles.Third,an analysis of the content of factors and items
and skills of a firm include size advantages (Reid 1982),in- is performed to ensure the consistency of the substantive
ternational experience(Douglas and Craig 1989),extent of meaning of items in the same factor and purify the factors.
international business involvement,and resources available Fourth,using the literature,the proposed conceptual frame-
for export development (Terpstra 1987).Possession of such work is operationalized into a testable model,and hypothe-
assets and skills enables an exporter to identify the idiosyn- ses pertaining to the relationships in the operational model
cracies in the export markets,develop appropriate market- are developed.Fifth,a confirmatory factor analysis (CFA)
ing strategy,and execute it effectively.Therefore,firm char- is performed on the hold-out subsample to test the measure-
acteristics affect export marketing strategy and ment model of export performance and factors included in
performance. the operational model.Finally,a path analytic procedure is
Product characteristics.The specific marketing strat- performed on the hold-out subsample to assess the opera-
tional model and test the hypotheses.
egy in an export venture is influenced by product character-
istics(Cavusgil,Zou,and Naidu 1993;Cooper and Klein-
schmidt 1985;McGuinness and Little 1981).Product attrib- Instrument
utes can affect the positional competitive advantage (Day
and Wensley 1988),which influences the choice of an offen- Results from previous studies on exporing and standardiza-
sive or defensive strategy(Cook 1983).Relevant product tion formed the basis for developing an instrument for data
characteristics that influence export marketing strategy in- collection.The instrument was semi-structured in the sense
clude culture-specificity,strength of patent,unit value, that it contained a list of variables and the intended scales
uniqueness,age,and service/maintenance requirements of for measuring them,but no specific questions.The ration-
product. ale for using a semi-structured instrument was to enable the
researchers to tailor the questions to the specific contexts of
Industry characteristics.The intensity of exporting activ- the export ventures during the interviews and ensure that
ity and the nature of export marketing strategy vary consid- the interviews were specific to the ventures studied.Ini-
erably across industries.This is largely a result of the vary- tially,a series of preliminary interviews were conducted
ing nature of industries (Porter 1980).Industry structure has with export marketing managers directly involved in 15 ex-
been considered a key determinant of firms'strategy in do- port ventures to(1)verify and improve the relevance of the
mestic market context (Kerin,Mahajan,and Varadarajan variables suggested by the literature,(2)validate and mod-
1990;Porter 1980).In export marketing,analysis of the re-
lationship between industry structure and marketing strat- IThe exploratory factor analyses are performed by the procedure FAC-
egy must incorporate the significant variations in the mar- TOR in SPSS,whereas the confirmatory factor analysis is performed by
ket systems,government interventions,and presence of for- multiple groups analysis (MGRP)in the computer program PACKAGE
eign competitors across markets.In addition,technology (Hunter et al.1980).Path analysis is performed also via PACKAGE.
intensiveness and intensity of price competition in the indus- MGRP is a confirmatory factor analytic technique developed by Spearman
try also must be considered as the relevant correlates of ad- (1952).The detailed description of this approach can be found in Anderson
aptation of marketing strategy(Jain 1989). and Gerbing (1982)and Hunter and Gerbing(1982).The MGRP provides
estimates that are adequate for most practical purposes (Lawley and
Export market characteristics.Conditions in foreign Maxwell 1963)and information that more readily suggests model respeci-
markets pose both opportunities and threats for exporters. fication(Anderson and Gerbing 1982).It should be noted that,given the na-
ture of the study,relative complexity of the operational model and moder-
Export marketing strategy must be formulated in such a ate sample size,we believe that full information techniques,such as Maxi
way to match a firm's strengths with market opportunities mum Likelihood,are not suitable for our study(cf.Anderson and Gerbing
and neutralize the firm's strategic weaknesses,or to over- 1982;Anderson,Gerbing,and Hunter 1987).
come market threats(Aaker 1988;Terpstra 1987).Conse-
quently,export marketing strategy tends to be conditioned
by export market characteristics(Cavusgil,Zou,and Naidu
1993;Cooper and Kleinschmidt 1985;Rosson and Ford
1982).The key characteristics of the export market that can
affect the choice of export marketing strategy include de-

ify the scales intended to measure the variables,and (3)de- tive's answer to the questions pertinent to the variable,as
vise and verify a procedure that the researchers would use well as the words given by the executive that would suggest
to assign scores to variables. the score.This procedure ensured that sufficient and consis-
The final,refined instrument contained six groups of var- tent information had emerged from the discussion before
iables intended to measure firm,product,industry,and ex- the score was assigned.Furthermore,without being dis-
tracted by the need to read the instrument and assign
port market characteristics,as well as export marketing strat-
scores,the responding executives were able to discuss the ex-
egy and performance.The five groups of explanatory varia-
port venture in great detail.
bles were measured primarily by five-point bipolar scales,
though classifications and rating scales were also used to Immediately following the interview,the two research-
tap some variables (see Appendix B).The content validity ers independently reviewed the information about the ven-
of the instrument was established during the preliminary in- ture,and confirmed and finalized the scores they assigned
terviews,because those variables and scales deemed irrele- to the variables.They then met to discuss their ratings,re-
vant by the responding managers were not included in the solve any differences,and reach a final agreement on the
scores assigned to each of the variables.Overall,the inter-
final instrument
rater agreement (calculated as the number of variables to
Sample and Data Collection which the two researchers assigned the same score as a per-
Data were collected through in-depth personal interviews centage of the total number of variables measured by five-
with export marketing managers who were involved di- point bipolar scales)averaged about 80%prior to resolving
rectly in the particular ventures under study.Personal inter- their differences.All differences between the two research-
views enabled discussion of export ventures in the total con- ers were reconciled subsequent to the discussions.Because
text of company history,policies,and future plans.They information pertaining to classification variables was
also ensured that (1)the managers chosen were those who straightforward,these variables did not require the research-
were directly involved in the export ventures studied,(2) ers to assign scores.Furthermore,performance measures
the managers fully understood the purpose of the study and were directly reported by the managers near the end of the
the exact measures solicited by the interviewers,and (3)a interviews.
particular interview was focused on an individual product-
market export venture,excluding other export ventures of At the completion of data collection,information pertain-
the same company.Given the need to collect data at the ex- ing to 202 export venture cases from 79 firms across 16 in-
port venture level and the complexity of the individual ven- dustries was obtained.Of these 202 cases,about 47.5%
tures studied,it was believed that the data collected through were related to consumer products,42.6%to industrial prod-
in-depth personal interviews were more comprehensive,ac- ucts,and 9.8%to products that could not be classified
curate,and reliable than what would have been possible clearly.All respondents were from manufacturing firms,
through a mail survey. with average annual sales of $200 million and average num-
ber of full-time employees of approximately 1000 (see Ap-
The interviews were conducted in Illinois,Indiana,Mich- pendix A for a profile of the sample).Most of the sampled
igan,Ohio,and Wisconsin.The list of companies with ex- export ventures had a history of between 5 and 12 years,al-
port marketing operations,which constituted the study pop- lowing for a long-term measure of export performance.In
ulation,was compiled first from state export promotion agen-
cases in which a company provided more than one export
cies and from several trade associations.Next,the export
venture case,each interview regarding a particular venture
marketing managers in these firms were contacted by tele-
was conducted independently of interviews regarding other
phone to ensure that they were qualified (directly involved
in an export venture)and willing to participate in the study. ventures of the same company.This was accomplished by
Then an appointment was made for an interview.The inter- interviewing different managers involved in different ex-
views were conducted over a period of one year,each last- port ventures of the same company.
ing about two hours. Given the fact that we investigated export market perfor-
During each interview,two experienced international mance,one might expect that only successful exporters
marketing researchers were present.Following the semi- would be willing to participate in the interviews.This was
structured instrument as a guide and using an open-ended not the case,however.In fact,nearly 30%of the respon-
format,they probed the manager about the company's inter- dents perceived their ventures to be unsuccessful;about
national business involvement;the export venture's plan- 20%of the ventures reported negative growth or no growth
ning and entry,export marketing strategies,strategic and ec- in export sales;and about 25%of the ventures were
onomic goals,and performance;and other aspects pertain- unprofitable.
ing to product,industry,and export market characteristics.
They also collected background reports,product literature, Export Marketing Performance and
and export marketing plans that were pertinent to the ven- Explanatory Variables
ture.Following the standard procedure established in the pre- We captured four aspects of an export venture's perfor-
liminary interviews,the researchers independently assigned mance:(1)the extent to which the initial strategic goals of
a score to each of the variables measured by five-point bi- management were achieved,(2)the average annual growth
polar scales.The basis for assigning a score to a variable rate of export sales over five years of the venture,(3)the
consisted of the researchers'judgment about the execu- overall profitability of exporting over five years of the ven-
61Journal of Marketing,January 1994

