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An investigation of crossmarket
standardisation strategies
Crossmarket
standardisation
strategies
Experiences in the European Union
Henry F.L. Chung
Department of Commerce, College of Business,
Massey University Albany Campus, Auckland, New Zealand
1345
Received June 2004
Revised October 2004
Accepted February 2005
Abstract
Purpose – The importance of the European Union (EU) to international business cannot be stressed
too greatly. Recently it has expanded to 25 country markets. Its total population has reached 455
million people, which is the world’s largest economic organisation. Previous international marketing
standardisation (IMS) studies focused on the EU are mainly descriptive in nature and they have not
specifically examined issues related to firms’ operations in two or more EU country markets at one
time. The purpose of this study is to examine issues related to the crossmarket standardisation
strategy, i.e. whether a standardised marketing programme and process can be used across the
country markets in the EU.
Design/methodology/approach – Using the pair-wise comparison method originally developed by
Sorenson and Wiechmann this study examines the marketing standardisation strategies selection
process of 66 New Zealand firms which were concurrently operating in two or more EU markets. In
total these firms were operating in 13 different EU country markets.
Findings – The outcomes of this study suggest that, although a complete similarity in the marketing
environment is not likely to occur in the EU, it is possible for firms to locate a group of country markets
which have shared similar marketing characteristics in the EU region. For instance, country pairs such
as UK-France, UK-Germany, UK-Ireland, Germany-France, Germany-Italy and Germany-Sweden
could offer some extent of similarity which allows firms to adopt a standardised marketing strategy
across these countries.
Originality/value – This study generates a research framework for future studies and firms
intending to operate in the EU region. The findings generated contribute to research in the areas of
international marketing standardisation and international segmentation.
Keywords Marketing, Standardization, European Union, New Zealand
Paper type Research paper
Introduction
The debate between standardisation and adaptation marketing strategies is not new,
being well reported in the literature. Despite 40 years of development, however, there
are suggestions that there is still a need for more empirical research on this important
issue, as a considerable amount of the theories are yet to be established as conclusive
(Theodosiou and Leonidou, 2003). In the past, many international marketing
standardisation (IMS) studies have focused on the European Union (EU) (Buzzell, 1968;
Terpstra, 1967; Sorenson and Wiechmann, 1975; Boddewyn and Hansen, 1977;
Boddewyn et al., 1986; Martenson, 1987; Boddewyn and Grosse, 1995; Shaw, 2000;
Chen and Wong, 2003). This focus is probably due to its importance to the world’s
trade (Reichel, 1989; Ganesh, 1998). Existing IMS studies focused on the EU are mainly
descriptive in nature (Terpstra, 1967; Buzzell, 1968; Sorenson and Wiechmann, 1975;
European Journal of Marketing
Vol. 39 No. 11/12, 2005
pp. 1345-1371
q Emerald Group Publishing Limited
0309-0566
DOI 10.1108/03090560510623299
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Boddewyn and Hansen, 1977; Boddewyn et al., 1986; Martenson, 1987; Boddewyn and
Grosse, 1995; Shaw, 2000; Chen and Wong, 2003). These studies tend to examine issues
related to various elements of a/the marketing programme. Few studies have focused
on the process element (Sorenson and Wiechmann, 1975). A standardised marketing
programme includes a common mixed set of marketing tools (product, price, place and
promotion), which are used on a regional or worldwide basis (Jain, 1989; Levitt, 1983).
A standardised marketing process, on the other hand, denotes that a common tool is
used in the development and/or implementation of a firm’s marketing programme
which is used in its international operation (Jain, 1989; Sorenson and Wiechmann,
1975). Furthermore, past studies have only examined the experience of firms from a
limited amount of industry sectors (Sorenson and Wiechmann, 1975; Martenson, 1987;
Boddewyn and Grosse, 1995). Similarly, most of the existing EU studies have not
explicitly examined the issues related to the crossmarket standardisation strategies
(Whitelock, 1987; Boddewyn and Grosse, 1995), though the importance of this strategy
has been well identified in the literature (Jain, 1989; Baalbaki and Malhotra, 1993).
Crossmarket standardisation strategy maintains that a firm has used a common set of
marketing programmes and processes for its operations in two or more foreign host
markets at one time (Chung, 2003). It is often used synonymously with the intermarket
standardisation strategy (Baalbaki and Malhotra, 1993). Moreover, the important issue
of standardisation-performance has been neglected in existing studies on the EU.
The EU now consists of 25 member states and its total population has reached 455
million people since 1 May 2004 (BBC, 2004). This newly expanded economic region
represents a huge business opportunity for firms from around the world. Very few
multinational corporations (MNCs) operating in the EU region will limit themselves to
only a single country, but are more likely to conduct business in two or more of its
member states at the same time (Chen and Wong, 2003; Martenson, 1987). With all the
above issues in mind, this study is devoted to examining issues related to the
crossmarket standardisation strategy, i.e. whether a standardised marketing
programme and process can be used across the country markets in the EU.
This study will first review the findings of existing IMS studies focusing on the EU
perspective (Sorenson and Wiechmann, 1975), and those developed in other regions
which are, however, relevant to this study (e.g., Cavusgil et al., 1993; Hill and Still, 1984;
Samiee and Roth, 1992; Chung, 2003). The reason for including some studies which
focus on other geographical areas in the literature review process, is due to the limited
amount of existing research purely focusing on the EU in the crossmarket scenario.
Based on this review, a research framework will be proposed. The study will then
conduct an empirical examination of the proposed framework using the data collected
through a mail survey. The article will be concluded by a discussion of its research
findings and implications for future research, as well as the limitations of this research.
This study will adopt the pair-wise comparison method which was invented by
Sorenson and Wiechmann (1975). It will use the experience of 66 New Zealand firms
which were concurrently operating in two or more EU markets in order to establish a
crossmarket standardisation framework. Unlike previous studies (Sorenson and
Wiechmann, 1975; Samiee and Roth, 1992), this study will include firms from four key
industrial sectors: consumer non-durables (CNDs), consumer durables (CDs), industrial
products (IDs) and services (SVs). Likewise as this study was conducted just before the
latest EU enlargement, the country markets included in this study are mainly members
of the old Europe (i.e. countries which joined the EU before 2004) (BBC, 2004).
The debate of IMS – the EU prespective
Research on IMS from the EU perspective has generated mixed results. Some
researchers have suggested that a standardised marketing programme can be
employed when operating in the EU (Martenson, 1987; Sorenson and Wiechmann,
1975; Shaw, 2000; Chen and Wong, 2003). These studies have concluded that a
standardised or similar set of marketing programmes can be used by firms operating
in the EU region despite various differences existing within the region. A considerable
number of studies have, however, also suggested that, mainly due to the cultural and
consumer differences, it is difficult to employ a highly standardised marketing
programme across the EU countries. These studies suggest that firms treat each
market as an individual one and should have adopted an adapted marketing
programme for that market. Studies in this group include Whitelock (1987), Reichel
(1989), Boddewyn and Grosse (1995), Diamantopoulos et al. (1995) and Whitelock and
Rey (1998).
In summary, as findings on the IMS in the EU perspective are still inconclusive, the
need for further development on this area seems justified, especially when a research
framework is expanded from the traditional home-host scenario (Cavusgil et al., 1993)
to a crossmarket scenario (Baalbaki and Malhotra, 1993). As reported in the literature,
the home-host scenario occurs when a firm transfers a set of marketing programmes
and processes from its home country to another foreign host market (e.g., Akaah, 1991).
Research hypotheses
Organisational factors
As indicated, the two key components in the marketing standardisation strategy are:
the marketing programme; and the marketing process (Jain, 1989). Existing findings on
how organisational factors such as firm size can affect the choice of these two key
elements are mixed. On one hand, large size firms are suggested to be more likely to
employ an adapted marketing programme (Jain, 2001). This is probably related to the
large level of financial resource commitment required from the firms (Whitelock and
Pimblett, 1997). A universal marketing process can help firms maintain their consistent
corporate/brand image and their competitive advantage across the country markets in
which they operate (Douglas and Craig, 1986; Sorenson and Wiechmann, 1975). Large
firms are, however, found to be more likely to adopt a standardised marketing process
(Sorenson and Wiechmann, 1975).
