International Business Review 12 (2003) 141171 www.elsevier.

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Standardization versus adaptation of international marketing strategy: an integrative assessment of the empirical research
Marios Theodosiou , Leonidas C. Leonidou
Department of Public and Business Administration, University of Cyprus, Kallipoleos 75, P.O. Box 20537, CY-1678, Nicosia, Cyprus Received 1 January 2002; received in revised form 1 April 2002; accepted 1 July 2002

Abstract Despite 40 years of debate on international marketing strategy standardization vs adaptation, extant empirical research is too fragmented to yield clear insights. Based on an integrative analysis of 36 studies centering around strategy standardization/adaptation, its antecedents, and performance outcomes, this stream of research was found to be characterized by non-signicant, contradictory, and, to some extent, confusing ndings attributable to inappropriate conceptualizations, inadequate research designs, and weak analytical techniques. The central conclusion that stems from this analysis is that the decision whether to standardize or adapt the marketing strategy to achieve superior business performance will largely depend on the set of circumstances that a rm is confronted by within a particular foreign market at a specic period of time. 2003 Elsevier Science Ltd. All rights reserved.
Keywords: International marketing strategy; Literature review; Strategy standardization/adaptation

1. Introduction Recent decades have witnessed a dramatic globalization of the international business scene due to: increasing liberalization of trade policies; growing stability in

Corresponding author. Tel.: +357-22892465; fax: +357-22892460. E-mail address: mariosth@ucy.ac.cy (M. Theodosiou).

0969-5931/03/$ - see front matter 2003 Elsevier Science Ltd. All rights reserved. doi:10.1016/S0969-5931(02)00094-X

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monetary transactions; creation of regional economic integrations; uninterrupted ow of goods due to relatively peaceful world conditions; and revolutionary advances in transportation, communication, and information technologies (Czinkota & Ronkainen, 2001; Keegan, 1999). All these factors have led to the rise of erce competition, with the participation of a wide array of rms of different size, industry, and national origin (Craig & Douglas, 1996). As a result, issues relating to the design of sound international marketing strategies to compete effectively and efciently in this new business environment have been the focus of a sizeable stream of research. This has particularly concentrated on whether rms, irrespective of the foreign market entry mode chosen, should standardize or adapt their marketing strategy in overseas markets. Proponents of the standardization approach view the globalization trends in the world as the driving force behind greater market similarity, more technological uniformity, and higher convergence of consumer needs, tastes, and preferences (Levitt, 1983; Ohmae, 1985). They also claim that standardization is further facilitated by the growth of international communication channels, the emergence of global market segments, and the appearance of the Internet. They posit that such a strategy can offer a number of benets: (a) signicant economies of scale in all value-adding activities, particularly in research and development, production, and marketing; (b) the presentation of a consistent corporate/brand image across countries, especially in light of the increasing consumer mobility around the world; and (c) reduced managerial complexity due to better coordination and control of international operations (Levitt, 1983; Douglas and Craig, 1986; Yip, Loewe, & Yoshino, 1988). Advocates of the adaptation approach argue that, despite increasing globalization tendencies, variations between countries in such dimensions as consumer needs, use conditions, purchasing power, commercial infrastructure, culture and traditions, laws and regulations, and technological development are still too great, thus necessitating the adjustment of the rms marketing strategy to the idiosyncratic circumstances of each foreign market (Terpstra & Sarathy, 2000). In particular, they criticize strategy standardization as a new kind of marketing myopia, representing an oversimplication of reality, and contradicting the marketing concept (Boddewyn, Soehl, & Picard, 1986; Wind, 1986; Douglas & Wind, 1987). They also stress the fact that the ultimate objective of the rm is not cost reduction through standardization, but long-term protability through higher sales accrued from a better exploitation of the different consumer needs across countries (Onkvisit & Shaw, 1990; Rosen, 1990; Whitelock & Pimblett, 1997). To overcome the above polarization, a third group of researchers offers a contingency perspective on the standardization/adaptation debate. In their view: (a) standardization or adaptation should not be seen in isolation from each other, but as the two ends of the same continuum, where the degree of the rms marketing strategy standardization/adaptation can range between them; (b) the decision to standardize or adapt the marketing strategy is situation specic, and this should be the outcome of thorough analysis and assessment of the relevant contingency factors prevailing in a specic market at a specic time; and (c) the appropriateness of the selected level of strategy standardization/adaptation should be evaluated on the basis of its

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impact on company performance in international markets (Quelch & Hoff, 1986; Onkvisit & Shaw, 1987; Jain, 1989; Cavusgil & Zou, 1994). Hence, the challenge for the international rm is to determine which specic strategy elements are feasible or desirable to standardize or adapt, under what conditions, and to what degree. This erce debate on the subject has attracted the attention of many researchers, who have contributed a plethora of empirical writings. Although challenging, this stream of research is: (a) fragmented, consisting of numerous studies, each adopting its own conceptual method, methodological design, and analytical technique; (b) repetitive, researching in many cases the same issues, without extending the work of other researchers in the eld; (c) diverse, examining different aspects of marketing strategy adaptation/standardization, as well as its antecedents and outcomes; and (d) inconsistent, yielding different, and sometimes contradicting, results as to which strategic approach is more appropriate. Consequently, there is a need to consolidate this piece of research and reach conclusions that would facilitate theory development. The aim of this study is to satisfy this need, by providing an integrative analysis of extant empirical knowledge on international marketing adaptation versus standardization. It aims to review, assimilate, and evaluate empirical research on the content and interactions of the components of a simplied model on international marketing strategy standardization/ adaptation (Jain, 1989; Cavusgil & Zou, 1994) (see Fig. 1). Specically, the emphasis is on: (a) antecedent factors, that is, contingency variables that affect the decision to standardize or adapt the rms marketing

Fig. 1.

A conceptual model on international marketing strategy standardization/adaptation.

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strategy in a specic foreign market; (b) strategy variables, that is, the specic elements of the marketing mix program, where the degree of standardization or adaptation must be determined; and (c) performance outcomes, that is, the impact of international marketing strategy standardization/adaptation on the companys performance in overseas markets. The remainder of the article is organized into six sections: rst, the method employed to select the pertinent empirical studies is explained, and their methodological prole is presented; second, the antecedent forces of international marketing strategy are identied and their signicance is established; third, each strategy variable is analyzed and its degree of standardization/adaptation is determined; fourth, the nature of the international business performance measures used is explained, as well as their link with strategy variables; fth, certain conclusions are extracted from the ndings of the study; and, nally, some guidelines for future research on the subject are provided.

