International Business Review 12 (2003) 141–171

www.elsevier.com/locate/ibusrev

Standardization versus adaptation of

international marketing strategy: an integrative
assessment of the empirical research
Marios Theodosiou ∗, Leonidas C. Leonidou
Department of Public and Business Administration, University of Cyprus, Kallipoleos 75, P.O. Box
20537, CY-1678, Nicosia, Cyprus

Received 1 January 2002; received in revised form 1 April 2002; accepted 1 July 2002

Abstract

Despite 40 years of debate on international marketing strategy standardization vs adaptation,

extant empirical research is too fragmented to yield clear insights. Based on an integrative
analysis of 36 studies centering around strategy standardization/adaptation, its antecedents, and
performance outcomes, this stream of research was found to be characterized by non-signifi-
cant, contradictory, and, to some extent, confusing findings attributable to inappropriate con-
ceptualizations, inadequate research designs, and weak analytical techniques. The central con-
clusion that stems from this analysis is that the decision whether to standardize or adapt the
marketing strategy to achieve superior business performance will largely depend on the set of
circumstances that a firm is confronted by within a particular foreign market at a specific
period of time.
 2003 Elsevier Science Ltd. All rights reserved.

Keywords: International marketing strategy; Literature review; Strategy standardization/adaptation

1. Introduction

Recent decades have witnessed a dramatic globalization of the international busi-

ness scene due to: increasing liberalization of trade policies; growing stability in

∗
Corresponding author. Tel.: +357-22892465; fax: +357-22892460.
E-mail address: [email protected] (M. Theodosiou).

0969-5931/03/$ - see front matter  2003 Elsevier Science Ltd. All rights reserved.
doi:10.1016/S0969-5931(02)00094-X
142 M. Theodosiou, L.C. Leonidou / International Business Review 12 (2003) 141–171

monetary transactions; creation of regional economic integrations; uninterrupted flow

of goods due to relatively peaceful world conditions; and revolutionary advances in
transportation, communication, and information technologies (Czinkota & Ron-
kainen, 2001; Keegan, 1999). All these factors have led to the rise of fierce compe-
tition, with the participation of a wide array of firms of different size, industry, and
national origin (Craig & Douglas, 1996). As a result, issues relating to the design
of sound international marketing strategies to compete effectively and efficiently in
this new business environment have been the focus of a sizeable stream of research.
This has particularly concentrated on whether firms, irrespective of the foreign mar-
ket entry mode chosen, should standardize or adapt their marketing strategy in over-
seas markets.
Proponents of the standardization approach view the globalization trends in the
world as the driving force behind greater market similarity, more technological uni-
formity, and higher convergence of consumer needs, tastes, and preferences (Levitt,
1983; Ohmae, 1985). They also claim that standardization is further facilitated by
the growth of international communication channels, the emergence of global market
segments, and the appearance of the Internet. They posit that such a strategy can
offer a number of benefits: (a) significant economies of scale in all value-adding
activities, particularly in research and development, production, and marketing; (b)
the presentation of a consistent corporate/brand image across countries, especially
in light of the increasing consumer mobility around the world; and (c) reduced mana-
gerial complexity due to better coordination and control of international operations
(Levitt, 1983; Douglas and Craig, 1986; Yip, Loewe, & Yoshino, 1988).
Advocates of the adaptation approach argue that, despite increasing globalization
tendencies, variations between countries in such dimensions as consumer needs, use
conditions, purchasing power, commercial infrastructure, culture and traditions, laws
and regulations, and technological development are still too great, thus necessitating
the adjustment of the firm’s marketing strategy to the idiosyncratic circumstances of
each foreign market (Terpstra & Sarathy, 2000). In particular, they criticize strategy
standardization as a new kind of marketing myopia, representing an oversimpl-
ification of reality, and contradicting the marketing concept (Boddewyn, Soehl, &
Picard, 1986; Wind, 1986; Douglas & Wind, 1987). They also stress the fact that
the ultimate objective of the firm is not cost reduction through standardization, but
long-term profitability through higher sales accrued from a better exploitation of the
different consumer needs across countries (Onkvisit & Shaw, 1990; Rosen, 1990;
Whitelock & Pimblett, 1997).
To overcome the above polarization, a third group of researchers offers a contin-
gency perspective on the standardization/adaptation debate. In their view: (a) stan-
dardization or adaptation should not be seen in isolation from each other, but as the
two ends of the same continuum, where the degree of the firm’s marketing strategy
standardization/adaptation can range between them; (b) the decision to standardize
or adapt the marketing strategy is situation specific, and this should be the outcome
of thorough analysis and assessment of the relevant contingency factors prevailing
in a specific market at a specific time; and (c) the appropriateness of the selected
level of strategy standardization/adaptation should be evaluated on the basis of its
 M. Theodosiou, L.C. Leonidou / International Business Review 12 (2003) 141–171 143

impact on company performance in international markets (Quelch & Hoff, 1986;

Onkvisit & Shaw, 1987; Jain, 1989; Cavusgil & Zou, 1994). Hence, the challenge
for the international firm is to determine which specific strategy elements are feasible
or desirable to standardize or adapt, under what conditions, and to what degree.
This fierce debate on the subject has attracted the attention of many researchers,
who have contributed a plethora of empirical writings. Although challenging, this
stream of research is: (a) fragmented, consisting of numerous studies, each adopting
its own conceptual method, methodological design, and analytical technique; (b)
repetitive, researching in many cases the same issues, without extending the work
of other researchers in the field; (c) diverse, examining different aspects of marketing
strategy adaptation/standardization, as well as its antecedents and outcomes; and (d)
inconsistent, yielding different, and sometimes contradicting, results as to which stra-
tegic approach is more appropriate. Consequently, there is a need to consolidate this
piece of research and reach conclusions that would facilitate theory development.
The aim of this study is to satisfy this need, by providing an integrative analysis
of extant empirical knowledge on international marketing adaptation versus stan-
dardization. It aims to review, assimilate, and evaluate empirical research on the
content and interactions of the components of a simplified model on international
marketing strategy standardization/ adaptation (Jain, 1989; Cavusgil & Zou, 1994)
(see Fig. 1). Specifically, the emphasis is on: (a) antecedent factors, that is, contin-
gency variables that affect the decision to standardize or adapt the firm’s marketing

Fig. 1. A conceptual model on international marketing strategy standardization/adaptation.

144 M. Theodosiou, L.C. Leonidou / International Business Review 12 (2003) 141–171

strategy in a specific foreign market; (b) strategy variables, that is, the specific
elements of the marketing mix program, where the degree of standardization or adap-
tation must be determined; and (c) performance outcomes, that is, the impact of
international marketing strategy standardization/adaptation on the company’s per-
formance in overseas markets.
The remainder of the article is organized into six sections: first, the method
employed to select the pertinent empirical studies is explained, and their methodolog-
ical profile is presented; second, the antecedent forces of international marketing
strategy are identified and their significance is established; third, each strategy vari-
able is analyzed and its degree of standardization/adaptation is determined; fourth,
the nature of the international business performance measures used is explained, as
well as their link with strategy variables; fifth, certain conclusions are extracted from
the findings of the study; and, finally, some guidelines for future research on the
subject are provided.

