Customer involvement and service firm internationalization performance: An integrative framework

Abstract

To overcome the costs of doing business abroad, researchers have suggested either legitimacy- or efficiency-based solutions. However, both types of solutions still treat host-country customers as external to the theory. We highlight the role of customers in the international professional business service setting and argue that customer involvement is positively related to the perceived internationalization performance of multinational corporations (MNCs). MNCs with managers who perceive higher legitimacy pressures and greater needs for local knowledge tend to undertake greater efforts to build customer involvement. Furthermore, we develop a configuration framework between perceived strategic needs and MNCs’ capabilities. Specifically, MNCs that match relational capability with legitimacy needs and absorptive capacity with knowledge needs are more likely to engage in customer involvement. Our survey of 175 Chinese MNCs provides evidence that customer involvement is positively related to perceived internationalization performance. When MNCs’ relational capabilities are stronger, the positive relationship between legitimacy pressure and customer involvement increases. By contrast, MNCs with greater perceived market ambiguity improve customer involvement only when they have stronger absorptive capacity. We conclude that MNCs may simultaneously reduce legitimacy and efficiency costs through customer involvement after considering the fit between perceived environmental pressures and firm capabilities.