standardization versus adaptation

International Business Review 12 (2003) 141–171www.elsevier.com/locate/ibusrev

Standardization versus adaptation ofinternational marketing strategy: an integrative

assessment of the empirical research

Marios Theodosiou∗, Leonidas C. LeonidouDepartment of Public and Business Administration, University of Cyprus, Kallipoleos 75, P.O. Box

20537, CY-1678, Nicosia, Cyprus

Received 1 January 2002; received in revised form 1 April 2002; accepted 1 July 2002

Abstract

Despite 40 years of debate on international marketing strategy standardization vs adaptation,extant empirical research is too fragmented to yield clear insights. Based on an integrativeanalysis of 36 studies centering around strategy standardization/adaptation, its antecedents, andperformance outcomes, this stream of research was found to be characterized by non-signifi-cant, contradictory, and, to some extent, confusing findings attributable to inappropriate con-ceptualizations, inadequate research designs, and weak analytical techniques. The central con-clusion that stems from this analysis is that the decision whether to standardize or adapt themarketing strategy to achieve superior business performance will largely depend on the set ofcircumstances that a firm is confronted by within a particular foreign market at a specificperiod of time. 2003 Elsevier Science Ltd. All rights reserved.

Keywords: International marketing strategy; Literature review; Strategy standardization/adaptation

1. Introduction

Recent decades have witnessed a dramatic globalization of the international busi-ness scene due to: increasing liberalization of trade policies; growing stability in

∗ Corresponding author. Tel.:+357-22892465; fax:+357-22892460.E-mail address: [email protected] (M. Theodosiou).

0969-5931/03/$ - see front matter 2003 Elsevier Science Ltd. All rights reserved.doi:10.1016/S0969-5931(02)00094-X

142 M. Theodosiou, L.C. Leonidou / International Business Review 12 (2003) 141–171

monetary transactions; creation of regional economic integrations; uninterrupted flowof goods due to relatively peaceful world conditions; and revolutionary advances intransportation, communication, and information technologies (Czinkota & Ron-kainen, 2001; Keegan, 1999). All these factors have led to the rise of fierce compe-tition, with the participation of a wide array of firms of different size, industry, andnational origin (Craig & Douglas, 1996). As a result, issues relating to the designof sound international marketing strategies to compete effectively and efficiently inthis new business environment have been the focus of a sizeable stream of research.This has particularly concentrated on whether firms, irrespective of the foreign mar-ket entry mode chosen, should standardize or adapt their marketing strategy in over-seas markets.

Proponents of the standardization approach view the globalization trends in theworld as the driving force behind greater market similarity, more technological uni-formity, and higher convergence of consumer needs, tastes, and preferences (Levitt,1983; Ohmae, 1985). They also claim that standardization is further facilitated bythe growth of international communication channels, the emergence of global marketsegments, and the appearance of the Internet. They posit that such a strategy canoffer a number of benefits: (a) significant economies of scale in all value-addingactivities, particularly in research and development, production, and marketing; (b)the presentation of a consistent corporate/brand image across countries, especiallyin light of the increasing consumer mobility around the world; and (c) reduced mana-gerial complexity due to better coordination and control of international operations(Levitt, 1983; Douglas and Craig, 1986; Yip, Loewe, & Yoshino, 1988).

Advocates of the adaptation approach argue that, despite increasing globalizationtendencies, variations between countries in such dimensions as consumer needs, useconditions, purchasing power, commercial infrastructure, culture and traditions, lawsand regulations, and technological development are still too great, thus necessitatingthe adjustment of the firm’s marketing strategy to the idiosyncratic circumstances ofeach foreign market (Terpstra & Sarathy, 2000). In particular, they criticize strategystandardization as a new kind of marketing myopia, representing an oversimpl-ification of reality, and contradicting the marketing concept (Boddewyn, Soehl, &Picard, 1986; Wind, 1986; Douglas & Wind, 1987). They also stress the fact thatthe ultimate objective of the firm is not cost reduction through standardization, butlong-term profitability through higher sales accrued from a better exploitation of thedifferent consumer needs across countries (Onkvisit & Shaw, 1990; Rosen, 1990;Whitelock & Pimblett, 1997).

To overcome the above polarization, a third group of researchers offers a contin-gency perspective on the standardization/adaptation debate. In their view: (a) stan-dardization or adaptation should not be seen in isolation from each other, but as thetwo ends of the same continuum, where the degree of the firm’s marketing strategystandardization/adaptation can range between them; (b) the decision to standardizeor adapt the marketing strategy is situation specific, and this should be the outcomeof thorough analysis and assessment of the relevant contingency factors prevailingin a specific market at a specific time; and (c) the appropriateness of the selectedlevel of strategy standardization/adaptation should be evaluated on the basis of its

143M. Theodosiou, L.C. Leonidou / International Business Review 12 (2003) 141–171

impact on company performance in international markets (Quelch & Hoff, 1986;Onkvisit & Shaw, 1987; Jain, 1989; Cavusgil & Zou, 1994). Hence, the challengefor the international firm is to determine which specific strategy elements are feasibleor desirable to standardize or adapt, under what conditions, and to what degree.