2. Prole of studies The review covered all empirical studies on marketing strategy adaptation/standardization published since the inception of this body of research. For a study to be included in the review, three major criteria had to be met: (a) to focus on the content and/or interactions of the various components of marketing strategy standardization/adaptation model; (b) to have an empirical nature, providing sufcient primary information on the subject presented in quantitative format; and (c) to investigate the international activities of manufacturing rms irrespective of foreign market entry mode (e.g., indirect exporting, direct exporting, or foreign production). Using a combination of manual and electronic literature search methods, 36 studies were found to meet the above criteria1. These were published in 18 different outlets, primarily in the Journal of Global Marketing, the International Marketing Review, and the Journal of Marketing. Table 1 summarizes the prole characteristics of the studies selected, while a more detailed analysis is presented in the following. The rst attempt to empirically investigate the issue of marketing strategy standardization/adaptation was in the mid1970s with the pioneering work of Sorenson and Wiechmann (1975). Since then, there has been an exponential growth of research on the subject, with about twothirds of the studies conducted in the 1990s. To some extent, this reects the increasing globalization of the international marketplace which has provided the impetus for a more intense conceptual debate among researchers in the eld. Notably, with the exception of the work of Boddewyn and his colleagues, who conducted a longitudinal study of standardization/adaptation over a 30-year period (Boddewyn &

1 The electronic search was based mainly on the ABI/INFO database, as well as on various Internet resources, including Science Direct, Expanded Academic ASAP International, and MCB University Press.

Table 1 Prole of empirical studies on international marketing strategy standardization vs adaptationa.

Methodological aspects 1990s (n 22)

Study demographics Total Fieldwork time 1970s 1980s (n 36) (n 1) (n 13) Company country of origin N. America Europe (n 26) (n 12) Company type Other Exporting (n 14) (n 14)

MNCs (n 22)

2 9 8 17 1 1 1 1 1 1 1 12 1 18 5 8 5 13 9 8 5 14 8 16 10 14 12 22 4 8 3 1 7 13 3 11 10 5 9 3 7 5 4 8 8 4 3 3 7 7 4 11 4 7 15 1 1 10 5 9 4 9 1 8 6 8 6 12 3 7 1 2 3 11 2 2 4 4 12 2 2 6 6 5 2 2 5 7 2 2 4 11 2 1 8 2 4 10 3 1 7 7 9 5 11 3

6 3 4

2 2 5 13

2 6 7 11

1 4 1 6

1 4 2 7

4 3 7

2 5 5 10 8 3 5 8 2 5 15 5 13 4 16 6 12 10 19 4 (continued on next page)

19 3 2 6 8

10 7 19

15 16 5

23 13

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Industrial coverage 13 industries 47 industries 8 industries or more Not available Unit of analysis Corporate Business unit Export venture Product/brand Foreign subsidiary Sampling design Probability Nonprobability Not available Response rate Below 25% 25% or above Not available Sample size Below 100 100 or above Nonresponse bias Tested Nontested Data collection Mail Personal

21 15

30 7

145

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Table 1 (continued)

Methodological aspects 1990s (n 22) MNCs (n 22)

Study demographics Total Fieldwork time 1970s 1980s (n 36) (n 1) (n 13) Company country of origin N. America Europe (n 26) (n 12) Company type Other Exporting (n 14) (n 14)

7 10 8 3 5 6 1 1 1 7 7 4 16 8 16 18 13 14 1 4 1 4 2 3 3 3 4 3 1 1 1 1 10 6 7 6 1 4 2 6 2 7 7 9 3 10 4 3 1 5 3 5 1 3 5 2 2 2 1 7 4 7 3 2 2 2 7 1 3 4 8 3 6 3 3 1 2 3 4 1 1 3 1 2 2 5 1 4 3 4 3 2 3 6 2 9

3 5 2 1 3

4 5 6 2 4 3

3 8 4 2 4 6

4 1 2 3 3 1

4 3 2 1 3 1

2 3 8 1 3

5 7 2 5 3 9 3 4 4 7 2 8 6 1 3 2 18 13 11

10 3 6 6

12 3 12 9

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Key informant CEO/President International operations ofcer Export ofcer Marketing manager Subsidiary manager Not available Antecedent variables 13 46 712 More than 12 Strategy measures 13 46 712 More than 12 Performance measures 1 23 45 6 or more Statistical analysis Descriptive Uni-/bivariate Multivariate

5 6 4 3

24 15 20

a. For some methodological aspects and demographic elements, entries do not add up to 36 (i.e., the total number of studies reviewed) for a number of reasons: (a) study samples including companies from different countries of origin, (b) studies with multiple entries on such methodological aspects like unit of analysis, data collection, key informant, measurement scales, and statistical analysis, and (c) studies not investigating all three categories of relevant variables (i.e., antecedent measures, strategy items, and performance measures).

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Hansen, 1977; Picard, Boddewyn, & Soehl, 1988; Boddewyn & Grosse, 1995), all other studies were of a one-shot nature. Most of the studies focused on the international activities of rms located in the United States, while European rms, as well as rms from other countries, attracted less research attention. Although the location of the supplying rms was primarily in developed countries (probably due to their dominant role in world manufactured exports, as opposed to the agricultural orientation of less-developed economies), in the majority of cases their international marketing strategy covered a variety of markets, irrespective of stage of economic development. Approximately two-thirds of the studies examined the strategies pursued by the foreign subsidiaries of multinational corporations (MNCs), while the remainder examined the standardization/adaptation of exporting rms. To some extent, this reects the tendency by independent foreign subsidiaries to seek to develop their own national products in the markets they operate (Terpstra & Sarathy, 2000). Seventeen studies did not report the nature of the industry investigated, while, with a few exceptions, the remaining studies covered multiple industries. In some cases, researchers intentionally selected rms from a variety of industrial sectors, in order to explore the effect of product factors on the decision to standardize or adapt the marketing strategy. Slightly more than half of the studies concentrated their analysis at the company level, this being more evident in exporting research2. The fact that a large proportion of the studies focused on multinational rms resulted in the use of lower levels of analysis, namely foreign subsidiaries, products/brands, and business units. Two exporting studies (i.e., Cavusgil & Zou, 1994; Shiram & Manu, 1995) also narrowed the level of their analysis to the rms ventures with specic export markets. Nineteen studies (particularly those researching multinational rms) gave no information on the specic sampling designs used, while, of the remainder, most rms employed probability-sampling methods. Sample sizes were relatively small, with 23 studies reporting a gure of less than 100 cases. This can be partly attributed to the fact that most of these studies focused on large multinational corporations which, compared to exporting rms, are more difcult to contact due to their small population. The average response rate of the studies under review was 28.5%, which is comparable to that of other studies conducted in international marketing. Compared to export studies, research among multinational rms exhibited higher rates of survey response. Although a satisfactory number of studies (21 out of 36) checked for nonresponse bias, it is surprising that many other studies did not carry out such controls, casting doubt on the robustness of the data obtained. In the majority of cases, data collection was based on mail survey methods, probably due to the difculties in physically reaching rms of a geographically dispersed sample. This was particularly true in the case of cross-cultural studies, where respon-

This unit of analysis has been criticized as being inappropriate for this type of research because signicant variations often exist in the marketing strategy that a rm pursues in different foreign markets and with respect to different products/product lines (Cavusgil & Zou, 1994).

