The Impact of a Centralised Organisational Structure on ......This study has conﬁrmed a signiﬁcant relationship between the level of centralisation and the level of adver-tising

The Impact of a Centralised Organisational Structure onMarketing Standardisation Strategy and Performance: The

Experience of Price, Place and Management Processes

Henry F. L. Chung

ABSTRACT. Prior findings on promotion and product structure are more conclusive than those relatedto pricing, place and management processes. Further research effort is required regarding these threeelements. This study is mainly designed to fill this research gap. Unlike prior studies, most of the firmsexamined here were small-to-medium sized manufacturing firms. The outcomes of this study revealedthat both the price and place decision structures had a significant impact on the selection of standard-isation. Consistent with other studies, the interaction of the place and management process structuresand a number of other factors were also significantly related to the decision of place and managementprocesses standardisation. The joint influence of the price, place and management processes structure,and internal and external factors, were associated with firms’ performance. This study had added a sig-nificant amount of new information to the research concerning price, place and management processesin the areas of organisational structure, standardisation and performance.

KEYWORDS. Marketing standardisation, adaptation, centralisation organisational structure, perfor-mance, price, place and management processes

Despite much research having been com-mitted to marketing standardisation strategy,and due to its strategic role, this topic will stillremain an important research issue in the future(Walters, 1986; Krum and Rau, 1993; Ozsomerand Simonin, 2004; Katsikeas, Samiee andTheodosiou, 2006). Standardisation refers tothe adoption of a similar, or uniform, marketingprogramme, or process, across national borders(Walters, 1986; Ozsomer, Bodur and Cavusgil,1991). Programme denotes the various elementsof the marketing mix (product, price, place andpromotion) and management process representsthe marketing philosophy, principles and toolsused to develop and implement the marketing

Address correspondence to Henry F. L. Chung, Senior Lecturer in Marketing, Department of Commerce,College of Business, Massey University Auckland Campus, Private Bag 102 904, NSMC, Auckland, NewZealand. E-mail: [email protected]

programme (Ozsomer et al., 1991; Ozsomer andSimonin, 2004). When operating in a foreignhost market, firms can choose a centralised,or decentralised, organisational structure tomanage its local operations (Jain, 1989; Daniels,1987). The selection of organisational structureis likely to influence a firm’s choice of standardi-sation strategy (Daniels, 1986, 1987; Martenson,1987; Duncan and Ramaprasad, 1995; Ozsomeret al., 1991). Centralisation structure occurswhen the marketing decision is mostly per-formed at a firm’s headquarters (HQ) (Daniels,1986), while a decentralised structure representsthe situation whereby the marketing decisionis jointly made by the HQ and a firm’s local

Journal of Global Marketing, Vol. 21(2), 2008Available online at http://jgm.haworthpress.com

C© 2008 by The Haworth Press. All rights reserved.doi: 10.1080/08911760802135152 83

84 JOURNAL OF GLOBAL MARKETING

representation (Tai and Wong, 1998), or ismostly delegated to a firm’s representation inthe host markets (Solberg, 2000).

Previous studies on the influence of organisa-tional structure on standardisation have mainlyfocused on promotion, or advertising. For ex-ample, Kirpalani, Laroche and Darmon (1988)investigated the role of headquarters in inter-national advertising decisions. This study hasconfirmed a significant relationship between thelevel of centralisation and the level of adver-tising standardisation. The study conducted byDuncan and Ramaprasad (1995) examined thefactors affecting international, standardised ad-vertising by multinational corporations. This re-search has found that organisational structure isone of the most important factors in advertis-ing standardisation strategies. In his study of theimpact of the extent of control on the choiceof promotion standardisation/adaptation strat-egy, Solberg (2002) suggested that standardisa-tion of promotion (communication) is influencedby the interaction between knowledge of the hostmarket and the degree of control. Firms adopt-ing a highly controlled structure and having ahigh level of knowledge tend to employ a highlystandardised strategy. This study has indirectlyconfirmed that organisational structure is a fac-tor of marketing standardisation strategy in itsresearch concerning promotion. In their analy-sis of MNCs’ operation, Laroche et al. (2001)also confirmed that the degree of control is pos-itively related to advertising standardisation. Itwas found that firms adopting a highly controlledorganisational structure are more likely to em-ploy a standardised advertising campaign. In astudy of the relationship between centralisationand marketing programme standardisation, Pi-card, Boddewyn and Grosse (1998) reported ahigher proportion of adaptation when a firm’spromotion-related decision is mainly made byits local subsidiaries. Likewise, despite beingunable to confirm a significant relationship, Taiand Wong (1998) revealed that firms often con-sider the advertising structure and the extent ofadvertising standardisation together. Based onthe combination of the decision making struc-ture and the standardisation strategy, Tai andWong proposed several strategic choices whichare useful in research concerning organisational

structure, standardisation and performance. Inbrief, it appears conclusive that the organisa-tional structure concerning promotion is relatedto promotion standardisation strategy.

Other studies have pointed out that the or-ganisational structure related to the product el-ement is likely to be associated with the degreeof product standardisation. For example, in theirstudy of US firms’ operations in the EuropeanUnion, Picard et al. (1998) proposed that whenthe product decision is mainly made by the firm’sHQ the firm tends to use a highly standardisedproduct strategy. In their study of twenty-twoUS firms’ operations in the EU region, Krumand Rau (1993) reported that product decisionsare most likely to be centralised and uniform. Intheir study of MNCs’ operations in the emergingmarkets, Ozsomer et al. (1991) reached a similarconclusion by pointing out that product-relateditems are most likely to be centralised and stan-dardised. Quester and Conduit (1996) also madea similar contribution, by confirming that the re-lationship between centralisation and standard-isation is more substantial for the product ele-ment than are the other marketing programmeelements, including price and place. This anal-ysis indicates that, like the promotion element,the relationship between the product decisionstructure and the product standardisation strat-egy also appears to be definite. Therefore, whenmaking comparisons to the elements of price,place and management process, any extra effortregarding uncovering the relationship betweenproduct structure and product standardisation isnot so necessary.

The need to focus on the price, place andmanagement process elements is further illus-trated by some conceptual studies which havefound an uneven coverage of the marketingprogramme elements (Rau and Preble, 1987;Aulakh and Kotabe, 1992). In their thoroughreview of the previous literature, Aulakh andKotabe (1992) indicated that previous marketingmanagement studies have tended to focus moreon the product and promotion elements, withless focus on the elements of price and place.Likewise, though management process has longbeen regarded as an important aspect of mar-keting standardisation, the relationship betweenthe organisational structure and standardisation

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concerning the management process element isyet to be determined (Walters, 1986; Ozsomeret al., 1991; Krum and Rau, 1993; Griffith,Hu and Ryans, 2000). Thus, an examination ofthe issue of decision structure and marketingstandardisation concerning the price, place andmanagement processes seems warranted.

Existing studies which have specifically fo-cused on uncovering the influence of the priceand place decision structures are limited. Exist-ing findings can be grouped into two streams.The first steam focuses on the relationship be-tween the organisational structure and standard-isation, while the second group examines theeffect of the organisational structure on perfor-mance. Both streams of studies have produceda non-significant result (Picard et al., 1998;Quester and Conduit, 1996). Due to their centralrole in this study, these studies and their find-ings will be analysed in detail in the followingsection. Though useful, both streams of researchcan be improved in a number of ways. Firstly,it is likely that the findings of previous stud-ies might only apply to large-sized firms (Picardet al., 1998; Quester and Conduit, 1996). Forinstance, the study conducted by Picard et al.(1998) focused on the experience of Fortune 500companies, while the sales revenues of thoserespondents included in the study by Questerand Conduit (1996) were mostly over US$1 bil-lion. The respondents included in Ozsomer et al.(1991) were also large-sized multinational cor-porations, such as Coca Cola and Nestle SA.Most of the firms examined in prior studies werebased in larger economies, such as the US andWestern Europe. It is possible that the decision-making structure of large-sized firms is signifi-cantly different from those of small-to-mediumsized firms, such as those based in New Zealandand Australia (Australasia) (Gates and Egelhoff,1986; Ellis and Pecotich, 2001). Secondly, asillustrated in prior studies (Quester and Con-duit, 1996), the results of previous researchesmostly rely on a less comprehensive bivariateanalysis technique, such as t-testing, or correla-tion testing methods (e.g., Picard et al., 1998;Quester and Conduit, 1996). The causal rela-tionship between structure and standardisationwas not highlighted in prior studies. This limita-tion indicates that the extent of the contribution

of individual explanatory variables in the frame-works still remains unknown (Cavusgil, Zou andNaidu, 1993). Thus, existing frameworks can becomplemented by studies based on a more com-prehensive analysis method, such as regressionanalysis. Lastly, it is possible that the effect ofthe price and place decision structures on stan-dardisation and performance might only occurin an interaction manner (Rau and Preble, 1987;Picard et al., 1998; Solberg, 2002). For example,the outcomes of several studies have suggestedthat the influence of organisational structure onstandardisation and performance is likely to besubject to a firm’s knowledge of the host marketand its choice of organisational structure, as wellas the interaction of the structure and the hostmarket environmental conditions (Picard et al.,1998; Solberg, 2000; Myers and Harvey, 2001).Existing studies concerning the price and placeelements have only considered a direct effectin their framework (e.g., Quester and Conduit,1996). The existing research could be improvedon by including an indirect interaction effect inthe research model.

