Toward the development of an integrative framework of subsidiary success: A synthesis of the process and contingency models with the strategic reference points theory

Abstract

The purpose of this article is to integrate the process and contingency models with the Strategic Reference Points (SRP) theory in the context of international marketing decisions for subsidiary success. The SRP theory suggests that strategy and structure of organizations, and their subsequent performance, can be influenced by management's choice of SRPs. From the review of the literature on the contingency, process, and SRP theories, the authors develop two interrelated theoretical models, the Target Market Similarity Continuum (TMSC) model and the Target Market Strategic Reference Points (TMSRP) model. Based on the TMSC model, it is proposed that as the economies of scale in marketing activities increase, (1) the positive relationship between target market similarity and a standardized marketing strategy will become stronger and (2) the positive relationship between target market similarity and a centralized marketing structure will become stronger. Based on the TMSRP model, it is also proposed that (1) active interactions between target market similarity, strategy, and structure facilitate the establishment of internal and external SRPs and (2) active interactions with established SRPs will improve subsidiary performance. © 2006 Wiley Periodicals, Inc.