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dents were located in many different locations. Personal interviews were reported in only six studies, focusing mainly on a small sample of rms. Only one study (i.e., De Luz, 1993) used a combination of a mail survey and personal interviews. In the majority of cases, data were collected from the individual responsible for international marketing activities, namely the international operations manager and the export ofcer. In some studies, the CEO/president, subsidiary manager, or marketing executive also provided the information requested. None of the studies checked for key informant bias, by collecting data from more than one individual in the company and subsequently assessing the relative equivalence of their responses. The role of antecedent factors in international marketing standardization/adaptation was explored by 25 studies3. The number of factors examined varied signicantly among these studies, ranging from one to 22, with most focusing on up to three. Altogether, 50 factors have been identied, which were subsequently reduced to 22, based on their substantive conceptual meaning. These can be broadly categorized into seven groups, namely environmental (4), market (4), customer (3), competition (2), product/industry (3), organizational (4), and managerial (2). Given the great diversity of these factors, a variety of ways was used for their measurement. For instance, for environmental factors, market characteristics, and customer issues, vepoint or seven-point interval scales were employed, measuring the degree of difference between home and host markets (see, for example, Ozsomer, Bodur & Cavusgil, (1991), Johnson & Arunthanes, 1995; and Theodosiou & Katsikeas, 2001). Twenty-one studies reported empirical data on the actual degree of international marketing strategy standardization/adaptation, while another 15 used the level of standardization/adaptation identied for subsequent analysis without clearly stating it (e.g., Albaum & Tse, 2001; Johnson & Arunthanes, 1995). Altogether, 35 different marketing strategy items were examined, with the majority of the studies exploring seven items or more. These fall under one of the four generic categories of the marketing mix, namely product (11), price (8), promotion (11), and distribution (5). Multiple-point scales were mainly employed to measure the degree of similarity of each marketing strategy element in the domestic market versus the overseas market (Johnson & Arunthanes, 1995; Leonidou, 1996) or its degree of standardization/adaptation (e.g., Shoham, 1999; Theodosiou & Katsikeas, 2001). In some cases, dichotomous scales, indicating whether the rm followed a standardization or adaptation approach, were also used (e.g., Hill & Still, 1984; Chhabra, 1996). The effect of marketing strategy standardization/adaptation on company performance was investigated in 18 studies, with most of them operationalizing performance using three measures or less4. However, only ten of these studies were designed with

Of these studies, only 15 provided evidence of a direct link between antecedent factors and international marketing standardization/adaptation (e.g., Seifert & Ford, 1989; Leonidou, 1996). 4 Numerous different measures of performance were employed by researchers in the eld, and a compromise solution was, therefore, adopted by grouping the various performance measures into eight categories: sales-related, growth-in-sales related, prot-related, growth-in-prot related, market sharerelated, goal achievement/satisfaction, satisfaction with change in performance, and composite scales of performance.

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the strategy-performance link at the center of their investigation, whereas in the remaining studies this association received peripheral treatment. Performance was mainly assessed using subjective rather than objective measures, and these were essentially centered on sales, prot, and market share. Moreover, international business performance was assessed on an absolute and/or growth basis. Despite several claims in the literature that performance is a multidimensional construct, only a few studies used composite measures, mainly comprising nancial, market, and strategic dimensions (e.g., Kotabe & Omura, 1989; Kotabe, 1990; Kotabe & Okoroafo, 1990; Cavusgil & Zou, 1994; Hewett & Bearden, 2001). Descriptive statistics (percentage frequencies and mean scores) were the principal method used in analyzing the degree of international marketing strategy standardization/ adaptation, as well as the individual items comprising antecedent factors and business performance. However, in investigating the effect of antecedent factors on the decision to standardize or adapt the international marketing strategy, as well as the impact of this strategy on business performance, bivariate and multivariate statistical tools, such as correlation analysis, regression analysis, and analysis of variance, were commonly employed. Only in more recently conducted research on the subject more advanced analytical tools, like path analysis and structural equation modeling, were used (e.g., Cavusgil & Zou, 1994; Shoham, 1999).

3. Antecedent factors Antecedent factors refer to all those background forces that inuence the rms decision to standardize or adapt its international marketing strategy. Although at times a large number of such factors was proposed to have an inuential role on aspects of marketing strategy (see, for example, Buzzell, 1968; Papavassiliou & Stathakopoulos, 1997; Rau & Preble, 1987; Jain, 1989), only a small subset of them has been empirically examined. Several attempts have also been made to develop broad classicatory schemes for these factors (Jain, 1989; Ozsomer, Bodur & Cavusgil, 1991; Cavusgil, Zou, & Naidu, 1993; Johnson & Arunthanes, 1995), which for the purposes of this review were consolidated into environmental, market, customer, competition, product/industry, organizational, and managerial. Table 2 presents these antecedent factors, as well as their impact (signicant/nonsignicant) on each element of international marketing strategy, while a more detailed analysis is presented in the following5. Environmental factors consist of a broad spectrum of economic, sociocultural, political-legal, and physical forces which have an inuence, either direct or indirect, on international business operations. In fact, these factors can severely restrict the rms ability to develop and implement a standardized strategy, even in cases when this choice is deemed desirable (Douglas & Wind, 1987). Of these, political-legal

5 The data on Table 2 should be treated with caution, since most of the associations between antecedent factors and international marketing strategy have been examined in only a few empirical studies.

