Korea Trade Review (무역학회지)

Korea Trade Research Association (한국무역학회)
권호 표지
DOI QR코드

DOI QR Code

An Empirical Analysis on MNC's Investment Performances in a Host Country through Market Orientation Mediation Effects

현지시장지향성의 매개변수 효과를 통한 다국적기업의 해외시장 투자성과에 대한 실증연구

  • Lim, Sung-Hoon (Department of International Trade, Konkuk University)
  • 임성훈 (건국대학교 국제무역학과)
  • Received : 2019.04.05
  • Accepted : 2019.04.16
  • Published : 2019.04.30
Download PDF
⟨ Previous Next ⟩

Abstract

Multinational corporations (MNCs) usually face indigenous business environments in host countries which are different from a home country's. In this circumstance, MNCs would accomplish low-investing performance if they pursuit the same as the home oriented business strategy in the host country. The more different kinds of specialized environments a host countries have, the more pressure of modifying the international strategy needed for MNCs. This paper examines that how a different market environment between a home country and a host country, through MNC's local responsive managements, can influence investing performance in a host country. This paper conducts structural equation analyses with collected empirical data focusing upon a MNC's market orientation efforts and the realization of management localization (i.e., increasing local sourcing intensity or local sales intensity) as mediators between the specialized environment in a host country and the MNC's investing performance. This paper has several contributions in developing the prior approaches: first, the market orientation variables are regarded not as normal independent factors but mediators; second, two step mediation model is examined to make link between host market's heterogeneity and MNC's performance.

Keywords

Acknowledgement

This work was supported by the Ministry of Education of the Republic of Korea and the National Research Foundation of Korea (NRF-2017S1A5A2A01027749).

