Economic Development and Marketing Strategies: a Comparative Lens

Elitsa R Banalieva,Ravi Sarathy

doi:10.15388/omee.2014.5.1.14241

Abstract

Go back   We analyze two core models of economic development in emerging markets: socialism (i.e., the “visible hand” of the state in directing the country’s socio-economic life) and capitalism (i.e., the “invisible hand” of the markets implemented through pro-market reforms). We further distinguish between two types of socialist economic development: Soviet Communism (as experienced in the pre-1990s Central and Eastern European transition economies) and Fabian Socialism (as experiencedin pre-1991 India). We then suggest that companies can adapt to the evolution from socialism to capitalism in their countries through the implementation of more sophisticated marketing strategies that can ensure a sustainable competitive advantage. Thus, we study the marketing strategies of companies from emerging markets operating under both models of economic development. We analyze the opportunities and challenges that emerging market companies face under each model of economic development in terms of deploying various marketing strategies, and provide useful venues for future research. 

Highlights

How has the economic development of emerging markets over time affected their companies’ marketing strategies? From an economic development perspective, this is an important and timely research question as it highlights the opportunities and threats that the external institutional environment presents to companies from emerging markets
The socialist regime in the Central and Eastern European (CEE) countries experienced a more extreme version of socialism, often referred to as State Socialism or Soviet Communist or central planning, than developing countries like India, whose socialist version was referred to as Fabian Socialism (Desai & Bhagwati, 1975; Kornai, 1992; Rapley, 1996). While these institutional changes have been unfolding over time, we know less about how local companies have been adjusting to these major shifts in economic development, especially in terms of their marketing strategies
We compare these two types of socialism to the capitalist model of economic development adopted in India after the start of pro-market reforms in 1991. We follow this discussion with how the type of economic development model adopted by the emerging market government influenced the marketing strategies of local companies operating in these emerging markets during these historical periods. We summarize these two broad models of economic development—socialism and capitalism—and the distinction between Soviet Communism and Fabian Socialism as two forms of socialism, in Table 1, elaborating on each of these

Summary

Introduction

How has the economic development of emerging markets over time affected their companies’ marketing strategies? From an economic development perspective, this is an important and timely research question as it highlights the opportunities and threats that the external institutional environment presents to companies from emerging markets. The socialist regime in the Central and Eastern European (CEE) countries experienced a more extreme version of socialism, often referred to as State Socialism or Soviet Communist or central planning, than developing countries like India, whose socialist version was referred to as Fabian Socialism (Desai & Bhagwati, 1975; Kornai, 1992; Rapley, 1996) While these institutional changes have been unfolding over time, we know less about how local companies have been adjusting to these major shifts in economic development, especially in terms of their marketing strategies. We compare these two types of socialism to the capitalist model of economic development adopted in India after the start of pro-market reforms in 1991 We follow this discussion with how the type of economic development model adopted by the emerging market government influenced the marketing strategies of local companies operating in these emerging markets during these historical periods. Three key features characterized the Soviet-style communism: an “undivided political power of the ruling party” (Napier & Thomas, 2004, p. 17), state

Goals of economic system

Mechanisms of economic development

Findings

Informal institutions