The essentials of value chain implementation in small and medium sized enterprises

Global Strategy Journal

2012

The global firm needs to recognize the crucial role of foreign subsidiary strategy in building global competitive advantage and emphasize corporate control of important strategy elements. In particular, there is a need to examine the role of foreign subsidiary strategy in the firm's efforts to break through local barriers to competition that obstructs the search for global competitive advantage. This study seeks answers to two questions. First, how does the business relatedness between a foreign subsidiary and the parent firm moderate the performance impact of local competition barriers? Second, how does the business strategy of a foreign subsidiary moderate the performance impact of local competition barriers? To test contingency hypotheses, the study used data from 191 subsidiaries in Germany, the United Kingdom, and the United States. The subsidiaries belong to Swedish manufacturing firms. It was found that greater business relatedness and business scope of the subsidiary weaken the negative impact of competition barriers on subsidiary performance, while product differentiation and customer responsiveness differentiation have no moderating effects. The study contributes to theory on control of foreign subsidiaries by extending the knowledge of strategy drivers of foreign subsidiary performance, and the knowledge facilitates the formulation of effective global strategies. Copyright © 2012 Strategic Management Society.

Section: Introductionmentioning

confidence: 99%

Competition barriers and strategy moderations: Impact on foreign subsidiary performance

Global Strategy Journal

2012

“…O'Sullivan and Geringer (1993) went further and examined what needs to be accomplished and how resources are used, and Evans and Berman (2001) incorporate goals, total delivered product, and perceived outputs. Following this line of development, McLarty (2005) focuses on value adding in small‐ and medium‐sized firms.…”

Section: Conceptual Framework and Hypothesesmentioning

confidence: 99%

“…An industrial firm's implementation of its international marketing strategy involves choosing the extent of value‐adding activity a foreign subsidiary needs to perform (Evans and Berman, 2001; McLarty, 2005). The extent of value‐adding activity is crucial as it establishes the international capacity to implement strategy and exploit competitive advantages based on differentiation from competitors (Porter, 1985).…”

Section: Introductionmentioning

confidence: 99%

Marketing strategy antecedents of value adding by foreign subsidiaries

International Marketing Review

2009

If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service information about how to choose which publication to write for and submission guidelines are available for all. Please visit www.emeraldinsight.com/authors for more information. About Emerald www.emeraldinsight.comEmerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio of more than 290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of online products and additional customer resources and services.Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation. AbstractPurpose -The purpose of this paper is to extend the knowledge of marketing strategy antecedents of industrial value adding in foreign markets. It attempts to answer the following two questions: how is the marketing strategy of a foreign subsidiary associated with the extent of its value-adding activity? Is there an association between the extent of value-adding activity and financial performance of the subsidiary? Design/methodology/approach -A model is developed and hypotheses are tested. Data are collected from 191 subsidiaries of Swedish manufacturing firms in Germany, the UK, and the USA. Findings -Product-market breadth and market experience positively affect the extent of foreign value adding. Also, market experience has a moderating effect and strengthens the positive association between product-market breadth and the extent of value adding. A foreign subsidiary's financial performance is positively associated with the number of value-adding activities of the subsidiary.Research limitations/implications -The study shows that the marketing strategy of a foreign subsidiary needs to be acknowledged to understand the antecedents of foreign value-adding activity. In addition, the extent of value-adding activity contributes to the implementation of an effective international strategy. Practical implications -An industrial firm wanting to implement an effective international marketing strategy needs to pay attention to the links between the marketing strategy of a foreign subsidiary and the extent of the subsidiary's value-adding activity. Originality/value -The study is unique in that it applies a subsidiary perspective and focuses on foreign subsidiary strategy associations. The study both extends the common approach, which argues that the value adding of a foreign subsidiary is determined only by the corporate marketing strategy, and explores associations with foreign subsidiary performance.

“…Although there are opposing views on the character of value adding processes such as the circle view (Andersson and Larsson, 2005), the sequential view dominates (Birkinshaw and Morrison, 1995;Evans and Berman, 2001;Lorange and Roos, 1993;McLarty, 2005;O'Sullivan and Gerringer, 1993;Pehrsson, 1995;Porter, 1985;Roth, 1992). Porter (1985) was among the first to conceptualize value chain as a set of activities whereby competitive advantage is sustained.…”

Section: Type Of Value Addingmentioning

confidence: 99%

Value adding in foreign markets

European Business Review

2008

Purpose -The purpose of this paper is to extend our knowledge of industrial firms' international strategy implementation by exploring key associations pertaining to types of value adding in foreign markets. The questions are: how are types of value adding in foreign markets associated with differentiation attributes? How are the types associated with the performance of foreign units? Design/methodology/approach -A hypothesized model is developed. The key terms (type of value adding, differentiation attributes, financial performance) are operationalized. A questionnaire was used to collect the quantitative data necessary to test the hypotheses using ANOVA analyses. The questions were answered by managers of 191 subsidiaries of Swedish manufacturing firms in Germany, the UK and the USA. Findings -Firms with product development in foreign markets are associated with a limited focus on product attributes in trying to receive orders compared with firms without such local value adding. Local customer services are related to a limited emphasis on product attributes as well, but such services are associated with an emphasis on customer flexibility attributes. Foreign product development and customer services are associated with high performance. Interpretations of the findings are discussed. Practical implications -The study contributes theoretically as it extends our knowledge of international strategy implementation. In the search for the type of value adding in a foreign market, the industrial firm is recommended to be aware of the general associations among the types, and the differentiation attributes and performance established in the study. Originality/value -The application of a local perspective goes beyond what has been done in the dominant head quarter studies in previous research. Another key value is the analysis of perceptual data collected from managers responsible for foreign subsidiaries.