International Business Review: Roland Helm, Stephanie Gritsch

International Business Review 23 (2014) 418–428
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International Business Review

journal homepage: www.elsevier.com/locate/ibusrev
Examining the influence of uncertainty on marketing mix strategy

elements in emerging business to business export-markets
Roland Helm a,1, Stephanie Gritsch b,*
a
Chair of Strategic Industrial Marketing, University of Regensburg, Germany
b
Research assistant, Chair of Strategic Industrial Marketing, University of Regensburg, Germany
A R T I C L E I N F O A B S T R A C T
Article history: The degree of adaptation or standardization of the marketing program is critical in international business
Received 2 August 2012 ventures. However, findings within this important research field and, consequently, implications for
Received in revised form 11 April 2013 practice remain contradictory and confusing. The purpose of this paper is to examine determinants of an
Accepted 26 June 2013
international marketing-mix strategy within a specific business-to-business context that includes the
effects of uncertainty. Is the degree to which the marketing program is adapted or standardized
Keywords: dependent on the managerial perception of uncertainty? Does a firm’s international entrepreneurial
Adaptation
ability or the use of networks positively influence the degree of positive assessment of the environment?
Business-to-business
Data were collected from German companies working in different international business-to-business
Globalization
Industrial goods markets. The results indicate that international entrepreneurship has a greater impact on uncertainty
International marketing strategy reduction than the use of networks. After having reduced uncertainty, a firm tends to adapt their
Marketing mix communication and pricing strategy, whereas the adaptation of the product and distribution strategy in
Standardization general is not significant.
Uncertainty ß 2013 Elsevier Ltd. All rights reserved.
1. Introduction market settings. When entering a new market, firms have to design
and implement an appropriate marketing mix approach. They have
Industrial market players feel a particularly high pressure to go to weigh up between a cost and complexity saving strategy of
abroad in order to secure and enlarge a company’s sales volume. international standardization and a customer and market-tailored
Since international activity is vital to their performance, business- adaptation strategy of the marketing-mix. For industrial marketing
to-business companies are facing the challenge of designing and in particular, there is a growing need for guidance when navigating
implementing market-specific export strategies that take into through a fast changing international business environment
account the uncertain environment within the fast changing target (Madhavaram, Badrinarayanan, & Granot, 2011). Sheth and
markets (Katsikeas, 2006). The fundamental proposition of Sharma (2006) identified a lack of theory-based empirical studies
international marketing is that the mere existence of a firm‘s examining the international and cross-cultural effects on business-
global marketing strategy will have a positive effect on its global to-business marketing.
market performance (Cavusgil & Zou, 1994; Leonidou, Katsikeas, & The importance of research on the marketing mix strategy is
Saimee, 2002; O’Cass & Julian, 2003; Shoham, 1999; Theodosiou & undoubted. However, the debate on the marketing mix strategy is
Leonidou, 2003; Zou & Cavusgil, 2002). But what is considered to unfortunately characterized by non-significant, contradictory and
be a good global marketing strategy? International market success confusing, and highly aggregated findings (Theodosiou & Leonidou,
is always linked to an efficient and effective implementation of a 2003; Zou & Cavusgil, 2002) and, in many cases, is concentrated on
well planned marketing-mix strategy (Sousa, Martı́nez-López, & b2c-settings (Sheth & Sharma, 2006). The transfer of these findings
Coelho, 2008) for a specific market. So, it is necessary to rethink to industrial goods seems problematic due to the complexity of the
established domestic strategies when entering a new market goods and the different customer problems encountered (Back-
(McDougall & Oviatt, 1996) because of different international haus, Lügger, & Koch, 2011). In addition, it is necessary to shed light
on the heterogeneity of the various business types in international
industrial markets because designing a ‘‘one-fits-all’’ marketing
strategy seems to be problematic and ineffective (Backhaus &
* Corresponding author. Tel.: +49 941 943 5624; fax: +49 941 943 5622.