This fierce debate on the subject has attracted the attention of many researchers,who have contributed a plethora of empirical writings. Although challenging, thisstream of research is: (a) fragmented, consisting of numerous studies, each adoptingits own conceptual method, methodological design, and analytical technique; (b)repetitive, researching in many cases the same issues, without extending the workof other researchers in the field; (c) diverse, examining different aspects of marketingstrategy adaptation/standardization, as well as its antecedents and outcomes; and (d)inconsistent, yielding different, and sometimes contradicting, results as to which stra-tegic approach is more appropriate. Consequently, there is a need to consolidate thispiece of research and reach conclusions that would facilitate theory development.

The aim of this study is to satisfy this need, by providing an integrative analysisof extant empirical knowledge on international marketing adaptation versus stan-dardization. It aims to review, assimilate, and evaluate empirical research on thecontent and interactions of the components of a simplified model on internationalmarketing strategy standardization/ adaptation (Jain, 1989; Cavusgil & Zou, 1994)(see Fig. 1). Specifically, the emphasis is on: (a) antecedent factors, that is, contin-gency variables that affect the decision to standardize or adapt the firm’s marketing

Fig. 1. A conceptual model on international marketing strategy standardization/adaptation.


strategy in a specific foreign market; (b) strategy variables, that is, the specificelements of the marketing mix program, where the degree of standardization or adap-tation must be determined; and (c) performance outcomes, that is, the impact ofinternational marketing strategy standardization/adaptation on the company’s per-formance in overseas markets.

The remainder of the article is organized into six sections: first, the methodemployed to select the pertinent empirical studies is explained, and their methodolog-ical profile is presented; second, the antecedent forces of international marketingstrategy are identified and their significance is established; third, each strategy vari-able is analyzed and its degree of standardization/adaptation is determined; fourth,the nature of the international business performance measures used is explained, aswell as their link with strategy variables; fifth, certain conclusions are extracted fromthe findings of the study; and, finally, some guidelines for future research on thesubject are provided.

2. Profile of studies

The review covered all empirical studies on marketing strategyadaptation/standardization published since the inception of this body of research. Fora study to be included in the review, three major criteria had to be met: (a) to focuson the content and/or interactions of the various components of marketing strategystandardization/adaptation model; (b) to have an empirical nature, providing suf-ficient primary information on the subject presented in quantitative format; and (c)to investigate the international activities of manufacturing firms irrespective offoreign market entry mode (e.g., indirect exporting, direct exporting, or foreignproduction). Using a combination of manual and electronic literature search methods,36 studies were found to meet the above criteria1. These were published in 18 differ-ent outlets, primarily in the Journal of Global Marketing, the International MarketingReview, and the Journal of Marketing.

Table 1 summarizes the profile characteristics of the studies selected, while amore detailed analysis is presented in the following. The first attempt to empiricallyinvestigate the issue of marketing strategy standardization/adaptation was in the mid-1970s with the pioneering work of Sorenson and Wiechmann (1975). Since then,there has been an exponential growth of research on the subject, with about two-thirds of the studies conducted in the 1990s. To some extent, this reflects the increas-ing globalization of the international marketplace which has provided the impetusfor a more intense conceptual debate among researchers in the field. Notably, withthe exception of the work of Boddewyn and his colleagues, who conducted a longi-tudinal study of standardization/adaptation over a 30-year period (Boddewyn &

1 The electronic search was based mainly on the ABI/INFO database, as well as on various Internetresources, including Science Direct, Expanded Academic ASAP International, and MCB University Press.

145M. Theodosiou, L.C. Leonidou / International Business Review 12 (2003) 141–171T

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146 M. Theodosiou, L.C. Leonidou / International Business Review 12 (2003) 141–171T

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Hansen, 1977; Picard, Boddewyn, & Soehl, 1988; Boddewyn & Grosse, 1995), allother studies were of a one-shot nature.

Most of the studies focused on the international activities of firms located in theUnited States, while European firms, as well as firms from other countries, attractedless research attention. Although the location of the supplying firms was primarilyin developed countries (probably due to their dominant role in world manufacturedexports, as opposed to the agricultural orientation of less-developed economies), inthe majority of cases their international marketing strategy covered a variety of mar-kets, irrespective of stage of economic development. Approximately two-thirds of thestudies examined the strategies pursued by the foreign subsidiaries of multinationalcorporations (MNCs), while the remainder examined the standardization/adaptationof exporting firms. To some extent, this reflects the tendency by independent foreignsubsidiaries to seek to develop their own national products in the markets they oper-ate (Terpstra & Sarathy, 2000).

Seventeen studies did not report the nature of the industry investigated, while,with a few exceptions, the remaining studies covered multiple industries. In somecases, researchers intentionally selected firms from a variety of industrial sectors, inorder to explore the effect of product factors on the decision to standardize or adaptthe marketing strategy. Slightly more than half of the studies concentrated theiranalysis at the company level, this being more evident in exporting research2. Thefact that a large proportion of the studies focused on multinational firms resulted inthe use of lower levels of analysis, namely foreign subsidiaries, products/brands, andbusiness units. Two exporting studies (i.e., Cavusgil & Zou, 1994; Shiram & Manu,1995) also narrowed the level of their analysis to the firm’s ventures with specificexport markets.

Nineteen studies (particularly those researching multinational firms) gave no infor-mation on the specific sampling designs used, while, of the remainder, most firmsemployed probability-sampling methods. Sample sizes were relatively small, with23 studies reporting a figure of less than 100 cases. This can be partly attributed tothe fact that most of these studies focused on large multinational corporations which,compared to exporting firms, are more difficult to contact due to their small popu-lation. The average response rate of the studies under review was 28.5%, which iscomparable to that of other studies conducted in international marketing. Comparedto export studies, research among multinational firms exhibited higher rates of surveyresponse. Although a satisfactory number of studies (21 out of 36) checked for nonre-sponse bias, it is surprising that many other studies did not carry out such controls,casting doubt on the robustness of the data obtained.

