The Future of Global Business: a Reader / [Edited By] Michael R Czinkota, Ilkka a Ronkainen, Masaaki Kotabe

The Future of Global Business

The Future of Global Business A Reader

Michael R. Czinkota McDonough School of Business, Georgetown University and the University of Birmingham, U.K. Masaaki Kotabe Institute of Global Management, Temple University, Philadelphia, P.A. Ilkka A. Ronkainen McDonough School of Business, Georgetown University, Washington, D.C. First published 2011 by Routledge 711 Third Avenue, New York, NY 10017 Simultaneously published in the UK by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN Routledge is an imprint of the Taylor & Francis Group, an informa business © 2011 Taylor & Francis The right of the editors to be identiﬁed as the authors of the editorial material, and of the authors for their individual chapters, has been asserted by them in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. Typeset in Berling and Futura by Keystroke, Station Road, Codsall, Wolverhampton Printed and bound in the United States of America on acid-free paper by Sheridan Books Inc. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark Notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identiﬁcation and explanation without intent to infringe. Library of Congress Cataloging in Publication Data The future of global business: a reader / [edited by] Michael R Czinkota, Ilkka A Ronkainen, Masaaki Kotabe. p. cm. 1. Export marketing. 2. International business enterprises. 3. International trade. I. Czinkota, Michael R. II. Ronkainen, Ilkka A. III. Kotabe, Masaaki. HF1416.F88 2011 338.8'8—dc22 2010022288 ISBN13: 978-0-415-80093-8 (hbk) ISBN13: 978-0-203-87813-2 (ebk) To Ilona and Margaret. MRC

To my children in pursuit of their dreams. MK

To Sirkka and Alpo Ronkainen. IAR

Table of Contents

About the Editors xiv

1. Role of Research in International Marketing 1 1.1 Czinkota, Michael R. and Ilkka A. Ronkainen, “An International Marketing Manifesto,” Journal of International Marketing 11,1, 2003, 13–27. 3

1.2 Czinkota, Michael R. and A. Coskun Samli, “The Remarkable Performance of International Marketing in the Second Half of the 20th Century,” European Business Review, 19, 4, 2007, 316–331. 21

1.3 Czinkota, Michael R., “Freedom and International Marketing: Janis Joplin’s Candidacy as Patron of the Field,” Thunderbird International Business Review, January–February 2005, 1–13. 44

1.4 Czinkota, Michael R., “Academic Freedom for All in Higher Education: The Role of the General Agreement on Trade in Services,” Journal of World Business, 41, 2, 2006, 149–160. 58

1.5 Czinkota, Michael R., “International Information Cross- Fertilization in Marketing: An Empirical Assessment,” European Journal of Marketing, 34, 15, 2000, 1305–1314. Winner, Article of the Year Award. 83 viii Contents

1.6 Czinkota, Michael R. and Ilkka A. Ronkainen, “Trends and Indications in International Business: Topics for Future Research,” Management International Review, April 2009. 96

1.7 Kotabe, Masaaki and Crystal X. Jiang, “Contemporary Research Trends in International Marketing: The 2000s,” in Alan Rugman, ed., Oxford Handbook of International Business, 2nd ed., Oxford: Oxford University Press, 2008, 447–501. 119

2. Competition from Emerging Markets 193 2.1 Malik, Omar R. and Masaaki Kotabe, “Dynamic Capabilities, Government Policies, and Performance in Firms from Emerging Economies: Evidence from India and Pakistan,” Journal of Management Studies, 2009. 195

2.2 Gao, Gerald Y., Janet Y. Murray, Masaaki Kotabe, and Jiangyong Lu, “A ‘Strategy Tripod’ Perspective on Export Behaviors: Evidence from Domestic and Foreign Firms Based in an Emerging Economy,” Journal of International Business Studies, 39, 2009. 239

2.3 Aulakh, Preet S., Masaaki Kotabe, and Hildy Teegen, “Export Strategies and Performance of Firms from Emerging Economies: Evidence from Brazil, Chile, and Mexico,” Academy of Management Journal, 43 (3), 2000, 342–361. 279

2.4 Aulakh, Preet S. and Masaaki Kotabe, “Institutional Changes and Organizational Transformation in Developing Economies,” Journal of International Management, 14 (September), 2008, 209–216. 322

3. Marketing Mix 341 3.1 Dimofte, Claudiu V., Johny K. Johansson, and Ilkka A. Ronkainen, “Cognitive and Affective Reactions of U.S. Consumers to Global Brands,” Journal of International Marketing, 16, 4, December 2008. 343 Contents ix

3.2 Czinkota, Michael R. and Masaaki Kotabe, “Entering the Japanese Market: A Reassessment of Foreign Firms’ Entry and Distribution Strategies,” Industrial Marketing Management, 29, November 2000, 483–491. 372

3.3 Swan, K. Scott, Masaaki Kotabe, and Brent B. Allred, “Exploring Robust Design Capabilities, Their Role in Creating Global Products, and Their Relationship to Firm Performance,” Journal of Product Innovation Management, 22, 2, March 2005, 144–164. 388 3.4 Clark, Terry, Masaaki Kotabe, and Dan Rajaratnam, “Exchange Rate Pass-Through and International Pricing Strategy: A Conceptual Framework and Research Propositions,” Journal of International Business Studies, 30, Second Quarter, 1999, 249–268. 432

3.5 Gençtürk, Esra F. and Masaaki Kotabe, “The Effect of Export Assistance Program Usage on Export Performance: A Contingency Explanation,” Journal of International Marketing, 9, 2, 2001, 51–72. 459

4. Global Sourcing and Supply Chain Management 487 4.1 Czinkota, Michael R., “An Analysis of the Global Position of U.S. Manufacturing,” Thunderbird International Business Review, October 2003: 505–519. 489

4.2 Kotabe, Masaaki, Michael J. Mol, and Sonia Ketkar, “An Evolutionary Stage Model of Outsourcing and Competence Destruction: A Triad Comparison of the Consumer Electronics Industry,” Management International Review, 48, 1, 2008, 65–93. 504

4.3 Kotabe, Masaaki, Michael J. Mol, and Janet Y. Murray, “Outsourcing, Performance, and the Role of E-Commerce: A Dynamic Perspective,” Industrial Marketing Management, 37, 1, 2008, 37–45. 546

4.4 Murray, Janet Y., Masaaki Kotabe, and Joe Nan Zhou, “Strategic Alliance-Based Sourcing and Market Performance: x Contents

Evidence from Foreign Firms Operating in China,” Journal of International Business Studies, 36, 2, March 2005, 187–208. 568

5. Emerging Issues 615 5.1 Czinkota, Michael R., Gary A. Knight, Peter W. Liesch, and John Steen, “Positioning Terrorism in Management and Marketing: Research Propositions” Journal of International Management, 11, 2005, 581–604. 617

5.2 Czinkota, Michael R., David A. Grossman, Rajshekhar G. Javalgi, and Nicholas Nugent, “Foreign Market Entry Mode of Service Firms: The Case of U.S. MBA Programs,” Journal of World Business, forthcoming. 655 5.3 Czinkota, Michael R., “How Government Can Help Increase U.S. Export Performance: Testimony Before the House Committee on Small Business.” 688 5.4 Kotabe, Masaaki and Crystal X. Jiang, “Three Dimensional: The Markets of Japan, Korea, and China are Far from Homogeneous,” Marketing Management, 15, 2, 2006, 39–43. 697 5.5 Kotabe, Masaaki, Srini S. Srinivasan, and Preet S. Aulakh, “Multinationality and Firm Performance: The Moderating Role of R&D and Marketing Capabilities,” Journal of International Business Studies, 33, 1, 2002, 79–97. 709

Index 734 The Future of Global Business: A Reader Edited by Michael R. Czinkota and Ilkka A. Ronkainen Global Business: Positioning Ventures Ahead Michael R. Czinkota and Ilkka A. Ronkainen This list matches the chapters in Global Business: Positioning Ventures Ahead with the readings found in this book.

Chapter 1: The Global Imperative 1.1 Czinkota, Michael R. and Ilkka K. Ronkainen, “An International Marketing Manifesto” 1.2 Czinkota, Michael R. and J. Samli “The Remarkable Performance of International Marketing in the Second Half of the 20th Century”

Chapter 2: Establishing the Context 2.1 Malik, Omar R. and Masaaki Kotabe, “Dynamic Capabilities, Government Policies, and Performance in Firms from Emerging Economies: Evidence from India and Pakistan” 2.3 Aulakh, Preet S., Masaaki Kotabe, and Hildy Teegen, “Export Strategies and Performance of Firms from Emerging Economies: Evidence from Brazil, Chile, and Mexico” 2.4 Aulakh, Preet S. and Masaaki Kotabe, “Institutional Changes and Organizational Transformation in Developing Economies” 3.5 Gençtürk, Esra F. and Masaaki Kotabe, “The Effect of Export Assistance Program Usage on Export Performance: A Contingency Explanation”

Chapter 3: Doing Your Homework on Global Markets 1.5 Czinkota, Michael R., “International Information Cross-Fertilization in Marketing: An Empirical Assessment” 1.7 Kotabe, Masaaki and Crystal Jiang, “Contemporary Research Trends in International Marketing: The 2000s” 5.3 Czinkota, Michael R., “How Government Can Help Increase U.S. Export Performance; Testimony Before the House Committee on Small Business”

Chapter 4: Getting There with Customers and Suppliers 3.2 Czinkota, Michael R. and Masaaki Kotabe, “Entering the Japanese Market: A Reassessment of Foreign Firms’ Entry and Distribution Strategies” 3.3 Swan, K. Scott, Masaaki Kotabe, and Brent Allred, “Exploring Robust Design Capabilities, Their Role in Creating Global Products, and Their Relationship to Firm Performance” 4.3 Kotabe, Masaaki, Michael J. Mol, and Janet Y. Murray, “Outsourcing, Performance, and the Role of E-Commerce: A Dynamic Perspective”