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Table 2a Prole of empirical studies on international marketing strategy standardization vs adaptationa

Antecedent factors

International Marketing Strategy Overall Product Posit- Design/ strategy ioning style Features/ characteristics N S N N S SN S N S N S S N N S N SS S N N SN N N S N S S S SN S N N N S N Branding/ brand image Packaging Labeling Warranty Models in line Pricing Method

Strategy Wholesale price

Retail price

Environmental factors Economic Sociocultural Political-legal Physical Market characteristics Marketing infrastructure Advertising media availability Distribution infrastructure Size Customer issues Characteristics/behavior Tastes/preferences Usage patterns

S N

N SN N SN

N N S

S N SS S N

N N

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(continued on next page)

Table 2a (continued)

Antecedent factors

International Marketing Strategy Overall Product Posit- Design/ strategy ioning style Features/ characteristics N N S N N N N N N N S N S N N S N N N N S S S S N N S N N N N N N S SS S S SN S N N N N N N Branding/ brand image Packaging Labeling Warranty Models in line Pricing Method

Strategy Wholesale price

Retail price

S SS S SN SN N

N SN SS S

S S N S N N

S SN

N S

Competition Structure/nature Intensity Product/Industry Product type Technology orientation of industry Stage of PLC Organizational factors Nationality of parent company Nature of ownership International experience Market share position Managerial factors Centralization in decision making Corporate orientation

S SN S

S N

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a .

N: Non-signicant association at 90% condence intervalS: Signicant association at 90% condence interval.

151

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Table 2b Prole of empirical studies on international marketing strategy standardization vs adaptationa

International Marketing Strategy Promotion (overall) theme ment age/ sion cation tion manage- role relations tising messexpres- allopromoforce force public bution bution AdverBasic Creative Media Sales SalesSalesPublicity/ DistriChannels of distriType of middlemen Role of middlemen

Antecedent factors

Prot

Dis-

margins

counts

(trade)

Environmental factors SN N N S S S N N S S S S S S S N S S N N N S N N S N N N

N N N

N N N S

S S N S

S S S S

Economic

Sociocultural

Political-legal

Physical

Market characteristics

Marketing infrastructure

Advertising media availability

Distribution infrastructure

Size

Customer issues

Characteristics/behavior

Tastes/preferences

Usage patterns

M. Theodosiou, L.C. Leonidou / International Business Review 12 (2003) 141171

(continued on next page)

Table 2b (continued)

International Marketing Strategy Promotion (overall) theme ment age/ sion cation tion manage- role relations bution tising messexpres- allopromoforce force public bution of distriAdverBasic Creative Media Sales SalesSalesPublicity/ DistriChannels Type of middlemen Role of middlemen

Antecedent factors

Prot

Dis-

margins

counts

(trade)

Competition N N S SS S S S S SN SN NN N N N N N N N S S N N N N N N N S N S S N N S N S S S SN N S S S S N N N S SS N S N S S S N N N N N N N N S N N

N N S N N S

N N S N N N N

S N S N S N N

Structure/nature

Intensity

Product/Industry

Product type

Technology orientation of industry

Stage of PLC

Organizational factors

Nationality of parent company

Nature of ownership

International experience

Market share position

Managerial factors

Centralization in decision making

Corporate orientation

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a .

N: Non-signicant association at 90% condence intervalS: Signicant association at 90% condence interval.

153

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and economic factors received most research attention, whereas sociocultural and physical aspects were largely ignored. Although it has been repeatedly asserted in the literature that environmental differences are very important in determining both the feasibility and the appropriateness of international marketing strategy, only 18 out of the total 43 reported associations were signicant6. This was particularly true for both product (e.g., branding) and pricing in general. The large number of nonsignicant relationships reported (25 out of 43) partly contradicts the traditional notion that environment is the driving force behind marketing strategy differentiation. Market characteristics refer to those factors that determine the level of sophistication and development of a particular foreign market, including its marketing infrastructure, advertising media availability, distribution structure, and market size. While the latter determines demand potentials in a foreign market, the other market characteristics inuence the rms ability to strengthen and serve demand. Of those, market size had consistently exhibited the greatest inuence on marketing strategy the larger the market the more the adaptation requiredparticularly affecting its promotional aspects. This is because the higher sales derived from large markets are more likely to cover the added costs of adaptation (Chhabra, 1996). Moreover, although one would expect greater standardization due to similarities in the availability, performance, and cost of the marketing, advertising, and distribution infrastructure between the home and host markets (Jain, 1989), this was only partially validated in the studies under review. Customer issues focus on the characteristics/behavior, tastes/preferences, and usage patterns of customers in overseas markets. In fact, the rms success or failure abroad largely depends on its ability to satisfy the needs of its target customers better than the competition. Despite its importance, this group of antecedent factors was surprisingly the least examined by researchers in the eld. Nonetheless, empirical ndings strongly indicate that customer issues have a rather signicant effect on marketing strategy standardization/ adaptation, this being true for almost all strategic elements. Specically, it has been revealed that the more the similarity in customer proles across countries, the greater the standardization of the marketing strategy, and vice versa. These results are uniformly consistent with conceptual claims in the eld (e.g., Jain, 1989), although the scarcity of empirical evidence, particularly with respect to the ner dimensions of this construct, limits their credibility. Competition-related factors include the structure (i.e., monopolistic vs oligopolistic), nature (i.e., price vs nonprice), and intensity (i.e., mild vs erce) of competition in foreign target markets. In the majority of cases, the structure/nature of competition did not have a serious impact on the decision to standardize or adapt the various marketing strategy elements7. This is in contrast to the view that the rms international marketing strategy should take into consideration the number,
The basic premise is that the greater the environmental similarity between a rms home and host country, the greater the likelihood of marketing strategy standardization being successful, and vice versa (Jain, 1989). 7 Although different, most of the empirical studies have combined competition structure and nature of competition into a single item, which was inevitably adopted in our analysis.
6

