Your task is to offer a detailed critique of a peer-reviewed article, which you can locate in the CSU Online Library.
Your task is to offer a detailed critique of a peer-reviewed article, which you can locate in the CSU Online Library. The article must be related to international marketing.
In your critique, address the following questions:
What are the main points and arguments of the author(s)?
What is your opinion of the article?
How can the points and arguments of the author(s) be applied to the lesson in this unit? (Some examples include the marketing mix, marketing orientation, and organizational structure.)
There has been a significant increase in scholarly research focusing on marketing capabilities as an important aspect of marketing theory-based explanations of firm performance. This growing research interest in marketing capabilities has also been reflected in the international marketing literature. However, it is unclear whether and how thinking and research about international marketing capabilities differs from that of marketing capabilities in a domestic market context. To explore this question, the authors conduct a review of studies of marketing capabilities in the most influential journals publishing research in international marketing. They supplement this with insights from interviews with executives in firms engaged to varying degrees in international marketing. The study suggests that there remain numerous important unanswered questions in conceptualizing and empirically researching international marketing capabilities.
The concept of capabilities in the marketing literature is not new. Drawing on theory and empirical work in strategic management, researchers have generally viewed capabilities as complex bundles of skills and knowledge embedded in the organizational processes by which a firm’s available resources are transformed into valuable outputs (Day 1994). As capabilities are developed over time and become embedded in organizational processes and routines, they are difficult for rivals to observe and imitate, thereby enabling firms that possess them to enjoy sustainable competitive advantage (Grant 1996; Grewal and Slotegraaf 2007; Peteraf 1993). Marketing researchers have conceptualized marketing capabilities in terms of a firm’s ability to use available resources to perform marketing tasks in ways that achieve desired marketing outcomes (Morgan, Katsikeas, and Vorhies 2012). The literature suggests that marketing capabilities are especially valuable (Dutta, Narasimhan, and Rajiv 1999), inimitable (Morgan, Vorhies, and Mason 2009), and nonsubstitutable in creating sustainable competitive advantage and superior firm performance (Krasnikov and Jayachandran 2008; Moorman and Rust 1999). In international markets, marketing capabilities have also been shown to improve firm performance by enhancing the level and sustainability of realized positional advantages (for a review, see, e.g., Tan and Sousa 2015).
Over the past 18 years, marketing scholars have intensified their focus on conceptualizing marketing capabilities and empirically examining their role in explaining firm performance. This growth in research attention has been mirrored in the international marketing literature. However, the extent to which conceptual and empirical approaches to studying marketing capabilities in the international context differand should differfrom those in domestic market contexts remains unclear. This is an important gap in existing knowledge in both theoretical and practical terms. From a theory perspective, it is difficult for researchers to accurately conceptualize and measure marketing capabilities without knowing whether and how they may be different in international (vs. purely domestic) market contexts. In addition, without an understanding of whether and how the mechanisms linking marketing capabilities with performance outcomes may (or may not) differ in international marketing contexts, it is difficult for researchers to know what types of mediators and moderators to study.
From a managerial perspective, managers want to know both what types of marketing capabilities may be appropriate for their firms and how to build, maintain, and leverage themand the answers to these questions may vary based on the degree to which they operate in international markets and how they are organized to do so. Without understanding whether and how these international-related contingencies may matter, it is impossible for international marketing researchers to provide appropriate guidance to managers.
We address this important gap in knowledge, in an effort to clarify thinking and provide guidance for future research in this theoretically interesting and managerially important area. As a starting point, we examine published research to identify and explore key differences between international and domestic marketing capabilities regarding their conceptualization, types, measurements, development, and relationships. We then further explore a number of important research questions arising from this analysis: ( 1) What are the drivers of marketing capability development in international markets? ( 2) Can marketing capabilities help improve firm performance in the international markets, and if so, how? ( 3) What conditions may enhance or weaken the marketing capability-firm performance relationship in international markets?
To accomplish this, we first review the literature to examine how marketing capabilities have been studied in international marketing contexts. Second, given important gaps identified in literature-based knowledge, we supplement this literature-based analysis with insights from practice generated through in-depth interviews with executives in firms with varying degrees of internationalization. These inputs are then used to synthesize existing knowledge regarding marketing capabilities in international marketing, identify key knowledge gaps, and develop an agenda for future research in this important domain.