ture, and (4) management’s perceived success of the specification from pricing strategy (relabeled as price
venture. competitveness), frm’s relative position in industry from in-
Using the preliminary interviews, seven strategic goals ternatonal business intensity, product’sunit price from prod-
were preset in the instrument (see Аррепdіх В). Near the uct features (relabeled as product uniqueness), intensity of
end of the interviews, researchers asked managers to indi- price competition from industry characteristics (relabeled as
cate the relative importance attached to each goal by allocat- technology orientation of industry), and product exposure
ing a constant-sum (100 points) to the individual goals pro- from export market compettve intensity. The measure-
portonal to their importance. Managers also were asked to ment model for export performance and the purified’ fас-
elaborate on whether these goals were met. We computed tors is presented in Table 3.
the extent to which the initial strategic goals were achieved
as the weighted sum of the importance of the initial strate- Operational Mode/
gic goals, with weights of 0 (the goal was not achieved) or
1 (the goal was achieved). Next, managers indicated their We decided to include a factor in the operational model on
perceived success ofthe export ventures on a 10-point bро- the basis of whether there is theoretical or empirical rele-
lar scale (1 = unsuccessful, 10 = successful). Then they vance of the factor, the relationships between the factor and
were asked to indicate the annual export sales growth rates other included factors are consistent with the proposed the-
оуeг а fуе-уеаг рeriоd ofthe ventures and wheter the ven- oretcal framework, and the factor contributes to the explan-
ture was profiabe in each ofthe fve уeaгз Ауегаде ап- atoгу pоwer ofhe model Onte bass of expor marketng,
nual sales growth rate as well as the overall profitability standardization, and strategic management literature, 12 fac-
оуег Ше Йуе уеагз оГше уепиге меге сотриед ю tors were selected for inclusion and the conceptual frame-
сарШге the economic measures о[ ехрог work was operationalized into the testable model in Figure
регГогтапсе. Тпезе гоиг indicators were summed into 2. The five remaining factors were excluded from further
a composite scale for measuring export performaпсе. analysis for one of two reasons: they were judged to be less
relevantto he proposed conceplual framework based on re-
Potential explanatory variables were categorized into
view of the fterature or, though making minimal explana-
fve groups, which are associated wih expor marketпв
toгy contibuton, they would reduce te parsimony ofthe
strategy, firm characteristics, product characteristics, indus-
try characteristics, and export market characteristics. With model.
the ехсерйоп of the frm characteristcs that were measured
at the frm level, all other varables were defned and meas- Research Hypotheses
ured at the product-market venture level. The measurement Ехроп тагкеппв регогтапсе . Тпе регГогтапсе
scales used are shown in Appendiх В . оГап ех- porl venture is determined Ьу ехрогt
marketng strategies and managemen"s capabiiy to
Operatonal Model and Hypotheses implement the strategies (Aaby and Slater 1989; Соорег
and Kleinschmidt 1985). Whnen expor marketng
ЕЕА on Analysis Subsample and strategies are coalgned wi ше соп- text оГап ехрort
Duiicaion ol Factorg venture as defnед Ьу frm, product, indus- ігу, апа ехрог
тагке сПагастепбйсв, ровййуе регГогтапсе can Ье
The sampe was frst splt ino two subsamples—te analy- ехресted for the venture (Anderson and Zeithaml 1984;
sis subsample and the hold-out subsample—each contain- Porter 1980; Venkatraman and Prescott 1990). ргоd- uct
ing 101 cases. Onthe analyss subsample, an EFA wih pnп- adaptaton, promoton adaptation, and competitive pnicing
cipal component extraction and varimax rotation was ар- strategies have been described as the means by which
plied to each category of explanatory variables. In Table 2, hrmns' оfЁeгпдз адарttо ог Ёнше лфовупсгастев оЁ
which is arranged so that variables belonging to the same Ёогейдп markets (Douglas and Craig 1989; Douglas
factor are grouped together, we present 17 factors extracted and Wind 1987; Ouelch and Hoff 1986; Walters and
from the analyses and the preliminary labels assigned to Toyne 1989). Therefore, lese strategies can be
them. interpreted as the means Ьу which a frm achieves
coalgnment between the marketing strategies and inlernal
Recognizng hat ablnd’’ EFA can result in factors and external context of the expor venture. Therefore, itis
that lack substantive meanings and are inappropnate for the-
expected that ехрог регїогпапсе із inIuenced posiivelу
огy development, a thorough analysis of the substantive
Ьу product adaptaйоп, рготойоп аа- aptation, and
meanings o[ the factors and corresponding items was peг-
competive pricing. Some empirical evidence also supports
formed to puriy tne uncovered factors. SpeсiїсаПу, iems
the positve relationship between performance and product
in each factor were examined carefully so that only the
adaptation (Cooper and Kleinschmidt 1985; Hi1 and Stl
iems wit consistenl meanings were retained for measunng
the factor. Other item(s) were excluded from further analy- 1984; Kirpalani ana Maclntosh 1980), ргото- ton
s1s. Because of this overriding concern with the interpreta- adaplation (Kllough 1978), and compettive pnicing
biftу of the factors, the analysis sugeested that some fa (Chrstensen, da Rocha, and Gertner 1987; Kirpaiani and
tors must be purifed and relaЬеlіед ассогшіпеіу. Агше сот- Maclntosh 1980).
pletion o[ the analysis, the following variables were l also is lypothesized that expor performance is роsі-
dropped from their respectve factors: degree of market cоу-
егаgе from promoton adaptaton, degreе оftагдеt тагкеt ively affected by a frm’s internatOnal competencе, сотті-
ment to the venture, and support to distributor/subsidiary.
Competence in international operatons enables firms to se-
lect better expor markets, formulate suiabe markehng strat-
Markelng Slraiegy-Perlormance Relatonsnp/7

