Managerial Perspectives on Export Pricing Adaptation Decisions: An Experimental Investigation: An Abstract

Abstract

One of the main challenges of an international marketing strategy is how to control the enormous diversity beyond borders and design optimal cross-border strategies. Firms seeking international presence and opportunities for expansion need to take strategic decisions regarding the degree of adaptation of their marketing mix in their business arrangements in the host country. Specifically, price adaptation, relative to the other elements of the international marketing mix, has received the least attention in international marketing studies, despite having a fundamental role in the marketing program. Some possible explanations to the lack of research attention include the dearth of appropriate and sophisticated theoretical international pricing frameworks, the heterogenous nature of pricing, and the downgrade of its importance. This study investigates whether, how and under what conditions psychic distance affects managers’ decisions regarding international marketing adaptation strategies. Drawing on the construal level theory, we develop a model that suggests promotion orientation and cognitive style as the boundary conditions, and construal level mindset as the underlying mediating mechanism of this effect. Using an experimental vignette study with 233 export managers from originating from analytic (Greece) and holistic (Taiwan) cognitive style markets we find that psychic distance has a significant positive effect on price adaptation, but that this effect is attenuated among managers with a more holistic cognitive style. Results further reveal that the positive effect of psychic distance becomes weaker when managers are characterized by higher promotion orientation and confirm that construal level mindset mediates the effect of psychic distance on adaptation decisions. The article contributes to the international marketing literature by uncovering boundary conditions and an underlying mechanism for the effects of psychic distance. Moreover, results provide important managerial implications for business strategic planning, cross border strategy, recruitment and training. Finally, rich intercultural insights are offered which will encourage researchers to further investigate the global applicability of mindset in international marketing.