Likewise, another recent group of studieshas proposed a strategic choice between or-ganisational structure and standardisation strat-egy. This stream of studies has suggestedthat firms can choose the deployment of acentralised/decentralised structure and a stan-dardised/differentiated strategy (Tai and Wong,1998). This finding has provided new guidancefor firms when they formulate their marketingstrategies for a host market, as both elements areconsidered at the same time. As this strategicchoice might assist in explaining the relation-ship between standardisation and performance,it begs some empirical examination.

This study is designed to fill the above gaps.It will open with a review of the relevant lit-erature. As the findings specifically related tothe price, place and management process ele-ments are very limited, the review process willbe based on those which currently exist. Afterthis analysis, a set of hypotheses will be drawn.This is followed by an outline of the researchmethodology, the research findings and a dis-cussion around these findings. Research conclu-sions and limitations will be addressed in thefinal section.


CONCEPTUAL FRAMEWORKAND HYPOTHESES

External Factors (Environment)

A number of environmentally-related factorshave been identified as having significant influ-ence on the choice of marketing standardisation.This group of factors has been cited as externalfactors in the literature (Cavusgil et al., 1993;Picard et al., 1998). They include political-legal,economic, infrastructure, cultural, and customerfactors (Hill and Still, 1984; Jain, 1989). Thesefactors are likely to have an influence on thechoice of standardisation strategy concerningprice, place and management process elements(Walters, 1986; Ozsomer et al., 1991; Katsikeaset al., 2006; Xu, Cavusgil and White, 2006).

Previous research suggests that a highly com-petitive environment leads to the use of a highlyadapted programme. In their research on firmsoperating in the EU region, Boddewyn, Soehland Picard (1986) and Katsikeas et al. (2006)suggested that the competitive environment isa key factor of the marketing standardisationstrategy. Some other studies focusing on firms’operations in the EU region have also indi-cated that the host market political-legal envi-ronment is likely to influence firms’ choices ofmarketing standardisation strategy (Boddewynand Grosse, 1995). Ohmae (1985) and Theo-dosiou and Katiskeas (2001) indicated that firmsoperating in a similar economic environmentare more likely to employ a standardised pro-gramme. Others have suggested that the similar-ity of the infrastructure, consumer, and culturalenvironments all have an effect on the choice ofmarketing standardisation strategies (Boddewynet al., 1986; Hill and Still, 1984; Ozsomer andSimonin, 2004; Papavassiliou and Stathakopou-los, 1997). These factors are also likely to havean impact on the choice of price, place and man-agement process standardisation strategies (Wal-ters, 1986; Boddewyn et al., 1986; Theodosiouand Katiskeas, 2001; Katsikeas et al., 2006).

Inter-Relationship BetweenOrganisational Structure, ExternalFactors and Standardisation

Though it has been conceptually proposed,the impact of organisational structure on market-

ing standardisation strategy has received very lit-tle research attention (Jain, 1989). As analysed,the existing empirical literature fails to confirmthat the price and place decision structure is sig-nificantly related to their associated standardi-sation strategy, while that related to the man-agement process is rarely reported (Krum andRau, 1993; Quester and Conduit, 1996; Griffithet al., 2000). In their study of MNCs’ operationsin Australia, Quester and Conduit (1996) havebeen unable to confirm that organisational struc-ture concerning price and place is significantlyrelated to marketing standardisation strategy. Intheir study of US firms’ operations in the EUregion, Picard et al. (1998) also failed to sup-port the theory that the price and place decision-making structure is significantly related to theselection of a marketing standardisation strategy.Though previous studies have suggested that theinfluence of the organisational structure on stan-dardisation is unlikely to exist, it is possible thattheir influence would occur in a joint effect man-ner. For example, Picard et al. (1998) and Rauand Preble (1987) proposed that the influence oforganisational structure on marketing standardi-sation strategy is likely to be subject to the typeof environment which firms face in their hostmarkets. It is reported that firms operating in ahighly similar environment, and also adoptinga highly centralised organisational structure, aremore likely to employ a standardised strategy.Thus, in light of the above analysis, the follow-ing hypotheses are proposed.

Hypothesis 1a: The degree of similarity inthe environment across the home and hostmarkets is likely to be related to the choiceof standardisation strategy.

Hypothesis 1b: The choice of organisa-tional structure is unlikely to be related tothe choice of standardisation strategy.

Hypothesis 1c: The interaction betweenthe extent of environmental similarity andthe organisational structure is likely to berelated to the choice of standardisationstrategy; it is expected that firms operat-ing in a highly similar environment, andadopting a highly centralised structure, are

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more likely to employ a highly standard-ised strategy.

Internal Factors (CompanyCharacteristics)

Likewise, company characteristic factorshave also been classified as having a significantinfluence on marketing standardisation strategy(Xu et al., 2006). These factors have been codedas internal factors (Picard et al., 1998). Cavus-gil et al. (1993) have identified that firms witha higher level of business experience tend toemploy a higher degree of adaptation strategy.When a firm accumulates a high level of businessexperience it is in a better position to employ ahighly adapted marketing programme (Cateora,1990). Firms with a minimum of internationalbusiness experience tend to enter a host marketwhich requires a minimum amount of adaptationto their existing marketing programme (Douglasand Craig, 1989). Xu et al. (2006) proposed that afirm’s business experience is related to its choiceof marketing strategy, and its implementation ofthat strategy.

Inter-Relationship BetweenOrganisational Structure, InternalFactors and Standardisation

Similar to the interaction between the en-vironment and the organisational structure, anumber of studies indicate that the joint ef-fect between organisational structure and com-pany characteristic factors might influence afirm’s choice of marketing standardisation strat-egy (e.g., Picard et al., 1998; Solberg, 2000).This outcome might be attributed to a significantrelationship between the price, place and man-agement process structures and the related stan-dardisation strategy. For example, in their studyof Norwegian firms’ international operations,Solberg (2000) indicated that the joint influenceof local knowledge and the selection of organisa-tional structure is likely to affect a firm’s choiceof marketing standardisation strategy. Firmswith a high level of market knowledge, andwhich adopt a highly centralised organisationalstructure, are most likely to employ a highlystandardised strategy. It is reported that a firm’s

local knowledge is often related to companycharacteristic factors, such as its internationalbusiness experience (Johanson and Vahlne,1977; Solberg, 2002). Thus, it is expected that:

Hypothesis 2a: A firm’s choice of standard-isation strategy is likely to be significantlyrelated to company characteristic factors(e.g., international business experience).

Hypothesis 2b: The interaction betweencompany characteristic factors and organ-isational structure is likely to be related tothe choice of standardisation strategy; it isexpected that firms with a high level of lo-cal knowledge (business experience), andadopting a highly centralised structure, aremore likely to employ a highly standard-ised strategy.

Inter-Relationship BetweenOrganisational Structure, External andInternal Factors, and Performance

The relationship between marketing organ-isational structure and performance has rarelybeen examined. Past studies examining the re-lationship between organisational structure andperformance have tended to suggest a non-significant relationship between price and placeorganisational structure, and performance. Therelationship between management process deci-sion structure and performance is not reported inthe literature (Jain, 1989; Krum and Rau, 1993;Ozsomer et al., 1991; Griffith et al., 2000). Pi-card et al. (1998) suggested that the organisa-tional structure of price and place has no influ-ence on performance. Other studies, however,have suggested that the interaction of organisa-tional structure and external factors, such as thehost environment, is likely to have an influenceon performance. Myers and Harvey (2001) re-ported that the joint effect between the degreeof control and local environmental differences isa factor of performance. Their study found thatfirms adopting a high level of control, and oper-ating in a highly different environment, tend toperform better on economic performance.