Chapter 5: Creating a Global Presence 2.2 Gao, Gerald Y., Janet Y. Murray, Masaaki Kotabe, and Jiangyong Lu, “A ‘Strategy Tripod’ Perspective on Export Behaviors: Evidence from Domestic and Foreign Firms Based in an Emerging Economy” 4.1 Czinkota, Michael R., “An Analysis of the Global Position of U.S. Manufacturing” 4.4 Murray, Janet Y., Masaaki Kotabe, Joe Nan Zhou, “Strategic Alliance-Based Sourcing and Market Performance: Evidence from Foreign Firms Operating in China” 5.2 Czinkota, Michael R., David A. Grossman, Rajshekhar (Raj) G. Javalgi, Nicholas Nugent, “Foreign Market Entry Mode of Service Firms: The Case of U.S. MBA Programs”

Chapter 6: Making Communication Happen 1.3 Czinkota, Michael R., “Freedom and International Marketing: Janis Joplin’s Candidacy as Patron of the Field” Chapter 7: Negotiating Cultural Chasms 5.1 Czinkota, Michael R., Gary A. Knight, Peter W. Liesch, and John Steen, “Positioning Terrorism in Management and Marketing: Research Propositions”

Chapter 8: Positioning the Product and Brand 1.4 Czinkota, Michael R., “Academic Freedom For All in Higher Education: The Role of the General Agreement on Trade in Services” 3.1 Dimofte, Claudiu V., Johny K. Johansson, and Ilkka A. Ronkainen, “Cognitive and Affective Reactions of U.S. Consumers to Global Brands” 5.4 Kotabe, Masaaki and Crystal X. Jiang, “Three Dimensional: The Markets of Japan, Korea, and China are Far from Homogeneous” 5.5 Kotabe, Masaaki, Srini S. Srinivasan, and Preet S. Aulakh, “Multinationality and Firm Performance: The Moderating Role of R&D and Marketing Capabilities”

Chapter 9: Making Money 3.4 Clark, Terry, Masaaki Kotabe, and Dan Rajaratnam, “Exchange Rate Pass-Through and International Pricing Strategy: A Conceptual Framework and Research Propositions” 4.2 Kotabe, Masaaki, Michael J. Mol, and Sonia Ketkar, “An Evolutionary Stage Model of Outsourcing and Competence Destruction: A Triad Comparison of the Consumer Electronics Industry”

Chapter 10: Discovering and Using Trends in International Business 1.6 Czinkota, Michael R. and Ilkka A. Ronkainen, “Trends and Indications in International Business: Topics for Future Research” About the Editors

Michael R. Czinkota Michael R. Czinkota presents international business and marketing issues at the Graduate School and the Robert Emmett McDonough School of Business at Georgetown University and the Birmingham Business School in the United Kingdom. He has held professorial appointments at universities in Asia, Australia, Europe, and the Americas. Dr. Czinkota served in the U.S. government as Deputy Assistant Secretary of Commerce. He also served as head of the U.S. Delegation to the OECD Industry Committee in Pars and as senior advisor for Export Controls. His background includes ten years of private-sector business experience as a partner in a fur trading ﬁrm and in an advertising agency. His research has been supported by the U.S. government, the National Science Foundation, the Organization of American States, and the American Management Association. He was listed as one of the three most published contributors to international business research in the world by the Journal of International Business Studies and has written a number of books. Dr. Czinkota was born and raised in Germany and educated in Austria, Scotland, Spain, and the United States. He studied law and business administration at the University of Erlangen-Nürnberg and was awarded a two-year Fulbright Scholarship. He holds an MBA in international business and a Ph.D. in logistics from the Ohio State University. About the Editors xv

Masaaki Kotabe Masaaki Kotabe holds the Washburn Chair Professorship in International Business and Marketing, and is Director of Research at the Institute of Global Management Studies at the Fox School of Business at Temple University. Prior to joining Temple University in 1998, he was Ambassador Edward Clark Centennial Endowed Fellow and Professor of Marketing and International Business at the University of Texas at Austin. Dr. Kotabe also served as the Vice President of the Academy of International Business in the 1997–1998 term. He received his Ph.D. in Marketing and International Business at Michigan State University. Dr. Kotabe teaches international marketing, global sourcing strategy (R&D, manufacturing, and marketing interfaces), and Asian business practices at the undergraduate and MBA levels and theories of international business at the Ph.D. level. He has lectured widely at various business schools around the world, including Austria, Germany, Finland, Norway, Sweden, Brazil, Colombia, Mexico, China, Japan, Korea, Indonesia, and Turkey. For his research, he has worked closely with leading companies such as AT&T, Kohler, NEC, Nissan, Philips, Sony, and Ito-Yokado (parent of 7-Eleven stores), and served as advisor to the United Nations’ and World Trade Organization’s Executive Forum on National Export Strategies. Dr. Kotabe has written many scholarly publications. He serves as the Editor of the Journal of International Management, and also has served on the editorial boards of the Journal of Marketing, the Journal of International Business Studies, the Journal of International Marketing, the Journal of World Business, the Journal of the Academy of Marketing Science, Advances in International Management, the Journal of Business Research, and the Thunderbird International Business Review, among others. He also serves as an Advisor to the Institute of Industrial Policy Studies (IPS) National Competitiveness Report

Ilkka A. Ronkainen Ilkka A. Ronkainen is a member of the faculty of marketing and international business at the School of Business at Georgetown University. He has received the undergraduate teaching and research awards twice, and in 2001 and 2008, the International Executive MBA program at Georgetown recognized him as the Outstanding Professor of xvi About the Editors the Year. He is the founder and director of the MSB’s summer Hong Kong program. He has been a member of the Georgetown University Faculty Senate since 1992. Dr. Ronkainen serves as docent of international marketing at the Helsinki School of Economics. He was visiting professor at HSE during the 1988–1997 and 1991–1992 academic years and continues to teach in its Executive MBA, International MBA, and International BBA programs. He is co-author of two key college texts, International Marketing, 9th edition (Cengage) and International Business, 8th edition, Wiley. Dr. Ronkainen holds a Ph.D. and a Master’s degree from the University of South Carolina as well as an M.S. (Economics) degree from the Helsinki School of Economics. Section 1 1 2 3 4 5 Role of Research in 6 7 International Marketing 8 9 10 1 2 3 4 5 6 7 8 9 20 1 2 3 4 5 6 7 8 9 30 1 2 3 4 5 6 7x

Chapter 1.1 1 2 3 4 5 An International 6 7 Marketing Manifesto 8 9 Michael R. Czinkota and Ilkka 10 A. Ronkainen 1 2 3 4 5 INTERNATIONAL MARKETING WORKS 6 7 Today might be called the triumph of international marketing. There 8 seems finally to be proof that planned economies are less efficient than 9 market economies. Governments all over the world are encouraging 20 market-based activities. The abolishment of state monopolies, the priva- 1 tization of state-owned companies, the opening of national economies 2 toward the world market, and the ongoing introduction and enforcement 3 of rules and laws to ensure competitive market conditions are being 4 witnessed. 5 As a change agent, international marketing has brought important 6 benefits to nation-states, firms and their employees, and customers. 7 During the past 30 years, the value of global trade has risen from $200 8 billion to more than $7.6 trillion (World Trade Organization 2002). The 9 growth rate of marketing between countries has consistently exceeded 30 average domestic growth rates (International Monetary Fund 2000). The 1 fastest globalizing nations have enjoyed rates of economic growth up to 2 50% higher than those that have integrated into the world economy 3 more slowly (Global Business Policy Council 2000). Linked to this 4 growth, these same countries have also achieved relatively greater gains 5 of political freedom, greater increases in life expectancy, higher literacy 6 rates, and better overall standards of living. 7x 4 Michael R. Czinkota and Ilkka A. Ronkainen

1 Firms have benefited substantially from global marketing expansion. 2 With wider market reach and many more customers, firms in the 3 international market produce more and do so more efficiently than their 4 domestic-only counterparts. As a result, international firms simultane- 5 ously achieve lower costs and higher profits both at home and abroad. 6 Market diversification and the stability arising from firms’ lack of 7 dependence on any particular market are other positive effects. Firms 8 also learn from their competitors, which often makes their managers 9 more sensitive and responsive to differing environments, thus preparing 10 them for change. In addition, their recruiting can expressly seek out 1 and develop the best talent from all nationalities (Theuerkauf, Ernst, and 2 Mahini 1996). The cumulative effect of these dimensions is major. 3 Research has shown that firms of all sizes and in all industries that engage 4 in international marketing outperform their strictly domestic counter- 5 parts. They grow more than twice as fast in sales and earn significantly 6 higher returns on equity and assets (Taylor and Henisz 1994). 7 Workers also benefit from international marketing activities. 8 International firms of all sizes pay significantly higher wages than 9 domestic-only firms (Business America 1996). Because of their greater 20 profitability and longevity, workplace security is also substantially greater 1 for employees who work in plants of international marketers than for 2 those who work in local firms (Richardson and Rindal 1996). Compelled 3 by global media scrutiny, international firms have become greater 4 practitioners of social responsibility—much to the benefit of their 5 employees around the world. Never before have workers benefited to 6 such a degree from benevolent rules implemented by corporations 7 headquartered far away from their locale. For example, the global 8 working conditions set by Nike, for its subcontractors, or by Kmart, for 9 its suppliers, are unique in the annals of global commerce. 30 Consumers are the greatest beneficiaries of all. They are offered an 1 unprecedented degree of product availability and choice. Furthermore, 2 as a result of international competition, the prices of these products 3 are usually low and offer a better quality of life to a broad spectrum of 4 individuals. Rising incomes have ensured leaps in purchasing power. For 5 the first time in history, international goods and service availability has 6 gone beyond the luxury of the elite and has become, especially in 7x emerging markets, the reasonable expectation of the masses. An International Marketing Manifesto 5