2. Profile of studies

The review covered all empirical studies on marketing strategy

adaptation/standardization published since the inception of this body of research. For
a study to be included in the review, three major criteria had to be met: (a) to focus
on the content and/or interactions of the various components of marketing strategy
standardization/adaptation model; (b) to have an empirical nature, providing suf-
ficient primary information on the subject presented in quantitative format; and (c)
to investigate the international activities of manufacturing firms irrespective of
foreign market entry mode (e.g., indirect exporting, direct exporting, or foreign
production). Using a combination of manual and electronic literature search methods,
36 studies were found to meet the above criteria1. These were published in 18 differ-
ent outlets, primarily in the Journal of Global Marketing, the International Marketing
Review, and the Journal of Marketing.
Table 1 summarizes the profile characteristics of the studies selected, while a
more detailed analysis is presented in the following. The first attempt to empirically
investigate the issue of marketing strategy standardization/adaptation was in the mid-
1970s with the pioneering work of Sorenson and Wiechmann (1975). Since then,
there has been an exponential growth of research on the subject, with about two-
thirds of the studies conducted in the 1990s. To some extent, this reflects the increas-
ing globalization of the international marketplace which has provided the impetus
for a more intense conceptual debate among researchers in the field. Notably, with
the exception of the work of Boddewyn and his colleagues, who conducted a longi-
tudinal study of standardization/adaptation over a 30-year period (Boddewyn &

1
The electronic search was based mainly on the ABI/INFO database, as well as on various Internet
resources, including Science Direct, Expanded Academic ASAP International, and MCB University Press.
Table 1
Profile of empirical studies on international marketing strategy standardization vs adaptationa.

Study demographics

M. Theodosiou, L.C. Leonidou / International Business Review 12 (2003) 141–171

Methodological aspects Total Fieldwork time Company country of origin Company type
1970s 1980s 1990s N. America Europe Other Exporting MNCs
(n ⫽ 36) (n ⫽ 1) (n ⫽ 13) (n ⫽ 22) (n ⫽ 26) (n ⫽ 12) (n ⫽ 14) (n ⫽ 14) (n ⫽ 22)

Industrial coverage
1–3 industries 2 – – 2 2 1 1 – 2
4–7 industries 9 1 6 2 6 4 4 4 5
8 industries or more 8 – 3 5 7 1 2 3 5
Not available 17 – 4 13 11 6 7 7 10
Unit of analysis
Corporate 19 1 7 11 12 5 7 11 8
Business unit 3 – 1 2 2 2 2 – 3
Export venture 2 – – 2 2 – – 2 –
Product/brand 6 – 2 4 6 2 2 1 5
Foreign subsidiary 8 1 3 4 6 5 4 – 8
Sampling design
Probability 10 – 3 7 4 1 5 8 2
Nonprobability 7 – 3 4 7 1 – 2 5
Not available 19 1 7 11 15 10 9 4 15
Response rate
Below 25% 15 – 8 7 11 – 4 10 5
25% or above 16 – 3 13 10 9 9 3 13
Not available 5 1 1 3 5 3 1 1 4
Sample size
Below 100 23 1 8 14 16 7 8 7 16
100 or above 13 – 5 8 10 5 6 7 6
Nonresponse bias
Tested 21 – 8 13 14 4 8 9 12
Nontested 15 1 5 9 12 8 6 5 10
Data collection
Mail 30 – 12 18 22 8 12 11 19
Personal 7 1 1 5 4 4 3 3 4
(continued on next page)

145
 146
Table 1 (continued)

Study demographics
Methodological aspects Total Fieldwork time Company country of origin Company type
1970s 1980s 1990s N. America Europe Other Exporting MNCs

M. Theodosiou, L.C. Leonidou / International Business Review 12 (2003) 141–171

(n ⫽ 36) (n ⫽ 1) (n ⫽ 13) (n ⫽ 22) (n ⫽ 26) (n ⫽ 12) (n ⫽ 14) (n ⫽ 14) (n ⫽ 22)

Key informant
CEO/President 7 – 3 4 3 4 4 2 5
International operations officer 10 – 5 5 8 1 3 3 7
Export officer 8 – 2 6 4 2 2 8 –
Marketing manager 3 1 – 2 2 3 1 1 2
Subsidiary manager 5 – 1 4 4 3 3 – 5
Not available 6 – 3 3 6 1 1 3 3
Antecedent variables
1–3 10 – 3 7 8 3 4 1 9
4–6 3 – 2 1 3 1 1 – 3
7–12 6 1 2 3 6 2 1 2 4
More than 12 6 – 2 4 3 3 3 2 4
Strategy measures
1–3 12 – 6 6 9 3 5 5 7
4–6 3 – 1 2 3 1 1 1 2
7–12 12 1 4 7 10 5 3 4 8
More than 12 9 – 2 7 4 3 5 3 6
Performance measures
1 5 – 1 4 3 – 2 4 1
2–3 6 – 4 2 4 1 2 3 3
4–5 4 – 1 3 3 1 2 2 2
6 or more 3 – – 3 1 1 1 3 –
Statistical analysis
Descriptive 24 1 7 16 18 10 7 6 18
Uni-/bivariate 15 – 7 8 13 6 4 2 13
Multivariate 20 – 4 16 14 7 7 9 11

a.
For some methodological aspects and demographic elements, entries do not add up to 36 (i.e., the total number of studies reviewed) for a number of
reasons: (a) study samples including companies from different countries of origin, (b) studies with multiple entries on such methodological aspects like unit
of analysis, data collection, key informant, measurement scales, and statistical analysis, and (c) studies not investigating all three categories of relevant
variables (i.e., antecedent measures, strategy items, and performance measures).
 M. Theodosiou, L.C. Leonidou / International Business Review 12 (2003) 141–171 147

Hansen, 1977; Picard, Boddewyn, & Soehl, 1988; Boddewyn & Grosse, 1995), all
other studies were of a one-shot nature.
Most of the studies focused on the international activities of firms located in the
United States, while European firms, as well as firms from other countries, attracted
less research attention. Although the location of the supplying firms was primarily
in developed countries (probably due to their dominant role in world manufactured
exports, as opposed to the agricultural orientation of less-developed economies), in
the majority of cases their international marketing strategy covered a variety of mar-
kets, irrespective of stage of economic development. Approximately two-thirds of the
studies examined the strategies pursued by the foreign subsidiaries of multinational
corporations (MNCs), while the remainder examined the standardization/adaptation
of exporting firms. To some extent, this reflects the tendency by independent foreign
subsidiaries to seek to develop their own national products in the markets they oper-
ate (Terpstra & Sarathy, 2000).
Seventeen studies did not report the nature of the industry investigated, while,
with a few exceptions, the remaining studies covered multiple industries. In some
cases, researchers intentionally selected firms from a variety of industrial sectors, in
order to explore the effect of product factors on the decision to standardize or adapt
the marketing strategy. Slightly more than half of the studies concentrated their
analysis at the company level, this being more evident in exporting research2. The
fact that a large proportion of the studies focused on multinational firms resulted in
the use of lower levels of analysis, namely foreign subsidiaries, products/brands, and
business units. Two exporting studies (i.e., Cavusgil & Zou, 1994; Shiram & Manu,
1995) also narrowed the level of their analysis to the firm’s ventures with specific
export markets.
Nineteen studies (particularly those researching multinational firms) gave no infor-
mation on the specific sampling designs used, while, of the remainder, most firms
employed probability-sampling methods. Sample sizes were relatively small, with
23 studies reporting a figure of less than 100 cases. This can be partly attributed to
the fact that most of these studies focused on large multinational corporations which,
compared to exporting firms, are more difficult to contact due to their small popu-
lation. The average response rate of the studies under review was 28.5%, which is
comparable to that of other studies conducted in international marketing. Compared
to export studies, research among multinational firms exhibited higher rates of survey
response. Although a satisfactory number of studies (21 out of 36) checked for nonre-
sponse bias, it is surprising that many other studies did not carry out such controls,
casting doubt on the robustness of the data obtained.
In the majority of cases, data collection was based on mail survey methods, prob-
ably due to the difficulties in physically reaching firms of a geographically dispersed
sample. This was particularly true in the case of cross-cultural studies, where respon-