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origin, and approach of its major competitors in each market, as well as its position ` (leader, challenger, follower) vis-a-vis each competitor (Buzzell, 1968; Jain, 1989; Rosen, 1990). Competition intensity, the other factor in this group, was signicantly and positively associated with both product and promotion adaptation, suggesting that competitive pressures may necessitate strategy customization to the specic requirements of the foreign market to gain an advantage over rivals (Cavusgil, Zou & Naidu, 1993). Product and industry factors refer to the type of the product (i.e., consumer or industrial), the technology orientation of the industry (i.e., technology-intensive or old-line), and the stage of product life cycle (i.e., early or mature). Despite claims that, as opposed to consumer products, industrial goods require a more standardized approach, due to the fact that purchasing decisions are based on rational rather than emotional criteria, these were only partially conrmed by empirical research (e.g., Akaah, 1991; Ozsomer, Bodur & Cavusgil, 1991; Cavusgil, Zou & Naidu, 1993)8. Technology orientation was repeatedly found to have a serious impact on standardizing marketing strategy, especially on product, due to the need to allocate the vast research and development costs over long production runs (Cavusgil & Zou, 1994; Cavusgil, Zou & Naidu, 1993; Grosse & Zinn, 1995). Product life-cycle was also found to signicantly affect almost all dimensions of marketing strategy and, in fact, it has been conrmed that a standardized marketing strategy works best in markets where the product is in the same stage of its life cycle (Cavusgil, Zou & Naidu, 1993; Grosse & Zinn, 1990; Johnson & Arunthanes, 1995; Chhabra, 1996). Organizational factors focus on internal company characteristics and consist of four items: (a) the nationality of the parent company, where results show that although certain product and advertising aspects are inuenced by the origin of the parent ofce, other marketing strategy parameters were not inuenced; (b) the nature of company ownership, where results were non-signicant, with the exception of Ozsomer et al.s (1991) study which reported that the extent of standardization of the overall marketing strategy was higher in wholly-owned subsidiaries than in joint ventures; (c) the rms international experience, where one study found a positive association with product and promotion adaptation (Cavusgil, Zou & Naidu, 1993); and (d) the foreign market share position, where no effect was revealed whatsoever on marketing strategy adaptation (Akaah, 1991; Shoham, 1999). The nal set of antecedent factors refer to managerial attitude toward international operations, and include the degree of centralization of decision-making (i.e., centralized vs decentralized) and corporate orientation (i.e., the extent of managements willingness to accommodate foreign perspectives)9. With regard to the former, the basic assumption that a marketing strategy standardization is more likely to be fol8 These ndings are somewhat surprising, given the fact that product nature is generally considered to be the single most important factor in determining the appropriateness of marketing strategy standardization. 9 Building on Perlmutters (1969) classication, some scholars suggested that rms adopting an ethnocentric or regiocentric/geocentric orientation are more likely to pursue a strategy of standardization, whereas polycentric rms are more likely to adopt marketing program adaptation.

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lowed when decision-making is centrally controlled at headquarters, was examined in two studies, yielding antithetical results: while Ozsomer, Bodur and Cavusgil (1991) supported this association, Quester and Conduit (1996) found no signicant relationship with most of the marketing strategy elements examined. As far as corporate orientation is concerned, a study conducted by Akaah (1991) revealed that this factor signicantly affected the extent of standardization of promotion-related elements, but had no effect on product, pricing, and distribution strategy standardization. Moreover, Kanso, (1992) found that cultural-oriented managers adapt advertising to a greater extent than do nonculturally-sensitive executives.

4. International marketing strategy Marketing strategy is the central construct in the standardization/adaptation debate and has traditionally been dened as the statement of how the company is going to achieve its marketing objectives (Kotler & Armstrong, 2001). This is particularly expressed in terms of product, price, distribution, and promotion aspects, which are blended for the purpose of achieving a specic marketing objective. Although the appropriateness of marketing strategy standardization or adaptation should be evaluated within the context of the relevant antecedent factors, it is still important to know what the actual managerial practices are with respect to the specic level of standardization/adaptation realized10. Table 3 presents the ndings of 21 studies that have empirically measured the actual degree of marketing strategy standardization/adaptation, while a more detailed analysis is provided in the following11. Of the elements of the marketing mix, product-related issues exhibited the most standardization, probably due to: (a) the greater incentive to reap the benets from economies of scale in research and development and production; (b) the desire for rapid diffusion of new products in the market, especially in light of the fact that product life-cycles are increasingly becoming shorter; and (c) the need to achieve better coordination through the application of more uniform internal production controls and quality standards (Ohmae, 1985; Douglas & Craig, 1986; Walters & Toyne, 1989). Of these, product attributes, namely quality, design, and features, were the
10 Ideally, it would be more appropriate to compare and contrast intended strategies (i.e., strategies reecting the managers initial vision, stemming from formal, analytic, and planned procedures) against realized strategies (i.e., strategies actually being implemented in practice) (Mintzberg & Waters, 1985). However, with the exception of Johnson and Arunthanes (1995) study which distinguished between ideal and actual levels of product adaptation, all other studies focused on realized strategies. 11 As many different scales were used to measure standardization/adaptation, the results of each study were converted into a 100-point scale, where 1 represents complete standardization and 100 denotes full adaptation. In the case of dichotomous scales, the two dummy variables were converted into 1% and 100%, while for interval scales the mid-point was set at 50% and the two ends of the scale were converted into 1% and 100% respectively. For instance, a mean score of 4.5 on a ve-point scale was converted into 88%. Although the limitations associated with such a conversion are fully recognized, it was deemed necessary to facilitate comparison and consolidation of the available empirical ndings.

Table 3a Converted empirical results on the degree of international marketing strategy adaptation (percentages)a

Empirical studies Marketing strategy Sorenson Hill element and and Still Wiechmann (1984) (1975) Seifert and Ford (1989) Grosse and Akaah Zinn (1991) (1990) Ozsomer et al. (1991) Cavusgil, Zou and Naidu (1993) 31 29 34 31 31 50 50 36 46 28 33 56 62 58 62 52 46 51 51 48 48 54 52 Shoham and Albaum (1994) 17 6 9 15 5 37 22 22 53 52 67 60 60 52 50 67 31 36 25 29 28 23 33 32 55 55 51 52 55 61 56 48 57 60 61 52 74 74

Boddewyn and Grosse (1995)b

16 17 7 23

45 33 31 47 69

37

37

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Product General product Positioning Design/style Quality Features/character. Brand/branding Packaging Labeling Services Warranty Items/models in product line Price General price Pricing method/strategy Retail price Wholesale/trade price Prot margins to trade customers Prot margins to endusers Discounts Sales/credit terms

(continued on next page)

157

158

Table 3a (continued)

Empirical studies Marketing strategy Sorenson Hill element and and Still Wiechmann (1984) (1975) Seifert and Ford (1989) Grosse and Zinn (1990) Akaah (1991) Ozsomer et al. (1991) Cavusgil, Zou and Naidu (1993) 30 30 74 47 47 37 37 48 48 54 53 51 57 66 57 67 73 74 74 Shoham and Albaum (1994) Boddewyn and Grosse (1995)b 57 60 57 53 74 45 53 65 45 62 58 45 56 56 63 45 45 51 50 52 60