Similarly, some studies have suggested that a firm’s choice of market entry mode
could have an impact on the selection of IMS (Rau and Preble, 1987). It has been
reported that firms using the same type of market entry mode when operating in the
crossmarket scenario are more likely to adopt a standardised programme (Rau and
Preble, 1987). For example, past studies have found that firms adopting exporting
methods are more likely to choose to enter country markets which can accept their
standardised products (Terpstra and Sarathy, 2000; Kacker, 1975; Root, 1994). In the
previous studies several items are often used to represent the term “products”. These
include packaging, design, positioning and characteristics associated with a product or
service (e.g., Akaah, 1991; Whitelock, 1987). This system is also adopted in this study
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in order to allow for consistency with the existing literature. This study has decided
not to include branding in its product mix assessment as this item has been clearly
identified to have a distinguished feature which should be separately considered from
the other product items (Jain, 2001; Onkvisit and Shaw, 1989; Ozsomer et al., 1991).
Unlike the findings related to firm size and market entry modes, the results
concerning the impact of international business experience (IBE) on the choice of
standardisation are less conclusive (Theodosiou and Leonidou, 2003; Cavusgil et al.,
1993). In the home-host scenario, this factor is suggested to be positively related to the
selection of adaptations of the marketing programme elements (Cavusgil et al., 1993). In
the crossmarket scenario, it is found to be more likely to be associated with the choice
of standardisation strategy. For example, in a study on firms’ operations in the Greater
China markets, it was identified that MNCs with a high IBE are likely to adopt a
standardised marketing programme (Chung, 2003). Likewise, US firms were also found
to be more likely to adopt a standardised marketing process when operating in the EU
region (Sorenson and Wiechmann, 1975). In short, mixed results have been established
on the effect of IBE in the literature. As this study is designed to examine firms’
operations purely in the crossmarket scenario, it was decided that the hypothesis
related to the IBE factor be proposed based on the findings generated in this scenario.
In light of the findings of past studies, it is expected that the following hypotheses
hold. Unless specified, the term “standardisation strategy” stated in the following
hypotheses and the subsequent sections represents all elements of the marketing
programme and process.
H1a. When operating in the EU, the extent of crossmarket standardisation of the
marketing programme is likely to be negatively related to a firm’s size, while
the degree of standardisation of the marketing process is likely to be
positively related to a firm’s size.
H1b. When operating in the EU, firms which service host markets with the same
type of entry mode are more likely to adopt a high standardisation strategy
across the markets in which they operate.
H1c. When operating in the EU, the extent of standardisation is positively related
to a firm’s IBE in the crossmarket scenario. Firms with high IBE are more
likely to adopt a high standardisation strategy.
Product factor
Research has indicated that the selection of international marketing strategy is also
related to the nature of the product (Jain, 1989). Studies regarding the EU have revealed
that marketing for consumer products is more likely to be adapted, while that for
industrial products is more likely to be standardised (Boddewyn et al., 1986;
Papavassiliou and Stathakopoulos, 1997; Theodosiou and Leonidou, 2003). Among
consumer goods, non-durables often require greater customisation than durables
because they are related more to local tastes, habits and customs (Whitelock, 1987).
Past EU studies have not focused on examining the marketing strategies used by
service providers (Boddewyn and Grosse, 1995; Chen and Wong, 2003). A number of
conceptual studies have suggested that services are more likely to be adapted, because
of their unique characteristics (intangibility, perishability, inseparability and
heterogeneity) (Berry, 1980; Fletcher and Brown, 2002; Terpstra and Sarathy, 2000),
than are tangible goods. This proposition is supported by a number of empirical
studies (e.g., Patterson and Cicic, 1995; Nicoulaud, 1989).
H2. When operating in the EU, service providers and consumer non-durables are
more likely to adopt a higher degree of marketing adaptation in the
crossmarket scenario.
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Marketing environmental factors
Past studies have pointed out that the extent of standardisation is significantly related
to the degree of the similarities of the marketing environment of the host countries
(Sorenson and Wiechmann, 1975; Quelch and Hoff, 1986; Ozsomer et al., 1991). In the
literature, the term “marketing environmental factors” is often used to represent those
factors which are externally related to a host country, including its political, legal,
economic, marketing infrastructure, competitive and socio-cultural environment (Jain,
2001; Whitelock and Pimblett, 1997; Shoham, 1999). The term “marketing
environmental factors” has an equivalent meaning to the term “external
environmental factors”. It has been decided to adopt the former term in this study in
order to be consistent with the existing literature (e.g., Baalbaki and Malhotra, 1993).
Political and legal environment. Previous studies regarding the EU (Boddewyn and
Hansen, 1977; Boddewyn et al., 1986; Boddewyn and Grosse, 1995; Hildebrand, 1994)
have suggested that national government regulations have a significant impact on the
choice of standardisation strategy. Over three decades of study, Boddewyn and Hansen
(1977), Boddewyn et al. (1986) and Boddewyn and Grosse (1995), have all identified that
national regulations are a key barrier to US firms’ adoption of standardisation strategy.
In their study of US MNCs’ operations in the EU, Sorenson and Wiechmann (1975) also
found that firms operating in countries which have similar marketing legislation are
more likely to choose a crossmarket standardisation strategy.
The political environment reflects the interference by host governments in
regulating foreign firms’ operations in their countries. It has been reported that firms
often need to change their operations, policies and strategies in foreign countries as a
result of political intervention (Jain, 1989; Vernon, 1971).
H3. When operating in the EU, the extent of standardisation in the crossmarket
scenario is expected to be positively related to the degree of similarity of the
political and legal environment among the country markets.
Economic development. Past research has suggested that a standardisation strategy is
more practical for markets which are at a similar economic development stage (Buzzell,
1968; Hill and Still, 1984; Jain, 1989; Papavassiliou and Stathakopoulos, 1997). This
condition is particularly important when operating in the crossmarket scenario as
firms are operating in a group of foreign host markets at one time (Sorenson and
Wiechmann, 1975). Residents in countries at a similar stage of economic development
are more likely to have a common consumer demand, life style pattern and purchasing
power (Whitelock and Rey, 1998; Jain, 1989). The commonalities in these areas are
likely to provide a basis for the implementation of crossmarket standardisation
strategies. It has been reported that countries which are economically similar including
nations of the OECD (Jain, 1989) and the industrial triad (Ohmae, 1985). As most of the
countries in the EU are OECD countries, it is expected that crossmarket differences in
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stages of economic development are likely to be minimal (Sorenson and Wiechmann,
1975). This similarity seems to particularly hold among the old EU countries.
H4. When operating in the EU, crossmarket similarity in stages of economic
development is likely to be a factor in the choice of crossmarket
standardisation. The extent of standardisation in the crossmarket scenario
is expected to be positively related to the degree of similarity in the economic
environment of the host markets.
Cultural environment. The impact of the cultural environment on the selection of a
standardised marketing programme is well reported in the literature. Hill and Still
(1984) have suggested that factors such as consumer literacy, educational level,
sociocultural customs and taboos are keys to the selection of marketing
standardisation strategies. Papavassiliou and Stathakopoulos (1997), among others
(Boote, 1982; Mueller, 1991) also supported the theory that a standardised advertising
strategy is workable only when the cultural environment across countries is similar.
A number of studies, however, have pointed out that the cultural environments
across the EU region are not likely to be similar in the near future. Reichel (1989)
suggested that the EU consisted of countries which are equipped with different
cultures and histories. Even though the EU might already have a common legislative
system (the Common Law), its culture diversity is not likely to disappear. This view is
shared by a number of others (Douglas and Wind, 1974; Whitelock and Chung, 1989;
Sriram and Gopalakrishna, 1991). The cultural dissimilarities among the EU countries
have long been identified as a primary barrier to the choice of standardisation strategy.