REVIEW OF EXISTING RESEARCH
Overview
Our literature review focuses on the most influential journals publishing international marketing research since 1999. To ensure the representativeness, completeness, and high quality of studies included in our review, the criteria for journal selection were based on previous ratings of journals in marketing and international business disciplines (Kirca and Yaprak 2010). In the marketing discipline, we chose six out of the ten most influential marketing journals from Baumgartner and Pieters’s (2003) study (i.e., Journal of Marketing, Journal of Marketing Research, Marketing Science, Journal of the Academy of Marketing Science, Journal of Retailing, and Industrial Marketing Management). The remaining four journals in that study (i.e., Journal of Consumer Research, Harvard Business Review, Management Science, and Advances in Consumer Research) on average have published only .8% of international marketing-related articles from 1975 to 2004 and are not typical publication outlets for marketing strategy studies (Leonidou et al. 2010). Because all six journals are based in the United States, we further added one international journal, International Journal ofResearch in Marketing, which is considered a top marketing journal in Europe (Kumar, Sharma, and Gupta 2017; Roberts, Kayande, and Stremersch 2014).
From the international business discipline, we added three of the six top journals from Dubois and Reeb’s (2000) study (i.e., Journal of International Business Studies, Journal of International Marketing, and International Marketing Review). These are the most influential international business journals (Leonidou et al. 2010) focusing on marketing rather than management, whereas the remaining journals (i.e., Management International Review, Journal of World Business, and International Studies of Management and Organization) focus on management.
These considerations led us to select ten journals: Journal of Marketing, Journal of Marketing Research, Marketing Science, Journal of the Academy of Marketing Science, Journal of Retailing, Industrial Marketing Management, International Journal of Research in Marketing, Journal ofInternational Business Studies, Journal of International Marketing, and International Marketing Review. Eligible articles were identified by an issue-by-issue manual search for qualitative and empirical articles that have “marketing capability(ies),” “marketing competence^),” “capabilities,” and/or “competences” in their title, abstract, and/or keywords. We performed this search in EBSCO and the journals’ websites.
Following procedures recommended for literature review articles (e.g., Katsikeas et al. 2016; Lipsey and Wilson 2001), when further examination was required, two experienced researchers separately examined the articles to determine inclusion. Five criteria had to be satisfied for a study to be eligible for this review: ( 1) the focus of the study is on marketing capabilities,[ 1] either as a primary objective or as part of a wider research design; ( 2) the study examines firms engaged in international businessthat is, the firms’ operations and/or markets span multiple countries (e.g., multinational corporations [MNCs]) or the firm has export ventures, international new ventures/international joint ventures (IJVs), or international logistics/outsourcing businessesor the study examines firms from multiple countries; ( 3) the unit of analysis is at the international microbusiness level (e.g., export venture, international venture), that is, the international context is a focus of the study rather than only a part of the sampling or a control variable; ( 4) the study is evidence based (vs. purely conceptual) in nature, such as empirical studies using primary and/or secondary data, or qualitative research such as case studies and meta-analyses; and ( 5) the research was published since 1999 (because very few studies of marketing capabilities were conducted before this period; Vorhies, Harker, and Rao 1999).
A total of 57 articles remained after this filtering process. Average interrater agreement was 93%, and we discussed all remaining discrepancies to reach consensus. Finally, we supplemented the search process by scanning the reference lists of the collected articles to identify any additional relevant articles missed through the keyword searches. This produced an additional 7 articles from top management journals (Strategic Management Journal, Journal of Management, and Decision Sciences), for a total of 64 articles included in this review. For each of these 64 published studies, we then cataloged ( 1) how they define marketing capabilities and the theories on which the conceptualization draws; ( 2) the types of marketing capabilities identified and/or examined; ( 3) the marketing capability operationalization and analysis method used (for empirical studies); and ( 4) findings reported in the empirical studies with respect to antecedents, consequences, moderators, and mediators connected with marketing capabilities in international marketing. The answers to these four questions are summarized in the various tables and discussed in more detail next.
