In Search of Platforms to Increase Market Responsiveness: Evidence from Foreign Subsidiaries
Published 6/1/2009
Author: Ruby P. Lee, Qimei Chen, and Xiongwen Lu
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Executive Summary
Although market responsiveness has been studied extensively in the marketing strategy literature, understanding of how it is formed in an international business context remains limited. Increasingly, a foreign subsidiary’s success relies on the use of related knowledge acquired from its headquarters to improve its responsiveness to the marketplace. Furthermore, despite a growing interest in knowledge management and information technology, recent research reveals that empirical studies that combine both these avenues in international businesses are inadequate. To address this emerging trend and fill the research gap, Lee, Chen, and Lu examine how multinational firms’ operations in China can enhance their market responsiveness through understanding the different roles of information system integration and knowledge codification in connection with related market knowledge that resides in their headquarters.
The authors draw on the dynamic capabilities perspective and its extension and integrate it with the information technology literature to develop a conceptual model. Their findings, which are based on survey data collected from 140 foreign subsidiaries in China, show that market responsiveness is the direct and indirect consequence of information system integration and knowledge codification, both of which benefit from knowledge relatedness. Specifically, the authors find that knowledge codification leads to market responsiveness. However, they also find that information system integration is not associated directly with market responsiveness. Rather, their results indicate that information system integration must work through knowledge codification to influence market responsiveness. The results further illustrate that increased knowledge relatedness encourages the subsidiary not only to increase information system integration but also to engage more in knowledge codification.
In conclusion, previous empirical evidence seems to agree that the liability of foreignness makes overseas subsidiaries more vulnerable in their host-country markets. Nevertheless, the authors find that information system integration and knowledge codification are critical platforms to sequentially link knowledge relatedness to market responsiveness. Despite the effort of this study, challenges for these foreign subsidiaries remain. The authors urge managers and researchers to pay more attention to identify different mechanisms and paths that can amplify their responsiveness to local markets.
Biography
Ruby P. Lee is Assistant Professor of Marketing in the College of Business at Florida State University. She holds a PhD from Washington State University, an MPhil from the Chinese University of Hong Kong, and a BSW (Honors) from the University of Hong Kong. Her current research interests include marketing strategy and metrics, product innovation, knowledge management, and interfirm relationships. In addition to Journal of International Marketing, she has published in Journal of Marketing, Journal of the Academy of Marketing Science, International Journal of Research in Marketing, and Journal of Product Innovation Management, among others.
Qimei Chen is Shidler College Distinguished Professor, Associate Professor, and Chair of the Department of Marketing in the Shidler College of Business, University of Hawaii at Manoa, and Advisory Professor at Fudan University, Shanghai, China. She received her MA and PhD from the University of Minnesota. Her research interests include online/offline consumer behavior, health care marketing, and innovation/knowledge. She has published in journals such as Journal of Advertising, Journal of Advertising Research, Journal of Retailing, and Journal of Product Innovation Management.
Xiongwen Lu is Dean and Professor of Marketing in the School of Management at Fudan University, and Honorable Professor of Faculty of Economics & Business at the University of Hong Kong and BI Norwegian School of Management. He received his PhD, MSc, and BSc from Fudan University. His current research interests include consumer behavior, customer satisfaction and loyalty, Chinese market transition, and Chinese marketing strategy. He has published in a variety of journals, including Journal of Marketing Science (Chinese) and Marketing Herald (Chinese), as well as International Journal of Bank Marketing. He has written two books and coauthored three others.
J International Marketing, Volume 17, Number 2, June 2009
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