Purpose Establishment of wholly owned subsidiaries in a foreign market is central to international marketing because sole ownership and high commitment facilitate firm's marketing in the local market. Drawing on knowledge-based theory, this study extends the current understanding of firm's sequential establishments of wholly owned subsidiaries in a host country. Design/methodology/approach Swedish firms' establishments of wholly owned subsidiaries in Germany, the United Kingdom and the United States were analyzed using a longitudinal approach. Findings A firm's broad international experience is associated with an acquisition in any phase, while mode experience and value-adding experience are associated with postinitial acquisitions. There is no association between mode experience and greenfield investments. Research limitations/implications Knowledge-based theory explains a firm's choice of establishment mode when establishing in the same host country. Effects of marketing experiences are due to the establishment mode and different experiences explain choices for initial and postinitial establishments. Practical implications In choosing between a wholly owned subsidiary in terms of an acquisition or a greenfield investment, for a foreign establishment the firm is advised to consider the impact of marketing experiences and establishment phase. Originality/value Research is needed on how experiences affect choices between foreign establishment modes where the firm is the sole owner. This study is the first to focus on the choice between wholly owned subsidiaries in terms of acquisitions and greenfield investments, and the impact of experience and phase of establishment in a particular host country.

This article contributes to global strategy literature by examining the impact of industrial firms’ diversification on value-adding modes of wholly owned foreign subsidiaries. Thus, the study extends theory on global strategy implementation by developing and testing a conceptual model that integrates strategy theory and internationalization theory. The study contrasts triggers of basic modes consisting of promotion, sales, and after-sales services, and advanced modes that also include product development and/or production. It was found that greater product/market relatedness between the core business unit of the parent firm and the foreign subsidiary favors a basic mode, while greater resource relatedness favors an advanced mode. However, the foreign subsidiary’s market experience moderates the relationship pertaining to product/market relatedness, and the interaction triggers an advanced mode. By using the study contributions the industrial firm’s efforts to efficiently implement corporate diversification in an international context would become more efficient as strategy coherence will increase.

The PSE model is presented and illustrated by Ericsson’s entry into the mobile systems market in the USA. Advices on application of the model are presented. The case shows key lessons in entering an international market.

A firm implementing a competitive international strategy needs to balance global standardization and responsiveness to individual host country markets. In order to balance in an appropriate way, the firm needs to answer two central questions: (1) how can sharing of knowledge relevant to any market support a foreign subsidiary’s competitive strategy? and (2) how should local competition and other local matters be handled? However, despite the fact that the issue of balancing is largely relevant, in practice, strategy literature does not pay enough attention to the issue. Therefore, this chapter initially elucidates corporate support of a subsidiary’s competitive strategy and the strategy expresses the degree to which the firm implements global standardization and local responsiveness at the same time. After that, the chapter highlights implementation of a competitive international strategy in terms of upgrading a subsidiary’s scope of value adding. The upgrading is triggered by incoming knowledge stemming from the corporate strategy and by market experience accumulated by the subsidiary itself. An analysis of two subsidiaries shows how it may work in practice. Both belong to Swedish parent firms and operate in the United States.

Purpose – To review previous research and to propose a model for the impact of barriers to entry on the market strategy of an entrant firm, where product/market scope and product differentiation are central strategy components. Questions: What is the impact of barriers on market strategies of entrants? Are early and late entrants affected in different ways?

Design/methodology/approach – A model and propositions are developed based on a review of previous research. The model applies the contingency perspective and company cases exemplify the model.

Findings – It is proposed that a firm that enters a market late and faces extensive barriers would choose a broader product/market scope and differentiate its products to a larger extent than an early entrant. It is also proposed that incumbents’ market strategies indirectly affect the market strategy of an entrant firm as incumbents’ market strategies interact with barriers, and the effects are due to entry timing.

Implications – The study contributes theoretically as it extends current knowledge of the impact of barriers to entry on strategy. Management of entrant firms are advised to strive for a fit between barriers and market strategy and consider the propositions.

Originality/value – The model and the propositions concern barrier effects on two key components of the market strategy of an entrant firm: product/market scope and product differentiation. Another important value is that the model accounts for interactions between incumbent strategies and barriers to entry, and effects on the market strategy of an entrant firm.

Understanding of business relatedness and performance effects is the foundation of any diversification decision, but we have limited knowledge of how managers consider relatedness. This study identified relatedness classes and performance effects using perceptual survey data from top industrial executives. Four classes with significant variable differences were found: high-, technology-, customer-, and low relatedness. Technology-relatedness had a strong positive performance effect and high relatedness had a negative effect. The findings confirm that perceptions are multidimensional, but may include 5 key factors rather than the previously identified attribute categories of product-markets, resources, and value chains. Contributions to diversification literature are discussed.

