Abstract
The role and significance of adaptation versus standardization for performance in foreign markets has stirred some important debates among the academic community. In this paper, we aim to contribute to the ongoing debate by applying the logic of institutional theory and organizational capabilities to reconsider the relationship between adaptation and foreign market performance. In particular, we argue based on extant theory and our own mixed-method study that while more accentuated differences in the institutional environment reinforce the role of adaptation in achieving legitimacy, the possession of relational and technological capabilities can reduce the relevance of adaptation. The empirical study is based on a sample of 284 firms in the quantitative study and eight firms in the qualitative study. Our findings reveal that adaptation is positively associated with performance in foreign markets. This relationship is also positively moderated by institutional distance, and negatively moderated by relational and technological capabilities.
Highlights
Foreign market strategy adaptation has been discussed as one of the key decisions in foreign market entry [1]
Theodosiou and Leonidou [2] indicated that research has concentrated on whether firms, irrespective of the foreign market entry mode chosen, should standardize or adapt their marketing strategy in overseas markets to ensure the sustainability of international operations [3]
We argue that institutional theory and its attention to achieving legitimacy toward the foreign market environment can be a promising ground to explain the relationship between adaptation and its performance outcomes, as well as other variables affecting this relationship
Summary
Foreign market strategy adaptation has been discussed as one of the key decisions in foreign market entry [1]. We argue that institutional theory and its attention to achieving legitimacy toward the foreign market environment can be a promising ground to explain the relationship between adaptation and its performance outcomes, as well as other variables affecting this relationship. Our study broadens the analysis of the relationship existing between predictor and criterion variables with the moderators “leads to richer theoretical models with which researchers are able to explain or specify relationships with greater accuracy” [15]. We examine these questions on a sample of firms from Poland, which may be considered as a mid-range emerging economy [16]. The international market portfolios of such firms embrace both advanced countries and emerging economies, enabling a high level of variation in the institutional profiles of the host countries of the firms under study
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