TABLE 2
Exploratory Factor Analyses by Group on the Analysis Subsample
Group 1.Export Marketing Strategy

Factors: Factor 1.1 Factor 1.2 Factor 1.3 Factor 1.4 Factor 1.5
Support to Foreign
Distributor/ Promotion Distributor Product Pricing
Factor Label Subsidiary Adaptation Strategy Adaptation Strategy
Eigenvalue 4.09 2.10 1.63 1.20 1.13
Percent of Variance 27.3 14.0 10.8 8.00 7.50
Variables
Overall support to distributor/subsidiary .913 .146 -.020 -.002 .086
Training of sales force .850 .104 .125 .110 -.014
Promo.support to distributor/subsidiary .738 .181 .249 .347 .164
Adapt.of product positioning .106 .868 .036 -.061 -.026
Adaptation of packaging .133 .628 .151 .160 -.090
Adaptation of promotional approach .132 .626 .081 .189 -.128
Degree of market coverage .162 .645 -.010 .124 .490
Distribution channel type -.072 .137 .797 -.162 -.036
Number of export customers 326 .164 .575 .098 -.100
Sales goal of the venture .218 -.134 .690 .366 .226
Initial product adaptation -.106 .515 -.233 .603 .031
Subsequent product adaptation .357 .131 .283 .610 .227
Labeling in local language .191 .148 .017 .711 -.205
Price competitiveness .174 .172 -.271 -.386 .659
Degree of target market specification -.009 .345 -.184 -.090 -.773
Group 2.Firm Characteristics

Factors: Factor 2.1 Factor 2.2 Factor 2.3
Firm's International
International Commitment Business
Factor Label Competence to Venture Intensity
Eigenvalue 4.81 2.09 1.34
Percent of Variance 40.1 17.4 11.1
Varlables
Number of full-time employees .928 .124 .012
Annual sales volume of firm .876 .007 .137
Amount of firm's int'l experience .694 .396 .435
Years of IB involvement of firm .701 .081 .100
Number of foreign markets operated .611 一.182 .474
Resources for export developmen .677 .419 -.008
Extent of careful entry planning .047 .735 .116
Extent of management commitment .187 .866 .145
Extent of resource commitment 075 .850 .211
Firm's relative position in industry 328 .060 .518
Percent of sales from IB .168 .228 .775
Percent of profit from IB -.120 .250 .837
egy,and effectively implement the chosen strategy subsidiary.Cooperation in the export channel will lead to ef-
(Douglas and Craig 1989;Terpstra 1987).When managers fective implementation of marketing strategy and better per-
are committed to an export venture,they carefully plan the formance (Rosson and Ford 1982).
entry and allocate sufficient managerial and financial re- Empirical evidence supports the positive relationship be-
sources to the venture.With formal planning and resource tween export performance and a firm's international experi-
commitment,uncertainty is reduced and marketing strategy ence (competence)(Aaby and Slater 1989;Kirpalani and
can be implemented effectively (Aaby and Slater 1989; MacIntosh 1980),management commitment (Bilkey 1982;
Christensen,da Rocha,and Gertner 1987),leading to better Daniels and Robles 1985;Johnston and Czinkota 1982;Ros-
performance(Aaker 1988).Similarly,supporting a distribu- son and Ford 1982),and support to distributor/subsidiary
tor/subsidiary in the export market can lead to a cooperative (Bello and Williamson 1985;Rosson and Ford 1982).There-
partnership between the manufacturer and the distributor/ fore,the following hypotheses will be tested:

TABLE 2
Continued
Group 3:Product Characteristics
Factors: Factor 3.1 Factor 3.2 Factor 3.3 Factor 3.4

Firm's Product's
Experience Technical Product Cultural
Factor Label with Product Complexity Features Speciflcity
Eigenvalue 1.98 1.65 1.08 1.01
Percent of Variance 24.7 20.6 13.5 12.6
Varlables
Age of product .874 006 -.160 .075
Extent of establishment with firm .781 .018 .292 一.197
Training needs of sales force .032 .839 .021 -.123
Service/maintenance requirement .163 .661 .172 .260
Strength of product patent -.422 .640 -.012 一.156
Product's unit price .169 .003 .877 .152
Degree of product uniqueness -.317 .294 .622 -.376
Degree of cultural specific. -.080 -.003 .025 .869
Group 4.Industry Characteristics

Factor: Factor 4.1
Factor Label Industry Characteristics
Eigenvalue 1.14
Percent of Variance 56.8
Variables
Degree of technology orientation of industry.754
Intensity of price competition -.754
Group 5.Export Market Characteristics