Purpose Business relatedness is important in international diversification because it enables a firm's transfer of resources to business units operating in foreign markets. The purpose of this paper is to develop a conceptual model based on a review of the major contributions of studies regarding the relatedness of subsidiaries, joint ventures or any other foreign unit. Design/methodology/approach The paper examines theory bases, the relatedness construct, data issues and the key achievements of previous studies. Drawing on organizational learning, transaction costs economics and industrial organization, a conceptual model and propositions are developed that intend to close important research gaps. Findings The model includes competitive strategy as a mediator of the effects of relatedness on foreign unit performance, type of foreign unit - that is, a wholly owned unit or joint venture - as a moderator; and competition barriers as a moderator. Research limitations/implications In future research, the propositions need to be transformed into testable hypotheses. It is recommended to treat relatedness as a multidimensional concept. Practical implications A firm is primarily advised to evaluate how its relatedness with foreign units enables knowledge transfer. A foreign cost leadership strategy benefits from product relatedness, while a differentiation strategy calls for resource relatedness. Originality/value The proposed model is unique as it includes an actionable component that mediates the effects of relatedness on international performance, i.e. competitive strategy, and concerns both wholly owned foreign units and international joint ventures.

Relatedness between foreign business units and the core business unit of the parent firm is an underlying issue in the process of integration and local responsiveness going on in any international industrial firm. In this process, the character of customer needs is an important indicator of the demand for integration/local responsiveness. This study contributes to the development of the business relatedness concept by exploring the performance impact of degrees of relatedness in two international customer contexts: foreign business units delivering to original equipment manufacturers (OEMs), and units delivering to end-user firms. The study focuses on the impact of product, market, skills and branding relatedness on foreign performance. Perceptual data from 191 units of Swedish firms in Germany, the UK, and the US were used to test hypotheses. The findings show that relatedness between the foreign business unit and the core unit of the parent firm is associated with negative foreign performance. Market relatedness and skills relatedness mean low performance in both customer contexts. Branding relatedness has negative effects in the OEM context, while product relatedness has negative effects in the end-user firm context. The findings implicate that we need to pay attention to the significance of low relatedness and the customer context in international settings in developing the relatedness concept.

The purpose of this article is to extend our understanding of business relatedness, a concept that is central to diversification issues. These questions are put forward: What characterizes existing types of measurements of business relatedness? What are the weaknesses of these types? What would be the features of a model for measurement of business relatedness?

As relatedness concerns specific business attributes, common attributes used in measurements are presented. A review of previous studies on types of measurements of business relatedness (codes or indices, researcher assessments and managerial perceptions) is followed by a discussion on correlations between perceptual and objective measurements.

The review shows that application of SIC codes/ and researcher assessments suffer from weak content validity of the measurements, and underestimation of the multidimensionality of the construct. Use of managerial perceptions needs to address the uncertainty inherent in managerial self-assessments; previous research has found a major divergence between perceptual and objective measurements.

A model is proposed for the measurement of business relatedness using perceptual data. It is stressed that the context of the comparisons (i.e., reason for comparison and units to be compared) has a major influence on the outcomes. Business attributes to be subjectively compared by managers are those that have been singled out as important for financial performance.

Obstacles to strategy implementation and change are often due to limited consistency between the choices that a firm has to make regarding business scope and differentiation.

The purpose of this paper is to identify relationships between business scope and competitive differentiation in industrial firms. It reports on managerial perceptions within a sample of business units of Swedish manufacturing firms in Germany, the United Kingdom and the United States.

The study found that standardised products offered to just a few market segments are associated with an emphasis on product differentiation but that this strategy causes negative performance effects. In contrast, penetration of many segments is associated with customer flexibility attributes, yielding positive results.

The study contributes to our understanding of strategy consistency by establishing associations between business scope and competitive differentiation. Management advice is presented.

The market context of the foreign subsidiary is essential in determining an appropriate headquarter-subsidiary relationship in international strategy making. The study aims to extend the understanding of linkages between business strategy and performance of foreign subsidiaries by focusing on customer access moderations. Hypotheses were tested on 263 subsidiaries in Europe and the USA. The subsidiaries belong to Swedish manufacturing firms. The study found that the customer scope of the subsidiary positively triggers its performance if it encounters many obstacles to accessing customers. The study also found that a subsidiary emphasis on differentiation of products from those of competitors negatively triggers performance regardless of the number of obstacles, while customer responsiveness differentiation has positive effects where there are few obstacles. Contributions to literature are discussed.

The purpose of this paper is to improve the existing knowledge of international strategy antecedents of foreign subsidiary performance. Hypotheses are developed regarding the impact of perceived relatedness between the foreign subsidiary and the parent firm’s core business unit, and the moderating effect of the subsidiary’s business strategy. In order to test the hypotheses, the study uses survey data from Europe (Germany and the UK), and the USA, and the subsidiaries belong to Swedishmanufacturing firms. Perceived relatedness regarding intangible resources affects foreign subsidiary performance positively. Competitive differentiation and market knowledge of a foreign subsidiary reinforce the performance impact of the perceived relatedness. A foreign subsidiary’s relatedness to the core business unit of its parent firm determines the subsidiary’s ability to assimilate the parent firm’s core competencies. The relatedness represents a synergy potential that is realized by the subsidiary’s core competence exploitation and economies of learning.

