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Volume 20 Number 5 2003 ISBN 0-86176-880-9 ISSN 0265-1335
International
Marketing
Review
International marketing in the Asia-Pacific region
Guest Editors: Paul Chao, Saeed Samiee and Leslie Sai-Chung Yip
www.emeraldinsight.com
International Marketing ISSN 0265-1335
Volume 20
Review Number 5
2003
International marketing in the Asia-Pacific region

Guest Editors
Paul Chao, Saeed Samiee and Leslie Sai-ChungYip
Access this journal online __________________________ 467

CONTENTS
Editorial advisory board ___________________________ 468
Abstracts and keywords ___________________________ 469
French abstracts___________________________________ 471
Spanish abstracts __________________________________ 474
Japanese abstracts_________________________________ 477
International marketing and the Asia-Pacific Region:
developments, opportunities, and research issues
Paul Chao, Saeed Samiee and Leslie Sai-Chung Yip ___________________ 480
Export market-oriented behavior and export
performance: the moderating roles of competitive
intensity and technological turbulence
John W. Cadogan, Charles C. Cui and Erik Kwok Yeung Li _____________ 493
The relationship between strategic type and firm
capabilities in Chinese firms
C. Anthony Di Benedetto and Michael Song __________________________ 514
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A cross-cultural comparison of Internet buying
CONTENTS behavior: effects of Internet usage, perceived risks,
continued and innovativeness
Cheol Park and Jong-Kun Jun _____________________________________ 534
The effect of FDI inflows and ICT infrastructure on
exporting in ASEAN/AFTA countries: a comparison
with other regional blocs in emerging markets
Taewon Suh and Omar J. Khan ___________________________________ 554
Awards for Excellence _____________________________ 572
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IMR EDITORIAL ADVISORY BOARD EDITORIAL REVIEW PANEL
David Ballantyne Dr Jim Bell
20,5 Melbourne Business School, Australia Magee College, University of Ulster, UK
Professor Jean J. Boddewyn Dr Roger Bennett
The City University of New York, USA London Guildhall University, UK
Dr Marylyn Carrigan Professor Paul Chao
University of Birmingham, UK University of Northern Iowa, USA
468 Professor Tevfic Dalgic Dr Irvine Clark III
University of Texas at Dallas, USA James Madison University, USA
Professor Adamantios Diamantopoulos Dr John B. Ford
Loughborough University Business School, UK Old Dominion University, Norfolk, USA
Professor Manucher Farhang Dr June Francis
Lulea University of Technology, Sweden Simon Fraser University, Burnaby, BC, Canada
Professor Krzysztof Fonfara Professor George T. Haley
Wielkopolska Business School, Poland University of New Haven, USA
Professor Nigel J. Holden Professor E. Kaynak
Copenhagen Business School, Denmark Pennsylvania State University, USA
Professor Constantine S. Katsikeas Professor Leonidas Leonidou
University of Wales, UK University of Cyprus, Cyprus
Sam Okoroafo Professor Dale Littler
University of Toledo, USA UMIST, UK
Professor Stan Paliwoda Professor Thomas J. Maronick
University of Birmingham, UK Towson State University, USA
Professor K.N. Rajendran Professor Hans Muhlbacher
The University of Northern Iowa, USA University of Innsbruck, Austria
Professor Ilkka Ronkainen Dr Helen Perks
Georgetown University, USA UMIST, UK
Professor Saeed Samiee Professor C.P. Rao
University of Tulsa, USA Kuwait University, Kuwait
Professor Bodo B. Schlegelmilch Professor Ronald Savitt
Wirtschaftsuniversität, Wien, Austria University of Vermont, USA
Professor Vern Terpstra Dr Vivienne Shaw
University of Michigan, USA University of Otago, New Zealand
Professor Sandra Vandermerwe Dr K. Sivakumar
Imperial College, University of London, UK Lehigh University, Pennsylvania, USA
Dr Chris Styles
University of New South Wales, Australia
Dr Isabelle Szmigin
University of Birmingham, UK
Professor Michael J. Thomas
University of Strathclyde, UK
Dr P.M. Williamson
Liverpool John Moores University, UK
Professor James E. Wills Jr
University of Hawaii, USA
International Marketing Review

Vol. 20 No. 5, 2003
p. 468
# MCB UP Limited
0265-1335
International marketing and the predictors of several dimensions of export Abstracts and
Asia-Pacific Region: developments, performance. In particular, it appears that this
opportunities, and research issues behavior is most important for exporters keywords
Paul Chao, Saeed Samiee and operating under conditions of high
Leslie Sai-Chung Yip environmental turbulence. The export
market-oriented behavior – export
Keywords Asia-Pacific,
performance relationship for these firms, was
Electronic commerce, Brands,
generally positive and strong. However, under 469
Multinational companies,
conditions of low environmental turbulence,
International marketing
the costs of developing and implementing high
This study is motivated by the theme of this levels of export market-oriented behavior may
special issue of International Marketing outweigh the benefits accrued.
Review, which highlights the enormous
economic success of Asia-Pacific nations and
their emergence as global marketers of the
twenty-first century. The success of firms
situated in these nations has been even more
pronounced since the 1990. This study The relationship between strategic type
highlights international marketing and firm capabilities in Chinese firms
developments, opportunities, and research
issues that warrant closer attention. In C. Anthony Di Benedetto and Michael Song
examining the topic, highlights a number of Keywords Strategic choices,
important developments including Company performance, China,
technological innovations, the penetration Strategic management, Decision making
and influence of the Internet and electronic Proposes that firms of different Miles and
commerce in the region, the emergence of Snow strategic types will have different
Asian multinational companies, the bundles of firm-level capabilities; that is,
development of Asian brands, the certain capabilities will be more important to
importance of relationships and networks for certain strategic types. Specifically, proposes
firms in this region, and their greater that prospectors have greater relative
international integration and cooperation inside-out capabilities and information
with the rest of the world. International technology capabilities, while defenders have
marketing research considerations pertaining greater relative outside-in capabilities and
to the Asia-Pacific Region are explored in each marketing capabilities. Empirically tests, and
section, as well as in the conclusions. finds support for, the propositions using a
data set of 245 Chinese firms, comprised
mostly of state-owned enterprises.
Export market-oriented behavior and Understanding the Chinese business
export performance: the moderating environment is of importance to businesses
roles of competitive intensity and around the world as the Chinese economy
technological turbulence undergoes rapid expansion and
decentralization of strategic decision making
John W. Cadogan, Charles C. Cui and
to the level of the state-owned enterprise. As
Erik Kwok Yeung Li
the central government takes on a lesser role
Keywords Export markets, Behaviour, in the management of enterprises, and Chinese
Environmental regulations, Hong Kong enterprise managers become more responsible
This study examines the issue of how export for their own strategic decision making, a clear
market-oriented behaviors influence export understanding of the enterprise’s specific
success. Using survey data obtained from capabilities and advantages is required in International Marketing Review
Hong Kong based manufacturing exporters, order to achieve sustained competitive Vol. 20 No. 5, 2003
Abstracts and keywords
our findings suggest that export advantage. Concludes by discussing q MCB UP Limited
market-oriented behaviors are important managerial implications. 0265-1335
IMR A cross-cultural comparison of Internet The effect of FDI inflows and ICT
buying behavior: effects of Internet infrastructure on exporting in
20,5 usage, perceived risks, and ASEAN/AFTA countries: a comparison
innovativeness with other regional blocs in emerging
Cheol Park and Jong-Kun Jun markets
Keywords Internet marketing, Taewon Suh and Omar J. Khan
470 Republic of South Korea, Keywords Foreign exchange options,
United States of America, Perceived risks, Export markets, Globalization
Innovation, Online catalogues This paper explores the impact of both the
This research attempted to examine increase in foreign direct investment inflows
differences in Internet usage, Internet and the increase in information and
innovativeness, perceived risks of Internet communication technology infrastructure
buying, and Internet buying behaviors investments on exporting in ASEAN nations
between Korea and America, and to identify (the trade bloc of which is known as AFTA)
a model for factors influencing Internet compared with two other major trade blocs:
buying behavior, explained by Internet CEFTA and LAIA. The analyses are based on
usage, perceived risks, and innovativeness data from a cross section of countries (26
on a cross-cultural basis. Results showed that emerging markets from three trade blocs) over
there were significant differences in Internet time (from 1995 to 2000). The results show that
usage and the perceived risks of Internet the increase of investments in ICT
shopping, but no significant differences in infrastructure yields positive and significant
Internet buying intentions or online buying returns in the national exporting level only for
experience between Korean and American the ASEAN/AFTA and CEFTA sample.
consumers. Nonetheless, analyzing a Interestingly, the impact of the increase of
regression model of factors influencing FDI inflows on export is significant only in the
Internet buying behavior, and cultural CEFTA and LAIA samples. These results are
differences in effects of Internet usage and discussed in the light of the different economic
perceived risks on Internet buying behavior experiences of these trade blocs, noting that
were found. While there were main effects of variations are typically present between
Internet usage and perceived risk on Internet individual countries. Overall, reflecting the
buying behavior, these effects were weaker or results from this study, research concerned
even opposite to those related to Korean with the determinants of national exporting
samples. The implications of the study are level should be conducted independently, along
discussed and further research suggested. with regional and national characteristics.
French abstracts French abstracts
Mercatique Internationale et la Région d’Asie Pacifique: développements,
possibilités et questions de recherche
Paul Chao, Saeed Samiee et Leslie Sai-Chung Yip
Mots-clés Asie Pacifique, Commerce électronique, Marques, Sociétés multinationales,
Mercatique internationale 471
L’étude que voici est motivée par le thème du numéro spécial que voici de la Revue
Internationale de Mercatique, qui met en évidence le succès économique énorme remporté par
les nations d’Asie Pacifique et leur apparition en tant que mercaticiens du vingt-et-unième siècle
au niveau mondial. Le succès des entreprises établies dans ces nations est de plus en plus
prononcé depuis les années 1990. L’étude que voici met en évidence les développements en
mercatique internationale, les possiblitiés qui s’offrent et les questions de recherche qui méritent
d’être considérées de plus près. En examinant le sujet, nous soulignons toute une série de
développpements importants, notamment les innovations technologiques, la pénétration et
l’influence de l’Internet et du commerce électronique dans la région, l’apparition de sociétés
multinationales asiatiques, le développement de marques asiatiques, l’importance des rapports
et des réseaux pour les firmes établies dans la région en question, ainsi que l’accroissement de
leur intégration internationale et de leur coopération avec le reste du monde. Nous explorons
dans chaque section, ainsi que dans nos conclusions, les considérations de recherche en
mercatique internationale, qui ont trait à la région d’Asie Pacifique.
Comportement d’exportation orienté vers le marché et performance à

l’exportation: les rôles modérateurs de l’intensité compétitive et de la turbulence
technologique
John W. Cadogan, Charles C. Cui et Erik Kwok Yeung Li
Mots-clés Marchés d’exportation, Comportement,
Règlements concernant l’environnement, Hong Kong
L’étude que voici examine la question de savoir comment les comportements d’exportation
orientés vers le marché influencent le succès des exportations. Nous nous sommes servis de
données obtenues au moyen d’un sondage entrepris auprès de fabricants exportateurs établis à
Hong Kong; nos résultats suggèrent que les comportements d’exportation orientés vers le
marché constituent des facteurs importants permettant de prédire plusieurs dimensions de la
performance à l’exportation. Il semble surtout que ce comportement soit le plus important pour
les exportateurs fonctionnant dans des conditions de haute turbulence écologique. D’une
manière générale, il y avait, pour ces entreprises, un rapport positif et puissant entre le
comportement d’exportation orienté vers le marché et la performance à l’exportation.
Cependant, dans des conditions de turbulence écologique faible, les coûts représentés par le
développement et la mise en pratique de niveaux élevés de comportement d’exportation orienté
vers le marché risquent de dépasser les avantages retirés.
Le rapport qui existe entre le type stratégique et les capacités de la firme dans les
firmes chinoises
C. Anthony Benedetto et Michael Song
Mots-clés Choix stratégiques, Performance de l’entreprise, Chine, Gestion stratégique,
Prise de décisions Vol. 20 No. 5, 2003
French abstracts
Dans l’étude que voici, nous proposons que les firmes appartenant à différents types # MCB UP Limited
stratégiques, selon Miles et Snow, auront différents lots de capacités au niveau de la firme; c’est- 0265-1335
IMR à-dire que certaines capacités seront plus importantes pour certains types stratégiques. Plus
particulièrement, nous proposons que les prospecteurs possèdent de plus grandes capacités
20,5 d’externalisation relatives et de plus grandes capacités informatiques, tandis que les défendeurs
ont de plus grandes capacités d’internalisation relatives et de plus grandes capacités de
mercatique. Nous mettons nos propositions à l’essai de manière empirique et les renforçons par
des preuves, en nous servant d’un ensemble de données provenant de 245 firmes chinoises,
comprenant surtout des entreprises de l’état. Il importe que les firmes dans le monde entier
472 comprennent l’environnement commercial chinois, tandis que l’économie chinoise subit une
expansion rapide et une décentralisation de la prise de décisions stratégiques au niveau de
l’entreprise de l’état. Tandis que le gouvernement central assume un rôle réduit dans la gestion
des entreprises et que les directeurs d’entreprises chinoises deviennent de plus en plus
responsables pour leur propre prise de décisions stratégiques, il s’agit de comprendre clairement
les capacités et avantages spécifiques à l’entreprise, afin d’obenir un avantage compétitif
durable. Nous concluons en discutant les implications pour les directeurs d’entreprises.
Une comparaison transculturelle du comportement d’achat par Internet: effets de

l’utilisation de l’Internet, risques perçus et caractère innovateur
Cheol Park et Jong-Kun Jun
Mots-clés Mercatique par Internet, république de la Corée du sud, États-Unis, Risques perçus,
Innovation, Catalogues en ligne
La recherche que voici s’efforce d’examiner les différences qui existent, entre la Corée et
l’Amérique, dans l’utilisation de l’Internet, le caractère innovateur de l’Internet, les risques
perçus que posent les achats par l’Internet, et les comportements d’achat par Internet; elle
cherche à identifier un modèle pour les facteurs qui influencent le comportement d’achat par
Internet, tel qu’il est expliqué par l’utilisation de l’Internet, les risques perçus et le caractère
innovateur, sur une base transculturelle. Nos résultats indiquaient qu’il y avait de grosses
différences dans l’utilisation de l’Internet et les risques perçus des achats par Internet, entre les
consommateurs coréens et américains, mais qu’il n’existait aucune différence importante dans
les intentions d’achat par Internet ou l’expérience d’achat en ligne. Cependant, en analysant un
modèle de régression des facteurs qui influencent le comportement d’achat par Internet, nous
avons trouvé des différences culturelles dans les effets de l’utilisation de l’Internet et les risques
perçus sur le comportement d’achat par Internet. Tandis qu’il s’agissait des effets principaux de
l’utilisation de l’Internet et des risques perçus du comportement d’achat par Internet, ces effets
étaient plus faibles, ou même contraires, par rapport aux effets ayant trait aux échantillons
coréens. Nous avons discuté les implications de l’étude et suggéré des recherches
supplémentaires.
L’effet produit par les afflux d’investissements directs étrangers et

l’infrastructure pour la technologie de l’information et de la communication sur les
exportations dans les pays de l’ANASE/AFTA: une comparaison avec d’autres
blocs régionaux dans les marchés naissants
Taewon Suh et Omar J.Khan
Mots-clés Options de change, Marchés d’exportation, Globalisation
L’article explore l’impact produit sur les exportations dans les nations ANASE (dont le bloc
commercial est connu sous le nom d’AFTA Zone de Libre-Échange Asiatique) par les afflux
croissants d’investissements directs étrangers et l’augmentation des investissements en
infrastructure pour la technologie de l’information et de la communication, par rapport à
deux autres blocs commerciaux principaux: l’ALECE et la LAIA (Association latino-américaine French abstracts
d’intégration). Les analyses se fondent sur des données provenant d’un groupe représentatif de
pays (26 marchés naissants appartenant à trois blocs commerciaux) au cours d’une période
déterminée (de 1995 à 2000). Les résultats indiquent que l’augmentation des investissements en
infrastructure pour la technologie de l’information et de la communication ne produit des
résultats positifs et significatifs dans le niveau d’exportation national que pour l’échantillon de
l’ANASE/AFTA et de l’ALECE. Ce qui est intéressant, c’est que l’impact produit par les afflux
croissants d’investissements directs étrangers sur les exportations n’est important que dans les 473
échantillons ALECE et LAIA. Nous discutons ces résultats à la lumière des différentes
expériences économiques de ces blocs commerciaux, en observant qu’il existe des variations
typiques entre les divers pays. Dans l’ensemble, pour refléter les résultats de cette étude, toute
recherche traitant des facteurs qui déterminent le niveau d’exportation national devrait être
menée indépendamment et inclure les caractéristiques régionales et nationales.
IMR Spanish abstracts
20,5
Marketing internacional y la región de Asia-Pacı́fico: desarrollos, oportunidades y
cuestiones de investigación
Paul Chao, Saeed Samiee y Leslie Sai-Chung Yip
474 Palabras clave Asia-Pacı́fico, comercio electrónico, marcas, empresas multinacionales,
marketing internacional
Este estudio está motivado por el tema de esta edición especial de International Marketing
Review, que destaca el enorme éxito económico de las naciones de Asia-Pacı́fico y su
surgimiento como comercializadoras globales del siglo XXI. El éxito de las empresas situadas
en estas naciones ha sido aún más pronunciado desde 1990. Este estudio destaca los desarrollos,
oportunidades y cuestiones de investigación del marketing internacional que merecen una
mayor atención. Al examinar el tema, ponemos de relieve una serie de desarrollos importantes,
incluyendo innovaciones tecnológicas, la penetración e influencia de Internet y el comercio
electrónico en la región, el surgimiento de empresas multinacionales asiáticas, el desarrollo de
marcas asiáticas, la importancia de las relaciones y las redes para las empresas de esta región, y
su mayor integración y cooperación internacional con el resto del mundo. Se exploran
consideraciones de investigación del marketing internacional relacionadas con la región de
Asia-Pacı́fico en cada sección, ası́ como en nuestras conclusiones.
Comportamiento orientado hacia el mercado de exportación y rendimiento de

exportación: las funciones moderadoras de la intensidad competitiva y la
turbulencia tecnológica
John W. Cadogan, Charles C. Cui y Erik Kwok Yeung Li
Palabras clave Mercados de exportación, comportamiento, reglamentos medioambientales,
Hong Kong
Este estudio examina la cuestión de cómo los comportamientos orientados hacia el mercado de
exportación influyen sobre el éxito exportador. Nuestros descubrimientos, utilizando datos de
encuestas obtenidos de exportadores fabriles ubicados en Hong Kong, sugieren que los
comportamientos orientados hacia el mercado de exportación son pronosticadores importantes
de varias dimensiones del rendimiento exportador. En particular, parece que dicho
comportamiento es más importante para exportadores que operan bajo condiciones de gran
turbulencia medioambiental. El comportamiento orientado hacia el mercado de exportación la
relación de rendimiento exportador de estas empresas fue generalmente positivo y fuerte. No
obstante, bajo condiciones de baja turbulencia medioambiental, los costes de desarrollar e
implantar niveles altos de comportamiento orientado hacia el mercado de exportación pueden
superar los beneficios obtenidos.
La relación entre el tipo estratégico y las capacidades empresariales en empresas

chinas
C. Anthony Benedetto y Michael Song
Palabras clave Elecciones estratégicas, rendimiento empresarial, China, gestión estratégica,
Vol. 20 No. 5, 2003
toma de decisiones
Spanish abstracts
# MCB UP Limited
En este estudio, proponemos que las empresas de diferentes tipos estratégicos de Miles y Snow
0265-1335 poseerán diferentes grupos de capacidades a nivel de empresa; es decir, ciertas capacidades
serán más importantes para ciertos tipos estratégicos. Especı́ficamente, proponemos que las Spanish
prospectoras tienen mayores capacidades relativas de ‘‘dentro-fuera’’, ası́ como capacidades
informáticas, mientras que las defensoras tienen mayores capacidades relativas de ‘‘fuera- abstracts
dentro’’ y capacidades de marketing. Ensayamos empı́ricamente, y encontramos apoyo para
nuestras proposiciones, utilizando un conjunto de datos de 245 empresas chinas compuestas
principalmente por empresas propiedad del estado. Comprender el entorno de negocios chino es
importante para los negocios de todo el mundo, a medida que la economı́a china realiza una
rápida expansión y descentralización de la toma de decisiones estratégicas, hasta el nivel de las 475
empresas propiedad del estado. A medida que el gobierno central desempeña una menor
función dentro de la gestión de empresas, y los gerentes empresariales chinos se hacen más
responsables de su propia toma de decisiones estratégica, se requiere un entendimiento claro de
las capacidades y ventajas especı́ficas de la empresa para lograr una ventaja competitiva
sostenida. Concluimos con una discusión de las implicaciones gestoras.
Una comparación transcultural del comportamiento de compra por Internet:

efectos del uso de Internet, riesgos percibidos e innovación
Cheol Park y Jong-Kun Jun
Palabras clave Marketing de Internet, república de Corea del sur, EE UU, riesgos percibidos,
innovación, catálogos en lı́nea
Esta investigación intentó examinar las diferencias en el uso de Internet, el carácter innovador
de Internet, los riesgos percibidos de la compra por Internet, y los comportamientos de compra
por Internet, entre Corea y América, ası́ como identificar un modelo para factores que influyen
sobre el comportamiento de compra por Internet, explicado por el uso de Internet, los riesgos
percibidos y el carácter innovador, sobre una base transcultural. Nuestros resultados mostraron
que existı́an diferencias significativas en el uso de Internet y en los riesgos percibidos de la
compra por Internet, pero no diferencias significativas en las intenciones de compra por Internet
o la experiencia de compra en lı́nea, entre los consumidores coreanos y americanos. No obstante,
se descubrieron diferencias analizando un modelo de regresión de factores que influyen sobre el
comportamiento de compra por Internet, y diferencias culturales en los efectos del uso de
Internet y los riesgos percibidos en el comportamiento de compra por Internet. Aunque se
observaron efectos principales del uso de Internet y el riesgo percibido en el comportamiento de
compra por Internet, dichos efectos fueron más débiles o incluso opuestos a aquellos
relacionados con las muestras coreanas. Las implicaciones del estudio se discutieron y se
sugirió mayor investigación.
El efecto de entradas de IED e infraestructura de TCI al exportar a paı́ses de

