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Effective Global Strategy Implementation

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DOI: 10.1007/s11575-011-0071-6

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Manag Int Rev (2011) 51:179–192
DOI 10.1007/s11575-011-0071-6

R e s e a r c h Art i c l e

Effective Global Strategy Implementation

Structural and Process Choices Facilitating Global
Integration and Coordination

Attila Yaprak · Shichun Xu · Erin Cavusgil

Abstract: 
0 This article offers a contingency framework of global strategy implementation effectiveness
on firm performance. The research question we seek to address is what the structural and
process requirements are for MNEs to successfully implement global strategy through in-
creased efficiency and effectiveness of integration and coordination across world markets.
0 Our central premise is that MNEs’ capabilities in establishing supporting structural and proc-
ess mechanisms will enhance the effectiveness and efficiency of implementing their global
strategies which would, in turn, lead to better firm performance.

Keywords:  Integration and coordination · Global strategy · Firm performance ·

Contingency framework

Received: 25.12.2009 / Revised: 15.08.2010 / Accepted: 11.10.2010 / Published online: 02.04.2011

© Gabler-Verlag 2011
Prof. A. Yaprak ()
Department of Marketing, Wayne State University, Detroit, USA
e-mail: [email protected]
Asst. Prof. S. Xu
Department of Marketing and Logistics, University of Tennessee, Knoxville, USA
Asst. Prof. E. Cavusgil
Department of Marketing, University of Michigan-Flint, Flint, USA
180 A. Yaprak et al.

Introduction

The globalization of the world economy and markets has given rise to the growth of
multinational enterprises (MNEs). With the expanded geographical scope and dispersed
operations across national borders, managing MNEs effectively has become a challeng-
ing task for managers. As such, numerous studies have been conducted to understand
what contributes to the success of MNEs in the global market. Many studies have adopted
the resource-based view (RBV) of the firm as the theoretical basis of such an exploration,
arguing that the competitive advantage of MNEs is sourced primarily in their ability to
access and acquire rare and inimitable resources that create better value for customers
around the world (e.g. Peng et al. 2008). These resources are considered indicators of firm
performance levels in the global market (Lu et al. 2010; Peng et al. 2008).
While RBV has been instrumental in explaining the performance differences among
MNEs, arguments have been advanced that the mere possession of resources is insuffi-
cient to generate superior performance (Sirmon et al. 2007). For instance, Barney and Ari-
kan (2006) state that assuming appropriate strategic action will automatically follow from
the recognition of valuable resources within the firm is an intellectually naive assumption.
Specifically, how resources can be used through strategic actions to create superior value
to create a competitive advantage for the firm remains unclear (Priem and Butler 2001).
While firm resources have a more or less direct impact on the strategic courses of action
a firm may pursue, implementation of such strategies to realize value creation potential
remains an under-researched topic (Barney and Arikan 2006).
This deficiency in the literature has led to the distinction between resources and capa-
bilities. Lu et al. (2010) propose that resources and capabilities are clearly distinguish-
able from each other. While Grant (1991) defined resources as stocks of tangible and
intangible assets which firms use to convert into products and services while capabilities
are viewed as intermediate goods generated by the firm to enhance the productivity of
resources (Amit and Schoemaker 1993). As such, capabilities are different from resources
since they act as enablers for firms to create value more effectively from the resources they
possess. This distinction between resources and capabilities has encouraged researchers
to examine the effect of MNEs’ capabilities on firm performance.
Research regarding the capabilities of MNEs has mostly focused on those that facili-
tate global strategy formulation. For example, Elango and Pattnaik (2007) propose that
networking capabilities have a direct impact on the internationalization strategy of the
firm. Peng et al. (2008) articulates a framework in which firm resources and capabilities
are viewed as one of three antecedents of a firm’s international business strategy (the
other two being industry based competition and institutional conditions and transitions).
Thus, the current literature sheds light only on how the capabilities of MNEs enable them
to formulate appropriate strategic choices that match their resources with opportunities
in their external, that is, their global, environment. However, mechanisms that ensure
successful implementation of the chosen strategies remain unclear. While we assume that
MNEs should be able to establish appropriate structures to match their strategies, research
has shown that there is a lot of incongruence between MNE strategy and structure (Duys-
ters and Hagedoorn 2001).
Effective Global Strategy Implementation 181