E-mail addresses: sigm@wiwi.uni-regensburg.de (R. Helm),
Muehlfeld, 2005). Many authors claim that industrial products are
stephanie.gritsch@wiwi.uni-regensburg.de (S. Gritsch). more likely to be standardized (Jain, 1989; Samiee & Roth, 1992;
1
Tel.: +49 941 943 5620; fax: +49 941 943 5622. Schilke, Reinmann, & Thomas, 2009); however, a marketing mix
0969-5931/$ – see front matter ß 2013 Elsevier Ltd. All rights reserved.
http://dx.doi.org/10.1016/j.ibusrev.2013.06.007
R. Helm, S. Gritsch / International Business Review 23 (2014) 418–428 419
does not result in a single product strategy. Up until now, most results and a conclusion that includes implications for future
research has focused on a single analysis of the influence of one research.
marketing mix element on a company’s performance. But there is a
need to examine the interplay of all four mix elements at the same 2. Literature review and theoretical foundation
time (Kustin, 2004). Schmid and Kotulla (2011) showed that
hitherto researchers have not been able to clearly derive 2.1. Marketing mix in export markets
performance-enhancing strategies to answer the question of
marketing standardization or adaptation in a given context. They In light of the international surroundings, a fundamental issue
call for more industry-segment and country-specific studies facing international business is the question of how to coordinate
(Schmid & Kotulla, 2011). the different generic marketing mix elements (i.e., product, place,
Next to industry-specific reflection on the marketing mix price, and promotion) across national boundaries (Douglas, 2000).
strategy, another critical variable in the whole decision context is Literature on international marketing strategy provides a magni-
the construct of uncertainty. Moving to different foreign markets tude of arguments for both the standardization and the adaptation
always increases the environmental complexity (Ghemawat, of the marketing mix elements. The standardization of the
2001). If a company wants to expand into new markets that seem marketing mix elements across countries is favored by many
different from the home market, uncertainty about strategy arises authors due, above all, to the realization of economies of scale
(Erramilli & Rao, 1993). Uncertainty plays a central role in a firm’s (Levitt, 1983). Furthermore, standardization is one answer to the
internationalization strategy due, above all, to the shift to the increasing homogenization of world markets, where differentia-
unfamiliar and fast changing environment of emerging markets tion in marketing becomes less and less important (Sheth, 2001).
(Hoskisson, Eden, Lau, & Wright, 2000). Schmid and Kotulla (2011) Supporters of the adaptation approach highlight instead the need
criticized the fact that potentially false perceptions managers have to react to cultural differences, another competition set, and
about the environment and its influence on strategy have, up until foreign market regulations (Diamantopoulos, Schlegelmilch, &
now, not been included enough in international studies. Hence, the DuPreez, 1995; Douglas & Wind, 1987). Studies within the
objective of this study is to include perceptual uncertainties in the contingency research stream argue that the ultimate strategy
international marketing strategy research. depends on various situational factors and is a degree rather than
Uncertainty in decision making has to be reduced (Schmid & an absolute position (Cavusgil & Zou, 1994; Cavusgil, Zou, & Naidu,
Kotulla, 2011) to an individually appropriate level. Well estab- 1993; Jain, 1989; Zeithaml, Varadarajan, & Zeithaml, 1988).
lished concepts within the contingency literature are based on the Building on this, Katsikeas (2006) emphasizes the importance of
constructs of international entrepreneurship and the networking the so-called fit between the strategy chosen by a company and the
capabilities of a company. Firms providing entrepreneurial situation in which the strategy is pursued.
orientation are expected to be better able to deal with uncertain But what is the appropriate marketing mix strategy for
environments because these companies possess the abilities business-to-business companies acting in emerging export mar-
needed to react to unknown and fast changing environmental kets? International studies seem to lack a systematic approach
circumstances (Kraus, Rigtering, Hughes, & Hosman, 2012). toward settings other than environmental fit that determine a
Furthermore, Jones, Coviello, and Tang (2011) state that network firm’s marketing mix strategy (Schilke et al., 2009). Schmid and
capabilities in combination with entrepreneurial opportunity- Kotulla (2011) call for more integrated research combining a
seeking behavior are crucial for a rapid and successful interna- normative developed theory and the concept of fit. They propose a
tionalization process. Therefore, we want to link these important framework of four situational fit variables, integrating the two
skills to the firm’s ability to reduce uncertainty about the moderation effects of perceptual errors of managers and the
appropriate marketing mix strategy for a foreign market. quality of execution of a pursued strategy. In line with this recent
Our research will contribute to a deeper understanding of research, this paper proposes a detailed analysis of the generic
contingency factors influencing international marketing-mix elements of the marketing mix strategy in the specific context of
strategies in a b2b-context. Determinants of strategic decisions emerging business-to-business export markets.