Factors; Factor 5.1 Factor 5.2 Factor 5.3 Factor 5.4
Export Cultural/Legal Export Market
Factor Label Marke Similarity Competitive Brand
Attractiveness of Markets Intensity Familiarity
Eigenvalue 1.91 1.62 1.12 .81
Percent of Variance 27.3 23.1 15.9 11.6
Variables
Demand potential of export market .825 -.144 .112 .008
Sophistication of marketing infrastructure .803 .256 .028 .083
Cultural similarity of markets .082 .837 .181 .144
Extent of legal/regulatory barriers -.003 .801 -.275 -.158
Competitive intensity .345 097 .805 -.077
Product exposure in export market -.129 -.161 .803 .315
Brand familiarity in export market .079 .014 .122 .961
H₁:Export marketing performance in an export venture is en- the degree of product adaptation is influenced positively by
hanced when
a.the degree of product adaptation increases; a firm's international competence,product uniqueness,cul-
b.the degree of promotion adaptation increases; tural specificity of product,and export market competitive-
c.support to distributor/subsidiary increases; ness;and negatively by a firm's experience with product
d.price competitiveness increases; and technology orientation of industry.Similarly,it is
e.firms'intemational competence increases;and hypothesized that the degree of promotion adaptation is af-
f.commitment to the export venture increases. fected positively by a fim's international competence,prod-
Product and promotion adaptation.The degree of product uniqueness,and export market competitiveness;and neg-
atively by a firm's experience with product,brand familiar-
uct and promotion adaptation is contingent on the character-
istics of firm,product,industry,and export market (Ca- ity of export customers,and technology orientation of
vusgil,Zou,and Naidu 1993;Jain 1989).It is posited that industry.

TABLE 3
Purified Measurement Model and Confirmatory Factor Analysis on the Hold-Out Subsample
Coefficient Item-factor
Factors Included Items Alpha Correlation
Export Marketing Performance .781
Extent to which strategic goals are achieved .66
Perceived success of the venture .96
Average sales growth over the first five years .47
Average profitability over the first five years .69
Product Adaptation .559
Degree of initial product adaptation 66
Degree of product adaptation subsequent to entry .70
Extent of product labeling in local language .31
Promotion Adaptation .857
Degree of adaptation of product positioning .80
Degree of adaptation of packaging .74
Degree of adaptation of promotional approach 92
Support to Foreign Distributor/Subsidiary .853
Overall support to foreign distributor/subsidiary .81
Training provided to sales force of foreign distributor/subsidiary .95
Promotion support to foreign distributor/subsidiary .69
International Competence .930
Number of full-time employees 89
Three-year average sales volume .93
Amount of firm's international experience .68
Years of firm's regular international operations .91
Number of foreign markets in which firm operates .73
Amount of resources available for export development 85
Commitment to the Venture .884
Extent of planning for the entry of the venture 75
Extent of management commitment to the venture .92
Extent of (non-managerial)resource commitment .87
Firm's Experience with Product .592
Extent to which product is established with the firm .65
The age of product since commercialization .65
Price Competitiveness n.a.
Degree of price competitiveness in export market 1.00
Cultural Specificity of Product n.a.
Degree to which the product is culture-specific 1.00
Product Uniqueness n.a.
Degree to which the product is unique 1.00
Technology Orientation of Industry n.a.
Degree of technology orientation of industry 1.00
Export Market Competitiveness n.a.
Degree of competitive intensity in the export market 1.00
Brand Familiarity of Export Customers n.a
Degree of brand familiarity in export market 1.00
As Douglas and Wind (1987)point out,somewhat iron- Douglas and Craig 1989;Hill and Still 1984).An inexperi-
ically,the more internationally experienced (competent)a enced firm seeks the closest match between its current offer-
firm is,the more likely it is that standardization will not ings and foreign market conditions so that minimal adapta-
lead to optimal results.A competent firm,because of its in- tion is required (Douglas and Craig 1989).
ternational experience and resources,knows the subtle dif- When a product can meet universal needs,standardiza-
ferences in environmental conditions,market demand,and tion of product and promotion is facilitated (Levitt 1983).
the degree of competition and is more likely to select the However,if a product meets only unique needs,greater ad-
most attractive market for the venture and adapt (align)the aptation of product and promotion will be required to meet
marketing strategy (e.g.product and promorion strategy)to export customers'product use conditions (Buzzell 1968;Ca-
the export market(Cavusgil,Zou,and Naidu 1993; vusgil,Zou,and Naidu 1993;Keegan 1969),and educate ex-
10/Journal of Marketing,January 1994

TABLE 3
Continued
Factors Not Included Items

Distribution Strategy
Type of export distribution channel
Number of export customers of the venture
Sales goal of the export venture
International Business Intensity
Percentage of total sales derived from foreign operations
Percentage of total profits derived from foreign operations
Product's Technical Complexity
Amount of training needed by salespeople to handle product
Extent of product's service maintenance requirements
Strength of the patent of product technology
Export Market Attractiveness
Demand potential of export market
Sophistication of marketing infrastructure in the export market
Cultural/Legal Similarity of Markets
Degree of cultural similarity of export market to home market
Extent of legal/regulatory barriers in export market
port customers in using and maintaining the product.Simi- 1990).The aforementioned relationships are summarized in
larly,when a culture-specific product is exported to a for- the following hypotheses:
eign market,the cultural base on which the product is devel-
oped may not match the cultural base in the foreign market H₂:The degree of product adaptation increases as
a.firms’international competence increases;
(Terpstra 1987).To be viable,the product must be adapted b.product uniqueness increases;
to the cultural idiosyncracies of the export market (Douglas c.cultural specificity of product increases;
and Wind 1987). d.export market competitiveness increases;
e.firms’experience with product decreases;and
The intensity of competition in the export market could f.technology orientation of industry decreases.
force firms to seek a high degree of product and promotion H:The degree of promotion adaptation increases as
adaptation to gain a competitive advantage over rivals (Ca- a.firms international competence increases;
vusgil,Zou,and Naidu 1993;Jain 1989),because adapta- b.product uniqueness increases;
tion of product and promotion can broaden the local market c.export market competitiveness increases;
base and be geared to specific local preferences (Douglas d.firms'experience with product decreases;
and Craig 1989).In contrast,a firm can be reluctant to mod- e.brand familiarity of export customers decreases;and
ify a product if it has been long established with the firm.Or- f.technology orientation of industry decreases.
ganizational inertia can prevent changes because the firm
Support to distributor/subsidiary and price competitive-
could believe that the product and promotion strategies
have proven to be successful in the past (Cateora 1990). ness.Both support to distributor/subsidiary and price com-
petitiveness are influenced positively by commitment to the
Technology orientation of the industry negatively influ- venture,export market competitiveness,and technology ori-
ences product and promotion adaptation(Cavusgil,Zou, entation of industry.The optimal amount of support to for-
and Naidu 1993).In technology-intensive industries (e.g., eign distributor/subsidiary is influenced by the firm's com-
computers,consumer electronics,and aircraff),products ap- mitment,nature of product,and export market forces
peal less to the generic needs such as tastes,habits,and cus- (Bilkey 1982;Rosson and Ford 1982).Because the foreign
toms (Levitt 1983),which tend to vary from market to mar- distributor/subsidiary is the vital link between manufacturer
ket(Douglas and Urban 1977).As a result,technology is ap- and export customers(Rosson and Ford 1982),manage-
plied better as a standard across markets(Christensen,da ment's commitment to the venture is likely to lead to a high
Rocha,and Gertner 1987),and a lower degree of product ad- level of support to the distributor/subsidiary.Similarly,ef-
aptation and promotion adaptation is required in technology- fective exporters are those committed to exporting and
intensive industries (Cavusgil,Zou,and Naidu 1993).Fi- competitive pricing(Christensen,da Rocha,and Gertner
nally,export customers'familiarity with the brand can ease 1987;Kirpalani and MacIntosh 1980).
the entry of the product into the export market.Therefore,a
When the export market is competitive,supporting the
familiar brand requires a lower degree of promotion adapta-
distributor/subsidiary is particulariy important to ensure
tion in the export market than an unfamiliar one,because fa-
that the distributor/subsidiary performs adequate promo-
miliarity can translate into favorable attitude (Parames-
tion,timely delivery,and proper maintenance and service
waran and Yaprak 1987),which forms brand equity and (Terpstra 1987).It is also important that competitive pric-
can be exploited in the foreign market (Kashani and Quelch ing is offered so that the export venture will not be under-
Marketing Strategy-Performance Relationship /11

