when does international marketing standardization matter ... · pdf filewhen does...

In their fight for global competitive advantage, firmspick strategic options that enable them to save costsand effort in marketing their goods and services

on a global scale. The cost benefits and administrationease make the strategy of standardizing international marketing programs an attractive choice to many firms (Douglas and Wind 1987; Johansson and Yip1994; Katsikeas, Samiee, and Theodosiou 2006).Consequently, standardization is considered perhaps themost influential aspect of international marketing strategy (Zou and Cavusgil 2002).

Most prior research on the topic has primarily pertainedto the antecedents to standardization, analyzing a rangeof factors that lead firms to adopt this strategy (e.g.,Baalbaki and Malhotra 1993; Griffith, Chandra, andRyans 2003; Harvey 1993; Jain 1989; Laroche et al.2001; Picard, Boddewyn, and Grosse 1998; Powers andLoyka 2007). Performance implications have receivedless emphasis, and thus the question of the impact ofstandardization on firm performance remains an endur-ing research concern (Griffith, Cavusgil, and Xu 2008).Among the few studies that have focused on this aspect,reported results are inconclusive (Özsomer and Prussia2000; Theodosiou and Leonidou 2003), limiting furtherdevelopment of theory and improvement of manage-ment practices. Although prior research has predomi-nantly indicated overall beneficial effects of standardiza-

When Does International MarketingStandardization Matter to FirmPerformance?Oliver Schilke, Martin Reimann, and Jacquelyn S. Thomas

ABSTRACTThe topic of standardization of international marketing programs is an important one faced by managers of global firmsand has attracted significant research attention. Although previous research has established that standardizationenhances performance outcomes, more recent theorizing suggests that this may not always be the case. However, empiri-cal investigators have paid little systematic attention to moderating conditions. The major purpose of this article is toinvestigate the organizational factors that moderate the standardization–performance relationship and, thus, to explorethe types of firm for which standardization is particularly beneficial. The authors examine survey data from 489 firms,and their results indicate that the standardization–performance link is significantly stronger for large firms with a homo-geneous product offering, high levels of global market penetration, a cost leadership strategy, and strong coordinationcapabilities. The authors conclude that managers evaluating the adequacy of a standardization strategy should considerthe list of contingencies advanced in this research.

Keywords: marketing strategy, standardization, performance, structural equation modeling

Oliver Schilke is Postdoctoral Research Fellow, Stanford University/RWTH Aachen University (e-mail: [email protected]).

Martin Reimann is Postdoctoral Research Fellow, Universityof Southern California (e-mail: mreimann@ usc.edu).

Jacquelin S. Thomas is Associate Professor of Marketing, CoxSchool of Business, Southern Methodist University (e-mail:[email protected]).

Journal of International Marketing

©2009, American Marketing Association

Vol. 17, No. 4, 2009, pp. 24–46

ISSN 1069-0031X (print) 1547-7215 (electronic)

24 Journal of International Marketing

International Marketing Standardization and Firm Performance 25

tion (e.g., O’Donnell and Jeong 2000; Szymanski,Bharadwaj, and Varadarajan 1993) stemming mainlyfrom economies of scale and reduction of complexity,some investigators have also argued that a standardi-zation strategy can come with disadvantages (Lages,Abrantes, and Lages 2008). Consequently, despite itsdemonstrated benefits, standardization may not alwaysimprove performance outcomes.

Therefore, we agree with Ryans, Griffith, and White(2003, p. 589) on the need to further substantiate “some of the key underlying assumptions regarding the value of standardization.” Indeed, researchers arebeginning to recognize that the relationship betweenstandardization and performance may be complicatedand contingent on other factors. Katsikeas, Samiee, andTheodosiou (2006) argue that the effect of standardiza-tion on performance becomes stronger if a fit or coalign-ment is present between overall marketing programstandardization and the market environment in which it is implemented. Their findings—as well as the incon-clusive results in studies investigating an unconditionaldirect link between standardization and performance—suggest that the performance effect of standardizationincreases under certain circumstances and decreasesunder others. However, researchers have paid little sys-tematic attention to the conditions other than environ-mental fit that determine when and how standardizationis related to firm success. In making suggestions for further research, Zou and Cavusgil (2002) state thatimportant moderators may include not only the externalindustry environment but also internal organizationalattributes. Similarly, Samiee and Roth (1992) posit thatstandardization must be viewed in light of other impor-tant firm policies and strategies; certain organizationalactivities and characteristics may have significant impli-cations for the effectiveness of global standardization.

This article explores the moderating effect of severalorganizational factors on the relationship between standardization and firm performance. Specifically, weinvestigate the role of competitive strategies, otheraspects of marketing strategy, product characteristics,and general firm characteristics. Thus, the study’s maincontribution is to improve understanding of the internalorganizational aspects that make standardization a par-ticularly effective approach to international marketing.From an academic viewpoint, the study can help resolvesome of the inconsistent results regarding the linkbetween standardization and performance. In addition,our findings can help managers decide whether interna-

tional marketing standardization is a beneficial strategicoption for them, given the idiosyncrasies of their specificcompany. We develop a parsimonious list of organiza-tional attributes that managers should consider whendeciding on their companies’ standardization strategy.Knowledge of these factors can reduce the ambiguitythese decision makers face with regard to the appropri-ateness of standardization. Subsequently, we elaborateon these arguments in greater detail and report tests ofthe resulting hypotheses in a sample of 489 firms.

CONCEPTUAL BACKGROUND

The concept of standardization has received ampleattention from various disciplines, and though priorresearch has put forth diverse interpretations, a com-mon view emerges. Building on this prior research, wedefine standardization as the degree to which firmsapply common marketing-mix variables across nationalmarkets (Cavusgil and Zou 1994; Lim, Acito, andRusetski 2006; Szymanski, Bharadwaj, and Varadarajan1993; Zou and Cavusgil 2002). Buzzell (1968) wasamong the first to systematically discuss standardizationas a significant aspect of international marketing strat-egy. Since then, a multitude of marketing researchershave continued to debate the drivers as well as perform-ance implications of standardization.

From the studies that involve performance implications,three dominant perspectives have emerged: total stan-dardization, total adaptation, and contingency (Zou,Andrus, and Norvell 1997). The total standardizationperspective views market conditions as increasingly sim-ilar across countries, favoring the standardization ofmarketing activities. Among the most prominent propo-nents of standardization is Levitt (1983), who arguesthat technological advancements have diminished cul-tural differences across countries and thus make a glob-ally standardized marketing strategy the preferredchoice to capture worldwide economies of scale. Othersupporters of this perspective include, for example, Eger(1987), Ohmae (1985), and Yip (1995), who developvarious arguments regarding scale advantage, time tomarket, and worldwide consistency of company image.In contrast, the total adaptation perspective emphasizespersistent differences between various country markets,which would speak in favor of customizing the firm’smarketing efforts (e.g., Black 1986; Boddewyn, Soehl,and Picard 1986; Cavusgil and Zou 1994; Donnelly andRyans 1969; Douglas and Wind 1987). Scholars favor-

ing the total adaptation perspective emphasize the bar-riers to worldwide convergence, including governmentaland trade restrictions, intercountry differences in mar-keting infrastructure, and local management resistance(Lim, Acito, and Rusetski 2006; Viswanathan andDickson 2007). The contingency perspective argues thatthe optimal degree of standardization depends on inter-nal organizational and external environmental factors(Zou, Andrus, and Norvell 1997).

In line with recent research (Katsikeas, Samiee, andTheodosiou 2006), the current article reflects a contin-gency perspective of international marketing standardi-zation. More specifically, we maintain that the impact ofstandardization differs contingent on internal organiza-tional characteristics. This perspective is backed up bythe inconsistent findings of previous empirical researchinvestigating a direct relationship between standardiza-tion and performance. Table 1 lists important empiricalstudies on the standardization–performance link andpresents the focal standardization constructs the authorsanalyze, the performance variables used as dependentvariables, the main finding about the standardization–performance relationship, and characteristics of thesample. As Table 1 indicates, the results regarding thelink between standardization and performance havebeen mixed, with several studies finding positive rela-tionships and others reporting insignificant links.