2
This unit of analysis has been criticized as being inappropriate for this type of research because
significant variations often exist in the marketing strategy that a firm pursues in different foreign markets
and with respect to different products/product lines (Cavusgil & Zou, 1994).
148 M. Theodosiou, L.C. Leonidou / International Business Review 12 (2003) 141–171

dents were located in many different locations. Personal interviews were reported in
only six studies, focusing mainly on a small sample of firms. Only one study (i.e.,
De Luz, 1993) used a combination of a mail survey and personal interviews. In the
majority of cases, data were collected from the individual responsible for inter-
national marketing activities, namely the international operations manager and the
export officer. In some studies, the CEO/president, subsidiary manager, or marketing
executive also provided the information requested. None of the studies checked for
key informant bias, by collecting data from more than one individual in the company
and subsequently assessing the relative equivalence of their responses.
The role of antecedent factors in international marketing standardization/adaptation
was explored by 25 studies3. The number of factors examined varied significantly
among these studies, ranging from one to 22, with most focusing on up to three.
Altogether, 50 factors have been identified, which were subsequently reduced to 22,
based on their substantive conceptual meaning. These can be broadly categorized
into seven groups, namely environmental (4), market (4), customer (3), competition
(2), product/industry (3), organizational (4), and managerial (2). Given the great
diversity of these factors, a variety of ways was used for their measurement. For
instance, for environmental factors, market characteristics, and customer issues, five-
point or seven-point interval scales were employed, measuring the degree of differ-
ence between home and host markets (see, for example, Ozsomer, Bodur & Cavusgil,
(1991), Johnson & Arunthanes, 1995; and Theodosiou & Katsikeas, 2001).
Twenty-one studies reported empirical data on the actual degree of international
marketing strategy standardization/adaptation, while another 15 used the level of
standardization/adaptation identified for subsequent analysis without clearly stating
it (e.g., Albaum & Tse, 2001; Johnson & Arunthanes, 1995). Altogether, 35 different
marketing strategy items were examined, with the majority of the studies exploring
seven items or more. These fall under one of the four generic categories of the
marketing mix, namely product (11), price (8), promotion (11), and distribution (5).
Multiple-point scales were mainly employed to measure the degree of similarity of
each marketing strategy element in the domestic market versus the overseas market
(Johnson & Arunthanes, 1995; Leonidou, 1996) or its degree of
standardization/adaptation (e.g., Shoham, 1999; Theodosiou & Katsikeas, 2001). In
some cases, dichotomous scales, indicating whether the firm followed a standardiz-
ation or adaptation approach, were also used (e.g., Hill & Still, 1984; Chhabra, 1996).
The effect of marketing strategy standardization/adaptation on company perform-
ance was investigated in 18 studies, with most of them operationalizing performance
using three measures or less4. However, only ten of these studies were designed with

3
Of these studies, only 15 provided evidence of a direct link between antecedent factors and inter-
national marketing standardization/adaptation (e.g., Seifert & Ford, 1989; Leonidou, 1996).
4
Numerous different measures of performance were employed by researchers in the field, and a
compromise solution was, therefore, adopted by grouping the various performance measures into eight
categories: sales-related, growth-in-sales related, profit-related, growth-in-profit related, market share-
related, goal achievement/satisfaction, satisfaction with change in performance, and composite scales of
performance.
 M. Theodosiou, L.C. Leonidou / International Business Review 12 (2003) 141–171 149

the strategy-performance link at the center of their investigation, whereas in the

remaining studies this association received peripheral treatment. Performance was
mainly assessed using subjective rather than objective measures, and these were
essentially centered on sales, profit, and market share. Moreover, international busi-
ness performance was assessed on an absolute and/or growth basis. Despite several
claims in the literature that performance is a multidimensional construct, only a few
studies used composite measures, mainly comprising financial, market, and strategic
dimensions (e.g., Kotabe & Omura, 1989; Kotabe, 1990; Kotabe & Okoroafo, 1990;
Cavusgil & Zou, 1994; Hewett & Bearden, 2001).
Descriptive statistics (percentage frequencies and mean scores) were the principal
method used in analyzing the degree of international marketing strategy
standardization/ adaptation, as well as the individual items comprising antecedent
factors and business performance. However, in investigating the effect of antecedent
factors on the decision to standardize or adapt the international marketing strategy, as
well as the impact of this strategy on business performance, bivariate and multivariate
statistical tools, such as correlation analysis, regression analysis, and analysis of
variance, were commonly employed. Only in more recently conducted research on
the subject more advanced analytical tools, like path analysis and structural equation
modeling, were used (e.g., Cavusgil & Zou, 1994; Shoham, 1999).

3. Antecedent factors

Antecedent factors refer to all those background forces that influence the firm’s
decision to standardize or adapt its international marketing strategy. Although at
times a large number of such factors was proposed to have an influential role on
aspects of marketing strategy (see, for example, Buzzell, 1968; Papavassiliou & Sta-
thakopoulos, 1997; Rau & Preble, 1987; Jain, 1989), only a small subset of them
has been empirically examined. Several attempts have also been made to develop
broad classificatory schemes for these factors (Jain, 1989; Ozsomer, Bodur & Cavus-
gil, 1991; Cavusgil, Zou, & Naidu, 1993; Johnson & Arunthanes, 1995), which for
the purposes of this review were consolidated into environmental, market, customer,
competition, product/industry, organizational, and managerial. Table 2 presents these
antecedent factors, as well as their impact (significant/nonsignificant) on each
element of international marketing strategy, while a more detailed analysis is
presented in the following5.
Environmental factors consist of a broad spectrum of economic, sociocultural,
political-legal, and physical forces which have an influence, either direct or indirect,
on international business operations. In fact, these factors can severely restrict the
firm’s ability to develop and implement a standardized strategy, even in cases when
this choice is deemed desirable (Douglas & Wind, 1987). Of these, political-legal

5
The data on Table 2 should be treated with caution, since most of the associations between antecedent
factors and international marketing strategy have been examined in only a few empirical studies.
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M. Theodosiou, L.C. Leonidou / International Business Review 12 (2003) 141–171
Table 2a
Profile of empirical studies on international marketing strategy standardization vs adaptationa

International Marketing Strategy

Antecedent factors Overall Product Posit- Design/ Features/ Branding/ Pack- Labeling Warranty Models Pricing Method Strategy Whole- Retail
strategy ioning style character- brand aging in line sale price
istics image price

Environmental factors – – – – N N N – S – – N – – N
Economic – – – – S SS SN S – – S – – – –
Sociocultural – N – – – S – – – – – – – – –
Political-legal S SN – – – – N N – – SN – – – –
Physical – N – – – – – – – – S – – – –
Market characteristics – – – – N N N – S – – N – – N
Marketing infrastructure – SN – – – – – – – – N – – – –
Advertising media N – – – – – – – – – – – – – –
availability
Distribution infrastructure S – – – – – – – – – N – – – –
Size N N – – N SN N N – S N – N – –
Customer issues – – – – S S S – S – – S – – S
Characteristics/behavior SS – – – – – – – – – S – – – –
Tastes/preferences S N – – – – – – – – – – – – –
Usage patterns N – – – – – – – – – – – – – –
(continued on next page)
Table 2a (continued)

M. Theodosiou, L.C. Leonidou / International Business Review 12 (2003) 141–171

International Marketing Strategy
Antecedent factors Overall Product Posit- Design/ Features/ Branding/ Pack- Labeling Warranty Models Pricing Method Strategy Whole- Retail
strategy ioning style character- brand aging in line sale price
istics image price

Competition – – – – – – – – – – – – – – –
Structure/nature S N – – N N N – N – N N – – S
Intensity – SN – – – – S S – – – – – – –
Product/Industry – – – – – – – – – – – – – – –
Product type SS SS – – N N SS SN – N – – N – –
Technology orientation of S S – – – – S S – – – – – – –
industry
Stage of PLC S N – – S S S – S – S S – – S
Organizational factors – – – – – – – – – – – – – – –
Nationality of parent SN S SN – – – – – – – N – – – –
company
Nature of ownership S – – – N N N – N – – N – – N
International experience – S – – – – S S – – – – – – –
Market share position SN N – – N N N – N – N N – – S
Managerial factors – – – – – – – – – – – – – – –
Centralization in decision S – SN N – S N – N – – – – N N
making
Corporate orientation – – – – N N N – N – – N – – N

a .
N: Non-significant association at 90% confidence intervalS: Significant association at 90% confidence interval.