Boddewyn and Hansen (1977) and Boddewyn et al. (1986) found that language
differences among the EU markets was a major obstacle to the standardisation of
marketing strategies. The study conducted by Whitelock (1987) also confirmed that as
the cultural environment is so diversified it is difficult to implement a uniform
marketing programme in the EU region.
In short, even though the cultural environment within the EU region is not likely to
be similar, most of the previous studies seem to suggest that this similarity (or
dissimilarity) is likely to have a significant impact on the selection of marketing
strategies.
H5. When operating in the EU region, crossmarket cultural similarity is likely to
be a factor for selection of crossmarket standardisation. The extent of
standardisation in the crossmarket scenario is expected to be positively
related to the degree of similarity in the cultural environment across host
markets.
Competitive environment. Previous studies have identified that the disparity of
competitive environments is a barrier to the employment of standardisation strategy
(Jain, 1989; Walters, 1986). Most of the existing studies have agreed that competition
from European firms are likely to have a significant impact on the choice of
standardisation strategy (Boddewyn and Hansen, 1977; Boddewyn et al., 1986;
Boddewyn and Grosse, 1995). This is despite the fact that some studies have found that
only a selected competition component (e.g., market share) has an impact on the choice
of crossmarket standardisation strategy (Sorenson and Wiechmann, 1975).
H6. When operating in the EU, the extent of standardisation in the crossmarket
scenario is likely to be positively related to the degree of similarity of
competitive environments among the host markets.
Marketing infrastructure. It has been suggested that international marketing decisions
are influenced by the marketing infrastructure of a host country, including media
availability and distribution infrastructure (Akaah, 1991). A number of studies have
posited that standardisation strategy is more likely to succeed if the basic marketing
infrastructure between the home and host countries is similar (Jain, 1989;
Papavassiliou and Stathakopoulos, 1997). The impact of marketing infrastructure is
also evident in the crossmarket scenario. Several studies have suggested that the
degree of standardisation strategy is likely to be affected by the availability and
coverage of promotional infrastructure across markets (Baalbaki and Malhotra, 1993;
Sorenson and Wiechmann, 1975; Whitelock and Rey, 1998).
H7. When operating in the EU, the extent of standardisation in the crossmarket
scenario is positively related to the degree of similarity in the marketing
infrastructure of the host markets.
Consumer behaviour factor
This factor has received a lot of attention in studies on the EU. The findings related to
this factor have not, however, been conclusive. Most of the earlier studies have
suggested that consumers in the EU are likely to exhibit dissimilar behaviour, while
the findings of later studies tend to point to an opposite outcome. For instance,
Diamantopoulos et al. (1995) and Whitelock (1987) have suggested that Europe is not
likely to have uniformed consumer behaviour. On the other hand, recent studies such
as those of Leeflang and van Raaij (1995) and Ganesh (1998) have revealed that
consumer behaviour across the EU is more convergent, than it is divergent.
As past research has indicated, standardisation strategy is more effective when
customers, not countries, are the basis of identifying the segments to serve (Jain, 1989;
Akaah, 1991). It, therefore, seems sensible to hypothesize that crossmarket consumer
behaviour within the EU country markets is important in the selection of crossmarket
standardisation strategy. Boddewyn and Hansen (1977), Boddewyn et al. (1986) and
Boddewyn and Grosse (1995) all identified that differences in consumer behaviour
across the EU countries were a key barrier to the adoption of crossmarket
standardisation strategy. Theodosiou and Leonidou (2003) have also suggested that
the cross country similarity in customer profiles is significantly associated with the
degree of standardisation strategy. In summary, though a uniformed consumer
behaviour is probably unlikely to exist in the EU, consumer related factors are likely to
have an impact on firms’ selection of marketing standardisation strategy.
H8. When operating in the EU, crossmarket similarity in consumer behaviour is
likely to be a factor in the choice of crossmarket standardisation. The extent of
standardisation marketing strategy in the crossmarket scenario is likely to be
positively affected by the crossmarket similarity in consumer behaviour.
Performance – marketing programme and process
A good performance has been cited as the ultimate objective of any business strategy
(Jain, 1989; Samiee and Roth, 1992). Very little evidence has been produced, however,
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on the relationship between crossmarketing standardisation and a firm’s performance
in the EU business arena. Most of the existing studies seem to suggest that
standardised programme and process elements are likely to have a positive impact on a
firm’s financial performance when operating in the EU. For instance, Sorenson and
Wiechmann (1975) suggested that standardised marketing processes are likely to be
positively related to US firms’ performance when operating in the EU region. Similarly,
Chen and Wong (2003) found a negative relationship between product adaptation and a
firm’s performance. Their study was designed to examine the successful marketing
strategies used by firms from East Asia, operating in the UK and Ireland. Successful
firms were found to be more likely to adopt a standardisation strategy. In a study of
German firms’ operations in the UK, however, Shaw (2000) found no support for a
significant relationship in product/service modification between successful and less
successful firms.
Despite the mixed results regarding the relationship between standardisation and
performance, the majority of previous studies seem to support the following
hypothesis:
H9. When operating in the EU, the level of performance is likely to be positively
related to the degree of standardisation of marketing strategy in the
crossmarket scenario.
Research design
Sampling frame and postal survey
Sample firms in the study were mainly acquired from one semi-government
organisation’s web site and a commercial firm’s database. The government
organisation was established by the New Zealand Government to assist firms
exporting to overseas markets. Its web site is widely used by New Zealand based
exporters as a medium to provide their product/service details to firms from other
countries. The commercial firm is a leading database firm which has operations in
many parts of the world, including New Zealand and the EU. After a number of
attempts, it was found that the number of New Zealand firms, operating in the EU was
293. This group formed the sampling frame of the study. The study adopted a postal
survey to collect its primary data. The survey was completed (just before 1 May 2004)
by the managing directors of the respondent firms or the marketing managers who
were in charge of their firms’ operation in the EU.
In total, 140 questionnaires were returned. Among them, 38 were returned due to
wrong addresses, addressees no longer working for the firm, or no business in the EU.
Two firms indicated that they did not wish to participate in this study. Within the
remaining responses, 34 firms indicated they had operated in one EU market only. A
total of 66 firms replied that they had operations in two or more EU markets at the
same time. As this study is designed to focus on the crossmarket scenario, the findings
presented hereafter are based on the experience of these 66 firms. Based on these
results, the size of the sampling frame was adjusted to 221 firms, which yielded a net
response rate of 29.8 per cent. Though this research response is comparable to those of
similar studies (Boddewyn and Grosse, 1995; Chen and Wong, 2003; Theodosiou and
Leonidou, 2003), it is low. This result is likely due to the quantity of questions asked of
the respondents, which are comprehensive and have included their firms’ operation in
their most important and second most important EU markets. Another possible reason
for the low response rate is likely to be related to the one-off contact approach adopted
in this study. Due to time and budget constraints this study did not adopt the follow-up
approach used in many other studies to increase its response rate (Boddewyn and
Grosse, 1995).
The extrapolation method suggested by Armstrong and Overton (1977) was
employed to examine this study’s non-response bias. The research respondents were
placed into two groups based on the time sequence of their responses (first and second
waves). These two groups were compared based on four items: product category,
profit, sales growth and market share. Chi-square was employed to conduct this
comparison test. Results suggested that the study’s empirical results were not
influenced by a non-response bias to any significant level ( p . 0.1).
Research measurement
In order to achieve the research objectives, respondents were instructed to answer the
survey questions in relation to their most important product/service in the EU markets.
This product-market focus has been cited as a future practice in the IMS research field
(Theodosiou and Leonidou, 2003). As this study was designed to focus on firms
operating in the crossmarket scenario only, respondents were asked to compare their
operation in their most important and second most important EU market. Information
requested from the respondents included crossmarket comparison of their marketing
programme and process, marketing factors, performance and information related to
their own firms (e.g., firm size and market entry mode selection).