HYPOTHESESDirect Impact of Standardization on FirmPerformance

Although previous research is inconsistent overall, themajority of studies have indicated that the pursuit ofstandardized marketing activities by itself has mostly apositive impact on performance (Table 1; for a similarassessment, see Özsomer and Simonin 2004), independ-ent of any moderating effects. Several ongoing trendssuggest that standardization remains an important, positive antecedent to firm performance. More than 25years ago, Levitt (1983) observed that markets acrossthe world are converging as consumers become moresimilar. Belk (1996) suggests that this process of con-verging markets and consumer tastes is driven byincreasing multinationalism, world tourism, worldsports, and expanded communication and transporta-tion systems. These transformations lead firms to stan-dardize to achieve economies of scale and scope notonly in production, distribution, logistics, advertising,and promotion but also in research and development

(Porter 1980; Shoham 1999; Yip 1995). In addition,Neff (1999) posits that standardization decreases aproduct’s time to market by reducing the time needed toadapt to local specifications. Furthermore, standardi-zation enables firms to exploit superior products andoperations in multiple markets (Maljers 1992; Özsomerand Prussia 2000; Özsomer and Simonin 2004), to havegreater control over overseas operations (Taylor andOkazaki 2006), and to retain a consistent image world-wide (Okazaki, Taylor, and Doh 2007; Shoham 1999).

As a result of these benefits, the strategy of standardiz-ing international marketing programs is an attractiveoption for many firms (Johansson and Yip 1994;Katsikeas, Samiee, and Theodosiou 2006). Therefore,all else being equal, we expect standardization toimprove firm performance.

H1: All else being equal, standardization is posi-tively related to firm performance.

Conditional Impact of Standardization onFirm Performance

The preceding hypothesis does not mean that standardi-zation improves the performance of all firms equally. Incertain situations, the benefits of adaptation may dimin-ish the positive impact of a standardization strategy onperformance. Next, we argue that the organizationalcharacteristics of competitive strategies, other aspects ofmarketing strategy, product characteristics, and generalfirm characteristics moderate the relationship betweenstandardization and firm performance. Although theselection of moderators emerged from a comprehensiveliterature review, we do not claim that these represent acomplete set of those that influence the standardization–performance link. The specific organizational charac-teristics whose impact we investigate here include com-petitive strategies (differentiation, cost leadership),aspects of international marketing strategy (coordina-tion of marketing activities, global market participa-tion), product characteristics (product homogeneity,business-to-business [B2B] versus business-to-consumer[B2C]), and the general firm characteristic of firm size.Figure 1 summarizes the conceptual model implied byour hypotheses.

Competitive Strategies. Morgan, Kaleka, and Katsikeas(2004) suggest that the effectiveness of internationalmarketing strategy depends on the specific competitivestrategy the firm pursues because the international mar-keting and competitive strategies must fit well with each



147 firms from various industries

PIMS data; 1556 firms

36 companies from various industries

100 firms operating in high-tech,

industrial settings

183 exporters

64 Fortune 500 companies

126 large business units from various industries

233 firms operating in the Greater China

markets

222 multinational corporations

206 global companies

63 service international firms,

519 main export ventures of firms

203 members of theStrategic Account

ManagementAssociation

Table 1. Selected Studies on Performance Implications of Marketing Program Standardization

FocalStandardization Performance Impact of

Authors Construct Variables Standardization Sample

Samiee and Roth (1992)

Szymanski,Bharadwaj, andVaradarajan (1993)

Johansson and Yip (1994)

O’Donnell and Jeong (2000)

Albaum and Tse (2001)

Waheeduzzaman and Dube (2003)

Zou and Cavusgil (2002)

Chung (2003)

Özsomer and Simonin (2004)

Townsend et al.(2004)

Chung and Wang (2006)

Lages, Jap, andGriffith (2008)

Shi et al. (in press)

Global marketing standardization

Standardization of the pattern of resource allocation across marketing-mix variables

Global strategy

Global marketing standardization

Globalization of international marketing strategy

1. Standardizationof products

2. Standardization of promotion

3. Standardization of distribution

Global marketing strategy

1. Standardized products2. Standardized price3. Standardized place4. Standardized promotion

Marketing program standardization

Global standardization

1. Uniform pricing strategy2. Uniform place strategy

1. Product standardization2. Promotion standardization3. Pricing standardization4. Distribution standardization

Marketing activities standardization

1. Return on investment2. Return on assets3. Sales growth

1. Market share2. Return on

investment

Firm performance

Subsidiary performance

Competitive advantage

1. Return on sales2. Sales growth

1. Strategic performance2. Financial performance

1. Market share2. Sales growth3. Profit

Business performance

1. Marketing performance2. Financial performance

1. Strategic market expansion2. Increased awareness

Export performance improvement

Global account management performance

Insignificant

Positive

Positive

Positive

Insignificant

Mixed(positive/

insignificant)

Positive

Mixed(positive/

insignificant)

Positive

Insignificant

Mixed(positive/ negative)

Mixed(positive/

insignificant)

Positive


other. Research in industrial economics proposes twomajor competitive strategies that firms can adopt to earnan above-average rate of return: differentiation and costleadership (Porter 1980, 1985). Both strategies remaininfluential on strategic management in both research andpractice (Acquaah and Yasai-Ardekani 2008; Campbell-Hunt 2000; Zajac and Shortell 1989) and, as such, areconsidered important moderators in this study.1

The differentiation approach entails being distinct fromcompetitors, for example, by providing superior infor-mation, prices, distribution channels, and prestige to thecustomer (Porter 1980). The competitive advantage ofdifferentiators rests on being unlike the competition andsatisfying customer demand in the best possible way.Standardization does not have much to offer firms striv-ing for this objective and thus may not be a strong per-formance driver. Rather, differentiating firms may needto adapt their marketing programs and customize theirofferings to achieve a competitive advantage based ondifferentiation. For them, it is central to meet their cus-tomers’ wants and needs in greatest possible detail.Given persisting differences in consumer tastes acrosscountries (Douglas and Wind 1987), achieving thisstrategic objective makes a local adaptation strategy anattractive option for differentiators. In addition, differ-entiators are likely to possess strong capabilities andhigh flexibility with respect to marketing activities,which enabled them to adapt their offerings easily tolocal tastes when selling abroad. Typically, their opera-tions are aimed less at achieving economies of scale andscope, thus reducing the positive performance impact of

standardization. For example, the Swiss-based high-quality restaurant chain Marché stands out from itscompetition through its market-style concept. As a dif-ferentiator, Marché has developed strong marketingcapabilities, which enable it to adapt to tastes and fash-ions effectively when entering and operating in interna-tional markets such as Germany and Slovenia. Marché’scompetitive strategy is not aimed at achieving theeconomies of scale and scope for which fast-food chains,such as McDonald’s, would aim.

Because standardization is a less attractive approach to internationalization for differentiators, we expect a weaker impact on firm performance. Building on these notions, we posit that, in general, a differentiation strategy reduces the positive impact of standardizationon firm performance. Thus, we hypothesize the following:

H2: The positive relationship between standardi-zation and firm performance is weaker for firms pursuing a differentiation strategythan for firms not pursuing a differentiationstrategy.