FIGURE 2
An Operational Model of Export Marketing Strategy and Performance
International
Cultural Competence 十
+|
Specificity +
of Product
+
+
PRODUCT
Product + ADAPTATION 十
Uniqueness
Firm's PROMOTION
Experience ADAPTATION +
with Product
EXPORT
MARKETING
Technology PERFORMANCE
+ SUPPORT TO FOREIGN`
Orientation
DISTRIBUTOR/
of Industry +
SUBSIDIARY
Export Market +
Compefliveness PRICE
COMPETITIVENESS
Brand
+
Famillartty of
Export Customers
Commitment +
to Venture
mined by competitors.In technology-intensive industries,be- Research Results

cause of the inherent complexity of technology incorpo-
rated in the products,manufacturers must provide adequate
training support to the foreign distributors/subsidiaries so
CFA on Hold-Out Subsample
that the product can be handled,marketed,and serviced
properly(Cooper and Kleinschmidt 1985;McGuinness and A confirmatory factor analysis (CFA),using the oblique cen-
Little 1981).Similarly,because of the need to recover troid multiple groups analysis(Anderson and Gerbing
quickly huge investments in technology in today's market 1982;Holzinger 1944;Hunter and Gerbing 1982),was per-
environment (Harrigan 1987;Ohmae 1989),firms in technol- formed to(1)assess and validate the measurement model of
ogy-intensive industries are likely to adopt a competitive export performance and the purified export marketing strat-
pricing strategy in export ventures to broaden the demand egies and other factors included in the operational model
base and facilitate scale efficiency.These relationships can (first part of Table 3)and (2)generate a disattenuated corre-
be expressed in the following hypotheses: lation matrix of the explanatory factors and performance to
be used in path analysis.The CFA was performed on the
H:Support to foreign distributor/subsidiary increases as hold-out subsample of 101 cases,with communalities
a.commitment to export venture increases; placed on the diagonal of the correlation matrix.Therefore,
b.export market competitiveness increases;and the resultant correlation estimates among factors and export
c.technology orientation of industry increases. performance have been corrected for attenuation(Hunter
Hs:Price competitiveness increases as and Gerbing 1982).The estimates of the item-factor corre-
a.commitment to export venture increases;
lations and the reliability for the explanatory factors and ex-
b.export market competitiveness increases;and
c.technology orientation of industry increases. port performance are shown in Table 3.

Given that the factors were uncovered initially by the strongly and positively to a firm's international competence
EFA on the analysis subsample and the CFA was per- and cultural specificity of product;moderately and posi-
formed on the hold-out subsample,we believe that the reli- tively to product uniqueness and export market competitive-
ability estimates for export performance and all explanatory ness;and strongly but negatively to a firm's experience
factors measured by multiple indicators are acceptable. with product and technology orientation of industry.Sec-
Though only item-factor correlations and coefficient alphas ond,the degree of promotion adaptation is related strongly
are reported in Table 3,the patterns of item-item correla- and positively to product uniqueness,a firm's experience
tions and item-factor correlations exhibit no apparent devi- with product,and export market competitiveness;strongly
ations from the internal consistency and external consis- but negatively to technology orientation of industry;
tency criteria described by Anderson and Gerbing (1982) weakly and positively to a firm's international competence;
and Anderson,Gerbing,and Hunter (1987),suggesting uni- and weakly but negatively to brand familiarity of export cus-
dimensionality of export performance and the factors tomers.Third,the level of support to foreign distributor/
(Hunter and Gerbing 1982).Though the reliability of those subsidiary is related strongly and positively to technology
factors measured by single indicator could not be assessed, orientation of industry and commifment to the export ven-
it is concluded that the measurement model adequately fits ture;and moderately and positively to export market com-
the hold-out subsample data,and the purification of the fac- petitiveness.Finally,price competitiveness is related
tors made by the analysis of item-content is appropriate. strongly and positively to technology orientation of indus-
The disattenuated correlation matrix of the factors and per- try;and weakly and positively to commitment to the export
formance,which was part of the output of the CFA(Hunter venture and export market competitiveness.Overall,17 hy-
and Gerbing 1982),is used subsequently in path analysis to potheses are supported,5 are not supported,and 2 are
test the operational model.
refuted.
Path Analysis on Hold-Out Subsample