Marketing Capabilities
Definition and Theory. In the general marketing literature, marketing capabilities are viewed in terms of a firm’s ability to use available resources to perform marketing tasks in ways that achieve desired marketing outcomes (Day 1994; Morgan, Katsikeas, and Vorhies 2012). They therefore represent the processes that a firm uses to define, develop, communicate, and deliver value to its target customers by combining, transforming, and deploying its available resources (e.g., Bahadir, Bharadwaj, and Srivastava 2008; Morgan and Slotegraaf 2012). In the international marketing context, most studies define firm-level marketing capabilities in the same way as they are defined in the general marketing literature in domestic market contexts and simply emphasize that the marketing activities and the processes by which they are accomplished take place in international markets to fulfill international customers’ needs and achieve international marketplace goals (e.g., Lages, Silva, and Styles 2009; Shi et al. 2005; Zou, Fang, and Zhao 2003). Thus, firm-level marketing capabilities in international marketing are generally viewed in terms of a firm’s ability to use available resources to understand and fulfill foreign market customer needs better than its rivals. Tables 1-3 provide a review of different marketing capabilities identified in the international marketing literature.
A range of different theories are used to ground conceptualizations of marketing capabilities and hypothesize concerning their relationships with other phenomena in international marketing (see Web Appendix A). Unsurprisingly, as in the general marketing literature the majority of these draw on RBV theory. A large number also draw on dynamic capabilities (DC) theory, which, given the difficulties associated with measuring dynamic phenomena, can cause problems in matching theory to operationalization in many studies using primary survey research designs. A range of other theories used in domestic marketing contexts have also been applied in the internal marketing context, including organizational learning and the knowledge-based view. However, in a surprising number of studies (10 of the 64 studies in our sample), it is unclear what specific theory is being drawn upon to support the conceptualization of marketing capabilities in international markets.
The one theoretical viewpoint that is not used in the general marketing literature in domestic market contexts[ 2] that has been used in a few international marketing studies in our sample is the institution-based view. This perspective is based on institutional theory, which focuses on institutional pressures, such as industry or societal norms, regulations, and requirements, to which firms must adapt to attain legitimacy, operate, and serve customers in a country marketplace (e.g., Peng 2003). Such institutional forces may vary across different country marketplaces and can affect informal and formal marketing exchanges and thereby impact both the design and processes of an organization (e.g., Hult 2011).
Comparing specific marketing capabilities identified in the international marketing versus general marketing literature, we find only seven marketing capabilities that are specific/unique to studies in international marketplaces and that could therefore potentially be considered “international marketing capabilities” (vs. simply general marketing capabilities in an international context): ( 1) MNCs’ transnational product innovation capability (Sheng et al. 2015; Subramaniam and Venkatraman 2001), ( 2) global brand management capability (Matanda and Ewing 2012), ( 3) overseas market-related exploitative and explorative capabilities (Lisboa, Skarmeas, and Lages 2011), ( 4) international customer-support capability (Khavul et al. 2010), ( 5) adaptive capability (Lu et al. 2010), ( 6) local market competence (Wu et al. 2007), and ( 7) global account management capability (Shi et al. 2005). Details of the research on these capabilities are summarized in Table 4. In the following section, we review the literature on marketing capabilities in international marketing in more detail from three perspectives: ( 1) the classification of marketing capabilities; ( 2) the measurement and analysis of marketing capabilities; and ( 3) the antecedents, mediators, moderators, and consequences of marketing capabilities in international marketing.
Classification. As the notion of marketing capabilities is still relatively new to the marketing discipline (Morgan 2012), research in this area is still rather fragmented. However, the literature reveals several ways to classify different marketing capabilities. For example, adopting a market orientation perspective, Day (1994) classifies capabilities as outside-in, inside-out, and spanning capabilities and identifies market sensing and customer linking as the most important outside-in marketing capabilities. Day (2011) extends his earlier classification by proposing three subsets of marketing capabilities: ( 1) static marketing capabilities, which include specialized/functional capabilities and cross-functional capabilities; ( 2) dynamic marketing capabilities, such as the ability to reconfigure and improve existing marketing capabilities; and ( 3) adaptive marketing capabilities, which deal with proactive vigilant marketing learning through experimentation and active interactions with network partners.