151
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M. Theodosiou, L.C. Leonidou / International Business Review 12 (2003) 141–171
Table 2b
Profile of empirical studies on international marketing strategy standardization vs adaptationa

International Marketing Strategy

Antecedent factors Profit Dis- Pro- Adver- Basic Creative Media Sales Sales- Sales- Publicity/ Distri- Channels Type of Role of
margins counts motion tising mess- expres- allo- promo- force force public bution of distri- middle- middle-
(trade) (overall) age/ sion cation tion manage- role relations bution men men
theme ment

Environmental factors – N – S N N N S N N N – N S S
Economic – – – – – – – – – – – – – – –
Sociocultural – – – – – – – – – – – – – – –
Political-legal – – SN – S – N – – – – N – – –
Physical – – N – – – – – – – – N – – –
Market characteristics – N – S N N N S N N N – N S S
Marketing infrastructure – – N – – – – – – – – N – – –
Advertising media availability – – – – – – – – – – – – – – –
Distribution infrastructure – – – – – – – – – – – – – – –
Size N – – S S S S S S N – – N N S
Customer issues – S – S S S N N S S N – S S S
Characteristics/behavior – – – – – – – – – – – – – – –
Tastes/preferences – – – – – – – – – – – – – – –
Usage patterns – – – – – – – – – – – – – – –
(continued on next page)
 M. Theodosiou, L.C. Leonidou / International Business Review 12 (2003) 141–171
Table 2b (continued)

International Marketing Strategy

Antecedent factors Profit Dis- Pro- Adver- Basic Creative Media Sales Sales- Sales- Publicity/ Distri- Channels Type of Role of
margins counts motion tising mess- expres- allo- promo- force force public bution of distri- middle- middle-
(trade) (overall) age/ sion cation tion manage- role relations bution men men
theme ment

Competition – – – – – – – – – – – – – – –
Structure/nature – N N N N N N N N S N N N N S
Intensity – – – – S – S – – – – – – – –
Product/Industry – – – – – – – – – – – – – – –
Product type N – – – SS N S N S – – N N N
Technology orientation of industry – – – – S – S – – – – – – – –
Stage of PLC – S – S S SN N – S S N – S S S
Organizational factors – – – – – – – – – – – – – – –
Nationality of parent company – – N – S S N – – – – N – – –
Nature of ownership – N – N N N N S N N N – N N N
International experience – – – – S – S – – – – – – – –
Market share position – N S N N N N N N S N N N N S
Managerial factors – – – – – – – – – – – – – – –
Centralization in decision making – N – S SN SN NN N N N – – – N N
Corporate orientation – N – SS S S S N N S S – S N N

a .
N: Non-significant association at 90% confidence intervalS: Significant association at 90% confidence interval.

153
154 M. Theodosiou, L.C. Leonidou / International Business Review 12 (2003) 141–171

and economic factors received most research attention, whereas sociocultural and
physical aspects were largely ignored. Although it has been repeatedly asserted in
the literature that environmental differences are very important in determining both
the feasibility and the appropriateness of international marketing strategy, only 18
out of the total 43 reported associations were significant6. This was particularly true
for both product (e.g., branding) and pricing in general. The large number of nonsig-
nificant relationships reported (25 out of 43) partly contradicts the traditional notion
that environment is the driving force behind marketing strategy differentiation.
Market characteristics refer to those factors that determine the level of sophisti-
cation and development of a particular foreign market, including its marketing infra-
structure, advertising media availability, distribution structure, and market size.
While the latter determines demand potentials in a foreign market, the other market
characteristics influence the firm’s ability to strengthen and serve demand. Of those,
market size had consistently exhibited the greatest influence on marketing strategy—
the larger the market the more the adaptation required—particularly affecting its
promotional aspects. This is because the higher sales derived from large markets are
more likely to cover the added costs of adaptation (Chhabra, 1996). Moreover,
although one would expect greater standardization due to similarities in the avail-
ability, performance, and cost of the marketing, advertising, and distribution infra-
structure between the home and host markets (Jain, 1989), this was only partially
validated in the studies under review.
Customer issues focus on the characteristics/behavior, tastes/preferences, and
usage patterns of customers in overseas markets. In fact, the firm’s success or failure
abroad largely depends on its ability to satisfy the needs of its target customers better
than the competition. Despite its importance, this group of antecedent factors was
surprisingly the least examined by researchers in the field. Nonetheless, empirical
findings strongly indicate that customer issues have a rather significant effect on
marketing strategy standardization/ adaptation, this being true for almost all strategic
elements. Specifically, it has been revealed that the more the similarity in customer
profiles across countries, the greater the standardization of the marketing strategy,
and vice versa. These results are uniformly consistent with conceptual claims in the
field (e.g., Jain, 1989), although the scarcity of empirical evidence, particularly with
respect to the finer dimensions of this construct, limits their credibility.
Competition-related factors include the structure (i.e., monopolistic vs
oligopolistic), nature (i.e., price vs nonprice), and intensity (i.e., mild vs fierce) of
competition in foreign target markets. In the majority of cases, the structure/nature
of competition did not have a serious impact on the decision to standardize or adapt
the various marketing strategy elements7. This is in contrast to the view that the
firm’s international marketing strategy should take into consideration the number,

6
The basic premise is that the greater the environmental similarity between a firm’s home and host
country, the greater the likelihood of marketing strategy standardization being successful, and vice versa
(Jain, 1989).
7
Although different, most of the empirical studies have combined competition structure and nature of
competition into a single item, which was inevitably adopted in our analysis.
 M. Theodosiou, L.C. Leonidou / International Business Review 12 (2003) 141–171 155

origin, and approach of its major competitors in each market, as well as its position
(leader, challenger, follower) vis-à-vis each competitor (Buzzell, 1968; Jain, 1989;
Rosen, 1990). Competition intensity, the other factor in this group, was significantly
and positively associated with both product and promotion adaptation, suggesting
that competitive pressures may necessitate strategy customization to the specific
requirements of the foreign market to gain an advantage over rivals (Cavusgil, Zou &
Naidu, 1993).
Product and industry factors refer to the type of the product (i.e., consumer or
industrial), the technology orientation of the industry (i.e., technology-intensive or
“old-line”), and the stage of product life cycle (i.e., early or mature). Despite claims
that, as opposed to consumer products, industrial goods require a more standardized
approach, due to the fact that purchasing decisions are based on “rational” rather
than “emotional” criteria, these were only partially confirmed by empirical research
(e.g., Akaah, 1991; Ozsomer, Bodur & Cavusgil, 1991; Cavusgil, Zou & Naidu,
1993)8. Technology orientation was repeatedly found to have a serious impact on
standardizing marketing strategy, especially on product, due to the need to allocate
the vast research and development costs over long production runs (Cavusgil & Zou,
1994; Cavusgil, Zou & Naidu, 1993; Grosse & Zinn, 1995). Product life-cycle was
also found to significantly affect almost all dimensions of marketing strategy and,
in fact, it has been confirmed that a standardized marketing strategy works best in
markets where the product is in the same stage of its life cycle (Cavusgil, Zou &
Naidu, 1993; Grosse & Zinn, 1990; Johnson & Arunthanes, 1995; Chhabra, 1996).
Organizational factors focus on internal company characteristics and consist of
four items: (a) the nationality of the parent company, where results show that
although certain product and advertising aspects are influenced by the origin of the
parent office, other marketing strategy parameters were not influenced; (b) the nature
of company ownership, where results were non-significant, with the exception of
Ozsomer et al.’s (1991) study which reported that the extent of standardization of
the overall marketing strategy was higher in wholly-owned subsidiaries than in joint
ventures; (c) the firm’s international experience, where one study found a positive
association with product and promotion adaptation (Cavusgil, Zou & Naidu, 1993);
and (d) the foreign market share position, where no effect was revealed whatsoever
on marketing strategy adaptation (Akaah, 1991; Shoham, 1999).
The final set of antecedent factors refer to managerial attitude toward international
operations, and include the degree of centralization of decision-making (i.e., cen-
tralized vs decentralized) and corporate orientation (i.e., the extent of management’s
willingness to accommodate foreign perspectives)9. With regard to the former, the
basic assumption that a marketing strategy standardization is more likely to be fol-