Path analysis,with the ordinary least squares (OLS)cri- Discussion
terion,was performed to test the operational model,using Can performance in export markets be linked empirically to
the disattenuated correlation matrix as the input.Specifi- a fim's marketing strategy?This study of 202 expor mar-
cally,a series of multiple regressions were performed ac- ket ventures provides a positive answer to this research ques-
cording to the specification of the operational model in Fig- tion.When export ventures are considered over a five-year
ure 2.The estimates of the path coefficients (i.e.the regres- period,performance can be explained clearly by marketing
sion beta weights)and the model fit chi-square statistic are variables.The results also provide general support for the
presented in both Figure 3 and Table 4.?The chi-square sta- proposed conceptualization that the coalignment(via adap-
tistic of the overall model (calculated as the sum of squared tation)of marketing strategy with the intermal and external
residuals between the model-reproduced correlations and context of an export venture has positive performance
the corresponding observed correlations)is found to be implications.
statistically nonsignificant (x²=33.04,df =26,p>.15),
suggesting that the deviation between the model-repro- What Determines Export Marketing Performance?
duced correlations and the observed correlations is statisti-
Marketing variables,firm competence,and management
cally minimal.Hence,we conclude that the operational
commitment all have a direct impact on export perfor-
model fits the hold-out subsample data.This implies that
mance.This key finding supports the contention that suc-
the operational model adequately accounts for the observed
cess in export market ventures is within the reach of manage-
relationships between export performance,export market-
ment.Managers have available to them several strategy op-
ing strategies,and the internal and external factors.
tions to influence export performance.Paramount to favor-
Path coefficients reveal that the performance of an ex- able results are deliberate resource allocation,commitment,
port venture is influenced strongly and positively by a accumulated experience,product adaptation,and channel
firm's international competence and product adaptation; support.By considering poiential changes to product,provid-
moderately and positively by commitment to the venture ing sales and technical training to foreign distributor/subsid-
and support to foreign distributor/subsidiary;moderately iary,and committing financial and managerial resources to
but negatively by promotion adaptation;and weakly and pos- the venture,firms can expect better results in export mar-
itively by price competitiveness.? kets.Indeed,managers interviewed for the study often attrib-
Various internal and external factors exert indirect influ- uted their success to such measures.In contrast,poor perfor-
ences on export performance through export marketing strat- mance in export markets was attributed to factors such as
egies.First,the degree of product adaptation is related lack of proper attention to strategy planning,overlooked as-
?Following the suggestion of an anonymous JM reviewer,separate anal- duced by usual OLS regression analysis could be biased due to correction
yses of the model were performed by splitting the performance composite for attenuation.Therefore,the corresponding t-test on these estimates also
into individual measures.However,no material change in the conclusions can be biased.Based on the magnitude of path coefficient,it was decided
was found,and all models fitted data well.Because individual performance that a coefficient whose absolute value exceeds .25 would suggest a strong
measures are treated as the indicators of the export performance construct, relationship,whereas a coefficient whose absolute value is between.15
only the results of the analysis on the composite performance scale are and.25 would suggest a moderate relationship,and a coefhicient whose ab
presented. solute value is below.15 would suggest a weak or no relationship.This in-
3In attempting to interpret the estimates of the path coefficients,it terpretation of path coefficients is Conservative but similar to the one by
should be noled that the standard error estimates for path coefficients pro- Hunter,Gerbing,and Boster (1982).

FIGURE 3
OLS Estimates of Path Coefficients on the Hold-out Subsample
International
Cultural Competence
Specificity .32 .35
29|
of Product
.10°
.17
PRODUCT
Product ADAPTATION B
Uniqueness
37 u
si
n
Firm's .37 PROMOTION es
Experience .29* ADAPTATION -.19*, s
with Product P
-45 EXPORT
er
—29— MARKETING
fo
PERFORMANCE
Technology r
26 SUPPORT TO FOREIGN
Orientation DISTRIBUTOR/ m
of Industry |36 .bg 24
SUBSIDIARY a
n
ce
3
Export Market •
.10* N
Compefitiveness .10* PRICE e
COMPETITIVENESS t
-.12) .51
Brand p
Familiarity of .09° r
Export Customers Commitment o .15
to Venture f
i
Chi-Square =33.04 d.f.=26
t p>.15
M
*Non-significant relationship
a
**Refuted hypothesis
r
g
pects of product adaptation,poor choice of distributors,and i least for the
egy raises several possibilities.One is that,at
errors in pricing.As such,the study provides support for n
types of products included in the sample,adapting commu-
the role management plays in export market ventures nication strategies can take away from the universal appeal
through appropriate strategy formulation and execution.Per- of certain export products.A second explanation is that in-
formance in export ventures is enhanced when management appropriate and/or costly adaptation can lead to poor perfor-
has international competence,is committed to the venture, mance.Managers can use poor judgment in altering the po-
adapts the product to meet export customer requirements, sitioning or promotional mix;the execution could be poor;
and provides strong support to its foreign distributor/ or the timing of promotion adaptation could be wrong.A
subsidiary. third explanation lies in the sensitivity of promotional ef-
forts to cross-cultural variables.Advertising is highly
A finding that was not anticipated is the moderate and in-
bounded by culture,and export customers could be less re-
verse relationship between promotion adaptation and export
sponsive to promotion that fails to precisely match their cul-
performance.Previous findings generally support the no-
tion that promotion adaptation can better match the firm's of- tural preferences.During the interviews,the more experi-
fering to export customers'expectations and should lead to enced managers warned against a sweeping generalization
better performance.Our results point to the existence of a on the usefulness of promotion adaptation.They empha-
more complex relationship.The fact that enhanced perfor- sized the need to study customer specifications and prefer-
mance does not result from adaptation of promotional strat- ences in advance and engage in adjustments only as a re-

