About AMA

Executive Summary
In the past two decades, there has been extensive literature on brand management positing that brands are one of the greatest assets of firms. Yet much remains to be explored with regard to how a brand’s competitive advantages can be leveraged in different market environments. In this study, Gao, Pan, Tse, and Yim investigate the drivers of the market share performance of both foreign and domestic brands in a transition economy, China.

Drawing on the resource-based view and brand management literature, Gao and colleagues investigate the impacts of brands’ competitive advantages, external market environments, and the length of brand existence. They also examine the different influences of these factors on foreign versus domestic brands. The study’s findings indicate that (1) different components of brand competitiveness play different roles in transition economies (brands’ core advantages show a significant effect on market share performance for foreign brands, and brands’ local advantages significantly contribute to the performance of domestic brands), (2) brands have lower market shares in fragmented product sectors (foreign brands suffer more severely from the market fragmentation than domestic brands), and (3) brands that entered the market earlier have larger market shares (this effect is robust for both foreign and domestic brands).

The results are based on data obtained through a survey on 408 brands in 52 product categories in China. Gao and colleagues selected the brands through a two-stage stratified sampling scheme. They developed a structured questionnaire on the basis of established theory and pretests. They conducted the survey in face-to-face interviews with senior executives through cooperation with a national market research company. They used confirmatory factor analysis to assess the validity and reliability of the measures, and they employed logistic regression analysis to test the hypotheses.

Gao and colleagues conclude that external market environments exhibit significant effects on brand performance in transition economies, such as China, and foreign and local brands compete on the basis of their own unique competitive advantages. As market barriers and imperfections continue to be removed, firms will be able to compete competently and fairly. It is expected that brands’ core advantages will gain in importance when the competition among brands becomes stronger and when consumers become sophisticated enough to disregard unlawful and unethical practices in the marketplace. This raises an important question for further research: What brand-building strategies are effective at what development stages in the transition economies?

Biography
Gerald Yong Gao is Assistant Professor of Marketing at University of Missouri, St. Louis. His areas of research include market entry strategy, foreign direct investment, and strategic orientation. He has published in Journal of Business Research.

Yigang Pan is ScotiaBank Professor of International Business in the Schulich School of Business at York University, Toronto. His research areas are market entry and alliance strategies, and he has eight publications in Journal of International Business Studies and two in Strategic Management Journal, among others.

David K. Tse is Professor of International Marketing and Director of Chinese Management Centre at the University of Hong Kong. His areas of marketing expertise and interest include marketing in the Chinese economy, international marketing, and consumer satisfaction. His articles have appeared in Journal of Marketing, Journal of Marketing Research, Journal of Consumer Research, and Journal of International Business Studies, among others.

Chi Kin (Bennett) Yim is Associate Professor of Marketing in the School of Business at the University of Hong Kong. He received his PhD in Management from the Krannert Graduate School of Management at Purdue University. His areas of marketing expertise and interest include services marketing, firm strategy, and marketing in transitional economies. His articles have appeared in Journal of Marketing, Journal of Marketing Research, Marketing Science, Journal of Retailing, Journal of World Business, and Journal of Business Research. In his current research, he is exploring customer emotions and customer participation in services.