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Promotion 32 General promotion Advertising (overall) Creative/execution 36 style Message/theme 22 Media allocation 52 Sales promotion 39 Salesforce 22 structure/management Salesforce role 20 Publicity/public relations Personal selling Advertising/promotion budget Distribution 28 General distribution Channels of distribution Physical distribution Type of 38 middlemen/retail outlets Role of middlemen 17

Percentages have been rounded to the nearest integral; The rst, second and third columns report the results of the 1973, 1983, and 1993 studies respectively;

Table 3b Converted empirical results on the degree of international marketing strategy adaptation (percentages)

Empirical studies Marketing strategy Chhabra Leonidou element (1996) (1996) Quester and Conduit (1996) 28 41 21 23 28 29 59 61 54 63 63 63 62 41 41 49 49 67 67 57 51 56 65 63 63 48 55 37 40 58 40 41 39 47 52 41 21 16 26 93 93 29 26 18 29 41 33 40 40 43 41 42 44 41 Shoham (1996) Zou and Laughlin (1996)c Yip Zou et al. Mitchell et (1997) (1997) al. (1998) Shoham (1999) Theodosiou and Katsikeas (2001)

Total

34 19 7 49 30 66

41 43 35 35 35 40 58

40 40 42 33 27 27 29 40 51 51 38 62 56 58 49 52 48 63 41 60 45 54 (continued on next page)

64 46

81

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Product General product Positioning Design/style Quality Features/character. Brand/branding Packaging Labeling Services Warranty Items/models in product line Price General price Pricing method/strategy Retail price Wholesale/trade price Prot margins to trade customers Prot margins to endusers Discounts Sales/credit terms

159

160

Table 3b (continued)

Empirical studies Marketing strategy Chhabra Leonidou element (1996) (1996) Quester and Conduit (1996) 28 56 57 47 66 57 57 52 60 59 68 68 41 41 49 49 58 58 70 62 22 75 75 49 48 58 67 58 67 69 67 46 56 59 52 65 65 48 70 40 61 61 47 67 67 21 68 77 66 93 52 68 29 53 56 40 69 69 40 55 62 51 55 45 61 59 53 46 51 64 50 58 61 52 74 57 Shoham (1996) Zou and Laughlin (1996)c Yip Zou et al. Mitchell et (1997) (1997) al. (1998) Shoham (1999) Theodosiou and Katsikeas (2001) Total

41

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Product 34 Promotion 64 General promotion Advertising (overall) Creative/execution 72 style Message/theme 52 Media allocation 76 Sales promotion 80 Salesforce 60 structure/management Salesforce role 44 Publicity/public relations Personal selling Advertising/promotion budget Distribution 45 General distribution Channels of 43 distribution Physical distribution Type of 41 middlemen/retail outlets Role of middlemen 50 60 77

52

The rst column reports the results for Japanese rms and the second for European rms.

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least adapted. The same was also true of branding decisions, which were partly adjusted, probably as a result of undesirable meanings, pronunciation difculties, or brand similarity in foreign markets. Packaging was slightly more adapted, concentrating mainly on material, design, and size, while information and language requirements were responsible for some labeling adaptation. Differences in product use conditions, competitors practices, and service facilities across countries also led to moderate adjustments in the provision of after-sales service and warranties. Finally, product line changes in overseas markets seem to be common, resulting mainly from differences between home and foreign environments, the development of new products for specic overseas markets, or nancial limitations in supporting specic products abroad due to high entry costs. Compared to product aspects, price-related elements were much more adapted, as a result of differences in such factors as marketing objectives, cost structures, ination rates, competitive policies, and government controls. Pricing adjustments centered on ve major areas: (a) pricing methods/strategies, adopting a skimming or penetration strategy, depending on variations in market size, consumer sensitivity to prices, and competitors actions or reactions across markets; (b) wholesale prices/margins, resulting from differences in the role of wholesalers in the distribution trade of a foreign country, as well as the mark-ups charged; (c) retail prices/margins, being the result of variations in the size, type, and services provided by retail outlets abroad, which largely determine the retail margins charged; (d) end user prices/margins, usually affected by demand variations caused by differences in customer numbers, purchasing power, and economic conditions; and (e) sales/payment terms, being the result of variations in the companys entry mode, degree of involvement, and response to competitors in overseas markets. On average, price adaptation was relatively moderate in almost all the above areas, indicating the lack of exibility of international rms to achieve the desired level of price discrimination across countries as a result of excessive pressures by their competitors (Samiee & Roth, 1992). The third element of the marketing strategy, distribution, was the most adapted, this being attributable to both foreign market(e.g., differences in disposable incomes, purchasing habits, and distribution infrastructure) and company-related (e.g., variations in the level of involvement, product line, and sales volume) reasons. Several studies stressed the existence of signicant differences (in terms of number, size, type, and services) in both wholesale and retail trade between home and host markets (Akaah, 1991; Ozsomer et al., 1991; Quester & Conduit, 1996; Michell, Lynch, & Alabdali, 1998). Adjustments were also reported with respect to the different roles middlemen have to play in domestic vs foreign markets, caused by variations in bargaining power, nancial strength, and marketing know-how. Of signicance is the fact that physical distribution exhibited the greatest degree of adaptation, as a result of differences in: (a) the special documentation and ordering procedures required in international product shipments; (b) the availability of transportation facilities to carry goods to and within foreign markets; (c) the number, type, and technology of the warehouses abroad; and (d) the level of inventories needed to be maintained in overseas markets, usually determined by territorial size, infrastructural

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facilities, and purchasing/consumption habits. Notably, designing a physical distribution system for international markets requires continuous adjustments because market, competitive and transportation conditions are constantly changing. The nal, and perhaps the most widely investigated, element of the marketing strategy is promotion, which also exhibited slightly above-average levels of adaptation in foreign markets. With regard to advertising, language differences, media availability, government regulations, economic differences, and competitors actions have often been cited as reasons for advertising adaptation. In fact, these factors are responsible for adjustments in the advertising message, its execution style, and media mix. They also have a great impact on the allocation of the advertising and promotional budget. Sales promotions were subject to moderate adaptations, often attributable to variations in legal restrictions, cultural characteristics, competitive practices, and retailers capabilities in foreign markets. Moderate adjustments were also observed in the case of publicity/public relations, caused mainly by variations in the degree of company involvement, the nature and importance of publics, and availability of public relations agencies abroad. Finally, personal selling has also undergone mild adaptations in international markets, particularly as regards the recruitment, training, motivation, and control of the salesforce and the way the selling task is performed.