Adopting the practices of a number of previous studies (Hill and Still, 1984; Jain,
1989; Quelch and Hoff, 1986; Sorenson and Wiechmann, 1975; Walters, 1986;
Whitelock, 1987; Theodosiou and Leonidou, 2003), 22 items were used to measure
respondents’ marketing programmes and their processes. Likewise, the measurement
of the explanatory variables was also based on the suggestion of previous research
(Theodosiou and Leonidou, 2003; Jain, 1989; Baalbaki and Malhotra, 1993; Buzzell,
1968; Cavusgil et al., 1993; Hill and Still, 1984; Terpstra and Sarathy, 2000; Akaah,
1991; Boddewyn and Hansen, 1977; Sorenson and Wiechmann, 1975). These items were
all measured by a five-point scale (1 ¼ very similar, 5 ¼ very different).
A respondent’s firm size was measured by the number of full time employees of a
respondent firm. Firms’ international business experience was measured by the
number of years a firm had operated in international business and the number of
countries in which it had ongoing operations at the time the study was conducted
(Cavusgil et al., 1993). The market entry mode effect was measured relative to the most
important entry mode used to service their most, and second most, important EU host
markets. Results were coded into two categories; dependent upon whether or not a
respondent firm has used the same type of entry mode to service its most important
and second most important EU markets (1 ¼ identical; 0 ¼ otherwise) (Kacker, 1975;
Rau and Preble, 1987).
Performance was measured through three aspects: market share, sales growth and
profit (Kotabe, 1990; Sorenson and Wiechmann, 1975). These performance
measurement items are widely used by studies on the EU and other regions (Shaw,
2000; Theodosiou and Leonidou, 2003). Adopting the practice of previous studies (e.g.,
Chung, 2003), performance items were measured by respondents’ operations in their
second most important EU market. Market share and sales growth were measured by a
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firm’s product’s average performance over the previous three financial years in the
market. Profit was assessed by the performance over the previous financial year, based
on a seven-point scale (1 ¼ high levels of loss; 7 ¼ high levels of profit) (Kotabe, 1990).
Sales growth was also measured by a seven-point scale (1 ¼ negative return, 2 ¼ 0-5
per cent, 3 ¼ 6-10 per cent, 4 ¼ 11-15 per cent, 5 ¼ 16-20 per cent, 6 ¼ 21-25 per cent,
7 ¼ greater than 25 per cent) while market share was determined by a ten-point scale
(1 ¼ 0-10 per cent, 10 ¼ 91-100 per cent) (Johnson and Arunthanes, 1995; Samiee and
Roth, 1992; Cavusgil and Zou, 1994).
Respondent profile
The profile of the research respondents is listed in Table I. The average size of firms, as
measured by full-time employees, is 481. The average years of operation in
international business is approximately 22, and the number of countries operated in is
also approximately 22. On average, the respondents have been operating in the EU
region for approximately 16 years. In New Zealand terms, these firms are classified as
highly experienced international marketers and are classed as being medium- to
large-sized firms. Past studies focusing on New Zealand firms have pointed out that the
experience of firms with these characteristics is similar to those from other Western
industralised countries (Chung, 2003). With this average size, however, a considerable
number of the respondent firms included in this study are classified as being small
firms. More than 50 per cent of the firms included in this study have less than 100
employees. This finding shows that, like their medium- to large-sized counterparts,
small-sized firms can also actively operate in a large regional market such as the EU in
the crossmarket scenario. This finding might provide a research implication for firms
intended to operate in the EU region, and will be further discussed in a following
section.
Furthermore, as the two main market entry methods used in this study are FDI
and non-FDI methods, the profile of the respondents was examined further within
these two categories (Table I). The average size of FDI firms is 1,050 employees,
while it is 240 for non-FDI users. The average length of operation in international
business for FDI users is about 32 years, while it is 18 years for non-FDI respondents.
For the FDI users the number of countries operated in is approximately 40, while it is
15 for the non-FDI users. On average, the FDI respondents have been operating in the
EU region for about 27 years. Non-FDI users, however, have only been operating in
the EU for about 11 years on average. In brief, these findings suggest that FDI users
are larger in size, have more international business experience and have been
operating in the EU region longer than their non-FDI counterparts. The differences
between these two categories of firms might also offer research implications for
future studies.
With respect to the market entry modes adopted by the respondents, the most
frequently used entry methods were exporting via overseas agents or distributors,
wholly owned marketing subsidiaries and the internet. About 83 per cent of firms
indicated that they have used the same entry method for both their most, and second
most, important markets (Table I). FDI mode users were found to have only used two
types of market entry modes to serve their most important EU market (strategic
alliance and wholly owned marketing subsidiary). The adoption of FDI modes is an
internalisation exercise which allows the FDI mode users to hold a tighter control over
Per cent of firms
(overall)
(n ¼ 66)
Per cent of firms
(FDI)
(n ¼ 21)
Per cent of firms
(non-FDI)
(n ¼ 45)
Firm size – number of full-time employees
10 or less
11-99
100-999
1,000 or more
26.6
31.2
23.5
18.7
5.3
15.8
31.5
47.4
35.6
37.7
20.0
6.7
Product type a
Consumer non-durables (CNDs)
Consumer durables (CDs)
Industrial products (IDs)
Services (SVs)
47.0
10.6
18.2
24.2
42.9
23.8
19.0
14.3
48.9
4.4
17.8
28.9
Most and second important EU markets b
Austria
Belgium
Denmark
France
Germany
Greece
Ireland
Italy
Spain
Sweden
Switzerland c
The Netherlands
UK
( –, 1.5)
(1.5, 4.5)
(1.5, 4.5)
(7.6, 12.1)
(30.3, 25.8)
( –, 3.0)
(3.0, 4.5)
(7.6, 4.5)
(4.5, – )
(1.5, 4.5)
(3.0, 1.5)
(3.0, 1.5)
(36.4, 31.8)
( – , 4.8)
( – , 14.3)
( – , 4.8)
( – , 19.0)
(33.3, 23.8)
(–, –)
(–, –)
( – , 9.5)
( – , 9.5)
(–, –)
( – , 4.8)
(–, –)
(66.7, 9.5)
(–, –)
(2.2, –)
(2.2,4.4)
(11.1, 8.9)
(28.9, 26.7)
( – , 4.4)
( – , 2.2)
(4.4, 2.2)
(11.1, 2.2)
(6.7, 4.4)
(2.2, 2.2t)
(4.4, 2.2)
(22.2, 42.2)
(1.5, 3.0)
(53.0, 56.1)
( –, 3.0)
( –, 1.5)
(3.5, 4.5)
(27.3, 16.7)
(12.1, 12.1)
( – , 4.8)
( – , 23.8)
(–, –)
( – , 4.8)
(14.3, 14.3)
(85.7, 47.6)
(–, –)
(2.2, 2.2)
(77.8, 71.1)
( – , 4.4)
(–, –)
(–, –)
( – , 2.2)
(17.8, 17.8)
(1.5, 1.5)
(–, –)
(2.2, 2.2)
83.3
15.2
1.5
61.9
33.3
4.8
93.3
6.7
–
Market entry modes selection
Indirect exporting
Direct exporting (agents, distributors)
Licensing/ franchising
Joint ventures
Strategic alliance
Wholly-owned marketing subsidiary
Internet
Other (e.g. sales representative, direct
marketing)
Market entry modes selection
Identical entry modes
Different entry modes
Missing values
Notes: a: CNDs include fruit, meat, dairy products, seafood, food, wine, books, skin care products and
chest protectors. CDs include machines, computers, wheel chairs, security alarms and vision products.
IDs include dairy ingredients, soles, machines (milking), fruit juice concentrates, trees, trade directory
and communications. SVs include education, consulting, immigration, freight, tourism, computer
services (e.g. software) and engineering. b figures within bracket represent percentages of firms
occurring in the most and second most important markets. c this country is included due to its mean
ratings of marketing environmental factors being similar to those of the others in the study
Crossmarket
standardisation
strategies
1355
Table I.