Advocates and activists have had their causes benefit substantially 1 from the spread of international marketing. In 1999, business, labor, and 2 government representatives from 173 countries affirmed core labor 3 standards as fundamental human rights, including freedom of association 4 and the right to organize and bargain collectively. Included was also a call 5 to eliminate child labor, forced labor, and employment-related discrimi- 6 nation (Mazur 2000). International marketing linkages have also resulted 7 in the emergence of pressure points for activists, which has led to 8 the introduction and implementation of new concepts. The acceptance 9 of “fair trade” and “living wage” requirements has achieved substantial 10 increases in the incomes of the poorer participants in international trade 1 flows (The Economist 2001). 2 3 4 THE FIELD STAGNATES 5 6 In spite of these achievements, the academic field of international 7 marketing bears up unsteadily under the weight of these laurels. Some 8 researchers doubt whether the insights they gain from studying and 9 working with other marketing systems broaden their own horizons and 20 increase their abilities to explain marketing phenomena (Douglas 2001). 1 Many practitioners ignore the academic pronouncement of globalization 2 and still refuse to participate in the global market—judging either the 3 market to be too dangerous or themselves too unprepared. This even 4 applies to the most technologically advanced firms. For example, in the 5 United States, most e-tailers do not accept orders from outside their 6 home market, and more than 55% of U.S. web-merchants do not even 7 ship to Canada (Putzger 2000). International marketing academics are 8 not deluged by great attention from policymakers. Few marketers are 9 offered chairs at the table in international negotiations, and the writings 30 of international marketers are not often sufficiently part of any great 1 readings package for policymakers (Czinkota 2000a). 2 Most visible is the discontent of consumers. The “Battle of Seattle” and 3 the subsequent confrontations in Washington, D.C.; Davos and Geneva, 4 Switzerland; Quebec, Canada; and Genoa, Italy have alerted the world to 5 the displeasure vocalized by a variety of groups (Kobrin 2001). Simplistic 6 populist messages have turned globalization into a derogatory term and 7x 6 Michael R. Czinkota and Ilkka A. Ronkainen

1 are swaying the sentiments of the general public. For example, after the 2 Seattle summit, a survey found that 52% of the respondents were 3 sympathetic toward the protestors even though they may have been 4 hard-pressed to explain the goals of the protest (BusinessWeek Online 5 1999). Within the United States, many people have come to believe that 6 international marketing undermines U.S. labor and living standards. 7 Outside of the United States, international marketing and its agents, the 8 marketers, are derided as exploiters, destroyers, and Americanizers (see, 9 e.g., Barnet and Cavanagh 1994; Klein 2000). Papers by experts are 10 derided as planning for economic rape and pillage; their speeches and 1 meetings are disrupted. International meetings are being shortened and 2 held at inaccessible locations, giving the public impression of a gathering 3 of fiends in the dark. Proponents of international marketing talk about 4 retreat and introspection even though opponents do not offer any 5 coherent alternative economic or social approaches. 6 Is this an example of the classic Sun Tzu strategy in which the 7 victorious general only attacks already defeated armies? Has international 8 marketing already begun its demise? We think not. We believe that the 9 best is yet to come for international marketing. However, it will take 20 new thinking and new actions by researchers to propel the field forward 1 again. International marketing academics need to be the guardians who 2 separate fact from fiction in policy, practitioner, and consumer discussions. 3 Qualified not by weight of office but by expertise, thoughtfulness, and 4 knowledge (rather than emotions), international marketing researchers 5 must be the guarantors and guides toward free and open markets. 6 Antiglobalization activists deride international marketing but seem to 7 have difficulties articulating what they are really for. At the same time, 8 government and business arguments in favor of globalization are often 9 vague and based on an abstract long-term vision. No wonder ordinary 30 citizens are left confused, skeptical, and ill-informed, which may lead 1 them to make poor decisions. Given that the public in general does 2 not have a great deal of interest toward international and trade matters, 3 the need is great for outspoken comment on the transformational 4 and uplifting capabilities of market forces. This is a task for marketing 5 scholars. Two examples can highlight this imperative. Antiglobalizers 6 have argued (1) that globalization equals Americanization and (2) that 7x globalization leads to global brands’ hegemony and, therefore, global An International Marketing Manifesto 7 uniformity. In practice, it is evident that cultural imperialism does not 1 sell. In nearly every television market of the world, local production has 2 grown at the expense of imports (The Economist 2002). More signifi- 3 cantly, with the increased facilitation of global production companies, 4 local producers and products have penetrated markets beyond their 5 domestic ones. Although global brands may have gained worldwide 6 prominence in terms of headlines, they constitute only a small percent- 7 age of a global marketer’s sales in any given market. 8 9 10 . . . THE DEEPER THEY FALL 1 2 The ongoing growth and success of international marketing cannot 3 be taken for granted. As the events of September 11, 2001, show, the 4 international landscape can change with the impact of tectonic-plate 5 adjustment. Even the very essence of international exchange may be 6 called into question. History demonstrates that international marketing 7 has not always persisted in spite of its proven benefits. For example, in 8 1896, the Empress Dowager Tz’u-hsi, to finance the renovation of her 9 summer palace, impounded government funds that had been designated 20 for China’s shipping and its Navy. As a result, China’s participation in 1 world trade came almost to a halt. In the subsequent decades, deprived 2 of its means to market internationally, China operated in virtual isolation, 3 without transfer of knowledge from the outside, without major inflows 4 of goods, and without the innovation and productivity increases that 5 result from exposure to international trade. 6 During the 1930s, the turning away from international marketing 7 came through the Smoot-Hawley Act, which raised U.S. duties to 8 reduce the volume of imports into the United States in the hopes that 9 this would restore domestic employment. However, the result was an 30 increase of duties and other barriers to imports by most other trading 1 nations as well. These measures were key contributing factors in the 2 subsequent worldwide depression and the collapse of the world financial 3 system, which in turn set the scene for World War II (Czinkota and 4 Ronkainen 2002). 5 As global marketing advances to emerging markets, new challenges 6 emerge and old ones may be magnified. For example, international 7x 8 Michael R. Czinkota and Ilkka A. Ronkainen

1 expansion typically results in a more widespread use of intellectual 2 property (Czinkota and Ronkainen 1997). More customers should then 3 lead to an increase in the value of such property. However, resource 4 constraints combined with popular demands and political power have 5 delivered different scenarios. Entry into some markets may actually lead 6 to value destruction. The government-induced price revisions of AIDS 7 drugs in Latin America and South Africa and of Cipro, the anthrax 8 antidote, have revealed new problems, which may yet fan local flames 9 into global conflagrations. 10 The present-day worst-case scenario is frightening. Some people 1 view globalization as a force of oppression, exploitation, and injustice. 2 Might not then extreme actions, such as anarchism and terrorism, 3 be justifiable to correct for its impacts? Successful international market- 4 ing scholarship can perhaps become a bulwark against terrorism. 5 Such work does not need to be perceived as apologetic for business 6 interests in promoting international trade. International marketing 7 may well become a key remedy for the world’s poor, because scholars 8 should help devise creative strategies for the poor to access the world 9 marketplace. 20 1 2 SEVEN PROPOSITIONS 3 4 Given the precarious experiences by the international marketing field in 5 spite of the substantial global improvements due to international 6 marketing activities, steps undertaken by international marketers in 7 academia must be considered to ensure the further progress of and 8 ongoing contribution by the field. Such progress is not viewed narrowly 9 to benefit the academic high priests of international marketing and their 30 acolytes, but rather it is considered imperative in order to have input and 1 guidance for further improvements in the global economy and in the 2 lives of people. Here, we present propositions for the strengthening of 3 the future role of international marketing. We hope that they will lead 4 to introspection as well as to an open and frank exchange of ideas with 5 a subsequent renaissance of international marketing. 6 7x An International Marketing Manifesto 9

1 Remember the Roots and Purpose of 1 the Field 2 3 International marketing is a practical field. It is based on the premise that 4 international marketing transactions can be carried out more effectively, 5 that there are many needs that have been left unsatisfied worldwide, 6 and that the field of international marketing can improve the quality 7 of life of individuals. The field requires that its proponents visit with 8 people, institutions, and companies to observe, talk, and understand their 9 activities. The central role of people in international marketing subjects 10 the field to all the vagaries inherent in social sciences. Research gains 1 are not only what researchers can learn about other systems but also 2 what they are forced to learn about their own system in order to 3 understand what happens elsewhere (Cox 1965). With this approach, 4 junior researchers do not need to compromise the requirements placed 5 on them for detailed research at the expense of seeing the bigger picture. 6 Rediscovery of this truth may force some international marketing 7 researchers to shed their “lab coat” syndrome. For some, complexity has 8 become fashionable and esoteric, and analytical tools have become the 9 drivers of research content. On occasion, researchers talk more about 20 models than about people, substitute tools for insight, and examine 1 printouts instead of market participants. Although some international 2 marketers may have chosen the academic profession in a repressed desire 3 to become hard scientists such as physicists or chemists, it is unlikely that 4 a squirt of one compound, a dash of another liquid, or an increase in 5 pressure will precisely manifest itself in international marketing outcomes. 6 It is critical to develop ways for international marketing to become 7 more accepted by the academic community for its past efforts and the 8 contributions it can make in the future. The field of finance achieved 9 such acceptance through its association with economics; international 30 marketing may want to expand its roots by extending its association with 1 international trade. Perhaps, in the future, international marketing work 2 may then make a scholar eligible for the Nobel Prize. At the same time, 3 senior scholars have the responsibility not only to develop knowledge but 4 also to help grow journals in terms of acceptance and respect. By placing 5 their best work in the internationally oriented outlets, scholars can 6 perform an important service to the profession. 7x 10 Michael R. Czinkota and Ilkka A. Ronkainen