5. Performance outcome The ultimate relevance of the marketing strategy standardization or adaptation depends on its performance outcomes, that is, the economic or behavioral payoffs derived from its implementation (Jain, 1989). Despite its critical importance, the relationship between marketing strategy standardization or adaptation and business performance received scant empirical attention (Kotabe & Omura, 1989; Shoham & Albaum, 1994). In fact, this relationship was the primary focus of a few studies only (e.g., Cavusgil & Zou, 1994; Shoham, 1999), while the remainder examined this aspect as a side issue (e.g., Christensen, da Rocha & Gertner, 1987; Koh, 1991)12. With a single exception (i.e., Roth, 1995), all studies attempted to establish a direct link between marketing strategy standardization/adaptation and business performance, without investigating the role of numerous antecedent factors that determine the circumstances under which each strategy becomes appropriate to achieve superior performance. Given these limitations, Table 4 shows whether the relationship between the standardization or adaptation of a particular strategy element and a specic performance category was signicant and negative (), non-signicant (0), or signicant and positive (+). Sales-related measures of performance were among the most commonly
12 Four studies, namely those by Kirpalani and Macintosh (1980); Cooper and Kleinschmidt (1985), Christensen et al., (1987), and Szymanski, Bharadwaj & Varadarajano, (1993), were not incorporated in Table 4, because they have tackled tangentially the effect of marketing strategy standardization/adaptation on business performance.

Table 4 International marketing strategy standardization/adaptation effect on foreign business performancea.

Marketing program elements

Performance measures Sales-related Growth in performance sales-related performance Prot-related Growth in Market share- Goal performance prot- related related achievement performance performance /satisfaction Satisfaction with change in performance 0 + 0

Composite scales of performance

+ 0 0 0 0 0

Marketing strategy(overall) Global standardization

Product

Core product

Product design/style

Positioning

Product quality

Brand image

Product peripherals

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Product lines

Items in product lines

S A S A S A S A S A S A S A S A S A S A S A 1 1 1 1 1

1 2 1 1 1

1 1 1

1 1 1 1 1 1 1

1 1

1 3 1 1 1 1

1 1

1 1

2 1 1 1

1 2 (continued on

1 next

1 page)

163

164

Table 4 (continued)

Marketing program elements

Performance measures Sales-related Growth in performance sales-related performance Prot-related Growth in Market share- Goal performance prot- related related achievement performance performance /satisfaction Satisfaction with change in performance

Composite scales of performance

Services

Promotion

Advertising

Advertising message/ contents Salesforce management 1

0 1 1

Promotion budget

0 1 1 1

Pricing 1 1 1

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Distribution

S A S A S A S A S A S A S A S A 1 1

1 1 1

0 1 1 1 1 1

+ 1 1 1 1 1 1 1 1 1 1 1 0 1 1 0 1 1 1 1 1 1 0 1

+ 1 1

+ 1

+ 1

+ 1

0 1

+ 1

0 1

a. S: Standardization A: Adaptation +: Signicant positive relationship at 90% condence interval interval 0: Non-signicant relationship at 90% condence interval.

: Signicant negative relationship at 90% condence

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employed, indicating, however, a non-signicant association with marketing strategy in the majority of cases examined. Analytically, most studies investigated the link between standardization of the design/style, quality, service, and mix of the companys product on its international sales (both static and dynamic) without nding any signicance. Moreover, a positive association with foreign sales performance was established in the case of standardizing the core product (Zou, Andrus, & Norvell, 1997) and the length of the product line (Shoham, 1996), while a negative association was found with respect to product peripherals (Zou, Andrus & Norvell, 1997). In the case of promotional aspects, standardizing both the advertising content and the salesforce management was responsible for deteriorating sales performance (Shoham, 1996). In contrast, standardizing the promotional budget was conducive to higher sales performance within a short time span (Shoham, 1996). Of the two studies investigating the link between pricing strategy standardization and sales performance, only one revealed signicant results (Zou, Andrus & Norvell, 1997), while standardizing distribution had no association whatsoever with this measure of performance. The effect of strategic marketing factors on prot-related measures was examined relatively more extensively, revealing mixed results: 16 associations were non-signicant, 14 associations were signicant and negative, and six associations were signicant and positive. As in the previous case, most studies concentrated mainly on product strategy standardization/adaptation. Specically, the effect of standardization/adaptation of product design/style on prot performance was examined in two studies: Shoham (1996) who found no association with prot, but a negative relationship with growth in prots, and Frazer and Hite (1990) who reported no association between strategy and performance in English speaking and Asian markets, but a negative one in European and Latin American markets. Standardizing product quality did not have a signicant effect on either static or growth measures of prot performance (Shoham, 1996), and the same was true with respect to adapting product positioning (Albaum & Tse, 2001). Although standardizing the number of product lines sold in foreign markets seems to have a negative or no impact on prot performance, the standardization of the number of items contained in each product line had a signicant positive effect (Shoham, 1996). The impact of standardizing postsales service on prot performance was examined in one study revealing nonsignicant results (Shoham, 1996), while of the two studies investigating the effect of service adaptation on prot performance, only one found signicant negative results (Kaynak & Kuan, 1993). The association of promotional aspects with prot performance was less frequently examined, with standardization of the advertising content leading to poor prot performance (Shoham, 1996), while standardizing the promotion budget had a positive impact. With regard to pricing, results were relatively consistent: pricing standardization was negatively associated with prot performance (Shoham, 1996), although the latter was positively linked with pricing adaptation (Koh, 1991). Finally, both standardization and adaptation of distribution strategy had no serious effect on prot performance (Shoham, 1996; Albaum & Tse, 2001). Compared to sales- and prot-related measures, the impact of marketing strategy standardization/adaptation on market share-related performance was less frequently

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examined. However, the majority of studies focusing on this association revealed no signicant results. Only two studies examining the adaptation of brand image (Roth, 1995) and the standardization of advertising (Shiram & Manu, 1995) reported a positive association with market share performance. More subjective measures of performance, such as satisfaction with changes in performance, were rarely used and these concentrated mainly on the generic aspects of marketing strategy. While standardizing product and distribution strategy had no impact on this measure of performance, promotion adaptation demonstrated a negative, and pricing standardization a positive effect (Shoham, 1999). Composite scales of perfomance, incorporating various nancial, market, and strategic measures, were also employed, indicating mixed results with regard to product strategy: of the three studies examining product standardization, two found a negative (Kotabe & Omura, 1989; Kotabe & Okoroafo, 1990) and the other a positive (Cavusgil & Zou, 1994) association with performance. Another study examining product standardization revealed no particular effect on composite performance (Kotabe, 1990). Finally, one study found a negative relationship between promotion adaptation and composite performance, but no link at all between pricing adaptation and this measure of performance (Cavusgil & Zou, 1994).