concerning the question of standardization versus adaptation
within the business-to-business context will be examined. We 2.2. Project business markets
make an important theoretical contribution to the idiosyncrasies
of business-to-business markets and concentrate on the project There has already been a great increase in business-to-business
business, which has an essential influence on the marketing mix studies; however, the growth and diversification of the discipline
strategy. Moreover, we extend the research on the four marketing needs to be examined more deeply and considerable research still
mix elements. Furthermore, our study is one of the first empirical needs to be undertaken (Backhaus et al., 2011). The spectrum of
studies to link the construct of uncertainty to the strategic options industrial products and services sold is very wide-ranging.
of the marketing mix. In addition, we believe that business-to- Backhaus and Muehlfeld (2005) presented a comprehensive
business firms have to stress more and more their international systematization of the heterogeneous products and services within
networking and international entrepreneurial capabilities to cope the business-to-business context, following the transaction cost
with the possible uncertainties of foreign markets. We postulate theory and using asset specificity as the basic criterion for
that these positively influence the decisions made in association categorization. They distinguish the product business, the project
with the marketing-mix strategy. business, and the relational business. This paper focuses on the
The structure of our paper is as follows: First, we discuss project business, the most complex and the most representative
previous research findings on the topic and develop a theoretical type within business-to-business marketing. In Germany, project
framework, from which we design a set of hypotheses. These focus marketing deserves particular attention due to the existence of
on the marketing mix strategy of a business-to-business firm that powerful industrial companies specializing in the selling of heavy
takes into account possible uncertainty about the strategy and equipment and the strong tradition of the mechanical engineering
influencing factors such as international entrepreneurship and and construction industries (Cova & Salle, 2007; Günter, 1986). The
network capabilities. Second, we test our hypotheses using project business is characterized by an idiosyncratic investment of
structural equation modeling. Finally, we present and argue our both seller and buyer. Premature termination, for example during
findings, followed by a discussion on the wider implications of our the phase of construction of a customized product results in a
420 R. Helm, S. Gritsch / International Business Review 23 (2014) 418–428
significant loss for at least one project partner (Backhaus & market. In line with Schmid and Kotulla (2011), we include
Muehlfeld, 2005). Project business definitions, derived from uncertainty as a critical decision variable. Uncertainty still plays a
project marketing literature, emphasize the dimensions unique- central role in a firm’s internationalization strategies and is an
ness, complexity, and discontinuity of industrial projects (Cova & established concept in the literature; however, it has been defined
Salle, 2005, 2007). Industrial projects are unique as they result in various ways. Uncertainty, in general, refers to a situation in
from individual customer problems and the need for customized which one cannot make specific previsions, neither about the
solutions, they are complex as they require numerous different environment nor about consequences of a chosen strategy
activities – even from different firms selling parts for the projects – (Milliken, 1987; McMullen & Shepherd, 2006). Milliken (1987)
in one single project, and they are non continuous as projects are distinguishes three types of uncertainty: uncertainty about the
singular and independent transactions (Lecoeuvre-Soudain, state of the environment; effect uncertainty, which is the ability to
Deshayes, & Tikkanen, 2009; Mandjak & Verez, 1998). Neverthe- predict the impact of environmental events on the organization;
less, the need for customization of products and services for the and response uncertainty, which is the ability to choose the right
customer does not automatically lead to a general adaptation response option or strategy. When entering a new market, a
approach by a company (Söhnchen & Albers, 2010). Sellers try to company is confronted with all three types of uncertainty at the
realize a semi-standardization approach on a platform basis. same time. The political and economic state as well as the future
The inherent characteristics of projects in business-to-business trend of the market development is unclear. The competitive
selling situations cause strong uncertainty for both buyer and environment is hard to assess. But by contributing to doubt,
seller. Due to the idiosyncratic investment, buyers face consider- uncertainty prevents action (McMullen & Shepherd, 2006; Shane &
able uncertainty about the outcome of a project business, which is Venkataraman, 2000) and the question raised is whether
impossible to fully eliminate just by gathering information in uncertainty prevents possible actions concerning the adaptation
advance. Detailed specifications and references are critical within of the marketing-mix elements.
this type of business. Within an extensively elaborated contract, it By now, little empirical research has been conducted on the
is important, above all, for the seller to define any environmental relationship between uncertainty and the marketing mix strategy.