Similarly, a number of studies have suggestedthat the interaction effect between organisationalstructure and company characteristic factors islikely to have an influence on firms’ perfor-mance (e.g., Kohli and Jaworski, 1990; Solberg,2002). Solberg (2002) revealed that the relation-ship between organisational structure and the de-gree of local knowledge is likely to be relatedto a firm’s performance. Firms with a high de-gree of local knowledge, and employing a highlycentralised structure, perform better than firmsadopting other alternatives. The above analy-sis suggests that the impact of organisationalstructure on performance is also likely to ex-ist in an interaction manner. Though valuable,the application of these findings to the price,place and management processes are yet to beuncovered.

Hypothesis 3a: The choice of organisa-tional structure is unlikely to be related toperformance.

Hypothesis 3b: The interaction betweenenvironmental factors and organisationalstructure is likely to be related to perfor-mance; it is expected that firms operating ina highly different environment, and adopt-ing a highly centralised structure, are likelyto perform better.

Hypothesis 3c: The interaction betweencompany characteristic factors and organ-isational structure is likely to be relatedto performance; it is expected that firmswith a high local knowledge, and adoptinga highly centralised structure, are likely toperform better.

Inter-Relationship BetweenOrganisational Structure, Standardisationand Performance

Past studies have proposed a number of strate-gic choices regarding the relationship betweenorganisational structure and standardisation forfirms formulating their operational strategies(e.g., Quester and Conduit, 1996; Tai and Wong,1998). In pioneering research, Tai and Wong

(1998) suggested that firms can use a globalapproach where a centralised decision structureand a highly standardised strategy are employed;and a local approach where a decentralised struc-ture and an adapted strategy are used. Thoughuseful, prior studies have not explored whetherthese choices have a significant impact on perfor-mance (Solberg, 2002). As any strategy choiceis dependent on its influence on performance(Katiskeas et al., 2006; Xu et al., 2006), it islikely that the combined choice of organisationalstructure and the extent of standardisation is rel-evant to a firm’s performance in a host market.Due to its exploratory nature, and due to the factthat no existing findings can be used to guide thespecific direction of influence, a neutral interac-tion relationship is thus adopted concerning thishypothesis.

Similarly, because the relationship betweenstandardisation strategy and performance is al-ways a key component in the research con-cerning marketing standardisation strategy (Jain,1989; Katiskeas et al., 2006), it is also neces-sary to examine whether, or not, this relation-ship actually exists within this current investiga-tion context. As reported, previous studies tendto focus on the experience of large-sized firms(Samiee and Roth, 1992; Picard et al., 1998). Astudy on whether those studies’ results can beapplied to small-to-medium sized firms wouldoffer additional insights to the literature. Exist-ing studies concerning standardisation and per-formance seem to support a significant relation-ship between the standardisation of price, placeand management processes, and performance,however, a conclusive direction, still awaits ex-ploration (Sorenson and Wiechmann, 1975; Jain,1989; Shoham, 1996; Xu et al., 2006). In light ofthese results, a neutral direction concerning therelationship between standardisation and perfor-mance is hypothesized.

H4a: The extent of standardisation is likelyto be related to performance.

H4b: The interaction between standardis-ation and organisational structure is likelyto be related to performance.

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Control Variables: Stage ofInternationalisation and Firm Size

In addition to international business experi-ence, some studies have indicated that the ex-tent of internationalisation might influence thechoice of organisational structure and standard-isation strategy (Benito, Sloberg and Welch,1993; Solberg, 2000). It is suggested that, dueto their insufficient knowledge of the host mar-ket, firms at earlier stages of internationalisa-tion are more likely to adopt a lower level ofcontrol. At this stage a standardised marketingprogramme is more appropriate (Cavusgil et al.,1993). Firm size is also revealed as being an-other factor which might have an influence onthe choice of marketing standardisation strategy.It is reported that large-sized firms are likely toemploy an adaptation strategy because of theamount of resources required to implant such astrategy (Chung, 2002; Xu et al., 2006). Bothfactors are listed as control variables due to theirpotential influence in this analysis.

Control Variables: Host-countryCharacteristics

Existing studies related to host markets tendto focus on the environmental aspects (e.g., Jain,1989). Studies focused on the characteristicsof the host market are rare among enquiriesinto organisational structure and marketingstandardisation (e.g., Walters, 1986; Ozsomeret al., 1991; Katiskeas et al., 2006). Past researchhas indicated that, probably related to gains ineconomies of scale and cost savings, a host coun-try’s market size is specified as being related tothe extent of standardisation in the programmeused in that country (e.g., Ozsomer et al.,1991).

RESEARCH METHODOLOGY ANDMEASUREMENT

Sampling Frame and Data Collection

The self-administered survey questionnairewas initially sent to a sample of 293 New Zealandcompanies which were believed to have businessoperations in the EU region. These firms were

drawn from the database of an international firmand other sources, such as government websitesand business associations. This survey was com-pleted by the marketing manager who was re-sponsible for the firm’s operations in the hostmarkets, or the highest ranking staff member ofthe company.

A total of 142 useable questionnaires were re-turned. A number of respondents were excludedfrom the analysis for the reasons of wrong ad-dresses, or being unwilling to provide the nec-essary information. At the conclusion of thesurvey process, due to the focus of this study,only 78 useable questionnaires were utilised inthis study. The response rate was approximately34%. This response rate is higher than others re-ported in this research field (e.g., Chung, 2002;O’Cass and Julian, 2003). The non-response biaswas determined by the wave technique recom-mended by Armstrong and Overton (1977). Ex-aminations of a number of key indicators (per-formance and industry type) showed that thereare no significant differences between early andlate respondents, thus it was concluded that thisstudy has suffered from a non-bias problem.

Measurement

Respondents were instructed to answer thesurvey in relation to their most important prod-uct, marketed in their most important EU marketat the time the survey was conducted. Impor-tance was measured in terms of sales revenue.Respondents were first asked to assess the degreeof similarity/dissimilarity of their price, placeand management process elements in their homeand host markets. The items used were all culledfrom the literature (Walters, 1986; Ozsomeret al., 1991; Chung, 2002; Katsikeas et al., 2006).Pricing was determined by wholesale, retail,pricing method and price discounts. Distributionwas measured by type of retailing, sales channel,role of the sales force, management of the salesforce and middlemen, with the managementprocess decided by planning, budgeting andcontrol, as well as the marketing orientation/philosophy.

The participants were then requested to nom-inate the extent of the similarity/difference inthe market environments of the home and the


EU host markets (1 = very similar; 5 = verydifferent) (Duncan and Ramaprasad, 1995). Theenvironmental measurement was also based onthose methods suggested in the literature (Soren-son and Wiechmann, 1975; Garnier, 1982; Bod-dewyn et al., 1986; Jain, 1989; Akaah, 1991;Katsikeas et al., 2006); and included political,legal, economic, competitive, infrastructure, cul-tural and consumer factors. The political factorwas determined by the extent of host governmentintervention, while the legal environment wasmeasured by legal regulations concerning con-tent, price, safety and packaging. The economicenvironment was measured in terms of GNP percapita, labour cost, purchasing power and stageof economic development. The cultural envi-ronment includes the linguistic situation, under-standing and interpretation of advertising, ed-ucation, and social customs and taboos. Fouritems were used to measure the effect of the con-sumer environment, including consumer prefer-ences, purchasing habits, conditions of productusage and consumption patterns. Infrastructurewas examined in terms of distribution and me-dia infrastructure. Competition was measured interms of the competitive nature of the marketand market share position.

The marketing organisational structure wasmainly determined using the practice suggestedby Picard et al. (1998) and Solberg (2000). In-stead of requesting the location of specific ele-ment items (e.g., pricing method), respondentswere asked to identify the location/s of theiroverall marketing programme/process decisionstructure (Ozsomer et al., 1991; Picard et al.,1998). This practice was adopted in order to bein line with the practices employed in previousstudies (Daniels, 1987; Ozsomer et al., 1991; Pi-card et al., 1998; Tai and Wong, 1998), as wellas to reduce the complexity of the study survey,which was lengthy. Respondents were instructedto provide answers on whether, or not, their mar-keting decision was made by only one party (e.g.,HQs, or local representatives), or was equallyshared by their HQs and local representatives(Tai and Wong, 1998). Answers to this ques-tion were then classified into two different cat-egories; solely made by HQs (1 = centralised),or others (i.e., shared by HQs and local repre-sentatives/completely delegated to local repre-

sentatives) (0 = decentralised). Firms have thehighest control when the marketing strategy de-cision is made at their headquarters, while thosefirms sharing their decision-making with localrepresentatives, or having their decisions madepurely by local representatives, have lower con-trol vested in the parent firm, but higher authorityvested in the local representation (Daniels, 1987;Ozsomer et al., 1991; Picard et al., 1998; Tai andWong, 1998).