Profiles of Respondents
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1356
their operation in the EU (Jain, 2001; Fletcher and Brown, 2002). This choice might be
due to the high physical and psychic distance between New Zealand and the EU, and
these firms’ intention to maintain a competitive advantage over their competitors in the
EU region (Jain, 2001).
The results indicated that non-FDI firms have used a wider range of market entry
modes to serve their EU host markets (Table I). Non-FDI mode users tend to use an
identical market entry mode to serve their most, and second most, important host
markets more often than do their FDI counterparts. These results suggest that, in
comparison to the FDI mode users, non-FDI users are more likely to employ a uniform
market entry mode to serve their foreign host markets when operating in the
crossmarket scenario in the EU region. This result is probably related to the business
nature of the non-FDI firms whose products are produced in their home countries. This
business nature might have attributed to exporting firms marketing their products in
countries which can be served by a uniform market entry mode and product/service.
This result is consistent with those reported in the literature (Kacker, 1975; Rau and
Preble, 1987). The impact of the market entry mode in the crossmarket scenario is thus
confirmed in the EU perspective.
In terms of the number of countries operating across EU borders, 36.4 per cent
of the respondents indicated that the UK was their most important market,
following by Germany (30.3 per cent), Italy (7.6 per cent), France (7.6 per cent),
Spain (4.5 per cent), Ireland, Switzerland, The Netherlands (all at 3.0 per cent),
Belgium, Denmark and Sweden (all at 1.5 per cent). In terms of firms’ second most
important EU market, the order is as follows: UK (31.8 per cent), Germany (25.8
per cent), France (12.1 per cent), Belgium, Denmark, Ireland, Italy, and Sweden (all
at 4.5 per cent), Greece (3.0 per cent), Austria, Switzerland and The Netherlands
(1.5 per cent). Within this study, Switzerland was included because its marketing
environment was suggested to be similar to those of other countries included in
the study. In total the respondents reported in this study were found to be
operating in 13 EU country markets (Table I). A key difference was found
between the FDI and non-FDI mode users in terms of their most important host
markets. For FDI users their most important EU markets were Germany and the
UK, whereas those of non-FDI users tended to be scattered. This result is probably
related to the market size of the host markets, i.e. only those markets with large
market size can support the FDI users (Agarwal and Ramaswami, 1992). It is
known that Germany and the UK are the two largest economies in the EU region.
Statistical analysis methods
This study employed a number of statistical analysis tools – correlation, factor
analysis, reliability testing (Cronbach’s alpha) and multiple regression analysis to
examine its proposed research framework. The statistical analysis package employed
was SPSS Release 12.0.1 (SPSS, 2003).
Each marketing programme and process element was examined by factor analysis.
The results are presented in Table II. As demonstrated in this table, the validity of each
element of the marketing programme and process was high (Cronbach’s alpha
statistics greater than 0.85).
The three groups of factors (organisation, product and market) affecting the choice
of marketing standardisation strategies were also tested by several rounds of factor
Items
Marketing programme and process constructs
Product
Characteristics, packaging, design and
positioning
Price
Wholesale price, retail price, pricing method, and
offer of price discounts
Place
Type of retail outlets, channel of distribution,
roles of sales force, managing of sales force and
role of middlemen/dealers
Promotion
Role of advertising, basic theme, copy, creative
expression, media allocation and role of sales
promotion
Process
Marketing planning process, budgeting and
control system, and marketing
philosophy/orientation
Marketing, product and organisational constructs
Political/legal environment
Political interference of the host government,
legal regulations on price and sales conditions,
product content, performance and safety and
packaging requirements
Economic environment
GNP/capita, cost of labour, stage of economic
development and consumer purchasing power
Competitive/marketing
Competitive nature, market share position,
infrastructure
distribution infrastructure and media availability
Cultural environment
Understanding and interpretation of advertising,
consumer literacy and education level, linguistic
and connotative implications and socio-cultural
customs and taboos
Consumer behaviour
Consumer purchasing habits, conditions of
usage, consumer preferences and consumption
patterns
Cronbach’s alpha
(standardised)
Crossmarket
standardisation
strategies
0.854
0.967
1357
0.942
0.941
0.917
0.892
0.944
0.902
0.877
0.907
Notes: IBE, product type, firm size (employees) and market entry mode variables are not listed in this
table due to their single-item variable nature. These variables are still included in the following
multi-variate regression analyses
analysis. These results are also presented in Table II. All elements in each construct
were clustered well, except for the political factor (which appears to be integrated with
the legal factor items) and the competitive environment factors (which were clustered
with the marketing infrastructure items). The two items employed to measure the
effect of international business were treated as individual variables, as they showed a
low correlation with each other. The combined and singular constructs all
demonstrated a high validity (Cronbach’s alpha . 0.87).
The Kendall’s tau-b (bivariate, two-tailed) correlation function was employed to
determine the relationship between all independent variables (Table III). After several
experiments it was found that both the economic and the cultural constructs were
highly correlated with other independent variables. These two were excluded from
further statistical analysis due to the issue of multicollinearity. The same problem
occurred with the product type factor. Product type was originally assessed in four
Table II.
Constructs and factor
analysis results
Table III.
Correlations –
organisational, product
and marketing factors
1.000
2 0.267
0.072
0.009
0.093
2 0.093
2 0.156
2 0.140
1.000
20.374
20.147
0.145
20.063
20.037
20.208
Product type (2)
1.000
0.365
20.254
0.078
0.098
0.231
IBE
1.000
20.189
0.134
0.057
0.101
Intcoun
1.000
2 0.016
2 0.028
2 0.020
Market entry
1.000
0.481
0.539
P/L
1.000
0.583
Comp/Mar
Notes: Employees ¼ number of full-time employees (firm size); Product type (1) ¼ industrial products vs others; Product type (2) ¼ services vs others;
IBE ¼ international business experience; Intcoun ¼ number of countries operating; Market entry ¼ market entry mode selection; P/L ¼ political and
legal construct; Comp/mark ¼ competitive environment and marketing infrastructure construct; Consumer ¼ consumer behaviour construct
1.000
2 0.107
2 0.134
0.488
0.351
2 0.336
0.152
0.097
0.154
Product type (1)
1358
Employees
Product type (1)
Product type (2)
IBE
Intcoun
Market entry
P/L
Comp/mark
Consumer
Employees
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39,11/12
ways (consumer non-durables vs others; consumer durables vs others; industrial
products vs others; services vs others). Among the four original coding systems the
first two were found to cause multicollinearity among the independent variable set.
These two were excluded from the rest of the analysis. The correlation coefficients of
the remaining independent variables were acceptable (Table III).
Multiple regression analysis was conducted to examine the relationships between
the independent variables and the extent of standardisation of programme and process
element constructs. Among the five models initially suggested, two models (place and
process) did not meet the assumptions of normality and linearity. The remedy practice
suggested by Hair et al. (1998) was employed to fix these problems. A number of
variables were transformed in these two models. After the transformation, the
violations of these two assumptions were mainly fixed. The residuals were situated
roughly along the regression line.
The relationship between the five programme and process element constructs and
performance was also tested by a multiple regression analysis. Prior to this analysis, a
correlation test was performed on the five programme and process constructs. It was
found that promotion and process constructs were highly correlated with others.
Because of this reason, these two were excluded from the regression analysis. The final
results of all multiple regression analyses are demonstrated in Table IV. As shown, the
goodness of fit of the proposed models is high (R and F statistics), suggesting that the
models fit well with the data.
Research findings and discussion
The present study represents an attempt to test empirically a research framework
which focuses on firms’ operations in the EU, in the crossmarket scenario. It was
proposed based on the findings of previous studies (e.g., Sorenson and Wiechmann,
1975; Boddewyn and Grosse, 1995). The proposed framework was tested by a
comprehensive set of statistical analysis methods. The statistical analysis results are
presented and discussed in the following section. A summary of the hypotheses’ test
results is listed in Table V.
