Determinants and Consequences of Product Differentiation Strategy: Evidence from Chinese Indigenous Exporters

Xuenan Ju,Baowen Sun,Zuohao Hu,Lili Tong

doi:10.5539/ibr.v10n9p60

Abstract

Focusing on Chinese indigenous exporters, this research investigates the antecedents of the product differentiation strategy (PDS), and its impacts on export performance with the moderating role of export target markets. Drawing from the contingency theory and strategy management framework, the authors adopt structural equation modeling (SEM) to analyze the survey data collected from 195 Chinese indigenous exporters. The empirical results suggest that the PDS positively affects Chinese exporters’ performance. Firms are more likely to adopt the PDS when innovation and marketing capabilities are high and when they export to turbulent markets. The positive impact of the PDS on export performance is stronger when firms export to developed (vs. other emerging) markets. With the unique perspective from emerging markets, the authors theoretically discuss and empirically examine the antecedents-PDS-performance link. This research suggests that Chinese export firms rationally adopt the PDS and actively cultivate technology and innovation capability and international marketing competence on export businesses.

Highlights

Investigating emerging market firms’ product strategies’ impact on export performance is a urgent and remarkable topic in international market researches
Unfavorable research and development capabilities make the internationalization of emerging market firms do not have enough resources to meet the local institutional environment pressure while providing higher value -added products at the same time, so this study argues that with the institutional environment pressure rises, the tendency to choose the product differentiation strategy (PDS) will be gradually reduced
With the deepening of internationalization, a great number of exporters enhance export performance by improving established product characteristics, which complies with the core element of the PDS: empower business growth through optimizing products quality and uniqueness

Summary

Introduction

Investigating emerging market firms’ product strategies’ impact on export performance is a urgent and remarkable topic in international market researches. Because of various industrial standards and economic foundations across nations, emerging markets have more widely different understandings and choices on export product strategies compared to other markets. Researches regarding product strategy’s impact on performance for exporters from emerging markets still call for further attention. As one of the most essential marketing elements for both marketing practitioners and academics, product strategy is if not more, important in the context of emerging market firms’ export business. Due to the critical role to a firm’s success, export product strategy has drawn the attention of a considerable number of researchers as a key determinant of export performance. The variety on the country and cultural level and the various measurements of performance add more complexity to the product-performance relationship for international markets

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