The measurement for firms’ performance wasalso based on the practices of some recent em-pirical studies (Johnson and Arunthanes, 1995;Shoham, 1996; Picard et al., 1998; Katsikeaset al., 2006), with the following measurementscales used: Profit (1 = high level of loss; 7 =high level of profit); sales growth (1 = negativereturn; 7 = greater than 25%); and market share(1 = 0–10%; 10 = 91–100%). Both profit andsales growth were estimated using a firm’s aver-age performance in the previous three financialyears, while market share was determined by afirm’s performance in the last financial year atthe time the study was conducted.

This study has used a firm’s business expe-rience as a proxy determinant for local marketknowledge (Johansson and Vahlne, 1977; 1990;Johansson and Wiedersheim-Paul, 1975). Twotypes of business experience were used-firms’overall international business experience andfirms’ specific experience regarding a hostmarket (Solberg, 2002; Xu et al., 2006).Respondents’ overall international businessexperience was measured by the years a firmhad operated in international business andnumber of countries in which they had operated(Xu et al., 2006). Firms’ specific experienceabout a host market was determined by thenumber of years they had been operating in theirmost important host markets. Firm size wasmeasured by the number of full-time employeesa firm had at the time of the survey. A firm’sextent of internationalisation was assessed bythe proportion of its international sales over itstotal sales (1 = under 10%; 7 = 60% or over).This measurement is based on those studieswhich have suggested that the importance of afirm’s international sales is related to its stageof internationalisation, with a higher proportionof international sales indicating that firms are

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likely to be at a later stage of internationalisation(Sullivan, 1994; Ramaswamy, Kroeck and Ren-forth, 1996; Johansson, 2003). Following this,respondents were asked to identify the marketentry mode they used in the subject EU hostmarket, and the size and potential of that market.Host market size and potential was determinedby a 7-point scale (1 = small, 4 = medium and7 = large) (Agarwal and Ramaswami, 1992).

RESEARCH FINDINGS

About 75% of the firms employed fewer than200 employees, while approximately 10% of therespondents employed between 1,000 and 4,000people. The remaining firms employ between200 and 999 individuals in their firms. Thesefirms are mainly classified as being small-to-medium-sized firms, in accordance with interna-tional standards (Akoorie and Enderwick, 1992).The average international business experience ofthe respondents was around twenty-two years.On average, the respondents have been operatingin around eighteen other countries. With respectto the proportion of international sales over to-tal sales revenue (extent of internationalisation),approximately 60% of the respondent firms iden-tified that their international sales occupied 60%,or more, of their total sales, while approximately15% of the firms indicated that their internationalsales contributed less than 20% to their totalsales revenue. Key market entry modes includeexporting, joint ventures, strategic alliances andmarketing subsidiaries.

Regarding the location of their decision-making, the firms tend to have chosen a morecentralised approach to their management pro-cess element. The extent of control of the man-agement process was highest, with approxi-mately 60% of the respondents indicating thattheir decision-making was made at the firms’headquarters, with the remainder replying thattheir management process control was autho-rised to, or shared with, local representatives.Around 45% and 35% of the price and place de-cisions, respectively, were solely controlled bythe HQs.

Similar to those reported in the literature (Pi-card et al., 1998), the respondents in this study

were operating in a number of manufacturingsectors, in both the consumer (e.g., food, wine,publishing, clothing, health goods) and indus-trial sectors (e.g., parts, ingredients, machines,telecommunications). Most of the product sec-tors are different from those reported in the priorstudies (e.g., Picard et al., 1998; Quester andConduit, 1996). Some research indicates thatproduct type (consumer vs industrial) is likelyto be a factor of marketing standardisation strat-egy (Cavusgil et al., 1993). A separate set oftests (chi-square and t-test) was conducted on thestructure of decision-making, marketing stan-dardisation and performance between consumerand industrial product firms. No significant dif-ferences were observed on these factors acrossthe two groups, thus the influence of the producttype factor is excluded in this study.

With respect to the most important EU mar-kets, 40% of respondents stated that the UK wastheir most important market, while around 25%of them indicated that Germany was their mostimportant market. This is followed by France,Spain, Ireland, Italy, Switzerland, The Nether-lands, Denmark, Belgium and Sweden. In totalthe firms were operating in eleven key EU coun-try markets.

STATISTICAL ANALYSIS PROCEDUREAND RELIABILITY OUTCOMES

This study employed moderated multiple re-gression analysis (MMR) (Bedeian and Mossh-old, 1994; Bobko and Russell, 1994; Szymanski,Troy and Bharadwaj, 1995; Myers and Harvey,2001) as its analysis technique. MMR involves ahierarchical, rather than a simultaneous, anal-ysis approach. With a hierarchical regressionapproach, factors are assessed by whether, ornot, their contribution to the R2 value is signif-icant. MMR is often used in a variety of man-agement and marketing issues (Bobko and Rus-sell, 1994). Similar to the practice suggestedin the literature, this study has examined boththe main effect and the full models (main ef-fect + interaction), based on the significanceof the change in the R2 value. Both modelswere examined using a stepwise technique. Thevariation of the R2 value was determined by


TABLE 1. Constructs and Items

Specific constructs Loading Cronbach Alpha Meana S.D.

ENVIRONMENTAL CONSTRUCTSb POLITICAL-LEGAL .824 2.597 1.115� Legal: content .842� Legal: price/safety .735� Legal: packaging .762� Political environment .888

ECONOMIC .839 3.05 .944� Labour cost .897� GNP/capita .893� Purchasing power .897� Stage of development .635

CULTURE .848 2.501 0.843� Level of education .735� Purchasing habits .824� Advertising understanding .626� Pattern of consumption .681� Condition of usage .608� Linguistic & connotation .640� Consumer preference .843� Taboos and customs .671

COMPETITIVE .690 2.889 1.057� Market share position .840� Nature of competition .741� Media infrastructure .718

FIRM CONSTRUCT INTBE .640 18.140 19.267� Years in int’l business .798� Number of countries

operating.709

� Number of years in the hostmarkets

.853

PRICE, PLACE PRICE .859 2.594 1.133AND MANAGEMENTPROCESS CONSTRUCTSb

� Wholesaling .918� Retailing .913� Pricing method .815

PLACE .882 2.485 1.091� Retailing outlets .819� Channel of distribution .843� Role of sales force .878� Management of sales force .902

MANAGEMENT PROCESS .834 2.205 1.075� Planning process .921� Budgeting and control .924� Marketing philosophy .753

Note. a: The mean rating of each construct is used in the regression analysis (Katsikaas, Samiee and Theodosiou, 2006). b: as reported,these items were measured by a five-point scale (1 = very similar: 5 = very different).

the difference of proportion method (Blalock,1960). In this analysis the dependent variablesare the three standardisation constructs (price,place and management process) and the threeperformance items (Table 1). The independentvariables are environment, firm-factors and con-trol variables (e.g., firm size, stage of interna-tionalisation, market size and market potential).

The interaction factors represent the combina-tions of price, place and management processes’structure marketing control and the independentvariables. Price, place and management processstandardisation items were examined by a confir-matory factor analysis. One price item (pricingdiscount) and one place item (management ofmiddlemen) were excluded from the study due

Chung 93

to their insignificant contribution to the nom-inated constructs. The three management pro-cess items were all retained. The proposed con-structs were also tested by their reliability. Theoutcomes are appealing (Table 1). In line withth existing literature (Johnson and Arunthanes,1995), the three performance items were treatedas individual items, as each represents a differentperformance perspective.