The alternative strategy, cost leadership, involves gener-ating higher margins than competitors by achievinglower manufacturing and distribution costs. Therefore,firms pursuing cost leadership can benefit strongly fromthe cost-saving potential of standardization. Zou andCavusgil (2002, p. 41) note that to attain a competitiveadvantage based on a low-cost position, “the optimum

Figure 1. Conceptual Model

Moderators

Differentiation strategy

Cost leadership strategy

Coordination of marketing activities

Global market participation

Product homogeneity

B2B/B2C focus

Firm size

Competitive Strategies

Aspects of International Marketing Strategy

Product Characteristics

General Firm Characteristics

StandardizationFirm

Performance

H2–H8

H1


global marketing strategy is to sell standardized prod-ucts using standardized marketing programs.” Becausestandardization can result in economies of scale (Levitt1983) and efficiency in marketing operations (Larocheet al. 2001; Zou, Andrus, and Norvell 1997), it is a particularly important performance driver for firms iso-lating themselves from competition through a cost lead-ership position. For example, when the British airlineRyanair—a typical low-cost carrier—expanded its oper-ations to other European countries, it used an interna-tionally standardized marketing program, which was anexcellent fit with its strong focus on a cost leadershipstrategy and therefore contributed significantly to thefirm’s success. Thus, we hypothesize a positive moderat-ing impact of the cost leadership business strategy on the relationship between standardization and firmperformance.

H3: The positive relationship between standardi-zation and firm performance is stronger for firms pursuing a cost leadership strategythan for firms not pursuing a cost leadershipstrategy.

Aspects of International Marketing Strategy. In additionto considering the effect of the two aforementionedgeneric strategies, we analyze standardization in con-junction with other aspects of international marketingstrategy because investigators have found that interna-tional marketing strategy dimensions are strongly inter-related (Zou and Cavusgil 2002). Specifically, we focuson two factors that have been the subject of consider-able research: coordination of marketing activities andglobal market participation.

Coordination of marketing activities can be defined as“the extent to which a firm’s marketing activities in different country locations, including development ofpromotional campaign, pricing decision, distributionactivities, and after-sale services, are planned and exe-cuted interdependently on a global scale” (Zou andCavusgil 2002, p. 43). Prior work in international mar-keting has indicated that standardization’s performanceimpact is much weaker without coordinated marketingactivities (Daniels 1987; Özsomer and Prussia 2000).We posit that when firms coordinate marketing-mixdecisions interdependently, their standardizing effortswill affect their performance more positively. For exam-ple, when hospitality provider Marriott plans and rollsout new international hotels, it coordinates the interiordesign, branding of the hotel and restaurants, initialpricing of room rates, and sales promotions through its

headquarters. This coordination enables Marriott tomaximize the leverage of its standardization strategy,which, because of a consistent worldwide image andeconomies of scale and scope, drives its performance. In summary, we posit that the coordination of market-ing activities captures synergies derived from economiesof scale and scope as well as learning (Bartlett andGhoshal 1991; Kogut 1989; Zou and Cavusgil 2002).Therefore, coordination will positively influence therelationship between standardization and firm perform-ance. We hypothesize the following:

H4: The positive relationship between standardi-zation and firm performance is stronger forfirms with a high degree of coordination ofmarketing activities than for firms with a lowdegree of coordination.

The impact of standardization on firm performance isalso affected by whether a firm is active globally (i.e.,present in all major markets; Yip 1991) or is present inonly a limited number of international markets. Priorliterature has recognized two important opportunitiesattached to global market participation. First, globalmarket participation offers the greatest possibilities forexploiting economies of scale and scope (Grant,Jammine, and Thomas 1988; Kim, Hwang, and Burgers1993), thus maximizing standardization’s potentialimpact on firm performance. Second, the firm’s leveland form of investment in international markets can significantly affect its ability to employ standardizationeffectively (Chandra, Griffith, and Ryans 2002). Thegreater the number of markets a firm targets, the morecomplex and inefficient adaptation to each of the coun-tries becomes. Thus, firms with a high degree of globalmarket participation are likely to be more successfulwhen adopting a standardized approach to market theirofferings. For example, hotel chains such as Marriott,with its hotels currently in 65 different countries, canleverage their standardization strategy to a much greaterextent than rivals with few hotels in foreign markets,such as the Germany-based hotel chain Kempinski.Therefore, we hypothesize the following:

H5: The positive relationship between standardi-zation and firm performance is stronger forfirms with a high degree of global market par-ticipation than for firms with a low degree ofglobal market participation.

Product Characteristics. Beyond these strategic postures,we also view product characteristics as important moder-


ators of the standardization–performance link. Previousresearch has stressed the importance of inherent productcharacteristics and indicated that they may influence afirm’s ability to standardize effectively (Chandra, Griffith,and Ryans 2002). However, the effect of specific productcharacteristics on the standardization– performance linkhas not yet been approached empirically. We consider asadditional moderators the level of product homogeneityand whether products are sold to other firms (B2B) or toend consumers (B2C).

Homogeneous products are those the market perceivesas interchangeable (Bakos 1997; Greenstein 2004;Pelham 1997; Robinson, Clarke-Hill, and Clarkson2002). High levels of product homogeneity are occur-ring in a growing number of diverse industries (Green-stein 2004; Olson and Sharma 2008; Sharma and Sheth2004). For example, many high-tech industries currentlyface the challenge of high levels of product homogeneityas steadily more offerings from their component suppli-ers are undifferentiated, including computer memory,television parts, and disk drives (Christensen andRaynor 2003; Greenstein 2004; Kohli and Thakor1997). As such, product homogeneity is considered animportant phenomenon of marketing competition (Heiland Helsen 2001; Unger 1983). We posit that when nomajor product differences exist among competitors andhomogeneity is high, standardization is a stronger per-formance driver because firms may be unable to createuseful adaptations. Because homogeneous products areoften sold on price (Rangan and Bowman 1992), a stan-dardization strategy may provide crucial cost-savingadvantages and thus increase firm performance.Therefore, firms that operate in industries with homoge-neous products (e.g., utilities such as electricity or watersuppliers) will leverage a greater impact of their stan-dardization efforts on firm performance than firms inmarkets with product heterogeneity. Thus, we hypothe-size the following:

H6: The positive relationship between standardi-zation and firm performance is stronger forfirms offering homogeneous products than forfirms offering unique products.

According to Jain (1989) and Samiee and Roth (1992),firms selling B2B products can benefit more from stan-dardization than firms selling directly to end consumers.Products sold to business customers often fill specificneeds that do not differ significantly between countries.Technical specifications, which tend to be uniformacross national borders, make standardization a prom-

ising marketing approach. For example, the industrialgases supplier Air Products, which sells oxygen, nitro-gen, and other gases primarily to other firms, stronglyrelies on standardization to enhance performance.Compared with firms, consumers are more context sen-sitive; preferences tend to be idiosyncratic to local cul-tures, tastes, and other factors. Against this background,we hypothesize the following:

H7: The positive relationship between standardi-zation and firm performance is stronger forfirms with a B2B focus than for firms with aB2C focus.

General Firm Characteristics. In their literature review,Lages, Abrantes, and Lages (2008) find that research on international marketing standardization is short on studies analyzing the specifics of small and medium-sized enterprises, though international markets havebecome increasingly attractive for these firms as well. Smaller firms’ competitive advantage often rests ontheir flexibility in providing customized marketing solu-tions, whereas multinational corporations employworldwide corporate policies that enable them to rollout standardized marketing strategies effectively. Inaddition, less flexible structures inhibit large firms fromefficient adaptation, increasing the potential perform-ance impact of standardization. Therefore, we proposethe following:

H8: The positive relationship between standardi-zation and firm performance is stronger forlarge firms than for small firms.

METHODOLOGYData Collection Procedure

Given the need for further empirical research on the stan-dardization–performance link, we conducted a large-scale survey among firms from various industries: con-sumer packaged goods, pharmaceuticals, consulting,retailing, telecommunications/information technology,and utilities. In selecting these industries, we attemptedto capture a variety of market settings to achieve a sufficient variance in the variables of interest to ourresearch. The unit of analysis is a business unit within a firm or (if no specialization into different business unitsexisted) the entire firm.2 We obtained a random sampleof U.S. business units from a commercial list supplier (n = 2549) and provided the questionnaire to key inform-ants (chief executive officer, head of marketing/sales,


head of product management, or general manager) atthese business units.