8
These findings are somewhat surprising, given the fact that product nature is generally considered
to be the single most important factor in determining the appropriateness of marketing strategy standardiz-
ation.
9
Building on Perlmutter’s (1969) classification, some scholars suggested that firms adopting an ethno-
centric or regiocentric/geocentric orientation are more likely to pursue a strategy of standardization,
whereas polycentric firms are more likely to adopt marketing program adaptation.
156 M. Theodosiou, L.C. Leonidou / International Business Review 12 (2003) 141–171

lowed when decision-making is centrally controlled at headquarters, was examined in

two studies, yielding antithetical results: while Ozsomer, Bodur and Cavusgil (1991)
supported this association, Quester and Conduit (1996) found no significant relation-
ship with most of the marketing strategy elements examined. As far as corporate
orientation is concerned, a study conducted by Akaah (1991) revealed that this factor
significantly affected the extent of standardization of promotion-related elements, but
had no effect on product, pricing, and distribution strategy standardization. Moreover,
Kanso, (1992) found that cultural-oriented managers adapt advertising to a greater
extent than do nonculturally-sensitive executives.

4. International marketing strategy

Marketing strategy is the central construct in the standardization/adaptation debate

and has traditionally been defined as the statement of how the company is going to
achieve its marketing objectives (Kotler & Armstrong, 2001). This is particularly
expressed in terms of product, price, distribution, and promotion aspects, which are
blended for the purpose of achieving a specific marketing objective. Although the
appropriateness of marketing strategy standardization or adaptation should be evalu-
ated within the context of the relevant antecedent factors, it is still important to
know what the actual managerial practices are with respect to the specific level of
standardization/adaptation realized10. Table 3 presents the findings of 21 studies that
have empirically measured the actual degree of marketing strategy
standardization/adaptation, while a more detailed analysis is provided in the follow-
ing11.
Of the elements of the marketing mix, product-related issues exhibited the most
standardization, probably due to: (a) the greater incentive to reap the benefits from
economies of scale in research and development and production; (b) the desire for
rapid diffusion of new products in the market, especially in light of the fact that
product life-cycles are increasingly becoming shorter; and (c) the need to achieve
better coordination through the application of more uniform internal production con-
trols and quality standards (Ohmae, 1985; Douglas & Craig, 1986; Walters & Toyne,
1989). Of these, product attributes, namely quality, design, and features, were the

10
Ideally, it would be more appropriate to compare and contrast intended strategies (i.e., strategies
reflecting the manager’s initial vision, stemming from formal, analytic, and planned procedures) against
realized strategies (i.e., strategies actually being implemented in practice) (Mintzberg & Waters, 1985).
However, with the exception of Johnson and Arunthanes’ (1995) study which distinguished between ideal
and actual levels of product adaptation, all other studies focused on realized strategies.
11
As many different scales were used to measure standardization/adaptation, the results of each study
were converted into a 100-point scale, where 1 represents complete standardization and 100 denotes full
adaptation. In the case of dichotomous scales, the two dummy variables were converted into 1% and
100%, while for interval scales the mid-point was set at 50% and the two ends of the scale were converted
into 1% and 100% respectively. For instance, a mean score of 4.5 on a five-point scale was converted
into 88%. Although the limitations associated with such a conversion are fully recognized, it was deemed
necessary to facilitate comparison and consolidation of the available empirical findings.
Table 3a
Converted empirical results on the degree of international marketing strategy adaptation (percentages)a

Empirical studies

M. Theodosiou, L.C. Leonidou / International Business Review 12 (2003) 141–171

Marketing strategy Sorenson Hill Seifert and Grosse and Akaah Ozsomer et Cavusgil, Shoham Boddewyn and Grosse
element and and Still Ford Zinn (1991) al. (1991) Zou and and (1995)b
Wiechmann (1984) (1989) (1990) Naidu Albaum
(1975) (1993) (1994)

Product 16 45 17 31 29 55 31 36 56 51 56
General product – – – 36 – – 29 – – – –
Positioning – – – – – 55 34 – – – –
Design/style – – 6 – – – – 46 – – –
Quality – – 9 – – – – 28 – – –
Features/character. 17 33 15 – 28 51 – – – – –
Brand/branding 7 31 5 25 23 52 – – 62 51 48
Packaging 23 47 37 – 33 55 31 – 58 48 57
Labeling – 69 – – – – 31 – 62 48 60
Services – – 22 – – 61 – 33 52 54 61
Warranty – – 22 – 32 – – – 46 52 52
Items/models in – – – – – – – – – – –
product line
Price 37 – – 60 52 67 – 50 – – 74
General price – – – 60 – – – 50 – – 74
Pricing – – – – 50 – – – – – –
method/strategy
Retail price 37 – – – 52 67 – – – – –
Wholesale/trade price – – – – – – – – – – –
Profit margins to – – – – – – – – – – –
trade customers
Profit margins to – – – – – – – – – – –
end–users
Discounts – – – – 53 – – – – –
Sales/credit terms – – – – – – – – – – –
(continued on next page)

157
 158
Table 3a (continued)

Empirical studies
Marketing strategy Sorenson Hill Seifert Grosse Akaah Ozsomer et Cavusgil, Shoham Boddewyn and Grosse
element and and Still and Ford and Zinn (1991) al. (1991) Zou and and (1995)b

M. Theodosiou, L.C. Leonidou / International Business Review 12 (2003) 141–171

Wiechmann (1984) (1989) (1990) Naidu Albaum
(1975) (1993) (1994)

Promotion 32 – – 45 51 60 30 37 48 54 66
General promotion – – – – – – 30 – – – –
Advertising (overall) – – – 45 50 – – 37 48 53 57
Creative/execution 36 – – – 52 – – – – – –
style
Message/theme 22 – – – 45 56 – – – – –
Media allocation 52 – – – 62 56 – – – – –
Sales promotion 39 – – – 58 63 – – – 51 67
Salesforce 22 – – – 45 – – – – – –
structure/management
Salesforce role 20 – – – 45 65 – – – – –
Publicity/public – – – – 53 – – – – – –
relations
Personal selling – – – – – – – – – 57 73
Advertising/promotion – – – – – – – – – – –
budget
Distribution 28 – – – 57 74 – 47 – – 74
General distribution – – – – – – – 47 – – –
Channels of – – – – 53 – – – – – –
distribution
Physical distribution – – – – – – – – – – 74
Type of 38 – – – 60 74 – – – – –
middlemen/retail
outlets
Role of middlemen 17 – – – 57 – – – – – –

a
Percentages have been rounded to the nearest integral;
b
The first, second and third columns report the results of the 1973, 1983, and 1993 studies respectively;
Table 3b
Converted empirical results on the degree of international marketing strategy adaptation (percentages)

Empirical studies

M. Theodosiou, L.C. Leonidou / International Business Review 12 (2003) 141–171

Marketing strategy Chhabra Leonidou Quester Shoham Zou and Yip Zou et al. Mitchell et Shoham Theodosiou Total
element (1996) (1996) and (1996) Laughlin (1997) (1997) al. (1998) (1999) and
Conduit (1996)c Katsikeas
(1996) (2001)