Based on this backdrop and drawing from the strategic fit literature, the purpose of this
paper is to offer a contingency framework of global strategy implementation effectiveness
on firm performance. The research question we seek to answer is what the structural and
process requirements are for MNEs to successfully implement global strategy through
increased efficiency and effectiveness of integration and coordination across world mar-
kets. Our central premise is that MNEs’ capabilities in establishing supporting structural
and process mechanisms will enhance the effectiveness and efficiency of implementing
their global strategies which would, in turn, lead to better firm performance. That is, we
argue that firms need to achieve a harmonious configuration among strategy, structure,
and process to better deliver superior value from the resources they possess.
The remainder of this article is organized as follows. After reviewing the literature and
presenting a comprehensive picture of the integration and coordination dimensions of
global strategy, we offer propositions for future research. We discuss the merits of explor-
ing each of these and conclude with suggestions for managerial practice.

Conceptualizations of Global Strategy

The globalization of the world economy has pushed many organizations, particularly
those MNEs with abundant resources, to rethink how they compete in this expanded
market. The increasingly interdependent financial, product, and labor markets are all
advancing at different paces towards a “globalized” system (Buckley and Ghauri 2004).
As the political, economic, and cultural forces increasingly promote a global environ-
ment, many industries have become global in nature (Morrison and Roth 1992; Kim et
al. 2003). Such global industries are largely driven by three structural forces: economies
of scale, comparative advantage, and standardized markets (Birkinshaw et al. 1995).
Firms competing in such industries have gradually been adopting a global strategy in
which they no longer view their subsidiaries located across the world as independent
subunits, but as a highly interdependent network (Kim and Hwang 1992). Global strategy
is thus characterized as developing competitive advantage through operating in inter-
dependent national markets by exploiting differences in national resource endowments,
the flexibility of MNC networks, and economies of scale and scope, as well as learning
(Malnight 1996).
Extant literature suggests that the strategic choice of a firm competing in global mar-
kets is a function of firm traits and aptitudes and market contexts (Peng et al. 2008). The
positive relationship between financial and market performance and global strategy is
also well documented in the literature (Roth 1992; Kim et al. 2003). We further argue that
these relationships are mediated by the interplay among strategy, structure and processes
of the firm (Fig. 1). We now discuss these, in turn.

Firm Traits and Aptitudes

Firm traits and aptitudes refer to the resources and capabilities that a firm possesses to
compete in the global marketplace. These resources and capabilities can take on differ-
ent forms such as culture, knowledge, orientation, experiences, and learning capability.
182 A. Yaprak et al.

Firm Traits Aptitudes Processes

Configuration Perspective
Innovative Culture Degree of integration of
Firm's strategic creativity in its strategic design and
marketing strategy making implementation
Latitude in autonomy vs. control [Integration vs. Independence]
Local Embeddedness Strategy
Depth in local market knowledge Degree of
Local market orientation standardization
International Embeddedness Coordination / Integration .n marketing Strategy
International Orientation strategy Performance
International Experience [Standardization
Firm Capabilities in vs. Adaption]
Structure
Cross-subsidization (Leverage)
Organizational learning Degree of
Market Contexts Concentration of value chain
Degree of international integration activities [Concentration
Degree of similarity with the vs. Dispersion]
primary international market Contingency Perspective

Fig. 1:  Strategy, structure, and processes as mediators of the firm, market and performance relationship.
(Source: Constructed by the authors from Lim et al. (2006), Menon et al. (1999), Ozsomer and Prussia (2000),
Solberg (2000), Xu et al. (2006), Zou and Cavusgil (2002))