Extent of standardisation
The mean ratings of all of the elements of programme and process are less than 3,
suggesting that firms included in this study had used a standardised programme and
process when operating in the EU region, in the crossmarket scenario. The findings on
crossmarket standardisation are consistent with those reported in a number of EU
studies (e.g., Sorenson and Wiechmann, 1975; Martenson, 1987; Shaw, 2000; Chen and
Wong, 2003) but contradict those of others (e.g., Whitelock, 1987; Reichel, 1989). These
mixed results suggest that the findings related to marketing standardisation in the EU
are still inconclusive. It is confirmed, however, that it is possible to locate a country
market segment which allows firms to implement a crossmarket standardisation
strategy when operating in the region.
Organisational factors
Firm size. The effect of firm size is significant only in the selection of product
standardisation strategy (Table IV). Large size firms are found to be more likely to
adopt a higher extent of product adaptation strategy. This result is possibly related to
Crossmarket
standardisation
strategies
1359
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1360
Variable
Coefficients (Beta)
Standard error
t-value
Significance
Dependent variable: Product
Constant
Employees (firm size)
Product type (services vs others)
P/L
Consumer
R-value ¼
R 2 value ¼
2 0.283
0.000
0.681
0.314
0.385
0.734
0.539
0.162
0.000
0.314
0.165
0.168
F-value ¼
F-significance ¼
21.743
2.340
2.172
1.898
2.292
10.822
0.000
0.090
0.025
0.036
0.065
0.028
Dependent variable: Price
Constant
IBE
Comp/mark
Consumer
R-value ¼
R 2 value value ¼
2 0.114
0.012
0.476
0.429
0.860
0.739
0.146
0.006
0.143
0.134
F-value ¼
F significance ¼
20.784
2.102
3.334
3.203
33.086
0.000
0.439
0.043
0.002
0.003
Dependent variable: Place
Constant
Market entry (identical vs otherwise)
P/L
Comp/mark
Consumer (log transformed)
R-value ¼
R 2 value ¼
0.680
2 0.622
0.343
0.409
0.323
0.755
0.570
0.309
0.328
0.140
0.161
0.165
F-value ¼
F-significance ¼
2.200
21.893
2.456
2.545
1.960
10.609
0.000
0.035
0.067
0.020
0.016
0.059
2 0.153
0.011
0.466
0.398
0.821
0.675
0.156
0.006
0.117
0.138
F-value ¼
F-significance ¼
20.978
1.867
3.972
2.898
24.205
0.000
0.335
0.070
0.000
0.006
2 0.009
0.015
0.689
0.406
0.791
0.625
0.178
0.006
0.100
0.106
F-value ¼
F-significance ¼
20.049
2.311
6.916
3.834
20.568
0.000
0.962
0.027
0.000
0.000
3.938
2 0.588
0.589
0.424
0.179
0.217
0.229
0.243
F-value ¼
F-significance ¼
18.145
22.564
2.423
4.045
0.026
0.000
0.015
0.020
1.979
0.788
0.431
0.185
0.304
0.268
F value ¼
F-significance ¼
6.502
2.940
8.645
0.006
0.000
0.006
Dependent variable: Promotion
Constant
IBE
P/L
Comp/mark
R-value ¼
R 2 value ¼
Dependent variable: Process
Constant
IBE
P/L
Comp/mark (log transformed)
R-value ¼
R 2 value ¼
Dependent variable: Profit
Constant
Product
Price
R-value ¼
R 2 value value ¼
Table IV.
Multiple regression
analysis results
Dependent variable: Market share
Constant
Product
R-value ¼
R 2 value value ¼
Hypothesis
Summary of hypothesis
Results
H1a
The extent of cross market standardisation of
marketing programme is likely to be negatively
related to a firm’s size, while the degree of
standardisation of marketing process is likely to be
positively related to a firm’s size
Firms which service the host markets with the same
type of entry mode are more likely to adopt a high
standardisation strategy across the markets in which
they operate
The extent of standardisation is positively related to
a firm’s IBE in the crossmarket scenario. Firms with
high IBE are more likely to adopt a high
standardisation strategy
Service providers and consumer non-durables are
more likely to adopt a higher degree of adaptation
The extent of standardisation in the crossmarket
scenario is positively related to the degree of
similarity of the political and legal environment
among the country markets
The extent of standardisation in the crossmarket
scenario is positively related to the degree of
similarity of economic environment among the host
markets
The extent of standardisation in the crossmarket
scenario is positively related to the degree of
similarity of cultural environment among the host
markets
The extent of standardisation in the crossmarket
scenario is likely to be positively related to the
degree of similarity of competitive environments
among the host markets.
The extent of standardisation in the crossmarket
scenario is positively related to the degree of
similarity of marketing infrastructure among the
host markets
The extent of standardisation marketing strategy in
the crossmarket scenario is likely to be positively
affected by the crossmarket similarity in consumer
behaviour
The level of performance is likely to be positively
related to the degree of standardisation of marketing
programme/process in the crossmarket scenario
Supported (partially)
H1b
H1c
H2
H3
H4
H5
H6
H7
H8
H9
Supported (partially)
Crossmarket
standardisation
strategies
1361
Supported (mostly)
Supported (only on services)
Supported (mostly)
Not supported
Not supported
Supporteda (mostly)
Supporteda (mostly)
Supported (mostly)
Supported (partially)
Note: aEmpirical results suggest that these two factors needed to be considered together
the amount of resources required to employ an adapted product strategy, meaning that
only large firms can afford to adopt this strategy (Whitelock and Pimblett, 1997). This
study, however, does not support the theory that firm size has a significant impact on
the selection of other elements of the programme and process (Sorenson and
Wiechmann, 1975). These insignificant results might suggest that the selection of these
Table V.
Test results of
hypotheses
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1362
elements is more likely to be related to other factors (e.g., IBE, see discussion below).
This finding suggests that H1a can only be partially supported.
Market entry mode selection. As shown in Table IV, this factor is evident on the
place element only. Firms which have used an identical market entry method to serve
both their most, and second most, important EU markets are more likely to use a
standardised place strategy. This result is consistent with the proposition raised in the
conceptual studies that market entry mode selection is likely to be a factor for a
crossmarket standardisation strategy (Rau and Preble, 1987). The finding suggests
that the impact of market entry mode on the selection of IMS is confirmed, from the EU
perspective (Kacker, 1975; Root, 1994). This finding is not fully expected, however, as it
has been indicated that the selection of market entry mode is likely to be related to all
elements of the marketing programme (e.g., Grosse and Zinn, 1990). This is not
confirmed by this study. A number of factors might have attributed to the result that
the impact of market entry mode is only evident on the place element. Firstly, this
result might relate to the type of market entry modes used by firms operating in the
EU. As indicated, exporting via agents or distributors are the most frequently used
entry mode in this study and 83 per cent of the respondents have used the same entry
methods to service their most, and second most, important EU host markets. These
outcomes suggest that exporting via agents or distributors is most likely to be used
across the countries in the EU. When this method is used in the crossmarket scenario,
an important issue is probably the use of a uniform place (distribution) strategy, such
as an identical agent system for all the countries they operate in, as this would help
firms to manage their operation in the EU countries. Secondly, this result is likely to be
related to the similarity of distribution infrastructure across the EU countries. Past
studies suggest that a standardised strategy is easier to be implemented when
countries share a similar infrastructure (Jain, 1989; Boddewyn and Hansen, 1977;
Akaah, 1991). As discussed, the country markets under study have a similar
infrastructure (which provides a foundation for using the same type of market entry
mode) and a standardised distribution system. Based on these results, H1b is
supported but only on the selection of distribution strategy.