In a different approach drawing on qualitative fieldwork based on interviews and focus groups with managers, Vorhies and Morgan (2003, 2005) classify marketing capabilities into two categories: specialized capabilities and architectural capabilities. Specialized capabilities refer to the lower-order, functionally focused, marketing mix-related processes and routines such as pricing, advertising, product management, and channel management. Architectural capabilities such as marketing strategy planning and implementation capabilities deal with higher-order processes and routines that orchestrate and coordinate the firm’s specialized marketing capabilities and their associated resource inputs. Morgan and Slotegraaf (2012) and Morgan (2012) build on this to provide a more extensive taxonomy by ( 1) adding a third type of marketing capability: cross-functional capabilities, such as brand management and customer relationship management (CRM), that bring together multiple different functional inputs; and ( 2) classifying marketing capabilities not only by their lower- to higherorder nature but also by the different levels at which they existindividual, group, organization, and interorganizational levelsproviding the most comprehensive framework available to date for classifying various marketing capabilities.
Consistent with Morgan and Slotegraafs (2012) classification system, we classify the marketing capabilities in the representative set of studies we identified in the international marketing literature by their lower- to higher-order nature and the organizational levels at which they exist. Table 5 is adapted from Morgan and Slotegraaf (2012, p. 94) and summarizes the characteristics, examples, and representative studies of various types of marketing capabilities in the international market context.
Table 5 reveals that existing research on marketing capabilities in international markets has a heavy focus on midlevel marketing capabilities (35 of the 64 articles reviewed), compared with research in domestic markets, which has generally focused to a greater degree on lower-level marketing capabilities. While many articles examining marketing capability in international markets also study lower-level marketing capabilities (23 of the 64 articles), very few focus on higher-level marketing capabilities (6 of the 64 articles). This is consistent with- and may even be due tothe equally scant research on higher-level marketing capabilities in domestic market contexts in the general marketing literature.
Lower-level marketing capabilities are characterized by the specialized functional marketing processes used to design and implement individual marketing-mix (four Ps) activities (e.g., Morgan, Katsikeas, and Vorhies 2012; Vorhies and Morgan 2005) such as pricing (e.g., Zou, Fang, and Zhao 2003), advertising and promotion (Chen 2008; De Carolis 2003), and selling (e.g., Lee and Zhou 2012). In the international market context, most research on lower-level marketing capabilities focuses on firm-level capabilities, particularly in the areas of advertising, marketing communications, and product management capabilities in foreign markets. In contrast, we observe no research on functional market research capabilities or on individual- and group-level marketing capabilities, such as overseas salesperson skills and overseas store management skills, perhaps because of the different nature of international selling (i.e., foreign sales) or difficulty getting data on overseas retail stores.
Midlevel marketing capabilities are characterized by architectural or strategic marketing capabilities (Morgan, Katsikeas, and Vorhies 2012; Morgan et al. 2003) such as market sensing (e.g., Kaufmann and Roesch 2012; Malik, Sinha, and Blumenfeld 2012; Song et al. 2005), marketing strategy planning (e.g., Morgan, Katsikeas, and Vorhies 2012), and strategy implementation capabilities (e.g., Spyropoulou et al. 2017); cross-functional capabilities such as brand management (e.g., Erramilli, Agarwal, and Dev 2002), CRM (e.g., Reinartz, Krafft, and Hoyer 2004; Leonidou, Palihawadana, and Theodosiou 2011), and new product development (Kaleka 2011); and interorganizational capabilities such as channel bonding and networking (Blesa and Ripolles 2008; Boso et al. 2013; Zhou, Wu, and Barnes 2012). We find that in the international context, environmental scanning or market sensing capabilities are the most frequently studied midlevel capabilities. This makes sense given the increased complexity of the environment when dealing with international markets. Meanwhile, brand management capability is the least frequently studied midlevel marketing capability, which mirrors the equally scant research in a domestic market context (Morgan, Slotegraaf, and Vorhies 2009) and may be dueat least in partto the relative lack of established scales for this capability. In comparison with domestic marketing capability research, studies in international marketing have paid relatively more attention to interorganizational capabilities such as channel bonding and channel relationship management and networking capabilities, perhaps due to the importance of relying on local partners to understand and facilitate marketing operations in overseas markets in exportingthe most widely used mode of international market entry.