The paper extends current knowledge of international strategy antecedents of foreign subsidiary performance as it applies the perceptual approach to relatedness and acknowledges the impact of foreign subsidiary strategy.

Realization of synergy between related business units, such as a foreign subsidiary and the corporate core business, is crucial to successful implementation of a competitive international strategy. Exploitation of relatedness facilitates the sharing of knowledge relevant to competitive advantage across the corporation. This chapter explores the role of managerial cognition and biases that may appear when managers specify relatedness among business units. Understanding the impact of such obstacles facilitates realization of the synergy potential of relatedness. Without sharing resources, each business unit would work separately, resulting in risks for sub-optimization and a difficulty to achieve competitive advantage by means of extending corporate efficiency. The extent of cost-reduction, or increase of revenues, manifests synergy realization. This chapter contributes to the understanding of managerial cognition in the context of implementation of competitive international strategy. The chapter shows that biases arise when individual managers judge similarities, and the biases are linked to the specification of relatedness in terms of the choice of business units to compare and the choice of relatedness dimensions. Furthermore, for both choices, conflicting views of managers may appear that may cause cognitive dissonance. 

In formulating a focus strategy, the firm needs to achieve a fit between the product/market scope and competition. This paper explores competition antecedents of the firm’s degree of focus, and the moderating effect of market knowledge. The paper emphasizes impacts of the main competitor’s scope and strategic behavior, and competition-based customer access obstacles. To test hypotheses, the study uses data on 430 Swedish firms and contrasts firms with limited and extensive market knowledge. It was found that the competitor’s scope and strategic behavior positively triggers the firm’s focus. The main competitor’s market focus has a greater impact if the firm possesses extensive market knowledge, while the competitor’s strategic behavior affects the firm’s scope only if the firm has extensive experience. The paper discusses theoretical contributions.

This study relies on managerial cognition literature and extends our understanding of firm strategy antecedents. The model suggests that the firm’s perceived competition and market experience affect its differentiation. The model contrasts two competition contingencies stemming from industrial organization theory and competitive dynamics theory (barriers to competition and competitors’ differentiation). Hypotheses were tested on 168 Swedish firms competing in the Swedish and Polish markets. First, it was found that perceived competition may consist of three reliable factors: government requirements, dominant competitors, and the main competitor’s differentiation. Second, the barrier of dominant competitors and the main competitor’s differentiation affect the firm’s differentiation positively, while the firm’s market experience has a reinforcing effect. The main effect of market experience is negative. Contributions to literature are discussed.

This paper captures subsidiary entrepreneurship. In order to build competitive advantage the global firm needs to recoqnize great diversity, including foreign subsidiary's knowledge of breaking through competition barriers. However, the relationship between subsidiary's knowledge of barriers and subsidiary performance may not be linear, but stronger in certain contexts specified by entrepreneurial orientation. Drawing on the knowledge-based view the purpose is to contribute to literature on subsidiary entrepreneurship by developing propositions regarding relationships between foreign subsidiary’s knowledge of exogenous competition barriers and subsidiary performance. The paper focuses on barriers created by global competitors or a diversity of local competitors: need for scales and barriers to access customers. The knowledge may be transferred to the subsidiary, or acquired by the subsidary itself.

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: how does the business relatedness between a foreign subsidiary and the parent firm moderate the performance impact of local competition barriers? 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 USA. 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.  

Contemporary businesses are exposed to global competition enhanced by new information technology and liberalized cross-border transactions in many industries. This introduces a new competitive dynamic, influenced by actors in developed and emerging markets. The dynamic puts major demands on executives as they consider future moves that support strategic initiatives. The context of intensified global competition requires attention from practicing (and aspiring) leaders in international business organizations.

Drawing on contemporary research, Competitive International Strategy: Key Implementation Issues addresses international business strategy formulation and implementation in the global competitive market. It captures the essential strategy components by elaborating on the implementation of corporate integration and local responsiveness. This is considered a vital dichotomy in the development of international business strategies. Essential components include competition context, firm’s resources, strategy directions and competence, implementation issues, and competitiveness. The book includes several detailed company cases.

Bridging the strategy formulation and implementation is crucial for the ultimate success of international business firms. This book will be of great value to students at an advanced level, academics, and reflective practitioners in the fields of strategic management, leadership, and international business.

This chapter presents the resource-based model for competitive international strategy and its components. The first section presents competition context in terms of competition barriers that make it complicated for the firm to establish itself firmly in a host country market and then competitive dynamics follow. The second section clarifies the meaning of resources and capabilities, whereas the third discusses strategy formulation and, in particular, strategy directions and strategy competence. The fourth section captures implementation of competitive international strategy in terms of phases of a firm’s establishment in a host country, establishment modes, local value adding, and corporate control of strategy implementation. The final section discusses outcome in terms of sustainable international competitiveness.