As a further step to ensure the appropriateness of therespondents, we included an item in the questionnairethat asked how knowledgeable the respondents believedthey were regarding their businesses’ strategy. Weexcluded returned questionnaires if one of these itemswas rated lower than 3 on a five-point scale (5 = “veryknowledgeable”). The usable returned responses totaled489, representing a response rate of 19%. Table 2describes the composition of our sample.

Tests for Potential Biases

Following Armstrong and Overton’s (1977) recommen-dations, we assessed nonresponse bias by comparing theresponses of early and late participants. Specifically, wetested the first and last quartiles of the sample for signif-icant differences across means for each of the theoreticalconstructs. The results of the t-tests indicated no signif-icant differences (p ≤ .05) between early and late respon-dents, suggesting that nonresponse bias is not a problemin our data.

Furthermore, common method bias could be a potentialproblem if data on two or more constructs were col-lected from the same person, and correlations betweenthese constructs need to be interpreted (Podsakoff et al.2003). Following prior research (e.g., Brettel et al. 2008;Yalcinkaya, Calantone, and Griffith 2007; Zhang, Hu,and Gu 2008), we applied Harman’s single-factor test todetermine the presence of such a bias. We found that thehypothesized measurement model fits the data signifi-cantly better than a single-factor model (χ2

diff =4325.74, Δd.f. = 15, p ≤ .01). In addition, we applied thepartial correlation adjustment procedure that Lindelland Whitney (2001) suggest to control for commonmethod bias. Consistent with Krishnan, Martin, andNoorderhaven (2006), we used tenure of the respondentas the marker variable because it was theoretically unre-lated to firm performance. All significant zero-ordercorrelations with firm performance remained significantafter the partial correlation adjustment. Thus, we con-clude that common method variance does not constitutea problem for this study.

Measurement Procedure

When possible, we adopted measurement scales fromprevious research. Before the main data collection, wepretested a draft of the questionnaire in a pilot study.

The surveys were mailed to 80 randomly selected firms,and we received 18 responses. The results from the pilotstudy suggested that the survey was appropriate for fur-ther administration. The Appendix lists the scale items,construct means and standard deviations, coefficientalphas, composite reliabilities, and average variancesextracted (AVE).

In this study, we applied reflective measurement models;that is, the observed variables are interchangeable manifestations of the underlying construct (Bagozzi andBaumgartner 1994). We followed standard psychomet-ric scale assessment procedures. Overall, the results indi-cate good psychometric properties for all constructs (seethe Appendix). On the basis of confirmatory factoranalysis, the composite reliabilities and AVE indicatesatisfactory construct reliability and validity; theyexceed the commonly used thresholds of .6 and .5

Table 2. Sample Composition

Industries Percentage

Consulting 10

Consumer packaged goods 38

Pharmaceuticals 10

Retailing 13

Telecommunications/information technology 8

Utilities 16

Other 4

Position of Respondents Percentage

Chief executive officer 18

Head of marketing 25

Head of product management 15

Head of sales 19

General manager 21

Other 2

Number of Employees Percentage

<50 21

50–500 21

501–1000 25

1001–5000 19

>5000 14


(Bagozzi and Yi 1988). Furthermore, no coefficientalpha value is lower than .7, thus exceeding the recom-mended cutoff value (Nunnally 1978).

Independent Variable. We conceptualized standardizationas the degree to which firms apply common marketing-mix variables across national markets (Cavusgil and Zou 1994; Jain 1989; Szymanski, Bharadwaj, andVaradarajan 1993; Zou and Cavusgil 2002). FollowingZou and Cavusgil (2002), we measured standardizationas a second-order factor reflected by the three dimensionsof product standardization, promotion standardization,and standardized channel structure. Although Zou andCavusgil originally proposed a four-dimensional model ofstandardization, also including price standardization,they dropped this fourth dimension after personal inter-views with executives. They argued (p. 47) that “the itemmeasuring the standardized price was dropped, becausethe executives believed that they could not provide accu-rate information on this: Local regulations and competi-tive situations were such that their [business units] had lit-tle control over the final prices of their products in foreignmarkets.” We followed Zou and Cavusgil in not includ-ing the pricing dimension in our standardization measure,and we adopted their measurement items for each of thedimensions.

Dependent Variable. Firm performance can be definedas “the unique position of a firm in relation to its com-petitors that allows it to outperform them consistently”(Fiol 1991, p. 191). Researchers have warned againstusing a unidimensional view of firm performance wheninvestigating the effectiveness of standardization strat-egy (Ryans, Griffith, and White 2003). Thus, we followed the lead of Vorhies and Morgan (2005) andconceptualized and operationalized performance as amultidimensional construct, reflected by three dimen-sions: customer satisfaction (degree of customer-oriented success), market effectiveness (degree to whichthe firm’s market-based goals had been achieved), andprofitability (degree of financial performance). Eachdimension was measured by four items, which weadopted from Vorhies and Morgan (2005).

Moderating Variables. Differentiation entails beingunlike or distinct from competitors (Porter 1980). Wemeasured differentiation with five items borrowed fromFrambach, Prabhu, and Verhalen (2003), Homburg,Workman, and Krohmer (1999), and Nayyar (1993).The competitive strategy of cost leadership aims toachieve low manufacturing and distribution costs(Narver and Slater 1990; Nayyar 1993; Porter 1980).

We based the measures for cost leadership on the scalesthat Li and Li (2008) and Nayyar (1993) employ.According to Zou and Cavusgil (2002), coordination ofmarketing activities denotes the extent to which a firm’smarketing activities in different country locations areplanned and executed interdependently on a globalscale, whereas global market participation refers to theextent to which a firm pursues marketing operations in all major markets in the world. We adopted the itemsfor measuring the constructs of coordination of market-ing activities and global market participation from Zou and Cavusgil (2002). Product homogeneity consti-tutes the degree to which a firm’s products are perceivedin the market as interchangeable (Bakos 1997;Greenstein 2004; Pelham 1997; Robinson, Clarke-Hill,and Clarkson 2002). We measured product homogene-ity using a newly developed scale. Item generation wasinspired by the work of Hill (1990) and Sheth (1985).We measured B2B/B2C focus with one item adoptedfrom Carpenter (1987), which asks for the share of salesdirect to end users. Finally, we measured firm size interms of the number of employees, in line with Steensmaand Corley’s (2000) work.

Hypotheses-Testing Procedure

We used the covariance-based software AMOS 16.0 totest the measurement model and to estimate the struc-tural relationships our conceptual framework posits. To test the moderating hypotheses, we primarily appliedmultigroup structural equation modeling as Homburg,Grozdanovic, and Klarmann (2007) outline. Morespecifically, we conducted a median split of our samplealong the values of the moderator variable to create two subsamples, one with low values and the other withhigh values of the moderator. Then, we compared a con-strained model in which the effect of standardization on firm performance was set equal across the two subgroups with an unconstrained case. If the introduc-tion of the equality constraint resulted in a significantdecrease in model fit, we inferred that the relativeimportance of the standardization was different in both subsamples. In that case, we analyzed whether the respective values of the path coefficients in the two models were in line with our hypotheses.3

RESULTSMeasurement Model

We followed a two-stage data analysis approach toassess the measurement model and the structural model(Anderson and Gerbing 1988). In the measurement


model, all item loadings were significantly greater thanzero (p ≤ .01), positive, and high in magnitude (≥64).Moreover, considering the comparatively high modelcomplexity, the goodness-of-fit indexes indicated thatthe measurement model fit the data sufficiently well (χ2 = 1,640.51, d.f. = 666, χ2/d.f. = 2.46; comparative fitindex [CFI] = .93; goodness-of-fit index [GFI] = .85;normed fit index [NFI] = .88; Tucker–Lewis index [TLI] = .91; standardized root mean square residual[SRMR] = .05). Subsequently, we assessed discriminantvalidity on the basis of the procedure that Fornell andLarcker (1981) propose. We found that the square rootof the AVE by the measure of each factor was largerthan the correlation of that factor with all other factorsin the model (see Table 3). In addition, we tested dis-criminant validity by performing a series of chi-squaredifference tests between a model in which the factor cor-relation is fixed at 1 and the unrestricted model. Everyrestricted model exhibited a significantly worse fit thanthe unrestricted model. On the basis of these findings,

we conclude that there are no problems with respect todiscriminant validity.