The environmentally related factors (i.e., po-litical, legal, economic, competitive, infrastruc-ture, cultural and consumer) were examined us-ing the confirmatory factor analysis technique.It was found that the cultural construct consistedof all of the cultural and customer related items.The economic construct contained all four orig-inal items, while the competitive construct con-sisted of both the two competition items andthe media infrastructure item. When operatingin the EU region, the competitive environmentwas suggested to be associated with the mediainfrastructure of the host markets. The political-legal construct was revealed to be comprised ofall four political-legal items. The construct ofinternational business experience was also con-firmed by the same factor analysis and onlyone construct was proposed (number of yearsin international business, number of countriesin operation and years of operation in the hostmarket/s). These proposed constructs were allexamined with reliability testing. Most of theresults showed a high loading within the con-struct (> 0.5) and a reasonable reliability value(alpha = 0.7) (Table 1). The reliability of theinternational business and competitive constructis slightly lower than 0.7. Market size and po-tential were treated as separate variables, as thedirection of their influence on standardisationand performance is varied (e.g., profit, see dis-cussion below).

The correlation relationships between itemsincluded in the regression models were alsoexamined before being entered into the regres-sion analysis. Past studies suggest that, whenan interaction is included in a model, the multi-collinearity issue is likely to exist. To avoid thisproblem, this study employed the mean centredtechnique in its analysis (Cohen and Cohen,1983). After transformation, the highest correla-tion coefficient is around 0.50 (Table 2). In light

of this result it is concluded that this study doesnot pose a serious threat of multicollinearity (Er-ramilli and Rao, 1993). The correlation resultsare displayed in Tables 2, 3 and 4. In short, thisstudy consists of eleven independent variablesand several control variables. The interactionsbetween the decision-making structure and thecontrol variables are also included, as they havebeen found to have a significant impact on thedependent variables (see analyses presentedbelow).

The first round of the regression results areshown in Table 5. Among the results related tostandardisation, the full model of price does notperform better than that of the main effect alone(the R2 value is not significantly improved), thusthe analysis concerning this element is basedon that established for the main effect. The fullmodel of the place and management processesperforms better than the main effect model, thusthe full models are used for the analysis relatedto these two elements.

Performance related results are displayed inTables 6 to 8. As demonstrated, in relation toprofit the full models performed better than thoseestablished in the main effect only with respectto the price and management process structures(Table 6). The full model in relation to the man-agement process structure also performs betterthan the main effect model with regard to salesgrowth (Table 7). The full models performed bet-ter than the main effect models on market share,regarding the price and place structure (Table 8).When examining the other scenarios, the maineffect models performed better than those of thefull models.

The relationship between price, place andmanagement process standardisation, and per-formance, was also examined using the MMRanalysis technique. In this analysis, the indepen-dent variables in the main effect include stan-dardisation and decision structure, while thosein the full model include both independent vari-ables and the interaction between standardisa-tion and structure. Variables in the full modelwere examined using correlation testing beforebeing entered into a regression analysis. No se-rious multicollinearity was detected. The threeperformance items (profit, sales growth and mar-ket share) are utilised as dependent variables.

TAB

LE2.

Cor

rela

tion

Coe

ffici

entM

atrix

(pric

est

ruct

ure)

ab

cd

ef

gh

ij

kl

mn

op

qr

(a)P

rice

Cen

t(pr

ice

stru

ctur

e)†

1.00

0(b

)Em

ploy

ee†

(con

trol

)−.

070

1.00

0(c

)IN

TB

E†

.076

.450

1.00

0(d

)Pol

itica

l-leg

al†

−.20

0−.

002

.038

1.00

0(e

)Eco

nom

ic†

−.14

7−.

069

−.08

5.2

511.

000

(f)C

ompe

titiv

e†−.

133

.077

.048

.092

.345

1.00

0(g

)Cul

ture

†−.

026

−.04

1−.

017

.410

.340

.166

1.00

0(h

)Mkt

sze†

(con

trol

).0

66.1

83.2

51.1

66.0

43.1

64.0

221.

000

(i)M

ktpt

t†(c

ontr

ol)

−.11

4−.

002

−.07

7.0

70.0

62.1

48.0

05.4

691.

000

(j)In

tsal

e†(c

ontr

ol)

.045

−.04

6.2

09.1

15.0

47.2

09.1

12.0

34−.

137

1.00

0(k

)Pric

eCen

t∗E

mpl

oyee

(con

trol

)−.

241

−.13

4−.

192

.048

.034

.055

−.04

9−.

113

.035

−.16

01.

000

(l)P

riceC

ent∗

INT

BE

−.20

8−.

124

−.15

4.0

67−.

065

.040

−.06

7−.

090

−.11

9−.

071

.519

1.00

0(m

)Pric

eCen

t∗P

oliti

cal-l

egal

−.09

5.0

91.0

08−.

140

.130

.183

.051

.096

.107

−.02

0.0

52.0

441.

000

(n)P

riceC

ent∗

Eco

nom

ic−.

037

.034

−.05

9.0

76.0

11.1

02.0

87.0

55.0

32.1

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092

−.10

4.2

051.

000

(o)P

riceC

ent∗

Com

petit

ive

−.09

4.0

92.0

43.1

45.1

19.1

57.0

11.0

92−.

086

.090

.097

.086

.054

.320

1.00

0(p

)Pric

eCen

t∗C

ultu

re−.

015

−.02

5−.

081

.031

.068

.023

−.04

2.0

48.1

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046

−.05

5−.

045

.389

.345

.152

1.00

0(q

)Pric

eCen

t∗M

ktsz

e(c

ontr

ol)

.033

−.06

6−.

068

.058

.057

.076

.040

−.11

7−.

050

.070

.133

.220

.146

.071

.210

.029

1.00

0(r

)Pric

eCen

t∗M

ktpt

l(co

ntro

l).0

42.0

76−.

098

.062

.024

−.08

5.1

15−.

008

.095

.019

.001

−.12

9.0

55.0

65.1

35.0

41.4

051.

000

(s)P

riceC

ent∗

Ints

ale

(con

trol

)−.

016

−.11

0−.

109

−.02

7.0

30.0

50−.

089

.056

.041

−.14

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34.0

97−.

006

.105

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−.17

2

Not

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ain

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94

TAB

LE3.

Cor

rela

tion

Coe

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entM

atrix

(pla

cest

ruct

ure)

ab

cd

ef

gh

ij

kl

mn

op

qr

(a)P

lace

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t(pl

ace

stru

ctur

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1.00

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)Em

ploy

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(con

trol

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129

1.00

0(c

)IN

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E†

−.08

6.4

501.

000

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†−.

146

−.00

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381.

000

(e)E

cono

mic†

.035

−.06

9−.

085

.251

1.00

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petit

ive†

−.17

1.0

77.0

48.0

92.3

451.

000

(g)C

ultu

re†

.107

−.04

1−.

017

.410

.340

.166

1.00

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)Mkt

sze†

(con

trol

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075

.183

.251

.166

.043

.164

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1.00

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−.08

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mpl

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(con

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261

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203

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−.13

91.

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(l)P

lace

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t∗IN

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E−.

265

−.20

6−.

380

.014

.016

−.10

5−.

098

−.11

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178

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1.00

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ceC

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Pol

itica

l-leg

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104

.008

−.02

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.035

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(n)P

lace

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t∗E

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−.00

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.154

−.03

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.150

−.07

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.250

1.00

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petit

ive

−.13

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82−.

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.137

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011

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106

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1.00

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ture

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−.05

2−122

−.07

8−.

033

.024

−.15

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028

−.07

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.399

.319

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1.00

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)Pla

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(con

trol

)−.

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−.04

0−.

065

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−.08

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−.02

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.267

.160

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.169

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1.00

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Mkt

ptl(

cont

rol)

.047

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.126

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−.02

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69.1

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(s)P

lace

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t∗In

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ontr

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.108

−.17

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95

TAB

LE4.

Cor

rela

tion

Coe

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atrix

(pro

cess

stru

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ab

cd

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hi

jk

lm

no

pq

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(a)P

roce

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ent(

proc

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stru

ctur

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ploy

ee†

(con

trol

)−.

047

1.00

0(c

)IN

TB

E†

.120

.450

1.00

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)Pol

itica

l-leg

al†

−.09

3−.

002

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1.00

0(e

)Eco

nom

ic†

.123

−.06

9−.

085

.251

1.00

0(f

)Com

petit

ive†

.078

.077

.048

.092

.345

1.00

0(g

)Cul

ture

†.1

40−.

041

−.01

7.4

10.3

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000

(h)M

ktsz

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ontr

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.099

.183

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.166

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.164

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1.00

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Mkt

ptl†

(con

trol

)−.