An industrial firm’s implementation of international marketing strategy can be hampered where there is limited consistency across the strategy, the firm’s international marketing experience, and the value-adding role of the foreign subsidiary. This paper develops a framework consisting of three dimensions: international marketing strategy in terms of character of main competitive advantages, international marketing experience, and value-adding role of the foreign subsidiary. Propositions are put forward regarding consistent relationships between the dimensions. The propositions are generated based on case studies of Swedish firms and their subsidiaries in the US market. Contributes to theory are discussed.

Contemporary businesses are exposed to global competition enhanced by new information technology and liberalized cross-border transactions in many industries. This introduces a new competitive dynamic, influenced by actors in developed and emerging markets. The dynamic puts major demands on executives as they consider future moves that support strategic initiatives. The context of intensified global competition requires attention from practicing (and aspiring) leaders in international business organizations.

Drawing on contemporary research, Competitive International Strategy: Key Implementation Issues addresses international business strategy formulation and implementation in the global competitive market. It captures the essential strategy components by elaborating on the implementation of corporate integration and local responsiveness. This is considered a vital dichotomy in the development of international business strategies. Essential components include competition context, firm’s resources, strategy directions and competence, implementation issues, and competitiveness. The book includes several detailed company cases.

Bridging the strategy formulation and implementation is crucial for the ultimate success of international business firms. This book will be of great value to students at an advanced level, academics, and reflective practitioners in the fields of strategic management, leadership, and international business.

The core message of this volume is that each firm needs to align its international strategy carefully with competition. In particular, consciousness to potential obstacles to strategy implementation simplifies a firm’s efforts to cope with changing landscapes of international competition. The model for competitive international strategy draws on resource-based theory of strategy. Essentially, the theory predicts that tangible and intangible resources constitute a viable ground for strategy, and alignment leads to competitiveness. The model contributes to the theory in four major ways. First, the model shows that strategy implementation mediates the effect of strategy on sustainable competitiveness, and implementation activities need to fit the strategy. Second, competition needs to be incorporated explicitly in a resource-based model as a moderator of direct relationships between model components. Third, knowledge-based theory complements resource-based theory regarding resource foundations of strategy. Fourth, additional theories complement the applications of resource-based theory and knowledge-based theory, including contingency theory, the theory of industrial organization, and competitive dynamics theory.

This article extends our understanding of performance effects of expansion barriers in different strategy contexts relevant to industrial firms. Effects of perceived obstacles to customer access are studied, and competitive certainty is acknowledged since barriers to a large extent originate from business strategies of competitors. The study explores patterns using data from subsidiaries of Swedish manufacturing firms in Germany, the United Kingdom, and the United States. For units with a narrow product/market scope, the direct performance effects of customer access obstacles and competitive certainty are negative. On the other hand, in the narrow context competitive certainty moderates the relationship between customer access obstacles and performance, and this implicates a positive effect. There are no significant effects in the context of a broad product/market scope. Performance effects of barriers are, thus, more complicated than previously thought, and we need to pay attention to perceived competitive certainty and the strategy context.

This paper focuses on performance effects of expansion barriers in different strategy contexts of industrial firms. Effects of obstacles to customer access, and competitor certainty are studied. The study explores patterns using perceptual data from subsidiaries of Swedish manufacturing firms in Germany, the UK, and the USA. For units with a narrow product/market scope, the direct performance effects of customer access obstacles and competitive certainty are negative. On the contrary, in this context competitive certainty moderates the relationship between customer access obstacles and performance, and this implicates a positive effect. There are no significant effects in the context of broad product/market scopes. Performance effects of barriers are more complicated than previously thought, and we need to consider perceived competitive certainty and the strategy context.

Digital Business Strategy responds to the need for clarification of the increasing, but fragmented, knowledge of digital business strategy. It systematically presents topical knowledge by reviewing previous research and developing frameworks for the content of digital business strategy and its relationships with relevant factors. In addition, the book analyses issues encountered by individual companies when implementing digital business strategies.

The volume identifies key categories of digital business strategy, in particular, strategy scope and direction, competitive advantage, and resource and capability reliance. It then explores relationships with antecedents such as digital experience, relationships with obstacles and enablers of strategy implementation, and relationships with operational and financial outcomes. The author demonstrates that strategy content and relationships differ among manufacturing companies, retailers, digital content providers, and digital platforms and also presents ways to cope with issues of implementation.

In summary, the book provides readers who wish to know more about the growing field of digital business strategy with up-to-date and systematic knowledge. It will be of great value to students at an advanced level, researchers, and reflective practitioners in the fields of technology management and strategic management in particular.

This paper draws on the knowledge-based view and contributes to literature on subsidiary entrepreneurship which is an underestimated topic despite its importance for firm performance. The paper addresses limitations of previous studies, and develops a conceptual model and propositions based on a literature review. The Page 265 THURSDAY AIB 2014 Conference Proceedings propositions highlight associations among types of barriers to competition that may obstruct post-entry growth of the foreign subsidiary, transfer and acquisition of knowledge of barriers, and the moderating role of subsidiary’s entrepreneurial orientation. The first proposition predicts that the greater the foreign subsidiary’s entrepreneurial orientation, the stronger the positive association between knowledge of scale barriers transferred to the subsidiary and the subsidiary’s relative growth. The second proposition predicts that the greater the foreign subsidiary’s entrepreneurial orientation, the stronger the positive association between knowledge of customer access barriers acquired by the subsidiary and the subsidiary’s relative growth. Theoretical and managerial contributions are discussed.

