Institutional Distances in International Marketing Article Critique

Pages: 2 (868 words)  ·  Bibliography Sources: 2  ·  File: .docx  ·  Level: College Senior  ·  Topic: Business

SAMPLE EXCERPT . . .
Firms can mimic their channel partners to gain legitimacy.

To prove their hypothesis, the researchers conducted personal interviews with two senior managers from Chinese firms that manufacture and export goods to various countries through foreign distributors. A total of 436 managers from 218 firms were asked to answer survey questions pertaining to their relationship with the distributor with which they conducted the highest volume of business. The multi-choice survey questions were designed to measure institutional distance at the organizational level, including regulatory, normative, and cross-cultural. Measurements were also taken of perceived legitimacy pressures and market ambiguity. The authors also measured the use of governance strategies to combat legitimacy-effectiveness challenges -- contract customization and relational governance. The research design also included measures of strategic, selling and economic performance within the channel. Firm size, transaction history and frequency with the distributor, asset specificity, environmental volatility, and the effects of state-owned manufacturers, an important institutional factor in China, were set as controls. All measurements were tested to ensure adequate convergent validity, limited bias, and satisfactory reliability.Download full Download Microsoft Word File
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Article Critique on Institutional Distances in International Marketing Assignment

Flaws in procedural design include, as the researchers discussed, the fact that only manufacturers were interviewed. Admittedly, a study that includes distributors would offer more breadth of insight and reveal the dynamic relationship between both parties. In addition, only direct exporters were included, not indirect. Studies in the future should explore those manufacturers who also face dual institutional pressures from business and consumer markets in foreign countries. Only organizational-level measures of institutional distance were explored. Including national-level measurements would open up the scope of this study and certain reveal cross-level effects of institutional distance. Finally, those manufacturers surveys tended to have positive relationships with their distributors. It would be interesting to survey those who are new entrants to foreign markets without established relationships, or those having less than ideal ones.

An analysis of the findings supports the hypothesis that firms can design governance strategies to deal with both legitimacy and efficiency issues when entering international markets. Participants who employed both contract customization and relational governance with host partners faired the best, again suggesting that a using a dual approach can work to improve a firm's competitive advantage. Employing governance strategies can allow firms to accomplish two goals -- safeguard performance while seeking social acceptance. This study supports this specific conclusion.

References

Lin, H. (2012). Strategic Alliances for Environmental Improvements. Business & Society, 51(2), 335-348. doi:10.1177/0007650312437918.

Yang, Z., Su, C., & Fam, K. (2012). Dealing with Institutional Distances in International Marketing Channels: Governance Strategies… [END OF PREVIEW] . . . READ MORE

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