Product 34 41 28 48 40 47 21 93 29 40 - 40
General product – 43 – – 41 52 – – – 40 – 40
Positioning – – 41 – 39 41 – – – – – 42
Design/style – 35 21 55 – – – – – – – 33
Quality – 35 – 37 – – – – – – – 27
Features/character. 19 – – – – – – – 26 – – 27
Brand/branding 7 35 23 – – – 16 – 18 – – 29
Packaging 49 40 28 – – – 26 – 29 – – 40
Labeling 30 58 – – – – – – – – – 51
Services – – – 40 – – – 93 41 – – 51
Warranty – – 29 – – – – – 33 – – 38
Items/models in 66 – – 58 – – – – – – – 62
product line
Price 64 – 59 63 41 49 – 67 57 63 43 56
General price – – – 62 41 49 – 67 – 63 – 58
Pricing 46 – – – – – – – 51 – – 49
method/strategy
Retail price – – 61 – – – – – 56 – 41 52
Wholesale/trade price – – 54 – – – – – – – 42 48
Profit margins to 81 – – – – – – – – – 44 63
trade customers
Profit margins to – – – – – – – – – – 41 41
end–users
Discounts – – 63 – – – – – 65 – – 60
Sales/credit terms – – – 63 – – – – – – 45 54
(continued on next page)

159
 160
Table 3b (continued)

Empirical studies
Marketing strategy Chhabra Leonidou Quester Shoham Zou and Yip Zou et al. Mitchell et Shoham Theodosiou Total

M. Theodosiou, L.C. Leonidou / International Business Review 12 (2003) 141–171

element (1996) (1996) and (1996) Laughlin (1997) (1997) al. (1998) (1999) and
Conduit (1996)c Katsikeas
(1996) (2001)

Product 34 41 28 48 40 47 21 93 29 40 - 40
Promotion 64 – 56 70 61 67 68 52 53 69 – 55
General promotion – – – – 61 67 77 68 – 69 – 62
Advertising (overall) – – – – – – 66 – – – – 51
Creative/execution 72 – 57 – – – – – 56 – – 55
style
Message/theme 52 – 47 – – – – – 46 – – 45
Media allocation 76 – 66 – – – – – 56 – – 61
Sales promotion 80 – 57 – – – – – 59 – – 59
Salesforce 60 – 57 69 – – – 67 52 – – 53
structure/management
Salesforce role 44 – 52 – – – – – 49 – – 46
Publicity/public – – – – – – – – 48 – – 51
relations
Personal selling – – – – – – 62 – – – – 64
Advertising/promotion – – – 70 – – – 22 58 – – 50
budget
Distribution 45 – 60 68 41 49 58 75 67 65 – 58
General distribution – – – – – – 58 75 – 65 – 61
Channels of 43 – – 68 41 49 – – 58 – – 52
distribution
Physical distribution – – – – – – – – – – – 74
Type of 41 – 59 – – – – – 67 – – 57
middlemen/retail
outlets
Role of middlemen 50 – 60 – – – – – 77 – – 52

c
The first column reports the results for Japanese firms and the second for European firms.
 M. Theodosiou, L.C. Leonidou / International Business Review 12 (2003) 141–171 161

least adapted. The same was also true of branding decisions, which were partly
adjusted, probably as a result of undesirable meanings, pronunciation difficulties, or
brand similarity in foreign markets. Packaging was slightly more adapted, concentrat-
ing mainly on material, design, and size, while information and language require-
ments were responsible for some labeling adaptation. Differences in product use
conditions, competitors’ practices, and service facilities across countries also led to
moderate adjustments in the provision of after-sales service and warranties. Finally,
product line changes in overseas markets seem to be common, resulting mainly from
differences between home and foreign environments, the development of new pro-
ducts for specific overseas markets, or financial limitations in supporting specific
products abroad due to high entry costs.
Compared to product aspects, price-related elements were much more adapted,
as a result of differences in such factors as marketing objectives, cost structures,
inflation rates, competitive policies, and government controls. Pricing adjustments
centered on five major areas: (a) pricing methods/strategies, adopting a skimming
or penetration strategy, depending on variations in market size, consumer sensitivity
to prices, and competitors’ actions or reactions across markets; (b) wholesale
prices/margins, resulting from differences in the role of wholesalers in the distri-
bution trade of a foreign country, as well as the mark-ups charged; (c) retail
prices/margins, being the result of variations in the size, type, and services provided
by retail outlets abroad, which largely determine the retail margins charged; (d) end
user prices/margins, usually affected by demand variations caused by differences in
customer numbers, purchasing power, and economic conditions; and (e)
sales/payment terms, being the result of variations in the company’s entry mode,
degree of involvement, and response to competitors in overseas markets. On average,
price adaptation was relatively moderate in almost all the above areas, indicating
the lack of flexibility of international firms to achieve the desired level of price
discrimination across countries as a result of excessive pressures by their competitors
(Samiee & Roth, 1992).
The third element of the marketing strategy, distribution, was the most adapted,
this being attributable to both foreign market—(e.g., differences in disposable
incomes, purchasing habits, and distribution infrastructure) and company-related
(e.g., variations in the level of involvement, product line, and sales volume) reasons.
Several studies stressed the existence of significant differences (in terms of number,
size, type, and services) in both wholesale and retail trade between home and host
markets (Akaah, 1991; Ozsomer et al., 1991; Quester & Conduit, 1996; Michell,
Lynch, & Alabdali, 1998). Adjustments were also reported with respect to the differ-
ent roles middlemen have to play in domestic vs foreign markets, caused by vari-
ations in bargaining power, financial strength, and marketing know-how. Of signifi-
cance is the fact that physical distribution exhibited the greatest degree of adaptation,
as a result of differences in: (a) the special documentation and ordering procedures
required in international product shipments; (b) the availability of transportation
facilities to carry goods to and within foreign markets; (c) the number, type, and
technology of the warehouses abroad; and (d) the level of inventories needed to be
maintained in overseas markets, usually determined by territorial size, infrastructural
162 M. Theodosiou, L.C. Leonidou / International Business Review 12 (2003) 141–171

facilities, and purchasing/consumption habits. Notably, designing a physical distri-

bution system for international markets requires continuous adjustments because
market, competitive and transportation conditions are constantly changing.
The final, and perhaps the most widely investigated, element of the marketing
strategy is promotion, which also exhibited slightly above-average levels of adap-
tation in foreign markets. With regard to advertising, language differences, media
availability, government regulations, economic differences, and competitors’ actions
have often been cited as reasons for advertising adaptation. In fact, these factors are
responsible for adjustments in the advertising message, its execution style, and media
mix. They also have a great impact on the allocation of the advertising and pro-
motional budget. Sales promotions were subject to moderate adaptations, often
attributable to variations in legal restrictions, cultural characteristics, competitive
practices, and retailers’ capabilities in foreign markets. Moderate adjustments were
also observed in the case of publicity/public relations, caused mainly by variations
in the degree of company involvement, the nature and importance of publics, and
availability of public relations agencies abroad. Finally, personal selling has also
undergone mild adaptations in international markets, particularly as regards the
recruitment, training, motivation, and control of the salesforce and the way the selling
task is performed.

5. Performance outcome

The ultimate relevance of the marketing strategy standardization or adaptation

depends on its performance outcomes, that is, the economic or behavioral payoffs
derived from its implementation (Jain, 1989). Despite its critical importance, the
relationship between marketing strategy standardization or adaptation and business
performance received scant empirical attention (Kotabe & Omura, 1989; Shoham &
Albaum, 1994). In fact, this relationship was the primary focus of a few studies only
(e.g., Cavusgil & Zou, 1994; Shoham, 1999), while the remainder examined this
aspect as a side issue (e.g., Christensen, da Rocha & Gertner, 1987; Koh, 1991)12.
With a single exception (i.e., Roth, 1995), all studies attempted to establish a direct
link between marketing strategy standardization/adaptation and business perform-
ance, without investigating the role of numerous antecedent factors that determine
the circumstances under which each strategy becomes appropriate to achieve
superior performance.
Given these limitations, Table 4 shows whether the relationship between the stan-
dardization or adaptation of a particular strategy element and a specific performance
category was significant and negative (–), non-significant (0), or significant and posi-
tive (+). Sales-related measures of performance were among the most commonly

12
Four studies, namely those by Kirpalani and Macintosh (1980); Cooper and Kleinschmidt (1985),
Christensen et al., (1987), and Szymanski, Bharadwaj & Varadarajano, (1993), were not incorporated in
Table 4, because they have tackled tangentially the effect of marketing strategy standardization/adaptation
on business performance.
Table 4
International marketing strategy standardization/adaptation effect on foreign business performancea.