References

  1. Andrews, K. R. (1971), The Concept of Corporate Strategy, Homewood, IL: Dow Jones-Irwin.
  2. Cadogan, J. W., A. Diamantopoulos and J. A. Siguaw (2002), "Export Market-oriented Activities: Their Antecedents and Performance Consequences", Journal of International Business Studies, 33(3), 615-626. https://doi.org/10.1057/palgrave.jibs.8491036
  3. Chae, Myung-Su and Hyung-Taek Lee (2006), " Export Firms' Market Orientation, Competitive Advantage, and Export Performance", Korean Management Review, 35(1), 279-306.
  4. Day, G. S. (1994), "The Capabilities of Market-Driven Organizations", Journal of Marketing, 58(4), 37-52. https://doi.org/10.2307/1251915
  5. Dawar, N. and A. Chattopadhay (2002), "Rethinking Marketing Programs for Emerging Markets", Long Range Planning, 35(2), 457-74. https://doi.org/10.1016/S0024-6301(02)00108-5
  6. Douglas, S. P. and Y. Wind (1986), "The Myth of Globalization", Journal of Consumer Marketing, 3, 23-26. https://doi.org/10.1108/eb008160
  7. Ellis, P. D. (2006), "Market Orientation and Performance: A Meta-Analysis and Cross-National Comparisons", Journal of Management Studies, 43(5), 1089-1107. https://doi.org/10.1111/j.1467-6486.2006.00630.x
  8. Encamation, D. J. (1999), Japanese Multinationals in Asia, Oxford: Oxford University Press.
  9. Frost, T. S. (2002), "Centers of Excellence in Multinational Corporations," Strategic, Management Journal, 23, 997-1018. https://doi.org/10.1002/smj.273
  10. Ghemawat, P. (2007), Redefining Global Strategy, Boston, MA: Harvard Business School Press.
  11. Heenan, D. A. and H. V. Perlmutter (1979), Multinational Organization Development - A Social Architectural Perspective, Reading MA: Addison-Wesley.
  12. He, X., K. D. Brouthers, and I. Filatotchev (2018) "Market Orientation and Export Performance: The Moderation of Channel and Institutional Distance", International Marketing Review, 35 (2), 258-279. https://doi.org/10.1108/IMR-09-2015-0194
  13. Hoang, B. P. (2015), "Relationship of Export Market Orientation, Selected Export Strategy, and Export Performance: An Empirical Study", Global Journal of Management and Business Research, 15(6), 24-32.
  14. Hsu, T. T, M. H. Hsieh, K. H. Tsai, and W. Y. Wang (2014), "Strategic Orientation and New Product Performance: The Role of Technological Capability", Canadian Journal of Administrative Sciences, 31(1), 44-58. https://doi.org/10.1002/cjas.1274
  15. Is'haq, A. Y. and A. Haque (2017), "Firm Export Market Performance: The Case in Uganda", Journal of Business and Policy Research, 12(1), 54-71. https://doi.org/10.21102/jbpr.2017.07.121.04
  16. Jarillo, J. and J. I. Martinez (1990), "Different Roles for Subsidiaries: The Case of Multinational Corporations in Spain", Strategic Management Journal, 11(7), 501-512. https://doi.org/10.1002/smj.4250110702
  17. Jarrison-Walker, L. J. (2001), "The Measurement of a Market Orientation and Its Impact on Business Performance", Journal of Quality Management, 6, 139-172. https://doi.org/10.1016/S1084-8568(01)00035-9
  18. Jensen P. and T. Pedersen, (2011), The Economic Geography of Offshoring: the Fit Between Activities and Local Context, Journal of Management Studies, 48(2), 352-372. https://doi.org/10.1111/j.1467-6486.2010.00967.x
  19. Kang, Seong-Ho, Sunp-Mee Choi and Heung-Soo Park (2011), "The Effect of Market Orientation on Business Performance: Focus on Mediating Role of New Product Development Performance", Yonsei Business Review, 48(1), 1-32.
  20. Kim, Byoung-Goo and Lck-Soo Kim (2010), "An Empirical Analysis of the Determinants of the Level of Control by Korean Firms' over Their Foreign Subsidiaries: Focus on Firm's Strategy and Subsidiary Capability", Korean Management Review, 39(5), 1227-1252.
  21. Kim, Byoung-Goo and Jae-Jin Kim (2013), "The Determinants of Korean Subsidiaries' Performance in China: Localization and Intra-firm Trade between HQ and Subsidiary", Korea Trade Review, 38(4), 229-253.
  22. Kim, Yong-Kyu (2000), "Direct Investment Profile and Localization Strategy of Korean Corporation Within NAFTA Areas", International Business Journal, 9(2), 233-260.
  23. Kim, Seok-Won and Dong-Woo Yang (2018), "A Study on Slack Resources Factor to Financial Profitability Results: Focusing on Mediating Effect of Market Orientation and New Product Development Capability of Manufacturing Companies", Korean Journal of Business Administration, 31(6), 1141-1161.
  24. Kirca, A. H., S. Jayachandran, and W. Bearden (2005), "Market Orientation: A Meta-analytic Review and Assessment of its Antecedents and Impact on Performance", Journal of Marketing, 69(2), 24-41. https://doi.org/10.1509/jmkg.69.2.24.60761
  25. Kotler, P. (1986), "Global Standardization: Courting Dangers", Journal of Consumer Marketing, 3, 13-15. https://doi.org/10.1108/eb008158
  26. Kohli, A. K. and B. J. Jaworski (1990), "Market Orientation: The Construct, Research Propositions, and Managerial Implications", Journal of Marketing, 54(2), 1-18. https://doi.org/10.2307/1251866
  27. Kohli, A. K., B. J. Jaworski and A. Kumar (1993), "MAR-KOR: A Measure of Market Orientation", Journal of Marketing Research, 30(4), 467-477. https://doi.org/10.2307/3172691
  28. Kostova, T., K. Roth and M. T. Dacin (2008), "Institutional Theory in the Study of Multinational Corporations: A Critique and New Directions", Academy of Management Review, 33(4), 994-1006. https://doi.org/10.5465/AMR.2008.34422026