In the majority of cases, data collection was based on mail survey methods, prob-ably due to the difficulties in physically reaching firms of a geographically dispersedsample. This was particularly true in the case of cross-cultural studies, where respon-

2 This unit of analysis has been criticized as being inappropriate for this type of research becausesignificant variations often exist in the marketing strategy that a firm pursues in different foreign marketsand with respect to different products/product lines (Cavusgil & Zou, 1994).


dents were located in many different locations. Personal interviews were reported inonly six studies, focusing mainly on a small sample of firms. Only one study (i.e.,De Luz, 1993) used a combination of a mail survey and personal interviews. In themajority of cases, data were collected from the individual responsible for inter-national marketing activities, namely the international operations manager and theexport officer. In some studies, the CEO/president, subsidiary manager, or marketingexecutive also provided the information requested. None of the studies checked forkey informant bias, by collecting data from more than one individual in the companyand subsequently assessing the relative equivalence of their responses.

The role of antecedent factors in international marketing standardization/adaptationwas explored by 25 studies3. The number of factors examined varied significantlyamong these studies, ranging from one to 22, with most focusing on up to three.Altogether, 50 factors have been identified, which were subsequently reduced to 22,based on their substantive conceptual meaning. These can be broadly categorizedinto seven groups, namely environmental (4), market (4), customer (3), competition(2), product/industry (3), organizational (4), and managerial (2). Given the greatdiversity of these factors, a variety of ways was used for their measurement. Forinstance, for environmental factors, market characteristics, and customer issues, five-point or seven-point interval scales were employed, measuring the degree of differ-ence between home and host markets (see, for example, Ozsomer, Bodur & Cavusgil,(1991), Johnson & Arunthanes, 1995; and Theodosiou & Katsikeas, 2001).

Twenty-one studies reported empirical data on the actual degree of internationalmarketing strategy standardization/adaptation, while another 15 used the level ofstandardization/adaptation identified for subsequent analysis without clearly statingit (e.g., Albaum & Tse, 2001; Johnson & Arunthanes, 1995). Altogether, 35 differentmarketing strategy items were examined, with the majority of the studies exploringseven items or more. These fall under one of the four generic categories of themarketing mix, namely product (11), price (8), promotion (11), and distribution (5).Multiple-point scales were mainly employed to measure the degree of similarity ofeach marketing strategy element in the domestic market versus the overseas market(Johnson & Arunthanes, 1995; Leonidou, 1996) or its degree ofstandardization/adaptation (e.g., Shoham, 1999; Theodosiou & Katsikeas, 2001). Insome cases, dichotomous scales, indicating whether the firm followed a standardiz-ation or adaptation approach, were also used (e.g., Hill & Still, 1984; Chhabra, 1996).

The effect of marketing strategy standardization/adaptation on company perform-ance was investigated in 18 studies, with most of them operationalizing performanceusing three measures or less4. However, only ten of these studies were designed with

3 Of these studies, only 15 provided evidence of a direct link between antecedent factors and inter-national marketing standardization/adaptation (e.g., Seifert & Ford, 1989; Leonidou, 1996).

4 Numerous different measures of performance were employed by researchers in the field, and acompromise solution was, therefore, adopted by grouping the various performance measures into eightcategories: sales-related, growth-in-sales related, profit-related, growth-in-profit related, market share-related, goal achievement/satisfaction, satisfaction with change in performance, and composite scales ofperformance.


the strategy-performance link at the center of their investigation, whereas in theremaining studies this association received peripheral treatment. Performance wasmainly assessed using subjective rather than objective measures, and these wereessentially centered on sales, profit, and market share. Moreover, international busi-ness performance was assessed on an absolute and/or growth basis. Despite severalclaims in the literature that performance is a multidimensional construct, only a fewstudies used composite measures, mainly comprising financial, market, and strategicdimensions (e.g., Kotabe & Omura, 1989; Kotabe, 1990; Kotabe & Okoroafo, 1990;Cavusgil & Zou, 1994; Hewett & Bearden, 2001).

Descriptive statistics (percentage frequencies and mean scores) were the principalmethod used in analyzing the degree of international marketing strategystandardization/ adaptation, as well as the individual items comprising antecedentfactors and business performance. However, in investigating the effect of antecedentfactors on the decision to standardize or adapt the international marketing strategy, aswell as the impact of this strategy on business performance, bivariate and multivariatestatistical tools, such as correlation analysis, regression analysis, and analysis ofvariance, were commonly employed. Only in more recently conducted research onthe subject more advanced analytical tools, like path analysis and structural equationmodeling, were used (e.g., Cavusgil & Zou, 1994; Shoham, 1999).