Performance measures

M. Theodosiou, L.C. Leonidou / International Business Review 12 (2003) 141–171

Marketing program Sales-related Growth in Profit-related Growth in Market share- Goal Satisfaction Composite
elements performance sales-related performance profit- related related achievement with change scales of
performance performance performance /satisfaction in performance
performance

– 0 + – 0 + – 0 + – 0 + – 0 + – 0 + – 0 + – 0 +

Marketing S – – – – – – – – – – – – – – – – 1 – – – – – –
strategy(overall) A – 1 1 – 1 – – – – – – – – – – – – 1 – – – – – –
Global standardization S – – – – 1 – – 1 – – – – – – – – – 1 – – – – – –
A – – – – – – – – – – – – – – – – – – – – – – – –
Product S – – – – – 1 – – – – – 1 2 – 1 – – – 1 – – 1 –
A – 2 – – 1 1 1 3 1 – – – – 1 – – – – – – – 2 – 1
Core product S – – 1 – – – – – – – – – – – – – – – – – – – – –
A – – – – – – – – – – – – – – – – – – – – – – – –
Product design/style S – 1 – – 1 – – 1 – 1 – – – – – – – – – – – – – –
A – – – – – – 1 1 – – – – – 1 – – – – – – – – – –
Positioning S – – – – – – – – – – – – – – – – – – – – – – – –
A – – – – – – – 1 – – – – – 1 – – – – – – – – – –
Product quality S – 1 – – 1 – – 1 – – 1 – – – – – – – – – – – – –
A – – – – – – – – – – – – – – – – – – – – – – – –
Brand image S – – – – – – – – – – – – – – – – – – – – – – – –
A – – – – – – – – – – – – – – 1 – – – – – – – – –
Product peripherals S 1 – – – – – – – – – – – – – – – – – – – – – – –
A – – – – – – – – – – – – – – – – – – – – – – – –
Product lines S – 1 – – 1 – 1 – – – 1 – – – – – – – – – – – – –
A – – – – – – – – – – – – – – – – – – – – – – – –
Items in product lines S – – 1 – 1 – – – 1 – – 1 – – – – – – – – – – – –
A – – – – – – – – – – – – – – – – – – – – – – –
(continued on next page)

163
 164
Table 4 (continued)

M. Theodosiou, L.C. Leonidou / International Business Review 12 (2003) 141–171

Performance measures
Marketing program Sales-related Growth in Profit-related Growth in Market share- Goal Satisfaction Composite
elements performance sales-related performance profit- related related achievement with change scales of
performance performance performance /satisfaction in performance
performance

– 0 + – 0 + – 0 + – 0 + – 0 + – 0 + – 0 + – 0 +
Services S 1 1 – – 1 – – 1 – – 1 – – – – – – – – – – – – –
A – 1 – – – – 1 1 – – – – – 1 – – – – – – – – – –
Promotion S – 1 – – – – – – – – – – – – – 1 – – 1 – – – – –
A – – – – – – – – – – – – – – – – – – – – – 1 – –
Advertising S – – – – – – – – – – – – – 1 1 – – – – – – – – –
A – – – – – – – – – – – – – – – – – – – – – – – –
Advertising message/ S 1 – – 1 – – 1 – – 1 – – – – – – – – – – – – – –
contents A – – – – – – 1 1 – – – – – 1 – – – – – – – – – –
Salesforce management S 1 – – – 1 – 1 – – 1 – – – – – – – – – – – – – –
A – – – – – – – – – – – – – – – – – – – – – – –
Promotion budget S – – 1 – 1 – – – 1 – – 1 – – – – – – – – – – – –
A – – – – – – – – – – – – – – – – – – – – – – –
Pricing S – 1 1 – 1 – 1 – 1 – – – – – – 1 – – – 1 – – –
A – – – – – – – 1 1 – – – – 1 – – – – – – – – 1 –
Distribution S – 1 – – 1 – – 1 – – 1 – – – – – – 1 – 1 – – – –
A – – – – – – – 1 – – – – – 1 – – – – – – – – – –

a.
S: Standardization A: Adaptation +: Significant positive relationship at 90% confidence interval ⫺ : Significant negative relationship at 90% confidence
interval 0: Non-significant relationship at 90% confidence interval.
 M. Theodosiou, L.C. Leonidou / International Business Review 12 (2003) 141–171 165

employed, indicating, however, a non-significant association with marketing strategy

in the majority of cases examined. Analytically, most studies investigated the link
between standardization of the design/style, quality, service, and mix of the com-
pany’s product on its international sales (both static and dynamic) without finding
any significance. Moreover, a positive association with foreign sales performance
was established in the case of standardizing the core product (Zou, Andrus, & Norv-
ell, 1997) and the length of the product line (Shoham, 1996), while a negative associ-
ation was found with respect to product peripherals (Zou, Andrus & Norvell, 1997).
In the case of promotional aspects, standardizing both the advertising content and the
salesforce management was responsible for deteriorating sales performance (Shoham,
1996). In contrast, standardizing the promotional budget was conducive to higher
sales performance within a short time span (Shoham, 1996). Of the two studies
investigating the link between pricing strategy standardization and sales performance,
only one revealed significant results (Zou, Andrus & Norvell, 1997), while stan-
dardizing distribution had no association whatsoever with this measure of perform-
ance.
The effect of strategic marketing factors on profit-related measures was examined
relatively more extensively, revealing mixed results: 16 associations were non-sig-
nificant, 14 associations were significant and negative, and six associations were
significant and positive. As in the previous case, most studies concentrated mainly
on product strategy standardization/adaptation. Specifically, the effect of
standardization/adaptation of product design/style on profit performance was exam-
ined in two studies: Shoham (1996) who found no association with profit, but a
negative relationship with growth in profits, and Frazer and Hite (1990) who reported
no association between strategy and performance in English speaking and Asian
markets, but a negative one in European and Latin American markets. Standardizing
product quality did not have a significant effect on either static or growth measures
of profit performance (Shoham, 1996), and the same was true with respect to adapting
product positioning (Albaum & Tse, 2001). Although standardizing the number of
product lines sold in foreign markets seems to have a negative or no impact on profit
performance, the standardization of the number of items contained in each product
line had a significant positive effect (Shoham, 1996). The impact of standardizing
postsales service on profit performance was examined in one study revealing non-
significant results (Shoham, 1996), while of the two studies investigating the effect of
service adaptation on profit performance, only one found significant negative results
(Kaynak & Kuan, 1993). The association of promotional aspects with profit perform-
ance was less frequently examined, with standardization of the advertising content
leading to poor profit performance (Shoham, 1996), while standardizing the pro-
motion budget had a positive impact. With regard to pricing, results were relatively
consistent: pricing standardization was negatively associated with profit performance
(Shoham, 1996), although the latter was positively linked with pricing adaptation
(Koh, 1991). Finally, both standardization and adaptation of distribution strategy had
no serious effect on profit performance (Shoham, 1996; Albaum & Tse, 2001).
Compared to sales- and profit-related measures, the impact of marketing strategy
standardization/adaptation on market share-related performance was less frequently
166 M. Theodosiou, L.C. Leonidou / International Business Review 12 (2003) 141–171

examined. However, the majority of studies focusing on this association revealed no

significant results. Only two studies examining the adaptation of brand image (Roth,
1995) and the standardization of advertising (Shiram & Manu, 1995) reported a
positive association with market share performance. More subjective measures of
performance, such as satisfaction with changes in performance, were rarely used
and these concentrated mainly on the generic aspects of marketing strategy. While
standardizing product and distribution strategy had no impact on this measure of
performance, promotion adaptation demonstrated a negative, and pricing standardiz-
ation a positive effect (Shoham, 1999). Composite scales of perfomance, incorporat-
ing various financial, market, and strategic measures, were also employed, indicating
mixed results with regard to product strategy: of the three studies examining product
standardization, two found a negative (Kotabe & Omura, 1989; Kotabe & Okoroafo,
1990) and the other a positive (Cavusgil & Zou, 1994) association with performance.
Another study examining product standardization revealed no particular effect on
composite performance (Kotabe, 1990). Finally, one study found a negative relation-
ship between promotion adaptation and composite performance, but no link at all
between pricing adaptation and this measure of performance (Cavusgil & Zou, 1994).

