Abstract
Research on multinational inter-organizational relationships has demonstrated that the capabilities of small and medium sized enterprises (SMEs) can be developed via partnerships, but at present, we lack studies that relate the development of such capabilities to the management of business governance structure. This study provides a new perspective on internationalized SME marketing strategies in the global context. Using a dynamic capability view of firms, the study develops hierarchical regression models linking global dynamic capabilities and governance structure. This study empirically verifies the research framework from 206 internationalized SME Taiwanese firms. The results confirm previous studies that indicate positive correlations between market orientation, learning orientation, and global dynamic capabilities. The results also indicate that the development of global dynamic capabilities impacts the choice of governance structure in firms. Our study suggests that internationalized SMEs strategically manage their autonomy and strategic options by choosing combinations of different relationship types while they decide to develop global marketing capabilities and global design capability, or both. The study also found that market orientation and learning orientation act as enabling mechanisms for building global dynamic capabilities.
Highlights
Issues of inter-firm relationships and governance mechanisms have received considerable attention in literature on marketing
To integrate the concept of dynamic capability with international marketing, this study proposes global dynamic capability (GDC) and defines it as internationalized firms processes with essential flexibility and efficacy for maintaining the value of existing global customers, creating value-adding products and global market niches in response to the changing global environment
A major area of contribution to the literature is the evaluation of alternative global dynamic capabilities as determinants of the governance structure
Summary
Issues of inter-firm relationships and governance mechanisms have received considerable attention in literature on marketing. Since most studies emphasize the effect of inter-firm governance mechanisms on resource allocation or firm performance, they are of little help in the study of how governance mechanisms are connected to the development of a firms’ capabilities (Mota and de Castro, 2005), especially in an international inter-firm relationship. Most previous related studies have been made with the assistance of inter-organizational relationships on organizational capabilities but were limited by resource constraints. The relationship-capability-performance inference method does not apply to SMEs, especially those engaged in internationalization, it is necessary. A relationship is a mechanism through which firms continually combine existing resources and capabilities with the resources of their counterparts (Dyer and Singh, 1998; Mota and de Castro, 2005), to obtain new knowledge and develop new capabilities (Dyer and Hatch, 2006; Furlan et al, 2007). This study assumes governance, which is conceptualized as contractual and relational governance, to exhibit how SMEs align the composition of their governance mechanisms with the development of their capabilities
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