3. Antecedent factors

Antecedent factors refer to all those background forces that influence the firm’sdecision to standardize or adapt its international marketing strategy. Although attimes a large number of such factors was proposed to have an influential role onaspects of marketing strategy (see, for example, Buzzell, 1968; Papavassiliou & Sta-thakopoulos, 1997; Rau & Preble, 1987; Jain, 1989), only a small subset of themhas been empirically examined. Several attempts have also been made to developbroad classificatory schemes for these factors (Jain, 1989; Ozsomer, Bodur & Cavus-gil, 1991; Cavusgil, Zou, & Naidu, 1993; Johnson & Arunthanes, 1995), which forthe purposes of this review were consolidated into environmental, market, customer,competition, product/industry, organizational, and managerial. Table 2 presents theseantecedent factors, as well as their impact (significant/nonsignificant) on eachelement of international marketing strategy, while a more detailed analysis ispresented in the following5.

Environmental factors consist of a broad spectrum of economic, sociocultural,political-legal, and physical forces which have an influence, either direct or indirect,on international business operations. In fact, these factors can severely restrict thefirm’s ability to develop and implement a standardized strategy, even in cases whenthis choice is deemed desirable (Douglas & Wind, 1987). Of these, political-legal

5 The data on Table 2 should be treated with caution, since most of the associations between antecedentfactors and international marketing strategy have been examined in only a few empirical studies.


Tab

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Profi

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acte

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and

agin

gin

line

sale

pric

e

istic

sim

age

pric

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Env

iron

men

tal

fact

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––

––

NN

N–

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nom

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SSSN

S–

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char

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Adv

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Tab

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Inte

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pric

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Com

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ctur

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nsity

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/Ind

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type

SSSS

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orie

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indu

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––

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Nat

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––

–

com

pany

Nat

ure

ofow

ners

hip

S–

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NN

N–

N–

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Inte

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nfide

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inte

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Tab

le2b

Profi

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stra

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stan

dard

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tion

men

men

them

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Env

iron

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tal

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NS

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ic–

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ocul

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l–

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Polit

ical

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ical

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Tab

le2b

(con

tinu

ed)

Inte

rnat

iona

lM

arke

ting

Stra

tegy

Ant

eced

ent

fact

ors

Profi

tD

is-

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-A

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Cre

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Sale

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nnel

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of

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(tra

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anag

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tion

men

men

them

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ent

Com

peti

tion

––

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––

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Stru

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e/na

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–N

NN

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NN

NS

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Inte

nsity

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duct

/Ind

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ion

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ry–

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Org

aniz

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nal

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Nat

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lity

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rent

com

pany

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N–

SS

N–

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–N

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Inte

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peri

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––

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S–

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Man

ager

ial

fact

ors

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––

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––

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–

Cen

tral

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inde

cisi

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akin

g–

N–

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–N

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ient

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ciat

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at90

%co

nfide

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inte

rval

S:Si

gnifi

cant

asso

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ion

at90

%co

nfide

nce

inte

rval

.


and economic factors received most research attention, whereas sociocultural andphysical aspects were largely ignored. Although it has been repeatedly asserted inthe literature that environmental differences are very important in determining boththe feasibility and the appropriateness of international marketing strategy, only 18out of the total 43 reported associations were significant6. This was particularly truefor both product (e.g., branding) and pricing in general. The large number of nonsig-nificant relationships reported (25 out of 43) partly contradicts the traditional notionthat environment is the driving force behind marketing strategy differentiation.

Market characteristics refer to those factors that determine the level of sophisti-cation and development of a particular foreign market, including its marketing infra-structure, advertising media availability, distribution structure, and market size.While the latter determines demand potentials in a foreign market, the other marketcharacteristics influence the firm’s ability to strengthen and serve demand. Of those,market size had consistently exhibited the greatest influence on marketing strategy—the larger the market the more the adaptation required—particularly affecting itspromotional aspects. This is because the higher sales derived from large markets aremore likely to cover the added costs of adaptation (Chhabra, 1996). Moreover,although one would expect greater standardization due to similarities in the avail-ability, performance, and cost of the marketing, advertising, and distribution infra-structure between the home and host markets (Jain, 1989), this was only partiallyvalidated in the studies under review.

Customer issues focus on the characteristics/behavior, tastes/preferences, andusage patterns of customers in overseas markets. In fact, the firm’s success or failureabroad largely depends on its ability to satisfy the needs of its target customers betterthan the competition. Despite its importance, this group of antecedent factors wassurprisingly the least examined by researchers in the field. Nonetheless, empiricalfindings strongly indicate that customer issues have a rather significant effect onmarketing strategy standardization/ adaptation, this being true for almost all strategicelements. Specifically, it has been revealed that the more the similarity in customerprofiles across countries, the greater the standardization of the marketing strategy,and vice versa. These results are uniformly consistent with conceptual claims in thefield (e.g., Jain, 1989), although the scarcity of empirical evidence, particularly withrespect to the finer dimensions of this construct, limits their credibility.

Competition-related factors include the structure (i.e., monopolistic vsoligopolistic), nature (i.e., price vs nonprice), and intensity (i.e., mild vs fierce) ofcompetition in foreign target markets. In the majority of cases, the structure/natureof competition did not have a serious impact on the decision to standardize or adaptthe various marketing strategy elements7. This is in contrast to the view that thefirm’s international marketing strategy should take into consideration the number,

6 The basic premise is that the greater the environmental similarity between a firm’s home and hostcountry, the greater the likelihood of marketing strategy standardization being successful, and vice versa(Jain, 1989).