TABLE 4
Summary Assessment of Research Hypotheses
Expected Path
Factor Hypothesis Sign Coefficient Assessment
Export Marketing Performance
n.S.
n.s
Product Adaptation
S
.29
Promotion Adaptation
Support to Foreign Distributor/Subsidiary
Hi ++++++
-.19
Price Competitiveness H 16 Mar
n.S
S
H₁ e ,15 keti
Commitment to the Venture Hif
ng
Product Adaptation
International Competence Str
S S
H₂a .32
Product Uniqueness H2o .17 ate
Cultural Specificity of Product gy
S
H₂c 29
Export Market Competitiveness • S
S
H₂d 22
Firm's Experience with Product
S S
H2e
1
37 a
Technology Orientation of Industry H₂r 45 -.
l
Promotion Adaptation e
Ha Mars
n.S.
Product Uniqueness .37
Export Market Competitiveness ket
H₃c + .60
Firm's Experience with Product H₃d .29 Co f
Brand Familiarity of Customers H₃e -.12 mp
.29 o
Technology Orientation of Industry H₃f -.29 etitir
Support to Foreign Distributor/Subsidiary on c
•
R
s s
Commitment to the Venture H₄a .51 e
P
Export Market Competitiveness H4b .22 r
Technology Orientation of Industry H4c .26 e
o
Price Competitiveness f
Commitment to the Venture Hsa +++ .09 n.S. if
Export Market Competitiveness
Technology Orientation of Industry H A
.10
.36
te
c
a
Notation:S=supported;n.s.=not significant;R=refuted t
b
i
sponse to solid evidence from the market.Indeed,further re- What Determines Promotion Adaptation? lv
search is necessary to shed light on this unexpected finding. ie
As noted previously,for the cases studied,adapting promo-
tn
What Determines Product Adaptation? tional aspects of the marketing strategy could affect perfor-
ye
mance negatively.Nevertheless,there is a tendency to alter
Consistent with the standardization literature (e.g.,Buzzell s
the promotional strategy when the product has some unique
1968;Douglas and Wind 1987;Jain 1989),a high degree • product.The
features or it is not a technology-intensive sC re-
of product adaptation is found when the firm is internation- sults suggest,however,that promotion u adaptation is
ally competent;the product is unique,new,or culture spe- • sC in the export
prompted largely by the competitive pressures
cific;the industry is less technology intensive;or the export market.Indeed,responding managers said that tu promotional
market is competitive.A product that is unique to the domes- efforts were very much dictated by market s pressures,as
o
tic market,new to the company,or culture specific could well as environmental factors such as mediam t availability in
have limited acceptance in the export market.Similarly,a the export market.Contrary to expectations,the o results sug-
e
competent firm understands the idiosyncracies of the export gest that promotion adaptation tends to be high rm for an estab-
market and is able to respond to the local conditions by an ished product.Presumably,greater experienceewith the prod-
adaptation strategy (Douglas and Craig 1989).In a compet- uct affords management a better understanding r of what can
S
itive export market,a high degree of product adaptation facilitate or hinder a product's potential ain the export
also is needed due to intense competitive pressure,because markets. tS
product adaptation can help gain a competitive superiority ie
over rivals (Hill and Still i984).Responding managers in What Determines Support to sr
technology-intensive industries such as scientific instru- Distributor/Subsldiary? fv
ments or medical equipment argued for universal acceptabil- i hesitate to
a
Some of the managers interviewed did not
ity of their products.This contention is verified in the find- equate success in export markets with their cability to initi-
ings.In fact,technology orientation emerges as the strong- ate and sustain strong and mutually beneficial te relationships
est determinant of product adaptation. with their foreign partners.Companies provide i ongoing sup-
q
o
u
n
Marketing Strategy Performance Relationship a /15
l
i
t
y
port to their foreign distributors/subsidiaries in the form of tional experience in a programmatic manner,and allocate
sales force training,technical assistance,marketing know- sufficient resources to fully capitalize on export market op-
how,promotional support,and so on.Perhaps not surpris- portunities.Perhaps the best investment companies can
ingly,the most critical determinant of such support turned make in this context is in strengthening their human re-
out to be management's commitment to the export venture. source capabilities.A long-term approach to cultivating in-
Indeed,responding managers often cited channel support as ternational market opportunities is clearly appropriate,
a logical consequence of commitment to the venture.For rel- given the amount of leaming that has to take place for suc-
atively less experienced managers,an often complex aspect cessful intermational marketing operations.Companies must
of export marketing was selecling,motivating,and evaluat- “institutionalize”international operations to cultivate inter-
ing foreign distributors.Competitiveness of export market national competence and ensure consistent commitment to
also seems to compel managers to strengthen distributor/ international operations.
subsidiary capabilities in the export market.Finally,sup- Third,managers are advised to develop a network of com-
port to distributor/subsidiary appears to be more likely in petent foreign distributors and strengthen their ability to per-
technology-intensive industries.When the product has a form marketing,distribution,and customer service func-
high degree of technological complexity,the manufacturer tions through appropriate support and training.Such sup-
engages in training and technical support activities to prop- port is especially crucial in technology-intensive industries
erly equip the distributor/subsidiary in the export market and competitive export markets.Establishment of a mu-
(McGuinness and Little 1981). tually beneficial partnership with overseas distributors or
subsidiaries would complement other strengths and contrib-
What Determines Price Competitiveness? ute to success in foreign markets.Finally,companies can
Of the three proposed determinants of price competitive- seek competitive pricing to maintain an advantageous posi-
ness,only the technology orientation of industry emerged tion in the export market.Nevertheless,relative to strate-
as a significant variable.It appears that managers are not re- gies such as support to foreign distributor/subsidiary or prod-
sorting necessarily to price as a competitive weapon as a re- uct adaptation,competitive pricing is a minor determinant
sult of either market pressures or higher commitment to the of export performance.Therefore,nonprice competitive
venture.This could reflect a preference for nonprice compe- weapons such as emphasizing product features,technologi-
tition.Nevertheless,a competitive pricing strategy is used cal superiority,quality,and patents should not be
more frequently in technology-intensive industries.Conceiv- neglected,
ably,firms try to recover their investments in technology Given the unexpected negative impact of promotion ad-
by broadening the customer base in export markets via com- aptation on export performance,recommendations for adapt-
petitive pricing ing the promotional aspect of export marketing strategy
have to be qualified.Clearly,simplistic adaptation without
a careful examination of customer needs and potential re-
lmplications for Management sponse is not advisable.Similarly,companies with exten-
The results point to tangible outcomes of marketing strat- sive experience with the product should not assume automat-
egy.Companies can improve their performance in export ically that they know how to promote their products in for-
market ventures through deliberate implementation of appro- eign markets.It is essential that any decision in promotion
priate marketing strategies.Such strategies should be co- adaptation be based on a sound analysis of costs,benefits,
aligned with (adapted to)the context of the export venture and competitive market considerations.
as defined by internal forces,such as firm and product char-
acteristics,and external forces,such as industry and export
market characteristics.Planning and execution of an export Directions for Further Research
venture must be incorporated into the firm's strategic man- Several limitations of this research should be noted with a
agement process.A firm that sets no strategic goals for its view toward extending the present study.First,the strategy-
export venture is less likely to make the venture a long- performance relationship can be investigated by a longitudi-
term success. nal design spanning longer than the first five years of the
Several specific normative prescriptions are justified by ventures,thus gaining a richer understanding of the dynam-
the findings.First,export performance can be enhanced sub- ics and complexity of the relationship.
stantially through product adaptation strategy.The nature Second,despite the large number of variables included in
and optimal degree of product adaptation,however,should the study,not all potentially relevant variables have been ex-
be determined by the interplay of internal and external plored.We investigated only technology intensiveness and
forces.Specifically,a high degree of product adaptation intensity of price competition in the industry.Other indus-
should be sought when a firm has substantial international try structure variables,such as presence of foreign competi-
competence or little experience with the product,the prod- tion,government intervention,and competitors'strategy
uct is culture specific or unique,the industry is technology- should be studied in the future.Similarly,the effects of in-
intensive,and the export market is competilive. dustry classification and organization structure,which are
Second,because management's intemational experience, not assessed in this study due to the intragroup heterogene-
competence,and commitment to the venture also contribute ity of the sample in terms of technology intensiveness of
to export performance,companies have much to gain if the industry or lack of measures,should be studied in the
they hire or train qualified personnel,accumulate interna- future