1 2 Resist the Temptations of Overspecialization 2 3 In an academic era of publish or perish, publishing in North America 4 mainly refers to academic journals of the highest order. To avoid 5 becoming academic equivalents of day laborers, international marketing 6 researchers often feel the need to rapidly produce as many top-tier “hits” 7 in as short a time as possible. Top-tier journals, however, together with 8 their editors and reviewers, often tend to adhere to traditional research 9 orthodoxies. Such orthodoxies may involve specific research methodolo- 10 gies, the citation of domestic (e.g., U.S.) literature, and the analysis of 1 problems, which are considered locally important. We do not believe 2 that such local-content requirements (Maruyama 1991) are perversely 3 or conspiratorially designed by the gatekeepers to publications, but we 4 recognize how easy it is to fall into that trap. 5 The problem of publishing is made even more acute by the 6 challenges of conducting research in an international setting, due to 7 data compatibility, definitional equivalence, timing, or funding difficul- 8 ties. International research typically introduces more noise into data 9 sets. Editors and reviewers need to appreciate and accept a responsible 20 adaptation of evaluative criteria if there is to be more knowledge 1 development and dissemination in the international marketing field. 2 The expectations set by journals and their evaluators have forced 3 many international marketing academics to become highly specialized 4 special specialists. They often investigate narrower and narrower aspects 5 of problems with tools that are ever increasing in their quantitative 6 sophistication, but in which many unrealistic conditions must be met for 7 the model to work. Many times the results are uninspiring for practi- 8 tioners or policymakers. The end results are insights that are decreasingly 9 useful for the discipline or for its social structure. Work in the field 30 must again become more broad-based and be linked to the practice of 1 international marketing. 2 It is important that a discipline have a communication venue in which 3 new approaches, concepts, frameworks, and ideas can be published with- 4 out the constraints imposed by rigid establishment journals. Thinkers 5 must be allowed to speculate, tease, bully, or simply visualize and then be 6 able to disseminate their thoughts. 7x An International Marketing Manifesto 11

3 A New Paradigm and New Methods 1 2 There is the emergence of a new approach to furthering the advance 3 of international marketing. Historically, the “case” period can be called 4 an early important approach to international marketing research. 5 Researchers analyzed the activities of one particular firm in great detail 6 and then attempted to generalize the findings to other firms, the industry, 7 or the discipline. This case era was supplemented, and some would even 8 say replaced, by the “numeric” era. Now the goal became the accumu- 9 lation of quantitative data, which were subjected to rigorous analysis. 10 The goal was to use statistical significances to build stepping-stones 1 for the advancement of knowledge. Taken in conjunction with other 2 tools of analysis and insight, the goal was quite praiseworthy. However, 3 for some, the actual insights obtained were of little concern. Rather, the 4 use and application of new tools became the only issue that mattered— 5 with the motto, “Have tool, will apply!” Although useful in bringing a 6 scientific perspective to international marketing research, in today’s 7 complex times, the singular focus on such an approach has become 8 too limiting. 9 In our view, today’s new paradigm is “boundary-spanning eclecticism.” 20 Interdependence requires the recognition of linkages. Progress in 1 international marketing makes it increasingly important to bring together 2 various perspectives from a variety of disciplines to truly understand 3 interactions and consequences. Such an eclectic approach in the interna- 4 tional marketing field needs to cover different areas such as jurisprudence 5 and cultural anthropology. In addition, the new eclecticism needs to 6 cover a wide variety of fields and include, for example, history, anthro- 7 pology, or political science that reflects both qualitative and quantitative 8 insights. Given the newness of some of these linkages and the need to 9 understand and interpret them, this boundary-spanning eclecticism may 30 be today’s version of what Bartels (1988) labeled the “period of 1 discovery” by early marketing scholars in 1900–10 during the formative 2 years of marketing. Perhaps the celebration of a centennial reflection of 3 marketing will lead to old paths not lately traveled. 4 The new eclecticism needs to use and define time lines and differ- 5 entiate between the short-term and long-term outcomes. It also 6 must simultaneously address the issues from the perspective of the key 7x 12 Michael R. Czinkota and Ilkka A. Ronkainen

1 constituencies—business, consumers, and governments—and do so over 2 a growing variety of countries. In addition, the different subcomponents 3 of the business discipline itself need to become reappreciated in their 4 interrelationships so that for example, the analyst fully understands the 5 repercussions that changing exchange or interest rates have on the 6 international marketing domain. The proof in the pudding? International 7 marketing academics should (again) become comfortable in teaching a 8 broadly focused “Introduction to Global Business” course. 9 International marketing scholars should join forces periodically 10 with colleagues in other disciplines beyond the conventional ones. Areas 1 such as genetics, health care, history, and linguistics should be consid- 2 ered. By definition, this would also mean becoming familiar with the 3 literature and attending appropriate annual meetings in these disciplines. 4 True cross-fertilization may then result in the application of medical 5 theories of pandemics and resistance to the development of theory for 6 the global diffusion of goods or the application of sociolinguistics to 7 international negotiations. Becoming more interdisciplinary will also be 8 the raison d’être for outlets such as the Journal of International Business 9 Studies. 20 1 2 4 Look to the World 3 4 In the international marketing field, the world is our oyster. Editors, 5 recruiting committees, and grant-giving organizations should look at the 6 world rather than their comfortable confines as their suppliers of talent 7 and knowledge. Journals need to look for content not just among their 8 traditional constituents but also among the great minds abroad. It must 9 be understood that English, albeit the language of many international 30 marketing transactions, is not the only storehouse of knowledge. It 1 pays to heed the historic lesson that power waxes and wanes depending 2 on the support, input, and actions of allies. When walking the dusty 3 roads of Baghdad, the congested streets of Rome, or the grassy plains of 4 Carthage, one remembers that these locations were once the economic 5 and political leaders of the world. 6 Although the cradle of marketing may indeed be in the United States, 7x significant contributions to the practice and theory of international An International Marketing Manifesto 13 marketing have been made throughout the world as the discipline has 1 matured. An examination of the origins of today’s academic contributors 2 to the international marketing discipline shows that many of them 3 hail from the Nordic Countries, Central Europe, Turkey, China, India, 4 and Japan. For example, many of the innovations and new thinking in 5 retailing have European roots. The emergent U.S. empire should joyfully 6 acknowledge its magnetism for contributions from around the globe. 7 It should also proudly highlight its emphasis on the protection of all 8 players and its reliance on market forces rather than on the rapaciousness 9 typical of earlier superpowers. Today, if there is a demand by the super- 10 power, there is true exchange rather than simple taking. If the practices 1 of centuries past are considered, one current example of comparative 2 advantage would be the burial of U.S. nuclear waste in Africa rather than 3 the western United States. 4 Academics in the United States in particular should build and main- 5 tain contacts with colleagues in other countries, learn other languages, 6 and scrutinize nondomestic literature. After all, it was not long ago when 7 every chemist was expected to know German and every painter had to 8 have been to Italy. Academics dealing with international marketing 9 should also be encouraged to be truly international in their outlook. 20 Listening to the world will make the field better, and doing so in their 1 own tongues will make the sounds so much more understandable. In this 2 context, it should be remembered that the search engines, which have 3 become so instrumental to academic research, tend to pick up only a 4 small portion of actual work carried out and are still heavily biased 5 toward English language publications. 6 Just as multinational corporations should have substantial international 7 board membership, academic journals should include more members 8 from abroad on their review boards. Such membership tends to have an 9 effect on the scope of activities. For example, the European Journal of 30 Marketing, which carries articles from the broadest national array of 1 authors, boasts 57% of its review board members from outside of the 2 United Kingdom. The non-U.S. share for the Journal of Marketing is a 3 mere 4% (Czinkota 2000b). International marketing would also benefit 4 from a regularly published volume (or a special issue) of articles not 5 originally published in English from language areas such as Germany, 6 Northern Europe, and Japan. 7x References

2 Chapter 2.4 Institutional Changes and Organizational Transformation in Developing Economies

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5 1 Chapter 1.2 The Remarkable Performance of International Marketing in the Second Half of the 20th Century

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5 2 Chapter 2.1 Dynamic Capabilities, Government Policies, and Performance in Firms from Emerging Economies

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5 Vernon, R. 1966. International investment and international trade in the product cycle. Quarterly Journal of Economics, 81: 190–207. Vernon-Wortzel, H., & Wortzel, L. H. 1988. Globalizing strategies for multinationals from developing countries. Columbia Journal of World Business, 23(spring): 27–35. White, R. E. 1986. Generic business strategies, organizational context and performance: An empirical investigation. Strategic Management Journal, 7: 217–231. Yip, G. S. 1992. Total global strategy: Managing for worldwide competitive advantage. Englewood Cliffs, NJ: Prentice-Hall. ABOUT THE AUTHORS Preet S. Aulakh is an associate professor of strategic management and international business at the Fox School of Business and Management, Temple University. He received his Ph.D. from the University of Texas at Austin. His research interests include international technology licensing, firm strategies in emerging markets, and foreign entry modes. Masaaki Kotabe holds the Washburn Chair of International Business and Marketing and is Director of Research at the Institute of Global Management at T emple University. He is a Fellow of the Academy of International Business and one of the most prolific authors in international marketing in the world. His Ph.D. is from Michigan State University. [email protected] Hildy Teegen is an associate professor of international business at George Washington University. She received her Ph.D. from the University of Texas at Austin. Her research focuses on international alliances, marketing str ategy, and negotiation, particularly in Latin America. 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 20 1 2 3 4 5 6 7 8 9 30 1 2 3 4 5 Institutional Changes and Organizational Transformation in Developing Economies Preet S. Aulakh and Masaaki Kotabe 1 INTRODUCTION A significant aspect of the changes in the global economy in the last two decades is the economic liberalization of protected markets and the further liberalization of market economies . Institutional changes emanating from evolving political landscapes within individual countries and pressures from supra-national bodies such as the World Trade Organization (WTO), International Monetary Fund (IMF), and the World Bank have been instrumental in the liberalization of developing countries’ economies and their integration into the global economy. As part of these reforms, a number of developing countries implemented policies aimed at encouraging competition in the domestic marketplace, urging domestic fi rms to build international levels of competitiveness , and allowing multinational enterprises (MNEs) to enter their erstwhile protected markets. Increasing integration in the global economy has meant changed competitive landscapes for organizations from developing countries as well as multinationals operating in these economies, thus necessitating organizational transformations to deal with new competitive dynamics. For instance, indigenous firms from developing