Studies suggest that a fundamental antecedent to superior performance is the corporate

culture of the firm, particularly those associated with innovation capabilities. They show
that innovative culture, reflected by the firm’s creativity in its marketing strategy making,
is a key ingredient in influencing strategic performance. They further show that focus on
effective use of the firm’s marketing assets and capabilities and prudent resource com-
mitments across markets will upgrade its cross-market integration skills, and thereby
enhance its market performance (Menon et al. 1999). The firm’s ability in reverse-inno-
vating products, distributing them globally, and its skills in expanding opportunities in
difficult markets and pioneering worthy segments in different types of market settings,
all manifestations of creative strategy making, will also upgrade its market performance
(Immelt et al. 2009).
A second key firm trait involves local market embeddedness. Local market orientation
underscored by increasing depth of local market knowledge will lead to higher levels of
global market penetration. When coupled with the ability to adapt to cultural diversity
and affinity to the local market intermediaries’ aspirations to extract common denomina-
tors for many markets, this will likely lead to higher degrees of strategy effectiveness
(Solberg 2000).
Equally important is international embeddedness. International orientation, bolstered
by previous international business and/or marketing experience in the major markets of
the firm will give the firm latitude in integrating and coordinating its competitive moves
across world markets and thus lead to network-wide efficiencies, effectiveness and syner-
gies. This valuable organizational resource will also help simplify worldwide planning
and help establish the firm’s brands with a consistent image across markets; thereby
enhancing the firm’s marketing strategy performance (Zou and Cavusgil 2002).
Effective Global Strategy Implementation 183

Firm capabilities in organizational learning and cross-subsidization will affect glo-

bal market performance positively. The firm’s ability to learn more and faster than its
competitors and from its alliance partners in foreign markets will advance its marketing
capabilities. Its skills in leveraging resources, information, experience, and ideas across
markets and affiliates, sacrificing competitive gains in some markets for the benefit of
other markets, and sharing organizational learning gains across its affiliate network will
help the firm maintain a strong configural advantage, and will improve the firm’s market-
ing strategy performance (Craig and Douglas 2000; Hamel 1991; Lim et al. 2006).
In light of these arguments, we propose that:
P1: Firm traits, such as innovative culture and strategic creativity and firm aptitudes such
as local and international embeddedness, along with capabilities in organizational
learning and cross-subsidization, will enhance the adoption of a global strategy,
which in turn, will positively influence firm performance.

Market Contexts

Porter (1990) suggests that the industry in which a firm finds itself competing largely
determines its strategic choices. Market contexts specifically examine the external envi-
ronment and the opportunities it presents to the firm. Market contexts, such as global
industry and the firm’s global orientation and international experience, will also give
firms an incentive to adopt a global strategy which will, in turn, enhance marketing strat-
egy performance. One argument here is that global strategy seeks benefits from both
comparative and competitive advantages by leveraging economies of scale derived from
common market demand and dispersion of operations across world markets to benefit
from factor cost differences (Kim et al. 2003). The degree of similarity among markets
will incentivize firms to adopt a globally-integrated strategy which will lead to efficien-
cies and strategy effectiveness, and this will improve performance (Zou and Cavusgil
2002). Participation in multiple markets offers the firm the ability to identify different
opportunities with which to exploit its resources. For example, the firm can extend its
product life cycle by launching products with different pacings across global markets.
Market contexts offer greater flexibility in implementing global business battles against
competitors. Participation in multiple markets also helps firms identify different value
chain activity locations based on the unique comparative advantages of each location.
The degree of integration in the firm’s markets will foster easier leveraging of resources
and capabilities and will ease learning from these. As the firm expands increasingly into
dissimilar markets, however, it will be inspired to develop creative solutions, innovative
marketing mix adaptations, and imaginative strategies. The degree of coordination and
differentiation in marketing strategies the firm is able to implement in global markets and
its ability to harmonize competitive tactics across regions will also improve performance
(Lim et al. 2006; Schilke et al. 2009). Since markets are dynamic, their changing nature
will require emerging strategic mechanisms, inspiring the firm toward developing crea-
tive market-based learning, rather than deliberative solutions (Ozsomer and Prussia 2000;
Vorhies and Morgan 2005). Thus, we propose that:
184 A. Yaprak et al.

P2: Similarities and dissimilarities among the firm’s market contexts will move the firm
toward adopting a global strategy, which in turn, will enhance marketing strategy
performance.