051

−.00

2−.

077

.070

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.148

.005

.469

1.00

0(j)

Ints

ale†

(con

trol

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69−.

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.209

.115

.047

.209

.112

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−.13

71.

000

(k)P

roce

ssC

ent∗

Em

ploy

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ontr

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−.28

8.2

69−.

081

.107

−.00

5.1

51−.

095

−.01

3.0

52−.

063

1.00

0(l)

Pro

cess

Cen

t∗IN

TB

E−.

228

−.03

3.2

10.0

72−.

088

.100

−.14

1.0

58−.

014

.084

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1.00

0(m

)Pro

cess

Cen

t∗P

oliti

cal-l

egal

−.07

8.0

47.0

43.3

24.0

90.0

61.2

20.0

31−.

042

.073

.059

.062

1.00

0(n

)Pro

cess

Cen

t∗E

cono

mic

−.11

0.0

70−.

070

.108

.359

.172

.026

−.07

8.0

15−.

076

−.05

3−.

079

.213

1.00

0(o

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cess

Cen

t∗C

ompe

titiv

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143

.212

.107

.104

.160

.395

−.08

5.1

30−.

011

.058

.081

.099

.025

.299

1.00

0(p

)Pro

cess

Cen

t∗C

ultu

re−.

115

−.08

4−.

115

.256

.034

−.07

5.3

60−.

057

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042

−.01

7.3

73.3

54.1

501.

000

(q)P

roce

ssC

ent∗

Mkt

sze

(con

trol

)−.

138

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.014

.039

−.07

2.0

80−.

077

.112

.052

.164

.201

.269

.139

.115

.168

.016

1.00

0(r

)Pro

cess

Cen

t∗M

ktpt

l(co

ntro

l).0

97.1

51.0

21−.

040

.031

−.01

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22.0

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12.0

66−.

005

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2.0

83.1

01.1

43.0

08.4

151.

000

(s)P

roce

ssC

ent∗

Ints

ale

(con

trol

)−.

006

−.07

5.0

67.1

08−.

036

.108

.022

.170

.093

.124

.050

.243

.065

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.111

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3−.

196

Not

e.† M

ain

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riabl

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the

regr

essi

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is.C

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ontr

olva

nabl

es.

96

Chung 97

TABLE 5. Regression Models–Centralised Structure and Standardisation

Dependent variable: Main effect model Full modelprice adaptation Beta Beta

Independent variables(Constant) 2.686 2.681PriceCent .634∗∗ .491∗Competitive .268∗Culture .519∗∗∗ .653∗∗∗Control variablesPriceCent∗mktptl .357∗PriceCent∗mktsze −.357∗

R2 value = 0.313 R2 value = 0.319(�R2 = 0.006, NS)

Dependent variable: Main effect model Full modelplace adaptation Beta Beta

Independent variables(Constant) 2.510 2.290IBE −.047∗∗PlaceCen −.772∗∗Political-legal .284∗∗PlaceCen∗INTBE −.162∗∗∗PlaceCent∗Political-legal −.807∗∗∗Control variablesEmployee .067∗∗PlaceCen∗Employee .251∗∗∗PlaceCen∗mktsze .359∗∗PlaceCen∗intsale .494∗∗∗

R2 value = 0.087 R2 value = 0.307(�R2 = 0.22, p < 0.01)

Dependent variable: management Main effect model Full modelprocess adaptation Beta Beta

Independent variables(Constant) 2.284 2.215Cultural .348∗∗Economic 0.397∗∗∗ProcessCen∗INTBE −.077∗∗ProcessCen∗Economic .577∗Control variablesMarketpotential .136∗ProcessCenz∗Employee .106∗

R2 value = 0.116 R2 value = 0.259(�R2 = 0.143, p < 0.05)

Note. ∗Statistically significant at p < 0.10; ∗∗statistically significant at p < 0.05; ∗∗∗statistically significant at p <

0.01; NS: non significant.

The results of this analysis are listed in Table 9.As no significant variations were observed be-tween the main effect and the full models, theanalysis is based on those findings establishedusing the main effect method.

DISCUSSION OF RESULTS

H1a suggests that the similarity of environ-mental factors in the home and host marketsis likely to be a factor of standardisation


TABLE 6. Regression Models–Centralised Structure andPerformance (Profit)

Main effect model Full modelDependent variable: Profit Beta Beta

Independent variables(Constant) 4.590 4.402INTBE 059∗∗∗PriceCent −.824∗∗PriceCent∗INTBE −.161∗∗∗Control variablesEmployee −.106∗∗∗ −.064∗∗∗Mktsze .289∗∗∗Mktptl −.269∗∗PriceCent∗Employee .172∗∗∗PriceCent∗Mktsze .509∗∗∗PriceCent∗Intsale −.305∗

R2 value = 0.214 R2 value = 0.417(�R2 = 0.203, p < 0.05)

Independent variables(Constant) 4.589 4.620PlaceCen −.732∗∗ −.708∗∗INTBE 054∗∗∗ .058∗∗∗PlaceCen∗Economic .782∗∗Control variablesEmployee −.109∗∗∗ −.118∗∗∗

R2 value = 0.284 R2 value = 0.356(�R2 = 0.072, NS)

Independent variables(Constant) 4.590 4.453INTBE .059∗∗∗ .061∗∗∗ProcessCen∗Economic 1.675∗∗∗ProcessCen∗Competitive –.616∗Control variablesEmployee −.106∗∗∗ –.104∗∗∗ProcessCen∗Mktptl .575∗∗∗ProcessCen∗Intsale .229∗

R2 value = 0.214 R2 value = 0.564(�R2 = 0.350, p < 0.01)

Note. ∗Statistically significant at p < 0.10; ∗∗statistically significant at p < 0.05; ∗∗∗statisticallysignificant at p < 0.01; NS: non significant.

strategy. This is supported on selected factors.As indicated in Table 5, the cultural factor ispositively related to the choice of pricing andmanagement process adaptation strategy, whilethe competitive factor is positively related tothe choice of price adaptation strategy. Theseresults are consistent with those reported inthe literature (Sorenson and Wiechmann, 1975;Hill and Still, 1984; Jain, 1989; Ozsomer et al.,1991; Katiskeas et al., 2006). Prior researchsuggests that firms are less likely to employa standardisation strategy when operating in a

dissimilar environment. This finding suggeststhat H1a, concerning these factors, is supported.

H1b hypothesises the relationship betweenthe price, place and management process organi-sational structure and marketing standardisationstrategy. A non-significant relationship wasproposed. The results indicate that pricingstructure is positively related to price adap-tation strategy, while the structure of place isnegatively related to place adaptation strategy(Table 5). This indicates that firms adopting acentralised pricing decision-making structure

Chung 99

TABLE 7. Regression Models–Centralised Structure andPerformance (sales growth)

Dependent variable: sales growth Main effect model Full modelBeta Beta

Control variables(Constant) 3.464 −Employee −.058∗ −Mktsze .215∗ −Intsale .262∗∗ −

R2 value = 0.143 R2 value = 0(�R2 = 0, NS)

Independent variables(Constant) 3.374 3.585PlaceCen −1.071∗∗INTBE −.047∗∗Control variablesMktsze .251∗ .205∗Intsale .331∗∗ .300∗∗PlaceCen∗Employee .200∗∗

R2 value = 0.200 R2 value = 0.174(�R2 = −.026, NS)

Independent variables(Constant) 3.412 3.401INTBE −.042∗ProcessCen∗Economic 1.543∗∗ProcessCen∗Culture −1.717∗∗Control variablesMktptl .257∗Intsale .250∗ .352∗∗Mktsze .269∗∗

R2 value = 0.105 R2 value = 0.229(�R2 = 0.124, p < 0.05)

Note. ∗Statistically significant at p < 0.10; ∗∗statistically significant at p < 0.05; ∗∗∗statisticallysignificant at p < 0.01; NS: non significant.

are more likely to employ an adapted pricingstrategy. Firms employing a centralised placedecision-making structure are more likely toemploy a standardised place strategy. Themanagement process structure is not confirmedas being related to standardisation strategy.Thus, H1b is mostly unconfirmed. This outcomesuggests that previous findings might need to bere-evaluated, as the relationship between organ-isational structure and standardisation could besignificant under certain circumstances (Picardet al., 1998; Quester and Conduit, 1996). Theinconsistency between the results of this studyand those of prior researches might be relatedto the size of the firmsexamined. As outlined,the samples reported in prior research tendedto be large-sized firms, while the respondents

in this study tend to be small-to-medium sized.The non-significant outcomes concerning priceand place structure might only be relevant forlarge-sized firms. These outcomes indicate thatfurther studies on this aspect are needed.