Genom att tillämpa modellen för strategiska tillstånd kan entreprenören öka medvetandet om marknadsrisker och klargöra optimala strategier för företaget. Entreprenören kan därmed hantera sina strategiska dilemman: standardisering eller kundanpassning och få eller många marknadssegment.

This paper reviews previous research and proposes a contingency-based model for the impact of barriers to entry on strategy for foreign market entry, where product/market scope and product differentiation are central strategy components. The questions are: What are the impact of barriers on entry strategies? Are early and late entrants affected in different ways? First, it is proposed that exogenous and endogenous barriers to foreign entry are mutually reinforcing. Second, a firm that enters a foreign market late and faces extensive barriers would choose a broader product/market scope and differentiate its products to a larger extent than an early entrant. Finally, it is proposed that incumbents’ market strategies indirectly affect the entry strategy of an entrant firm as incumbents’ market strategies interact with barriers, and the effects are due to entry timing. The study contributes theoretically as it extends our knowledge of the strategy impact of barriers to entry. Management of entrant firms are advised to strive for a fit between barriers and foreign entry strategy and pay attention to the proposals put forward in this paper.

Purpose - The literature reports mixed findings on the performance impact of market orientation and a lack of attention to the moderating roles of dyadic competition and firm's age. The purpose of this paper is to explore the relationship between customer responsiveness and performance of industrial firms and to consider the moderators. Design/methodology/approach - Drawing on competitive dynamics literature, a contingency model is developed. Hypotheses were tested on 350 Swedish industrial firms that market clean technology to business customers. Findings - First, the main competitor's cost leadership weakens the positive performance impact of the industrial firm's customer responsiveness. An interpretation would be that it is difficult for product firms to overcome competition based on low costs. Second, the industrial firm's age weakens the positive performance impact of the industrial firm's customer responsiveness. This indicates that the firm's responsiveness advantage diminishes as strategies of competing firms converge. Research limitations/implications - By adding literature on competitive dynamics the study contributes to theory. The article shows that dyadic competition and firm's age matter for the relationship between customer responsiveness and performance. Practical implications - The industrial firm may keep an efficient customer responsiveness strategy by reducing its vulnerability to low costs of the main competitor. Also, an ability of developing the content of the firm's responsiveness strategy would favor the strategy uniqueness and efficiency. Originality/value - The article presents a new model that shows the performance impact of the industrial firm's customer responsiveness, including the moderating roles of the main competitor's competitive strategy and the firm's age. By including the contingencies, the model explains mixed findings in the literature regarding relationships between customer responsiveness and performance.

The purpose of this paper is to examine important relationships pertaining to customer responsiveness of the industrial firm. Drawing on strategy and competitive dynamics literature, a contingency model is developed. Hypotheses were tested on 432 Swedish industrial firms that market to business customers in growing or mature markets. Clean technology markets represented growing markets, while miscellaneous markets represented mature markets. The relationship between the attention paid to customer responsiveness by the industrial firm and the attention paid to volume by the main competitor is negatively reinforced if the firm operates in a growing market. The relationship between the attention paid to customer responsiveness by the firm and competition-based customer access obstacles in terms of supplier loyalty is positively reinforced if the firm operates in a growing market. The relationship between the firm’s customer responsiveness attention and its financial performance is positively reinforced if the firm operates in a growing market. The industrial firm may find an efficient customer responsiveness strategy if the firm operates in a growing market. Because customer responsiveness does not improve firms’ financial performance in mature markets, competition relationships are only important to examine in growing markets. Thus, customer responsiveness is more complicated than previously thought in the literature. The paper presents a new model that integrates relationships among industrial firms’ attention to customer responsiveness, competition, and performance. By including the market growth contingency, the model explains mixed findings in the literature regarding relationships between customer responsiveness and performance.

In order to increase a foreign subsidiary’s contribution to international competitiveness of theindustrial firm it is decisive to be aware of boundaries to the subsidiary’s differentiationstrategy that may hamper its performance. Based on a literature review, this article develops atheoretical model in which the differentiations components of innovativeness and customerresponsiveness build on dynamic capabilities. The model contributes to theory by proposing anegative contingency effect of competitive dynamics on foreign subsidiary’s positiverelationships between innovativeness/responsiveness and performance. Also, the modelproposes that an appropriate value-adding mandate assigned to the subsidiary strengthens thedirect relationships. Implications and further research are discussed.

Purpose – The purpose of this paper is to extend the understanding of relationships betweenentrepreneurial orientation (EO) and performance, and between market orientation (MO) andperformance in different market contexts that set boundaries for performance.

Design/methodology/approach – The paper presents a review of studies containing empiricalresearch incorporating EO, MO, market context and firm performance.