Integration and Coordination in Global Strategy and Implementation

As the competitive advantage in adopting a global strategy lies in the firms’ ability to
effectively link competitive actions across national markets, global integration becomes
a critical task in coping with the challenges posed by the integrated global competitive
arena (Kim et al. 2003). Thus, firms adopting a globally integrated strategy seek to inte-
grate their globally-dispersed activities in a manner that will help them develop combi-
nations of comparative (that is, location-specific) and competitive (that is, firm-specific)
advantages that will foster more effective responses to cross-national competitive forces
(Roth and Schweiger 1991).
Global integration, that is the coordination and control of business operations and
functions across national borders (Cray 1984), is viewed as the ideal indicator of the
degree of comparative and competitive advantage combinations within the firm (Kobrin
1991; Rangan and Sengul 2009). Roth and Schweiger (1991) describe these two sources
of advantage in a global strategy as that developed through international scale economies
and economies of scope (competitive), and that which results from exploiting the dif-
ferences in factor costs across country locations (comparative). Comparative advantage
arises from the geographic configuration of location choices while competitive advan-
tage resides in geographic coordination or organization (Rangan and Sengul 2009). Thus,
integration allows the firm to disperse its value-adding activities across national markets
while integrating some of these within the firm’s own boundaries.
Two major activities in achieving global integration goals are coordination and control
(Kim et al. 2003). The purpose of coordination is to achieve concerted action among the
subunits and functional areas toward a unified organizational goal (Roth and Schweiger
1991). Coordination is essential in managing the interdependencies across the subunits
of an organization. As coordination effort in an international business organization can
range from low to high, the demand of a global strategy puts its coordination effort on
the high end. A high degree of coordination implies that functional activities are tightly
linked with one another and that these are tightly-integrated across geographic locations
(Roth 1992). This integration leads to configural advantage (Craig and Douglas 2000).
Thus, we propose that:
P3: Superior performance of the MNE’s global strategy will be positively linked to
increased integration and coordination of its value chain activities; that is, to the
degree of its configural advantage.

Structural and Process Requirements for Global Integration and Coordination

Even though MNEs enjoy the benefit of abundant resources and capabilities coming from
firm traits and aptitudes and the opportunities their environments present, designing the
organizational structures and processes that best support the strategies they deploy that
Effective Global Strategy Implementation 185

use the resources and capabilities that suit the demand of their external opportunities is
mandatory in realizing superior performance. In fact, the task of management is to for-
mulate strategies based on the resources and capabilities of the firm and match them with
identifiable opportunities in the external environment by selective market entry. Strategy,
as such, is seen as an outcome of the process of identifying the alignment of the resources
and capabilities of the firm and the opportunities present in the environment. Implement-
ing such a strategy relies primarily on supporting the organizational structures and proc-
esses that are in place. Without the appropriate strategy, processes and structure, firm
traits and aptitudes and market contexts may each present benefits by themselves, but
they may also lead to detrimental performance when inappropriately combined.
As such, firms need to examine both their internal strengths and the external opportuni-
ties they face and attempt to achieve the best synergy between these two. While strategy
is mostly focused on identifying market opportunities that best utilize the resources of
the firm, the reverse is also possible; the firm may identify opportunities in the environ-
ment but find that it lacks the resources to exploit these. Unique combinations of these
structure and strategy elements will yield unique levels of strategic performance (Olson
et al. 2005). Interrelationships among the internationalizing firm’s strategy, structure, and
processes are positively associated with market performance and will lead to strategy
implementation types that can serve as major sources of sustainable global competitive
advantage (Xu et al. 2006).

Structure

A critical determinant of success in implementing a global strategy is the development of

effective structures that will carry firm strategy toward superior performance. Organiza-
tional structural forces are crucial to effectively deploying and integrating firm resources
(Fang and Zou 2009). One element of this effort is the global configuration of value
chain activities such that achievement of the firm’s objectives is rationalized. Sourced in
competitive advantage theory (Porter 1990), this effort involves selectively concentrat-
ing and dispersing activities across the firm’s global network so that it can differentiate,
pursue cost efficiencies, focus on market niches, and achieve economies of scale in doing
so (Roth 1992). It also involves assigning various roles to the firm’s affiliates so that they
will serve the firm’s objectives in the most effective manner. For instance, subsidiaries
might play such roles as strategic leader, implementer, and contributor, depending on
their level of local competencies and the strategic importance of their markets to the firm
or can be early or late movers in carrying the firm’s products throughout its network,
depending on their special strengths and competitive advantages (Bartlett and Ghoshal
1989, 1992). The firm’s aims with regard to each local market as it incrementally inter-
nationalizes, and its desire for control over affiliates vs. encouragement of autonomy in
local markets, can lead to subsidiary roles as local barons or implementers of headquar-
ters strategies (Solberg 2000). These roles can then create internationalizing networks
modeled as federations, confederations, and the United Nations (Bartlett and Ghoshal
1989; Solberg 2000).
Of the different dimensions of organizational structure, three dimensions are recognized
as the most influential on global integration and coordination: formalization, departmen-
186 A. Yaprak et al.