Third,we measured whether an export venture is profita- ments developed,the unified theoretical framework of ex-
ble,but not the level of profitability,because responding port marketing strategy and performance,which has been
managers were reluctant or unable to reveal relevant infor- verified here,can serve as a foundation for further research
mation.Further research could remedy this problem and as- in export marketing.Third,the study has contributed to a
sess the effect of marketing strategy on the level of profita- more comprehensive understanding of the success factors
bility in export ventures.Furthermore,we relied largely on in export marketing.Marketing strategy,firms'interna-
managers'retrospective perceptions to operationalize the var- tional competence,and managerial commitment have
iables.Though it has been demonstrated (e.g.,Schwenk emerged as key success factors in export marketing.
1985)that this approach to data collection is generally reli-
able and valid,the findings can be strengthened with more APPENDIX A
objective data. A Profile of the Sampled Export Ventures
Fourth,the sample we used does not constitute a random
Dimension Range %of Ventures
sample,because only those managers who were qualified
for and willing to participate in the study were interviewed. Firm Size (number of full-time employees)
Generalization of the research results should be made with Less than 50 24.8
caution.A fruitful direction for further research is to repli- 50-499 26.7
cate the principal features of this study within different re- 500-4,999 15.3
gions,and/or different countries.Finally,a full information 5.000 or more 33.2
technique such as Maximum Likelihood could not be ap- Annual Sales of Firm(in thousands of dollars)
plied in this study because of the moderate sample size and Less than 1,000 11.2
relative complexity of the model.As a result,the model es- 1,000-9,999 15.7
timates obtained by the centroid method and path analysis 10,000-99,999 20.2
are statistically less efficient than what would have been pos- 100,000-1,999,999 18.0
sible if a full information technique had been used.Addi- 2.000.000 or more 34.8
tional research should attempt to provide estimates obtained Years of Firm's International Operation
by a full information technique such as Maximum Likeli- 5 years 10.8
hood.To achieve this,a larger sample size and muliple in- 5-10 13.7
dicators for all factors should be sought. 11-24 23.0
25-39 22.5
40 or more 29.9
Conclusion Number of Markets in Which Firm Operates

1-5 18.8
The present study has extended the literature on marketing
6-24 17.2
strategy and export marketing performance in several areas. 25-39 24.5
First,the present study has substantiated the empirical link 40-59 30.7
between marketing strategy and performance in the context 60 or more 8.9
of export market ventures.The results support the conten-
Type of Product
tion that firms can achieve better performance in interna- Consumer products 47.5
tional markets through deliberate marketing strategy implem- Industrial products 42.6
entation.Second,the study has overcome the conceptual Other 9.8
and methodological weaknesses inherent in previous export- Number of Industries From Which the Sample is Drawn 16
ing studies.Together with the constructs and the measure- Number of Markets Where Export Ventures Took Place 15
APPENDICES
Appendix 1.
Marketing Strategy
Sales force
effectiveness
I have access to all
the customer and
product information I
need to close deals
effectively.
My company's
compensation and
incentive plan
motivates me to
prioritize the right
sales activities
I receive clear and
consistent coaching
and feedback on my
sales performance
from my manager.
Our sales tools and
technology (CRM,
lead scoring, etc.)
are helpful in
managing my
pipeline and closing
deals.
I feel confident in my
ability to handle
customer objections
and effectively
address their
concerns.
Customer Service 5 4 3 2 1
quality
The customer
service
representative I
interacted with was
knowledgeable and
able to answer my
questions.
It was easy to reach
a customer service
representative when
I needed help.
The customer
service
representative
listened attentively to
my concerns and
made me feel
valued.
The issue I
contacted customer
service about was
resolved to my
satisfaction.
Overall, I am
satisfied with the
quality of customer
service I received.
Appendix 2.
Market Competition
Profitability 5 4 3 2 1
Increasing customer
satisfaction is more
important for long-
term profitability than
reducing costs.
Offering competitive
pricing is an
essential factor in
achieving
profitability.
Investing in
employee training
and development
can significantly
improve profitability.
A strong focus on
innovation is
essential for
maintaining
profitability in a
competitive market.
Effective inventory
management
practices can
significantly improve
profitability.
Customer 5 4 3 2 1
Satisfaction
Overall, how
satisfied are you with
our product/service?
I would recommend
our product/service
to a friend or
colleague.
The features of our
product/service meet
my needs.
Our customer
service team was
helpful and
responsive when I
needed assistance.
It is easy to find the
information I need
on our website or
customer support
channels.
Appendix 3.
Business Performance
Net Profit Margin 5 4 3 2 1

Maintaining a high
net profit margin is
essential for the
long-term success of
our company.
We effectively
control our costs to
ensure a healthy net
profit margin.
Our current pricing
strategy allows us to
achieve our desired
net profit margin.
Fluctuations in the
market have a
significant impact on
our net profit margin.
Our net profit margin
is a good indicator of
our overall business
performance.
S S
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Marketing Strategy and its

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Marketing Strategy-Performance Relationship 15

61Journal of Marketing,January 1994

Markelng Slraiegy-Perlormance Relatonsnp/7

Group 1.Export Marketing Strategy

Group 2.Firm Characteristics

81Journal of Marketing,January 1994

Group 3:Product Characteristics

Factors: Factor 3.1 Factor 3.2 Factor 3.3 Factor 3.4

Group 4.Industry Characteristics

Group 5.Export Market Characteristics

Marketing Strategy-Performance Relationship 19

10/Journal of Marketing,January 1994

Factors Not Included Items

Marketing Strategy-Performance Relationship /11

An Operational Model of Export Marketing Strategy and Performance

mined by competitors.In technology-intensive industries,be- Research Results

12/Journal of Marketing,January 1994

Path Analysis on Hold-Out Subsample

Marketing Strategy-Performance Relationship /13

141Journal of Marketing,January 1994

Price Competitiveness H 16 Mar

16/Journal of Marketing,January 1994

Conclusion Number of Markets in Which Firm Operates

Net Profit Margin 5 4 3 2 1

Marketing Strategy-Performance Relationship /19

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201 Joural of Markenд, Naпиагу 1994

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Marketing Strategy-Performance Relationship /21

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