Findings – Patterns regarding content of previous studies of the issue are outlined, and crucialresearch gaps are identified. These concern a lack of focus on relationships between EO/MO andperformance of foreign units.

Research limitations/implications – First, further studies on international strategy need todevelop EO/MO components that are consistent with foreign units’ value-adding roles. Second, theimpact of dynamism originating from competitors in foreign markets needs attention. Third, directimpacts of market dynamism on performance of foreign units, and moderating roles of EO/MO need tobe studied.

Practical implications – International competitiveness of the firm as a whole would benefit fromhigher performance of foreign units that may be achieved through aligning EO/MO with local marketcontexts.

Originality/value – Meta-analyses show that it is difficult to establish universal direct relationshipbetween EO/MO and performance and that the importance of market context is underestimated. Thepaper provides opportunities for further studies that may clarify underlying contingency mechanisms.

Purpose – The study draws on the resource-based view and the contingency view of strategy. The purposeof this paper is to contribute to international strategy literature by extending the current understanding offoreign subsidiary’s competitive strategy in terms of cost leadership and product differentiation.

Design/methodology/approach – Hypotheses concern associations between corporate supportbuilding on product and skills relatedness and subsidiary strategies. Also, it is hypothesized that strategiesare due to the type of local competitive intensity. The hypotheses were tested on wholly owned subsidiaries ofSwedish industrial firms in Germany, the UK and the USA.

Findings – Product and skills relatedness between the subsidiary and the corporate core unit are positivelyassociated with the subsidiary’s emphasis on cost leadership. Also, a positive association was found betweenskills relatedness and product differentiation, and extensive competitive intensity strengthens therelationship.

Research limitations/implications – The study specifies what business relatedness is needed for asubsidiary’s competitive strategy; skills relatedness is more important than product relatedness; thetype of local competitive intensity is important; corporate support and local strategy operatesimultaneously.

Practical implications – Management is advised to implement a foreign subsidiary’s competitivestrategy by recognizing the mechanisms identified in this study.

Originality/value – In a unique way, the study captures the role of corporate support of a foreignsubsidiary’s competitive strategy relying on business relatedness and the importance of aligning the strategywith competitive intensity.

This article draws on the dynamic capability view (Eisenhardt and Martin, 2000;Teece, 2014) and the contingency perspective of strategy (Boyd et al., 2012). The purpose isto extend the understanding of mechanisms underlying relationships between a differentiationstrategy of an industrial firm’s foreign subsidiary and its performance. First, I argue that thestrategy of the foreign subsidiary needs to rely on dynamic capabilities in order to be alignedwith a dynamic local context. Second, I argue that competitive dynamics in the foreignmarket, and the value-adding mandate assigned to the subsidiary are contextual boundaries ofthe strategy. An understanding of the impact of the contingencies would render the strategymore effective and extend the subsidiary’s contribution to firm’s global competitiveness.

Purpose – There is a lack of research on how the industrial firm’s international strategy is associated with basic and advanced value-adding modes of the wholly owned foreign subsidiary. The purpose of this paper is to fill the gap by answering two questions: how are relatedness between the firm and the foreign subsidiary, and the firm’s international scope associated with foreign subsidiary’s value-adding mode? How does the subsidiary’s market experience moderate the relationships?

Design/methodology/approach – The study develops a conceptual model that integrates strategy theory and internationalization theory in order to explain basic value-adding modes (promotion, sales, and after-sales services), and advanced modes that also include product development and/or production. Also, the study tests the model using statistical data from subsidiaries of Swedish firms operating in Germany, the USA, and the UK.

Findings – It was found that greater relatedness between the core business unit of the parent firm and the foreign subsidiary favors a basic mode. However, the foreign subsidiary’s market experience weakens the relationship, and the interaction triggers an advanced mode. Also, greater international scope of the firm favors an advanced mode.

Research limitations/implications – The model test shows that research needs to consider both international strategy and market experience in explaining value-adding modes of an industrial firm’s wholly owned subsidiary.

Practical implications – By using the study contributions the industrial firm’s efforts to efficiently implement international strategy would become more efficient as strategy coherence will increase.

Originality/value – This paper contributes to literature on international strategy and internationalization by showing that international strategy and market experience of foreign markets mutually impact value-adding modes of wholly owned foreign subsidiaries.

In order to increase a foreign subsidiary’s contribution to the global competitiveness of an industrial firm, an awareness of the boundaries to the subsidiary’s strategy of differentiation that may hamper the subsidiary’s performance is essential. Drawing on the contingency perspective of strategy, this article extends current understanding of relationships between the differentiation strategy of the industrial firm’s foreign subsidiary and its performance. A conceptual model is developed in which the differentiation strategies of innovativeness and customer responsiveness build on dynamic capabilities. Contingency factors consist of type of local competitive dynamics and the value-adding mandate assigned to the subsidiary. The model is illustrated by subsidiaries of four industrial firms operating on the US market. Five propositions are developed regarding direct effects of the strategies on performance, and contingency effects of combinations of rivalry and relational competitive dynamics and upstream and downstream activities of the subsidiary.