contingencies and resulting consequences, and to secure control Several researchers proved that a high level of uncertainty reduces
mechanisms with regard to payment structure and time horizon. a company’s market commitment and resource allocation (Agar-
In order to signal credibility and competence, the implementation wal & Ramaswami, 1992; Brouthers, 1995; Erramilli & Rao, 1990;
of various means regarding product, price, and communication are Helm, 2004), but a decisive link between the marketing-mix
crucial (Backhaus & Muehlfeld, 2005). strategy and uncertainty is yet to be found. Following the research
stream initiated by Johanson and Vahlne (1977), Sousa and Bradley
2.3. Emerging markets (2005) were among the first to examine the impact of psychic
distance on the international marketing strategy. They found a gap
The idiosyncratic characteristics in project business markets in the linking of these two things. Standardization seems to be the
shown above illustrate the great importance of the integration of more appropriate response when the foreign and the home market
the uncertainty variable in the whole decision context. But on top are similar, and, therefore, adaptation is a better approach when
of this, the specific context of international and even emerging the psychic distance is high (Cavusgil & Zou, 1994; Cavusgil et al.,
markets has to be considered. Business-to-business companies 1993; Sousa & Bradley, 2005).
face specific international interaction processes (Backhaus, 2004). But in line with Stöttinger and Schlegelmilch (1998, 2000), we
Multi-cultural buyer and seller teams meet in order to discuss also raise the question of whether the construct of psychic distance
detailed business needs. Furthermore, managing industrial goods is a construct past its due date and, therefore, not an adequate
across borders is a very complex venture due to local distribution measurement of possible uncertainties related to the marketing
peculiarities (e.g., higher transportation costs), political and legal mix strategy. In the global marketplace, the distinction between a
issues (e.g., price and tax controls, trade barriers), and the culturally close or dissimilar country seems to disappear. In fact,
technological state of development in the foreign market (Lages, there is a need for a construct representing individual uncertainty
Abrantes, & Lages, 2008). These risk factors enjoy even greater in terms of managerial decisions. Managerial decisions about a
power when entering so called emerging markets. Emerging certain strategic step are often simply based on their individual
markets are characterized by dynamic extraordinary growth perception and not on perfect objective information about a
(Hoskisson et al., 2000) with rapid changes in the structure of market environment (Madsen, 1989). Therefore, we examine a
needs and a differentiated product offering. They have a great manager’s capability to assess the given environment first and, as a
market potential, as approximately 75% of the world’s population consequence, to implement an appropriate marketing mix
lives in emerging countries (Cavusgil, Ghauri, & Agarwal, 2002). strategy. We argue that a manager’s perception of a certain
Nowhere is the designing of an effective marketing strategy more strategic environment immediately influences the decision on the
necessary than in emerging economies, where great potential and degree of standardization or adaptation of the marketing mix
great uncertainties about future developments exist in close elements. Hence, we examine the question of whether a negative
proximity to each other. Research on business-to-business assessment of the given environment can hinder a company in
marketing problems has to be intensified in order to keep pace following a strategy known to be right only because of the
with the fast changing global environment and to give the perceived high uncertainty of the environment.
necessary attention to the specific characteristics of these markets But how can a company reduce uncertainty associated with the
(Hult, 2000; Matthyssens, Kirca, & Pace, 2008). marketing mix? The contingency paradigm provides different
factors influencing the export performance of a company in a
2.4. The role of uncertainty specific context (Cavusgil & Zou, 1994; Sousa et al., 2008). A
company that adapts its international capabilities to a given
Emerging project market settings create a high degree of market setting in the right way can gain important competitive
uncertainty for an exporting company. When designing an advantages (Cavusgil & Zou, 1994; Lages et al., 2008). The given
internationalization strategy, managers run the risk of making market setting considered within this paper is characterized by the
perceptual errors about the strategic environment, which can uniqueness, complexity, and discontinuity of industrial project
result in an inappropriate marketing mix strategy for a specific deals on international emerging markets. Within this particular
context, international entrepreneurial capabilities and global The strategic value of networks has to be linked to the
networks are of growing importance for gaining access to foreign uncertainty reduction capability of a company, and thus to the
market knowledge and for allowing a rapid internationalization strategic question of the degree of standardization or adaptation.
(Albadvi & Hosseini, 2011; Matthyssens et al., 2008; Zhou, 2007). We suggest that a company with a large network that is made up of
We believe that the more international, entrepreneurial, and customers as well as business partners in the foreign market will
network capabilities a company has, the better they can cope with be better able to assess the market environment and cultural
uncertainties associated with the specific market environment particularities of a foreign market. As a consequence, networks are
and, as a consequence, the better they are able to design an able to help assess the right marketing mix strategy. We propose
appropriate marketing mix strategy for a designated market. the following:
H2. The better a firm’s use of networks, the greater the likelihood
3. Hypothesis development of the reduction of uncertainty and, therefore, the better the
assessment of the marketing mix strategy.