International business experience (IBE) (years in international business). This factor
is suggested to have a significant impact on marketing standardisation selection of
three elements (price, promotion and process) (Table IV). Firms with a higher IBE are
suggested to be more likely to choose a higher degree of price, promotion and process
adaptation strategy. These results indicate that findings related to the effect of IBE on
marketing programme and process elements might still be questionable, as a universal
result on these factors is yet to be developed (e.g., Baalbaki and Malhotra, 1993;
Sorenson and Wiechmann, 1975). For example, in contrast to Sorenson and
Wiechmann’s (1975) finding on the impact of IBE on the process element (that firms
with longer business experience are more likely to adopt a uniform marketing process),
this study has generated an opposite result. In this study, highly experienced firms are
found to be less likely to adopt a standardised process. Similarly, this study also cannot
support those studies which have found that firms with high IBE are more likely to
select a standardised product strategy (Chung, 2003). This lack of confirmation
suggests that the finding concerning the impact of IBE on product standardisation in
the EU perspective is yet to be finalised. Based on these findings, H1c is mostly
supported, but its direction of relationship needs to be revisited.
Product related factors
The impact of product type is evident on the product element only. Among the four
types of industrial sectors investigated, only service operators were found to be more
likely to choose an adapted product strategy. As pointed out in previous studies (Berry,
1980; Nicoulaud, 1989), this result is likely to be due to the special characteristics of
marketing services. The effect of services on product standardisation from the EU
perspective is thus empirically confirmed. This study cannot, however, confirm that
the choice of standardisation among the consumer non-durables, consumer durables
and industrial products operators is different when operating in the EU region, in the
crossmarket scenario (Boddewyn et al., 1986; Boddewyn and Grosse, 1995; Theodosiou
and Leonidou, 2003). This suggests that the findings concerning the relationship
between IMS and these three major product sectors, in the crossmarket scenario might
need to be developed further. H2 is supported, but only concerning the service sector.
Marketing factors
The findings of this study suggest that the marketing factors of the EU country
markets under examination are indeed similar though the extent of their similarity
varies. The mean ratings of each marketing factor group are less than 3, suggesting
that they are similar (1 ¼ very similar; 5 ¼ very different). The findings concerning
the similarity of the marketing factors in the EU suggest that, although the EU is a
wide region and the similarity of some aspects of the marketing environmental factors
among its member states is probably still unclear (Whitelock, 1987; Diamantopoulos
et al., 1995; Reichel, 1989; Boddewyn et al., 1986; Boddewyn and Grosse, 1995), it is
possible for firms to locate a group of country markets in the EU which have shared a
similar set of characteristics in the crossmarket scenario. These common
characteristics would allow firms to adopt a similar set of marketing programmes
and processes when operating in these country segments.
Political/legal environment. As shown in the methodology section, the elements of
political and legal factors have been grouped together because of their strong
correlation. The factor of political/legal environment is positively related to the extent
of standardisation of four programme and process elements (product, place, promotion
and process) (Table IV). This finding is consistent with those of Boddewyn and Hansen
(1977), Boddewyn et al. (1986), Boddewyn and Grosse (1995) and Sorenson and
Wiechmann (1975), who have found that government regulations play a key role in the
choice of standardisation for firms operating in the EU. Although it has been some time
since previous studies were conducted, this study still reveals that the similarity of
political and legal environment of the EU host markets plays a key role in the choice of
crossmarket standardisation. The significant impact of this factor on the choice of IMS
is again stressed in this study. The non-significant results on the selection of price
element suggest, however, that the effect of the political/legal factor on the choice of
marketing standardisation strategy is not universal in the EU. A possible reason for
this non-significant result might relate to the common law adopted in the EU region.
This common legal system probably has a higher impact on pricing than on other
elements. Under this system, the restrictions on a firm’s pricing strategy are probably
more universal throughout the region. It is, thus, less likely that the strategies used for
this element are relevant to the political/legal environment across the EU region. In
light of these results, H3 is mostly supported.
Crossmarket
standardisation
strategies
1363
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1364
Economic environment. This is not a factor in the choice of crossmarket
standardisation strategy. This result might be caused by the type of products/services
marketed by the respondents, which might be less affected by the
similarities/differences of economic development across the EU markets. When
operating in the EU region, respondents in this study might have carefully selected a
product/service which can only be accepted by consumers/customers in different
markets in the region (Jain, 1989). With this careful selection of country markets, the
stage of economic development factor is not likely to be an issue in their choice of IMS.
The research finding suggests that H4 is not supported.
Cultural environment. This study is unable to confirm that cultural environment has
a significant impact on the selection of crossmarket standardisation strategy. A
possible reason for this result is likely to be the factor’s role in the crossmarket
standardisation decision making process. Previous studies have viewed cultural
environment as a constant factor in the crossmarket standardisation (i.e. firms only
enter markets which are culturally similar when operating in the crossmarket scenario)
(Chung, 2003). Despite previous studies agreeing that the cultural environment within
the EU region is likely to vary, firms in this study might have carefully chosen to
operate in the country markets which share a similar cultural environment. This
careful selection might have attributed to the non-significant result of this factor. This
result implies that through careful selection of markets, the effect of the cultural factor
can be minimised. The finding of this study suggests that H5 is not supported.
Competitive environment and marketing infrastructure. As with the political and
legal factors, the competitive environment and marketing infrastructure elements were
also grouped together as one factor because of their similarity. Unlike those results
revealed in the previous studies (e.g., Boddewyn and Grosse, 1995), this study has
confirmed that these two factors need to be considered together when operating in the
EU region. This result suggests that a firm’s competitive position in the EU countries is
also likely to be affected by the development of the host countries’ marketing
infrastructure. This inter-relationship suggests that a firm cannot consider its
competitive position alone when operating in the EU. It also needs to consider the host
market’s infrastructure, as this could affect its competitive advantage in the host
market. This clustered factor is found to be positively related to the selection of price,
place, promotion and process elements (Table IV). These findings are consistent with
those which have identified that competition and marketing infrastructure are key
factors for the selection of marketing standardisation strategy (Boddewyn and Grosse,
1995; Theodosiou and Leonidou, 2003). Unlike pervious studies (Sorenson and
Wiechmann, 1975), this combined factor has been statistically found to have a
significant impact on the choice of crossmarket standardisation strategy. Similarly to
those discussed above, however, the effect of this combined factor is not evident on all
marketing programme and process elements. This incomplete result suggests that
further investigation in this area is required. In light of these findings, H6 and H7 are
mostly supported.
Consumer behaviour. Similarly (as shown in Table IV) the consumer behaviour
factor is also suggested to have a significant positive impact on the selection of
product, price and place adaptation strategy. This study confirms the findings of
Boddewyn and Grosse (1995), Leeflang and van Raaij (1995), Ganesh (1998) and
Theodosiou and Leonidou (2003), but contradicts those of Whitelock (1987) and
Diamantopoulos et al. (1995). This mixed result might relate to the similarity/difference
of the industrial sectors included in this current study in relation to those sectors in the
previous studies. As reported, the firms included in this study are from four sectors
(consumer non-durables, consumer durables, industrial products and services). The
background of the research respondents in this study is more consistent with those
reported in the former group of studies. For instance, this current study’s respondents’
profile is comparable with those included in Boddewyn and Grosse (1995) (consumer
non-durables, consumer durables and industrial products), Leeflang and van Raaij
(1995) (consumer non-durables, consumer durables and services) and Ganesh (1998)
(mainly consumer durables). In contrast the industrial sectors included in the latter
group of studies are much narrower and more specific, i.e. Whitelock’s (1987) study
was designed to examine firms in the bedding sector and the results of
Diamantopoulos et al. (1995) were established based on the experience of passenger
cars users. The differences in the respondents’ backgrounds might have attributed to
the inconsistent results.
Furthermore although this factor’s impact on the selection of IMS has been
statistically confirmed in this study, it is only significant on three elements (product,
price and place). This partial result suggests that, when operating in the EU, firms’
choice of promotion and process strategies are probably more likely related to other
factors such as those discussed previously (e.g., political/legal factor). In summary as
demonstrated, the findings of this study are consistent with some studies’ but not with
others. The findings related to this factor’s impact on the programme and process
elements are also varied. These outcomes all suggest that the results concerning this
factor’s impact on the IMS in the EU perspective are diversified and a conclusion is not
easily reached from findings generated in a single study. It is, thus, important that this
factor is examined further. It will also be beneficial to learn whether this study’s results
and their associated explanations can be applied to other studies or industries. Based
on the findings established in this study, H8 is mostly supported.