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5 Chapter reforms, a critical question faced by local firms in developing countries is how to respond to the challenges presented by a radically changed competitive environment. The nature of local firms’ strategic responses in this changed environment has strong implications for the perceived success or failure of economic reforms undertaken by developing country governments (Aulakh, 2007; Meyer, 2004; Ramamurti, 2004). The 8th Annual International Business Research Forum on the theme, “Institutional Changes and Organizational Transformations in Developing Economies,” was held at Temple University in Philadelphia on April 21, 2007. We invited papers that examine the interactions/ impact of institutional changes at various levels on the organizational transformations of fi rms in developing economies. We were interested in papers that explored transformation of indigenous firms from these economies, including business groups, priv ate and public enterprises and non-governmental organizations as well as foreign multinationals operating in these economies. After a first round of blind reviews, a dozen papers out of more than thirty submissions were initially selected for presentation at the Research Forum. Authors were then asked to revise their papers based on various critiques and comments received during the forum. Those revised papers were further subjected to a second round of up to two more reviews. Eventually, six of these papers have been selected for inclusion in this special issue. In the following paragraphs we first review the past literature on institutional changes and organizational transformation and then introduce the six papers as they intervene and expand on our understanding beyond the extant research. 2 LITERATURE REVIEW: INSTITUTIONAL CHANGES AND ORGANIZATIONAL RESPONSES An important study examining organizational tr ansformation in emerging economies was a conceptual paper by Newman (2000). She argued that institutional changes in Eastern and Central Europe in the 1990s “initiated a period of intense social, political, and economic change in the region” 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 20 1 2 3 4 5 6 7 8 9 30 1 2 3 4 5 organizational learning (defined as change in the core values, templates and archetypes). However, it was speculated that firms which were more embedded with the past institutional environment were less likely to accomplish second-order transformation necessitated by changed “rules of the game.” This view finds empirical support in a study on Lithuania. Kriauciunas and Kale (2006) surveyed 67 firms to assess the factors that influence transition economy firms to change their operating knowhow and knowledge sets (i.e., second second-order learning defined by Newman (2000) to compete in a changed environment). Their findings suggest firms that were formed during the socialist era (thus having a “socialist imprinting”) were less able to change their operating knowledge. In addition firms that were able to access external sources of knowledge were better able to meet the “demands of the new market-oriented environment” (Kriauciunas and Kale, 2006: 659). One way for organizational transformation to access outside resources (including capital, technology, and managerial know-how) is through the privatization of state-owned enterprises in a number of developing economies as part of the liberalization process. As stated by Zahra et al., 2000: 509–510), “[b]y placing the means of production outside of state ownership and control, privatization unleashes the forces and discipline of the free market . . .. Privatization, therefore, has the potential to transform national economies, industries, and organizations by infusing a spirit of entrepreneurial risk taking. These changes are in process currently across the world’s six major continents, making privatization an integral part of emerging, developing, and developed countries’ twenty-first-century strategic agendas. Effective privatizations however . . . without creating significant unemployment and related disruptions, are difficult to achieve .” In this regard, a number of studies have examined strategic transformation through privatization of state-owned enterprises (SOEs). Ramamurti (2000) proposed a multi-level theoretical model incorporating firm, industry and country level factors to explain the likelihood of a particular SOE being priv atized and how they impact post-privatization performance of these firms. Johnson et al. (2000), Cuervo and Villalonga (2000) and Dharwadkar et al. (2000) use institutional, public choice and agency theories, respectively, to address

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4 5 corporate governance aspects. Spicer et al. (2000: 630), using the case study of privatization in Central Europe, suggest that “entrepreneurship is better fostered through gradualist policies permitting negotiated solutions to restructuring, as opposed to market-driven reforms.” Konings et al. (2005) use panel data of Bulgarian and Romanian manufacturing firms and suggest that creation of competitive markets and privatization go hand-in-hand. The general approach of gradualist reforms and transformation is seen in the liberalization model followed by China where state-owned enterprises continue to play an important role. However, organizational transformation in a market-based regime is accomplished through accessing external resources through inter-organizational collabor ations and changes in intra-organizational norms and culture. Using a sample of Chinese state-owned pharmaceutical firms, White (2000) examined the impact of a set of internal and external factors on how the state-owned enterprises acquire new technology by make, buy or ally decisions. The external factors considered are suggested by transaction cost and resource dependency perspectives and the internal factors are suggested primarily by an organizational capabilities perspective. One of the key findings of the study was that these factors were primarily based on subjective managerial perceptions of the threat of opportunistic behavior by other organizations and the required marginal investment in organizational capabilities. Ralston et al. (2006) examine the transformation of Chinese state-owned enterprises from hierarchical and bureaucratic structures to market-oriented forms through a change in organizational cultures. Peng and Luo (2000) demonstrate that Chinese firm managers’ micro personal ties with other executives and government officials helped improve organizational performance. Hitt et al. (2000) study the resource acquisition and learning opportunities for emerging economy firms through international alliances. Their main contribution was that partner selection criteria are contextdependent and v ary across emerging and developed economies . In particular, they find that the firms from emerging markets place greater importance on financial assets, technical capabilities, intangible assets and willingness to share expertise as criteria for partner selection. On the 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 20 1 2 3 4 5 6 7 8 9 30 1 2 3 4 5 comparative study of firms from China and Russia, Hitt et al. (2004: 173) find that “China’s more stable and supportive institutional environment has helped Chinese firms take a longer-term view of alliance partner selection, focusing more on the potential partner’s intangible assets along with technological and managerial capabilities. In contrast, the less stable Russian institutional environment has influenced Russian managers to focus more on the short term, selecting partners that provide access to financial capital and complementary capabilities so as to enhance their firms’ ability to weather that nation’s turbulent environment.” The institutional changes experienced in the centrally planned command economies such as China and Eastern European countries manifested through full privatization of state-owned enterprises (e.g ., Eastern Europe) or partial-privatization (e.g ., China through the mode of equity joint ventures). This, in turn, brought about dramatic increases in inflows of foreign direct investment (FDI) and led to high rates of growth, primarily driven by inward FDI. A number of other emerging economies such as India, Brazil, and Mexico initiated liberalization through opening up their markets and general deregulation of key sectors. This resulted in stronger competition from domestic and foreign players and the issue of strategic transformation in these economies is fundamentally different. Aggarwal (2000) examined the innovation strategies of Indian firms in the pre- and post-liberalization era. She finds that “unlike in a regulated regime where technology imports [were] viewed important for filling gaps in domestic technological capabilities, in a deregulated regime technology up-gradation seems to be the major role of technology imports (p. 1081).” Peng (2000) examined str ategic choices during institutional transitions. Severe institutional transitions pose a challenge to organizations as they can cope when the new rules are not completely known. In such circumstances, organizations face two broad strategic choices—a network-based strategy emphasizing managers’ inter -personal ties as well as the firm’s inter-organizational relationships with other firms; and a marketbased strategy that relies on the firm’s unique competitive resources and capabilities. Also during such transitions, three types of firms emerge—