7 Although different, most of the empirical studies have combined competition structure and nature ofcompetition into a single item, which was inevitably adopted in our analysis.


origin, and approach of its major competitors in each market, as well as its position(leader, challenger, follower) vis-a-vis each competitor (Buzzell, 1968; Jain, 1989;Rosen, 1990). Competition intensity, the other factor in this group, was significantlyand positively associated with both product and promotion adaptation, suggestingthat competitive pressures may necessitate strategy customization to the specificrequirements of the foreign market to gain an advantage over rivals (Cavusgil, Zou &Naidu, 1993).

Product and industry factors refer to the type of the product (i.e., consumer orindustrial), the technology orientation of the industry (i.e., technology-intensive or“old-line” ), and the stage of product life cycle (i.e., early or mature). Despite claimsthat, as opposed to consumer products, industrial goods require a more standardizedapproach, due to the fact that purchasing decisions are based on “ rational” ratherthan “emotional” criteria, these were only partially confirmed by empirical research(e.g., Akaah, 1991; Ozsomer, Bodur & Cavusgil, 1991; Cavusgil, Zou & Naidu,1993)8. Technology orientation was repeatedly found to have a serious impact onstandardizing marketing strategy, especially on product, due to the need to allocatethe vast research and development costs over long production runs (Cavusgil & Zou,1994; Cavusgil, Zou & Naidu, 1993; Grosse & Zinn, 1995). Product life-cycle wasalso found to significantly affect almost all dimensions of marketing strategy and,in fact, it has been confirmed that a standardized marketing strategy works best inmarkets where the product is in the same stage of its life cycle (Cavusgil, Zou &Naidu, 1993; Grosse & Zinn, 1990; Johnson & Arunthanes, 1995; Chhabra, 1996).

Organizational factors focus on internal company characteristics and consist offour items: (a) the nationality of the parent company, where results show thatalthough certain product and advertising aspects are influenced by the origin of theparent office, other marketing strategy parameters were not influenced; (b) the natureof company ownership, where results were non-significant, with the exception ofOzsomer et al.’s (1991) study which reported that the extent of standardization ofthe overall marketing strategy was higher in wholly-owned subsidiaries than in jointventures; (c) the firm’s international experience, where one study found a positiveassociation with product and promotion adaptation (Cavusgil, Zou & Naidu, 1993);and (d) the foreign market share position, where no effect was revealed whatsoeveron marketing strategy adaptation (Akaah, 1991; Shoham, 1999).

The final set of antecedent factors refer to managerial attitude toward internationaloperations, and include the degree of centralization of decision-making (i.e., cen-tralized vs decentralized) and corporate orientation (i.e., the extent of management’swillingness to accommodate foreign perspectives)9. With regard to the former, thebasic assumption that a marketing strategy standardization is more likely to be fol-

8 These findings are somewhat surprising, given the fact that product nature is generally consideredto be the single most important factor in determining the appropriateness of marketing strategy standardiz-ation.

9 Building on Perlmutter’s (1969) classification, some scholars suggested that firms adopting an ethno-centric or regiocentric/geocentric orientation are more likely to pursue a strategy of standardization,whereas polycentric firms are more likely to adopt marketing program adaptation.


lowed when decision-making is centrally controlled at headquarters, was examined intwo studies, yielding antithetical results: while Ozsomer, Bodur and Cavusgil (1991)supported this association, Quester and Conduit (1996) found no significant relation-ship with most of the marketing strategy elements examined. As far as corporateorientation is concerned, a study conducted by Akaah (1991) revealed that this factorsignificantly affected the extent of standardization of promotion-related elements, buthad no effect on product, pricing, and distribution strategy standardization. Moreover,Kanso, (1992) found that cultural-oriented managers adapt advertising to a greaterextent than do nonculturally-sensitive executives.

4. International marketing strategy

Marketing strategy is the central construct in the standardization/adaptation debateand has traditionally been defined as the statement of how the company is going toachieve its marketing objectives (Kotler & Armstrong, 2001). This is particularlyexpressed in terms of product, price, distribution, and promotion aspects, which areblended for the purpose of achieving a specific marketing objective. Although theappropriateness of marketing strategy standardization or adaptation should be evalu-ated within the context of the relevant antecedent factors, it is still important toknow what the actual managerial practices are with respect to the specific level ofstandardization/adaptation realized10. Table 3 presents the findings of 21 studies thathave empirically measured the actual degree of marketing strategystandardization/adaptation, while a more detailed analysis is provided in the follow-ing11.

Of the elements of the marketing mix, product-related issues exhibited the moststandardization, probably due to: (a) the greater incentive to reap the benefits fromeconomies of scale in research and development and production; (b) the desire forrapid diffusion of new products in the market, especially in light of the fact thatproduct life-cycles are increasingly becoming shorter; and (c) the need to achievebetter coordination through the application of more uniform internal production con-trols and quality standards (Ohmae, 1985; Douglas & Craig, 1986; Walters & Toyne,1989). Of these, product attributes, namely quality, design, and features, were the

10 Ideally, it would be more appropriate to compare and contrast intended strategies (i.e., strategiesreflecting the manager’s initial vision, stemming from formal, analytic, and planned procedures) againstrealized strategies (i.e., strategies actually being implemented in practice) (Mintzberg & Waters, 1985).However, with the exception of Johnson and Arunthanes’ (1995) study which distinguished between idealand actual levels of product adaptation, all other studies focused on realized strategies.

