Academic journal article Multinational Business Review

Information Technology, International Marketing and Foreign Subsidiaries' Market Share

Academic journal article Multinational Business Review

Information Technology, International Marketing and Foreign Subsidiaries' Market Share

Article excerpt

This study investigated the relationships among foreign subsidiaries' market share, international marketing strategy, the international integration of marketing activities, and information technology. Hypotheses were tested on the relationship between a firm's market share and (1) the match between its international marketing strategy and use of information technology, and (2) the match between the integration of its marketing activities and its use of information technology. The empirical results are consistent with the hypotheses. Firms that matched their deployment of information technology with their strategy and structure attained greater market share.

Introduction

In the past two decades, we have witnessed a dramatic increase in the value of information technology (IT) to business organizations. Sophisticated, new information technologies have been a catalyst for many markets for goods and services becoming truly global in nature. IT plays an important role in the coordination of research and development, production, and marketing activities across borders (Roche, 1992). The globalization of markets and industries and the changing role of IT within business organizations have made the strategic use of IT a key element in determining the success of a company.

The management information systems (MIS) literature is rich in studies on the use of IT as a competitive "weapon" (Das, Zahra, and Warketin, 1991). These studies indicate that IT plays an important, if not crucial, role in the strategy of a domestic corporation. At the same time, studies in the international management literature have analyzed the strategic forces affecting global competition, and have shown the differences between these and the competitive forces faced by domestic corporations. It seems, however, that both the MIS and the international management literature have largely overlooked IT as a facilitator for gaining competitive advantage in the international field (Deans and Ricks, 1991). Further research is needed on how technology drives a global organization's structure and strategy (Ives and Jarvenpaa, 1991; Jarvenpaa and Ives, 1993).

The objective of this study, which investigates the role that IT plays in the proper implementation of international marketing strategies (IMS), is consistent with the need for research that "focus below the subsidiary level, preferably at a single value-adding function..." (Birkinshaw and Morrison, 1995: 750). The implementation of IT on a global scale is associated with problems that are far more complex than those encountered in sharing systems across domestic divisions (Ives and Jarvenpaa, 1991). Therefore, investments in global IT are justified only if they are associated with enhanced performance. Consequently, the central premise being investigated in this study is that a firm's performance is influenced (1) by the match between the degree of standardization of the IMS and the extent to which IT is used, and (2) by the match between the extent to which integrative mechanisms are used and the degree to which IT is used. This premise is grounded in the contingency theory assumption that there is no one best strategy, structure, or IT for all situations (Jarvenpaa and Ives, 1993; Miller, 1988).

International marketing strategy and information technology

Two of the major issues explored in the international marketing literature are (1) the extent to which customers' needs are homogeneous across nations, and (2) the conditions under which IMSs can be successfully standardized (Jain, 1989). Researchers have been concerned with these issues because of the impact of marketing on value chain activities, and consequently, on performance (Samiee and Roth, 1992).

In this study, IMS refers to the extent to which the elements of the marketing mix are modified to meet the particular needs of the country in which a firm competes. Firms pursuing standardized IMSs use the same marketing mix across national markets served (e. …

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