ASEAN/AFTA: una comparación con otros bloques regionales en mercados
emergentes
Taewon Suh y Omar J. Khan
Palabras clave Opciones de cambio extranjero, mercados de exportación, globalización
Este trabajo explora el impacto de las entradas de inversión extranjera directa (IED) y el
aumento de las inversiones en infraestructura de tecnologı́a de comunicaciones e informática
(TCI), sobre la exportación en naciones ASEAN (el bloque comercial conocido como AFTA) en
comparación con otros dos bloques comerciales importantes: CEFTA y LAIA. Los análisis se
basan en datos tomados de una sección transversal de paı́ses (26 mercados emergentes de tres
IMR bloques comerciales) a través del tiempo (de 1995 a 2000). Los resultados muestran que el
incremento de las inversiones en infraestructura de TCI ofrece unos beneficios positivos y
20,5 significativos en el nivel de exportación nacional, sólo en la muestra ASEAN/AFTA y CEFTA.
Peculiarmente, el impacto del aumento de entradas de IED en la exportación sólo es
significativo en las muestras de CEFTA y LAIA. Estos resultados se discuten a la luz de las
diferentes experiencias económicas de estos bloques comerciales, observando que tı́picamente
se producen variaciones entre paı́ses individuales. En general, reflejando los resultados de este
476 estudio, deberı́a realizarse independientemente investigación relacionada con los determinantes
del nivel de exportación nacional, junto con las caracterı́sticas regionales y nacionales.
Japanese abstracts Japanese
abstracts
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# MCB UP Limited
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The Emerald Research Register for this journal is available at The current issue and full text archive of this journal is available at
http://www.emeraldinsight.com/researchregister http://www.emeraldinsight.com/0265-1335.htm
IMR
20,5 International marketing and
the Asia-Pacific Region
480
Developments, opportunities, and
research issues
Paul Chao
University of Northern Iowa, Department of Marketing, Cedar Falls,
Iowa, USA
Saeed Samiee
College of Business Administration, The University of Tulsa, Tulsa,
Oklahoma, USA, and
Leslie Sai-Chung Yip
Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong
Keywords Asia-Pacific, Electronic commerce, Brands, Multinational companies,
Abstract This study is motivated by the theme of this special issue of International Marketing
Review, which highlights the enormous economic success of Asia-Pacific nations and their
emergence as global marketers of the twenty-first century. The success of firms situated in these
nations has been even more pronounced since the 1990. This study highlights international
marketing developments, opportunities, and research issues that warrant closer attention. In
examining the topic, highlights a number of important developments including technological
innovations, the penetration and influence of the Internet and electronic commerce in the region,
the emergence of Asian multinational companies, the development of Asian brands, the
importance of relationships and networks for firms in this region, and their greater international
integration and cooperation with the rest of the world. International marketing research
considerations pertaining to the Asia-Pacific Region are explored in each section, as well as in the
conclusions.
Over the last two decades an increasing number of Asian economies have
adopted new economic policies that have bolstered their presence in the global
marketplace. This development has received a great deal of press coverage and
academicians are demonstrating greater interest in pursuing Asia-specific
projects. Despite such coverage, little attention seems to have been paid to
certain key developments in Asian economies that have positioned them for an
even greater success in the years to come.
An even sharper focus on Asia is timely and warranted for several reasons.
As these markets are culturally and geographically removed from the
Vol. 20 No. 5, 2003
pp. 480-492
traditional business centers of North America and Europe, detailed knowledge
q MCB UP Limited with respect to prevailing conditions in Asian markets is diluted and vague, if
0265-1335
DOI 10.1108/02651330310498744 not lacking. Information flow with regard to social, legal, and technological
progress in Asia continues to be limited. Furthermore, Asian markets include International
the two most populous nations of the world, which possess over one-third of the marketing
world’s population as well as enormous natural and human resources. More
importantly, key Asian markets are developing at an accelerated rate that is
rapidly expanding demand for all types of products and services. Concomitant
with these developments is the need to pursue an intensive research agenda in
Asia-Pacific contexts.
481
In this article, we aim to explore the developments, the opportunities, and the
future research possibilities in Asian markets. Among others, we advocate the
need for a greater focus on Asia-Pacific research projects. Such an aggressive
research agenda includes an (re)examination of existing and new concepts and
theories to validate them within Asia-Pacific contexts. By extension, such
investigations also enrich our understanding of, and appreciation for, this very
important region of the world. Clearly, given the vastness of the region and the
presence of many different cultures and economic and political dynamics, we
will only highlight the main elements pertaining to a few markets, rather than
offering a comprehensive set of research topics or a full account of the events
on the continent.
In particular, we will focus on developments and conditions which will have
a significant influence on market opportunities in Asia. In doing so, we
examine Asian-based technological innovations, the penetration and influence
of the Internet and electronic commerce (e-commerce) in the region, the
emergence of Asian multinational companies (MNCs), the development of
Asian brands, the importance of relationships and networks, and the region’s
greater international integration and cooperation with the rest of the world. In
exploring each topic, we propose several research questions that will help shed
light on important international marketing issues pertaining to Asia-Pacific.
Technological innovations
Asian economies have dominated the market in a number of existing and
emerging markets. Two examples from Japan demonstrate both the
technological capability and the marketing savvy of Asian firms. In the
mobile telephone market, NTT DoCoMo has been a clear leader in developing
and marketing online telephones. The enormous success of the firm is reflected
in the significant market penetration of DoCoMo telephones among the
Japanese. NTT DoCoMo has now developed the third generation of mobile
telephones (3G) and is introducing it into global markets.[1] Another example is
the Japanese firms’ dominance in electronic games that were initially
envisioned and developed by US firms (e.g. Atari and ColecoVision), but were
manufactured in Asia. Such firms as Nintendo, Sega, and Sony have been
uncontested leaders in this industry for nearly two decades. Although some
competition from North America is now forthcoming, Japan continues to
possess the lion’s share of the market. Indeed, attempts by such late-entrants as
IMR Microsoft Xbox to compete in the crowded Japanese game console and software
20,5 markets demonstrate how much US multinationals are following the lead of
Asian firms while signifying the importance of Asian markets (Wildstrom,
2001).
Technological innovations based in Singapore and Taiwan have also set the
stage for greater influence in the shape of things to come. A Singaporean firm,
482 Creative Technologies, for example, is the world’s largest maker of computer
sound cards and its SoundBlaster card has become the standard for PC audio.
The technological capabilities of Asian markets are backed by efficient and
low-cost manufacturing facilities and a large army of highly trained engineers
and production workers. Malaysia, for example, has been the leading producer
of memory chips for many years. Taiwan and Korea manufacture laptop
computers under various well-known global brands of computers throughout
the world. In China, Legend was initially a distributor of foreign PCs, but
started manufacturing and selling its own computers in 1990 (Powell, 2002).
Today, with its 28 percent market share, Legend is a formidable competitive
force in the rapidly growing Chinese PC market (Knowledge@Wharton, 2003).
According to IDC, Legend’s closest foreign competitor, Dell, with a
manufacturing plant in China, had a market share of less than 6 percent at
the end of 2002.
These developments and conditions point to the technological agility and
savvy in Asian markets. Western markets can no longer claim a technological
monopoly that drives many products. If for no other reason, by virtue of
controlling downstream activities, Asian countries can exert much influence on
what is produced and how it is produced and marketed, and can introduce or
even impose product standards and features for world markets.
The dominance of Asian competitors in technology markets has largely
gone unnoticed. It is noteworthy, for example, that seven out of the top ten
global information technology (IT) firms (based on their performance over the
last 12 months) are located in Southeast Asia (BusinessWeek, 2002a). The USA
continues to be a major force in IT markets, but Asian countries are gaining
fast. Just over one-half (51) of the firms in the list of top 100 IT firms are
US-based.
In spite of such technological advances, consumers in the West continue to
hold poor or negative perceptions of products from most Asian countries. It is
no secret that many Western consumers are leery of products manufactured in
most Asian countries. However, Asian firms and governments are aware of this
deficiency and have instituted quality processes and programs to address this
shortcoming. Not surprisingly, they are increasingly noticed by such
authoritative sources as Consumer Reports (Lundegaard, 2003).
Korea and Taiwan, among other Asia-Pacific nations, are understandably
frustrated by the negative public perceptions regarding their products. In an
attempt to counteract this negative bias, Taiwan has engaged in a series of
government-sponsored media campaigns in the USA to promote the quality of International
their products by reinforcing the notion that they are “very well made in marketing
Taiwan”. The question of whether such government-sponsored media
campaigns are effective in reassuring consumers remains to be answered.
China’s successful bid to host the 2008 Olympic games (the third Asian
country to do so in recent years after Japan and Korea) offers a great
opportunity for extending country image studies in a Chinese context. Indeed,
483
an interesting research question might address whether the additional
visibility gained by staging the Olympic games offers China a significant boost
to its image and, by extension, to its products. With the exception of a study by
Jaffe and Nebenzahl (1993), no study has addressed the issue of how special
international events may influence product/country images of an Asian
country. In this regard, two research questions are worthy of consideration.
The first question concerns whether there are country equity or image
improvements associated with such special international events. For example,
did the image of Korea improve as a result of its recent co-hosting of the World
Cup? The second question concerns whether the international standing or
equity of brands manufactured or associated with the host country
simultaneously improves. Both questions offer an opportunity to design and
implement longitudinal studies that address these topics.
Embracing the Internet and e-commerce

Despite governmental controls in some Asian countries, the Internet has
become an integral part of daily lives in some markets. Such countries as Japan,
Hong Kong SAR (HK), and Singapore have made enormous investments in IT
and, as a result, e-commerce is very much integrated into firms’ operations and
consumer lifestyles. Available data indicate that Korea and Japan are ranked
second and third in terms of broadband connection to the Internet (seven
million and two million, respectively, versus ten million for the US). In fact, of
the 28 million total global subscribers to broadband Internet service, over 12
million are in Asia, most of which are located in Southeast Asian nations. HK
tops the list in terms of the percentage in its population with fast connection to
the Internet. In fact, the results of a ten-country survey involving 11,410
consumers has demonstrated HK people’s relatively high level of sophistication
in and enthusiasm for the Internet and e-commerce (American Express, 2000).
The survey reveals that HK residents lead the other countries in terms of the
influence of the Internet on how they view shopping and banking. Further,
more HK residents associate convenience with shopping and banking on the
Internet than other nations included in the study[2]. Concurrently, HK has the
lead, or is close to the leading country in terms of using the Internet for
entertainment, information searches, shopping, e-mail, travel information and
reservations, banking and financial transactions, and monitoring credit card
statements. A high level of reliance on the Internet potentially signifies the
IMR emergence of a new or modified cultural environment in the more advanced
20,5 Asia-Pacific countries, wherein impersonal modes of shopping and banking
have gained acceptance. Given the very personal and relatively high context
nature of cultures in the region, academic research is needed to uncover how
this trend is influencing aspects of international marketing, in particular
contract negotiation, supply chain management, and distribution strategies.
484 The emergence and quick penetration of 3G systems in Asian nations is
likely to result in a more rapid growth of e-commerce in this region than in
other countries. This is in part because of the rapid penetration of mobile
telecommunications in such important markets as Japan, Korea, and China. In
Korea, for example, about 64 percent of the population carry a mobile telephone
and the three mobile telephone firms there (KT Freetel, SK Telecom, and LG
TeleCom) are rapidly implementing the 3G system which offers rapid, ongoing
Internet connection (Moon, 2002). China Mobile (HK) has just announced its
intended launch of its 3G Systems ahead of it rivals in the US or Europe. The
existing success and deep market penetration of NTT DoCoMo in an increasing
number of markets, along with Korean firms conversion to 3G, affords them
leadership in an increasingly influential area of e-commerce.
Market potential for IT and e-commerce is unevenly distributed across
Asian nations. Such markets as Japan and Singapore, where Internet
infrastructures are well-developed, face relatively lower global e-commerce
growth rates. Emerging markets like Korea and Taiwan, where Internet
infrastructures are also fully developed, but unlike countries such as Japan,
production costs are still competitive, are prime candidates for realizing a more
rapid growth in global e-commerce. Figure 1 demonstrates the global
e-commerce potential of a sample of Asia-Pacific nations.
The rapid diffusion of wireless technology and the concomitant emergence
of e-commerce in the region should generate much interest in this line of
research. For example, the international product life cycle theory (IPLC) posits
that new technologies are first developed and introduced in advanced
industrialized countries. Once production outstrips demand in the initiating
country, these products are exported. The Internet and e-commerce have the
potential of either modifying or changing the traditional IPLC view. Research
projects in this regard can illuminate the impact of e-commerce on how
innovations are globally adopted and traded.
Figure 1.
The influence of IT
penetration on the
growth of global
e-commerce
Whereas various reports have indicated rapid growth in the number of Asian International
online consumers (NUA, 2002a, b), consumer evaluation of online service marketing
qualities has received only modest attention. Since its development in the
1980s, the SERVQUAL scale has guided research for consumer services
evaluations in the US (Parasuraman et al., 1985, 1988). Recent research has
extended the application of this scale to the e-commerce arena (Lociacono et al.,
2000; Zeithaml et al., 2002a). In addition to the unresolved issue of the
485
underlying differences in service quality constructs associated with different
modes of service delivery, the question of whether these constructs are
universal and appropriate for use in a broad range of international markets
remains critical for international marketers and offers additional opportunities
for research. For example, cross-cultural differences may influence the ways in
which Asian consumers evaluate web sites and this issue has not received
adequate attention.
The emergence of Asian MNCs

For over two decades, Japanese MNCs have increasingly established footholds
in markets around the world. Sony, Matsushita, Kyocera, Toyota, and Nissan
are among global leaders in their respective industries and it is routine to note
these firms’ names and activities in various media. What is increasingly visible
in the business press, however, is the emergence of MNCs based in other Asian
countries. For example, Haier of China, Samsung and LG of Korea, Samling
Malaysia and Malayan WTK, and Acer, a Taiwanese firm headquartered in
Singapore, are some of the relatively recent additions to the list of MNCs. These
growing enterprises have served as suppliers to firms around the world for
many years. Increasingly, however, they are moving their production facilities
closer to their markets with the hope of gaining a foothold in key markets
and/or integrating their operations downstream. Asian MNCs have
aggressively pursued emerging markets around the world by establishing an
increasing number of assembly and manufacturing facilities. Conditions in
these markets are more risky, but competition is less intense and markets are
generally undeveloped insofar as the availability of good quality, good value
products are concerned.
Samsung, under CEO Yun Jong Yong, has been transformed into a
multinational powerhouse. Samsung is currently the No. 1 of the four major
Korean chaebols and maintains manufacturing facilities in 14 countries,
including China and Mexico (Holstein, 2002). Today Samsung generates 70
percent of its revenues from outside of Korea.
Acer, for example, has aggressively pursued markets in Central and Eastern
Europe. Acer opened a small representative office in Moscow in 1993 to develop
a network of distributors (Bruton and Samiee, 1998). With its manufacturing
facilities in Taiwan, it had a relatively long lead time for delivery, which eroded
its competitive edge. In addition, a shorter lead time between assembly and
IMR delivery would reduce costs and permit Acer to be more price-competitive.
20,5 Given the high risks associated with locating a plant in Russia, Acer decided to
set up its operations for Central and Eastern Europe close to but away from the
turbulent Russian business environment. Today, their manufacturing facilities
in Lappeenranta, Finland are their main source of supply for the emerging
countries of Europe as well as for the adjacent developed nations of the
486 continent.
Other Asian MNCs are also rapidly learning how to leverage their global
competencies to remain globally competitive. Samsung, for example, maintains
production facilities in both Korea and China. Lower paid Chinese employees
work in the Korean plant and more skilled and experienced Korean employees
provide managerial leadership in the Chinese plant (Booth, 2002). To benefit
from lower costs of manufacturing in China, an increasing number of
Taiwanese firms have turned to the practice of processing orders in Taiwan,
but shipping goods out of their plants in China. Research on global marketing
strategies deployed by Asian MNCs is needed to fill this gap in the literature.
Finally, there are an increasing number of very capable domestic firms that are
expected to enter the international arena in the short term. Legend Computers
of China is but one example. Through its QDI subsidiary, Legend is already
engaged in selling parts and components in Europe and Asia
(Knowledge@Wharton, 2003). Likewise, China’s TCL (market share 8.1
percent) has passed Siemens (6.9 percent) and Samsung (6.3 percent) to
become China’s third-largest cellular handset vendor after Motorola (28
percent) and Nokia (22.4 percent) (The Economist, 2003; Einhorn et al., 2003). In
all, 36 manufacturers, including Ningbo Bird, Amoisonic, and Huawei are now
competing in the Chinese mobile telephone market, thus creating an enormous
competitive pressure in the domestic market. The competition is so intense that
it has virtually driven out several foreign brands, including Ericsson of
Sweden. The implication of such developments for Motorola, Nokia, and other
MNCs is clear.
Brand development
Widely recognized regional and global brands are essential in competing
internationally. With the notable exception of Japanese firms that possess a
substantial number of well-known, publicized, and respected brands and
several Korean firms that are marketing their brands internationally, Asian
firms have not devoted sufficient attention and resources to developing
regional or global brands (Doebele, 2002). The reason for the limited presence of
international Asian brands is in part historical. Many Asian firms continue to
serve as subcontractors or contractors to firms abroad and manufacture high
quality products under other well-known brands. Figure 2 demonstrates the
relationship between global branding and key market access/entry strategies
pursued by Asian countries. Given the large number of MNCs headquartered in
Japan, the nation is unique in the region. Japanese MNCs are clearly global International
marketers in every sense of the term. Others, like Korea and Taiwan, which marketing
continue to generally rely on contract manufacturing and exporting, have
developed some global brands, but much more is necessary for them to be able
to compete effectively against other global giants. Countries like India, on the
other hand, are almost entirely reliant on unbranded raw material exports or
contract manufacturing with hardly any international, let alone global, brands. 487
This practice has served firms in the region well for several decades.
However, this is an area to which substantial resources must be committed if
Asian firms are to replicate the success demonstrated by Japan. The
development of globally recognized brands is essential if these firms are to
differentiate their products, to penetrate consumer and business markets, and
to enjoy larger margins and market shares.
Asian firms are aware of the importance of international brands and are
gradually developing brands that are widely recognized. A handful of firms
have already established admirable brands and positions within their
respective industries. Singapore Airlines’ brand, for example, is synonymous
with utmost quality in service and travel experience. Likewise, Cathay Pacific
Airways’ brand image flawlessly ties in with Hong Kong’s image as one of the
most vibrant cities in the world, as well as with a high quality service. Not
surprisingly, these brands are rated as the second and fifth best known Asian
brands (The Great Asian Brands Survey, 2002). Other well-known international
brands based in Asia Pacific countries include Shangri-La Hotels (ranked 4),
San Miguel beer (The Philippines, ranked 6), and Creative Technologies
(Singapore, ranked 8). Other brands outside Japan and Korea are much lesser
known internationally but several promising ones are on the horizon: Lee Kum
Kee, Hello Kitty, Singha Beer, G2000 (HK-made apparel), Maggi, and Royal
Selangor Pewter (Malaysia) (Flannery, 2001).
China, with its very large market, has the potential to quickly turn
successful domestic brands into internationally competitive ones. Haier
appliances from China, for example, with plants in 13 countries, are rapidly
gaining a foothold in 160 countries, including the USA (Flannery, 2001). With a
27.7 percent market share in 2002, Legend Computer is the largest
manufacturer of PCs in China – a market that will soon overtake Japan as
the second largest market (Knowledge@Wharton, 2003). Furthermore, Legend
has already established a respectable name for itself by offering high quality,
good service, and value.
Figure 2.
strategy and global
branding
IMR The success of some Korean companies may serve as one model or path to
20,5 brand development by other firms. Samsung, for example, through its
consistent pursuit of research, development, licensing of new technologies, and
foreign investment initiatives to bring it closer to its markets and customers,
has managed to become one of the leading global brands. Based on estimated
brand value, Samsung is currently ranked number 42 among the global 100
488 brands (BusinessWeek, 2001).
Brand reputations are of great concern to Asian MNCs. Some firms do not
believe their brands receive the recognition or respect they deserve. There are
indications in the literature as to how Asian companies can effectively
communicate their brands or county images in the Western markets. Retail
distribution (Chao, 1989a, b) and pricing (Chao, 1993) strategies are but two
ways companies in Korea and Taiwan can circumvent poorly perceived
country images associated with products made in those countries. A limited
number of international branding studies have focused on how firms can create
and establish brand names in Asia to enhance consumer perceptions (Pan and
Schmitt, 1996; Tavassoli, 1999; Zhang and Schmitt, 2001). Still, the manner in
which Asian MNCs can create respected global brands like Sony and Toyota
remains a critical research issue.
Relationships and networks

A key strength in Asian business practice is reliance on personal and business
relationships and networks to accomplish business tasks and consummate
transactions. However, relationships and networks naturally exist in this part
of the world and their primary purpose is not that of a commercial transaction.
That is, relationships are critically important in people’s daily lives and their
societal purpose always supercede commercial transactions. All firms possess
“some” network in managing their operations, however, Asian firms have the
added advantage of more easily maneuvering around the regulatory and
bureaucratic requirements in their region (see Knowledge@Wharton, 2003).
For example, local brands such as Legend Computers in China, in addition to
having the ability to more easily adapt to local needs, tastes, and culture, have a
significant competitive advantage over MNCs owing to their local relationships
and networks. Whereas the MNCs can develop savvy marketing campaigns
and heavily promote their products in large Chinese metropolitan areas, the
domestic brands have networks that reach deep into not only the cities but also
the very large rural regions where mass media tends to be less effective. TLC,
the large mobile telephone manufacturer, for example, has a branch selling TV
sets and mobile telephones in nearly every town (The Economist, 2003). That is,
all else being equal, Asian firms have both a cultural as well as a networking
advantage in their home market. Despite the importance of relationships and
networks in this part of the world, scholars have only recently begun to apply
the relationship marketing paradigm within an Asian context and, thus far, International
much of this effort is focused on China. marketing
Greater international integration and cooperation
For some time Asia-Pacific Economic Cooperation (APEC) Forum has been
trying to emulate the success of the European Union in removing barriers to 489
trade while accommodating economic development. APEC Forum has 21
members which account for 47 percent of world trade. APEC nations are home
to a population of over 2.5 billion and produce a combined GDP of US$19
trillion. Although APEC’s vision of reaching its goals by no later than 2020
remains uncertain owing to economic and political problems in a number of
member countries, there is wide-spread support for the movement and its
objectives.
Likewise, China’s admission to the World Trade Organization constitutes a
major shift in regional economic policy for the nation while influencing
competition in the region (Chandler, 2003). Within the next few years, many of
China’s policies will need to be in line with those of other nations and China
must open its markets to competitors from other countries. Concurrently, as
more Chinese manufacturers are privatized, they will expand internationally to
reduce their risk while enhancing growth opportunities. As noted earlier, Haier
products are already being marketed in 160 countries and the computer maker
Legend will increasingly seek to cultivate international markets as foreign
competitors enter its traditional turf (Flannery, 2001).
Opportunities and implications

A major challenge facing international marketers wishing to enter markets in
Asia is the highly varied levels of economic development and IT penetration. It
is also common for many Western businesses to culturally cluster Asian
nations together and to further assume that market information in these
markets is easy to obtain. Businesses should recognize that conditions within
and among Asian markets vary considerably from one country to the next
(Walters and Samiee, 2003). Several markets in the region, such as Japan, are
fully developed. Others, such as China, are rapidly developing, but advances
are uneven across this vast nation. A third group, on the other hand, including
Vietnam, Cambodia, and Myanmar, faces substantial infrastructure and
development challenges. Thus, the heterogeneous nature of these markets
demands a close market-based attention, leading to the conclusion that Asian
markets cannot be cultivated with a single regional strategy.
For firms within the region wishing to directly compete for market share in
markets abroad, the development of respectable international brands is
potentially the most critical challenge. In the absence of such development, the
scope of their international involvement would be limited to competing as
contract manufacturers or marginal exporters.
IMR Conditions currently seem to favor enormous development and growth
20,5 opportunities in Asia. In particular, investments in IT, in terms of training,
access, software and hardware, at the very least accommodate the accelerated
development of Asian multinationals and their corresponding brands. Effective
communication is central to coordination and control of firms, and as Asian
firms spread across time zones and continents, their competence in IT will
490 permit them to grow faster and more efficiently than their rivals.
By virtue of having served as suppliers to Westerns firms, these firms are
also competent in not only negotiating and dealing with Western customers,
but also in managing very efficient production facilities. Furthermore, as
contract manufacturers whose products are sold under well-known Western
brands, Asian firms have learned how to maintain a very high level of quality
in production. This competency is clearly a critical one in developing successful
brands that can be differentiated from other offers.
There are tremendous research opportunities involving Asia-Pacific nations.
The relationship marketing field, for example, is over two decades old and is
now receiving much attention from scholars. For much of its history, however,
the paradigm was rarely applied in international contexts. As it turns out, the
cultural imperatives of Southeast Asian nations offer an excellent fit for
applying the relationship marketing concept. In recent years, scholars have
increasingly pursued projects involving the application of relationship
marketing to the Asia-Pacific cultures. In particular, HK-based scholars have
been on the forefront of, and the drivers of, developing a rich literature in
relationship marketing in a Chinese context. Such research initiatives, along
with others proposed in this article, offer excellent topics for investigation in an
increasingly important region and their pursuit should be promoted, supported,
and encouraged.
Notes
1. NTT DoCoMo developed and successfully marketed the i-Mode mobile telephone in Japan.
These phone are connected to the Internet at the speed of 9600 bps. Albeit slow, its use is
very economical. In contrast, 3G operates at speeds of 40 times greater than i-Mode, but it
also costs substantially more. It is believed that this will present a major challenge for
DoCoMo as it attempts to replicate the success of i-Mode (Belson, 2002).
2. Other nations included in the survey were Argentina, Australia, Brazil, Canada, Great
Britain, Italy, Japan, Sweden, and the USA.
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About the Guest Editors

Paul Chao (PhD, University of Washington) is a Professor of Marketing at the University of
Northern Iowa. His works have been published in the Journal of Consumer Research,
International Business Studies, Management International Review, International Marketing
Review among others. He has extensive international teaching and research experiences having
taught in Austria, Denmark, Taiwan, Hong Kong and China. He is currently on the Editorial
Review Board of the International Marketing Review.
Saeed Samiee is the Collins Professor of Marketing and International Business at the
University of Tulsa. He is also the Project Director for the Institute of International Business
Education, a joint project between the University of Tulsa and Moscow Institute of Electronics
Technology. His publications have appeared in Journal of Marketing, Journal of International
Business Studies, Journal of the Academy of Marketing Science, Journal of Business Research,
California Management Review, and others. He serves on the Editorial Review Boards of the
leading journals in his areas of expertise, including the Journal of the Academy of Marketing
Science and Journal of International Business Studies. In 2000, Professor Samiee was identified as
the third most published author in the Journal of Business Research for the 1985-1999 period. He
was also named among the ten most prolific authors in international marketing during the
1987-93 period according to the ranking developed by the Journal of Teaching in International
Business. He is listed among the ten and the top 30 most prolific authors in the Journal of the
Academy of Marketing Science and Journal of International Business Studies, respectively.
Leslie Sai-Chung Yip is the Associate Professor and Head of Department of Business Studies,
Faculty of Business, at the Hong Kong Polytechnic University. He is a Fellow of the Hong Kong
Institute of Marketing and UK Chartered Institute of Marketing. His current research interest
includes “Multidimensional Trust in Buyer-Seller Relationship”, and “Internet’s Contribution to
Supply Chain Management and Business Performance”. His publications have appeared in
Journal of Business Research, Industrial Marketing Management, International Journal of
Advertising, and Entrepreneurship Theory and Practice.
Special issue referees

James Agarwal, Imam Alam, Paul Beamish, Allan Chan, Ricky Chan, Steven Chang, Jyh-shen
(George) Chiou, Nicole Coviello, Michael Czinkota, Howard Davies, Paul Ellis, Abdi Eshghi, John
Ford, Esra Gencturk, Andy Grein, Michael Hu, Insik Jeong, Myung- Soo Jo, Johny Johansson,
Shashi Kaparthi, Namwoon Kim, Masaaki Kotabe, Dana Lascu, Don Lee, Kam Hong Lee,
Tomasz Lenartowicz, Zhan G. Li, Tiger Li, Sherriff Luk, David Luna, Bruce Money, Matthew
Myers, G.M. Naidu, Jae Pae, Nicolas Papadopoulos, Mohan Pisharodi, Raj Rajandran,
B. Ramaseshan, Pradeep Rau, Bucha Reddy, Abhik Roy, Tanuja Singh, Susan Tai, Esther Tang,
Peter Walters, Ian Wilkinson, Veronica Wong, Y. H. Wong, Attila Yaprak, Poh-Lin Yeoh, Joseph
Yu and Yong Zhang
Export
Export market-oriented market-oriented
behavior and export behavior
performance 493
The moderating roles of competitive
intensity and technological turbulence
John W. Cadogan
Aston Business School, Aston University, Birmingham, UK
Charles C. Cui and Erik Kwok Yeung Li
Manchester School of Management, UMIST, Manchester, UK
Keywords Export markets, Behaviour, Environmental regulations, Hong Kong
Abstract This study examines the issue of how export market-oriented behaviors influence export
success. Using survey data obtained from Hong Kong based manufacturing exporters, our
findings suggest that export market-oriented behaviors are important predictors of several
dimensions of export performance. In particular, it appears that this behavior is most important
for exporters operating under conditions of high environmental turbulence. The export
market-oriented behavior – export performance relationship for these firms, was generally positive
and strong. However, under conditions of low environmental turbulence, the costs of developing
and implementing high levels of export market-oriented behavior may outweigh the benefits
accrued.
Introduction
It has been suggested that one route to superior export performance is for firms
to adopt a market orientation in their export activities (Cadogan et al., 2001).
Previous studies have indicated that measures of firms’ market-oriented
behaviors in their export operations, export market-oriented (EMO) behaviors,
are significantly correlated with various dimensions of export success
(Cadogan and Diamantopoulos, 1998; Cadogan et al., 1999). However, the latter
findings were presented as part of the validation process for measures of export
market orientation, and the original studies did not systematically examine the
export performance related consequences of EMO behaviors. As a result, the
exact nature of the relationship between firms’ levels of EMO behavior and
export success, is in need of clarification.
The purpose of the current study is to bridge this research gap. Specifically,
we extend previous export market orientation research by investigating
whether the degree to which EMO behavior and export success are associated,
varies under differing environmental conditions. In particular, we attempt to International Marketing Review
Vol. 20 No. 5, 2003
determine whether competitive intensity and technological turbulence in firms’ pp. 493-513
export markets are moderators of the EMO behavior – export performance q MCB UP Limited
0265-1335
relationship. DOI 10.1108/02651330310498753
IMR The main benefit resulting from this research is that it will provide needed
20,5 empirical grounding from which to make recommendations to export managers
concerning important resource allocation decisions. Increasing market
orientation levels requires significant resource investments (Slater and
Narver, 1994) and managers need to be sure that their investments will reap
suitable rewards. Yet, as things stand, recommendations to practitioners are
494 plagued with uncertainty, simply because the performance-related
consequences of EMO behaviors have yet to receive rigoros empirical
attention. Specifically, there are doubts as to whether increasing levels of EMO
behavior is a good thing for all exporters, all the time. Thus, marketing
scholars do not know the conditions (if any) under which the benefits of EMO
behavior outweigh the costs. Similarly, it is not known whether there are
actually conditions under which the costs associated with increasing a firm’s
level of EMO behavior, outweigh the benefits accrued. Given that it is likely
that the costs associated with behaving in a market-oriented way in a firm’s
export operations may be significantly higher than those associated with being
market-oriented within a purely domestic setting, the generation of information
concerning the performance consequences of EMO behavior is timely.
In what follows, we first define the key construct, EMO behavior. We then
outline the study’s theoretical background and formally state our hypotheses.
The methods chosen to provide evidence on our conceptual framework are
described, and the key findings highlighted. We conclude with a discussion of
the study’s significance, pinpoint the research limitations and present several
directions for future research.
What are EMO behaviors?