H1c is related to the interaction effect be-tween organisational structure and environmen-tal factors. This effect mainly applies to theplace and management process elements. Theinteraction effect is involved with the political-legal and economic factors. As shown in Table5, the interaction between place structure andpolitical-legal factor is negatively related to theplace adaptation strategy. This result indicatesthat firms adopting a centralised place struc-ture, and operating in a highly different political-legal environment, are more likely to employ


TABLE 8. Regression Models–Centralised Structure andPerformance (market share)

Dependent variable: market share Main effect model Full modelBeta Beta

Independent variables(Constant) 2.036 2.215Political-legal .482∗∗Competitive −.596∗∗ −.446∗Culture −.572∗PriceCent∗Political-legal .838∗Control variablesMktptl −.236∗PriceCent∗Mktptl −.475∗PriceCent∗Intsale −.790∗∗∗

R2 value = 0.096 R2 value = 0.406(�R2 = 0.31, p < 0.01)

Independent variables(Constant) 2.036 2.257Political-legal .751∗∗Culture −.928∗∗∗Competitive −.596∗∗PlaceCen∗political-legal .969∗Control variablesEmployee −.108∗∗Mktptl −.285∗∗PlaceCen∗Employee −.255∗PlaceCen∗Intsale −.690∗∗∗

R2 = .096 R2 = .314(�R2 = .218, p < 0.01)

Independent variables(Constant) 2.036 2.036Competitive −.596∗∗ −.596∗∗

R2 value = 0.096 R2 value = 0.096(�R2 = 0, NS)

Note. ∗Statistically significant at p < 0.10; ∗∗statistically significant at < 0.005; ∗∗∗statisticallysignificant at p < 0.01; NS: non significant.

a standardised place strategy. The interactionbetween the management process structure andthe economic factor is positively related to themanagement process adaptation. This relation-ship suggests that firms adopting a centralisedmanagement process structure, and operating ina highly different economic environment, aremore likely to employ an adapted managementprocess strategy. Based on these outcomes, H1cis only partially supported. Prior research sug-gests that firms adopting a highly centralisedstrategy, and operating in a highly similar en-vironment, are more likely to use a highly stan-dardised strategy (Rau and Preble, 1987). Thisis not supported in regards to the element ofplace. This result might relate to the importanceof employing a uniform place strategy in the EU

(Krum and Rau, 1993). Despite operating in ahighly different environment, firms still attemptto have a uniform place strategy. When the eco-nomic environment is greatly different betweenthe home and host markets firms might also needto revise their management process in order tocompete effectively in the host markets. A cen-tralised management process structure can assistin implementing such a strategy. This latter re-sult is in line with those revealed in other studies(e.g., Solberg, 2002).

H2a is related to the relationship between firmfactors and standardisation strategy. The resultsof this study suggest that firms with a high levelof international business experience are morelikely to adopt a standardised place strategy(Table 5). This finding is not consistent with

Chung 101

TABLE 9. Regression Models–Standardisation and Performance

Main effect model Full modelDependent variable: Profit Beta Beta

Independent variables(Constant) 4.503 4.503PlaceCen −.634∗∗ −.634∗∗


Dependent variable: Main effect model Full modelsales growth Beta Beta

(Constant) 2.508 2.508Place adaptation .381∗ .381∗

R2 = .047 R2 = .047(�R2 = 0, NS)

Dependent variable: Main effect model Full modelmarket share Beta Beta

(Constant) 2.944 2.944Management process adaptation −.391∗ −.391∗


Note. ∗Statistically significant at p < 0.10; ∗∗statistically significant at p < 0.05; NS: non significant.

that of prior research, as it has been suggestedthat firms with high levels of business experi-ence are more likely to employ an adapted strat-egy (Cavusgil et al., 1993). As cited, this resultmight be because a uniform place strategy is im-portant to firms operating in the EU (Krum andRau, 1993), thus firms with a high level of localknowledge (international business experience)might recognise the benefits of place standardi-sation. Though not proposed in the hypotheses,the outcomes indicate that large-sized firms aremore likely to employ an adapted place strategy(Table 5). This finding is consistent with thoseof previous studies (Sorenson and Wiechmann,1975; Cavusgil et al., 1993; Xu et al., 2006).It is suggested that adaptation usually requiresmore resources and, as a result, large-sized firmsare more likely to employ an adapted strategy(Chung, 2002). Thus, the relationship betweenfirm factors and standardisation is supported onfirm size and international business experience.

H2b is associated with the interactionbetween firm factors and centralised organisa-tional structure. A number of results have beenestablished (Table 5). Those firms adopting

a centralised place and management processstructure, and having a higher level of busi-ness experience, are more likely to employ astandardised place and management processstrategy. Firms employing a centralised placestructure, and also operating in a large-sized hostmarket, are more likely to employ an adaptedplace strategy. This study has confirmed theseresults found in previous studies (e.g., Solberg,2002). It is suggested that firms are more likelyto employ a standardisation strategy whenemploying a high level of control, and whenequipped with a high level of local knowledge.The suggestion of Ozsomer et al. (1991) on thepossible impact of market size on the selectionof standardisation strategy is also confirmed. AnEU host market size is confirmed by the currentstudy to be related to the selection of standardi-sation/adaptation strategy. Though not includedin the hypotheses, firms employing a centralisedplace and management process structure,large-sized firms (PlaceCent∗Employee andProcessCen∗ Employee), and those in a laterstage of internationalisation (PlaceCen∗Intsale),are more likely to employ an adapted place


and management process strategy. These new,significant results indicate that further attentionshould be paid to these factors.

H3a relates to the relationship between or-ganisational structure and performance. In thisstudy, price and place structure is confirmed tobe negatively related to profit; indicating that adecentralised price and place structure is likelyto be related to higher profitability (Table 6).This result is not consistent with that reportedearlier (Picard et al., 1998). Previous researchhas not revealed a significant relationship be-tween organisational structure and performance.As reported earlier, this inconsistency might re-late to the nature of the firms examined in thisstudy. This result suggests that the relationshipbetween structure and performance needs to beexamined further, as a mixed finding is now es-tablished. The structure of management processis confirmed to have a non-significant relation-ship to performance. This latter result is in linewith that of previous studies which suggest thatcentralised structure has no impact on firms’ per-formance (Picard et al., 1998).

H3b suggests that the interaction between en-vironment and organisational structure is relatedto performance. This occurs in regards to thecultural, economic, competitive and political-legal environments (Tables 6 to 8). The inter-action between management process structureand the economic factor is positively related toprofit and sales growth; suggesting that a cen-tralised management process structure, as wellas operating in a highly different economic en-vironment, is likely to lead to a higher profit andsales growth. The interaction between the man-agement process structure and the competitiveand cultural environment is negatively relatedto profit and sales growth. This indicates thatcentralised management process structures, andthose operating in a competitive and cultural en-vironment with little difference, are more likelyto perform better in terms of profit and salesgrowth (Tables 6 and 7). Firms adopting a cen-tralised price and place structure and operatingin a highly different political-legal environmentare, however, more likely to perform better interms of market share (Table 8).

H3c is related to the structure and firm fac-tors. The interaction between price structure and

international business experience is negativelyrelated to profit (Table 6). Firms adopting a cen-tralised price structure, and having a low levelof international business experience, are morelikely to perform better in terms of profit. Thisindicates that firms with a short period of in-ternational business experience should employa highly controlled structure, as this adoption islikely to relate to a higher level of profitability.Large-sized firms which also adopt a centralisedprice structure are likely to do better on profit,but small-sized firms employing a centralisedplace structure tend to perform better on mar-ket share. Firms employing a centralised priceand management process structure, and operat-ing in a large-sized and large-potential domesticmarket, perform better on profit. Firms adopt-ing centralised price structures are, however,more likely to perform better on market sharewhen operating in a small-potential host mar-ket. Respondents utilising a centralised price andplace structure, and in an earlier stage of inter-nationalisation, tend to perform better in termsof profit and market share. Those employing acentralised management process structure andoperating in a later stage of internationalisationare suggested to perform better in terms of profit.The above analysis indicates that the interactionbetween company characteristic factors and or-ganisational structure is likely to be significantlyrelated to performance. The direction of the ef-fect is, however, not conclusive (Solberg, 2002).

