Exploitation Strategy and Performance of Contract Manufacturing Exporters: The Mediating Roles of Exploration Strategy and Marketing Capability

Abstract

Contract manufacturing exporters (CMEs) receive a meagre share of global value chain returns, primarily because of the mundane and exploitative nature of the activities they perform in their dependency relationships with lead firms. We posit that CMEs can enhance their performance by capitalizing on their exploitation strategy. Exploitation strategy triggers exploration strategy which requires building marketing capabilities for enhanced performance. Based on data from 154 Vietnamese CMEs, we find significant indirect only mediation effects of: 1) exploration strategy between exploitation strategy and export performance; and 2) marketing capability between exploration strategy and export performance. Further, we find significant indirect only serial mediation of exploration strategy and marketing capability between exploitation strategy and export performance. The findings are also supported and contextualized based on illustrative quotes from face to face semi-structured interviews with senior managers of 10 Vietnamese CMEs. The findings suggest that CMEs' that consciously capitalize on the exploitation strategy by seeking exploration opportunities while building their marketing capability exhibit enhanced performance.

The Impact of Exploitation and Exploration on Export Sales Growth: The Moderating Role of Domestic and International Collaborations

“…First, it investigates the influence of exploitation and exploration on firms’ export outcomes in term of export sales growth, which is an indicator of the health of a firm’s export operations, conceptualized and operationalized as the percentage change in export sales over time (Assadinia et al 2019; Chen, Sousa, and He 2019). Although exploitation and exploration have drawn growing attention in management and marketing research, this knowledge in the international marketing context is relatively limited (Pinho and Prange 2016; Sharma, Nguyen, and Crick 2018). Organizational learning is particularly important for firms that want to achieve superior performance in international markets, which are characterized by high levels of uncertainty, competition, and complexity of markets across their social, economic, cultural, political, and technological aspects (İpek 2019; Tse, Yu, and Zhu 2017).…”

“…Research in this area has been prolific in examining how a firm’s exploitation and exploration are linked to capabilities such as customer management and new product development (Mehrabi, Coviello, and Ranaweera 2019), learning culture (Gonzalez and de Melo 2018), organizational capital and human capital (Lin et al 2017), technological performance (Geerts et al 2018), and organizational failure (Swift 2016). These concepts have also increasingly been used in the international context to explain a variety of phenomena, such as international strategic alliances (Krammer 2018; Nielsen and Gudergan 2012), relationship-specific innovation (Choi, Ruey-Jer, and Kim 2019), propensity to engage in knowledge-seeking foreign direct investment (Kedia, Gaffney, and Clampit 2012), divestment and foreign exit decisions (Tan and Sousa 2019), merger and acquisition performance (Bauer et al 2018), international joint venture performance (Jin, Zhou, and Wang 2016), contract manufacturing exporters performance (Sharma, Nguyen, and Crick 2018), and international performance (Pinho and Prange 2016). There have also been studies focusing on ambidexterity, and viewing exploitation and exploration as complementary (Andriopoulos and Lewis 2009; Gibson and Birkinshaw 2004; Ho et al 2020).…”

Improvement Strategy of Export Performance in South Sulawesi

“…Alternative strategies for identifying balancing markets for certain commodities to maintain price stability have in common with the findings of Sharma, Nguyen, & Crick (2018), and Cieślik, Kaciak, & Thongpapani (2015). Furthermore Dikova et al (2016) recommends that export companies to be active in expanding export markets in various potential countries; this is aimed at avoiding saturation of demand from customer countries.…”

“…Over time the growth of the company's share from the main export market found a negative relationship with export performance. Sharma, Nguyen, & Crick (2018) explained that the exploration strategy has a significant relationship to export performance; and marketing capabilities have a significant effect on exploration strategies and export performance.…”

Innovative Marketing of Emerging Moslem Fashion in the Province of West Java Indonesia

“…One of the challenging issues in the product differentiation stage is the complexity of interindustry differentiation, how a firm's product can be distinguished from that of other competitors to create their uniqueness for both productivity and market leadership. The last dimension is focused strategy, (Sharma et al, 2018) stated that the refinement and improvement of a firm could lead to advantages, i.e., deeper penetration into an existing customer base. The activities comprise improving production efficiencies by exploiting their current strength and abilities to enhance their performance by higher value creation through improvements in their operational skills and wider accessibility that leads to the firms' resources.…”