Market orientation is usually defined as being the implementation of the
marketing concept. What does this mean? Although differences abound,
researchers are beginning to recognize that implementation means many
things and that “market orientation” is, in fact, a broad, multi-dimensional
concept. Specifically, the domain of market orientation encapsulates deeply
cultural facets, such as market-oriented values and norms (Harris, 1998), as
well as other psychologically endowed issues, such as market-oriented
artifacts, stories, rituals and arrangements (Homburg and Pflesser, 2000).
However, perhaps market orientation’s most critical manifestation is in the
form of market-oriented behaviors (Jaworski and Kohli, 1993). Indeed,
Homburg and Pflesser (2000) have argued that of the all the various
sub-dimensions of market orientation, only market-oriented behaviors directly
influence performance: market-oriented values, norms and artifacts are
considered to be antecedents to market-oriented behavior, and any performance
influence these aspects of market orientation may have is indirect and through
the firm’s actual activities (for additional arguments in support of this claim,
see also Jaworski and Kohli, 1996).
Thus, the focus of this study is on the behavioral aspects of market Export
orientation. Fortunately, for the most part, researchers tend to agree on the core market-oriented
components of market-oriented behavior. Specifically, market-oriented behavior
behaviors comprise the generation of information about a firm’s markets, the
dissemination of this information to relevant decision-makers within the firm,
and development and implementation of appropriate responses to the
information (Narver and Slater, 1990; Kohli and Jaworski, 1990).
495
Importantly, researchers are now beginning to recognize that it is possible
for firms to have different levels of market orientation across their different
business operations (Cadogan et al., 2001; Rose and Shoham, 2002; Uncles,
2000). Consequently, if a firm has a strong market orientation in its domestic
markets, this will not automatically be transferred into a high degree of market
orientation in its export operations (Hooley and Newcomb, 1983; Cadogan et al.,
2001). Thus, care must be taken when describing the level at which market
orientation is being conceptualized. For instance, Rose and Shoham (2002) have
conceptualized market orientation at the organizational level, while recognizing
that market orientation may differ across the firm’s domestic and export
activities. Cadogan et al. (1999), on the other hand, explicitly focused on
analyzing firms’ market-oriented behaviors in their export operations, not their
behaviors in their domestic markets.
Therefore, given the current study objectives, and drawing on Cadogan
et al.’s (1999) definition, EMO behavior can be formally defined as consisting of
export market intelligence generation, dissemination and responsive activities.
The focus of a firm’s EMO behavior is towards the firm’s export markets, not
its domestic markets. Indeed, it is likely that in many firms, the degree to which
activities are market-oriented in the domestic and export settings will differ
(Cadogan et al., 2001). The different components of EMO behavior are
inter-related, but are qualitatively distinct. Export intelligence generation
concerns the activities associated with generating information about the firm’s
export customers’ current and future needs and wants, competition in the firm’s
export markets, and other exogenous factors (such as technological and
regulatory developments); export intelligence dissemination concerns the
formal and informal information exchanges which allow the information
generated to reach appropriate export decision-makers; and export market
responsiveness is the design and implementation of strategies and tactics in
response to changes occurring in the firm’s export markets.
The export performance consequences of EMO behaviors

In this study, we define a firm’s export performance as its degree of economic
achievement in its export markets. Do firms with higher levels of EMO
behavior outperform their less export market-oriented counterparts? There are
two perspectives on this question.
IMR On the one hand, the marketing concept suggests that firms should focus on
20,5 the generation of information about their export customers’ needs and wants,
and the provision of solutions to these in the form of goods and services. The
better the firm is at identifying export customers’ real needs and wants, and
following this up with matching solutions, the more successful the firm’s export
operations should be. As Dickinson et al. (1986, p. 18) have noted, if buyers are
496 rational, “it follows, seemingly as a truism, that [they] will choose and come to
prefer those firms whose market offerings best meets wants”. Consequently, it
can be argued that higher levels of EMO behavior should result in superior
export performance, and that firms may need to expend greater effort to develop
their EMO behaviors in order to remain competitive (Kwon and Hu, 2000).
Consequently, we propose to test the following hypothesis:
H1. There is a positive relationship between exporters’ degree of
market-oriented behavior in their export operations and their export
success.
On the other hand, there are also arguments to suggest that behaving in a
market-oriented way in a firm’s foreign markets may not be beneficial for all
exporters. Specifically, scholars have argued that aspects of the environment
may moderate the market orientation – performance relationship. We focus on
two such potential environmental moderators; competitive intensity and
technological turbulence.
Looking at competition in firms’ exporting operations, although their
research was not specific to firms’ EMO activities, Jaworski and Kohli (1993,
p. 57) argued that a market orientation may be less important under conditions
of low competitive intensity: “in the absence of competition, an organization
may perform well, even if it is not very market-oriented, because customers are
“stuck” with the organization’s products and services”. Under more
competitive conditions, however, less-market-oriented firms are likely to see
their performance impaired as customers switch to more market-oriented
competitors. Thus, it is possible that a market orientation is not always
desirable, given that its development and maintenance is highly resource
intensive (Slater and Narver, 1994), and that the rewards from being
market-oriented may not always accrue (Jaworski and Kohli, 1993).
The logic of Jaworski and Kohli’s (1993) argument can also be applied to the
exporting context. Indeed, in firms’ exporting operations, market orientation’s
importance may be even more severely limited. Specifically, it has been argued
that, relative to firms’ domestic operations, behaving in a market-oriented
fashion in export markets is more difficult and, as a result, the resources required
in the development and maintenance of EMO activities are significantly higher
(e.g. Cadogan and Diamantopoulos, 1995; Kwon and Hu, 2000). Consequently, it
seems likely that EMO behaviors will be most important under conditions of
high competitive intensity in firms’ export markets. Here, firms that do not
behave in a market-oriented in their export operations way, will see export Export
customers switching to more market-oriented competitors. However, under market-oriented
conditions of low competitive intensity, the costs associated with having high behavior
levels of EMO behavior, may outweigh the benefits accrued.
Unfortunately, there is little by way of empirical evidence to shed light on this
issue. Cadogan et al.’s (1999) work, for instance, demonstrated that within the
samples obtained, measures of EMO behavior tend to correlate with measures of
497
export performance (Cadogan and Diamantopoulos, 1998). However, no attempt
was made to determine whether the competitive intensity in the export
environment moderated the EMO behavior – export performance relationship.
Other researchers have looked for moderator effects, but have failed to
measure market orientation and other important variables at the exporting
level. For example, Kwon and Hu (2000) and Rose and Shoham (2002) looked at
the relationships and interactions between measures of market orientation,
competitive intensity and export performance. However, neither of these
studies attempted to measure firm’s activities in their export operations, but
measured market orientation as an organization-wide variable. Furthermore,
competitive intensity was measured across the whole of the firms’ activities –
not within the firms’ export markets. Consequently, the market orientation and
environmental turbulence scores reported in these studies are unlikely to reflect
firms’ activities and experiences within their export operations. The fact that
these studies failed to detect moderator effects with their measures of market
orientation and competitive intensity,is difficult to interpret. What is certain,
however, is that the latter findings should not be used to conclude that the
relationship between EMO behavior and export success is not moderated by
firms’ export environments (Slater, 1995).
Consequently, we propose to test the following hypothesis:
H2. The relationship between exporters’ levels of market-oriented behavior
in their exporting activities and their export performance is moderated
by the competitive intensity in the firms’ exporting environments:
specifically, under conditions of low competitive intensity, the
relationship is negative; as competitive intensity becomes more
great, the relationship becomes less negative; and under conditions of
high competitive intensity, the relationship actually becomes positive
and stronger.
The second element of the export environment that we are interested in is
technological turbulence. Here, “technology” is a broad term which
encompasses “the entire process of transforming inputs to output, and the
delivery of those outputs to the end consumer” (Kohli and Jaworski, 1990, p. 14).
Drawing on Kohli and Jaworski’s (1990) qualitative study findings, it can be
argued that for firms operating in technologically turbulent markets,
channeling scarce resources into increasing market-oriented behavior levels
IMR may be counterproductive, since these resource could be better invested in
20,5 R&D or improving operations and production efficiency. Indeed, as Jaworski
et al. (2000) have noted, the success of firms operating in technologically
turbulent markets often hinges on these firms’ ability to better deliver value to
customers through more effective supply-side operations and cost
management. The point that Kohli and Jaworski (1990) were making was not
498 that market orientation is not a good thing for firms operating in
technologically turbulent markets. Rather, they were saying that
market-oriented behavior may not be as important as it is for firms
operating in markets which are technologically stable. In the latter case, there
are relatively few opportunities for changing the market structure or
manipulating market behavior (Jaworski et al., 2000), and consequently, the
“competitive battleground often focuses on changing customers’ perceptions of
the focal firm’s offerings versus the competitors’ offerings on attributes known
to be considered important by customers” (Jaworski et al., 2000, p. 47). Thus, we
also argue the following hypothesis:
H3. The relationship between exporters’ levels of market-oriented behavior
in their exporting activities and their export performance is moderated
by the technological turbulence in the firms’ exporting environments:
specifically, under conditions of low technological turbulence, the
relationship is strong and positive; as technological turbulence becomes
greater, the positive relationship becomes progressively weaker.
Methodology
Sampling issues
We used a mail survey to generate data in order to test the hypotheses. A
random sample of 800 manufacturing firms with 50 or more employees was
selected from the Hong Kong Trade and Development Council internet
database system. The sample included businesses from a wide range of
industrial sectors, including textiles and clothing, machinery, electronics,
pharmaceuticals, toys and games, watches and clocks, and jewelry. In order to
obtain the responses, we first contacted all the firms in the sample by telephone
in order to determine eligibility and then elicit cooperation in the study. The
export manager in those firms agreeing to participate was mailed a
questionnaire, together with a cover letter and pre-paid reply envelope. A
week after the initial posting, follow-up telephone calls were undertaken to
increase the response rate. Two weeks after this, a follow-up telephone call was
made to elicit reasons for non-response. In total, 213 firms were deemed
ineligible (e.g. the firm had never exported, the firm had stopped exporting, the
firm was listed more than once), and a further 278 declined to participate. Of the
309 questionnaires mailed out, a total of 137 completed questionnaires were
returned, corresponding to a response rate of 23 percent (i.e. 137/587). Our
telephone analysis indicated that the two main reasons for non-participation Export
and non-response were: market-oriented
(1) company policies restricting the giving of information to external behavior
parties; and
(2) time constraints.
499
Measurement
We used Cadogan et al.’s (2001) shortened version of the Cadogan et al. (1999)
measures of EMO activities to capture the degree to which each firm behaves in
a market-oriented way in its export operations.[1] Incorporated in the
instrument are items capturing firms’ levels of export market intelligence
generation, export market intelligence dissemination and export market
responsiveness. An additional item from Cadogan et al.’s (1999) original scale
was included in the responsiveness measure.
Two dimensions of environmental turbulence were also included in the
study. Specifically, we used Cadogan et al.’s (2001) adaptations of Jaworski and
Kohli’s (1993) measures of competitive intensity and technological turbulence.
Cadogan et al. (2001) modified the original instruments so they reflect changes
taking place in firms’ export markets, not changes taking place in firms’
domestic markets. Consequently, the measures of export environmental
turbulence capture aspects of change and unpredictability in competitive
activities and competitive intensity, and opportunities and threats arising from
changes in the firm’s technological environment.
Finally, following the recommendations of Cavusgil and Zou (1994) and
Matthyssens and Pauwels (1996), among others, we measured three aspects of
firms’ economic achievement in their export markets: export sales efficiency,
export sales growth and export profits. Our “export sales efficiency
performance” measure contained two items:
(1) the absolute average export sales turnover per company employee; and
(2) the absolute average export sales turnover per export destination
country.
Our “export growth performance” measure contained two items:
(1) the absolute annual percentage growth in export sales over the previous
three years; and
(2) the firm’s average annual export sales growth compared to the industry
average, measured on a ten-point scale, from 1 ¼ poor to
10 ¼ outstanding.
Finally, a single item was used to capture “export profit performance”.
Specifically, respondents were asked to indicate how profitable their export
operations had been over the last financial year on a ten-point scale, from
1 ¼ very unprofitable to 10 ¼ very profitable.
IMR Measurement assessment and construction
20,5 In order to comment on the validity and reliability of the measures used, all
scales were examined with confirmatory factor analysis (CFA) using LISREL
8.30 (Jöreskog and Sörbom, 1996). In order to avoid violating minimum sample
size to parameter ratios, the scales were analyzed in sets. The first set contained
the three EMO behavior scales and three items were eliminated to ensure
500 adequate model fit.[2] The second set contained the two export environmental
turbulence scales. The third set contained the export performance measures.
Since the “export profit performance” latent variable contained a single item
only, the latter’s error variance was set at [(1 - a) £ s2], where a ¼ scale
reliability (and was assumed to be 0.90), and s ¼ item standard deviation.
Table I provides the measurement model fit indexes for each of the three CFA
analyses. As can be seen, the fit indexes obtained for the measurement models
were good. The Appendix provides a complete listing of all items used for
model testing.
The final measurement results for the scales together with a correlation
matrix are shown in Table II. Overall, the results indicate that the scales
perform well. Specifically, the CFA fit indexes returned indicate that the
specified measurement structures fit the data acceptably and that the scales are
unidimensional. Furthermore, the composite reliabilities are all above the
recommended threshold of 0.60 and the average variance extracted (AVE)
scores are all above the recommended threshold of 0.50, except for the
competitive intensity measure, which returned an AVE of 0.44 (Bagozzi and Yi,
1988).
Analysis
Model testing was undertaking using LISREL 8.30. In preparation for the
analysis, three procedures were undertaken.
Model x2 (d.f.) RMSEA GFI NNFI CFI
Measurement (set 1) 53.97 (51) 0.024 0.916 0.979 0.984

Measurement (set 2) 13.89 (8)a 0.087 0.955 0.936 0.966
Measurement (set 3) 3.98 (5) 0.000 0.984 1.026 1.000
Main effects 3.03 (3) 0.010 0.990 0.990 0.998
Initial interaction-effects 3.90 (3) 0.055 0.990 0.896 0.989
Final interaction-effects 0.03 (2) 0.000 1.000 1.317 1.000
Notes: Measurement (set 1): export market intelligence generation, dissemination and
responsiveness; Measurement (set 2): export market competitive intensity, and export market
technological turbulence; Measurement (set 3): export sales efficiency performance, export
Table I. growth performance, export profit performance. RMSEA¼Root mean square error of
Fit measures approximation; GFI ¼ Goodness of fit index; NNFI ¼ Nonnormed fit index;
for the models CFI ¼ Comparative fit index; a: significant at p , 0.10
Standard Composite Average variance
Constructs Mean deviation reliability extracted 1 2 3 4 5 6 7 8
1. Export market intelligence
generation 4.63a 0.94 0.75 0.50 1.00
2. Export market intelligence
dissemination 5.02a 0.88 0.83 0.50 0.19 1.00
3. Export market responsiveness 5.34a 0.89 0.83 0.55 0.28 0.12 1.00
4. Export market competitive
intensity 14.78b 2.70 0.70 0.44 0.27 0.13 0.34 1.00
5. Export market technological
turbulence 14.77b 2.99 0.84 0.65 0.12 0.30 0.12 0.29 1.00
6. Export sales efficiency
performance 0.03c 1.77 0.73 0.59 0.13 0.12 -0.21 0.12 0.03 1.00
7. Export growth performance 0.09c 1.72 0.77 0.64 0.14 0.22 0.27 0.22 0.22 0.05 1.00
8. Export profit performance 0.06c 1.14 na na -0.02 0.09 0.11 0.13 0.14 0.02 0.22 1.00
Notes: a average score across the items (on a seven-point scale); b sum of item scores (on a seven-point scale); c scale items were standardized
prior to analysis and scale construction; na: composite reliability and average variance extracted are not applicable for the single item measure
market-oriented
Measurement
behavior
Export
information and
correlation matrix
Table II.
501
IMR First, single scores were created for each of the latent variables of interest. The
20,5 use of single indicants within interaction-based structural models to reduce
model complexity has been recommended in the literature (e.g. Jaccard and
Wan, 1996). Thus, a single score was obtained for EMO behavior by summing
across the export market intelligence generation, dissemination and
responsiveness scales (Cadogan et al., 1999, 2001). A similar process was
502 undertaken for export environmental turbulence, whereby single scores were
created for the competitor and technological environments respectively, and for
export performance, whereby single scores for “export sales efficiency
performance” and “export growth performance” were computed. The “export
profit performance” measure was already measured using a single item.
Second, to reduce possible problems associated with multi-collinearity
arising from the introduction of interaction terms in the structural model, the
single indicants for the EMO behavior scale, export market competitive
intensity scale, and the export market technological turbulence scale, were all
mean-centered (Ping, 1994).
Third, interaction terms were created. Specifically, the observed
mean-centered EMO behavior score was multiplied by the mean-centered
competitive intensity score. The resulting interaction term is simply referred to
as the “competition interaction” term. Similarly, using the mean-centered EMO
behavior and the technological turbulence scores, a “technology interaction”
term was created.
Hypothesis testing procedures then followed Ping’s (1995) guidelines for the
evaluation of structural models with interaction terms. Thus, a main effects
only structural model was estimated first, with the error variance of each latent
variable’s indicator set at [(1 - a) £ s2]. Here, the EMO behavior and the two
environmental latent variables were modeled as direct antecedents to all three
export performance measures (the interaction terms were excluded from this
main effects model). Looking at Table I, it can be seen that the model fit the
data well. Using the error variance and factor loading estimates obtained in the
main effects model, together with Ping’s (1995) equations, the loadings and
error variances of the interaction terms were calculated.
An initial interaction-effects model was then estimated, in which the
interaction terms were included. Here, the latters’ estimated loadings and error
variances were specified as constants in the model, and the interaction latent
variables were modeled as antecedents to the three performance latent
variables. The fit for the initial interaction-effects model was acceptable, as can
be seen in Table I. However, the NNFI was below the recommended threshold
value of 0.90. In order to improve the model fit, an examination of the
modification indexes was undertaken. As a result, it could be seen that the
exclusion of a significant path from “export growth performance” to “export
profit performance” explained the relatively low fit index. Given that the
inclusion of this path in the model makes good sense from a theoretical
perspective, the modified model was re-specified accordingly (NB: the inclusion Export
of this path did not substantively alter the other path estimates). As can be seen market-oriented
in Table I, the final interaction-effects model returned excellent model fit, with behavior
all fit indexes showing substantial improvement, and the NNFI returning a
value well in excess of the recommended threshold of 0.90. Furthermore, the
decrease in Chi-Square on moving from the initial interaction effects model to
the final interaction effects model was significant at p ¼ 0.05. A diagramatic
503
representation of the final interaction-effects model is shown in Figure 1, and
Table III provides the standardized and unstandardized parameter estimates
for the this model.
Results
H1. Positive relationship between EMO behavior and export success
Looking at Table III, it can be seen that H1 receives only partial support.
Specifically, only one of the three main effects from EMO behavior to the export
performance measures was significant: EMO behavior was a significant
predictor of export growth performance (g = 0.31, p , 0.01), but did not predict
export sales efficiency performance or export profit performance. However, it
can also be seen that there is an indirect linkage between EMO behavior and
export profit performance, since the path from growth to profits was also
significant (b ¼ 0.25, p , 0.05). As a result of the above, the findings provide
clear support for the notion that EMO behavior is an important determinant of
export success in terms of growth and profits.
Figure 1.
Final interaction-effects
model
20,5
IMR
504
Table III.
structural model
standardized path
Unstandardizeda and
estimates for the final

Standardized
Unstandardized parameter parameter
Dependent variables R2 Independent variables estimates estimates t-values
Export sales efficiency performance 0.10 EMO behavior 20.02 2 0.02 2 0.19
Competitive environment 0.11 0.18 1.52*
Technological environment 20.01 2 0.02 2 0.13
Competition interaction term 0.11 0.36 2.78***
Technology interaction term 20.06 2 0.25 2 1.89**
Export growth performance 0.24 EMO behavior 0.30 0.31 2.90***
Competitive environment 0.06 0.10 0.89
Technological environment 0.08 0.14 1.41*
Competition interaction term 0.03 0.11 0.92
Technology interaction term 0.06 0.25 2.08**
Export profit performance 0.08 EMO behavior 20.03 2 0.06 2 0.45
Competitive environment 0.03 0.08 0.64
Technological environment 0.03 0.07 0.64
Competition interaction term 2 0.01 2 0.05 2 0.41
Technology interaction term 2 0.01 2 0.06 2 0.47
Export growth performance 0.15 0.25 2.01**
Notes: a Unstandardized path estimates are used for interpreting the results of structural models with interaction terms (Jaccard and Wan,
1996); *: significant at p , 0.10 (one-tailed); **: significant at p , 0.05 (one-tailed); ***: significant at p , 0.01 (one-tailed).
H2. Competitive intensity as moderator Export
Some support was also provided in terms of H2. Specifically, for export sales market-oriented
efficiency performance, the competition interaction term returned a significant behavior
path coefficient (g ¼ 0.36, p , 0.01). Using the partial derivatives approach
(Greenley, 1995), and knowing that the competitive intensity scale could vary
between 3 (very stable) and 21 (extremely turbulent), the competitive export
environment’s influence on the relationship between EMO behavior and export
505
sales efficiency performance could be assessed. As a result, the value of the
competitive intensity measure at which EMO behavior is estimated to have no
relationship with export sales efficiency (i.e. the inflexion point for the
competition interaction term) is 14.78. The result supports the notion that, for
firms operating in environments where their competitive intensity score is less
than the inflexion point, the relationship between EMO behavior and export
sales efficiency is negative. Only as competitive intensity increases above a
value of 14.78 does the relationship between EMO behavior and export sales
efficiency become positive. This finding provides some support for the notion
that EMO behavior is most important under turbulent competitive conditions
in firms’ export operations. However, this finding was not repeated for either
export growth performance or export profit performance, since the competition
interaction terms were non-significant.
H3. Technological intensity as moderator