H4a is concerned with the relationship be-tween price, place and management processstandardisation and performance. This studyconfirms that a standardised management pro-cess strategy and adapted place strategy are as-sociated with a higher market share and salesgrowth, respectively (Table 9). This outcomeis consistent with Sorenson and Wiechmann(1975), Shoham (1996) and Xu et al. (2006), whohave confirmed that standardisation/adaptationis significantly related to performance. H4b isassociated with the effect of the interaction be-tween organisational structure and standardisa-tion on performance. As reported (Table 9), thisstudy cannot support a significant relationshipon any combination of price, place and manage-ment process structure and standardisation strat-egy. Therefore, the proposal of Tai and Wong

Chung 103

(1998) cannot be confirmed to lead to better fi-nancial performance.

RESEARCH IMPLICATIONS

Organisational Structure

Unlike those findings revealed in the existingliterature, this study has confirmed that both theprice and place structures have a significant di-rect influence on the selection of their relatedstandardisation strategy and performance. Thisstudy suggests that, for smaller-sized firms oper-ating in the EU region, when an adapted pricingstrategy is important they should still consider acentralised structure, so that this strategy is im-plemented properly. As a uniform place strategyis, however, probably essential for firms operat-ing in the EU region (Krum and Rau, 1993), acentralised organisational structure could alsoassist firms to deploy such a strategy. Thesefirms, however, should also know that a decen-tralised price and place structure might be ableto assist them to achieve their profit objective.

External Factors

By confirming the findings of other studies,several environmental factors (competitive andcultural) are suggested to have an influence onthe choice of price and management processstandardisation. As prior studies on the EU re-gion tend to focus on large-sized firms, this con-firmation suggests that the impact of these fac-tors can also be applied to firms of relativelysmaller size. This confirmation indicates that re-sults related to these factors are, therefore, con-clusive.

The interaction between environment andcentralised structure might also have an effecton the choice of place and management pro-cess standardisation strategy. The results of thisstudy indicate that firms employing a centralisedstructure might, or might not, need to adjust theirextent of standardisation strategy when operat-ing in the EU region. For example, centralisedfirms operating in a highly different political-legal environment could still employ a standard-ised place strategy, but they should consider anadapted management process strategy when the

local economic environment is highly differentfrom that of the home market. This outcome im-plies that, in addition to their direct influence onmarketing standardisation strategy, some envi-ronmental factors can also have an indirect effecton the selection of marketing standardisationstrategy. This finding has added new insights toexisting literature and has provided a new direc-tion for further research concerning the influenceof environmental factors on the choice of stan-dardisation strategy (Sorenson and Wiechmann,1975; Boddewyn et al., 1986; Krum and Rao,1993; Boddewyn and Grosse, 1995; Katiskeaset al., 2006).

Similar to those identified in prior studies,the interaction between environment and organ-isational structure could also have an impacton performance regarding the elements of theprice, place and management processes. For in-stance, as illustrated, a centralised managementprocess structure can probably assist firms oper-ating in a highly different economic environmentto achieve their profit and sales growth objec-tives. The combination of a centralised price andplace structure and a highly different political-legal environment can also help firms to performbetter on market share. A centralised manage-ment process, however, is likely to be more ef-fective in obtaining a higher profitability whenoperating in a host market whose competitiveenvironment is similar to that of the home mar-ket. These outcomes indicate that firms adoptinga high level of control can perform better in en-vironments with both high, and low, levels ofsimilarity. This has added new information tothose studies which suggest that only the com-bination of high control and high difference canlead to a higher financial performance (Myersand Harvey, 2001). This new result is also sig-nificant, as it has revealed that an adequate com-bination of price, place and management processstructures, and local environment, can also pro-mote a better economic outcome.

Internal Factors

This study has pointed out a number of firm-related factors which have an influence on thechoice of standardisation strategy. For instance,large-sized firms should consider employing a


place adaptation strategy, while those with highlevels of local knowledge should consider auniform place strategy. The inter-relationshipbetween firm-related factors and organisationalstructure are also suggested to have an influenceon the selection of standardisation. Large-sizedfirms and those are in a later stage of internation-alisation; as well as adopting a centralised struc-ture; are encouraged to adopt a highly adaptedplace and management process strategy. Firmsequipped with a higher local knowledge shouldconsider using a centralised structure to take ad-vantage of employing a standardised place andmanagement process strategy.

The combination of firm-related factors andorganisational structure might also have some in-fluence on performance. A centralised structureis probably more effective for large-sized firms,as well as for firms with a short period of busi-ness experience in the host market. This appliesmainly to the price structure. This combinationcan assist firms to achieve a higher profit objec-tive. Nonetheless, small-sized firms adopting ahighly centralised structure tend to perform bet-ter on market share. This choice has more effecton the place element.

Host Market Size and Potential

Similarly, the factors of host market size andpotential have been identified as having an ef-fect on standardisation and performance. In gen-eral, firms operating in a host country with alarge potential should consider employing anadapted management process strategy. Firms op-erating in a large-sized country market are alsosuggested to perform better on profit and salesgrowth. Those conducting business in a small-potential market are, however, more likely to dowell on profit and market share. The interactionoutcomes indicate that firms adopting a highlycontrolled place structure, and operating in a hostcountry with a large-sized market, should con-sider employing an adapted place strategy. Firmsemploying a centralised price structure, and op-erating in a large-sized country market, are alsomore likely to perform better on profit. It is pos-sible for firms adopting a centralised price struc-ture, and operating in a small-potential countrymarket, to do better on market share.

CONCLUSIONS AND LIMITATIONS

In summary, the findings of this study haveadded a number of new insights to the exist-ing literature related to structure, standardisationand performance. This study has concluded that,under particular conditions, the structure of de-cision making might still be relevant to market-ing standardisation strategy. This is illustratedin terms of price, place and management pro-cess structures. The type of structure adoptedmight also be related to a firm’s performance inthe host markets. This is mainly evident on theprice and place structure. These new results in-dicate that researchers may need to be cautiousin generalising the existing findings, at least untithe complete picture is uncovered. As illustrated,the findings established using the experience oflarger-sized firms might not be applicable tosmaller-sized firms. Second, the findings of thisstudy confirm those findings which have advo-cated that the interaction of structural, and inter-nal and external, factors could have an impact onthe choice of standardisation and performance.As demonstrated, a number of new insights wereestablished. This confirmation indicates that theinteraction results, in addition to those found inregards to the promotion strategy (Rau and Pre-ble, 1987; Solberg, 2002), can also be applied tothe standardisation of price, place and manage-ment processes. With an adequate combinationof the structure, firm and environmental factors,firms can still choose their ideal standardisa-tion strategy regarding the elements of the price,place and management processes when servic-ing the host market, in order to achieve theirfinancial objectives in that market. Thus, the out-comes of this study have presented more choicesto firms formulating their standardisation andperformance objectives. Lastly, this study has at-tempted to establish a relationship between a re-cent suggestion on the interaction between struc-ture and standardisation, and performance. Thisstudy cannot confirm any significant outcomeon this aspect. The strategic choice of structureand standardisation is not likely to lead to a sig-nificantly higher performance. Therefore, firmsneed to be careful if they wish to use this strate-gic choice to achieve their financial objectiveswhen operating in the EU region. Despite this,

Chung 105

standardisation and adaptation of managementprocess and place elements were confirmed tohave a significant effect on market share andsales growth. Firms may, perhaps, need to usethese two strategies to help achieve their finan-cial goals.

Like many other studies, this study has alsosuffered from a number of weaknesses, whichneed to be highlighted. Unlike those included inother studies, the majority of the respondents inthis study are small-to-medium sized firms. Asanalysed, this feature might have attributed to thedifferent results from those established in priorstudies. Due to its pioneer nature, the outcomesof this study need to be carefully re-examined, sothat a more conclusive result can be established.Future studies could be based in other countries,and their results compared with those of thisstudy. Only then can more conclusive findingsbe drawn. Likewise, the sample size includedin this study can also be improved. Though thesample size in this field tends to be small (Krumand Rau, 1993), an enlargement of the samplesize would improve the validity of the findings.The source of origin of the respondents mightalso be a concern. Internationally, New Zealandis yet to be considered as a key trading country.As a result, its firms’ experience could be dif-ferent from those based in other industrialisedcountries (e.g., the US). Both managers and re-searchers should also be aware of this limitation.

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