Performance
Among the five programme and process elements examined, only two were suggested
to have a significant impact on firms’ performance (Table IV). Product adaptation was
suggested to have a negative impact on a firm’s profitability, while price adaptation
had a positive effect on this performance item. These results suggest that a firm is
more likely to perform well if it adopts a crossmarket standardised product strategy
and an adapted pricing strategy when operating in the EU region. Nevertheless, a firm
is likely to perform better in terms of market share if it adopts a product adaptation
strategy. These results suggest that standardisation and adaptation do play a role in
determining firms’ performances when operating in the EU region (Jain, 1989).
Although these findings are useful, they are not consistent with those reported in
previous studies. For example, the impact of the standardised process, as suggested by
Sorenson and Wiechmann (1975), is not supported by this study. This study cannot
find that a standardised process can increase a firm’s performance in the EU region.
Likewise, the findings of Samiee and Roth (1992) are also not supported by the present
study. Their study concludes that a standardised strategy has little impact on a firm’s
performance. A possible explanation for these inconsistent results might relate to the
nature of firms included in this study as opposed to others. Sorenson and Wiechmann’s
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(1975) study was devoted to an examination of the experience of consumer non-durable
producers, while Samiee and Roth (1992) tended to focus only on the experience of
manufacturing firms. The size of firms included in both studies was large. In contrast,
as reported, firms included in this study were from a wider industrial source and their
firm size tended to be smaller. The results generated in this study and others seem to
imply that the effect of standardisation on performance is probably related to the
respondents’ background, such as their industrial sector and organisational factors
(e.g., firm size). This discrepancy result suggests that future research attention is
required in this area. Based on the research findings, H9 is partially supported.
Conclusions and implications
This study is designed to examine firms’ operations in the EU region, in the
crossmarket market scenario. It has employed pair-wise comparison and a set of
statistical methods to achieve its research objectives. Based on its findings, this study
has generated a research framework for future studies and firms intending to operate
in the EU region. This study has examined the similarities and differences of firms’
operations in a number of EU country markets. The outcomes of this study suggest
that, although a complete similarity in the marketing environment is not likely to occur
in the EU, it is possible for firms to locate a group of country markets which have
shared similar marketing characteristics in the EU region. For instance, the findings of
this research have pointed out that country pairs such as UK-France, UK-Germany,
UK-Ireland, Germany-France, Germany-Italy and Germany-Sweden could offer some
extent of similarity which allows firms to adopt a standardised marketing strategy
across these countries.
Similarly the three organisational factors are suggested to have a significant impact
on the choice of a number of elements of the marketing programme and process. The
findings of this study have confirmed that like medium and large size firms, small size
firms are also able to operate in the crossmarket scenario when operating in the EU
region. They might, however, need to consider adopting a different marketing strategy.
For example, probably because of their relatively limited resources, small size firms are
encouraged to enter a group of EU country markets which can accept their
standardised product. In contrast, larger size firms should take the advantage of the
product adaptation strategy and consider designing a more customised product or
service for their customers located in different countries in the EU. Similarly the
findings of this study also suggest that firms with a high IBE should consider adapting
their pricing, promotion and process elements in order to cater for the differences
between the host markets. Also when a standardised place strategy is important to
firms’ operations in the EU, firms should consider entering country markets which
allow their firms to use the same market entry mode to serve the markets.
The finding on product type suggests that services providing firms should consider
employing an adapted product strategy when operating in the crossmarket scenario, in
the EU region.
Managers should also recognise that political and legal environments still play an
important part in their choice of IMS when operating in the EU, even after many years
of development within the EU region. Also probably because a country’s legal
environment is often affected by its political environment (Jain, 2001), firms are
encouraged to consider these two factors as one issue when operating in the EU region.
The findings of this study indicate that managers should be aware of the similarity of
this combined factor when operating in the crossmarket scenario, in the EU region.
Similarly managers should also view the competitive environment and marketing
infrastructure as one factor when operating in this regional market. Their firm’s
competitive position in a market is closely related to the development of that country’s
marketing infrastructure. The effect of this interaction is evident in the selection of
price, place, promotion and process elements. Managers should consider adopting a
standardised programme and process when the host markets are similar in these two
aspects. Furthermore managers should also recognise that their crossmarket
standardisation decision is also significantly related to the similarity of consumer
behaviour across the EU markets. The results of this study confirm that it is possible to
locate a crossmarket segment with similar consumer characteristics, despite
consumers in the EU appearing to be divergent. The effect of consumer behaviour is
evident on the choice of three elements: product, price and place.
Lastly, firms could consider employing a standardised product strategy or an
adapted pricing strategy, in order to maximise their profitability when operating in the
crossmarket scenario, in the EU region. Managers also need to recognise that the extent
of their product adaptation strategy is likely to be associated with their market share in
the crossmarket scenario. A higher degree of product adaptation can lead them to a
greater market share when operating in the EU region. Managers, however, should be
cautious about using other programme and process elements to increase their firm’s
performance in this region.
Research limitations and future research
This study has applied the pair-wise comparison method to the crossmarket scenario,
for firms operating in the EU. It has generated a number of interesting findings, which
might have added new insights into the research of IMS. Nevertheless, like many
others, this study also has a number of weaknesses. Managers and researchers should
well note all of these limitations when applying the findings generated in this study, as
they may have an impact on the ability to generalise the findings established in this
study. Firstly, by focusing on firms operating concurrently in two or more EU markets,
the sample size included in this study is relatively small in comparison to those
reported in the existing literature (e.g., Samiee and Roth, 1992), despite its response
being comparable to other recent studies on the EU (e.g., Boddewyn and Grosse, 1995;
Chen and Wong, 2003; Theodosiou and Leonidou, 2003). The validity of its research
findings could certainly be improved if its sample size were enlarged. Likewise, the
sample firms included in the study are all from New Zealand, whose physical and
psychic distance to the EU might also have some impact on the generalisation of the
findings generated in the study. Secondly, as reported, the size of the respondents
included in this study tended to be smaller than those included in previous studies
(Sorenson and Wiechmann, 1975; Samiee and Roth, 1992). Over 50 per cent of the firms
included in this study are classified as small firms. Likewise most of the firms included
have also used identical market entry modes to serve their most, and second most,
important host markets. These results all provide avenues for generating a biased
result. Finally, this study has only focused on examining the effect of selected variables
in its research framework. Other important factors such as the extent of autonomy
given to local operation and market size and the potential of the host markets, have not
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been considered in this study (Boddewyn and Grosse, 1995). The findings generated in
this study could be improved if other important variables were also included in its
research framework.
Despite these limitations, this new study on the EU might have provided a number
of avenues for future research. Future studies can examine whether the findings
generated in this study can be applied to other MNCs operating in the EU region. These
MNCs could be based in other countries and/or operate in different industrial sectors.
As demonstrated, some of the findings here are unprecedented and are not consistent
with those previously reported in the literature. Future studies can perhaps also
investigate whether the findings generated in this study can be applied to firms
operating in other important regional markets, such as NAFTA or ASEAN. It is
important to learn whether the findings revealed in this study can be generalised to
other scenarios, so that a more definite conclusion on these findings can be drawn.
Studies in the future could also extend the scope of this study to other country markets
in the EU, e.g. Poland, the Czech Republic and others which have recently joined the
Union. This inclusion will help firms understand whether they can actually use their
established strategies, originally designed for the well established country markets, in
the new member states. This inclusion would have made this crossmarket
standardisation research concerning the EU more complete. Lastly, due to its small
sample size, this study has not examined the statistical differences or similarities of
their IMS selection process between firms using both FDI and non-FDI entry modes in
their investigation scope. With a larger sample size future research can perhaps
consider focusing on firms using either FDI or non-FDI, entry methods alone. It is
important to learn whether the IMS selection process between firms in these two
categories has a significant statistical similarity or difference when operating in the EU
region. Both approaches are often seen in the literature (e.g, Sorenson and Wiechmann,
1975; Cavusgil et al., 1993).
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