With export sales efficiency performance as dependent variable, the technology
interaction term also returned a significant co-efficient (g ¼ -0.25, p , 0.05).
This time, an inflexion point value of 14.77 was returned, on a scale varying
from 3 (very stable to) to 21 (extremely turbulent). Here, for firms operating in
technological environments that score less than the inflexion value, the
relationship between EMO behavior and export sales efficiency performance
was positive. However, as technological environmental turbulence increased
above the inflexion value, the relationship between EMO behavior and export
sales efficiency performance was negative. Consequently, this finding provides
support for H3.
Regarding export growth performance, H3 was refuted since the technology
interaction term returned a significant path coefficient (g ¼ 0.25, p , 0.05).
This time, the inflexion point occurred at a value of 13.57, and the parameter
estimate indicates that for firms operating in technological environments less
turbulent than the inflexion value, the relationship between EMO behavior and
export growth performance was negative. Only those firms operating in export
markets which are more turbulent than the inflexion point returned a positive
relationship between EMO behavior and export growth performance.
Finally, no support was found for H3 when looking at the export profit
performance measure, since the technology interaction term returned a
non-significant path coefficient.
IMR Discussion
20,5 The findings from this study are interesting from a number of perspectives.
Looking at the main effects only, EMO behavior was not associated with export
sales efficiency performance. Given that the sales efficiency measure was based
on “efficiency ratios” (i.e. export sales per employee; export sales per country
exported to), it can be concluded that EMO activity does not decrease the
506 amount of effort required to bring about sales in export markets. EMO
activities require considerable resource inputs themselves. However, EMO
behaviors were strong predictors of export sales growth. Thus, while behaving
in an export market-oriented fashion in firms’ export operations might not lead
to increases in the efficiency with which sales are made (i.e. increases in
resource inputs are required to achieve and maintain high levels of EMO
behavior), it does appear to lead to increased sales per se. Furthermore, EMO
behaviors also have an indirect influence on export profit performance via
export sales growth.
Regarding the moderating effect of competitive intensity, a single effect was
found in support of H2. Thus, under conditions of low competitive intensity,
EMO behavior was negatively related to export sales efficiency performance,
but positively associated with export sales efficiency performance under
conditions of high competitive intensity. Figure 2 demonstrates this finding.
Thus, under conditions of high competitive rivalry in export markets, sales
efficiency decreases as EMO behavior levels decrease, indicating that EMO
behaviors are a necessity under highly competitive conditions. However, when
competitive conditions are less hostile, and competition is weak, exporters can
perhaps get away with low levels of EMO behavior in order to sell their
products. Indeed, since customers have little choice under these conditions,
higher levels of EMO behavior may actually represent an unnecessary drain on
resources which reduces the efficiency with which sales are achieved.
This latter finding appears to indicate that, from an efficiency-based
perspective, and in line with Jaworski and Kohli’s (1993) reasoning, the returns
accruing from having high levels of EMO behavior under low levels of
competition are not as great as the returns accruing from having high levels of
EMO behavior under high levels of competition. However, the findings do not
completely support H2, since the competition interaction term did not return a
significant coefficient for either export growth or export profits. EMO
Figure 2.
Findings for H2.
Competitive intensity
behaviors, therefore, while apparently reducing sales efficiency under Export
conditions of low competitive intensity, do not appear to reduce actual sales market-oriented
growth, or the total profits accruing from export sales. This finding also makes behavior
sense since, by performing EMO behaviors, firms are better positioned to:
.
respond to changing customer needs and wants;
. develop competitive strategies; 507
.
identify new market opportunities; and
.
be able to match the firms’ marketing capabilities with the conditions
facing the firm.
This logic holds regardless of whether competition is weak or intense.
The findings for the moderating effect of technological turbulence in firms’
export markets (H3) were a little more controversial. First, the findings with
export sales efficiency performance appear to provide some support for H3, in
that EMO behaviors were positively related to export sales efficiency
performance under conditions of low technological turbulence. Unexpectedly,
under conditions of high technological turbulence, rather than having a weak
positive relationship, EMO behavior was negatively related to sales efficiency
performance (see Figure 3). At first glance, this appears to reinforce Jaworski
and Kohli’s (1993) contention that under conditions of high technological
turbulence, firms may find that market orientation becomes less beneficial.
However, this result only pertains to the efficiency-based measures of export
performance – not the sales growth measure. Here, refuting H3, sales growth is
negatively related to EMO behavior under conditions of low technological
turbulence and positively related to EMO behavior under conditions of high
technological turbulence (Figure 3).
It can be argued that these findings are a function of the fact that EMO
behaviors add a variable cost to the firms’ activities (e.g. developing and
implementing new technologies, new product development, etc.), and that this
Figure 3.
Findings for H3.
Technological intensity
IMR variable cost increases as a function of increased levels of technological
20,5 turbulence. Consequently, increased technological turbulence decreases the
efficiency with which sales are achieved by market-oriented firms. However, it
is necessary for firms to accept these reduced efficiencies since, under high
levels of technological turbulence, EMO behavior appears to be able to
stimulate customer demand, and is thus an important direct driver of sales
508 growth. In turn, since export growth is an antecedent to export profits, those
firms wishing to improve their profits via increased export sales will need to
ensure that their levels of EMO behaviors are sufficiently high.
However, under conditions of technological stability, EMO behavior is
positively related to sales efficiency and negatively related to sales growth.
Possibly, technological stability in the environment may actually reduce the
variables costs associated with behaving in a market-oriented way in firms’
export markets. Specifically, in a fairly predictable technological environment,
the types of market-oriented activities required of firms also become fairly
predictable and formalized and this, in turn, is likely to increase the efficiency
of those activities (Ruekert et al., 1985). Hence, sales efficiency increases under
conditions of low technological turbulence.
By the same logic, as the technological environment becomes more stable
and less prone to change, the need to generate, disseminate and respond to
information about the technological environment, decreases. Consequently,
some of those resources that help maintain EMO behavior levels could perhaps
be better spent by investing in market driving activities, such as research into
reducing production costs, more efficient distribution systems, product
innovations, new product designs, identifying radically new technologies, and
the like (Jaworski et al., 2000). For example, by investing in more efficient
distribution systems, or by undertaking operation and production research,
production, operations and distribution costs can be lowered. These lower costs
can be used to spur sales growth through reduced prices or by increasing value
in other ways. In short, under high levels of technological stability, high levels
of EMO behavior appear to introduce an opportunity cost such that sales
growth and profits are compromised.
Overall, then, the findings of this study provide strong support for the
importance of EMO behaviors to export performance. Some direct effects from
EMO behavior were observed, as well as several non-linear effects. What can
be concluded is that the findings indicate that EMO behaviors are perhaps
most important under conditions of high environmental turbulence, and
become less important when changes occurring in the environment are limited.
Conclusions and future research

This study asked two key questions:
(1) Does EMO behavior have a direct influence on export success?
(2) Does the export environment moderate in some way the EMO behavior Export
– export performance relationship? market-oriented
Our results have provided support for our hypotheses; a direct affect from behavior
EMO behavior to export sales growth was observed, and moderator effects
were also returned for both competitive intensity and technological turbulence.
In general, the findings indicate that export sales growth and (indirectly) export 509
profits, are facilitated by exporters’ levels of EMO behavior. These effects
varied depending on the degree of turbulence in the technological environment.
EMO behavior may have a positive influence on export growth and sales under
conditions of high technological turbulence, but the costs of EMO behavior
may outweigh the benefits accrued when technological change is rare.
The findings also seem to demonstrate that an efficiency based measure of
export sales efficiency performance was not directly influenced by EMO
behavior. Instead, it appears that firms with high levels of EMO behaviors have
higher levels of export sales per employee and export sales per export
destination country under conditions of high competitive intensity. Thus, the
payback from increasing levels of market orientation becomes greater when the
competitive environment is more intense.
Furthermore, under conditions of low technological turbulence, EMO
behavior was also positively related to the efficiency with which sales are
made. However, increased efficiency appears to come at a price, since sales
growth and profits appeared to be negatively affected by higher investments in
EMO activities in technologically turbulence markets: perhaps investments in
other activities would be more beneficial for growth and profits.
An important implication of this study for academics and export managers
is that there are likely to be many export business contexts in which high levels
of EMO behavior are critical. However, our findings also suggest that
academics should be aware that it is possible that higher levels of EMO
behavior are not always necessary. Indeed, approximately half of the current
sample operated in technological and competitive business contexts where it
seems that the costs of developing and maintaining EMO behavior may exceed
the associated benefits (the term “costs” is a broad concept, and includes
financial expenditures and resource investments, as well as opportunity costs).
While this conclusion may seem somewhat controversial, it is a logical
development from the empirical findings reported here, and finds support in a
growing body of market orientation research undertaken within the non
exporting literature (e.g. Greenley, 1995; Kumar et al., 1998; Appiah-Adu, 1998;
Gray et al., 1999).
Of course, the findings reported here must be interpreted in the light of
the study’s limitations. First, given the cross-sectional nature of the
research, we cannot draw firm conclusions regarding causal linkages
between variables. We can only compare the logic of the theoretical
arguments with the patterns of association between variables. A
IMR longitudinal study to explore the issues raised in this paper would provide
20,5 more conclusive evidence in this respect. The study also used a sample of
exporting companies based in Hong Kong. In order to explore whether
country of origin effects play a role in determining the effects observed in
this study, multi-country studies are also warranted.
There are also several directions for future research which may prove
510 fruitful. For example, future researchers may find it productive to investigate
whether there are other important moderators of the EMO behavior – export
performance relationship. Examples could include factors external to the firm
(such as changing socioeconomic factors within export destination countries or
the latters’ degree of political instability), as well as factors internal to the firm
(such as co-ordination capabilities, political acceptance of exporting, export
dependence or organizational structure issues).
It is also the case that EMO behaviors may influence non-economic as well
as economic performance. One avenue of research to pursue in this context is to
determine whether EMO behaviors influence the success of the firm’s chosen
strategies in their export markets. For instance, do EMO behaviors influence
the success of firm’s adaptation or standardization strategies[3]?
There is also a need to understand how firms’ market orientation behaviors
in both their export markets and domestic markets, interact. Why do some
firms fail to carry the market orientation they have develop in the domestic
context into their exporting operations? Are these firms behaving in a rational
way, or should they be attempting to have consistent levels of market-oriented
behavior in all their activities? Clearly, answers to issues such as these may
have important resource allocation implications.
Finally, investigators could examine market orientation in a more
fine-grained way. For example, should market orientation be viewed as a set
of activities that can and do vary market-by-market (Uncles, 2000)? If
market-oriented behavior does vary on a market-by-market basis, how can
such differences be explained, particularly in light of the recently advocated
market-oriented culture perspective of the firm (Harris, 1998; Homburg and
Pflesser, 2000)? Perhaps, most importantly, what are the performance
implications for firms with different profiles of market orientation across
their business portfolios, and are there any heuristics which can be identified to
help businesses organize their market-oriented behaviors in the most
appropriate way?
Notes
1. In response to a reviewer’s question, we used Cadogan et al.’s (2001) measure because there
are currently no valid alternative measures available of firms’ market-oriented behaviors in
their export operations.
2. Two items were eliminated from the generation scale, leaving a three-item measure, and one
item was eliminated from the responsiveness scale, leaving a four-item measure.
3. We thank an anonymous reviewer for suggesting this line of research.
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Appendix. Scale items

Export market intelligence generation (seven-point scale with very strongly disagree/very strongly
agree anchors).
(1) In this company, we generate a lot of information concerning trends (e.g. regulations,
technological developments, political, economic) in our export markets.
(2) We periodically review the likely effect of changes in our export environment (e.g.
regulation, technology).
(3) We generate a lot of information in order to understand the forces which influence our
overseas customers’ needs and preferences.
Export market intelligence dissemination (seven-point scale with very strongly disagree/very
strongly agree anchors).
(1) Too much information concerning our export competitors is discarded before it reaches
decision makersR.
(2) Information which can influence the way we serve our export customers takes forever to
reach export personnelR.
(3) Important information about our export customers is often “lost in the system”R.
(4) Information about our export competitors’ activities often reaches relevant personnel too Export
late to be of any useR.
(5) Important information concerning export market trends (regulation, technology) is often
market-oriented
discarded as it makes its way along the communication chainR. behavior
Export market responsiveness (seven-point scale with very strongly disagree/very strongly agree
anchors).
(1) If a major competitor were to launch an intensive campaign targeted at our foreign 513
customers, we would implement a response immediately.
(2) We are quick to respond to significant changes in our competitors’ price structures in
foreign markets.
(3) We are quick to respond to important changes in our export business environment (e.g.
regulation, technology, economy).
(4) We rapidly respond to competitive actions that threaten us in our export markets.
Competitive turbulence in the firm’s export markets (seven-point scale with not at all/to an
extreme extent anchors).
(1) In our export markets, there are many “promotion wars”.
(2) One hears of a new competitive move in our export markets almost every day.
(3) In our foreign markets, aggressive selling is the norm.
Technological turbulence in firm’s export markets (seven-point scale with not at all/to an extreme
extent anchors). Regarding the impact of technology in your export business. . .
(1) The technology in our industry is changing rapidly.
(2) Technological changes provide big opportunities in our industry.
(3) A large number of new product ideas have been made possible through technological
breakthroughs in our industry.
Export sales efficiency performance.
(1) Export sales per company employee (the ratio of the firm’s total annual export sales to
the total number of company employees).
(2) Export sales per country exported to (the ratio of the firm’s total annual export sales to
the total number of countries the firm exports to).
Export sales growth performance.
(1) Over the last three years, average annual percentage growth/decline in export sales
(a percentage score).
(2) How does your average annual export sales growth/decline compare to the industry
average? (10-point scale with poor/outstanding anchors).
Export profit performance.
(1) Overall, how profitable has exporting been over the last financial year? (10-point scale
with very unprofitable/very profitable anchors).
Note: R reverse coded.
IMR
20,5 The relationship between
strategic type and firm
514
capabilities in Chinese firms
C. Anthony Di Benedetto
Fox School of Business and Management, Temple University,
Philadelphia, Pennsylvania, USA, and
Michael Song
School of Business Administration, University of Washington, Seattle,
Washington, USA
Keywords Strategic choices, Company performance, China, Strategic management,
Decision making
Abstract Proposes that firms of different Miles and Snow strategic types will have different
bundles of firm-level capabilities; that is, certain capabilities will be more important to certain
strategic types. Specifically, proposes that prospectors have greater relative inside-out capabilities
and information technology capabilities, while defenders have greater relative outside-in
capabilities and marketing capabilities. Empirically tests, and finds support for, the propositions
using a data set of 245 Chinese firms, comprised mostly of state-owned enterprises.
Understanding the Chinese business environment is of importance to businesses around the
world as the Chinese economy undergoes rapid expansion and decentralization of strategic
decision making to the level of the state-owned enterprise. As the central government takes on a
lesser role in the management of enterprises, and Chinese enterprise managers become more
responsible for their own strategic decision making, a clear understanding of the enterprise’s
specific capabilities and advantages is required in order to achieve sustained competitive
advantage. Concludes by discussing managerial implications.
Introduction
Recent studies in the marketing and strategy literature have examined firms’
capabilities, defined as “complex bundles of skills and accumulated knowledge
. . . that enable firms to coordinate activities and make use of their assets” (Day,
1990, p. 38). Capabilities are typically extremely difficult to imitate since they
are deeply rooted in the firm’s routines and practices (Dierckx and Cool, 1987).
Firm-specific resources, which include both assets and capabilities, are the
source of the firm’s long-term competitive advantage and performance, and it is
the task of management to determine how best to exploit and improve these
resources (Mahoney and Pandian, 1992; Barney, 1991; Wernerfelt, 1984; Day,
1994). At the same time, a firm possessing a given strategy tends to develop
capabilities that help it to pursue its strategies and attain long-term competitive
International Marketing Review advantage. That is, capabilities determine strategy, and strategy determines
Vol. 20 No. 5, 2003
pp. 514-533
q MCB UP Limited
0265-1335
The authors wish to thank the reviewers who provided valuable and insightful comments on an
DOI 10.1108/02651330310498762 earlier draft of this article.
capabilities. This apparent circularity was perhaps best expressed by Strategic type
Hambrick: “prospectors tend to want to continue prospecting; defenders tend and firm
to want to continue defending” (Hambrick, 1983, p. 7). capabilities
The marketing strategy literature suggests that several capabilities are
critical to success, including “inside-out”, “outside-in”, marketing and
information technology capabilities (Day, 1990, 1994; Day and Wensley,
1988). Inside-out capabilities permit the organization to improve production
515
process efficiencies, reduce costs, and increase competitiveness. Outside-in
capabilities such as purchasing and new product development allow the
organization to exploit marketplace opportunities. Capabilities in marketing
and information technology are also related to firm performance, and the firm’s
ability to sustain competitive advantage (Conant et al., 1990; Jaworski and
Kohli, 1993; Day, 1994).
The research objective of this study is to investigate the relationships
between strategic type (as measured by the Miles-Snow strategic typology of
prospectors, analyzers, defenders, and reactors) and firm-level capabilities
(Miles and Snow, 1978). Specifically, we propose that some of these capabilities
will be relatively more important to firms that behave as prospectors, while
others will be relatively more important to those that behave as defenders.
Conant et al. (1990) empirically tested the relationship between marketing
capabilities and the Miles-Snow strategic typology. Except for Conant et al.’s
(1990) study, however, the relationships between firm capabilities, distinctive
competencies, and strategic selection have not been empirically tested.
In addition, we test our proposed relationships in the Chinese business
environment context. China is currently experiencing substantial economic
expansion. In the early 1990s, Business Week noted that China’s economy was
growing at a rate well above 10 percent per year, and that the emergence of this
economy was sure to “affect global trade, investment, and raw material flows”
(Barnathan et al., 1993). Fortune described the growth of the economy of
Guangdong province as “a stunning accomplishment unmatched by Japan [and
other Asian economies] during similar stages of development” (Worthy, 1992).
Also, the New York Times characterized the Chinese economy as “the second
largest . . .in the world . . . Such statistics, while open to conflicting
interpretation, suggest that China could overtake the USA as the biggest
economy in another decade or so” (Kristof, 1993, p. 1). By the mid-1990s, China
represented about a quarter of the world’s population and had a trade surplus
with the US of about $35 billion; recent Department of Commerce reports show
that the US trade deficit with China is greater than that with Japan (Borrus and
Engardio, 1995; Barnathan, 1996).
Many Chinese firms are state-owned enterprises (SOEs), characterized by
parallel power structures; a combination of administrative and party authority
(Schermerhorn and Nyaw, 1991). Managerial reforms initiated in the mid-1970s
were designed to stimulate growth in the Chinese economy, including a focus
IMR on technology and innovation to increase competitiveness. Later reforms were
20,5 intended to give the SOE greater latitude in strategic decision making, and
initiated profit sharing between the SOE and the state (Laaksonen, 1988; Child,
1987). Although the reforms have been adopted slowly, some decentralization
has been observed. The central authority is commonly involved in
management hiring, labor, investment, and performance targets, as well as
516 employee compensation and discipline, while the SOE typically has some
latitude in setting outputs, prices, and making product-mix and input decisions
(Schermerhorn and Nyaw, 1991; Henley and Nyaw, 1986). Other types of
Chinese enterprises, such as urban, township, or village collectives, are
supervised by lower levels of government and less subject to central
government control, as are small private companies (Parry and Song, 1994). As
the Chinese economy moves toward a more decentralized form with less
government involvement in planning and strategy, SOE decision-makers will
increasingly be accountable for choosing advantageous competitive strategies
in keeping with their firms’ distinctive capabilities.
Despite the important, growing role of SOEs in the emerging Chinese
economy and the increasing importance of China in the global marketplace, few
studies have systematically investigated Chinese companies and their
competitive strategies (Song and Parry, 1994; Parry and Song, 1994). To our
knowledge there are no published empirical studies of the process by which
managers of Chinese firms make and support strategic competitive decisions.
The above-mentioned theoretical studies on firm capabilities assume
capitalistic, Western market conditions; it is unclear whether their findings
are generalizable to the Chinese business environment and Chinese decision
makers.
We develop several propositions relating four distinct firm capabilities
(inside-out, outside-in, marketing, and information technology) to the firm’s
strategic choices, and conduct an empirical study in the Chinese business
environment in which we empirically test our propositions. We use the
Miles-Snow typology to operationalize strategic type, and gather data from 245
managers of Chinese firms (mostly SOEs). Our empirical results largely
support the conceptual work described above. That is, we find evidence that
the theoretical model we build from principles derived from the Western
business environment appears to be generalizable to the Chinese business
environment. We conclude by providing prescriptions for practicing managers
in Chinese SOEs seeking to improve their firm’s process of strategy selection
and capability development.
Theoretical framework
The Miles-Snow strategic typology
The Miles and Snow (1978) strategic typology has received much attention and
investigation in the marketing and management literature over the last two
decades (e.g. Hitt and Ireland, 1986; McDaniel and Kolari, 1987; Ruekert and Strategic type
Walker, 1987; Conant et al., 1990; Shortell and Zajac, 1990; Rajaratnam and and firm
Chonko, 1995; Dyer, 1997). Miles and Snow envisioned strategy as a pattern in capabilities
a firm’s (or SBU’s) decisions, by which the firm aligns itself with its
environment. Their typology categorize firms according to the enduring
patterns of strategic behavior by which they achieve this alignment with the 517
environment (McDaniel and Kolari, 1987). The critical underlying variable in
this typology is the organization’s rate of change in its products or markets.
Miles and Snow (1978) proposed four strategic types (prospectors, analyzers,
defenders and reactors), and suggested that first three types (the “archetypal”
types) choose different competitive strategies with respect to products and/or
markets. Prospectors, for example, are more likely to be technologically
innovative with their products and/or to seek out new markets, analyzers will
prefer a “second-but-better” strategy, and defenders will focus on maintaining
their current position in their product markets. Reactors, by contrast, typically
lack long-term plans. In short, all three “archetypal” strategic types can be
desirable, but the firm or SBU must understand its distinctive competencies
and capabilities in order to choose and implement its strategic type correctly.
Detailed definitions of each strategic type are presented below:
(1) Strategic types (Walker et al., (2003) as follows:
.
Prospectors. Firms that operate within a broad, periodically redefined
product-market domain. Prospectors value being a first mover,
responding rapidly to early signals of opportunity, and these
responses often lead to competitive action. Prospectors generally
compete by stimulating and meeting new market opportunities,
though they may not sustain their strong position through time in all
markets they enter.
.
Analyzers. Firms that make fewer and slower product-market changes
than prospectors, but are less committed to stability and efficiency
than defenders. Analyzers maintain a stable, limited line of products
or services, carefully following a selected set of promising new
developments. Seldom a first mover, analyzers often act as a second
or third entrant in product-markets related to their existing market
base.
.
Defenders. Firms that attempt to locate and maintain a secure position
in relatively stable product or service areas. Defenders offer a limited
range of products, protecting their domain instead by offering lower
prices, higher quality, or better service than competitors. Defenders
are usually not at the forefront of new product development in their
industries, often ignoring industry changes not directly related to
their operations.
IMR .
Reactors. Firms that lack any well-defined competitive strategy and
20,5 do not have as consistent a product-market orientation as the
competition. Reactors are generally not willing to assume the risks of
new product or market development, nor are they as aggressive in
marketing established products. Reactors respond primarily when
forced to by environmental pressures.
518
(2) Capabilities (Day, 1990, 1994; Day and Wensley, 1988) as follows:
.
Inside-out capabilities. Those that allow the firm to keep costs down
and/or differentiate its offerings from competitive offerings. This
category includes financial management, cost control, technology
development, and logistics.
.
Outside-in capabilities. Those that bring key information into the firm
and allow it to be more responsive to changes in customer needs.
Allow the firm to be more effective in exploiting its inside-out
capabilities. This category includes market sensing, channel linking,
customer linking, and technology monitoring.
.
Marketing capabilities. Those that allow the firm to take advantage of
inside-out and outside-in capabilities by implementing effective
marketing programs. This category includes skill in segmentation,
targeting, pricing, and advertising.
.
Information technology capabilities. Those that allow the firm to
diffuse market information effectively across all relevant functional
areas and direct its new product development efforts more effectively.
This category includes having systems in place for facilitating
cross-functional integration, internal communication, and technology
and market knowledge creation.
Organizational capabilities
An organization requires a wide range of capabilities in many areas to enable it
to create economic value. Capabilities are generally scarce (different firms in an
industry will not all have the same capabilities), they are relatively immobile
(they are more useful to the firm that has them than to others), and they are not
easily copied by competitors. For these reasons, capabilities allow the firm to
sustain its competitive advantage through time and to achieve superior
profitability (Reed and De Fillippi, 1990; Amit and Schoemaker, 1993; Day,
1994). As noted earlier, the objective of this study is to determine whether
certain firm-level capabilities will be relatively more important to certain
strategic types in the Chinese business environment. That is, in this business
environment, prospectors will focus on developing capabilities that sustain
their competitive position as prospectors, and defenders will focus on
developing capabilities that sustain their competitive position as defenders. Strategic type
Analyzers, sharing characteristics of both prospectors and defenders, will be and firm
midway between prospectors and defenders in their importances of firm-level capabilities
capabilities.
We do not attempt to provide an exhaustive list of all possible capabilities an
organization might have. We focus instead on four categories of capabilities
that have been identified in the marketing and management literature as being
519
critically linked to the development and sustainability of competitive
advantage and long-term competitive success (Day, 1990, 1994; Day and
Wensley, 1988; Conant et al., 1990; Jaworski and Kohli, 1993). Inside-out
capabilities such as financial management, cost control, technology
development, and logistics allow an organization to keep costs down and/or
to differentiate its offerings from those of competitors. Outside-in capabilities
such as market sensing, channel and customer linking, and technology
monitoring, bring key information into the organization and allows it to be
more responsive to changing customer needs. Outside-in capabilities allow the
organization to use their inside-out capabilities effectively to exploit external
possibilities (Day, 1994). Marketing capabilities such as skill in segmentation,
targeting, pricing and advertising permits the organization to take advantage
of its market sensing and technological capabilities and to implement effective
marketing programs. Finally, information technology capabilities permit the
organization to effectively diffuse market information across all relevant
functional areas so that it can direct new product development efforts. These
have been more fully defined earlier.
Proposition development
As shown previously, outside-in, or market sensing and linking capabilities are
those that allow the organization to compete by sensing market changes and
shifts in the market environment, forging durable links with customers, and
creating strong bonds with channel members. These capabilities enable the
organization to compete effectively, as it can sense marketplace requirements
before competitors, and connect the organization’s other capabilities to the
external environment (Day, 1994). By contrast, inside-out capabilities include
capabilities in manufacturing process, technology and new product
development, technology change forecasting, and production facilities, as
well as the ability to forecast technological change in the industry (Walker et al.,
2003; Day, 1994).
While it is true that all organizations should possess good outside-in
capabilities, defenders (as defined earlier) owe their competitive existence to
their ability to defend their familiar products and markets, so for their very
survival it is crucial to have excellent market sensing and linking (outside-in)
capabilities (Conant et al., 1990). Outside-in capabilities are less critical to the
success of prospectors, who, according to the previous definition, would
IMR respond to the same challenge by seeking out new markets to serve, or
20,5 developing new products that can be sold to new or existing markets. Thus,
while outside-in capabilities are important for prospectors, the abilities to
forecast technological change and develop new products (typical inside-out
capabilities) are what allow prospectors to keep on prospecting and stay
520 competitive. Thus, on a relative scale, inside-out capabilities are relatively more
important to prospectors, while outside-in capabilities are relatively more
important to defenders, with analyzers falling in between on both scales. We
propose:
P1. Prospectors will have the lowest relative outside-in capabilities and
defenders the greatest, along the prospectors-analyzers-defenders
continuum.
P2. Prospectors will have the greatest relative inside-out capabilities and
defenders the lowest, along the prospectors-analyzers-defenders
continuum.
Marketing capabilities include knowledge of competition and of customers,
skill in segmenting and targeting markets, effectiveness of advertising and
pricing programs, and marketing activity integration (Conant et al., 1990).
While important to all organizations, these capabilities will be of utmost
importance to defenders in sustaining competitive advantage, since they are
most concerned about protecting current products and customers (McDaniel
and Kolari, 1987). By contrast, prospectors rely more greatly on proactive new
product development (Robinson et al., 1992), which requires that information is
effectively gathered from the marketplace and disseminated throughout the
organization (Kohli and Jaworski, 1990; Jaworski and Kohli, 1993). Better
information technology improves communication across functional areas in the
organization, increases strategic flexibility, and ultimately leads to greater new
product success (Day, 1994; Gupta et al., 1986; Griffin and Hauser, 1992, 1993;
Moenaert and Souder, 1996; Bharadwaj et al., 1999). We propose:
P3. Prospectors will have the lowest relative marketing capabilities and
defenders the greatest, along the prospectors-analyzers-defenders
continuum.
P4. Prospectors will have the greatest relative information technology
capabilities and defenders the lowest, along the
prospectors-analyzers-defenders continuum.
We are primarily interested in the relative capabilities found in the three
archetypal strategic types, so our propositions do not explicitly include
reactors. We will gather data from reactor organizations, however, and include
them in our analysis section.
Data Strategic type
The sampling frame consisted of a random sample of 800 Chinese firms (almost and firm
all SOEs) listed in Ward’s Business Directory, Directory of Corporate capabilities
Affiliations, and the World Marketing Directory. The data collection has three
steps: presurvey, collecting data on SBU strategies, and collecting data on
relative capabilities. In the first stage, we sent a one-page survey and an
introductory letter to the president of the company requesting participation to
521
all of the selected firms. We also offered a list of available research reports to
the participating firms. Each firm was asked to select an SBU/division for
participation and provide a contact person in the SBU/division. Out of the 800
firms, 414 agreed to participate and provided the necessary contacts.
In the second stage the designated SBU managers were contacted directly by
the researchers and a questionnaire designed to collect data on strategic types,
together with personalized letters, was mailed to each manager. We employed a
three-wave mailing based on the recommendations of Dillman (1978). We
collected data on strategic types from 352 Chinese firms (representing a
response rate of about 44 percent). Two items at the end of the instrument
assessed respondents’ confidence in their ability to answer the questions. The
individuals with a low level of confidence (less than six) were excluded from the
sample.
In the third stage, the capability questionnaire (designed to collect data on
the four capabilities) was sent to the SBU managers. The same process in the
second phase was followed. We collected data on four capabilities from 245
Chinese firms.
The data on strategic types used in this study are from this second phase
while the data on four capabilities are from the third phase. The final sample
includes the following industries: computer related products; electronics;
electric equipment and household appliances; pharmaceuticals, drugs and
medicines; machinery; telecommunications equipment; instruments and related
products; air-conditioning; chemicals and related products; and transportation
equipment. The majority of the SBUs/divisions had annual sales between $11
million and $750 million and had between 100 to 12,500 employees.
Measures
A set of 36 capability scale items were generated based on our review of the
literature (primarily Day, 1994 and Conant et al., 1990) and based on our
preliminary field research with Chinese managers. These scale items were
grouped theoretically into four categories corresponding to the firm capabilities
(outside-in, inside-out, marketing, and information technology). Respondents
were required to rate their SBU on each of the capability scale items relative to
their major competitors, using 0-10 scales. Consistent with earlier studies (e.g.
Parry and Song, 1994; Song and Parry, 1994), our field research also suggests
that 11-point scales (0 for much worse than our competitors; 10 for much better
IMR than our competitors) are more appropriate for eliciting levels of agreement.
20,5 Our experience with cross-national surveys suggests that 0-10 scales are better
understood across multiple nations than are the 1-7 or 1-6 scales more
commonly seen in North American research, perhaps because of their
structural similarities to the metric system.
We performed principal factor analysis with varimax rotation on the 36
522 capability variables. We retained variables with factor loadings exceeding 0.40.
This procedure produced four factors and reduced the total number of
variables to 21. All factors are distinguishable and well defined, and are
consistent with the four categories of capabilities theoretically expected as
described above. Examination of the diagonal of the factor score covariance
matrix (SMCs) indicates that all factors are internally consistent and well
defined by the measurement items. Factor loadings are reported in Table I.
Construct reliabilities measured by Cronbach’s alpha for the four capabilities
measures (outside-in, inside-out, marketing, and information technology) were
0.813, 0.825, 0.949, and 0.795. The construct reliabilities all exceeded the 0.70
level recommended by Peter (1979).
Outside-in capabilities are defined as market sensing and linking
capabilities that are focused outside the organization. The final scale had
five items drawn from Day’s (1994) set of market sensing and linking
capabilities. These measured the firm’s customer-linking capabilities (creating
and managing durable customer relationships), channel-bonding capabilities
(creating durable relationships with channel members), capability to create
durable relationships with suppliers, the ability to retain customers, and
market sensing capabilities. Managers were asked to rate their SBU on each of
these capabilities, relative to competitors, on a 0-10 scale.
Inside-out capabilities are defined as those related to greater efficiencies, cost
reduction, consistency in delivery, and greater competitiveness. From Day’s
(1994) set of inside-out capabilities, we ultimately generated a five-item scale
measuring: manufacturing processes, technology development capabilities, the
ability to predict technological change, production facilities, and new product
development capabilities.
Marketing capabilities are measured using a six-item scale drawn from the
Conant et al. (1990) study of marketing capability and strategic type. These
include: knowledge of customers, knowledge of competitors, integration of
marketing activities, skills in segmentation and targeting, effectiveness of
pricing programs, and effectiveness of advertising programs.
Information technology capabilities are defined as those that help an
organization create technical and market knowledge, and to facilitate
intra-organizational communication flow. Based on our field studies with
managers, we developed a set of information technology capability scale items,
of which five items were ultimately retained. These included the possession of
information technology systems for new product development, cross-functional
Outside-in capabilities Strategic type
Market sensing capabilities 0.88 and firm
Customer-linking (i.e. creating and managing durablecustomer relationships) 0.79 capabilities
capabilities
Capabilities of creating durable relationships with our suppliers 0.66
Ability to retain customers 0.70
Channel-bonding capabilities (creating durable relationships with channel 0.67 523
members such as wholesalers, retailers, etc.)
Eigenvalue of this factor 2.64
Percent variance explained by this factor 12.6
Inside-out capabilities
Manufacturing processes 0.70
Technology development capabilities 0.81
Ability of predicting technological changes in the industry 0.69
Production facilities 0.73
New product development capabilities 0.78
Marketing capabilities
Knowledge of competitors 0.95
Effectiveness of advertising programs 0.86
Integration of marketing activities 0.94
Skill to segment and target markets 0.93
Effectiveness of pricing programs 0.83
Knowledge of customers 0.83
Information technology capabilities
Information technology systems for facilitating cross-functional integration 0.83
Information technology systems for new product development projects 0.80
Information technology systems for internal communication (e.g. across different 0.46
departments, levels of the organization, etc.)
Information technology systems for facilitating technology knowledge creation 0.67
Information technology systems for facilitating market knowledge creation 0.63 Table I.
Eigenvalue of this factor 1.75 Principal component
Percent variance explained by this factor 8.3 factor analysis
integration, technology knowledge creation, market knowledge creation, and