Realization of synergy between related business units, such as a foreign subsidiary and the corporate core business, is crucial to successful implementation of a competitive international strategy. Exploitation of relatedness facilitates the sharing of knowledge relevant to competitive advantage across the corporation. This chapter explores the role of managerial cognition and biases that may appear when managers specify relatedness among business units. Understanding the impact of such obstacles facilitates realization of the synergy potential of relatedness. Without sharing resources, each business unit would work separately, resulting in risks for sub-optimization and a difficulty to achieve competitive advantage by means of extending corporate efficiency. The extent of cost-reduction, or increase of revenues, manifests synergy realization. This chapter contributes to the understanding of managerial cognition in the context of implementation of competitive international strategy. The chapter shows that biases arise when individual managers judge similarities, and the biases are linked to the specification of relatedness in terms of the choice of business units to compare and the choice of relatedness dimensions. Furthermore, for both choices, conflicting views of managers may appear that may cause cognitive dissonance. 

Purpose – Drawing on the contingency perspective of strategy, the purpose of this paper is to extendcurrent understanding of fit between a differentiation strategy of the industrial firm’s foreignsubsidiary and key contextual boundaries.

Design/methodology/approach – A conceptual framework is developed in which a differentiationstrategy involves the complementary approaches of innovativeness and customer responsiveness. The key boundaries consist of local competitive dynamics and the value-adding mandate assigned to thesubsidiary. Detailed features of four types of differentiation strategies are identified by analysingstrategies applied by subsidiaries of industrial firms operating on the US market.

Findings – Four propositions are developed regarding alignment between strategy types and theboundaries. Relationships are proposed regarding a strategy type and a context specified by rivalry/relational competitive dynamics, and a broad/narrow value-adding mandate.

Research limitations/implications – The conceptual framework and the propositions may betested by analysing statistical data on industrial firms’ subsidiaries operating in several host countries.

Practical implications – To increase a foreign subsidiary’s contribution to the global competitiveness ofan industrial firm, an awareness of the boundaries to the subsidiary’s strategy of differentiation that mayhamper the subsidiary’s performance is essential.

Originality/value – The conceptual framework, and the propositions, contributes to literature on theindustrial firm’s global strategy because it focuses on subsidiary strategy and extends presentunderstanding of the mechanisms that drive the effectiveness of a foreign subsidiary’s differentiation strategy.

This study contributes to international business literature by addressing the important issue of contextual boundaries to the effectiveness of differentiation strategies of industrial firms’ foreign units, notably wholly owned subsidiaries and co-operations. A model was tested using data from 166 foreign units of Swedish firms. For the first-tier boundary of price competition, a positive association was found between technology leadership and the unit’s performance. The association between market responsiveness and performance is strengthened if the firm is the sole owner of the unit and is able to fully control the strategy. For value-based competition, a positive association was found between market responsiveness and performance. Here, the second-tier boundary of market experience strengthens the association between technology leadership and performance. Contributions to literature are discussed.

This chapter reveals changing patterns of competition in the telecommunications industry due to liberalization and technology innovations. Starting around 1980, governments in many countries took initiatives to liberalize the industry in order to move away from the dominance of monopolies and allow other firms to compete in markets for operations of telecommunications networks. The UK belonged to the forerunners and allowed entrant firms to challenge the previous monopoly. Among others, City of London Telecommunications (COLT) recognized the opportunity and developed a competitive international strategy relying on an innovative technology for fiber networks. This chapter analyzes the way in which COLT implemented the strategy under the influence of competition in the initial phase (1992-1996) and throughout the worldwide geographic expansion (1997-2019). The necessity of getting operating licenses and access to customers, and need for capital were the major barriers in the initial phase when COLT executed a strategy of customer responsiveness and exploited the network advantage. During the worldwide expansion, COLT broadened its range of services and strived towards standardization. The barriers of getting licenses and financing the expansion remained. The necessity of low costs became another major barrier because price competition became intensive. 

This article extends our understanding of performance effects of expansion barriers in different strategy contexts relevant to industrial firms. Effects of perceived obstacles to customer access are studied, and competitive certainty is acknowledged since barriers to a large extent originate from business strategies of competitors. The study explores patterns using data from subsidiaries of Swedish manufacturing firms in Germany, the United Kingdom, and the United States. For units with a narrow product/market scope, the direct performance effects of customer access obstacles and competitive certainty are negative. On the other hand, in the narrow context competitive certainty moderates the relationship between customer access obstacles and performance, and this implicates a positive effect. There are no significant effects in the context of a broad product/market scope. Performance effects of barriers are, thus, more complicated than previously thought, and we need to pay attention to perceived competitive certainty and the strategy context.

Purpose – The purpose of this paper is to improve the existing knowledge of international strategy antecedents of foreign subsidiary performance.