11 As many different scales were used to measure standardization/adaptation, the results of each studywere converted into a 100-point scale, where 1 represents complete standardization and 100 denotes fulladaptation. In the case of dichotomous scales, the two dummy variables were converted into 1% and100%, while for interval scales the mid-point was set at 50% and the two ends of the scale were convertedinto 1% and 100% respectively. For instance, a mean score of 4.5 on a five-point scale was convertedinto 88%. Although the limitations associated with such a conversion are fully recognized, it was deemednecessary to facilitate comparison and consolidation of the available empirical findings.


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least adapted. The same was also true of branding decisions, which were partlyadjusted, probably as a result of undesirable meanings, pronunciation difficulties, orbrand similarity in foreign markets. Packaging was slightly more adapted, concentrat-ing mainly on material, design, and size, while information and language require-ments were responsible for some labeling adaptation. Differences in product useconditions, competitors’ practices, and service facilities across countries also led tomoderate adjustments in the provision of after-sales service and warranties. Finally,product line changes in overseas markets seem to be common, resulting mainly fromdifferences between home and foreign environments, the development of new pro-ducts for specific overseas markets, or financial limitations in supporting specificproducts abroad due to high entry costs.

Compared to product aspects, price-related elements were much more adapted,as a result of differences in such factors as marketing objectives, cost structures,inflation rates, competitive policies, and government controls. Pricing adjustmentscentered on five major areas: (a) pricing methods/strategies, adopting a skimmingor penetration strategy, depending on variations in market size, consumer sensitivityto prices, and competitors’ actions or reactions across markets; (b) wholesaleprices/margins, resulting from differences in the role of wholesalers in the distri-bution trade of a foreign country, as well as the mark-ups charged; (c) retailprices/margins, being the result of variations in the size, type, and services providedby retail outlets abroad, which largely determine the retail margins charged; (d) enduser prices/margins, usually affected by demand variations caused by differences incustomer numbers, purchasing power, and economic conditions; and (e)sales/payment terms, being the result of variations in the company’s entry mode,degree of involvement, and response to competitors in overseas markets. On average,price adaptation was relatively moderate in almost all the above areas, indicatingthe lack of flexibility of international firms to achieve the desired level of pricediscrimination across countries as a result of excessive pressures by their competitors(Samiee & Roth, 1992).

The third element of the marketing strategy, distribution, was the most adapted,this being attributable to both foreign market—(e.g., differences in disposableincomes, purchasing habits, and distribution infrastructure) and company-related(e.g., variations in the level of involvement, product line, and sales volume) reasons.Several studies stressed the existence of significant differences (in terms of number,size, type, and services) in both wholesale and retail trade between home and hostmarkets (Akaah, 1991; Ozsomer et al., 1991; Quester & Conduit, 1996; Michell,Lynch, & Alabdali, 1998). Adjustments were also reported with respect to the differ-ent roles middlemen have to play in domestic vs foreign markets, caused by vari-ations in bargaining power, financial strength, and marketing know-how. Of signifi-cance is the fact that physical distribution exhibited the greatest degree of adaptation,as a result of differences in: (a) the special documentation and ordering proceduresrequired in international product shipments; (b) the availability of transportationfacilities to carry goods to and within foreign markets; (c) the number, type, andtechnology of the warehouses abroad; and (d) the level of inventories needed to bemaintained in overseas markets, usually determined by territorial size, infrastructural


facilities, and purchasing/consumption habits. Notably, designing a physical distri-bution system for international markets requires continuous adjustments becausemarket, competitive and transportation conditions are constantly changing.

The final, and perhaps the most widely investigated, element of the marketingstrategy is promotion, which also exhibited slightly above-average levels of adap-tation in foreign markets. With regard to advertising, language differences, mediaavailability, government regulations, economic differences, and competitors’ actionshave often been cited as reasons for advertising adaptation. In fact, these factors areresponsible for adjustments in the advertising message, its execution style, and mediamix. They also have a great impact on the allocation of the advertising and pro-motional budget. Sales promotions were subject to moderate adaptations, oftenattributable to variations in legal restrictions, cultural characteristics, competitivepractices, and retailers’ capabilities in foreign markets. Moderate adjustments werealso observed in the case of publicity/public relations, caused mainly by variationsin the degree of company involvement, the nature and importance of publics, andavailability of public relations agencies abroad. Finally, personal selling has alsoundergone mild adaptations in international markets, particularly as regards therecruitment, training, motivation, and control of the salesforce and the way the sellingtask is performed.

5. Performance outcome

The ultimate relevance of the marketing strategy standardization or adaptationdepends on its performance outcomes, that is, the economic or behavioral payoffsderived from its implementation (Jain, 1989). Despite its critical importance, therelationship between marketing strategy standardization or adaptation and businessperformance received scant empirical attention (Kotabe & Omura, 1989; Shoham &Albaum, 1994). In fact, this relationship was the primary focus of a few studies only(e.g., Cavusgil & Zou, 1994; Shoham, 1999), while the remainder examined thisaspect as a side issue (e.g., Christensen, da Rocha & Gertner, 1987; Koh, 1991)12.With a single exception (i.e., Roth, 1995), all studies attempted to establish a directlink between marketing strategy standardization/adaptation and business perform-ance, without investigating the role of numerous antecedent factors that determinethe circumstances under which each strategy becomes appropriate to achievesuperior performance.