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5 pete on the basis of networks and relationships rather than competitive resources and capabilities. In this phase, in order to pursue network-based strategies even foreign entrants are more likely to form joint ventures and alliances. During the later phases of transitions, except old incumbent firms that continue to compete based on relationships, all other types of firms such as new, young incumbent firms, start-ups and foreign entrants will move towards competing based on competitive resources and capabilities through restructuring and transformation. In the developing economy contexts, firms are known to form networks and their strategies and performance are posited to be strongly influenced by these networks. Using three longitudinal cases from China, Peng (1997) explores whether growth of the firm in tr ansitional economies has a distinct theoretical explanation compared to the Western theories given the vast differences in the institutional environments. T op managers of three Chinese firms representing different ownership-types were interviewed over the 1989–96 period. Based on these case studies, Peng (1997) posits that in a transition economy such as China, firms adopt a network-based strategy. This involved a process of what the author calls as “boundary blurring” through development of inter-organizational relationships with other firms. This unique strategy of growth has enabled the firms to avoid the tricky issue of ownership transfer of assets while allowing them access to complementary assets in the uncertain period of transition. This hybrid strategy, which is neither market nor hierarchy, was adopted by firms due to constraints on generic expansion or acquisitions imposed by the institutional environment. Elango and Pattnaik (2007) study the role of networks in the internationalization of Indian firms. Using a panel data of 794 firms, they find support for their hypothesis that international experiences of their parental and foreign networks help these firms to build capabilities to succeed in international markets. Similarly, Garg and Delios (2007) explore the role of business group affiliation on the performance of foreign subsidiaries of emerging economy multinationals. Operationalizing performance as subsidiary survival, they find that advantages associated with business group affiliation are more transferable in other developing countries (with similar institutional environments) than in developed country markets. Yiu et al. (2007) examine the 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 20 1 2 3 4 5 6 7 8 9 30 1 2 3 4 5 tion and securing control over a supply chain, constitute a weaker direct effect on international venturing, as compared with institutional networks. The findings show that institutional networks play a more important role at this stage of economic development of the country under study. This indicates that institutional networks may help firms in emerging economies such as China to cope with the transitioning institutional environment better” (p. 12.). 2.1 Business Groups as Micro-institutions A rich body of work has established the significance of business groups in the socio-economic landscape of developing economies (Strachen, 1976; Amsden, 1989; Keister, 1998; Khanna and P alepu, 1997, 1999; Ghemawat and Khanna, 1998). Ranging from Korean Chaebols, Turkish families, Latin American and Spanish grupos to Indian business groups, they have been defined as “a set of firms which, though legally independent, are bound together by a constellation of formal and informal ties and are accustomed to taking coordinated action” (Khanna and Rivkin, 2001, p. 47). While the focus of earlier research was to understand the rationale behind business groups, and relate their underlying characteristics to different country contexts (e.g., Khanna and Palepu, 2000a, 2000b; Guillen, 2000; Kock and Guillen, 2001), recent studies have been motivated by an attempt to understand their strategic responses to institutional transformations that potentially undermine the very reasons for group formation in the first place (e.g., Hoskisson et al., 2004; Hoskisson et al., 2005; Yiu et al., 2005). One view is that business groups emerge as a response to strategic factor market imperfections in developing economies (Khanna and Palepu, 2000a; Khanna and Rivkin, 2001). Due to information asymmetries, poor contract enforcement, and imperfect regulatory structures, institutional voids tend to develop in product, labor and capital markets . The absence of intermediary institutions increases transaction costs in acquiring inputs such as technology, finance and managerial talent. In response, business groups emerge. Performing the role of missing

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5 Member firms of a group are thus able to leverage their group’s scale, scope, track record and reputation and benefit from sheer availability and lower input costs of scarce resources. Guillen (2000) offered an alternative view on the rationale for business groups. Claiming that the prevailing predominant explanations for existence of business groups in emerging economies—market imperfections, authority structures or late development—were not convincing enough, the author offers a resource-based view explanation. Guillen posits that firms and entrepreneurs create business groups when they acquire and possess resources and capabilities to enter new industries quickly and in a cost effective manner. Also, it is argued that this capability will be inimitable only under conditions of asymmetric foreign trade and investment which limit this capability to a select few firms . Findings of an empirical study based on cross-sectional data on business groups from nine emerging economies indicate that asymmetries in foreign trade and investment are associated with business groups after controlling for alternative explanations. In a recent study on business groups, rejecting the established view that business groups in emerging markets exist primarily to fill institutional voids, Yiu et al. (2005) attempted to integrate the resource-based view with the institutional view by proposing that the value created by the business groups varied depending on the type of resources and capabilities they were able to acquire. Unlike most studies on business groups that were conducted at the member firm level, this study examined directly a sample of 224 largest business groups in China. Yieu et al. (2005) proposed that there were two kinds of potential resources and capabilities that a business group could possess—endowed and acquired/developed resources. Age of the group , government ownership, top management background etc. were classified as endowed resources whereas those acquired through mergers and acquisitions, development of internal capabilities, international diversification and so on were classifi ed as acquired/developed resources . The results of the study indicated that most of the endowed resources did not help business groups to create a competitive edge. Instead, the business groups that had sought to develop new capabilities through acquisitions, 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 20 1 2 3 4 5 6 7 8 9 30 1 2 3 4 5 In spite of their benefits, some associated costs of business groups have also been identified (Keister, 1998; Khanna and Palepu, 2000a,b). While controlling families have been known to interfere in both tactical and strategic decision-making, member firms tend to suffer from conflict of interests between controlling (typically family) and minority shareholders. Bertrand et al. (2002) found evidence that controlling shareholders of Indian business groups engage in tunneling, or moving profits from firms where they have low cash flow rights to those where they have high cash flow rights. Further, due to inequity and nepotism, inefficient compensation systems tend to develop across group companies, with detrimental effects on market for talent. Coupled with the security that group affiliation offers , managers of group-affiliated firms typically have weaker incentives to run their firms effi ciently (Khanna and Rivkin, 2001). As variety of the businesses within a group increases, the dominant logic of the traditional businesses may prove to be increasingly inadequate when applied to emerging initiatives, thus leading to sub-optimal decisions and organizational inertia. Recent research has queried the relevance as well as the ability of business groups to respond to disruptive institutional changes arising due to economic liberalization. As emerging economies continue to improve their economic institutions, largely as a consequence of market reforms, the performance of many large business groups, which acted as marketsubstitute mechanisms, has been reduced (Hoskisson et al., 2005). Business group affiliation, which was considered a plus during periods of underdeveloped capital markets and protectionist regimes that hindered the inflow of required technological know-how and other resources, is thus being questioned in a post-liberalization era. Local firms require second-order organizational changes in response to market reforms, which in turn requires greater emphasis on both exploratory and exploitative learning (Newman, 2000). Firms that are embedded in past institutional frameworks are, however, less likely and slower to undertake transformations when faced with environmental changes than firms that are less so (Greenwood and Hinings, 1996; Newman, 2000; Kriauciunas and Kale, 2006). For instance, Hoskisson et al. (2004) find that while business group group-affiliated firms were more responsive in

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5 less responsive than independent firms to regulatory changes and new competition. Similarly, given their market power and institutional positioning, business groups are more likely to follow sustaining strategies than independent firms during periods of environmental upheaval (Hoskisson et al., 2005). Khanna and Palepu (2000a) examine the issues of the future of business groups, especially in the changing institutional context brought about by a wave of deregulation in the emerging economies. The paper offers evidence from Chile, which has undergone significant changes in its institutional context, through a study of changes in the value creation by business groups between late 1980s and mid 1990s. Contrary to the evidence from studies in the western context, the authors find support for their hypothesis that marginal increases in group (unrelated) diversification will lead to marginal increase in firm performance, though the net benefi ts are found to kick in after the diversification reaches a threshold. This threshold was found to rise as market institutions evolve over time. The authors also find a nondiversification related net positive effect of group affiliation, which however diminished over time as emerging markets evolved. The authors conclude that the value-creating potential of business groups is reduced gradually with the evolution of the institutional context. Kim et al. (2004) propose an evolutionary model of the business groups by tracing the evolution and restructuring of two large business groups in Korea—the LG group and Hyundai Motor. The 30 largest Chaebols formed the backbone of Korean economy, but many of them suffered severe financial problems during the Asian crisis in 1997. Many of the Chaebols undertook restructuring measures either on government directive or on their own. The authors propose that the sources of valuecreating potential of business groups change and evolve along with its institutional environment and the strategy-structure fit is a key determinant of the performance of the diversified business groups. Initially, under weak market environments, the internal market capability of Chaebols (mainly unrelated business groups) under the organizational structure of co-operative M-form served as a rare and valuable resource. However, with increased competition and evolution of markets, the value of the internal market capability diminished. The Chaebols have 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 20 1 2 3 4 5 6 7 8 9 30 1 2 3 4 5 3 PAPERS IN THE SPECIAL ISSUE As the above literature review shows, there has been a flurry of research on developing economy firms during the last decade. While this research collectively has provided important insights into the evolution of organizations in the face of economic liberalization, there are a number of emerging trends that necessitate further examination of the linkages between organizational transformations and institutional changes. First, much of the extant research has focused on the privatization of stateowned enterprises (mostly in Eastern Europe) and the evolution of stateowned firms in a semi-liberalized environment (e .g., China). A number of developing economies have initiated reforms that do not necessarily involve a reduced role of the public sector in the new environment, but more through deregulation of the internal environment and open trade policies. In these economies (e.g., Brazil, Mexico, India, South Africa), the institutional changes are qualitatively different, and thus one would expect organizational responses to such changes would take different trajectories. Second, much of the extant research has identified factors that constrain strategic transformation as a response to institutional changes (e.g., pace of change (Newman, 2000), governance (Filatotchev et al., 2003), factor markets (Spicer et al., 2000), historical imprinting (Kriauciunas and Kale, 2006)). Thus as suggested by Uhlenbruck et al. (2003), future research needs to examine factors that explain firm level heterogeneity in fostering organizational transformation in light of macro- and micro-institutional changes. Third, the extant research has primarily used theoretical lenses honed in the developed country markets to understand organizational transformation in developing economies. This has inadvertently led to relating successful transformation to firm level resource and capability configurations similar to firms in developed countries . There is however increasing evidence that developing economy firms possess unique resources and capabilities that can be combined with new ones to sustain competitive advantages in an environment of market-based competition.