internal communication.
Classification of strategic type. We used the Conant et al. (1990) eleven-item
scale to classify firms into four strategies (see Appendix). Following Conant
et al. (1990), we classify the SBU’s strategic type (prospector, analyzer,
defender, or reactor) using the “majority-rule decision structure” (see Conant
et al., 1990 for details) with one modification. We required that for an SBU to be
classified as a prospector or a defender, it must have at least seven “correct”
answers.
IMR Analysis and results
20,5 Validation of multi-item strategic type scales
We validated the Conant et al. (1990) multi-item scale by using an independent
assessment of strategic type made by experts who were highly knowledgeable
about the Miles and Snow typology. We assigned a reliability score of 1 to
organizations that were classified “correctly” by the multi-item scale (i.e. the
524 scale classified the organization into the same strategic type category as the
experts did), and a score of 0 to organizations classified incorrectly.
Approximately 90 percent of firms were classified correctly by the
multi-item scale. Additionally, we calculated the mean reliability score for
each of the eleven individual items, and found these means to be consistently in
the range of 0.84 to 0.86 (see Table II). That is, the responses given on each
individual scale item were consistent with the “correct” strategic type about 85
percent of the time. As a result, we feel confident in using the Conant et al.
(1990) multi-item scale to classify the organizations in our samples by strategic
type. This procedure classified the 245 organizations as follows: 83 prospectors,
76 analyzers, 51 defenders and 35 reactors. We believe this is the first time the
Conant et al. (1990) multi-item scale has been validated using external experts,
and the first time it has been validated in the Chinese business environment.
Test of propositions
To test our propositions we compared the scores on each of the four
multiple-item relative capabilities across all four strategic types using multiple
analysis of variance. For each factor, a multiple-item scale was obtained by a
simple average of the items. As shown in Table II, the MANOVA F-statistic
was found to be significant for all four relative capabilities, so pairwise
Strategic dimensions
Entrepreneurial – product market domain 0.865

Entrepreneurial – success posture 0.849
Entrepreneurial – surveillance 0.841
Entrepreneurial – growth 0.849
Engineering – technological goal 0.841
Engineering – technological breadth 0.865
Engineering – technological buffers 0.845
Administrative – dominant coalition 0.845
Administrative – planning 0.865
Administrative – structure 0.849
Administrative – procedure 0.865
Notes: The entries in this table are mean reliability scores for each of the items of the Conant
Table II. et al. (1990) scale. A score of 1 was assigned to organizations that were classified the same way
External validation of by the Conant et al. (1990) scale and by independent knowledgeable experts (see text for details).
multiple measures of The results suggest that the Conant et al. scale correctly classifies firms about 85 percent of the
strategic types time. For full text of scale items and possible responses, see Appendix
comparisons were computed to examine the nature of the differences in relative Strategic type
capabilities among the four strategic types. The t-test results of the pairwise and firm
comparisons are also included in Table III. capabilities
The results in Table III provide support for all four propositions. (In
Table III, we report support for a proposition if at least two pairwise
comparisons are significant and in the expected direction; see note at bottom of
table.) The relative outside-in capabilities of defenders and analyzers firms are
525
significantly higher than those of prospectors, although the difference between
defenders and analyzers is not significantly different. According to Table III,
mean scores on outside-in capabilities are 2.22, 2.17, and 1.21 for defenders,
analyzers and prospectors respectively. The F-statistic from the ANOVA is
11.21, which is significant at p , 0.05. T-tests of the paired comparisons
showed both the defender mean and the analyzer mean to be significantly
larger than the prospector mean (D . P; A . P) at the p , 0.05 level. This
finding is consistent with P1.
P2 is also supported. Relative inside-out capabilities are significantly higher
in prospectors than in analyzers or defenders (the capabilities for prospectors,
analyzers and defenders are, respectively, 8.53, 7.81, and 7.43, prospector mean
significantly larger than the other two means at p , 0.05).
P3 was supported. Defenders had significantly higher relative marketing
capabilities than prospectors (relative capabilities for defenders and
prospectors were, respectively, 3.69 and 2.92, different at p , 0.05, while the
analyzers’ relative capability was 3.37).
Finally, P4 was strongly supported. Prospectors had significantly higher
relative information technology capabilities than analyzers and defenders (the
capabilities for prospectors, analyzers, and defenders are 8.96, 8.58, and 7.94
respectively). It should be noted that no counterintuitive findings were obtained
for any of the four propositions: all significant findings were in expected
directions.
To summarize: our expectations were that prospectors would be most likely
to be strongest in relative inside-out and information technology capabilities,
while defenders would have the greatest relative strengths in marketing and
outside-in capabilities. We find support for all of these propositions.
One unexpected finding concerned the relative capabilities of reactors. We
noted, in particular, that reactors reported higher relative outside-in and
marketing capabilities than did any other strategic type (2.71 and 4.13
respectively). Miles and Snow (1978) found that reactors did not implement
strategies consistently, and therefore did not fully develop internal capabilities
that allow them to compete successfully. Our results suggest that this
expectation is not borne out in China. One possible explanation is that Chinese
firms that are newly expanding their scope of operations to serve the export
market (or even far-away domestic regions within China) have outside-in
(market sensing and linking) and marketing capabilities that are better
20,5
IMR
526
Table III.
strategic types
Analysis of variance
results: capabilities and
Countries/relative Strategic type Univariate Paired comparisons Hypothesis
capabilities Prospector Analyzer Defender Reactor F-value (t-tests) supported?
Outside-in capabilities 1.21 2.17 2.22 2.71 11.21** D . P; A . P; Yes

(1.28) (1.52) (1.49) (1.74) R . A;
R. P
Inside-out capabilities 8.53 7.81 7.43 6.79 15.69** P . A; P . D; Yes
(1.27) (1.28) (1.19) (1.85) P . R;
A . R; D . R
Marketing capabilities 2.92 3.37 3.69 4.13 2.30* D . P; Yes
(2.20) (2.52) (2.82) (2.45) R. P
Information technology capabilities 8.96 8.58 7.94 7.59 13.38** P . A; P . D; Yes
(1.10) (1.13) (1.33) (1.60) P . R;
A . D; A . R
Notes: Each cell shows standard deviation below mean in parentheses. In univariate F-value column, **: p , 0.05; *: p , 0.10. In paired
comparison column, significant differences at p , 0.10 are reported. A hypothesis is supported if at least two pairs significantly different in the
hypothesized direction
developed than those of Chinese firms just serving the local market. These Strategic type
firms use their skills in marketing to venture out into new foreign markets, and firm
where they are likely to behave in a highly reactive manner. Their superior capabilities
market sensing skills allow them to act as prospectors in certain markets
selected for entry, and possibly as adapters or defenders in others, and to be
successful in doing so. A multinational organization doing business against a
Chinese competitor should keep in mind that a firm apparently lacking a
527
consistent strategy (i.e. displays reactive behavior) may nonetheless be highly
skilled in marketing and market sensing and may be a surprisingly formidable
opponent.[1]
Organizations adopt certain mechanisms in response environmental
changes (Miles and Snow, 1978). They may choose to be pioneers in product
or market development, seek to protect existing positions within their
industries, or find an intermediate position between these two extremes. As a
result, firms exhibit relatively consistent strategies, or patterns of
product/market innovation decisions, in response to environmental shifts. A
firm that pursues a given strategy develops certain capabilities that help it to
implement its preferred strategies (i.e. strategy determines capabilities); these
capabilities are a source of competitive advantage and are exploited by
management by choice of strategy (i.e. capabilities determine strategy). As
noted earlier, “prospectors tend to want to continue prospecting” (Hambrick,
1983) According to this framework, all of the archetypal strategic types
(prospector, analyzer and defender) are preferable to the reactor, or the firm
that does not develop a consistent strategy with all the associated capabilities
(Miles and Snow, 1978; Conant et al., 1990). That is, the organization that
formulates a consistent strategy over time develops response mechanisms for
dealing with environmental change.
As noted earlier, the Miles and Snow typology is, above all, a typology of
innovation strategies. We mapped four capabilities of innovating firms onto the
Miles and Snow strategic typologies and developed a theoretical framework.
We proposed that, to compete effectively, prospectors would need to build up
inside-out and information technology capabilities, and defenders would need
to develop outside-in and marketing capabilities in order to compete effectively.
The extant studies used to develop this framework assumed a Western,
capitalistic competitive environment, and the few available empirical studies
had been conducted in North America. We then collect empirical data among
state-owned enterprises in China to assess the generalizability of this
theoretical framework in a vastly different business environment. We found
supporting evidence for all our propositions. While not claiming that the
theoretical framework is universally generalizable, we do suggest that it can be
used to shed light on the rapidly globalizing competitive environment in China.
This is not to say that the differences between Chinese and Western
business environments are trivial. Indeed, one surprising and anomalous
IMR finding concerned the unexpectedly high levels of marketing and market
20,5 sensing and linking capabilities among Chinese reactors. As noted in the
results section, this finding may be a reflection of the recent changes in the
Chinese business environment reducing the role of the government in planning
and strategy and allowing SOE management more decision-making autonomy.
Chinese SOEs, taking advantage of this newfound autonomy by venturing to
528 foreign markets (or smaller Chinese firms branching out into far-away regions
of their large home market) may have to compete by being reactive to the
changing business environment in the targeted foreign market. Their superior
marketing and market-sensing capabilities allow them to react quickly and
correctly. As a result, these firms will score better on these capabilities than
will more locally-focused Chinese firms. Our findings may be an artifact of the
fact that the Chinese business environment changes are still relatively new. It
would be interesting to conduct this study again in several years, to determine
whether many of these current reactors have developed into more
conventionally preferred strategic types such as prospectors or defenders.
There are some implications for theory and future research derived from this
study. The results generally support the Miles and Snow typology, and the
contention that the most successful organizations do tend to respond in certain
consistent ways in response to environmental change. Among Chinese SOEs,
prospectors develop the greatest inside-out and information technology
capabilities so they can continually and successfully pursue first-to-market
initiatives. Similarly, defenders develop greater outside-in and marketing
capabilities in order to stay abreast of, and to respond effectively to,
marketplace changes. As noted above organizations doing business with
Chinese competitors (perhaps for the first time) should recognize that reactors
perceived themselves to be surprisingly strong in certain capabilities, more so
that would have been predicted by the Miles and Snow model. An organization
should not, therefore, take lightly a challenge from a Chinese competitor
apparently following a reactor strategy.
Several managerial implications are derived from this study. First, to
compete effectively, an organization should recognize their main competitors’
apparent strategic types when conducting an external assessment, considering
that these strategic types may not change rapidly. Then, it should do an honest
internal assessment, considering its own strengths and weaknesses relative to
the competitive environment, and selecting an appropriate strategic posture.
Our theoretical framework suggests that there is a complementary relationship
between capabilities and strategies. That is, relative strengths in inside-out and
information processing capabilities are more consistent with pursuing a
prospector (or even analyzer) strategy; and continuing to prospect should
further develop these relative strengths and solidify the prospector’s
competitive position. This is, to a certain extent, a resource allocation issue:
when making investment decisions, the organization should allocate more to
building up capabilities that are most consistent with the chosen strategic type Strategic type
(defenders need to build up outside-in capabilities, and prospectors need to and firm
build up inside-out, for example). Our findings suggest that these implications capabilities
are as relevant for managers in Chinese firms as they are for managers from
Western firms, who will be increasingly doing business with China in the
future.
We recognize several limitations to our study. First, we selected four 529
important strategic capabilities, yet several others could have been added to the
study (such as human resource management capabilities). There are other
important organizational capabilities such as financial management and
human resource management capabilities. Second, we used cross-sectional
information obtained from self-reports. While common in this type of research,
further information about how organizations chose their strategic stances and
how firm capabilities evolved through time could not be studied; and using
more data sources would have reduced self-report biases.
Note
1. We thank a reviewer for this insightful suggestion.
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Appendix. Strategic typology scale items