talization, and centralization. Formalization is defined as the degree to which organiza-

tional norms are defined explicitly (Hall 1982). It essentially prescribes the acceptable
and unacceptable behaviors within an organization. Roth and Schweiger (1991) argue
that formalization boosts integration and coordination efforts by decreasing the discre-
tion of the managers at both the headquarters and the subsidiary levels. Formalization
reduces the direct involvement of the headquarters in subsidiaries by offering rules and
procedures that fertilize the emergence of dominant logic within the organization. This
dominant logic fosters similar actions from managers at different geographic locations.
In addition, firms also increase integration efficiency by formalizing the ways func-
tional activities are performed across units. By establishing standardized procedures, pol-
icies and rules, the effectiveness of integration will increase as the process of conducting
activities is codified, a form of coordination by standardization (Kim et al. 2003).
Centralization is concerned with decision making authority and is regarded as an
important means of reaching coordination goals within an MNE (Roth and Schweiger
1991). A global strategy leads to higher levels of interdependencies among the subunits
within a global organization. This would require a higher level of coordination among the
functional activities. Adopting a centralization structure in an MNE means that critical
decision-making lies at the top management level because better understanding of the
various activities and units scattered around the world is possible there (Kim et al. 2003).
It could be argued that while formalization facilitates coordination of global integration,
centralization plays more of a role in the control of global integration. The assumption
here is that with a decentralized structure, each subunit will focus on achieving its indi-
vidual goals and tasks resulting in the sacrifice of the overall goal of the organization.
Formalization and centralization along the firm’s value chain configuration will also
affect its strategic behavioral orientations, such as customer, competitor, and innovation-
orientation, and by extension, the firm’s strategic performance.
Departmentalization is defined as the degree to which the tasks are confined to a
predetermined domain and members of departments are isolated from cross-functional
interactions (Mintzberg et al. 1976). Departmentalization is believed to be detrimental to
the integration and coordination effectiveness in business. It is argued that resource inte-
gration, especially as it involves knowledge integration, is an essential way to generate
new ideas, particularly for new product development purposes. By isolating the subunits
or functions from each other, members of the organization lose sight of the overall picture
and the unique goals of the organization. Thus, we propose that:
P4: Formalization and centralization of structure will positively influence integration and
coordination effectiveness in firms that adopt a global strategy.
P5: Departmentalization of structure will negatively influence integration and coordina-
tion effectiveness in firms that adopt a global strategy.

Processes

The major characterization of global strategy is focused on the integration of the firm’s
global network of activities and the coordination of functions and resources that will yield
enhanced strategy performance. This perspective is concerned with whether subsidiaries
Effective Global Strategy Implementation 187