5 is provided in Table 1. In the first paper, Malik provides a theoretical framework of organizational adaptation by developing economy firms to economic liberalization. Using a dynamic capability theoretical lens, he argues for the importance of examining organizational transformation from the perspective of evolutionary fit and suggests that initial firm level resources at the time of market liberalization determines the strategic path followed by a particular firm. Depending on the combination of existing core and complementary capabilities, a firm could use domestic competitive conditions, access international resources through alliances or use political leverage to create a fit conducive to post-liberalization conditions. He provides anecdotal evidence to build the theoretical arguments and develops propositions that can be empirically tested in diverse national and industry settings. The following two papers, respectively using the contexts of Mexico and India, examine internationalization as a strategic response to market liberalization in these two countries. Perez-Batres and Eden develop the concept of “liability of localness” that emerges in the post-liberalization environment. They suggest that “in a protectionist environment it is difficult to uncover the liabilities that local firms face when doing business in their home market. . . . When liberalization and privatization occur, and these artificial barriers are removed, the inefficiencies of local firms become visible. These firms incur a liability of localness, that is, added socio-political and relational costs or hazards of adjusting to the ‘now’ being different from ‘then’.” They further suggest that overcoming the liability of localness entails international diversification (especially through foreign acquisitions) and test and find support for their hypotheses on panel data of Mexican banks. Chittoor, Ray, Aulakh and Sarkar study the Indian pharmaceutical industry as it faced economy-wide market liberalization and changes in the intellectual property regime in the 1990s, which together took away historical competitive advantages of domestic Indian firms. The industry renewed itself by aggressively participating in international resource and product markets which were facilitated by the overall globalized context of the industry. They contrast the Indian institutional changes with those of other developing economies during the same period and speculate on 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 20 1 2 3 4 5 6 7 8 9 30 1 2 3 4 5 3

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5 A u t h o r ( s ) R e s e a r c h f o c u s T h e o r e t i c a l a p p r o a c h e s M e t h o d o l o g y N a t i o n a l / i n d u s t r y c o n t e x t s M a l i k D i v e r s i t y o f s t r a t e g i c D y n a m i c c a p a b i l i t i e s ; T h e o r y b u i l d i n g D e v e l o p i n g e c o n o m r e s p o n s e s t o e c o n o m i c R B V ; e v o l u t i o n a r y fi t n e s s fi r m s l i b e r a l i z a t i o n ; r o l e o f fi r m l e v e l c o r e a n d c o m p l e m e n t a r y c a p a b i l i t i e s P e r e z B a t r e s A d v a n c e c o n c e p t o f L i a b i l i t y o f f o r e i g n n e s s ; L o n g i t u d i n a l p a n e l M e x i c o ; B a n k i n g a n d E d e n “ l i a b i l i t y o f l o c a l n e s s ” a n d p u n c t u a t e d e q u i l i b r i u m ; d a t a o f 3 7 b a n k s r e l a t e i t t o s u r v i v a l o f d i v e r s i fi c a t i o n ( 1 9 9 1 – 2 0 0 4 ) d o m e s t i c fi r m s d u r i n g p e r i o d s o f r e g u l a t o r y p u n c t u a t i o n s C h i t t o o r , R a y , I n t e r n a t i o n a l i z a t i o n a s t h e R e s o u r c e b a s e d v i e w ; A g g r e g a t e i n d u s t r y I n d i a ; A u l a k h a n d S a r k a r e n g i n e o f g r o w t h a s a g r o w t h m o d e l s d a t a ( 1 9 9 5 – 2 0 0 5 ) ; p h a r m a c e u t i c a l s r e s p o n s e t o d o m e s t i c a n d t r e n d a n a l y s i s g l o b a l i n s t i t u t i o n a l c h a n g e s D i e l e m a n a n d S a c h s A d v a n c e e v o l u t i o n a r y I n d u s t r i a l o r g a n i z a t i o n ; H i s t o r i c a l c a s e s t u d y I n d o n e s i a ; b u s i n e s s c o n c e p t o f “ e c o n o m i e s o f n e t w o r k s ; s o c i a l c a p i t a l g r o u p s c o n n e c t e d n e s s ” a s t h e b a s i s f o r o r g a n i z a t i o n a l r e s p o n s e s t o i n s t i t u t i o n a l c h a n g e s T A B L E 1 . S u m m a r y o f t h e a r t i c l e s i n t h e s p e c i a l i s s u e 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 20 1 2 3 4 5 6 7 8 9 30 1 2 3 4 5 L o r e n z e n a n d T a e u b e E x a m i n e t h e e v o l u t i o n o f E v o l u t i o n a r y e c o n o m i c s ; I n t e r v i e w s a n d I n d i a ; fi l m I n d i a ’ s fi l m i n d u s t r y s o c i a l n e t w o r k t h e o r y a r c h i v a l s o u r c e s i n d u s t r y ( B o l l y w o o d ) i n a n e r a o f g l o b a l i z a t i o n a n d r e g u l a t o r y p r e s s u r e s . K s h e t r i a n d A j a m i P r o p o s e a f r a m e w o r k o f I n s t i t u t i o n a l t h e o r y T h e o r y b u i l d i n g ; G u l f c o u n t r i e s a n t e c e d e n t s o f i n s t i t u t i o n a l R e g i o n a l a n a l y s i s r e f o r m s i n t h e G u l f C o o p e r a t i o n C o u n c i l c o u n t r i e s ; i d e n t i fi e s e c o n o m i c c h a n g e a g e n t s i n d e v e l o p i n g c o u n t r i e s industry. The following two papers draw attention to the role of existing networks of individuals and firms in coping with institutional changes. Dieleman and Sachs use a case-study approach to understanding the transformation of an Indonesian business group in light of the 1997 Asian financial crisis. Proposing the concept of “economies of connectedness” as a complement to traditional economies of scale and scope, they suggest the shifting relative importance of these in evolving institutional contexts (Peng, 2003). Lorenzen and Taeube examine the domestic and international growth of the Indian film industry, Bollywood, in the postliberalization period beginning in the early 1990s. They suggest the importance of understanding the interplay between the structure of social networks and environmental conditions to assess unique industry evolutions in emerging economies. While the first five papers attempt to understand organizational transformations as a response to a diversity of institutional changes, the last paper by Kshetri and Ajami pushes the analyses into a different direction, that is, what are the factors that push institutional reforms compatible with free-market economics. Placing their paper in the context of the Gulf Cooperation Council countries in the Middle East, they identify societal structure, internal and external change agents, the nexus between economic and political actors, and external political relations influencing the nature and extent of institutional reforms in these countries. They provide extensive policy and managerial implications of their proposed framework. 4 EPILOGUE We would like to thank the authors of the six papers for their contributions to the special issue and their willingness to revise their manuscripts based on reviewer comments and discussions during the research forum in which they presented their work. W e are also indebted to the reviewers who reviewed the papers under time constraints and provided useful feedback for the papers’ development. We appreciate the effort 3

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5 Peng, M.W., 2003. Institutional transitions and strategic choices. Acad. Manage. Rev. 28, 275–296. R alston, D.A., Terpstra-Tong, J., Terpstra, R.H., Wang, X., Egri, C., 2006. Today’s state-owned enterprises of China: are they dying dinosaurs or dynamic dynamos? Strateg. Manage. J. 27 (9), 825–843. Ramamurti, R., 2000. A multilevel model of privatization in emerging economies. Acad. Manage. Rev. 25 (3), 525–550. Ramamurti, R., 2004. Developing countries and MNEs: extending and enriching the research agenda. J. Int. Bus. Stud. 35, 277–283. Spicer, A., Kogut, B., McDermott, G., 2000. Entrepreneurship and privatization in Central Europe: the tenuous balance between destruction and creation. Acad. Manage. Rev. 25, 630–649. Strachen, H., 1976. Family and Other Business Groups in Economic Development: the Case of Nicaragua. Praeger, New York. Uhlenbruck, K., Meyer, K.E., Hitt, M.A., 2003. Organizational transformation in transition economies: resource-based and organizational learning perspectives. J. Manag. Stud. 40, 257–283. White, S., 2000. Competition, capabilities, and the make, buy, or ally decisions of Chinese state-owned firms. Acad. Manage. J. 43, 324–341. Yiu, D., Bruton, G.D., Lau, Y., 2005. Understanding business group performance in an emerging economy: acquiring resources and capabilities in order to prosper. J. Manag. Stud. 42 (1), 183–206. Yiu, D.W., Lau, C., Bruton, G.D., 2007. International venturing by emerging economy firms: the effects of firm capabilities, home country networks, and corporate entrepreneurship. J. Int. Bus. Stud. 38 (4), 556–572. Zahra, S.A., Ireland, D., Gutierrez, I., Hitt, M.A., 2000. Privatization and entrepreneurial transformation: emerging issues and future research agenda. Acad. Manage. Rev. 25 (3), 509–524. 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 20 1 2 3 4 5 6 7 8 9 30 1 2 3 4 5 3 Chapter 3.1 Cognitive and Affective Reactions of U.S. Consumers to Global Brands

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5 Wall Street Journal (2004). As Microsoft Eyes Their Turf, Electronic Giants Play Defense. February 23, A1. W ernerfelt, B. (1984). A Resource-Based View of the Firm. S trategic Management Journal 5(1):171–180. Yamaoto, M. and Lambert, D.R. (1994). The Impact of Product Aesthetics on the Evaluation of Industrial Products. Journal of Product Innovation Management 11(4):309–324. Yip, G. (2003). Total Global Strategy II. New York: Prentice-Hall. APPENDIX Data Reduction Summary for Constructs Dependent Variables Relative Firm Performance (Cronbach’s alpha = .913) Compare your firm’s performance relative to your major competitors in the last 12 months (1 = Much Lower to 5 = Much Higher): 1. Sales growth 4. Return on investment increase 2. Market share growth 5. Growth in return on sales 3. Change in profitability 6. Overall performance of the firm last year Relative Speed-to-Market (correlation = .783) Compare your firm’s performance relative to your major competitors in the last 12 months (1 = Much Lower to 5 = Much Higher): 1. Time-to-market 2. Speed of introducing new products Robust Design Items Functional Capability (Cronbach’s alpha = .714) 1. What w as the total amount of time (in man-hours) spent on designing this product to be easily stretched into a family of products usable across domestic and multiple foreign market situations? 2. What was the total amount of resources (in thousands of U.S. $) spent on designing this product to be easily stretched into a family 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 20 1 2 3 4 5 6 7 8 9 30 1 2 3 4 5 3. The relative time commitment to R&D Functional Capabilities (as measured by the total hours spent on this capability versus the total time spent on the other three capabilities). 4. The relative resource commitment to R&D Functional Capabilities (as measured by the total U.S. $ spent on this capability versus the U.S. $ spent on the other three capabilities). Aesthetic Capability (Cronbach’s alpha = .683) 1. What was the total amount of time (in man-hours) spent on designing this product to be visually acceptable across domestic and multiple foreign market situations? 2. What was the total amount of resources (in thousands of U .S. $) spent on designing this product to be visually acceptable across domestic and multiple foreign market situations? 3. The relative time commitment to R&D Aesthetic Capabilities (as measured by the total hours spent on this capability versus the total time spent on the other three capabilities). 4. The relative resource commitment to R&D Aesthetic Capabilities (as measured by the total U.S. $ spent on this capability versus the total U.S. $ spent on the other three capabilities). Technological Capability (Cronbach’s alpha = .723) 1. What was the total amount of time (in man-hours) spent on selecting core product technologies that satisfy not only present requirements but are applicable to future product generations? 2. What was the total amount of resources (in thousands of U.S. $) spent on selecting core product technologies that satisfy not only present requirements but are applicable to future product generations? 3. The relative time commitment to R&D Technological Capabilities (as measured by the total hours spent on this capability versus the total time spent on the other three capabilities).