However, in general, marketing capability research in international markets is clearly dominated by firm-level marketing capabilities, with very few studies examining individual-level and group-level marketing capabilities. In addition, very few studies have focused on exploring higherlevel, dynamic marketing capabilities associated with reconfiguring resources and enhancing current marketing capabilities. Examples of such higher-level marketing capabilities are market learning capabilities (e.g., Morgan 2012), adaptive capabilities (Lu et al. 2010), and interorganizational learning capabilities (e.g., Selnes and Sallis 2003). Marketing capability research in domestic markets has also studied some individual-level higher-order capabilities like adaptive selling (e.g., Spiro and Weitz 1990) and process thinking (e.g., Dickson et al. 2009). Research in our sample of studies in the international marketing context has not examined such marketing capabilities.
In general, such higher-order marketing capabilities are difficult to observe and measure; thus, most studies of dynamic marketing capabilities adopt in-depth case study research designs (Evers, Andersson, and Hannibal 2012; Shi et al. 2005; Wilson and Daniel 2007). With few exceptions (e.g., Fang and Zou 2009), studies using primary survey data designs often conceptualize marketing capabilities as “dynamic” (or at least draw on dynamic capabilities theory) but measure them in a static way that does not reflect the “dynamism” proposed in the conceptualization (see detailed examples in Table 4) (e.g., Lages, Silva, and Styles 2009; Lisboa, Skarmeas, and Lages 2011; Selnes and Sallis 2003). Nevertheless, theoretically dynamic marketing capabilities are widely considered to be the ultimate source of competitive advantage in complex and rapidly changing global markets as they allow firms to continuously update their lower-order marketing capabilities and thus overcome path dependencies and avoid “competency traps” (Danneels 2002; March 1991; Morgan 2012). Given this, more research is clearly needed in the realm of higher-order dynamic marketing capabilities in both domestic and international markets.
Measurement and Analysis Method. Our review of the literature reveals that researchers have generally adopted one of three approaches to empirically investigate marketing capabilities: ( 1) direct observation using primary case studies, ( 2) direct primary survey methods, and ( 3) inference-based approaches using secondary data. The first approach measures marketing capabilities through in-depth case studies, and we identified eight such studies in the international marketing research in our sample (for a review, see Table 1). While such case studies provide in-depth understanding of firms’ specific marketing capabilities in international markets, they suffer from small sample size and generalizability problems.
The second approach uses primary survey measures of marketing capabilities (for a review, see Table 2), and this is the most frequently used method in studies in international marketing (64%, or 41 of the 64 articles reviewed). Marketing managers responsible for the international market(s) in question generally serve as key informants, and they are asked to rate how well their companies perform various marketing activities, often relative to their major competitors (e.g., Fang and Zou 2009; Spyropoulou et al. 2017). Given the widespread use of this method in international marketing research, we further examined the types of operationalizations used in primary survey measures of marketing capabilities in our sample (see Web Appendix B). All 41 studies that use survey approaches use multi-item scales, with the majority (63%) employing seven-point scales and either “much worse/much better” or “strongly agree/strongly disagree” scale anchors. Almost half the studies we reviewed (49%) use absolute (vs. relative to rivals) measures of capabilities (i.e., how well various activities are performed) when asking managers to evaluate their marketing capabilities.[ 3] The majority of the studies (71%) draw on existing conceptualizations and/or measures, primarily from the general domestic marketing capabilities literature.
The primary survey approach is a direct method to assess marketing capabilities, and it is flexible in enabling researchers to assess different types of marketing capabilities in various cultures and countries. However, there are two main problems with this method. First, with very few exceptions (e.g., Boso et al. 2013), due to the difficulty of collecting data from the same firms at different points in time over long time frames, survey studies use cross-sectional research designs, mostly with single informants, and are therefore prone to common method bias. Second, data collected via primary surveys cannot empirically establish causal relationships that may be hypothesized with marketing capabilities. In addition, this research design approach often limits the number of different control variables that can be included in the data collection.