3.1. Influence of international entrepreneurship and use of networks
on uncertainty
3.2. The influence of uncertainty on marketing mix strategy
adaptation for project businesses
International entrepreneurship is a well established concept in
research; however, the definition of the term remains unclear
In the following section, we investigate an appropriate strategy
(Wirtz, Mathieu, & Schilke, 2007). Following McDougall and Oviatt
for the four elements of the marketing mix, taking into account the
(2000), we associate the proactive and innovative action of a
idiosyncrasies of emerging project business markets. For these
company with its international entrepreneurship, as a ‘‘combina-
specific surroundings, we examine the link between the perceptual
tion of innovative, proactive, and risk-seeking behavior that
assessment of the environment and the effective marketing mix
crosses national borders and is intended to create value in
strategy.
organizations.’’ There seems to be a positive relationship between
Cavusgil et al. (1993) define product adaptation as the degree to
the active search for new opportunities or the innovative responses
which the physical product differs across national boundaries. This
to changing environments, and a firm’s export performance
is without doubt the most ambiguous question regarding
(Nelson & Winter, 1982; Wirtz et al., 2007). On an individual
adaptation or standardization within the four generic market-
level, Ruzzier, Antoncic, Hisrich, and Konecnik (2007) show that
ing-mix elements. Jain (1989) and Samiee and Roth (1992) suggest
the entrepreneur’s international orientation and environmental
that business-to-business companies should standardize their
risk perception influence the firm’s degree of internationalization.
product offerings across markets as there are no significant
Company vision and culture that is open to international markets
differences in business needs. However, the proclamation of this
and new chances lead to an international pioneering position
convergence of needs remains questionable and has to be critically
(Jones et al., 2011). Particularly in the knowledge-intensive
reviewed. As such, it must be examined whether it is true that the
business-to-business organizations, it is increasingly important
times of lesser versions of advanced products in less-developed
to rely on a global mindset within the company (Jones et al., 2011).
markets are over (Levitt, 1983). This needs to be looked at within
A proactive, innovative company that is open to new opportunities
the context of industrial markets as well. While designing strategic
will be better in assessing foreign market surroundings and coping
marketing-mix options, business-to-business firms have to re-
with uncertainties. We argue that international entrepreneurship
spond to the increasingly varied cultural backgrounds of their
can help to better assess the necessity of adaptation or
customers all around the world (Sheth & Sharma, 2006). Thus the
standardization of a firm’s marketing mix. Thus, we hypothesize
question remains whether the main technical product features
the following:
offered by a company should be standardized or adapted to the
H1. The better a firms international entrepreneurship abilities, the idiosyncratic needs of a business partner in a foreign country.
greater the likelihood of the reduction of uncertainty and, there- In order to derive an appropriate strategy, we take into
fore, the better the assessment of the marketing mix strategy. consideration the situational fit variables developed by Schmid
and Kotulla (2011). Their argumentation is concentrated on the
product-profit-function, thus on the fact that product-profit is
Studies on networks and how they can facilitate a firm’s market dependent on the price per unit, the quantity of products sold, and
entry have been in the focus of interest since Coviello and Munro the total costs per unit. Product standardization can enhance profit
(1995, 1997) first analyzed this topic. Networks can help greatly to if there is a high degree of homogeneity of world demand. In this
understand foreign customer needs and therefore help to reduce case, mass production and thus economies of scale have a
uncertainty about a marketing strategy. Networks can substitute decreasing effect on the total costs per unit. However, within
formal institutional support (Xin & Pearce, 1996; Zhou, Wu, & Luo, the project business, this argumentation faces certain limits. There
2007) and provide a better access to market knowledge. SMEs, in is no high cost saving potential in cross-market economies of scale
particular, should rely on a broad network to obtain international due to the absence of a sufficiently large group of customers with
growth (Zhou et al., 2007). Information from networks is often similar product needs. In many cases, technical specifications
critical for helping firms decrease the risk and uncertainty of determine the product specifications and, therefore, the project
international ventures (Liesch et al., 2002; Zhou et al., 2007). Albadvi outcome (Schilke et al., 2009). Furthermore, project outcomes are
and Hosseini (2011) state that there are direct – customer holding – normally characterized by them being customized constantly to
and indirect – uncertainty reduction – network effects. Thus a large the customer’s needs during the phase of completion (Backhaus &
network community, including business partners and suppliers and, Muehlfeld, 2005). Consequently, this argumentation does not lead
of course, customers, directly enhances a company’s sales perfor- to a recommendation to standardize the outcome of a product