In a separate analysis, we tested the postulated structureof the standardization construct by means of second-order confirmatory factor analysis (Bagozzi 1994). Inthe model, standardization is the second-order factorreflected by three first-order dimensions. The loadingsof the second-order construct on its five respectivedimensions are .91, .91, and .85 (p ≤ .01). The global fitcriteria indicate a good overall model fit (χ2 = 37.96, d.f. = 12, χ2/d.f. = 3.16; CFI = .99; GFI = .98; NFI = .98;TLI = .98; SRMR = .02). We then compared a three-factor model with a one-factor structure using a chi-square difference test. The fit of the single-factor modelwas considerably worse than that of the hypothesizedmodel (χ2 = 171.05, d.f. = 14, χ2/d.f. = 12.22; CFI = .94;GFI = .90; NFI = .93; TLI = .90; SRMR = .04). In par-ticular, the decrease in chi-square was significant (Δd.f. = 2, χ2

diff = 133.09, p ≤ .01). These results show

Table 3. Discriminant Validity

1 2 3 4 5 6 7 8 9 10 11 12 13

Product standardization .83

Promotion standardization .72 .86

Standardized channel structure .73 .72 —

Customer satisfaction .36 .32 .29 .77

Market effectiveness .61 .54 .50 .62 .80

Profitability .54 .49 .44 .58 .79 .84

Differentiation .41 .41 .40 .60 .51 .47 .71

Cost leadership .52 .53 .45 .56 .56 .55 .63 .71

Coordination of marketing activities .62 .56 .61 .40 .54 .50 .47 .48 .87

Global market participation .59 .53 .53 .21 .50 .43 .31 .38 .47 .75

Product homogeneity .45 .36 .34 .24 .37 .38 .23 .42 .36 .27 —

B2B/B2C focus .15 .16 .17 .17 .18 .19 .21 .16 .18 .22 .10 —

Firm size .42 .35 .36 .10 .33 .28 .15 .21 .33 .56 .15 .28 —

Notes: Bold numbers on the diagonal show the square root of AVE, and numbers below the diagonal show the correlations. Correlations ≥ .15 are significant at the1% level, and correlations ≥ .10 are significant at the 5% level.


the reliability and validity of the measurement of stan-dardization as a three-dimensional construct.

Structural Model

Next, we examined the structural model relating stan-dardization to firm performance. The fit measures forthe structural model showed satisfactory values (χ2 =400.31, d.f. = 146, χ2/d.f. = 2.74; CFI = .96; GFI = .92;NFI = .94; TLI = .96; SRMR = .04). Analyzing the pathestimates, we find further support for the validity of oursecond-order factors: All paths between second- andfirst-order factors were significant (p ≤ .01), and stan-dardized estimates were higher than .7.

In H1, we argued that standardization is positivelyrelated to firm performance. The estimate for the pathcoefficient between the two constructs confirms such apositive relationship between standardization and firmperformance (β = .68, p ≤ .01). Thus, we find empiricalsupport for H1. The resulting R2 = .46 underscores thenotion that standardization explains a substantial partof firm performance.

Following the work of Katsikeas, Samiee, andTheodosiou (2006), we also assessed two rival models.The first rival model treated international marketingstandardization as three separate, uncorrelated compo-nents. The fit indexes associated with this model werenot acceptable (χ2 = 1201.22, d.f. = 147, χ2/d.f. = 8.17;CFI = .84; GFI = .80; NFI = .83; TLI = .82; SRMR =.21). In addition, the performance variance explained bythis model was .34, considerably smaller than in theoriginal model (.46), providing further support for thesuperiority of a multidimensional specification of stan-dardization. The second rival model treated perform-ance as three separate components. This model’s fitindexes were again poor (χ2 = 826.32, d.f. = 147, χ2/d.f. = 5.62; CFI = .90; GFI = .83; NFI = .88; TLI =.88; SRMR = .08). Overall, the examination of the rivalmodels enhances confidence in this study’s model, spec-ifying standardization and performance as second-orderconstructs.

Moderation Analysis

Table 4 summarizes the results regarding the multigroupanalyses. Before interpreting the empirical support for our hypotheses, we followed Steenkamp andBaumgartner’s (1998) recommendation and tested formeasurement invariance by equating the factor loadingsin the two subgroups. Examining the effect of this con-

straint, we found that it did not lead to a significantdecrease in model fit for any of the multigroup analyses(for all models, χ2

diff ≤ 19.09, Δd.f. = 13, p > .1), whichsupports measurement equivalence.

Subsequently, we analyzed the differences between esti-mates for the standardization–firm performance path indifferent subsamples to test H2–H8. H2 predicted aweaker positive relationship between standardizationand firm performance for firms pursuing a differentia-tion strategy. Contrary to H2, we did not find a signifi-cant difference in the effect of standardization on firmperformance between firms pursuing a differentiationstrategy and firms not pursuing a differentiation strat-egy (χ2

diff = 1.02, p > .1). Thus, H2 is rejected. However,as H3 predicted, the cost leadership strategy of a firmhas a significant effect on the standardization–firm per-formance relationship (χ2

diff = 4.87, p ≤ .05). We foundthat standardization is more important to performancewhen a cost leadership strategy is emphasized (β2 = .73)than when it is not (β1 = .40), in support of H3. H4 proposed that standardization would be a stronger per-formance driver when the degree of coordination ofmarketing activities is high. In line with this hypothesis,the effect of standardization as a driver of firm perform-ance is significantly greater (p ≤ .01) when firms coordi-nate their marketing activities (β2 = .66) than when theydo not (β1 = .43). These results support H4. H5 statedthat the positive relationship between standardizationand firm performance would be stronger for firms witha high degree of global market participation. Our resultsreveal that global market participation plays a signifi-cant role in the standardization–performance relation-ship (χ2

diff = 62.58, p ≤ .01). For firms with a high levelof global market participation, standardization drivesperformance significantly more (β2 = .92) than for firmswith a low level of global market participation (β1 =.46). Thus, H5 is supported. H6 predicted that the standardization–performance link would be strongerfor firms whose products are homogeneous than forfirms with more heterogeneous products. Given a signif-icant chi-square difference (χ2

diff = 3.88, p ≤ .05) and ahigher path coefficient for firms with homogeneousproducts (β2 = .72) than for firms with heterogeneousproducts (β1 = .57), our results fully support thishypothesis. H7 proposed a moderating effect of thefirm’s customer type in a way that the positive relation-ship between standardization and firm performancewould be stronger for firms with a B2B focus than forfirms with a B2C focus. Because there was no significantdecrease in model fit when we equated the path coeffi-cient between standardization and firm performance in


the B2B and B2C subsamples (χ2diff = 2.68, p > .1), we

found no support for H7. Finally, H8 stated that the positive relationship between standardization and firmperformance would be stronger for large firms than forsmall firms. We find that firm size is a relevant modera-tor of the relationship between standardization and firmperformance. For the subsample including the largerfirms, the path coefficient (β2 = .76) is significantlylarger (p ≤ .01) than the path coefficient for the subsam-ple including the smaller firms (β1 = .54). This resultprovides empirical support for H8.

Post Hoc Analyses

Subsequently, we conducted several post hoc analysessimilar to the procedures Bouquet, Morrison, andBirkinshaw (2009) describe. More specifically, we esti-mated three additional series of structural equationmodels, one series for each standardization dimensionseparately. Comparing the direct effects of each dimen-sion, we found that product standardization had thegreatest influence on performance (β = .66, p ≤ .01), fol-lowed by promotion standardization (β = .61, p ≤ .01)and standardized channel structure (β = .52, p ≤ .01).