6. Summary and conclusions Despite decades of erce debate around the marketing strategy standardization versus adaptation issue, the present review reveals that empirical research on this topic is still at an early stage of development. Although compared to earlier studies, which were largely exploratory in nature, signicant progress has been made in the last decade by using more robust methods of investigation, there is a long way to go before a concrete theory on the subject can be built. Our review has amply demonstrated that research on the subject is characterized by the adoption of inappropriate conceptualizations, inadequate research designs, and weak analytical techniques, that were largely responsible for the generation of non-signicant, contradictory, and, to some extent, confusing ndings. Hence, the underlying question concerning which strategic option, standardization or adaptation, is the most suitable for the international rm remains an essentially unresolved and inconclusive issue. Although at times many antecedent factors were put forward as affecting marketing strategy standardization/adaptation, only a few of these exhibited a systematically signicant impact. Moreover, there was a tendency among researchers to investigate only a few of these background parameters, and in relation to certain aspects of the marketing strategy, thus providing only a partial understanding of their interactions. Furthermore, most studies used unidimensional conceptualizations of the antecedent factors, and examined their inuence on the degree of standardization/adaptation independently from each other. Most importantly, only a few studies attempted to check the concurrent effect of these factors in the selection of the best strategic alternative (either standardization or adaptation), that would lead to superior foreign business performance. With regard to the degree of standardization/adaptation of the marketing strategy,

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some general inferences can be made: (a) of the elements of the marketing mix, the standardization/adaptation of product- and promotion-related issues attracted most research attention, as opposed to pricing and distribution, which were less investigated; (b) most studies examined a few components of the marketing mix only, thus ignoring potential interrelationships in standardizing/adapting them; (c) the degree of standardization/adaptation was in most cases examined at a very generic level, failing to investigate the ner dimensions of each component separately; (d) productrelated elements tended to be more standardized compared to other marketing mix parameters, while distribution has undergone the greatest adaptation; and (e) on average, the degree of marketing strategy adaptation was moderate, denoting a middleof-the-road attempt to reap the benets of both standardization and adaptation. Empirical evidence on the association between international marketing strategy standardization/adaptation and foreign business performance was very scarce, with most research emphasis placed on the product and promotion, rather than on pricing and distribution. The fact that the great majority of the associations examined yielded non-signicant results suggests, prima facie, that the rms performance in foreign markets is indifferent to the particular strategic alternative pursued. However, a more thorough analysis implies that what leads to superior performance is not the adoption of marketing strategy standardization or adaptation, but the achievement of an appropriate coalignment or t between international marketing strategy and the context in which this strategy is implemented, whether this is environmental, organizational, or managerial (Cavusgil & Zou, 1994). Hence, international marketing strategy (whether standardized or adapted) will lead to superior performance only to the extent that it properly matches the unique set of circumstances that the rm is confronted by within a particular overseas market.

7. Future research directions Certain directions for future research on the subject can be extracted from the above ndings. First, contrary to a commonly expressed belief that standardization vs adaptation is one of the most highly researched issues in international marketing, our analysis indicated that there is still a pressing need for more empirical research on the topic. In addition, the fact that the vast majority of studies in the eld were conducted in isolation, ignoring the ndings and conclusions of preceding studies, has been responsible for the great heterogeneity in the research ndings. This was especially evident in the inuence of various antecedent factors on the degree of standardization/adaptation of specic marketing strategy elements, as well as the relationship between various marketing strategy elements and particular measures of performance. Therefore, there is a need for greater reliance on past studies, and this review provides a platform for designing such an integrative approach to the subject. Second, extant research suffers from the lack of validated measures of the various constructs used, which is an important prerequisite for study replication. This is particularly the case because, whereas the relevant constructs (i.e., antecedent factors, marketing strategy, and business performance) are multidimensional in nature, most

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researchers have used single-item measures. Moreover, with a few notable exceptions (e.g., Cavusgil & Zou, 1994; Shoham, 1999), no serious attempts have been made to assess the validity and reliability of these measures. Future research should, therefore, give considerable attention to the consistent conceptualization and measurement of the relevant constructs, as well as to the validation of the resulting measurement scales through appropriate analytical methods. These validated scales should then form the basis for more empirical research, replicated under different time, spatial, and industry contexts. Third, the fact that the majority of the studies reviewed were conducted at the corporate level imposes serious limitations to this type of research. This approach would be appropriate in the case of study samples consisting of manufacturers of a single product/product line, operating in a single overseas market. For the vast majority of researchers, however, who target large exporting and/or multinational corporations with diversied product portfolios and operations in many overseas markets, rm level investigations would inevitably lead to confounded and inaccurate measures (Cavusgil & Zou, 1994; Zou & Stan, 1998). Thus, researchers should focus their investigation on the product-market venture level, dened as the marketing of a single product/product line in a specic overseas market. Finally, the failure of previous studies to adequately address the thorny issue of marketing strategy standardization/adaptation effects on company performance can be largely attributed to the inappropriate conceptualization of the underlying relationship between these two constructs, and to the adoption of inappropriate analytical tools13. The key success factor for international rms is to manage to achieve the best possible co-alignment or t between their marketing strategy and the particular contextual factors they are confronting in each foreign market targeted. Although, a couple of studies attempted to incorporate the basic principles of contingency theory or concept of t in the investigation of the standardization versus adaptation issue with encouraging results (Cavusgil & Zou, 1994; Roth, 1995), more indepth work needs to be done in this area. In particular, greater emphasis should be placed on the establishment of an appropriate link between the theory and the hypothetical relationships being investigated, on the one hand, and the statistical testing of these hypotheses, on the other (Venkatraman, 1989).

Acknowledgements The constructive comments of the Guest Editor and the reviewers of the Journal on earlier versions of this article are greatly appreciated.
13 These studies were based on the incorrect assumption that there is a direct impact of international marketing strategy on business performance. They were, therefore, trying to provide an answer to the following question: Do rms that pursue a strategy of standardization perform better than rms pursuing a strategy of adaptation (or vice versa)? However, this is the wrong question to ask since, given the particular context in which the rm is operating (as this is dened by the relevant antecedent factors), both marketing strategy standardization and adaptation can lead to superior rm performance.

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