are standalone profit centers or parts of a more holistic design of deliberately integrated
units (Lim et al. 2006). Its focus is on the dependence of affiliates on the headquar-
ters and the interdependence among the subsidiaries for materials, resources, learning,
efficiencies, and company-wide decision-making (Bartlett and Ghoshal 1989; Lim et al.
2006). When combined with the market offering and the concentration dimensions of
strategy (Lim et al. 2006), and under the umbrella of contingency theory (Van de Ven and
Drazin 1985), this perspective provides a window into our understanding of the spread
of strategic autonomy, functional and operative control over affiliates, resource sharing,
and cross-market consultation in the internationalizing firm. Dependence of the firm on
its local affiliate or subsidiary for market knowledge due to lack of its own proficiency
would lead the firm, for instance, to nurture interdependencies with its affiliates and stra-
tegic control over them. Low dependence of the subsidiaries on the headquarters, along
with low interdependence among subsidiaries and high subsidiary autonomy are associ-
ated with worldwide mandates assigned to subsidiaries (Lim et al. 2006).
The organizational processes of MNEs largely involve the control aspects of organi-
zational activities. Gencturk and Aulakh (1995) classify formal control mechanisms as
market-based and hierarchy-based. Birkinshaw and Morrison (1995) add the heterarchy
model as an alternative control process. While the market-based control process intuitively
works against the goal of integration and coordination, the hierarchy- and the heterarchy-
based control mechanisms facilitate integration and coordination to a greater degree. We
argue, however, that the heterarchy-based control process is more appropriate for a glo-
bal strategy. First, the hierarchy concept is incongruous with interdependence among the
various regional and strategic business units that make up the global enterprise. Second,
the hierarchy model implies unidirectional control, imposed by the headquarters over the
subsidiary units, a notion incompatible with global integration. Finally, global integration
requires stability and instrumentality to succeed and at least one of these, instrumental-
ity, is less present in the hierarchy model than the other models of control. The heterar-
chy control model, in contrast, is based on three characteristics that global integration
requires: dispersion of resources and capabilities; existence of lateral relationships among
subunits; and coordinated activities. We feel that all three of these are consistent with the
coordination and integration efforts of an MNE and foster greater integration.
Thus, we propose that:
P6: Adoption of a heterarchy-based control model will positively influence the integra-
tion and coordination effectiveness of firms that adopt a global strategy.

The Interaction of Strategy, Structure, and Process

While each of strategy, structure, and process may have a direct impact on firm perform-
ance, the interaction among the three may exert even greater influence on that perform-
ance. Viewing strategy as matching resources with the environment focuses essentially
on strategy formulation. This relies largely on the fit of the external environment with the
firm. However, strategy implementation requires achieving the firm’s intended benefit. It
relies more on the internal fit within the organization; that is, the fit between structure and
processes (Venkatraman and Camillus 1984). Venkatraman and Camillus (1984) argue
188 A. Yaprak et al.

that effective implementation of any strategy requires congruence among a large number
of internal elements. This implies that the supporting role of structure and process cannot
be separated from each other. In addition, the dominant logic in the strategic management
literature is that strategy is the overriding concern, while structure and process are derived
from strategy.
Strategic performance is determined by how effectively the firm’s strategy is imple-
mented, and by extension, how marketing objectives are accomplished (Olson et al. 2005).
While there are many dimensions to performance measurement, financial and non-finan-
cial measurement metrics are typically used in strategy performance contexts. Among
these are profitability, ROI, and sales volume, as well as the strategic position of the
firm relative to its most relevant competitor, its relative market share in key markets, and
expectations compared to relevant competitors and satisfaction with achieved expecta-
tions (Olson et al. 2005; Zou and Cavusgil 2002). We argue that a holistic view should be
used in measuring strategic performance; a measure that would incorporate both financial
and non-financial considerations. We also argue that, all things considered, the strategy,
concentration, and integration/coordination conceptualizations of global strategy will
mediate the relationship between the firm and market antecedents of performance and
strategic performance itself. This is evidenced by recent research which shows that the
interplay of strategy, structure and processes lead to higher levels of performance when
they are mediated by co-alignment of strategy with the market context (Xu et al. 2006).
Thus, we propose that:
P7: Firm and market antecedents of firm performance will be mediated by the interplay
among the strategy, structure, and process components of internationalizing firms.

The Capability of Configuring Strategy, Structure, and Process

The capability of an MNE to successfully configure a harmonious strategy, structure,

and process could be a source of competitive advantage. Unlike the tangible resources
such as plant and raw materials, intangible resources and capabilities such as the ability
to align structural and process dimensions with the chosen strategy cannot be easily cop-
ied or substituted. When skillfully leveraged, these capabilities offer bases of competi-
tive advantage and increase the effectiveness and efficiency in implementing a chosen
strategy.
Capability development is viewed as path dependent (Nelson and Winter 1982). Firms
accumulate knowledge and capabilities by learning by doing. Dosi et al. (1990) views
the firm as a historic entity in which repetitive activities offer the opportunity to learn
and form routines and search processes. In this perspective, capabilities are viewed as
emerging from the past history of learning by doing. Firms may also actively invest in
organizational structures and processes to make constant improvements of routines and
practices (Ethiraj et al. 2005). As such, capabilities are a combined result of passive learn-
ing by doing and active investment in learning. MNEs with extensive internationalization
experiences would have the opportunity to nurture the capability to align their structure
and process with their strategies. As such, we propose that:
Effective Global Strategy Implementation 189