With regard to the moderated effects of the singledimensions, the pattern of results is largely similar to theanalyses of the multidimensional construct. Of the 21additional multigroup analyses for the separate dimen-sions (3 dimensions × 7 moderators), 19 yielded thesame findings regarding the (in)significance of the mod-eration effect. Only two of the single-dimension multi-group analyses differed in their results compared withthe analyses including the overall standardization construct.

As Table 4 shows, we found no support for H7 whenusing the multidimensional standardization construct;that is, the significance of the difference between theB2B subsample and the B2C subsample with respect tothe performance effect of standardization was justgreater than the 10% level (p = .102). However, themoderating influence of the B2B/B2C variable was sig-nificant for product standardization (χ2

diff = 6.87, p ≤.01) and weakly significant for promotion standardiza-tion (χ2

diff = 3.31, p ≤ .1), with a higher path coefficientfor B2C than for B2B firms. Overall, the largely consis-tent pattern between the moderation results includingthe single dimensions and the second-order construct

Table 4. Results of Multigroup Analyses

Standardization → Firm Performance

Moderator χ2 Difference Low Value High Value Hypothesis Variable (Δd.f. = 1) of Moderator of Moderator

H2 Differentiation χ2diff = 1.02 β1 = .43 β2 = .65(p > .1)

H3 Cost leadership χ2diff = 4.87 β1 = .40 β2 = .73

(p ≤ .05)

H4 Coordination of marketing activities χ2diff = 12.80 β1 = .43 β2 = .66

(p ≤ .01)

H5 Global market participation χ2diff = 62.58 β1 = .46 β2 = .92

(p ≤ .01)

H6 Product homogeneity χ2diff = 3.88 β1 = .57 β2 = .72

(p ≤ .05)

H7 B2B/B2C focus χ2diff = 2.68 β1 = .64 β2 = .67(p > .1)

H8 Firm size χ2diff = 37.03 β1 = .54 β2 = .76

(p ≤ .01)


provides further support for our conception of stan-dardization as a metaconstruct with interrelated andreinforcing dimensions.

DISCUSSION

The rationale for this research was to conduct a contin-gency analysis on the performance link of internationalmarketing standardization. Our study contrasts withprevious work in that we investigated several organiza-tional factors that have an important role in determin-ing the extent to which standardization facilitates performance.

This research explored Morgan, Kaleka, and Katsikeas’s(2004) position, which asserts that a fit must existbetween a firm’s competitive strategy and its interna-tional marketing strategy. For example, the basic premise of differentiation—being different from com-petitors—can conflict with the basic premise of stan-dardization—applying the same marketing-mix ele-ments across international markets. In theory, a firm canemphasize product differentiation and adopt standard-ized marketing practices across different markets.However, because the competitive market structure andits offerings can differ across markets, applying stan-dardization uniformly to all international markets couldweaken differentiation as a competitive advantage.Under these circumstances, a nonstandardized market-ing approach may be needed to maintain the integrity ofthe differentiation strategy. Thus, although our hypoth-esis with respect to differentiation is not supported, wemaintain that more conclusive results could be obtainedwith respect to differentiation if future analyses con-trolled for or matched markets with respect to theirmarket structure. Only then can differentiated firmsdetermine the appropriateness of standardization acrossmarkets.

In contrast to the effects of differentiation, our resultsshow a significant effect of cost leadership. Firmsemphasizing cost leadership as a competitive strategyare more capable of using standardization to enhanceperformance because cost leadership and marketingprogram standardization have a consistent objective: toprocess improvements that increase efficiency. Thus, thiscompetitive strategy and the firm’s marketing approachenjoy a strategic fit and the potential for synergy.

Extending Morgan, Kaleka, and Katsikeas’s (2004)position regarding the fit between the competitive and

international marketing strategies, we posit that theirkey notion of fit translates to other organizational char-acteristics as well. Specifically, we expected that a fitmust exist between the various aspects of the firm’sinternational marketing strategy. Thus, the coordinationof activities across markets is critical to providing firmswith relevant consumer and market information andsupport for effectively standardized marketing. Firmsthat do not coordinate efforts can miss the opportunityto acquire pertinent information about how to imple-ment standardized marketing techniques (e.g., whichcommunication and distribution channels to leverage).

Moreover, a low level of global market participation canlimit firms’ abilities to achieve economies of scale andthus also limit the performance benefit gained fromstandardizing marketing programs. Therefore, activeparticipation in many global markets, paired with coor-dination of activities across markets, enhances the linkbetween international marketing program standardiza-tion and firm performance because of the strategic fitbetween these marketing strategies.

In addition, we can extrapolate the notion of strategic fitto explain the association between specific productcharacteristics and standardization. We found that whencompetitors offer no major product differences andhomogeneity level is high, few opportunities for effec-tively leveraging standardization are prevalent, makingstandardization the more beneficial choice in commodi-tized markets. For example, the France-based energyutility provider GDF Suez, which operates acrossEurope and around the world, significantly improved itsbottom line by leveraging its standardization efforts.This was possible because of the homogeneous nature ofelectric energy. In contrast, Coca-Cola, a firm operatingin an industry with a wide variety of different products,must cope with local tastes and needs and thus cannotleverage the standardization–performance link to theextent that GDF Suez can.

Furthermore, we hypothesized that in contrast to B2Cfirms, B2B firms would have a stronger link betweenmarketing standardization and firm performance, possi-bly because end-user consumers, more than firms, tendto exhibit more variance in preferences and needs (e.g.,technical specifications, lot size requirements, productassortment). Given that B2B firms typically have fewercustomers than B2C firms, a greater variance among alarger number of customers can translate into more cus-tomer heterogeneity in a B2C market. As a result, astandardized marketing approach may not be as suc-


cessful in a B2C market as it would be in a B2B context.Although this rationale is intuitive, it is not supportedby our analysis. Instead, our findings imply that firmsmay require just as much customization as end-user con-sumers. This outcome could be a reflection of the grow-ing momentum around customer relationship manage-ment and the emphasis on the lifetime value ofindividual customers, a phenomenon inclusive of bothB2B and B2C firms (Coviello et al. 2002).

Finally, strategic fit can also explain why standardiza-tion has a greater impact on performance for largerfirms than for smaller firms. As firms grow, a factor thatoften contributes to the success and sustainability oftheir growth is their ability to streamline processesand/or communications to drive efficiency. Wal-Mart,the world’s largest retailer, is an example. A key ingredi-ent contributing to Wal-Mart’s growth is its efficientsupply chain management, an advantage that has led torecord growth and continued success even in a down-turned economy. As firms such as Wal-Mart grow, theytypically develop the necessary resources for effectivemarketing standardization. Although smaller firms canstrive for standardization as well, their smaller sizemakes standardized systems less critical to their func-tioning. Furthermore, because of the scale differencebetween large and small firms, the return from investingin standardized systems and processes may not be asgreat for a smaller firm. Therefore, given their resourceavailability and owing to basic necessity, marketingstandardization has a greater impact on the perform-ance of larger firms. Our analysis and explanations forthe results of this research offer several important contributions to both the academic literature and man-agerial practice regarding international marketing standardization.

Academic Contribution

First, this research informs the international marketingstandardization–performance literature by demonstrat-ing that both the type of firm and the firm’s approach toits competitive and international strategy condition therelationship between standardization and firm perform-ance. This finding is of particular importance given theinconsistent results with regard to the unconditionallink between standardization and performance (seeTable 1). Previous research has not provided consistentevidence for the value of standardization (Ryans,Griffith, and White 2003), resulting in an ambiguity ofserious concern because investigators of internationalmarketing strategy have largely argued that only aspects

with the potential to enhance business performance areworthy of continued research efforts (Jain 1989; Samieeand Roth 1992).