mance (Eid, Elbeltagi, & Zairi, 2006). Indirectly, this network can help business as it is simply not possible. But the question is whether a
to reduce uncertainty about a foreign market and thus uncertainty company has to ensure the same technical standard of a project
about implementing the appropriate marketing strategy for this outcome across national borders. Even in emerging economies, the
market. In the special context of project business marketing, latest technological standards are, in the meantime, being
networking capability gains an even higher importance. demanded. However, it is reasonable to ask whether a company
really should standardize their project outcome standard for every large firm size, the standardization of distribution seems to be
market. A ‘‘negative-adaptation’’ may sometimes be sufficient or preferable (Hultman, Robson, & Katsikeas, 2009; Schmid & Kotulla,
an even better solution. For instance, companies operating in 2011). Once more, the homogeneity of demand appears to be of
emerging markets are often faced with insufficient infrastructure crucial importance. But once again, the direct benefits of
or no equally high-quality local components that ensure the same standardization are limited due to the absence of a critical mass
level of product quality as their home market. The risk of imitation in the customer groups targeted around the world. However, in the
cannot be ignored either. In this case, a ‘‘negative-adaptation’’ case of a project business, where demand is always uncertain, the
seems to be an adequate approach. In general, adaptation is only usual means of interaction within a project deal is direct personal
associated with a positive target-group specific upgrading of selling. The sales force of a company has to go through a certain
product features. We defined adaptation as any modification of the process that includes the acquisition, negotiating, and selling
product standard due to certain market conditions. stages (Söhnchen & Albers, 2010). In the course of this interaction
In reality, however, the influence of uncertainty about the process the unique and complex project business needs have to be
environment and the effects of a certain marketing mix strategy dealt with. A uniform and standardized personal selling strategy
have to be considered. A manager has to assess the strategic across a market seems to be necessary. The support of local actors
surroundings of a market and choose an appropriate product such as importers or local firms with regard to distribution is of
strategy. We assume that if a manager is able to reduce the little importance. Therefore, we propose that even if a company is
perception of uncertainty about the strategic circumstances, he able to reduce the perception of uncertainty, the adaptation of the
will adapt the product standard for a certain market. Therefore, we sales system is not appropriate for emerging project business
propose the following hypothesis: markets. The sign of the hypothesis is assumed to be negative. We
conclude that the standardization of sales strategies across
H3a. The better the assessment of the environment and, therefore, markets is the appropriate strategy. We propose the following:
the lower the marketing mix strategy uncertainty, the greater the
likelihood of product adaptation by a firm. H3c. In the case of a project business, there is a higher likelihood of
a firm using a uniform and standardized personal sales system.
The question of pricing is closely related to the product strategy
of a company. Samiee and Roth (1992) found that adapting the Promotion adaption, defined as the degree of differences in the
pricing strategy to a foreign market can enhance a firm’s promotional approach across countries (Cavusgil, Zou, & Naidu,
performance. If the characteristics of a new market admit a higher 1993; Jain, 1989), is highly influenced by culture and different
price level, it would be unwise to not adapt them just because of a customer preferences. Therefore it seems rather rational that
standardized product strategy (Sousa & Lengler, 2009). This adaption of the promotional tools is a prerequisite for success in
positive effect of price discrimination and of price premium foreign markets (Cavusgil et al., 1993; Sousa & Bradley, 2005;
exploitation, which is larger than the possible effect of economies Sousa & Lengler, 2009). Tai and Pae (2002), on the other hand,
of scale, can play a decisive role, especially in the context of argue that firms producing and promoting durable goods should
international project business operations. Thus, price adaptation is standardize their advertising across nations. Continuous advances
to be favored by a company; however, the special bidding process in technology, communication, travel activities across national
within a tendering phase of a project business has to be considered. borders, and the customer’s own internationally active customers
A company will only be able to exploit premium prices if it is able shape a borderless world in which marketing practices face an
to assess the strategic environment in the right way. Next to the increasing convergence of customer needs (Douglas, 2000; Sheth,
willingness to pay by the business customer, the competitors’ 2001). The question is whether and to what extent this
offers play a critical role during the tendering phase. But within the homogenization of needs affects the marketing strategy, particu-
project business, a tendering company has only one attempt at larly the promotional tools, within the project business.
