Marketing innovation: A consequence of competitiveness

by Suraksha Gupta, Naresh K. Malhotra, Michael Czinkota, and Pantea Foroudi

A hopefully interesting read! Please find a brief excerpt of this published article along with the link to the full article below.

Abstract: This research uses complexity theory to probe the relationship between competiveness and innovation in the marketing practises of large manufacturing firms that offer their branded products in a foreign market by engaging a network of local small- and medium-sized enterprises (SMEs) as resellers of their brand. A deductive, quantitative research approach was employed and data were collected over a nine-month period from resellers of international IT firms in India using a questionnaire. A structural equation modelling technique and fuzzy-set qualitative comparative analysis (fsQCA) were employed on a sample of 649 respondents to find answers to the questions raised. This research indicates that a successful business relationship between a brand and its resellers can enable both parties to compete in a competitive market. This study finds that innovativeness in the marketing initiatives of the brand can be a function of the contributions made by the brand to its competitiveness. Nevertheless, the findings are also subject to some limitations and provide direction for future research on the topic.

1. Introduction

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 (Barney, Wright, & Ketchen, 2001; Porter, 2011; Samli, Wirth, & Wills, 1994). 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 & 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, Edwards, & Schroder, 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 practises by predicting the business environment and trends in the consumption patterns of the foreign market (Bell, 1995; Johanson & Vahlne, 2009). Distributors and resellers have an important role to play in the successful penetration of a foreign market showing that an international firm develops its capability to innovatively market its products through reseller networks that needs to be understood. The resource advantage theory recognises 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 & Morgan, 1995, 1996; Srivastava, Fahey, & Christensen, 2001). Simultaneously, the industrial practises of industrial brands particularly in the IT and telecom sector indicate 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 & Weitz, 1992). This study examines the relationship between competitiveness and innovation in the marketing practises of large manufacturing firms that offer their branded products in different countries through a network of local small- and medium-sized enterprises (SMEs) as resellers of their brand. It builds on both the resource-based view and complexity theory to understand what features of the brand and the reseller enable them to adopt innovative marketing practises in an international setting. We aim to bridge the gap in the existing marketing literature by reviewing current academic knowledge surrounding competitiveness and marketing innovation. Thus, the study addresses the following research question: What configurations of brand and the reseller enable the adoption of innovative marketing practises by two firms in an international setting? This study addresses the research question by first developing a suitable theoretical framework which is then used to investigate the question by means of empirical data. This study addresses this question in four phases. The first phase underpins the arguments about competitiveness and marketing innovation with the current academic knowledge about theory of competitive advantage and resource-advantage theory. The second phase explores the concept and assumptions using expert insights. During the third phase, this study conducts a field survey to collect data from resellers of international brands and use structure equation modelling (SEM) and fuzzy set qualitative comparative analysis (fsQCA) (Ragin, 2006, 2008). fsQCA has received increased attention as it gives an opportunity to the researchers to gain a deeper and richer perspective on the data, particularly when applied together with complexity theory (Leischnig & Kasper-Brauer, 2015; Mikalef, Pateli, Batenburg, & Wetering, 2015; Ordanini, Parasuraman, & Rubera, 2013; Woodside, 2014; Wu, Yeh, & Woodside, 2014). The fourth phase leads to interpret the results in order to make recommendations and consider future avenues for the research. This research contributes to the literature on business-to-business and international marketing. Finally, the study advances the current understanding about the interdependence of brand and reseller firms for developing their competitiveness and adopting innovative approaches to marketing

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