P8: The international experience of an MNE will be positively associated with its
capabilities to configure organizationally effective strategy, structure, and process
combinations.

Discussion and Suggestions for Future Research

The relationship between global strategy making and its performance outcomes has
generated a rich stream of research in the extant literature during the last few decades.
This interest was heightened recently with the explosive growth in international busi-
ness activity, especially by internationalizing firms from the emerging economies. This
recent interest has resulted in conceptual developments attempting to explain the roles
of various antecedents in explaining strategic performance and empirical testing of these
frameworks (e.g., Katsikeas et al. 2006; Lim et al. 2006; Solberg 2000; Zou and Cavus-
gil 2002). More recent work has explored the significance of the roles played by vari-
ous moderators in explaining the strength of the antecedents-performance relationship
(Schilke et al. 2009).
All of these studies have deepened our understanding of the strategy making-perform-
ance relationship, but we do not yet have a comprehensive picture of many of the actors
that might mediate this relationship. In this paper, we attempt to contribute to this void
by developing one such picture. We propose that firm traits and market contexts will
positively affect strategic performance, but this relationship should be enhanced when
mediated by the interplay among the strategy (standardization vs adaptation), structure
(concentration vs dispersion), and process (integration vs independence) dimensions of
strategy making (Lim et al. 2006). We offer propositions about each of these dimensions
and the interface they have with the antecedents and outcomes of strategy formulation.
Our work is exploratory and thus aims at offering a conceptual framework that should
lead to empirical research. Some empirical questions that future research might explore
include the following. First, what are the theory bases that might give us a better under-
standing of this relationship? The extant literature is full of studies that are anchored in
the contingency and the configurational theories, but other theories/paradigms, such as
agency theory, transactions cost economics, the resource based view, and social exchange
theory might be fruitful avenues of inquiry in explaining the strategy making-strategic
performance relationship. For example, agency theory may shed greater light on the
impact of principal-agent relationships on product introduction rollouts in international
markets and how these might shape the strategy formulation-strategic performance link-
age. Social exchange theory might explore the significance that such constructs as trust,
commitment, forbearance, and lack of opportunism might render on this relationship.
The resource based view might explain the significance of the role played by the interde-
pendence among the firm’s affiliates as they share certain types of resources; participate
in decision-making contexts; and leverage capabilities across the firm’s network in the
strategy making-strategic performance link.
Second, what is the role of culture in defining and predicting the outcomes of the strat-
egy-performance link? Culture, for instance, might influence conceptualizations of the
degree of control desired, what it means to be autonomous or interdependent, what kinds
190 A. Yaprak et al.

of gains autonomy and interdependence might bring to subsidiaries and how desired these
might be, and how norms and values might shape value chain configurations and levels of
adaptations needed in different markets.
Third, what role does time play in the shaping of this relationship? Longitudinal stud-
ies might show, for example, that the strategy making-strategic performance link changes
in short time frames for some products, medium time frames for others, and long time
frames for still others. Finally, are there other dimensions of strategy and/or performance
that should be considered and how might these interact with the three discussed in this
paper? For example, the firm’s position along its internationalization path or the level
of its participation in its global markets might be dimensions that need to be considered
more formally to better understand the strategy-performance relationship. The interac-
tions among these and the dimensions already considered in the literature are also worthy
of further study.
Our purpose is to depict a more comprehensive picture of the strategy formulation-
strategic performance relationship in international business and to suggest that the inter-
play among strategy, structure, and processes of the firm mediates that relationship. We
also aim to offer questions for future research. We hope that our work will provide a
deeper and broader picture of that relationship and the questions we ask will inspire future
research in this interesting domain of research.

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