Second, by identifying important organizational contin-gencies, our findings reduce the ambiguity that has sur-rounded the performance consequences of standardiza-tion. Specifically, our findings provide empirical supportfor the contingency perspective of standardization, asZou, Andrus, and Norvell (1997) articulate. By provid-ing evidence that a standardization strategy can enablefirms to achieve superior performance, we demonstratethat standardization is an important subject for researchin international marketing.

Finally, the findings lend further support to the multi-dimensional view of international marketing standardi-zation. In our study, we replicated the standardizationmeasures Zou and Cavusgil (2002) develop and, on thebasis of an examination of rival models including sepa-rated standardization factors, provided additional evi-dence for the appropriateness of a second-order factorfor measuring standardization. Thus, we heededTheodosiou and Leonidou’s (2003) call for furtherempirical research assessing the validity and reliabilityof existing multidimensional measures. Increased confi-dence regarding the availability of existing survey meas-ures should pave the way for more quantitative work oninternational marketing standardization and its nomo-logical network. We elaborate on specific avenues foradditional research in the “Limitations and Directionsfor Further Research” section.

Managerial Implications

Although previous studies have improved our under-standing of which factors make firms adopt a standardi-zation strategy, our research is especially useful for practitioners in that it analyzes the type of firms forwhich standardization is particularly beneficial to per-formance. The consistent message that our results sug-gest to managers is that marketing standardization ismore successful when it fits with the firm’s competitivestrategy, other aspects of the firm’s international strat-egy, and general firm characteristics. Because our resultsare based on manager data from a wide range of differ-ent industries, they offer broadly applicable directionsfor international marketing managers.

With respect to a firm that pursues differentiation as acompetitive strategy, our analysis suggests that man-agers must give thoughtful consideration to their mar-


kets before blindly adopting standardized practices.With careful profiling and matching of competitive mar-ket structures and offerings, standardized marketingapproaches can be used to market the differentiatedoffering while still enhancing firm performance.

The message to managers that cost leadership–orientedorganizations can successfully adopt marketing stan-dardization is not surprising, as a clear alignment existsbetween cost leadership and marketing standardization.However, when also considering that marketing stan-dardization tends to be more successful with largerfirms, firms that actively participate in global markets,and firms that promote the coordination of their mar-keting activities, a pattern of behavior emerges.Specifically, when interpreted in conjunction, theseresults suggest that organizational cultures that arefocused on efficiency and learning are more likely tohave a stronger link between marketing standardizationand firm performance. This important insight may pre-clude some firms from engaging in international market-ing standardization. For example, consider a firm whosestrategy is guided by a need for short-term profits. Onthe surface, standardized practices would seeminglyenhance profits. However, in general, firms must investtime and money to gain efficiencies and acquire relevantlearning to align standardization with existing practices.Therefore, a short-term profit focus could conflict withsuccessful marketing standardization.

Our broad-based industry analysis reveals anotherimportant managerial recommendation. Specifically,neither B2B nor B2C firms should dismiss marketingstandardization as inappropriate for their business. Ingeneral, the results suggest that marketing standardiza-tion has a similar positive association with performanceregardless of whether the product type is B2B or B2C.Thus, for example, an Italian shoe manufacturer has thepotential to standardize its marketing as it expandsinternationally just as much as an Italian shoe retailer.These two business types would not use the same mar-keting techniques; however, what should be the same istheir emphasis on efficient processes. This reminder isimportant for global managers because, in global markets, managers mainly attend to cultural, social, or economic differences, which can lead to more idiosyn-cratic or market-specific business practices. Althoughour research does not contest the validity of this mental-ity, it does suggest adopting a blended perspective.Specifically, global managers should attend to marketdifferences and strive for ways to engage efficiently inthose markets. One managerial approach is to focus

relevant resources on the market-specific differencesthat are important to the international customers andapply standardized approaches to the marketing aspectsthat are less critical to these customers. Therefore, mar-keting standardization is not a “cookie-cutter”approach to marketing but rather an informed methodbased on learning and firm efficiencies.

Thus, from our parsimonious list of organizationalattributes, we are able to isolate the key organizationalpositions that align with marketing standardization.Given our finding that the five factors have a significantinfluence on the effectiveness of standardization, man-agers should appreciate that a comprehensive analysis—not only of relevant market conditions but also of internal organization aspects—should precede any deci-sion about the degree of standardization to be adopted.Such a fit analysis is conducted best when firms plan toenter a new market. However, it is important to notethat as strategies, products, and firm characteristicschange over time, so does the optimal degree of stan-dardization. As such, the evaluation of the appropriatelevel of international marketing standardization shouldnot be a one-time event but rather conducted on a regular basis.

LIMITATIONS AND DIRECTIONS FORFURTHER RESEARCH

Although this study provides unique insights into thelink between international marketing standardizationand firm performance, as are prior studies, it is limitedby its conceptual focus and the methods employed.Although this study explored the moderated perform-ance effect of standardization, its findings are con-strained to the particular set of moderators examined.Specifically, we focused on organizational-level factorsto augment prior research that has investigated the mod-erating impact of factors related to the environment ofthe firm (Katsikeas, Samiee, and Theodosiou 2006).However, the list of possible sources for the differentialeffects of standardization has certainly not beenexhausted. For example, further research involvingmultinational corporations could explore the moderat-ing impact of relational factors characterizing the rela-tionship between the headquarters and foreign units.Concepts such as trust and commitment might prove tobe important contingencies for a successful implementa-tion of standardization.

Even within the domain of organizational-level factors,we expect supplementary moderators to have an impor-


tant role. For example, we focused on Porter’s (1980,1985) framework of generic competitive strategiesbecause it has been held repeatedly to be the most influ-ential framework in research on business-level strategy(Acquaah and Yasai-Ardekani 2008; Campbell-Hunt2000; Zajac and Shortell 1989). However, we stress that the literature offers other important strategyapproaches, such as Miles and Snow’s (1978) strategytypes or the resource-based view (Day 1994; Hunt1999). Further marketing standardization research thatconsiders the strategy dimensions highlighted in theseapproaches might yield additional insight into the con-tingent role of competitive strategy.

Moreover, we did not find empirical support for H2 andH7 (i.e., the moderating effects of differentiation strat-egy and B2B/B2C focus). Although we tried to provideconceptual reasons for these results in the “Discussion”section, the insignificant effects may also be due to themethod of analysis. Because our testing of moderatingeffects with multigroup analysis is based on thedichotomization of the moderator variable, it may beassociated with a reduced level of statistical power(Homburg, Grozdanovic, and Klarmann 2007; Irwinand McClelland 2001), which could also explain whywe do not find support for H2 and H7. Further researchmight use different statistical techniques to explore thisissue in greater detail.

Another limitation lies in the empirical context of thestudy—U.S. firms—and generalizations from our findingsshould be made cautiously because the results are limitedto the institutional context of the United States. Differentrelationships between international marketing standardi-zation and performance may well exist in alternative insti-tutional contexts. For example, different managementstyles in other cultures may affect the appropriateness of astandardization strategy. Thus, future studies shouldextend to firms from a wide variety of institutional con-texts, including both industrialized and less developedcountries. In a similar vein, further research could alsoanalyze the moderating effect of national culture on theperformance impact of standardization, an objective thatwould require data from multiple countries.

Another important limitation of this study is related to itsempirical design. Although the results indicate that stan-dardization of international marketing programs influ-ences the degree of firm performance, inferences to causal-ity are limited given the cross-sectional nature of the data.Thus, the performance impact of standardization shouldbe examined longitudinally. Moreover, we used a single

respondent from each organization. Although we find noevidence of common respondent bias, the use of multipleraters in future studies might enhance the reliability of ourmeasures (Huber and Power 1985).