  29. Kwon, Yung-Chul (1996), "The Effects of Market Orientation on Business Performance Evidence from Export Companies, Korean Marketing Review, 11(1), 35-48.
  30. Kwon, Yung-Chul (2010), "Market orientation of Korean MNC Subsidiaries and Their Performance in the Chinese and Indian Markets", International Marketing Review, 27(2), 79-199.
  31. Li, J. J. and K. Z. Zhou (2010), "How Foreign Firms Achieve Competitive Advantage in the Chinese Emerging Economy: Managerial Ties and Market Orientation", Journal of Business Research, 63(8), 856-862. https://doi.org/10.1016/j.jbusres.2009.06.011
  32. Li, X., X. Liu and H. Thomas (2013), "Market Orientation, Embeddedness and the Autonomy and Performance of Multinational Subsidiaries in an Emerging Economy", Management International Review, 53(6), 869-897. https://doi.org/10.1007/s11575-013-0177-0
  33. Lam, S. S. K. and J. C. K. Yeung (2010), "Staff Localization and Environmental Uncertainty on Firm Performance in China", Asia Pacific Journal of Management, 27(4), 677-695. https://doi.org/10.1007/s10490-008-9123-2
  34. Levitt, T. (1983), "The Globalization of Markets", Harvard Business Review, 61(3): 92-102.
  35. Lim Sung-Hoon (2012), An Empirical Study on a Relationship between Parent Company's Export Orientation and a Subsidiary R&D Dependency Mediated through Ownership Structure, International Business Review, 16(1), 1-24. https://doi.org/10.1016/j.ibusrev.2006.11.002
  36. Luo, Y. (2001), "Determinants of Local Responsiveness: Perspective from Foreign Subsidiaries in an Emerging Market", Journal of Management, 27(4), 451-477. https://doi.org/10.1177/014920630102700404
  37. Luo, Y. (2003), "Industrial Dynamics and Managerial Networking in an Emerging Market: The Case of China", Strategic Management Journal, 24(13), 1315-1327. https://doi.org/10.1002/smj.363
  38. Meyer, K. E., R. Mudambi, and R. Narula (2011), "Multinational Enterprises and Local Contexts: The Opportunities and Challenges of Multiple Embeddedness", Journal of Management Studies, 48(2), 235-252. https://doi.org/10.1111/j.1467-6486.2010.00968.x
  39. Morck, R., and B. Yeung (1991), "Why Investors Value Multi-nationality", Journal of Business, 64(2), 165-187. https://doi.org/10.1086/296532
  40. Mudambi, R. (2008), "Location, Control and Innovation in Knowledge-intensive Industries", Journal of Economic Geography, 8(5), 699-725. https://doi.org/10.1093/jeg/lbn024
  41. Mudambi, R. and P. Navarra (2004), "Is Knowledge Power? Knowledge Flows, Subsidiary Power and Rent-seeking within MNCs", Journal of International Business Studies, 35, 385-406. https://doi.org/10.1057/palgrave.jibs.8400093
  42. Murray, J. Y., G. Y. Gao and M. Kotabe (2011), "Market Orientation and Performance of Export Ventures: The Process through Marketing Capabilities and Competitive Advantages", Journal of the Academy of Marketing Science, 39(2), 252-269. https://doi.org/10.1007/s11747-010-0195-4
  43. Narver, J. C. and F. S. Slater (1990), "The Effect of a Market Orientation on Business Profitability", Journal of Marketing, 54(4), 20-35. https://doi.org/10.2307/1251757
  44. Narula, R. (2003), Globalization and Technology, Cambridge: Polity Press.
  45. Perlmutter, H. V. (1969), "The Tortuous Evolution of the Multinational Corporation", Columbia Journal of World Business, 4, 9-18.
  46. Porter, M. E. (1980), Competitive Strategy: Techniques for Analyzing Industries and Competitors, New York: The Free Press.
  47. Prahalad, C. K. and Y .L. Doz (1987), The Multinational Mission: Balancing Local Demands and Global Vision, New York: The Free Press.
  48. Rugman, A. (2003), "Regional Strategy and the Demise of Globalization", Journal of International Management, 9(4), 409-17. https://doi.org/10.1016/j.intman.2003.08.004
  49. Rugman, A., A. Verbeke and W. Yuan (2011), "Re-conceptualizing Bartlett and Ghoshal's Classification of National Subsidiary Roles in the Multinational Enterprise", Journal of Management Studies, 48(2), 253-77. https://doi.org/10.1111/j.1467-6486.2010.00969.x
  50. Sinkula, J. M. (1994), "Market Information Processing and Organizational Learning", Journal of Marketing, 58(1), 35-45. https://doi.org/10.2307/1252249
  51. Song, J. (2002), "Firm Capabilities and Technology Ladders: Sequential Foreign Direct Investments of Japanese Electronics Firms in East Asia", Strategic Management Journal, 23(3), 191-201. https://doi.org/10.1002/smj.219
  52. Song, J., R. Wang and S. T. Cavusgil (2015), "State Ownership and Market Orientation in China's Public Firms: An Agency Theory Perspective", International Business Review, 24(4), 690-699. https://doi.org/10.1016/j.ibusrev.2014.12.003
  53. Song, Jae-Yong and Chae-Rin Yun (2006), "A Study on the Determinants of Localization of Japanese Multinational", Korean Management Review, 35(2), 389-411.
  54. UNCTAD (1998), World Investment Report 1998: Trends and Determinants, New York NJ: United Nations Conference of Trade and Development (UNCTAD) Publication.
  55. Voss, G. B. (2000), "Strategic Orientation and Firm Performance in an Artistic Environment", Journal of Marketing, 64(1), 67-83. https://doi.org/10.1509/jmkg.64.1.67.17993
  56. Yip, G. (2003), Total Global Strategy II, Upper Saddle River, NJ: Prentice Hall.
  57. Yu, Seung-Hun (2018), "The Effects of Innovation Orientation and Market Orientation on the Export Performance Effects of Chinese Manufacturing Export Companies: Moderating Effects of Degree of Internationalization", Korea Journal of Business Administration, 31(7), 1383-1408.