6. Summary and conclusions

Despite decades of fierce debate around the marketing strategy standardization

versus adaptation issue, the present review reveals that empirical research on this
topic is still at an early stage of development. Although compared to earlier studies,
which were largely exploratory in nature, significant progress has been made in the
last decade by using more robust methods of investigation, there is a long way to
go before a concrete theory on the subject can be built. Our review has amply demon-
strated that research on the subject is characterized by the adoption of inappropriate
conceptualizations, inadequate research designs, and weak analytical techniques, that
were largely responsible for the generation of non-significant, contradictory, and, to
some extent, confusing findings. Hence, the underlying question concerning which
strategic option, standardization or adaptation, is the most suitable for the inter-
national firm remains an essentially unresolved and inconclusive issue.
Although at times many antecedent factors were put forward as affecting market-
ing strategy standardization/adaptation, only a few of these exhibited a systematically
significant impact. Moreover, there was a tendency among researchers to investigate
only a few of these background parameters, and in relation to certain aspects of the
marketing strategy, thus providing only a partial understanding of their interactions.
Furthermore, most studies used unidimensional conceptualizations of the antecedent
factors, and examined their influence on the degree of standardization/adaptation
independently from each other. Most importantly, only a few studies attempted to
check the concurrent effect of these factors in the selection of the best strategic
alternative (either standardization or adaptation), that would lead to superior foreign
business performance.
With regard to the degree of standardization/adaptation of the marketing strategy,
 M. Theodosiou, L.C. Leonidou / International Business Review 12 (2003) 141–171 167

some general inferences can be made: (a) of the elements of the marketing mix, the
standardization/adaptation of product- and promotion-related issues attracted most
research attention, as opposed to pricing and distribution, which were less investi-
gated; (b) most studies examined a few components of the marketing mix only, thus
ignoring potential interrelationships in standardizing/adapting them; (c) the degree
of standardization/adaptation was in most cases examined at a very generic level,
failing to investigate the finer dimensions of each component separately; (d) product-
related elements tended to be more standardized compared to other marketing mix
parameters, while distribution has undergone the greatest adaptation; and (e) on aver-
age, the degree of marketing strategy adaptation was moderate, denoting a “middle-
of-the-road” attempt to reap the benefits of both standardization and adaptation.
Empirical evidence on the association between international marketing strategy
standardization/adaptation and foreign business performance was very scarce, with
most research emphasis placed on the product and promotion, rather than on pricing
and distribution. The fact that the great majority of the associations examined yielded
non-significant results suggests, prima facie, that the firm’s performance in foreign
markets is indifferent to the particular strategic alternative pursued. However, a more
thorough analysis implies that what leads to superior performance is not the adoption
of marketing strategy standardization or adaptation, but the achievement of an appro-
priate “coalignment” or “fit” between international marketing strategy and the context
in which this strategy is implemented, whether this is environmental, organizational,
or managerial (Cavusgil & Zou, 1994). Hence, international marketing strategy
(whether standardized or adapted) will lead to superior performance only to the extent
that it properly matches the unique set of circumstances that the firm is confronted
by within a particular overseas market.

7. Future research directions

Certain directions for future research on the subject can be extracted from the
above findings. First, contrary to a commonly expressed belief that standardization
vs adaptation is one of the most highly researched issues in international marketing,
our analysis indicated that there is still a pressing need for more empirical research
on the topic. In addition, the fact that the vast majority of studies in the field were
conducted in isolation, ignoring the findings and conclusions of preceding studies,
has been responsible for the great heterogeneity in the research findings. This was
especially evident in the influence of various antecedent factors on the degree of
standardization/adaptation of specific marketing strategy elements, as well as the
relationship between various marketing strategy elements and particular measures of
performance. Therefore, there is a need for greater reliance on past studies, and this
review provides a platform for designing such an integrative approach to the subject.
Second, extant research suffers from the lack of validated measures of the various
constructs used, which is an important prerequisite for study replication. This is
particularly the case because, whereas the relevant constructs (i.e., antecedent factors,
marketing strategy, and business performance) are multidimensional in nature, most
168 M. Theodosiou, L.C. Leonidou / International Business Review 12 (2003) 141–171

researchers have used single-item measures. Moreover, with a few notable exceptions
(e.g., Cavusgil & Zou, 1994; Shoham, 1999), no serious attempts have been made
to assess the validity and reliability of these measures. Future research should, there-
fore, give considerable attention to the consistent conceptualization and measurement
of the relevant constructs, as well as to the validation of the resulting measurement
scales through appropriate analytical methods. These validated scales should then
form the basis for more empirical research, replicated under different time, spatial,
and industry contexts.
Third, the fact that the majority of the studies reviewed were conducted at the
corporate level imposes serious limitations to this type of research. This approach
would be appropriate in the case of study samples consisting of manufacturers of a
single product/product line, operating in a single overseas market. For the vast
majority of researchers, however, who target large exporting and/or multinational
corporations with diversified product portfolios and operations in many overseas
markets, firm level investigations would inevitably lead to confounded and inaccurate
measures (Cavusgil & Zou, 1994; Zou & Stan, 1998). Thus, researchers should focus
their investigation on the “product-market venture” level, defined as the marketing
of a single product/product line in a specific overseas market.
Finally, the failure of previous studies to adequately address the thorny issue of
marketing strategy standardization/adaptation effects on company performance can
be largely attributed to the inappropriate conceptualization of the underlying relation-
ship between these two constructs, and to the adoption of inappropriate analytical
tools13. The key success factor for international firms is to manage to achieve the best
possible “co-alignment” or “fit” between their marketing strategy and the particular
contextual factors they are confronting in each foreign market targeted. Although, a
couple of studies attempted to incorporate the basic principles of “contingency
theory” or “concept of fit” in the investigation of the standardization versus adap-
tation issue with encouraging results (Cavusgil & Zou, 1994; Roth, 1995), more in-
depth work needs to be done in this area. In particular, greater emphasis should be
placed on the establishment of an appropriate link between the theory and the hypo-
thetical relationships being investigated, on the one hand, and the statistical testing
of these hypotheses, on the other (Venkatraman, 1989).

Acknowledgements

The constructive comments of the Guest Editor and the reviewers of the Journal
on earlier versions of this article are greatly appreciated.

13
These studies were based on the incorrect assumption that there is a direct impact of international
marketing strategy on business performance. They were, therefore, trying to provide an answer to the
following question: Do firms that pursue a strategy of standardization perform better than firms pursuing
a strategy of adaptation (or vice versa)? However, this is the wrong question to ask since, given the
particular context in which the firm is operating (as this is defined by the relevant antecedent factors),
both marketing strategy standardization and adaptation can lead to superior firm performance.
 M. Theodosiou, L.C. Leonidou / International Business Review 12 (2003) 141–171 169

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