It is possible that an avenue for enhancing this researchis in the measurement of some of our constructs. Wechose to measure the majority of the constructs usingthe same items that were used in previously publishedresearch (e.g., Zou and Cavusgil 2002). In a fewinstances, leveraging prior research resulted in measureswith fewer than three items (e.g., promotion standardi-zation and standardized channel structure). Althoughthere is research that would support our approach (e.g.,Bergkvist and Rossiter 2007; Nagy 2002; Rossiter 2002;Wanous, Reichers, and Hudy 1997), we acknowledgethat a greater number of items may have increased thereliability of these measures (Churchill 1979; Peter1979). Although we tried to be judicious and managethe length of the questionnaire while maintaining thecore essence of the constructs, our approach to measur-ing these constructs could be viewed as a limitation ofour study. Thus, further research should be devoted tothe generation of comprehensive measures for the con-structs used in our study.

Finally, further research should investigate the interplaybetween industry-level factors (as Katsikeas, Samiee,and Theodosiou [2006] analyze) and organizational-level factors (as this study analyzes). In accordance with the positions of industrial economics and the structure–conduct–performance framework (Bain 1951,1968), studying the interaction between industry- andorganizational-level factors is an important undertakingbecause organizations are strongly intertwined withtheir environment.

CONCLUSION

This article examines the organizational factors thatmoderate the relationship between international mar-keting standardization and firm performance with aview to expanding academic knowledge and providingmanagerial insights. The results underscore the need tomove beyond a focus on the direct link between stan-dardization and performance. In seeking to understandthe conditions under which standardization promotesfirm performance, researchers and managers shouldtake into account the type of firm facing the standardi-zation decision. In our study, five organizational factors(cost leadership, coordination of marketing activities,


global market participation, product homogeneity, andfirm size) significantly moderated the relationshipbetween standardization and firm performance in sucha way that the standardization–performance relation-ship was strengthened at high levels of the moderating

variables and weakened at low levels. We encourageinvestigators to examine further the complex and contingent role of standardization from additionalangles to develop a more complete understanding of thephenomenon.

Appendix. Items for Construct Measurement

Construct Name Reference Items M σ α CR AVE

Product standardization(1 = “strongly disagree,” 5 = “strongly agree”)

Promotion standardization(1 = “strongly disagree,”5= “strongly agree”)

Standardized channel structure(1 = “strongly disagree,” 5 = “strongly agree”)

Customer satisfaction(1 = “much worse thancompetitors,” 5 = “muchbetter than competitors”)

Market effectiveness(1 = “much worse thancompetitors,” 5 = “muchbetter than competitors”)

Profitability(1 = “much worse thancompetitors,” 5 = “muchbetter than competitors”)

Differentiation(1 = “strongly disagree,” 5 = “strongly agree”)

Zou and Cavusgil(2002)

Zou andCavusgil(2002)

Zou andCavusgil(2002)

Vorhies andMorgan(2005)



Frambach etal. (2003);

Homburg etal. (1999);

Nayyar(1993)

• We adopt a standardized core product across all major markets in the world.

• Globally standardized components make up a significant percentage of the total cost of our product.

• Main features of our product are standardized across major markets in the world.

• The product designs we use in different country markets are very similar.

• Execution of our advertising varies greatly from one country market to another. (R)

• We use very different techniques for sales promotion in different country markets. (R)

• We develop similar channel structure for distributing any product in different country markets.

• Overall customer satisfaction

• Delivering value to our customers

• Delivering what our customers want

• Retaining valued customers

• Market share growth

• Growth in sales revenue

• Acquiring new customers

• Increasing sales to existing customers

• Business unit profitability

• Reaching financial goals

• Return on investment

• Return on sales (ROS)

• We offer superior products.

• We undertake new product development above industry average.

• Relative to the industry standard, our product quality is high.

3.55 .94 .90 .90 .69

3.50 1.03 .86 .85 .74

3.52 1.07 — — —

3.95 .64 .85 .86 .60

3.72 .73 .87 .88 .64

3.65 .77 .91 .91 .71

3.88 .69 .83 .83 .50


Appendix. Continued

Construct Name Reference Items M σ α CR AVE

Cost leadership(1 = “strongly disagree,” 5 = “strongly agree”)

Coordination of marketingactivities(1 = “not coordinated at all,” 5 = “highly coordinated”)

Global market participation(1 = “strongly disagree,” 5 = “strongly agree”)

Product homogeneity(1 = “strongly disagree,” 5 = “strongly agree”)

B2B/B2C focus(1 = “0%–50%,” 2 = “51%–100%”)

Firm size(1 = <50, 2 = 50–500, 3 = 501–1,000, 4 = 1001–5000, and 5 = >5000)

Li and Li(2008);Nayyar(1993)



Hill (1990);Sheth (1985)

Carpenter(1987)

Steensmaand Corley

(2000)

• We continuously improve existing products.

• We design or produce our products to order.

• Our manufacturing costs are lower than our competitors’.

• We continuously improve our processes in order to keep cost low.

• We continuously strive for product cost reduction.

• We are constantly improving our operating efficiency.

• Our efficient internal operation system has decreased the cost of our products.

• Our economy of scale enables us to achieve a cost advantage.

• We have achieved a cost-leadership position in the industry.

• Development of promotional campaigns

• Pricing decisions

• Distribution activities

• After-sale services

• We have business operations in all major markets in the world.

• Most products have no intrinsic differences from competing offerings.

• Many products are identical in quality and performance.

• Share of sales direct to end user

• Number of employees

3.77 .66 .87 .87 .50

3.70 .92 .93 .93 .76

3.15 1.27 — — —

3.40 .94 .72 .72 .56

1.58 .49 — — —

2.83 1.33 — — —

Notes: CR = composite reliability, and R = reversed items.


NOTES

1. Porter (1980) identifies a third generic strategy, focus,that involves serving a specialized market segment.However, this strategy has been subject to much cri-tique. In particular, it has been argued that focus can-not be adopted in isolation, but only in conjunctionwith one of the other two strategic options, and thusit does not constitute a viable single strategy (Karnani1984; Wright 1987). Consequently, we follow priorempirical research (e.g., Aulakh, Kotabe, and Teegen2000; Spanos and Lioukas 2001) and only incorpo-rate the effects of cost leadership and differentiationin our research model.

2. The questionnaire included the following instruction:“If you are employed at a diversified firm with severalbusiness units, please respond to all questions withreference to the business unit you are working for.”

3. In addition to multigroup analysis, we conductedmoderated regression analyses with interaction termsto test H2–H8. The results of the moderated regres-sion analyses were in line with the results of themultigroup analyses reported in this article.

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THE AUTHORS

Oliver Schilke is a research fellow at the Institute forResearch in the Social Sciences (IRiSS) at StanfordUniversity. He is also pursuing his venia legendi(Habilitation) at RWTH Aachen University, Germany.His research focuses on the management of interorgani-zational relationships, including buyer–seller, alliancepartner, and network relations. His work has been pub-lished or is forthcoming in Journal of the Academy ofMarketing Science and Long Range Planning, amongother journals. Schilke received his doctorate in businessadministration from Witten Herdecke University(Germany).

Martin Reimann is a research fellow at the University ofSouthern California and a scientific staff member at theBrain & Creativity Institute at the same university. Hisresearch focuses on the link between customer relation-ship management and firm performance and the com-moditization of products and industries. Furthermore,he assesses consumers’ decision making using psycho-metric, behavioral, and neural measures. His work hasbeen published or is forthcoming in Journal of theAcademy of Marketing Science, Journal of ServiceResearch, and Journal of Economic Psychology, amongother journals. Martin holds a doctorate in marketingfrom Technische Universität Bergakademie Freiberg(Germany).

Jacquelyn S. Thomas is Associate Professor ofMarketing in the Cox School of Business at SouthernMethodist University. Her areas of expertise are customer relationship management, database and directmarketing, customer equity analysis, and marketingmetrics. Her research has been published in Journal ofMarketing, Journal of Marketing Research, andHarvard Business Review, among other journals.Thomas holds a doctorate in marketing fromNorthwestern University.

ACKNOWLEDGMENTS

The authors thank the four anonymous JIM reviewersfor helpful comments and feedback. This study waskindly supported by a research grant from SouthernMethodist University.

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