making its offer at the same time as the competitor’s offer. Prices Within the project business, sellers have to provide detailed
for entirely new product processes have to be made without any information and even specifications about the exchanged goods
reference. There is no possibility for price adjustments later on. As before contracts are signed. These contracts are characterized by
a consequence, the pricing strategy is extremely dependent upon a extensive safeguard clauses against environmental as well as
company’s assessment of the environment and the ability to behavioral uncertainties. Therefore, it is more important here than
reduce uncertainties. Thus, the existence of a good network seems in any other business type to signal creditability and competence
to be crucial for a company setting prices within a project deal. in advance within the common communication instruments. The
Information about the competitors and customers price level can entire promotional tool set, particularly communication, becomes
help when negotiating and submitting an appropriate tender for a highly important (Backhaus & Muehlfeld, 2005). Cultural aspects
targeted project deal. We suggest that a company would be able to have to be considered, especially with regard to business practices
set the right pricing strategy and, therefore, adapt pricing if they at conventional tradeshows as well as in references, technical
are able to reduce perceived uncertainty about the influencing documentation, and on the web site, which are highly culturally
environmental factors. Hence, our hypothesis is: sensitive promotional tools. Therefore, we suggest that the
adaptation of the fourth marketing mix element is crucial to
H3b. The better the assessment of the environment and, therefore, success. However, uncertainty about the foreign market environ-
the lower the marketing mix strategy uncertainty, the greater the ment and the extreme costs of adaptation could hinder companies
likelihood of price adaptation. from designing marketing material for the specific needs of a
foreign customer segment. We propose as a consequence:
International standardization of distribution refers to a com-
pany’s uniform channel structures across markets (Zou & Cavusgil, H3d. The better the assessment of the environment and, therefore,
2002). With regard to the question of whether a company the lower the marketing mix strategy uncertainty, the higher the
implements a uniform distribution system or uses channels that likelihood of promotion adaptation.
have been adapted to the foreign market conditions, no explicit
solution has been postulated in the literature (Theodosiou & Theoretically, the best strategy within the project business
Leonidou, 2003). In a situation of high product homogeneity and a would therefore be to adapt the marketing mix elements product,
Fig. 1. Overview of explanatory model.
price, and promotion and to standardize the sales system. In fact, associated with the marketing strategy, we developed the
the degree of the actual adaptation or standardization of the construct ‘‘marketing strategy uncertainty.’’ In many studies,
marketing mix elements will depend on the managerial assess- uncertainty refers to the external uncertain market environment.
ment of the environment, which will be tested empirically later in Most researchers refer to an objectively-measured environment,
this paper. based on firm or industry data. The most common measures refer
Fig. 1 summarizes our hypotheses. to the model of Aldrich (1979) and Dess and Beard (1984),
indicating the dimensions of dynamism, complexity, and munifi-
4. Data set and operationalization cence. Other measurements for uncertainty originating from the
uncertain environment are often based on an internally available
In order to test our research hypotheses, we conducted a survey proxy variable (e.g., industry sales figures) examined over a period
of small and medium sized German manufacturing companies of time (Carpenter & Fredrickson, 2001; Cannella, Park, & Lee,
operating within the project business. We randomly selected 2008). However, the objective measurement of uncertainty ignores
relevant companies from a data base of the German Chamber of the fact that the same environmental conditions may be perceived
Commerce. In order to achieve our research objectives, we and evaluated differently by any individual (Snow, 1976). That is
gathered the contact data of managers in top management why some studies rely on the measurement of individually
positions who are involved in the marketing strategy decision perceived environmental uncertainty (Elenkov, 1997; Ebrahimi,
process. The questionnaire for the survey was pretested with 2000). This has to be interconnected with strategic uncertainty.
experts from the field, members of staff at different Chambers of Many authors claim that decision-making uncertainty is an
Commerce, and selected b2b companies. We contacted 10 persons outcome of external environmental uncertainty (Dwyer & Welsh,
in order to evaluate the comprehensibility and feasibility of the 1985; Paswan, Dant, & Lumpkin, 1998). According to these
questionnaire. The pretesting procedure did not point to any major statements and for the purpose of considering the individual level
problems in the wording or design of the study. For the main on which uncertainty arises (Evans, Treadgold, & Mavondo, 2000;
survey, 600 companies were contacted and asked to participate. Madsen, 1989), we used a perceptual measurement in order to
We directly contacted the managers in top management positions, understand the strategic options implemented by managers. We
after having identified their contact data in advance with the help defined our construct of ‘‘marketing strategy uncertainty’’ as the
of the Chambers of Commerce of each country. In order to motivate ability of a company to assess the required degree of adaptation for
the respondents, we promised an aggregated overview of the a marketing mix element, i.e., the ability to reduce uncertainty
results. A total number of 198 usable questionnaires were about these decisions. This definition includes a firm’s ability to
returned, corresponding to a response rate of 33%. The foreign identify the given market forces and to derive the required
activity of these companies was concentrated mostly on emerging strategic response to meet the company’s objectives. Thus we
countries within Asia, South America, and the Middle East. The designed four items to measure marketing strategy uncertainty as
entire sample set is composed of different industrial sectors, follows: the ability of a company to assess the importance to adapt
including the machinery and equipment sector, the building (1) the product, (2) the pricing strategy, (3) the sales structure, (4)
sector, and the pharmaceutical and medical engineering sector. the promotional strategy while entering the new market.