Given these limitations, Table 4 shows whether the relationship between the stan-dardization or adaptation of a particular strategy element and a specific performancecategory was significant and negative (–), non-significant (0), or significant and posi-tive (+). Sales-related measures of performance were among the most commonly

12 Four studies, namely those by Kirpalani and Macintosh (1980); Cooper and Kleinschmidt (1985),Christensen et al., (1987), and Szymanski, Bharadwaj & Varadarajano, (1993), were not incorporated inTable 4, because they have tackled tangentially the effect of marketing strategy standardization/adaptationon business performance.


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employed, indicating, however, a non-significant association with marketing strategyin the majority of cases examined. Analytically, most studies investigated the linkbetween standardization of the design/style, quality, service, and mix of the com-pany’s product on its international sales (both static and dynamic) without findingany significance. Moreover, a positive association with foreign sales performancewas established in the case of standardizing the core product (Zou, Andrus, & Norv-ell, 1997) and the length of the product line (Shoham, 1996), while a negative associ-ation was found with respect to product peripherals (Zou, Andrus & Norvell, 1997).In the case of promotional aspects, standardizing both the advertising content and thesalesforce management was responsible for deteriorating sales performance (Shoham,1996). In contrast, standardizing the promotional budget was conducive to highersales performance within a short time span (Shoham, 1996). Of the two studiesinvestigating the link between pricing strategy standardization and sales performance,only one revealed significant results (Zou, Andrus & Norvell, 1997), while stan-dardizing distribution had no association whatsoever with this measure of perform-ance.

The effect of strategic marketing factors on profit-related measures was examinedrelatively more extensively, revealing mixed results: 16 associations were non-sig-nificant, 14 associations were significant and negative, and six associations weresignificant and positive. As in the previous case, most studies concentrated mainlyon product strategy standardization/adaptation. Specifically, the effect ofstandardization/adaptation of product design/style on profit performance was exam-ined in two studies: Shoham (1996) who found no association with profit, but anegative relationship with growth in profits, and Frazer and Hite (1990) who reportedno association between strategy and performance in English speaking and Asianmarkets, but a negative one in European and Latin American markets. Standardizingproduct quality did not have a significant effect on either static or growth measuresof profit performance (Shoham, 1996), and the same was true with respect to adaptingproduct positioning (Albaum & Tse, 2001). Although standardizing the number ofproduct lines sold in foreign markets seems to have a negative or no impact on profitperformance, the standardization of the number of items contained in each productline had a significant positive effect (Shoham, 1996). The impact of standardizingpostsales service on profit performance was examined in one study revealing non-significant results (Shoham, 1996), while of the two studies investigating the effect ofservice adaptation on profit performance, only one found significant negative results(Kaynak & Kuan, 1993). The association of promotional aspects with profit perform-ance was less frequently examined, with standardization of the advertising contentleading to poor profit performance (Shoham, 1996), while standardizing the pro-motion budget had a positive impact. With regard to pricing, results were relativelyconsistent: pricing standardization was negatively associated with profit performance(Shoham, 1996), although the latter was positively linked with pricing adaptation(Koh, 1991). Finally, both standardization and adaptation of distribution strategy hadno serious effect on profit performance (Shoham, 1996; Albaum & Tse, 2001).

Compared to sales- and profit-related measures, the impact of marketing strategystandardization/adaptation on market share-related performance was less frequently


examined. However, the majority of studies focusing on this association revealed nosignificant results. Only two studies examining the adaptation of brand image (Roth,1995) and the standardization of advertising (Shiram & Manu, 1995) reported apositive association with market share performance. More subjective measures ofperformance, such as satisfaction with changes in performance, were rarely usedand these concentrated mainly on the generic aspects of marketing strategy. Whilestandardizing product and distribution strategy had no impact on this measure ofperformance, promotion adaptation demonstrated a negative, and pricing standardiz-ation a positive effect (Shoham, 1999). Composite scales of perfomance, incorporat-ing various financial, market, and strategic measures, were also employed, indicatingmixed results with regard to product strategy: of the three studies examining productstandardization, two found a negative (Kotabe & Omura, 1989; Kotabe & Okoroafo,1990) and the other a positive (Cavusgil & Zou, 1994) association with performance.Another study examining product standardization revealed no particular effect oncomposite performance (Kotabe, 1990). Finally, one study found a negative relation-ship between promotion adaptation and composite performance, but no link at allbetween pricing adaptation and this measure of performance (Cavusgil & Zou, 1994).

6. Summary and conclusions

Despite decades of fierce debate around the marketing strategy standardizationversus adaptation issue, the present review reveals that empirical research on thistopic is still at an early stage of development. Although compared to earlier studies,which were largely exploratory in nature, significant progress has been made in thelast decade by using more robust methods of investigation, there is a long way togo before a concrete theory on the subject can be built. Our review has amply demon-strated that research on the subject is characterized by the adoption of inappropriateconceptualizations, inadequate research designs, and weak analytical techniques, thatwere largely responsible for the generation of non-significant, contradictory, and, tosome extent, confusing findings. Hence, the underlying question concerning whichstrategic option, standardization or adaptation, is the most suitable for the inter-national firm remains an essentially unresolved and inconclusive issue.

Although at times many antecedent factors were put forward as affecting market-ing strategy standardization/adaptation, only a few of these exhibited a systematicallysignificant impact. Moreover, there was a tendency among researchers to investigateonly a few of these background parameters, and in relation to certain aspects of themarketing strategy, thus providing only a partial understanding of their interactions.Furthermore, most studies used unidimensional conceptualizations of the antecedentfactors, and examined their influence on the degree of standardization/adaptationindependently from each other. Most importantly, only a few studies attempted tocheck the concurrent effect of these factors in the selection of the best strategicalternative (either standardization or adaptation), that would lead to superior foreignbusiness performance.