The following statements describe some characteristics of this selected strategic business
unit/division. Please circle the description that best describes this selected business unit.
(1) In comparison to our competitors, the products which we provide to our customers are
best described as: (entrepreneurial – product market domain)
.
Products that are more innovative, and continually changing (P).
. Products that are fairly stable in certain markets while innovative in other markets
(A).
.
Products that are stable and consistently defined throughout the market (D).
.
Products that are in a state of transition, and largely respond to opportunities and
threats in the marketplace (R).
IMR (2) In contrast to our competitors, we have an image in the marketplace that:
(entrepreneurial – success posture)
20,5 .
Offers fewer, select products which are high in quality (D).
.
Adopts new ideas and innovations, but only after careful analysis (A).
.
Reacts to opportunities or threats in the marketplace to maintain or enhance our
position (R).
532 .
Has a reputation for being innovative and creative (P).
(3) The amount of time our business unit spends on monitoring changes and trends in the
marketplace can best be described as: (entrepreneurial – surveillance)
.
Lengthy: we are continuously monitoring the marketplace (P).
.
Minimal: we really don’t spend much time monitoring the marketplace (D).
.
Average: we spend a reasonable amount of time monitoring the marketplace (A).
.
Sporadic: we sometimes spend a great deal of time and at other times spend little time
monitoring the marketplace (R).
(4) In comparison to our competitors, the increases or losses in demand that we have
experienced are due most probably to: (entrepreneurial – growth)
.
Our practice of concentrating on more fully developing those markets which we
currently serve (D).
.
Our practice of responding to the pressures of the marketplace by taking few risks
(R).
.
Our practice of aggressively entering into new markets with new types of products
(P).
.
Our practice of assertively penetrating more deeply into markets we currently serve,
while adopting new products after a very careful review of their potential (A).
(5) One of the most important goals in this business unit in comparison to our competitors is
our dedication and commitment to: (engineering – technological goal)
.
Keep our costs under control (D).
.
Analyze our costs and revenues carefully, to keep costs under control and to
selectively generate new products or enter new markets (A).
.
Insure that the people, resources, and equipment required to develop new products
and new markets are available and accessible (P).
.
Make sure we guard against critical threats by taking any action necessary (R).
(6) In contrast to our competitors, the competencies (skills) which our managerial employees
possess can best be characterized as: (engineering – technological breadth)
.
Analytical: their skills enable them to both identify trends and then develop new
products or markets (A).
.
Specialized: their skills are concentrated into one, or a few, specific areas (D).
.
Broad and entrepreneurial: their skills are diverse, flexible, and enable change to be
created (P).
.
Fluid: their skills are related to the near-term demands of the marketplace (R).
(7) The one thing that protects us from our competitors is that we: (engineering –
technological buffers)
.
Are able to carefully analyze emerging trends and adopt only those which have
proven potential (A).
.
Are able to do a limitednumber of things exceptionally well (D). Strategic type
.
Are able to respond to trends even though they may possess only moderate potential and firm
as they arise (R).
.
Are able to consistently develop new products and new markets (P).
capabilities
(8) More so than many of our competitors, our management staff in this business unit tends
to concentrate on: (administrative – dominant coalition)
.
Maintaining a secure financial position through cost and quality control (D). 533
.
Analyzing opportunitiesin the marketplace and selecting only those opportunities
with proven potential, while protecting a secure financial position (A).
.
Activities or business functions which most need attention given the opportunities or
problems we currently confront (R).
. Developing new products and expanding into new markets or market segments (P).
(9) In contrast to many of our competitors, this business unit prepares for the future by:
(administrative – planning)
.
Identifying the best possible solutions to those problems or challenges which require
immediate attention (R).
.
Identifying trends and opportunities in the marketplace which can result in the
creation of product offerings which are new to the industry or reach new markets (P).
. Identifying those problems which, if solved, will maintain and then improve our
current product offerings and market position (D).
.
Identifying those trends in the industry which our competitors have proven possess
long-term potential while also solving problems related to our current product
offerings and our current customers’ needs (A).
(10) In comparison to our competitors, our organization structure is: (administrative –
structure)
.
Functional in nature (i.e. organized by department – marketing, accounting,
personnel, etc.) (D).
.
Product or market oriented (P).
.
Primarily functional (departmental) in nature; however, a product or market oriented
structure does exist in newer or larger product offering areas (A).
.
Continually changing to enable us to meet opportunities and solve problems as they
arise (R).
(11) Unlike our competitors, the procedures we use to evaluate performance are best
described as:
.
Decentralized and participatory encouraging many organizational members to be
involved (P).
.
Heavily oriented toward those reporting requirements which demand immediate
attention (R).
.
Highly centralized and primarily the responsibility of senior management (D).
.
Centralized in more established product areas and more participatory in new product
areas (A).
Notes: (P) ¼ prospector, (A) ¼ analyzer, (D) ¼ defender, (R) ¼ reactor. Provided here for
informational purposes only, not part of the instrument.
IMR
20,5 A cross-cultural comparison of
Internet buying behavior
534
Effects of Internet usage, perceived risks,
and innovativeness
Cheol Park
Department of Management Information Systems, Korea University,
Seoul, South Korea, and
Jong-Kun Jun
Department of Trade, Hankuk University of Foreign Studies,
Gyunggi, South Korea
Keywords Internet marketing, Republic of South Korea, United States of America,
Perceived risks, Innovation, Online catalogues
Abstract This research attempted to examine differences in Internet usage, Internet
innovativeness, perceived risks of Internet buying, and Internet buying behaviors between
Korea and America, and to identify a model for factors influencing Internet buying behavior,
explained by Internet usage, perceived risks, and innovativeness on a cross-cultural basis. Results
showed that there were significant differences in Internet usage and the perceived risks of Internet
shopping, but no significant differences in Internet buying intentions or online buying experience
between Korean and American consumers. Nonetheless, analyzing a regression model of factors
influencing Internet buying behavior, and cultural differences in effects of Internet usage and
perceived risks on Internet buying behavior were found. While there were main effects of Internet
usage and perceived risk on Internet buying behavior, these effects were weaker or even opposite to
those related to Korean samples. The implications of the study are discussed and further research
was suggested.
Introduction
The Internet is revolutionizing marketing and trade. As the Internet is
essentially a global medium, it is one of the most significant and the greatest
marketing tools for the global marketplace (Samiee, 1998). The global nature of
the Internet, combined with the nature of the communications that it can
convey, makes it a perfect vehicle for international interactive marketing.
International consumer research in a cross-cultural context is needed for a
better understanding of global online consumer behavior (e.g. Javenpaa and
Tractinsky, 1999). Cultural imperatives are likely to have a profound impact on
the adoption and the use of the Internet in international marketing. For
example, since Internet shopping tends to be impersonal, methodical, and
International Marketing Review policy-driven, it is not clear that a Confucian-based culture of personal
Vol. 20 No. 5, 2003
pp. 534-553
interaction is well suited to it. Furthermore, cultures that score high on
q MCB UP Limited
0265-1335
uncertainty avoidance are less likely to be early adopters of Internet marketing
DOI 10.1108/02651330310498771 schemes, even if other cultural imperatives are met. However, some observers
view Internet-based transactions as essentially culture-free and personal owing Internet buying
to the perception that they bring parties closer together (Perterson et al., 1997). behavior
Some researchers found that many international users of the Internet are
similar to US users (Quelch and Klein, 1996). Are Internet users around the
world homogeneous, and is there a worldwide common culture of the Internet?
The tremendous advances in global travel, communication, and media have led
to suggestions that cultures are converging and that the globalization of
535
markets will create, or at least lead to, a common culture worldwide. However,
common or uniform behaviors appear, there continue to be clear differences in
what these behaviors mean to the individuals and groups of different cultures
(Costa and Bamossy, 1995).
We could find some similarities and differences in Internet shopping
behavior between different culture groups. There are few cross-cultural studies
on the adoption of Internet shopping. This research attempts to examine the
differences in Internet usage, attitude (innovativeness and perceived risks), and
Internet shopping behaviors between Korea and America and to identify a
model of Internet buying, explained by Internet usage, perceived risk,
innovativeness, and online buying experience on a cross-cultural base. There
are two reasons why we chose to compare Korea and America. First, they are
both in the leading group in terms of Internet usage. According to an OECD
report, the Internet subscribers per 100 inhabitants of the two countries are well
above the OECD average (OECD, 2001a). Second, the two nations are culturally
very different from one another because Americans are generally
individualistic whereas Koreans are traditionally collective.
Theoretical background
Internet usage
Studies on the determinants of IT adoption and usage argue that perceived
usefulness and perceived ease of use are primary explanations of computer
acceptance behavior (Davis, 1986, 1989). Similarly, Igbaria et al. (1994) report
perceived usefulness and perceived fun play respective roles in the acceptance
of microcomputer technology. These factors can be applied to explain Internet
usage. Teo et al. (1998) found that perceived usefulness has consistently strong
effects on Internet usage, while the effects of perceived ease of use and
perceived enjoyment are partly supported. Loshe et al. (2000), using panel data,
found that the percentage of panelists making a purchase on the Internet
increases as a function of time spent online. They showed that the longer the
amount of time spent online, the greater the chance of making a purchase
online. Number of months online as well as length of time spent online is an
important predictor of online buying behavior (Bellman et al., 1999). They show
that a typical online buyer has a “wired” lifestyle. The wired lifestyle variables
include: number of months on the Internet; hours online per week; hours per
week working online; searching for product information online; and the attitude
IMR that email is indispensable. The variables predict buying behavior for 79
20,5 percent of the sample. Similar findings have also been reported by the research
of Citrin et al. (2000) on the role of Internet usage in the acceptance of Internet
shopping.
Perceived risks
536 Many marketing practitioners and researchers continue to be interested in
perceived risk because it is more powerful in explaining consumer behavior
and also because the theory has intuitive appeal and broad application
(Mitchell, 1999). Perceived risk is negatively correlated to self-esteem, rigidity
and risk taking and positively correlated to anxiety (Shaninger, 1976).
Attitudes toward perceived risk also affects consumer behavior. For some
decision situations like gambling or stock market investing, attitudes towards
perceived risk between subjects make significant differences in risk preference
(Weber and Milliman, 1997). Bhatnagar et al. (2000) argued that the likelihood
of purchasing on the Internet decreases with increases in product risk. Risk
perception is argued to have cross-cultural variation. The perception of the
riskiness of activities threatening health and safety showed cultural variation
(Slovic et al., 1991; Kleinhesselink and Rosa, 1991). Bontempo et al. (1997)
observed cross-cultural differences also in the perception of the riskiness of
financial gambles, comparing students and security analysts from the USA, the
Netherlands, Hong Kong, and Taiwan. Previous research has also
demonstrated the existence of cross-cultural differences in risky choices.
Weber and Hsee (1998) argue that people in socially-collectivist cultures tend to
choose riskier options than those in individualist cultures.
Innovativeness
Innovativeness has received considerable attention among consumer
researchers (e.g. Hirschman, 1980; Midgley and Dowling, 1978; Rogers, 1983).
There are two approaches to innovativeness. Joseph and Vyas (1984) focus on a
cognitive style, global innovativeness, which incorporates an individual’s
intellectual, perceptual, and attitudinal characteristics, arguing that this kind of
innovativeness is an important predictor of the adoption of innovations.
Goldsmith and Hofacker (1991) developed the domain specific innovation scale
as a Likert scale, arguing that it is a more useful predictor of the adoption of
innovations by consumers. Innovativeness should also be thought of as a
domain-specific phenomenon, linked to broader innovative traits, but more
predictive of actual behavior in a specific product than is global innovativeness
(Goldsmith and Flynn, 1995). Citrin et al. (2000) adopted the two measures of
innovativeness to explain consumer adoption of Internet shopping. Their
findings indicate that Internet usage and domain-specific innovativeness have
a direct influence on the adoption of Internet shopping. They also report that
domain-specific innovativeness is a moderator of the relationship between
Internet usage and the adoption of the Internet for shopping, but that general
innovativeness does not influence the use of the Internet for commerce. Like Internet buying
perceived risk, consumer innovativeness can be different according to cultural behavior
differences. Hofstede (1980, 1991) identifies three dimensions of national culture
that can be related to consumer innovativeness: individualism, uncertainty
avoidance, and masculinity. Individualism and masculinity are positively
related to consumer innovativeness whereas uncertainty avoidance is the
opposite (Skeenkamp et al., 1999). 537
Cultural differences
People are deeply influenced by the cultural values and norms they hold. Many
researchers have classified cultures around the world in various categories.
The most typical category is Western vs Oriental culture. The Western cultural
value ascribes individualism and low-context while oriental ascribes
collectivism and high-context (Kim et al., 1998). Individualism-collectivism is
a cultural-level variable referring to the extent to which members of a culture
tend to have an independent versus interdependent construal of the self
(Hofstede, 1980). These cultural values influence consumption related
behaviors (Wang, 1999). Western cultural values describe how an individual
from an individualistic society fulfills his/her needs through a market system
that emphasizes individualistic goals (Tse, 1996). The independent
construction of the self, which is dominant in Western cultures, is rooted in
the belief that distinct individuals are inherently separate (Wong and Ahuvia,
1998). As hedonic value primarily gratifies the internal, private self, Cheng and
Schweitzer (1996) noted that American television ads stressed enjoyment much
more than did Chinese commercials. Collectivists tend to be concerned with
affiliating closely with others, maintaining connectedness, and blending the
self/other boundary (Aaker and Williams, 1998). In collective and high-context
cultures, group bonds and harmony are viewed as important, while analytical
procedures and structures tend to be avoided. On the contrary, in individual
and low-context cultures, explicit communication and clear procedures are
preferred. Such traits were represented in pursuing the values or benefits from
certain activity or behavior. Harmonic and holistic benefits would be preferred
in collective cultures while accurate and analytical benefits are opted for in
individual cultures.
Demographic variables
Demographic variables have been reported as significant variables influencing
on Internet usage and buying. Males were found to use the Internet for
downloading and purchasing activities to a greater extent compared to females
(Teo, 2001). One possible reason is that since males are more likely to be
interested in learning and using PCs compared to females, they are likely to be
more skilled in downloading and purchasing activities on the Internet. Zeffane
and Cheek’s (1993) study of computer usage in an Australian
telecommunications organization found that age was negatively correlated
IMR with computer usage. Teo (2001), however, suggested that age was not
20,5 significantly related to usage of the Internet in terms of purchasing.
Research questions
Concerning Internet usage time, one might presume that Americans spend
538 more time on the Internet than Koreans because America is a more developed
country and is of course the origin of the Internet. However, recently Korea
become one of the leading countries of Internet development and there are some
unique cultural and infra-structural points relating to Internet usage.
Korean culture has undergone individualization for decades, although
collectivism still remains (Han and Shin, 2000). The ideology of independence,
individuality and privacy has not yet been fully developed in Korean society.
Individuals still do not exist alone. Rather, they exist as a part of their extended
family and a collective network. The following concepts are said to be
fundamental to understand the communication behavior of Korean people:
che-myon (described as akin to, but more complex than, Western or Chinese
concepts of “face”), jung (described as a psychological bond that goes beyond
attachment and love), and noon-chi (described as an aspect of tacit
communication akin to mind reading) (Gudykunst et al., 1996). Because of
che-myon and noon-chi, Koreans usually do not speak to strangers. Likewise,
value placed on harmony with others accounts for the collectivist styles of
communication and for the absence of argumentation and debate in their daily
life (Becker, 1986). But because status effects such as age, gender and
occupation are reduced in computer-mediated communication (see Tan et al.,
1998), many Koreans feel freer when communicating with one another on the
Internet. Furthermore, the low price of Korea’s broadband services (Point
Topic, 2002), combined with Koreans’ family-like social relationships helps to
promote Internet usage.
Koreans may spend more time online, first because they show a high level of
conformity with their peers (Cho and Kim, 2001). People in collectivist societies
conform more to their peers because they regard the behavior and opinions of
their peers as reference points. Korean people a have high degree of conformity
with their peers in using the Internet because Korean society is characterized
by collectivism. Collectivists are concerned with affiliating closely with others,
maintaining connectedness, and blending the self/other boundary. Second,
Koreans lead the world in per-capita broadband usage. High-speed connections
encourage Koreans to use online audio/video components and to play online
games, which are highly time consuming (NetValue, 2001). Since nearly 40
percent of the housing in Korea is apartments, broadband has been relatively
easy and cost-effective to install. Furthermore, the average monthly broadband
subscription is $28 (USD) with unlimited access time, which is highly
conducive to heavy Internet use. This has been possible because the Korean
government had made the information highway a national priority. There are a
lot of PC rooms (like Internet cafés) in Korea as well, which escalates the Internet buying
availability of the Internet. behavior
As stated above, cultural background is a strong determinant of risk
perception (Bontempo et al., 1997), but the perceived risk of online shopping is
not just a cultural matter, because the use of secure transaction systems or
policies on privacy protection will mainly determine the level of perceived risk
(Figure 1).
539
The uptake of B2C e-commerce is constrained by the availability of adequate
infrastructure for secure transactions. This infrastructure is unevenly
distributed across countries. According to OECD, Korea had less than one
secure server per 100,000 inhabitants in 2000, almost the lowest level among
the OECD countries, while the USA had almost 25 (OECD, 2001b). Secure
servers are essential for e-commerce and trust, so the low availability of secure
servers in Korea makes online shoppers perceive a higher risk. In addition,
Americans have experienced direct marketing through catalogues,
telemarketing, and cable TV for much longer than Koreans have. So,
American consumers who are familiar with direct marketing may perceive less
risk involved in Internet buying.We propose the following research questions:
RQ1. Do Korean Internet users spend more time online than American
users?
RQ2. Do Korean Internet users perceive more risks in Internet buying than
American users?
Other research questions are relating to factors influencing Internet buying
behavior between two countries. The factors we considered were Internet
usage, perceived risks, innovativeness, demographics, and nationality. We
Figure 1.
Secure servers per
100,000 inhabitants
IMR built a conceptual model explaining factors influencing online buying on the
20,5 basis of past studies (e.g. Swaminathan et al., 1999; Lohse et al., 2000; Bellman
et al., 1999; Citrin et al., 2000). The relationships between each exploratory
variable and the dependent variable in Figure 2 were proved to be significant in
past research, but nationality and its interactions has never been considered.
540 Perceived product risks and consumer innovativeness may have different
relationships to the adoption of Internet shopping in different cultures.
According to previous research, both Internet usage and consumer
innovativeness are positively related to the adoption of Internet shopping in
the USA (Citrin et al., 2000). Citrin et al. (2000) found that higher levels of prior
Internet usage, for purposes other than shopping, result in increased levels of
the use of the Internet for shopping. Domain-specific measures of
innovativeness have yielded more useful predictions of the adoption of
innovations by consumers (e.g. Goldsmith and Hofacker, 1991). It was found
that there is a significant positive relationship between domain-specific
innovativeness and the adoption of the Internet for shopping (Citrin et al., 2000).
Bhatnagar et al. (2000) argued that the likelihood of purchasing on the Internet
decreases with increases in perceived product risk. Perceived security of
transactions had a negative, although marginal, effect on the frequency of
shopping on the Internet (Swaminathan et al., 1999). According to Weber and
Hsee (1998), there are cross-cultural differences in risk perception, but not in
attitude towards perceived risk. The majority of respondents from the PRC,
Figure 2.
Conceptual model of
Internet shopping
USA, Germany, and Poland were willing to pay more for options perceived as Internet buying
less risky. We expect the same result will be found with Internet buying behavior
behaviors.
We considered dependent variables such as Internet buying intention and
online buying experience. Intention to behave (e.g. intention to buy) is widely
regarded as the most immediate antecedent of behavior (e.g. actual purchase).
Online buying experience means adoption of the Internet for shopping, and is
541
usually obtained by asking how often they use Internet for shopping (e.g.
Swaminathan et al., 1999; Citrin et al., 2000). While the experience of Internet
shopping is a measure of behavior, it seems to have an influence on intention to
buy. One’s past experience is an important influencing factor of one’s future
action.
There are few cross-cultural studies on how Internet usage, consumer
innovativeness, and perceived risks influence Internet buying behaviors, so we
attempted to identify cultural differences in these areas on Internet buying
behaviors. This lead us to making following research questions:
RQ3. Is there a cultural difference in the effect of Internet usage on Internet
buying behavior?
RQ4. Is there a cultural difference in the effect of perceived risk on Internet
buying behavior?
RQ5. Is there a cultural difference in the effect of innovativeness on Internet
buying behavior?
Method
Samples and procedures
An online survey was performed for obtaining data. The Korean subjects
consisted of a panel from an online survey company in Korea (www.survey.co.kr).
An HTML-format questionnaire was published on the Web site and the panel
members visited the website and responded to the survey. They were given air
mileage points as rewards. Of the Korean respondents 150 completed the online
survey. Unlike telephone surveys, we could not generate a representative
sample of American Internet users, so the American respondents were
contacted through email, newsgroups, Web-board postings and by inviting
them to visit the online survey site (www.survey.co.kr). Korean traditional
folding fans (bu-chae) were offered as an incentive for them. Of the US
respondents 133 completed the questionnaire. The available lists of e-mail
addresses are usually not representative (Furrer and Sudharshan, 2001), so we
diversified the sources of respondents to newsgroups and Web-boards.
In the Korean sample, 6.0 percent were in their teens, 45.3 percent were in
their twenties, 40.0 percent were in their thirties, and 8.7 percent were over
40 years old. The Korean sample consisted of 55.2 percent males, and 44.7
IMR percent females. The mean period of Internet usage was 3.88 years and the
20,5 mean time of Internet usage per week was 18.15 hours. In the US sample, 6.9
percent were in their teens, 36.2 percent were in their twenties, 32.3 percent
were in their thirties, and 24.6 percent were over forty years old. The American
sample consisted of 56.7 percent males, and 43.3 percent females. The mean
period of Internet usage was 4.84 years and the mean time of Internet usage per
542 week was 11.3 hours.
Our samples were from convenience sampling. Compared with the audience
profile of Nielsen/NetRatings (www.nielsen-netratings.com), the US sample had
slightly more male respondents (56.7 percent, 48.9 percent in
Nielsen/NetRatings), less teenage respondents (6.9 percent, 19.2 percent in
Nielsen/NetRatings). The gender distribution of the Korean sample compared
favorably with the Korea Netizen Profile of 2002 (knp.adic.co.kr) (e.g. the
Korean sample consists of 55.2 percent males, while KNP consists of 57.1
percent males), through the Korean sample had less teenage respondents (6.0
percent) than KNP had (27.8 percent).
There was no difference in gender distribution (Pearson chi-square ¼ 0.06
with df ¼ 1, p ¼ 0.807) between the two samples. Because the proportion of the
respondents who were more than forty years old was a little bit higher in the
US sample than that in the Korean sample, the two samples were statistically
different in age distribution (Pearson chi-square ¼ 13.93 with df ¼ 3,
p ¼ 0.007). But the number of respondents in their forties or over was
relatively small, so if we consider respondents who were in their thirties or
older as a combined group the two samples then showed homogeneity in age
distribution (Pearson chi-square ¼ 2.27 with df ¼ 2, p ¼ 0.322).
Measurements
Internet usage. Internet usage is said to have three dimensions: frequency of
Internet usage, amount of daily Internet usage and diversity of Internet usage
(Igbaria et al., 1994). We focused on the first two dimensions by measuring
hours of Internet use. Hours of Internet use per week and number of months on
the Internet were measured by open-ended questions. Number of months on the
Internet was recoded to number of years on the Internet.
Perceived risks. Risk is a multidimensional construct. However, Bhatnagar
et al. (2000) argue that in the case of Internet shopping, two types of risk –
product category risk and financial risk – are predominant. Product category
risk matters if one has a specific product in mind before getting on the Internet.
Since we focus on the risks involved in buying online regardless of product
category, product risks are measured by concerns about product price and
information. The reliability coefficient for the scale was 0.671 for the Korean
sample and 0.738 for the American sample. Financial risk associated with
Internet shopping is primarily in regard to losing money via credit card fraud.
Perceived security of transactions and concern for privacy are major elements
of financial risk in online transactions. We measured privacy and security risks Internet buying
by a two-item five-point Likert-type scale in which the former were privacy behavior
concerns and the latter were the payment concerns. The reliability coefficient
for the scale was 0.581 for the Korean sample and 0.782 for the American
sample. The relatively lower reliabilities of some constructs might undermine
the significance of the findings and their generalizability, but Nunnally’s
guidelines are primarily concerned with the development of finely tuned
543
measures of individual traits to be used for decisions about individual persons
(e.g. GMAT tests). As most marketing research is not of this nature, lower
levels of reliability may be acceptable in marketing research studies (Peter,
1979).
Innovativeness. Domain specific innovativeness (DSI) was measured using
Goldsmith and Hofacker’s (1991) six- item scale. Citrin et al. (2000) modified the
scale for the Web, so we used their adoptation. Originally, the scale was a
seven-point Likert-type scale, and items were anchored with “disagree
strongly” and “agree strongly”, but we used a five-point scale. Three items that
had factor loadings greater than 0.5 were retained. The scale yielded a
standardized a = 0.681 for the Korean sample and 0.690 for the American
sample.
Others. A measurement of buying intention at the Internet shopping
mall included a seven-point Likert-type scale ranging from “never buy” (1)
to “must buy” (7). Online shopping experience measured by purchasing
frequency on the Internet shopping mall included a five-point Likert-type
scale from “never buy” (1), “1-2 times per year” (2), “3-4 times per year” (3),
“once per one or two months” (4), “2-3 times or more per month” (5). The
medium value of the each frequency scale was reassigned to make a
numeric variable. For example, “1-2 times per year” becomes 1.5, “once per
one or two months” codes as 9. Age (younger than 29 years old ¼ 1, 30 to
39 years old ¼ 2, and older than forty ¼ 0), gender (male ¼ 1, female ¼ 0)
and nationality (Korea ¼ 1, America ¼ 0) were coded as dummy variables.
Among the constructs in the model, Internet usage, nationality, intention to
buy, and online shopping experience (frequency of Internet shopping) are not
measured with multi-item scales. We did exploratory factor analysis first to
test unidimensionality, and after exploratory factor analysis (see Appendix),
the constructs measured using multi-item variables were averaged for each
factor and the averages were used as input for each construct.
Results
Cross-cultural differences in Internet usage and Internet shopping behavior
An Independent sample t-test was performed to see if there are any differences
between respondents from Korea and those from America. The results are
presented in Table I.
IMR The period of Internet usage (length) in the US sample was longer than that
20,5 of Korean sample, but the hours of Internet use per week (hours) in the Korean
sample was longer than that of the US sample. This result was consistent with
other research reports (e.g. Nielsen/NetRatings, 2002; NetValue, 2001). Korean
users were more innovative than American users, but showed higher perceived
risk on privacy and security (RISK1) as well as higher perceived risk on
544 product (RISK2) than American users. We could not find any significant
difference in online shopping experience (EXP) nor in the Internet buying
intention (BI) between the two samples.
A Model on factors influencing Internet buying behavior

Although there was no difference in online shopping experience (the frequency
of Internet shopping) or in the Internet buying intention between the Korean
sample and the US sample, there were significant differences in the explanatory
variables such as perceived risks, innovativeness, hours of Internet use, and
length of Internet use. To investigate the reason for this phenomenon, we
structured regressions to account for the differences in relationship strength by
nationality.
The conceptual model can be transformed into a structural model. We
adopted a regression analysis to more clearly test the interaction effects (e.g.
Nat*RISK1 and so on). We believe regression method is more straightforward
in estimating interaction effects with a dummy variable (e.g. nationality). We
calculated the variance inflation factor to check for multicollinearity. The VIF
ranges from 1.04 to 7.43, which means multicollinearity is not a problem.
In order to test our proposed model, we included hours of Internet use
(hours), length of Internet use (length), perceived risk on privacy and security
(RISK1), perceived risk on product (RISK2), Internet innovativeness (DSI),
nationality (NAT) as main effects, in addition to each of the former five
variables’ interactions with nationality. Since research questions 3 to 5 required
testing for the moderating effects of nationality on the relationships between
independent variables and dependent variable, we formed interaction terms.
Two demographic variables – gender and age – were included in the analysis
Hours Length RISK1 RISK2 DSI EXP BI
Total Mean 14.93 3.88 3.44 3.02 3.27 6.28 4.37

s.d. 15.05 3.44 1.08 0.88 0.82 7.83 1.33
KOR Mean 18.15 3.03 3.96 3.22 3.55 5.92 4.49
s.d. 16.13 1.66 0.77 0.79 0.74 7.24 1.27
USA Mean 11.30 4.84 2.83 2.79 2.94 6.69 4.23
Table I. s.d. 12.84 4.52 1.07 0.92 0.80 8.48 1.38
Comparisons of mean Difference Mean 6.85 21.80 1.13 0.44 0.61 -0.78 0.26
differences between t-value 3.973 24.351 10.211 4.250 6.593 -0.826 1.661
Korea and the USA sig. P 0.000 0.000 0.000 0.000 0.000 0.409 0.098
as control variables. A multiple regression analysis was used to estimate the Internet buying
model with the total sample. behavior
The results, with online shopping experience (model 1) and Internet buying
intention (model 2) as the dependent variables, are presented in Table II. Model
1 is a kind of attitude-behavior model whose dependent variable (shopping
experience) is taken place in the past whereas the independent variables are
about present attitudes. That might result in mis-specification of the regression 545
model. Studies using cross-sectional data usually encounter such a problem;
nevertheless the practice is adopted in many studies (e.g. Korgaonkar and
Wolin, 1999, Citrin et al., 2000, Teo, 2001, Li et al., 1999). One of the notable
features of attitude is enduring and will likely be retained until there is some
strong reason to change them (Shimp, 1993). Therefore, we assumed that the
independent variables did not change during the period of our concern and
considered model 1. The explanatory power of the models, as indicated by R 2
for models 1 and 2 was 0.115 and 0.183 respectively.
Model 1 shows that perceived risk on privacy and security (RISK1)
negatively affects online buying experience (frequency of Internet shopping) (b
= 2 1.558, p , 0.05), whereas hours of Internet use is positively related to
online buying experience (b = 0.156, p , 0.01). Nationality (NAT) showed
interactions with perceived risk on privacy and security (RISK1) and hours of
Internet use in model 1. Model 1 also shows that the two variables act
differently in each country. Although perceived risk on privacy and security
Model 1 (dependant Model 2 (dependant

variable: EXP) variable: BI)
(Constant) 22.689 (4.201) 2.073 (0.664)