The third broad approach to assessing firms’ marketing capabilities relies on proxy measures from secondary data to infer a firm’s marketing capabilities (for a review, see Table 3) since no secondary data directly measuring firms marketing capabilities currently exist. There are generally two different methods used in this approach. One method uses marketing resource inputs such as advertising or selling, general, and administrative (SGA) expenditures/sales (e.g., De Carolis 2003; Gao et al. 2010; Goerzen, Asmussen, and Nielsen 2013; Kotabe, Srinivasan, and Aulakh 2002) and selling expenses/sales (Anand and Delios 2002) or simply advertising expenses and time spent (Chen 2008; Chen and Hennart 2002; Wu 2013). The inference is that the more a firm allocates resources to something, the more likely it is to be or become good at that thing. This is the most widely adopted method of measuring marketing capabilities using secondary data in international marketing. The second method uses marketing-related outcomes such as repeat client proportions (Ethiraj et al. 2005) to proxy how well a firm performs its marketing activities. This assumes that firms with better observed marketing-related outcomes have superior processes required to perform the activities that may deliver such outcomes. Both approaches have limitations in that the level of both (a) marketing resource deployments and (b) marketing-related outcomes represent only a part of the conceptualization of marketing capabilities as the firm’s ability to use available resources to achieve desirable marketing outcomes.
For this reason, scholars in the general domestic market context have begun to adopt “input-output” approaches using stochastic frontier estimation (SFE) as a third way to use secondary data to measure capabilities. This approach measures marketing capabilities by calibrating how well a firm transforms a given set of resources (e.g., advertising, sales expenses, trademarks) into certain desirable marketing-related outputs. Using SFE, this method estimates the maximum observed efficient frontier among firms in an industry in converting resources into desirable marketing output objectives in a sample of firms and then compares this maximum value with the actual resource-to-output performance of each firm in a sample. Greater deviations from the efficiency frontier value represent lower marketing capabilities.
This measurement approach offers several benefits. First, it is well aligned with the conceptualization of capabilities in that it calibrates how well a firm is able to deploy its available resources to implement marketing activities that achieve desired marketing outcomes relative to how well rivals do so. Thus, each firm is benchmarked in terms of its marketing capabilities against the best possible practices of firms with similar resources in the industry or sample of firms. Second, because it uses secondary data, this method can enable researchers to examine the drivers and impact of marketing capabilities over longer time periods across firmswhich is almost impossible to assess using primary data through case studies or surveys.
However, while this method has many merits and is gaining popularity in domestic market marketing capabilities research (e.g., Dutta, Narasimhan, and Rajiv 2005; Feng, Morgan, and Rego 2015,2017; Xiong and Bharadwaj 2011), only two of the studies we reviewed of marketing capabilities in international markets have adopted this method (Akdeniz, Gonzalez-Padron, and Calantone 2010; Nath, Nachiappan, and Ramanathan 2010). This may be due to the difficulty of obtaining multiple input and international market output secondary data to calibrate marketing capabilities or to the complexity/newness of this method.
We also examined the major methods of analysis used in exploring the relationships between marketing capabilities and other phenomena in the published international marketing research represented in our sample (see Web Appendix C). Most studies in our sample use structural equation modeling, which reflects the relative popularity of studies using primary survey research designs. Regression-based approaches (both hierarchical and nonhierarchical) are also frequently used. The relative infrequency of econometric modeling approaches (including mixed models and fixed or random effects) also makes sense given the infrequent use of panel and time-series data in the studies in our sample.
Antecedents, Moderators, Mediators, and Consequences. The role of marketing capabilities in explaining firm performance has been of increasing interest to marketing scholars, as many have questioned the value of firms’ marketing activities and investments (Rust et al. 2004). Generally, the literature suggests that firms with stronger marketing capabilities are better able to create value for customers and other stakeholders and thereby achieve and sustain competitive advantage and superior financial performance (Day 1994; Morgan 2012). Though still relatively scant, a growing number of empirical studies have examined the impact of various marketing capabilities on different kinds of firm performance (mainly subjectively assessed) ranging from product-market performance indicators, such as sales revenue, market share, sales growth, and customer satisfaction, to financial performance outcomes, such as cash flow, profitability, and return on investment (ROI) (Krasnikov and Jayachandran 2008). Research in international marketing also generally shows that marketing capabilities improve firms’ financial and nonfinancial pe