With regard to the degree of standardization/adaptation of the marketing strategy,


some general inferences can be made: (a) of the elements of the marketing mix, thestandardization/adaptation of product- and promotion-related issues attracted mostresearch attention, as opposed to pricing and distribution, which were less investi-gated; (b) most studies examined a few components of the marketing mix only, thusignoring potential interrelationships in standardizing/adapting them; (c) the degreeof standardization/adaptation was in most cases examined at a very generic level,failing to investigate the finer dimensions of each component separately; (d) product-related elements tended to be more standardized compared to other marketing mixparameters, while distribution has undergone the greatest adaptation; and (e) on aver-age, the degree of marketing strategy adaptation was moderate, denoting a “middle-of-the-road” attempt to reap the benefits of both standardization and adaptation.

Empirical evidence on the association between international marketing strategystandardization/adaptation and foreign business performance was very scarce, withmost research emphasis placed on the product and promotion, rather than on pricingand distribution. The fact that the great majority of the associations examined yieldednon-significant results suggests, prima facie, that the firm’s performance in foreignmarkets is indifferent to the particular strategic alternative pursued. However, a morethorough analysis implies that what leads to superior performance is not the adoptionof marketing strategy standardization or adaptation, but the achievement of an appro-priate “coalignment” or “fi t” between international marketing strategy and the contextin which this strategy is implemented, whether this is environmental, organizational,or managerial (Cavusgil & Zou, 1994). Hence, international marketing strategy(whether standardized or adapted) will lead to superior performance only to the extentthat it properly matches the unique set of circumstances that the firm is confrontedby within a particular overseas market.

7. Future research directions

Certain directions for future research on the subject can be extracted from theabove findings. First, contrary to a commonly expressed belief that standardizationvs adaptation is one of the most highly researched issues in international marketing,our analysis indicated that there is still a pressing need for more empirical researchon the topic. In addition, the fact that the vast majority of studies in the field wereconducted in isolation, ignoring the findings and conclusions of preceding studies,has been responsible for the great heterogeneity in the research findings. This wasespecially evident in the influence of various antecedent factors on the degree ofstandardization/adaptation of specific marketing strategy elements, as well as therelationship between various marketing strategy elements and particular measures ofperformance. Therefore, there is a need for greater reliance on past studies, and thisreview provides a platform for designing such an integrative approach to the subject.

Second, extant research suffers from the lack of validated measures of the variousconstructs used, which is an important prerequisite for study replication. This isparticularly the case because, whereas the relevant constructs (i.e., antecedent factors,marketing strategy, and business performance) are multidimensional in nature, most


researchers have used single-item measures. Moreover, with a few notable exceptions(e.g., Cavusgil & Zou, 1994; Shoham, 1999), no serious attempts have been madeto assess the validity and reliability of these measures. Future research should, there-fore, give considerable attention to the consistent conceptualization and measurementof the relevant constructs, as well as to the validation of the resulting measurementscales through appropriate analytical methods. These validated scales should thenform the basis for more empirical research, replicated under different time, spatial,and industry contexts.

Third, the fact that the majority of the studies reviewed were conducted at thecorporate level imposes serious limitations to this type of research. This approachwould be appropriate in the case of study samples consisting of manufacturers of asingle product/product line, operating in a single overseas market. For the vastmajority of researchers, however, who target large exporting and/or multinationalcorporations with diversified product portfolios and operations in many overseasmarkets, firm level investigations would inevitably lead to confounded and inaccuratemeasures (Cavusgil & Zou, 1994; Zou & Stan, 1998). Thus, researchers should focustheir investigation on the “product-market venture” level, defined as the marketingof a single product/product line in a specific overseas market.

Finally, the failure of previous studies to adequately address the thorny issue ofmarketing strategy standardization/adaptation effects on company performance canbe largely attributed to the inappropriate conceptualization of the underlying relation-ship between these two constructs, and to the adoption of inappropriate analyticaltools13. The key success factor for international firms is to manage to achieve the bestpossible “co-alignment” or “fi t” between their marketing strategy and the particularcontextual factors they are confronting in each foreign market targeted. Although, acouple of studies attempted to incorporate the basic principles of “contingencytheory” or “concept of fit” in the investigation of the standardization versus adap-tation issue with encouraging results (Cavusgil & Zou, 1994; Roth, 1995), more in-depth work needs to be done in this area. In particular, greater emphasis should beplaced on the establishment of an appropriate link between the theory and the hypo-thetical relationships being investigated, on the one hand, and the statistical testingof these hypotheses, on the other (Venkatraman, 1989).

Acknowledgements

The constructive comments of the Guest Editor and the reviewers of the Journalon earlier versions of this article are greatly appreciated.

13 These studies were based on the incorrect assumption that there is a direct impact of internationalmarketing strategy on business performance. They were, therefore, trying to provide an answer to thefollowing question: Do firms that pursue a strategy of standardization perform better than firms pursuinga strategy of adaptation (or vice versa)? However, this is the wrong question to ask since, given theparticular context in which the firm is operating (as this is defined by the relevant antecedent factors),both marketing strategy standardization and adaptation can lead to superior firm performance.


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