Control variables Gender 20.320 (0.963) 0.059 (0.152)
Age 1 (# 29) 22.082 (1.403) 20.154 (0.223)
Age 2 (30-39) 0.492 (1.439) 0.345 (0.228)
Research variables DSI 0.516 (0.913) 0.430*** (0.144)
RISK1 21.558** (0.651) 20.170 (0.104)
RISK2 20.380 (0.789) 0.016 (0.125)
Hours 0.156*** (0.056) 0.007 (0.009)
Length 0.187 (0.155) 0.016 (0.025)
NAT 20.721 (5.895) 0.410 (0.932)
NAT*DSI 1.513 (1.373) 20.208 (0.218)
NAT*RISK1 1.838* (1.074) 0.136 (0.171)
NAT*RISK2 20.790 (1.137) 20.218 (0.180)
NAT*hours 20.145** (0.073) 0.0005 (0.012)
NAT*length 20.093 (0.452) 0.031 (0.071)
EXP 0.027*** (0.010)
R2 0.115 0.183 Table II.
F-value F(14,260)=2.417 F(15,259)=3.855 Results of regression
Notes: * p, 0.1, ** p , 0.05, *** p , 0.01, S.E. in parentheses analysis
IMR (RISK1) negatively affects online buying experience in general, Korean online
20,5 users are not risk-aversive but risk-taking, when they purchase online. In other
words, Korean online users tend to buy online even though they feel privacy
and security risk while American users will not. This result is consistent with
the results in Table I, showing that Korean users perceive more privacy and
security risk (RISK1) than American users, but at the same time online buying
546 experience (EXP) is almost same for both groups. Second, “hours of Internet
use” is positively related to online buying experience, but the relationship is
significantly weakened in the Korean sample, meaning that Koreans prefer
using the Internet for other purposes, besides shopping. This result is also
consistent with the results in Table I. Other variables (innovativeness,
perceived risk on product, and length of Internet use) do not interact with
nationality.
The analysis of model 2 shows that domain-specific innovativeness and
online buying experience affect online buying intention (b = 0.430, p , 0.01;
b = 0.027, p , 0.01), but that no variable interacts with nationality. In
summary, we found there are some cross-national differences in experience
(action), but no differences in intention (attitude).
Discussion
Internet usage and Internet buying behaviors
Internet usage time is greater in Korea than in the US but there are no
significant differences in Internet shopping experience or intention between the
two countries. According to Citrin et al. (2000), higher levels of Internet usage
result in increased Internet shopping, but this was not supported in our Korean
sample. One explanation for this is that the Internet is used primarily for the
purposes of education, information searching, online gaming, participation in
community forums, and personal communication in Korea (NetValue, 2001). As
Korea is a collective society, involvement in online communities is higher than
in any other country. The popular Web-sites of Korea are community sites such
as “Daum”, “iloveschool”, “freechal”. Internet users in Korea tend to spend
more time in online communities or communication, but less time shopping.
This may explain why there is no significant relationship between Internet
usage time and Internet shopping experience. There is another explanation for
this. Korea grabbed the top position in the world in terms of e-commerce site
access with 78.2 percent of its Internet users visiting e-commerce sites, but only
28.3 percent of them making secure connections, representing the actual
purchase, which is lower than that of western countries (NetValue, 2001). This
may be somewhat related to the high perceived risk among Korean Internet
users.
Other explanations for the lack of a significant relationship between usage
time and Internet shopping experience in Korea are as follows. Consumers are
shopping differently depending on whether their motivations for searching are
primarily experiential or goal directed (Babin et al., 1994). Goal-oriented Internet buying
shoppers are more interested in buying online than experiential shoppers behavior
(Wolfinbargar and Gilly, 2001). There should be some discrepancy in the
motivations for Internet use between Koreans and Americans. Comparing the
top 50 Web sites (as of March 2002) of Media Metrix US and the top 50 Web
sites (as of April 2002) of Internet Metrix Korea, some differences were found.
Although most sites in both top ten lists were portals, Koreans preferred
547
community portals rather than information portals. Furthermore, there were
two shopping sites (eBay and Amazon) in the US top ten list, while there were
none in the Korean list. If we classify the motivations for Internet usage using
theories of mass communication (Defleur and Ball-Rokeach, 1989), Koreans, as
collectivists, seem to be interaction- oriented whereas Americans, as
individualists, are action-oriented. Therefore, longer Internet usage time
among Koreans may not be an influence on their Internet shopping behaviors.
Perceived risks and Internet buying behaviors

The perceived risks of Internet shopping are higher in Korea than in the US.
This means that fewer Koreans tend to trust e-commerce in Korea and that
more Koreans perceive high risk in Internet shopping. This seems to be related
to the low availability of secure servers (OECD, 2001b) and less experience with
direct marketing. Generally, the security of online transaction systems and the
protection of privacy are important to increase online purchasing, but many
Koreans have shopped online when the security systems were not good. This
means that Koreans take risks, somewhat, when they buy online, but cannot
see that they prefer risks.
Why do Koreans show a similar degree of online buying experience
(frequency of Internet buying) in spite of higher perceived risks of Internet
shopping? First, we notice that there are variances among Internet shopping
malls in Korea. Koreans tend to trust some malls controlled by big companies,
rather than independent malls. Perceived risks concerning these two kinds of
shopping malls are totally different, and almost all Korean Internet shoppers
prefer to buy products at more established malls, operated by big companies.
Therefore, Koreans seem to take risks in Internet shopping, despite the
regression result (i.e. high frequency of Internet buying, despite high perceived
risks) since most shoppers purchase goods from large, more-established
Internet shopping malls where they feel more secure, in spite of high perceived
risks.
Second, Korean Internet users tend to take risks owing to the high
innovativeness of Internet and IT. The household penetration rate of high
speed Internet (e.g. ADSL) in Korea at the end of 2002 was 67.5 percent, the
highest among OECD countries. This fact shows the high Internet
innovativeness in Korea.
IMR Third, it is possible to interpret that cultural traits of Korea cause the
20,5 risk-taking of Internet shopping. Hsee and Weber (1988) provided an answer to
the cross-cultural differences in attitude toward perceived risk. They found that
Chinese students were significantly less risk-averse than Americans in their
choices between risky options and sure outcomes. In their post-hoc explanation,
they suggested a “cushion hypothesis”, arguing that in collectivist cultures like
548 China, family or other members will help out any group member who loses a lot
of money after selecting a risky option. On the other hand, in individualist
cultures like America, a person is expected to bear the consequences of his or
her decision. Collectivism, thus, acts as a cushion against possible losses, in
other words as a social diversification of risks. Because Korea is a collectivist
culture similar to China, the cushion hypothesis can be an explanation for the
results of this research.
Bellman et al. (1999) explains that while online consumers are concerned,
security and privacy concerns are a decreasingly important predictor of
shopping behavior, because the number of consumers who has a bad
experience with buying online will decrease over time. With the increase of
secure servers and direct marketing in Korea, it is expected that the effect of
perceived risk on Internet buying will decrease accordingly.
Innovativeness and Internet buying behaviors

Just like Internet usage, the Korean sample showed higher innovativeness for
the Internet than the American sample, but there was no interaction effect of
culture (nationality) and innovativeness (DSI) on Internet shopping behavior.
This result could be understood in line with Internet usage time. Internet users
in Korea usually think of themselves as innovative because of their heavy use
of the Internet. Therefore, Internet innovativeness may not significantly affect
the Internet shopping experience of Koreans. In fact, Korean Internet users tend
to be innovative in using IT communication tools (e.g. mobile phones, PDAs,
instant messaging, and virtual communities). Therefore, innovativeness of IT
communication tools seems to have no significant relationship with Internet
shopping. Another reason is that the high risk perceived by Koreans may offset
the innovativeness effect on Internet buying behavior. This means that even
though Internet innovativeness is high, if the e-commerce system is not secure
and trustworthy, Internet buying will not occur.
Conclusion and limitations

The study found that there were significant differences in Internet usage,
innovativeness, and perceived risks of Internet shopping, but no significant
differences in online shopping experience and Internet buying intention and
between Korean Internet users and American Internet users. Also, there were
found to be cultural differences in the effects of Internet usage and perceived
risks on Internet buying behavior. Although there were effects of Internet
usage and perceived risk on Internet buying behavior, the effects were weaker Internet buying
or even opposite in the Korean sample compared to the American sample. behavior
Even when the same information technology is introduced, its adoption and
application depends on unique traits of the society. Advanced technology and
international standardization are not particular to a locale. Therefore, though
Internet marketing has some merit in targeting global customers, it should
consider cultural differences when adopting and applying e-commerce. 549
Eventually, proper cultural transformation in international marketing will be
necessary, even in the Internet age.
Managerial implications
The finding that Korean online shoppers take risks offers some marketing
implications. It might be important to develop a marketing strategy for
promoting Internet shopping rather than to improve secure e-commerce
systems. For example, discount pricing or convenient purchasing processes
should come prior to protecting personal information or security for payments.
As Korean Internet shoppers prefer big and noted shopping malls where they
feel more secure, marketers of independent Internet shopping malls could
consider strategic alliances with more-established malls to reduce perceived
risks among their customers. This means foreign Internet shopping malls
might be more successful if they align with famous Korean shopping malls in
developing a Korean target market, because familiar brands or store names
could reduce perceived risks involved in online shopping.
The finding that Internet usage time is greater in Korea, but that usage is not
related to Internet buying, implies that Internet marketers in Korea need to
encourage Internet users to convert to Internet buyers. As Koreans use the
Internet for social (e.g. virtual communities) and recreational (e.g. network
games) purposes, Internet marketers should develop strategies that lead them
from communities of fantasy, relationship, and interest towards communities
of transaction (Armstrong and Hagel, 1996). Recently, in Daum (www.daum.
net), the biggest online community site in Korea, sales from of shopping malls
rapidly increased to 73 percent in 2001 from 28 percent in 2000, while the
portion of online advertising decreased to 21 percent in 2001 from 54 percent in
2000 (Yonhap News, 2003). This shows that community sites in Korea are
trying to develop e-commerce transactions.
Limitations and further research

This study has some limitations owing to its exploratory stage, and presents
several challenges with respect to theory building and methodology. Some
scales were measured in minute increments. Furthermore, convenience
sampling weakens research objectivity. More scientific sampling will be
required for further research. There are some omitted variables relating to
Internet shopping in the model, for example, shopping orientations and vendor
characteristics. A comprehensive model of Internet buying behavior will be
IMR required for further research. A structural equation model is needed to attempt
20,5 to identify the exact causal relationship among variables. In addition, finding
and identifying new mediating variables between Internet usage, perceived
risks and Internet buying behavior will be needed for a more accurate
explanation of cultural differences in Internet buying behaviors.
550
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Appendix
Items DSI RISK1 RISK2
1. I know new Web sites on the Internet more than

my friends 0.792 20.114 20.118
2. I am an early adopter of Internet among my
friends 0.720 20.128 0.124
3. When I hear about a new Web site, I try to
visit it 0.661 20.269 20.214
4. I didn’t want to use the Internet until others
started using it a lot 20.633 20.01 20.168
5. I seldom visit a new Web site with which I am
not familiar 20.511 20.209 0.047
6. I do not feel safe exposing my personal
information when I buy goods online 20.138 0.884 0.037
7. I am not sure of Internet payment systems, and
hesitate to use them 0.011 0.854 0.193
8. To buy a product from web retailers would be a
high potential for loss 20.024 0.155 0.873
9. Web retailers’ product information is generally
not trustworthy 0.024 0.061 0.868 Table AI.
Eigenvalue 2.52 1.89 1.20 Factor analysis of
Variance explained (%) 28.0 21.0 13.3 measurement items
Note: Rotation method: Varimax with Kaiser normalization (DSI, RISK1 and RISK2)
.
IMR
20,5 The effect of FDI inflows and
ICT infrastructure on
554
exporting in ASEAN/AFTA
countries
A comparison with other regional blocs in
emerging markets
Taewon Suh
Department of Marketing, College of Business Administration, Texas
State University – San Marcos, San Marcos, Texas, USA, and
Omar J. Khan
Boeing Institute of International Business, John Cook School of Business,
St. Louis University, St. Louis, Missouri, USA
Keywords Foreign exchange options, Export markets, Globalization
Abstract This paper explores the impact of both the increase in foreign direct investment inflows
and the increase in information and communication technology infrastructure investments on
exporting in ASEAN nations (the trade bloc of which is known as AFTA) compared with two other
major trade blocs: CEFTA and LAIA. The analyses are based on data from a cross section of
countries (26 emerging markets from three trade blocs) over time (from 1995 to 2000). The
results show that the increase of investments in ICT infrastructure yields positive and significant
returns in the national exporting level only for the ASEAN/AFTA and CEFTA sample.
Interestingly, the impact of the increase of FDI inflows on export is significant only in the CEFTA
and LAIA samples. These results are discussed in the light of the different economic experiences of
these trade blocs, noting that variations are typically present between individual countries. Overall,
reflecting the results from this study, research concerned with the determinants of national
exporting level should be conducted independently, along with regional and national
characteristics.
Introduction
Emerging markets (EMs) constitute the major growth opportunity in the
evolving world economic order (Arnold and Quelch, 1998). Any cursory
overview of the global economy, however, indicates clearly that these markets
are by no means homogenous. The needs are clear to study these markets in
more regional groupings, in place of the ubiquitous “emerging market”
designation, thus yielding greater validity in applying research results. After
International Marketing Review all, can an emerging economy like Brazil, for example, be rationally assumed to
Vol. 20 No. 5, 2003
pp. 554-571
exhibit similar traits to Slovakia or Nigeria?
q MCB UP Limited
0265-1335
While clearly not all EMs exhibit homogeneity in characteristics and
DOI 10.1108/02651330310498780 attributes, it is useful to place individual countries within relevant trade bloc
contexts. As a former Under Secretary of Commerce, Garten (1996) finds great Exporting in
support for directing commercial and economic policy considerations towards ASEAN/AFTA
trade blocs rather than just concentrating on the individual nations that countries
comprise them; that is, for example, directing such policy initiatives to ASEAN
countries as a whole rather than to Indonesia specifically, or viewing China as
an integral part of the greater Chinese economic area (Tateisi, 1996). Academics
have also exposed the inherent value of gearing studies across such multiple
555
country group contexts (Craig and Douglas, 1996). After all, firms
implementing market entry strategies into single-country EMs must be
aware of the subsequent opportunities and pitfalls of the relevant trade blocs
they may be entering. In studying some established parameters across several
well-established trade blocs, our study directly provides just this kind of
across-bloc insight and implications. Our contention to begin the paper is that
studying all EMs together under one designation is too broad a stroke, while
single country analyses may limit generalizability. While the growth and
prevalence of regional economic blocs has itself increased the need for firms to
internationalize and establish presence therein (Monye, 1995), academic studies
have lagged in conceptualizing market entry parameters across trade blocs,
rather than across single countries. We believe this to be a serious oversight in
the literature that needs to be rectified.
In this study, we use as our canvas three regional blocs, in order to provide
us with greater within-group homogeneity. Whereas previous studies have
been plentiful in both the area of export performance at the firm-level
(Katsikeas et al., 2000; Holzmuller and Stottinger, 1996) and at the country-level
(Dominguez and Seqeira, 1992), studies of the effect of information
communications technology (ICT) infrastructure on exporting have been
lacking, particularly in an emerging market context. A cursory scan of the
literature reveals that studies outside of a one-country context are, in fact, few
and far between. The primary contribution of our research is that we focus in
on the effect of ICT infrastructure and foreign direct investment (FDI) inflows
on exporting within three emerging market trade blocs – thus forming a useful,
multiple, country-group context. Comparisons are made between these three
groupings of EMs, and strategic implications (from both the firm and
commercial policy-makers point of view) are drawn.
Regional economic integration, as exemplified by trade blocs, has the effect
of increasing “size of the country”; and the individual countries within such
groups can reap the resulting size-of-country benefits (Buckley et al., 2001).
Thus, its importance to the economic experience cannot be overstated. It
provides the opportunity for within-group firms to expand their operations
locally and utilize the immediately accessible markets. As Buckley et al. (2001)
and his colleagues mention, it also motivates “outsider firms” to become
“insider firms”. From a research standpoint, since countries vary in size,
studying effects at the trade bloc level inherently controls for the differing
IMR effects a larger country may have on the region as opposed to a smaller one.
20,5 The needs for cross-trade bloc analyses are, thus, clear; and our study fills in
this important gap in the literature while comparing the effects of FDI inflows
and ICT infrastructure on exporting in ASEAN/AFTA trade bloc with those in
CEFTA and LAIA.
Summarizing from the preceding discussion why an analysis by regional
556 blocs is relevant and necessary, we distill the following major points:
.
Increasingly, national trade policies and agreements are directed towards
a regional bloc as a whole, rather than individual countries.
.
A country’s membership in a regional bloc opens up corresponding
opportunities and pitfalls, of which a market-entering firm needs to be
mindful.
.
Trade blocs offer increasing “size-of-country” benefits, and can provide a
means to countervail individual country size distortions when comparing
multiple countries.
.
Such analyses provides greater generalizability than single-country
analyses.
.
Despite the advantages of cross-bloc analyses, there remains a clear gap
in the literature that needs to be filled.
ASEAN/AFTA compared to CEFTA and LAIA

With steady progress from supranational agencies like the GATT and its
evolutionary offspring, the WTO, combined with organically blossoming
free-market ideals, there has been a proliferation of free-trade bloc formation
over the last two decades. Not coincidentally, these blocs have tended to form
among nations who share certain core characteristics (like common language,
similar economic conditions, shared political breakthroughs, and geographical
proximity) (Czinkota et al., 2000). We, thus, believe that studies across these
distinct country groupings provide for great theoretical generalizability, while
still maintaining significance in the validity of findings. The reasoning behind
the selection of the particular country blocs used in our study is that:
.
all of them reflect countries which are considered EMs, and are in
differing stages of development;
.
they possess within-group similarities (both economically and socially),
allowing them to be differentiated prima-facie from one another as
groups; and
.
they are well-established groupings familiar to, and used by, multiple text
references in the existing literature
One of the newest regional trade blocs to form in Europe, the Central European
Free Trade Area (CEFTA), was created in 1993 by countries that had only
recently acquired free market persuasions. Economically, the seven-member
CEFTA can be considered a relative success, seeing growth in GDP, falling Exporting in
unemployment, and a slowdown in inflationary trends among members since ASEAN/AFTA
the bloc’s inception (Czech News Agency, 1997). countries
Like Europe, the Americas and Asia are no exception to the growing number
of regional co-operative groups. The Latin American Integration Association
(LAIA) proposes, as its long-term objective, a common Latin American market
– much along the lines of the EU. In reality, LAIA has become a labyrinth of
557
bilateral trade agreements between its member states, and has experienced
bumps along its path to economic union, primarily from the varying
experiences of development among its 11 member states. One need only point
out the recent demise of Argentine market emergence to highlight the dramatic
challenges faced by this projected integration. Currently, this regional bloc
operates most effectively as a trade bloc, with the operating goal of
encouraging free trade among its member nations. As the replacement to the
now defunct LAFTA (Latin American Free Trade Agreement), this regional
bloc represents an operating and well-established trade bloc in Latin America,
and provides us with a group that exhibits some useful commonalities among
member states. It should be noted that while LAIA’s stated objectives go
beyond the promotion of free trade among member nations, these objectives
have been largely not met.
Our third country grouping – and the primary focus of our comparative
analysis – is the major multinational trade group in Asia, called the
Association of Southeast Asian Nations (ASEAN). Created with the vision of
harmonization of economic activity among member states, ASEAN also
exhibits within-group similarities (Cateora and Graham, 2000). During the last
few decades the member countries of the Association of the Southeast Asian
Nations (ASEAN) have displayed an extremely high growth rate. Also, a
formal integration process has been initiated in the region, and this has recently
brought ASEAN into the focus of interest as a potential market and host of
FDI. The trade bloc of these countries is called AFTA, i.e. the ASEAN Free
Trade Association. Through the remainder of the paper, we will refer to this
group of countries as ASEAN/AFTA rather than ASEAN, to reflect the
emphasis on comparison of trade blocs (note: the composition of the country
group is exactly the same either way).
ASEAN/AFTA, with its more than 450 million people, represents a massive
market which has not yet been fully utilized. With the constituent countries
experiencing greater than average (i.e. world average) growth over the last few
decades, this potential utility will likely grow rapidly in the future (Wilson and
Mei, 1999). Certainly, there were stumbling blocs along the way (witness the
Asian economic crisis of the late 1990’s). However, overall, these countries,
along with the wider Asian continent, have experienced recovery and continue
to do so (Bartels and Freeman, 2000). It is observed that the ASEAN/AFTA
countries have stood up to the tribulations of the crisis, and continue to be in
IMR growth mode. Much of this growth is attributable to the promotion of export
20,5 expansion in order to achieve global competitiveness (World Bank, 1993).
In addition, when compared to the other two blocs in our study, the countries
of ASEAN/AFTA have had far longer (and more substantial) experience in the
exporting of component parts and finished consumer goods. It is thus likely
that their infrastructure and institutions are more tuned in with an exporting
558 philosophy than the CEFTA or LAIA nations. The Latin American countries
may, in turn, have greater experience in the export of primary products, while
the Central Europeans may be more proficient in exporting products requiring
a highly educated labor class. These differing characteristics between the trade
blocs can provide competitive advantages for one bloc over the other in the
global marketplace. For example, Christopher Carr (1993) highlights the
importance of manufacturing policies as primary sources of sustainable
competitive advantage in a market economy; therefore, favorable
manufacturing policies could be argued to provide a competitive advantage
for the ASEAN/AFTA countries over either the CEFTA or LAIA nations.
Research framework
An export marketing plan for an emerging nation can work in a qualitatively
similar manner as an exporting plan for a multinational firm; to paraphrase
Cavusgil’s (1993) prescription, the plan must be reviewed and revised
constantly as the nation acquires more experience, data, and feedback from the
export market. A look back at the well-documented determinants of the
national level of exports is warranted. After all, when studying the effect of any
one particular variable on exporting, we must account for the effects of other
determining factors as well. Significant research exists on the determinants of
export performance (Lages, 2000; Kumar, 1994), and the positive effects of FDI
on a country’s level of exports are well known (Vernon, 1966). It has also been
shown that promoting high-tech exports has a positive effect on the amount of
FDI flowing into a country (Wilkinson and Brouthers, 2000); and it is with this
view that we explore the effects of the development of infrastructure that will
facilitate these high-tech exports within a country. This becomes the primary
variable under investigation in this study, and is referred to as ICT
infrastructure.
The impact of FDI inflows and ICT infrastructure