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5 marketing in the world. His Ph.D. is from Michigan State University. [email protected] Dr. Brent B. Allred is assistant professor of business administration at the College of W illiam & Mary. He specializes in global competitive strategy and organization structure and the management of technology and innovation. His publications include articles in the Academy of Management Executive , Management International Review, Journal of Product Innovation Management, and Journal of International Management. He received his Ph.D . from Pennsylvania State University and has lectured at American University in Bulgaria and University of Queensland (Australia). Prior to joining academia Dr. Allred worked in the computer industry with Intel, Novel, Symantec, and Central Point Software. He has had extensive international experience and has lived in the Netherlands, Hong Kong, Belgium, and Bulgaria. 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 20 1 2 3 4 5 6 7 8 9 30 1 2 3 4 5 3 Chapter 3.4 Exchange Rate Pass-Through and International Pricing Strategy

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Terpstra, Vern. 1983. Suggestions for research themes and publications. Journal of International Business Studies, 14 (1/2): 9–10. United Nations Centre on Transnational Corporations. 1988. Transnational corporations in world development: Trends and perspectives, New York, NY: United Nations. Williamson, Nicholas C. & Daniel C. Bello. 1992. Product, promotion and “free market” pricing in the indirect export channel. Journal of Global Marketing, 6(1/2): 31–54. ABOUT THE AUTHORS Terry Clark is associate professor of marketing at Southern Illinois University. His research interests include international marketing and marketing strategy. Masaaki Kotabe holds the Washburn Chair of International Business and Marketing and is Director of Research at the Institute of Global Management at Temple University. He is a Fellow of the Academy of International Business and one of the most prolific authors in international marketing in the world. His Ph.D . is from Michigan State University. [email protected] Daniel Rajaratnam is associate professor at the Hankamer School of Business , Baylor University Waco TX. His research interests include international marketing and marketing strategy.

5 3 Chapter 3.5 The Effect of Export Assistance Program Usage on Export Performance

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5 3 (2), 55–66. —— and Phillip J. Rosson (1990), Government Export Promotion: A Global Perspective, London: Routledge. S inkula, James (1994), “Market Information Processing and Organizational Learning,” J ournal of Marketing , 58 (1), 35–45. ——, William E. Baker, and Thomas Noordewier (1997), “A Framework for Market-Based Organiztional Learning: Linking Values, Knowledge and Behavior,” Journal of the Academy of Marketing Science , 25 (3), 49–71. 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 20 1 2 3 4 5 6 7 8 9 30 1 2 3 4 5

3 4

5 4 Chapter 4.1 An Analysis of the Global Position of U.S. Manufacturing

Czinkota, M. R., & Kotabe, M. (1990, November/December). Product development the Japanese way. Journal of Business Strategy, 11, 31–36.

Czinkota, M. R., & Ronkainen, I. A. (2003). International marketing, 7th ed. Cincinnati: Thomson.

Lowe, J. H. (2003, January). An ownership-based framework of the U.S. current account, 1989–2001. Survey of Current Business, 17–19.

Kotabe, M. (1999). Efficiency vs. effectiveness orientation of global sourcing strategy: A comparison of U.S. and Japanese multinational companies. Academy of Management Executive, 12(4), 107–119.

* This article is based on the author’s testimony delivered to the Congress of the United States,

108th Congress, First Session, House of Representatives Committee on Small Business on

April 9, 2003.

ABOUT THE AUTHOR

Michael Czinkota works at Georgetown University in Washington D.C. and holds the chair in International Marketing at the University of

Birmingham in the U .K. He served in the U.S. government as Deputy

Assistant Secretary of Commerce. He was born and raised in Germany, and educated in Austria, Scotland, Spain and the United States. His

Ph.D. is from Ohio State University. [email protected] 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 20 1 2 3 4 5 6 7 8 9 30 1 2 3 4 5 4 Chapter 4.2 An Evolutionary Stage Model of Outsourcing and Competence Destruction

5 Sonia Ketkar is Assistant Professor, College of Business and Economics, Towson University, Towson, Maryland, USA. 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 20 1 2 3 4 5 6 7 8 9 30 1 2 3 4 5 4 Chapter 4.3 Outsourcing, Performance, and the Role of E-Commerce

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5 (Cronbach’s α = 0.93). (Strongly Agree 1–5 Strongly Disagree) Your parent company’s overall competitive strategy for Product A is n to have Product A maintain a technological edge over competitors’ products (reverse coded); n to have product A maintain higher quality standards than competitors’ products (reverse coded); n to maintain a unique image for Product A (reverse coded). Technological Uncertainty (Very Low 1–5 Very High) The predictability of the general technological developments for Product A in the mainland Chinese market (reverse coded). Demand Uncertainty (Cronbach’s α = 0.85). (Very Low 1–5 Very High) n the stability of Product A’s market share in the mainland Chinese market (reverse coded); n the accuracy of Product A’s sales forecasts in the mainland Chinese market (reverse coded); n the stability of the industry sales of Product A in the mainland Chinese market (reverse coded); n the stability of your firm’s sales of Product A in the mainland Chinese market (reverse coded). Control Variables Nationality: 0 = the US, 1 = Japan, and 2 = Western European nations. Product category: 0 = consumer dur able, 1 = consumer nondurable, 2 = industrial durable, and 3 = industrial nondurable. Firm size: Approximately , your parent company has ______employees in China. 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 20 1 2 3 4 5 6 7 8 9 30 1 2 3 4 5 Janet Y. Murray is an associate professor of international business at the Boeing Institute of International Business at the John Cook School of Business, Saint Louis University. Her research interest includes global sourcing and competitive strategies, international alliances, and international knowledge transfer. Her research has appeared in JIBS, J ournal of Marketing, Strategic Management Journal, and other journals. This article is Professor Murr ay’s third contribution to JIBS. Masaaki Kotabe holds the Washburn Chair of International Business and Marketing and is Director of Research at the Institute of Global Management at T emple University. He is a Fellow of the Academy of International Business and one of the most prolific authors in international marketing in the world. His Ph.D. is from Michigan State University. [email protected] Nan Zhou is Head and Associate Professor at the Department of Marketing, City University of Hong K ong. He has published extensively on China marketing/management in Journal of Advertising, Journal of Advertising Research, Journal of Business Research, J ournal of Consumer Research, Journal of International Business Studies, and others.

5 Chapter 5.1 Positioning Terrorism in Management and Marketing

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5 5 Chapter 5.5 Multinationality and Firm Performance

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Composition of R&D Expenditures: Relationship to Size of Firm, Concentration, and Innovative Output. Review of Economics and Statistics, 63 (November): 610–615. Mishra, Chandra S. & David H. Gobeli. 1998. Managerial Incentives, Internalization, and Market Valuation of Multinational Firms. Journal of International Business Studies, 29(3): 583–597. Peteraf, Margaret A. 1993. The Cornerstones of Competitive Advantage. Strategic Management Journal, 14(3): 179–192. Porter, Michael E., editor. 1986. Competition in Global Industries. Boston: Harvard Business School Press. Ramaswamy, Kannan. 1995. Multinationality, Configuration, and Performance: A Study of MNEs in the U.S. Drug and Pharmaceutical Industry. Journal of International Management, 1(2): 231–53. ——, K. Galen Kroeck, & William Renforth. 1996. Measuring the Degree of Internationalization of Firms: A Comment. Journal of International Business Studies, 27(1): 167–77. SAS/ETS User’s Guide. Version 6. SAS Institute Inc. Cary, NC. Sullivan, Daniel. 1994. Measuring the Degree of Internationalization of a Firm. Journal of International Business Studies, 25(2): 325–42. Takeuchi, Hirotaka & Michael E. Porter. 1986. Three Roles of International Marketing in Global Strategy. In M.E. Porter, editor., Competition in GlobaI lindustries. Boston, MA: Harvard Business School Press: 111–146. Tallman, Stephen & Jiatao Li. 1996. Effects of International Diversity and Product Diversity on the Performance of Multinational Firms. Academy of Management Journal, 39(1): 179–196. ABOUT THE AUTHORS Masaaki Kotabe holds the Washburn Chair of International Business and Marketing and is Director of Research at the Institute of Global Management at T emple University. He is a Fellow of the Academy of International Business and one of the most prolific authors in international marketing in the world. His Ph.D. is from Michigan State University. [email protected] Srini Srinivasan is an Associate Professor at Drexel University, Philadelphia. His research interests include international business , marketing strategy and marketing research.

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5 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 20 1 2 3 4 5 6 7 8 9 30 1 2 3 4 5 Business and Management, Temple University. His research focuses on international technology licensing, cross-border alliance, interorganizational governance, and firm strategies in emerging economies.