- This paper is published in the Journal of Business Research, full article can be found at: http://doi.org/10.1016/j.jbusres.2016.02.042
Professor Suraksha Gupta, University of Kent
Professor Naresh K Malhotra, Georgia Institute of Technology
Professor Michael Czinkota, Georgetown University
Professor Pantea Foroudi, Middlesex University
Various studies recommend that managers aiming to venture into the challenging field of internationalisation should create a competitive edge that helps them to demonstrate the superior abilities of their firm (Porter, 2011; Samli et al., 1994; Barney et al. 2011). But, fear of the unknown deters managers from stepping out of their home country and benefiting from internationalisation because growth markets tend to be very complex as they foster competition (Knight, 1995; Thai and Chong, 2013). A business-to-business model of distribution allows managers of international firms to successfully deal with entry barriers and enter smoothly into a foreign market and effectively address the complexity of a place that offers high potential of growth to their businesses (Yan, 2012).
A distributor simultaneously facilitates the entry of multiple firms with competing products into the market and engages micro level small and medium firms in the local market for selling (Chen, 2003). Since distributors offer multiple similar and competing products to resellers, markets being served through resellers become very competitive for international brands. Competition in a market encourages competing firms to demonstrate their ability to innovatively serve customers (Freeman et al., 2006). Lack of in-depth native knowledge in such markets is a major shortcoming for firms aiming to internationalise because it decreases their capability to innovate their marketing related business practices by predicting the business environment and trends in the consumption patterns of the foreign market (Bell, 1995; Johanson and Vahlne, 2009). Distributors and resellers have an important role to play in the successful penetration of a foreign market so how an international firm develops its capability to market its products through reseller networks needs to be understood.
The resource advantage theory recognizes the creation of a competitive edge as a function of marketing and identifies the role of branding in creating the capability of a firm to demonstrate its superior abilities (Hunt and Morgan, 1995; Hunt and Morgan, 1996; Srivastava et al., 2001). Simultaneously, the industrial practices of industrial brands particularly in the IT and telecom sector indicates that the managers of strong brands can compete in foreign markets based on their brand leadership and brand relationships in the local market. It has also been noticed and reported in the literature of local firms by studies like Gupta and Malhotra (2013) that a brand that contributes to the competitiveness of the reseller is able to compete at the local level using innovative marketing initiatives. These observations of various researchers indicate that the relationship between an international brand and its resellers in foreign markets becomes very important for brands in a market that poses strong competition (Anderson and Weitz, 1992).