FDI represents a great opportunity for emerging economies, like those of
ASEAN, to improve their balance of payments picture through increasing
exports. Consequently, further capital can be attracted from abroad, and a
circular cause-and-effect relationship results. Firms go overseas in order to
extract raw materials, source production; or penetrate markets (Kogut, 1984),
and thus host countries need to provide this “bait”. And they are better able to
do so with the added revenues from increased exporting activity. While there is
much greater support for FDI’s positive effect on exporting in the existing Exporting in
literature, we are also presented with the need for further clarification of the ASEAN/AFTA
direction of causality between exporting and FDI; and we further contribute to countries
this understanding by testing directionality in the discussion section of our
findings.
FDI directly affects a country’s exporting activity when the purpose of the
FDI is to utilize host country comparative advantages and sell in other national
559
markets (Hymer, 1976; Porter, 1990). Integrating economies are more likely to
gain from improving intra-regional market accessibility (which leads to
export-oriented FDI) than from tougher external trade policy, and may wish to
offer investment incentives to encourage FDI by outside firms (Motta and
Norman, 1996). In addition, FDI can play a key role in improving the capacity
of the host country to respond to the opportunities offered by global economic
integration, a goal increasingly recognized as one of the key aims of any
development strategy (Financial Market Trends, 1998). Thus, countries become
more in tune with global market trends and are able to gear their exporting
activity to higher demand sectors. On the flip side, developing countries’
governments are often concerned that too much dependence on inbound foreign
investment may lead to an eventual unacceptable erosion of the country’s
sovereignty (Dunning, 1998). An emerging economy can, however, improve its
relative bargaining power with foreign multinationals in the conduct of direct
investment (Fagre and Wells, 1982) by improving on the array of resources it
has to offer. Thus, the benefits to exporting activity from increased FDI far
outweigh any potential downsides. This leads us to our first research question:
RQ1. Will the increase in FDI inflows positively effect exporting in EMs?
Will the three trade blocs show similar effects in terms of this
relationship?
There is one stream of research on the efficiency of ICT, the so-called
“productivity paradox of information technology”, which questions the
contributions of ICT to economy-level productivity and growth (e.g. Roach,
1991; Brynjolfsson, 1993). There are conflicting results on this matter. For
example, Dewan and Kraemer (2000) reported that returns from ICT capital
investments were estimated to be positive and significant only for the developed
countries in the sample. Although a high-tech sector is great for a poor country’s
prestige, it may not do all that much for the economy.
However, we expect that although overall lack of some complementary
factors may bar the infrastructure from contributing sufficient influences to
general national productivity in those markets, investments in ICT
infrastructure in EMs may influence a particular part of the economy (in this
case, exporting). For example, investment in the Internet would directly benefit
exporting, since an Internet-based source of export market information can
provide tremendous help to export-oriented small and medium sized companies
IMR (Williamson, 1999). Domestic investments in ICT infrastructure, indicated by
20,5 penetration of computers, Internet hosts, and telecommunications in a nation,
are sometimes designed to enhance the level of exporting.
Thus, we expect that an increase in investment in ICT infrastructure will
boost exporting in EMs. But owing to the exploratory nature of this research,
we do not specify any expectation on the differences between the trade blocs in
560 terms of this relationship. We offer as our second research question, the
following:
RQ2. Will the increase in ICT infrastructure investment have a positive
effect on exporting in EMs? Will the three trade blocs show similar
effects in terms of this kind of relationship?
Covariates
There are a number of factors which we must control for in order to focus on
the major objectives of this study. Failure to do so may restrict the
generalizability of significant results found herein. Incentives need to be
provided to nurture competitiveness and also promote domestic investment.
This will, in turn, promote FDI, and thus positively affect exporting. The
corporate tax rate comprises a major incentive, in that it helps determine net
revenues and affects the profitability of both domestic and foreign firms
entering the host country (Abel and Bernanke, 2001). Firms operating in
countries with friendly corporate tax rates tend to exhibit significantly stronger
export performance (Bagchi-Sen and MacPherson, 1999), and so this factor is
presented as a control factor in our present investigation.
Exchange rates also have a direct effect on the level of exporting in a country,
and devaluation of the national currency has been often used as an instrument to
promote the export level (Froyen, 2002; Yarbrough, 1988). Certainly, it has
become widely accepted knowledge that when a particular country’s currency
becomes “cheaper”, so effectively do the goods it manufactures or produces (for
foreign markets, that is). Even though this tactic has often led to adverse effects
on the domestic equity markets (Doukas et al., 1999), the potential benefit to
exporting firms of favorable exchange rates cannot be ignored. Exchange rates,
of course, are a double-edged sword; and unfavorable exchange rate can have a
directly detrimental effect on exporting (Chaoshin et al., 2001). Thus, quite
clearly it is a factor that needs to be controlled for in our current study. It must
also be noted here that emerging countries tend to see great turbulence in their
political climate (Drabek and Laird, 1998). While it may not be possible to
maintain overall political stability with the often finicky populace wanting to see
immediate results, stability can and should be maintained in at least the policies
affecting the exporting level of the country. Political upheavals caused by the
new liberalism of EMs may, in fact, diminish over time as the nation realizes the
economic gains through exporting.
Another principle determinant of national export level, productivity, relates Exporting in
directly to the concept of efficiency at the firm and industry level. Here, the ASEAN/AFTA
focus is on market efficiency (Rockinger and Urga, 2000). Often, it is countries
infrastructure conditions which themselves promote productivity, and the
latter is naturally a necessary component to accelerate exporting. This is
because productivity directly promotes cost effectiveness and, therefore,
profitability – providing the prime incentive for exporting activity (Tiratsoo
561
and Tomlinson, 1997). Thus, it becomes a circular cause-and-effect
phenomenon, which should be welcomed by countries seeking to become
players in the global marketplace. And productivity becomes a variable to
control for in our study.
Real wages in the sense of labor cost also are influenced by productivity
(Seguino, 1997). But even, in and of themselves, labor costs are a key driving
factor in export oriented FDI. In other words, foreign firms wish to take
advantage of a cheap labor pool within a country in order to establish
production facilities there – but market their products elsewhere. Studies have
shown that, at least in the long run, a labor cost advantage is directly related to
exports (Ghosh et al., 2000), but this direct relationship is often moderated by
other country-specific factors such as skills, geographical proximity, etc (Lee,
1999). It is clear, however, from the literature that labor costs affect exporting
activity, whether through export oriented FDI or domestically initiated
production. Thus, it is a factor we control for in this paper.
Siebert (1999) found that economic growth is related to the openness of
economies, which was measured as the rate of increase of the trade ratio. The
openness of the economy is related, quite obviously, to the emergence of a
market economy, as well as growth. This would imply, at least at the
conceptual level, that FDI inflows would be positively effected by greater
market openness, and that again – in circular fashion – would promote
exporting. Market openness should, thus, be monitored when the country-level
study includes non-emerging countries.
Through the previous discussion, and related to all the determinants of
exporting success, we find that infrastructure development serves the major
facilitating role in reaching higher levels of exporting. Where this improves, the
other factors tend to follow. It is the responsibility of every nation’s
government and its people to ensure that infrastructure has developed to the
extent that private enterprise may be competitive and efficient. Bartlett and
Ghoshal (1989) found differences in local infrastructure development to be a
major component of performance differences among countries. A powerful ally
for responsible governments in emerging economies can be private
infrastructure investment at the sub-national level, operating with
transparency and disclosure (Beato and Vives, 2000). ICT infrastructure
development, in particular, is of paramount importance for countries intent on
achieving exporting success in today’s technology driven markets.
IMR Research methods
20,5 Data for this analysis is derived from various sources such as databases from
IMF, the World Bank, and the International Telecommunication Union. The
analysis was based on data from a cross section of countries (26 countries) over
time (from 1995 to 2000), for a total sample size of 156 Table I shows the
emerging countries by trade bloc included in our data set. Two countries in
562 ASEAN/AFTA (Brunei and Myanmar) were excluded because of data
unavailability. Also, we excluded intra-regional trade from our analysis, since
intra-regional trade depends on the specific terms of the trade agreements –
and AFTA, CEFTA and LAIA have differing trade arrangements among
member states. Thus, we eliminated this potential “noise” from affecting an
analysis such as ours – i.e. between regional blocs.
This study aims at explaining the dependent variable exports using two
focused independent variables and four control variables selected on the basis
of their importance, as identified by this and previous research. The definitions
of all the variables are presented in Table II. Our hypothesized independent
variables explaining exports, based on a review of the theoretical and empirical
literature and on the ideas we presented above in our theory section, are
represented by the regression equation below. EXP is exports, FDI is net FDI
inflows, ICT is information and communications technology infrastructure, PD
is national productivity, ER is exchange rate, LC is labor costs, TR is tax rate,
MO is market openness, 1 is error, i represents each sampled country,
and t represents each year.
ðLog EXPÞit ¼ b0 þ b1 ðLog FDIÞit þ b2 ðLog ICTÞit þ b3 ðLog PDÞit
þ b4 ðLog ERÞit þ b5 ðLog LCÞit þ b6 ðLog TRÞit
þ b7 ðLog MOÞit þ 1it

Even though a nation’s wealth has been used as a common explanation for
exports, national wealth indicators such as GDP per capita and GDP are
thrown out from our model because of high degree of correlation (causing a
multicollinearity problem). This can be legitimately rationalized since there is
Trade bloc Country name
ASEAN/AFTA Bruneia, Cambodia, Indonesia, The Lao PDR, Malaysia, Myanmara,

The Philippines, Singapore, Thailand, Vietnam
CEFTA Bulgaria, The Czech Republic, Hungary, Poland, Romania,
the Slovak Republic, Slovenia
LAIA Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Mexico,
Table I. Paraguay, Peru, Uruguay, RB de Venezuela
Countries by trade bloc
included in the data Note: a Countries excluded owing to unavailability of data
Exporting in
Variable name Definition
ASEAN/AFTA
EXP Exports: comprising all exporting transactions between residents of a countries
country and the rest of the world ($ million)
FDI Net FDI ($): net inflows of investment to acquire a lasting management
interest (10 percent or more of voting stock) in an enterprise operating
in an economy other than that of the investor 563
ICT ICT infrastructure: a composite variable composed of standardized
indicators such as of Internet host, personal computer, telephone
mainlines, and mobile phones (all in density term)
PD Productivity: obtained by dividing the value added of industry
establishments by the total payroll
ER Exchange rate: the actual, principal exchange rate, an annual average
based on monthly averages (local currency units relative to US dollars)
LC Labor cost: obtained by dividing the total payroll by the number of
employees, or the number of people engaged, in industry
establishments
TR Corporate tax rate: the highest rate shown on the schedule of tax rates
applied to the taxable income of corporations
MO Market openness: the sum of exports and imports of goods and services Table II.
as a share of GDP Definitions of variables
evidence of positive correlations between technological and innovative factor

(that is ICT) included in our model and the economic development and growth
level around the world (Saunders, 1994). ICT configuration nicely replaces the
level of economic development in our model. Also, GDP may be less important
here because each country is represented in terms of regional economic
integration.
Because of the cross-country and time-series nature of the data, we
log-transformed each variable to fix the heteroskedasticity problem and
employed a first-order autocorrelation procedure to correct the potential
problem of serial correlation. No variables in our model violate the common
cutoff thresholds of multicollinearity measures (the range of tolerance
value¼[0.46, 0.77]; the range of variance inflation factor ¼ [1.30, 2.19]). The
correlations among independent variables and other descriptive statistics are
shown in Table III. To test the hypotheses, few separate regression models
were run. The first two analyses include full sample (Table IV). The third,
fourth, and fifth models are censored to test each trade bloc sample, on its own.
Findings
Model fit
Model fit with each censored sample was quite acceptable (R 2¼[0.72, 0.93];
with all F values significant). However, when pooling the entire data set, the
explanatory power of model drops steeply (refer to full model 2 in Table IV;
R 2 ¼ 0.52). This explains why analyses by regional trade bloc are relevant
IMR here. The hierarchical regression in Table IV confirms the relevance of
20,5 censored samples again (from full model 2 to full model 5). The CEFTA and
LAIA dummy were significant, and the R 2 changes from the original model
(full model 2) were also significant. Therefore, although we report the results
from the full sample, our major focus is given to the results from each censored
sample.
564
Results
Regarding RQ1, an increase in investments from foreign countries was
significantly associated with an increase in exporting in the full sample (refer to
full model 2 in Table IV). However, in the censored samples, the increasing
investments from foreign countries showed a significant relationship with
exporting only in the CEFTA and LAIA samples and not in the ASEAN
sample.
Also, regarding RQ2, in the full sample, the increase in ICT infrastructure
investment was not significantly associated with an increase in exporting (refer
to full model 2 in Table IV); however, the results from the three trade bloc
models show that the influence of increasing ICT infrastructure investment
was significant in the ASEAN/AFTA and CEFTA sample and not in the LAIA
sample.
Discussion
As we take a look at the results from the three trade blocs individually, the
explanation might be not so straightforward. We do need a more sophisticated
discussion here other than the simple, independently drawn statements on the
effect of ICT infrastructure and FDI inflows on exporting.
As shown in Table IV, the increase of investments in ICT infrastructure
affects exporting only for some ASEAN/AFTA and CEFTA countries. That is,
returns for national exporting level from ICT investments are estimated to be
positive and significant only for the ASEAN/AFTA and CEFTA sample. Also,
Variable Mean SD 1 2 3 4 5 6
PD 0.58 0.21 1.00

ER 1.79 1.34 2 0.22** 1.00
LC 3.54 0.32 2 0.24** 2 0.36** 1.00
TR 1.46 0.11 0.04 2 0.11 2 0.32** 1.00
MO 1.84 0.28 2 0.51** 0.02 2 0.04 0.11 1.00
Table III. FDI 9.11 0.75 0.23** 2 0.47** 0.42** 2 0.12 2 0.16* 1.00
Means, deviations, and ICT 2.00 0.02 2 0.46** 2 0.29** 0.50** 2 0.03 0.50 0.24**
correlations between Note: All variables were log-transformed; *indicates significance at 0.05; **indicates significance
independent variables at 0.01
ASEAN/AFTA CEFTA LAIA
model model Model Full model 1 Full model 2 Full model 3 Full model 4 Full model 5
(n ¼ 48) (n ¼ 42) (n ¼ 66) (n ¼ 156) (n ¼ 156) (n ¼ 156) (n ¼ 156) (n ¼ 156)
Log FDI 0.01 0.22*** 0.24*** 0.32*** 0.30*** 0.31*** 0.14*

(0.01) (5.19) (4.66) (5.54) (5.06) (5.49) (2.59)
Log ICT 17.57*** 5.14* 0.47 2.16 3.36 0.51 4.26
(6.58) 2.34) (0.18) (0.79) (1.18) (0.18) (1.77)
Log PD 7.27*** 1.12 1.11*** 1.71*** 1.20*** 1.18*** 1.64*** 2.76***
(12.09) (1.82) (4.06) (5.92) (4.34) (4.29) (4.84) (8.33)
Log ER 0.90 0.10 0.06* 20.13** 20.04 20.05 0.01 0.01
(0.99) (1.82) 2.03) (2 3.18) (2 0.90) (2 1.28) (0.18) (0.31)
Log LC 2.75*** 1.40** 2.59*** 1.31*** 0.83*** 0.77*** 1.24*** 1.98***
(5.13) (3.36) (10.91) (6.14) (3.96) (3.62) (4.43) (7.93)
Log TR 0.34 1.30*** 1.77*** 1.39* 1.34** 1.30** 1.48** 1.53***
(0.28) (5.18) (7.28) (2.54) (2.74) (2.65) (3.00) (3.45)
Log MO 0.29 0.06 0.48* 0.46* 0.58** 0.37 0.68* 20.49*
(0.67) (0.25) (2.22) (2.34) (2.82) (1.48) (2.13) (2 2.05)
ASEAN dummy 0.17
(1.46)
CEFTA dummy 0.31*
(2.13)
LAIA dummy 21.19***
(2 6.53)
Constant 242.10*** 210.73* 26.73 1.95 23.62 25.19 22.89 29.02
(2 8.47) (2 2.17) (2 1.25) (1.16) (2 0.67) (2 0.95) (2 0.47) (2 1.89)
R2 0.93 0.72 0.92 0.43 0.52 0.53 0.54 0.64
Adjusted R 2 0.91 0.65 0.91 0.40 0.49 0.50 0.51 0.61
R 2 change – – – – 0.90*** 0.01 0.02* 0.12***
Durbin-Watson 1.60 1.70 2.31 1.92 1.86 1.87 1.87 1.92
Note: Dependent variable: Log EXP, t-statistics are in parentheses; * indicates significance at 0.05; ** indicates significance at 0.01; *** indicates
significance at 0.001
countries
ASEAN/AFTA
Regression estimates
565
Table IV.
Exporting in
IMR the impact of the increase of FDI inflows is significant only in the CEFTA and
20,5 LAIA samples.
Further investigation into the theoretical foundation of this hypothesis
yields an interesting insight. A study of exporting tendencies reveals that
ASEAN/AFTA trade bloc can be differentiated from the two other blocs
566 (CEFTA and LAIA) in that the ASEAN/AFTA countries are more prone to be
used as markets themselves as opposed to merely production facilities for other
markets (Lexis-Nexis Academic Universe, 2001). That is, the FDI flowing into
the countries of CEFTA and LAIA is primarily export oriented – or put
another way, foreign firms are utilizing these host countries’ comparative
advantages in order to produce and manufacture goods for other country
markets. Thus, an increase in FDI would significantly and directly impact
exporting – since that is the purposeful utilization of the FDI in the first place.
The FDI flowing into ASEAN/AFTA, by contrast, is primarily market based,
in that goods are produced there for host-country consumption. It then logically
follows that an increase in FDI here may not significantly affect exporting
activity, since the “fruits” of this FDI are being dissipated in the domestic
market. The data also bears witness to this thesis. FDI, in fact, accounted for 4
percent to over 20 percent of the gross domestic product growth in the
ASEAN-5 (i.e. the largest five ASEAN countries) during the 1987-1997 period
(Fan and Dickie, 2000).
In addition, the countries of ASEAN/AFTA have long been major
international exporters (far longer than their CEFTA and LAIA counterparts),
with high level of exports in hardware component parts and consumer goods.
The above discussion gives rise to the view that an increase in FDI inflows
from countries outside the bloc will not significantly affect the level of
exporting in ASEAN/AFTA, but would do so in the CEFTA and LAIA
markets.
Just as importantly, it is seen that ASEAN/AFTA countries are heavily
export-oriented in their own right – on a global scale, much more so than
CEFTA or LAIA nations. Thus, the impact of export-oriented FDI on overall
exporting in ASEAN/AFTA is not that much as the impact of the same on the
other two blocs. Put another way, in ASEAN/AFTA, much more of the
exporting activity is being accounted for by domestically initiated investments
rather than foreign investment. ICT infrastructure is a powerful driver of these
domestically-driven investments, and this is why we find great significance in
our results relating ICT and exporting in the ASEAN/AFTA sample.
To clarify the question of causality between FDI and exporting in our
sample, we conducted a test through two-stage least-squares regression. FDI
was still a strong predictor ( p , 0.001) of export after permitting the two error
terms being correlated. Thus, we can conclude that while the causality between
FDI and export is possible both ways, our test shows that FDI’s impact on
exporting is stronger than the other way around. And, as indicated in the Exporting in
literature review, this has been indicated and supported by existing theory. ASEAN/AFTA
Another phenomenon peculiar to ASEAN/AFTA markets also needs countries
elaboration – that of “mobile exporters”. There has been considerable activity
within the ASEAN/AFTA group, of exporters from one country establishing
outward-oriented factories in other countries. Taking Indonesia as an example,
close to half of recent investments from other ASEAN/AFTA and East Asian
567
countries has been for export factories – with the target markets being
primarily North America or Europe (Wells, 1993). As Wells indicates, the
reasons for this are similar to conditions which usually characterize FDI:
“advantages in the hands of foreign firms and reasons for internalizing the
transactions”. The data on these intra-ASEAN/AFTA investments points to
increasing regional economic integration; in fact, intra-ASEAN/AFTA FDI
accounted for 15 percent of the cumulative net FDI flows in ASEAN/AFTA
from 1995 through to the first half of 1999 (Heinrich and Konan, 2001). In more
recent years, as in the period under study, the main targets of mobile exporters
were CEFTA and LAIA nations as opposed to ASEAN ones. This is borne out
by our results, and is a direct consequence of the rapid opening up of Eastern
European markets in the early nineties, together with the burgeoning interest
in utilizing cheap labor markets in Latin American countries by US
conglomerates during the same time period.
In the meantime, when applying the results of this study, particularly to the
experiences of individual nations, we must be cognizant of a number of
variables which (if left uncontrolled) may confound or mediate the results. The
following variables should be included in a model that has a categorically
different sample (perhaps, using only individual nations without being
classified by trade-bloc) from this study’s. First, gross domestic product (GDP),
one of the most frequent measures of the size of markets, may also confound or
mediate results. Davison (1980) concluded that investment activity is closely
correlated with market size; it is naturally assumed that the larger the size of
the emerging market, the larger the level of exports it will have – especially
since it makes up part of the very definition of GDP. Thus, this variable needs
to be controlled for so as to not obscure the results. However, the increase in
GDP and its consequential effect on the level of increase in exporting is a
matter worthy of investigation. Second, with financial liberalization and central
bank autonomy, borrowing and lending at substantial real rates of interest are
made possible by a stable price level (Levine and Scott, 1993). It is never easy
and full of potential pitfalls. Nevertheless, it is critical to our investigation,
because financial liberalization – by increasing savings – can lead to higher
investment and growth, and consequentially to higher exports. Ending state
controls allows funds to be channeled into productive investments without
being wasted on unprofitable nationalized industries or lending to government
cronies (Siddiqi, 2000). Third, public or government policy variables could be
IMR critical for some country samples. These variables have two aspects. First, the
20,5 legal and regulatory environment should be such that contract law, enterprise
law, and property rights (including intellectual property) are all conducive to
the development and promotion of private enterprise. The “shadow economy”
or “black market” of the nation needs to be reigned in, either by assimilation
into the real economy or through strict law enforcement to mitigate its
568 counter-productive effects on real market development. Black markets in some
emerging economies are so large that both these measures would need to be
implemented simultaneously to have any significant effect. In fact, in recent
years, the total estimate for the world’s shadow economy has been upwards of
$9 trillion (The Economist,1999). Additionally, one may concern multicollearity
between a few variables (e.g. ER and FDI: -0.47). Although a few correlations
are highly significant, it does not seem to be a major problem because the face
validity is so apparent and the multicollinearity measures such as VIF and
tolerance value are quite acceptable (please refer to the methods section).
Conclusions
Overall, reflecting the results from this study, research concerned with the
determinants of national exporting level should be conducted independently,
along with regional and national characteristics. The drivers of exporting
between trade blocs are recognized to be different in many ways, and exhibit
similar within-group characteristics. This paper has contributed to the
understanding of the effect of FDI inflows and ICT infrastructure on Exporting
in ASEAN countries, through a comparison with two other major regional
blocs – CEFTA and LAIA. Hence, the implication of our results are
immediately useful to both MNCs’ considering strategic decisions within these
trade blocs, and also country-level policy makers. Certainly, managers must be
cognizant that macro-economic results may not apply to micro-economic
conditions – and they must consider their own specific conditions and
objectives. The results highlighted within the paper are limited to the period
from 1995 to 2000, and the relationships can and should be explored further,
using a larger time-frame in the future. Also, while the study provides great
generalizability in assessing the peculiar economic experiences within
countries belonging to the three regional blocs under investigation, it should
not be interpolated to other regional economic alliances – as each nation (and,
thus, each bloc for which it is a component) presents a unique situation which
must be analyzed in the light of its own historic data set. Thus, the limitations
(in terms of generalizability) of this study stem primarily from two conditions
– time period and regional trade affiliation. Also, another limitation of this
study is that within-group variability, which means the difference between
nation members in a trade bloc, was given less importance. While this is
because this study aims to reveal the inter-trade bloc differences in the
hypothesized relationships, several other constructs should be monitored to
formulate and give tangible implications for each individual country. Some Exporting in
candidate constructs in this regard have been discussed at the end of our ASEAN/AFTA
discussion section. countries
The causal relationships between ICT infrastructure, FDI inflows, and
exporting should be extensively investigated though more empirical tests and
further theoretical discussion. The export-oriented foreign investments from
MNCs are expected to play a mediating role between ICT infrastructure and
569
national level of exporting.
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Literati Club
Awards for Excellence

Øystein Moen
Norwegian University of Science and Technology (NTNU) Trondheim, Norway
is the recipient of the journal’s Outstanding Paper Award for Excellence for his paper
‘‘The Born Globals: a new generation of small European exporters’’
which appeared in International Marketing Review, Vol. 19 No. 2, 2002
Øystein Moen has a Ph.D. from Nth (now NTNU). Currently, he is hair of the Department of Industrial
Economics and Technology Management. His research focuses on the internationalization processes
of newly established high-tech firms, the use of information technology in international marketing, and
the development of public instruments to stimulate exporting/internationalization. His research is
sponsored by and performed in close co-operation with the Research Council of Norway, the
Norwegian Trade Council, and the Norwegian Ministry of Trade and Industry. As Through his
responsibly for a number of evaluations of export promotion programs, he has had a significant impact
on the development of public export promotion programs in Norway.

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qxd 9/17/03 1:03 PM Page 1

Volume 20 Number 5 2003 ISBN 0-86176-880-9 ISSN 0265-1335

International marketing in the Asia-Pacific region

Access this journal online __________________________ 467

Access this journal electronically

International Marketing Review

Comportement d’exportation orienté vers le marché et performance à

Une comparaison transculturelle du comportement d’achat par Internet: effets de

L’effet produit par les afflux d’investissements directs étrangers et

Comportamiento orientado hacia el mercado de exportación y rendimiento de

La relación entre el tipo estratégico y las capacidades empresariales en empresas

Una comparación transcultural del comportamiento de compra por Internet:

El efecto de entradas de IED e infraestructura de TCI al exportar a paı́ses de

International Marketing Review

Embracing the Internet and e-commerce

The emergence of Asian MNCs

Relationships and networks

Opportunities and implications

About the Guest Editors

Special issue referees

What are EMO behaviors?

The export performance consequences of EMO behaviors

Model x2 (d.f.) RMSEA GFI NNFI CFI

Measurement (set 1) 53.97 (51) 0.024 0.916 0.979 0.984

estimates for the final

H3. Technological intensity as moderator

Conclusions and future research

Appendix. Scale items

integration, technology knowledge creation, market knowledge creation, and

Entrepreneurial – product market domain 0.865

Outside-in capabilities 1.21 2.17 2.22 2.71 11.21** D . P; A . P; Yes

Appendix. Strategic typology scale items

A Model on factors influencing Internet buying behavior

Hours Length RISK1 RISK2 DSI EXP BI

Total Mean 14.93 3.88 3.44 3.02 3.27 6.28 4.37

Model 1 (dependant Model 2 (dependant

(Constant) 22.689 (4.201) 2.073 (0.664)

Perceived risks and Internet buying behaviors

Innovativeness and Internet buying behaviors

Conclusion and limitations

Limitations and further research

Items DSI RISK1 RISK2

1. I know new Web sites on the Internet more than

ASEAN/AFTA compared to CEFTA and LAIA

The impact of FDI inflows and ICT infrastructure

ðLog EXPÞit ¼ b0 þ b1 ðLog FDIÞit þ b2 ðLog ICTÞit þ b3 ðLog PDÞit

þ b4 ðLog ERÞit þ b5 ðLog LCÞit þ b6 ðLog TRÞit

þ b7 ðLog MOÞit þ 1it

Trade bloc Country name

ASEAN/AFTA Bruneia, Cambodia, Indonesia, The Lao PDR, Malaysia, Myanmara,

evidence of positive correlations between technological and innovative factor

PD 0.58 0.21 1.00

Log FDI 0.01 0.22*** 0.24*** 0.32*** 0.30*** 0.31*** 0.14*

Awards for Excellence

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Log FDI 0.01 0.22* 0.24* 0.32* 0.30* 0.31*** 0.14*