In this study, we draw on industrial organization and institutional research to explore the relationship between
market convergence and standardization of advertising programs. We argue that environmental isomorphism, which
maintains that the external market environment is a principal driver of firms’ institutional structures, places pressure on
firms to adapt their organizational structures and strategies to changing institutional conditions. We propose that the
convergence associated with European market integration will lead firms to emphasize three advertising strategies:
creating a uniform brand image, appealing to cross market segments, and increasing cost performance in advertising.
Further, we hypothesize that these strategies will be associated with an overall tendency to standardize advertising
strategy and execution. Results of a survey of managers of subsidiaries of Japanese and U.S. firms operating in the
EU suggest that firms that believe the EU is converging are more likely to engage in these standardized advertising
strategies. Additionally, our findings suggest that firms that seek to create a uniform brand image and appeal to cross
market segments are more likely to standardize their overall advertising programs. Finally, we find that firms’ desire to
create a uniform brand image is a function of their goal of building brand equity, regardless of the level to which
markets converge. We draw implications for research and practice regarding firm responses to market convergenceThis research was funded by a grant from the
Yoshida Hideo Memorial Foundation (Tokyo) to the
first author