Design/methodology/approach – Hypotheses are developed regarding the impact of perceived relatedness between the foreign subsidiary and the parent firm’s core business unit, and the moderating effect of the subsidiary’s business strategy. In order to test the hypotheses, the study uses survey data from Europe (Germany and the United Kingdom), and the USA, and the subsidiaries belong to Swedish manufacturing firms.

Findings – Perceived relatedness regarding intangible resources affects foreign subsidiary performance positively. Competitive differentiation and market knowledge of a foreign subsidiary reinforce the performance impact of the perceived relatedness.

Limitations/implications – A foreign subsidiary’s relatedness to the core business unit of its parent firm determines the subsidiary’s ability to assimilate the parent firm’s core competencies. The relatedness represents a synergy potential that is realized by the subsidiary’s core competence exploitation and economies of learning.

Originality/value – The study extends current knowledge of international strategy antecedents of foreign subsidiary performance as the study applies the perceptual approach to relatedness and acknowledges the impact of foreign subsidiary strategy.

Efficient dissemination of market knowledge within the industrial firm is essential to global competitiveness. However, use of knowledge regarding firm’s foreign markets needs more attention in research. This paper extends the understanding of the industrial firm’s use of its stock of market knowledge. Relying on the knowledge-based view of the firm and the market orientation construct, a conceptual model and propositions are developed. These focus on associations between foreign subsidiary’s value-adding scope and its growth, and the moderating roles of market knowledge created locally, or somewhere else in the corporation. An understanding of the importance of knowledge of foreign markets and use situations will facilitate the design of market information systems that include creation and sharing of knowledge within international industrial firms.

More intensive international competition allows for greater market par-ticipation of domestic and foreign firms. Changes affect involved firms’ competitiveness, no matter how the firm assesses the competitive envi-ronment, or what international strategy the firm seeks to implement. This book identifies strategy drivers of successful foreign establishments and presents methods for competitiveness. The book provides:

• An international strategy model, including the competitive envi-ronment, international strategy, international strategy implemen-tation, and international competitiveness.

• Firm cases of international strategies such as development of Ericsson’s international strategy, strategy issues of suppliers to Audi and Mercedes, and strategy issues of suppliers to the US automotive market.

• Studies of establishments of Swedish industrial firms in Ger-many, the United Kingdom, and the USA.

• Applications of the PSE model for market entry, and the Strategic States model for competitive strategy in a market, and advices regarding application of methods for competitiveness.

Although research on competition-based entry barriers has been popular, we still need to understand perceptions of barriers, effects on market strategy and accompanying knowledge processes. This paper suggests a model for knowledge of barriers and effects on entrant firm strategy. The model and its propositions rely on the contingency perspective, and company cases illustrate the model. It is proposed that exogenous and endogenous barriers are mutually reinforcing, and that an entrant firm perceiving extensive barriers would choose a broad product/market scope and differentiate its products to a large extent. Finally, it is proposed that incumbents’ strategies indirectly affect the strategy of an entrant firm and interact with barriers. Literature contributions and suggestions for empirical research are discussed.

Purpose – This study extends 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?

Methodology/approach – A model is developed and hypotheses are tested. Data were collected from 191 subsidiaries of Swedish manufacturing firms in Germany, the United Kingdom, and the United States.

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.  

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.

The purpose of this paper is to explore the competition antecedents and performance effects of firm product/customer scope, and the moderating role of market growth. The theoretical model follows the contingency perspective on strategy and draws on the strategy and competitive dynamics literature. A questionnaire was used to gather the quantitative data for testing the hypotheses using regression analyses. The questionnaires were completed by executives of 432 Swedish industrial firms serving business customers. The firms offering clean technology products operate in growing markets while the firms offering miscellaneous products operate in mature markets. Competition is an antecedent of firm product/customer scope. The more competitive the action of the main competitor, the more limited the customer scope of the firm if it operates in a mature market. The impact of the main competitor’s scope is robust across all market contexts. Furthermore, the broader the product scope of the firm, the better the financial performance if the firm operates in a growing market. The study contributes theoretically, as it extends our knowledge of crucial relationships of firm product/market scope. A firm must be aware of its main competitor’s scope and action, and adapt its scope to the level of market growth. The theoretical model and the tests go beyond those used in previous research. Another key value is the analysis of perceptual data gathered from executives. Earlier studies of competition assume equal perceptions among competing firms and do not acknowledge that market contexts are ambiguous realities.

This chapter presents practical guidelines regarding the application of the model for competitive international strategy. Guidance relates to general steps to develop a strategy, operationalization of the model components, and how to develop competitive international strategy based on the example of the COLT case. Management of a firm is advised to formulate a competitive international strategy following these principal steps: (1) specify the current competitive international strategy and lessons from the past; (2) formulate relevant strategy alternatives and pay attention to competition (focused or global standardization, focused or global responsiveness, or combinations?); and (3) choose a competitive international strategy. For the last step, it is important to evaluate to what extent the strategy relies on sustainable competitive advantages, consistency among items of the strategy, whether it is explicitly formulated, enabling communication within the firm and with stakeholders, and whether it is possible to adjust the strategy under the influence of competition.