MARKETING STRATEGY

Marketing Strategy



Marketing Strategy

Introduction

The question of what drives the performance of a firm is a central issue in contemporary research on international strategy that applies the resource-based view of strategy (see, for example, Barney, 2001; Farjoun, 1998). In earlier publications (Pehrsson, 2000, 2001) I have proposed that strategy competence is a key driver of performance. The term “strategy competence” is composed of two dimensions: the international market experience of the firm; and relatedness among the businesses of the firm. International market experience is manifest, for example, in a firm's perceptions of local entry barriers. Awareness of entry barriers is certainly practically crucial as this to a large extent decides the freedom of action of the firm. As regards business relatedness, the exploitation of similarities has been singled out as a major determinant of performance (e.g. Palich et al., 2000).

The purpose of the study presented in this article is, thus, to explore the relationship between strategy competence and the performance of the firm's local business. Perceptual data were obtained from 173 ventures of Swedish manufacturing firms operating in the German market and statistical techniques were applied to detect significant relationships. The article presents the research design, a discussion of the findings, conclusions and implications.

The concept of strategy competence

Strategy competence is a central driver of firm performance (Pehrsson, 2000, 2001). The concept is primarily an outgrowth of the resource-based view of strategy (e.g. Barney, 1991, 2001; Grant, 1991). In this view, resources essentially are said to confer competitive advantage to the extent that the resources must be difficult to create, buy, substitute, or imitate (Barney, 1991; Lippman and Rumelt, 1982). In line with this, strategy competence is considered to be a crucial source of heterogeneity that enables the firm to achieve competitive advantage and generate high performance. Moreover, much recent research from the resource school has shifted from focusing on tangible assets as a source of competitive advantage to include intangible assets, such as competence and experience. No matter what asset is the focus, the rationale is that key resource advantages lead to high performance.

International market experience and business relatedness

The concept of strategy competence comprises an international market experience dimension. High familiarity with international market conditions particularly strengthens the competence and the possibility of finding sustainable positions in local markets. Local market conditions may be specified by aspects such as market entry barriers (e.g. Porter, 1980; Robinson and McDougall, 2001), the behaviour of competitors in the market (Bengtsson, 1998; Pehrsson, 1990), consumer behaviour in the market (Rumbo, 2002), and local preferences for technology and choice of suppliers (Makadok, 1998; Pehrsson, 1985). Familiarity with international market conditions might be acquired through any sequence of market entry or any way of searching knowledge on the conditions external to the firm.

Market entry barriers and associated relatedness issues

The match between a firm's perceptions of barriers to entering local markets and associated relatedness issues is a central feature of the strategy competence concept. The reason is that the exploitation of advantages stemming from the relatedness between ...