The majority of the companies in the sample operate with less than International entrepreneurship was measured according to the
500 employees (44% with less than 250 employees; 17% with definition by McDougall and Oviatt (2000) as the innovative,
between 250 and 500 employees, the remaining with 500–3000 proactive, and risk-seeking behavior of a company. Three items to
employees), ensuring the typical structure of firms in this business. measure international entrepreneurship were designed as follows:
In order to secure the reliability and validity of the measure- (1) The company’s products are perceived by the customers in the
ment model, we used previously validated scales as much as foreign market as exceptionally innovative, (2) The market entry of
possible within this study. All items were conceptionalized as six- the company was proactive rather than a reaction to existing
point bipolar scales with the range indicating strongly disagree (1) customers or competitors, and (3) The company was moving to the
and strongly agree (6). In order to measure the degree of the foreign market before the competition. The measurements of the
adaptation or standardization of each of the four marketing mix construct ‘‘use of network’’ incorporate the essential statements of
elements, we used a single item scale, indicating the extent of the social network theories, where interpersonal ties and social
adaptation according to Cavusgil and Zou (1994). Higher values contacts, including personal relationship, are crucial for business
mean greater adaptation. In order to measure the uncertainty effort (Harris & Wheeler, 2005; Zhou et al., 2007). According to
these theories, we designed our construct by measuring the Newsted (1999), the variance technique is to be preferred if the
following items. We intend to explore (1) the intensity of network investigated constructs are newly conceptualized and the mea-
use between the company and local business, (2) the degree of surement is not yet proven. In addition, the relatively small sample
support through the network and, (3) the relevance of the network indicates the use of the variance technique.
and thus the establishment of long lasting business relationship. There is no general index to evaluate the complete model, but
As all our constructs were measured by a single rater, we risk several indices that estimate quality and data fit (Chin, 1998a;
having common method biases (Podsakoff, MacKenzie, Lee, & Fornell & Larcker, 1981). To ensure that constructs are valid and
Podsakoff, 2003). In order to control for any kind of bias, it is reliable, the outer measurement model has to be evaluated before
important to collect data for dependent and independent variables the inner structural model. The following indices are used. In order
independently of each other (Richardson, Simmering, & Sturman, to evaluate the outer measurement model, the convergent validity,
2009). We could not consider that in our study but undertook the indicator reliability, and the construct reliability have to be
various other measures in order to prevent biases. We first revised. Convergent validity exists if the average variance
pretested our questionnaire. Furthermore, we divided the ques- extracted (AVE) exceeds the value of .5 (Fornell & Larcker,
tionnaire into parts so that there was no contextual correlation 1981). Factor loadings should be greater than .7 to meet indicator
between the predictor and predicted variables, but the predictor reliability (Henseler, Ringle, & Sinkovics, 2009). To ensure
items were asked prior to the predicted variables. We assured construct reliability, a value greater than .6 indicated as composite
anonymity to the respondents and encouraged their honest reliability is recommended (Bagozzi & Yi, 1988). In order to
answers, stressing that there are no right or wrong answers. In evaluate the inner model, the index of R2 is observed. According to
addition, we followed the recommendation of Podsakoff and Organ Chin (1998b), R2 determines the model substantially if the value
(1986) by making use of statistical techniques for controlling exceeds .67, moderately if the value is greater than .33, and weakly
common method bias, thus using the Harman’s one-factor test and if the values exceed .19. Path coefficients have to show a minimum
a confirmatory factor analysis (CFA). We conducted an un-rotated value of .1 (Lohmöller, 1989) and be significant by means of the
exploratory factor analysis with independent and dependent items bootstrapping procedure with t > 2.59, p < .01; t > 1.96, p < .05;
at one time. Four factors were drawn out, and among them t > 1.65, p < .1 (Nevitt & Hancock, 2001).
(cumulative value is 67.27%) the largest factor explains 39.15%,
which still indicates no threat of common method variance. 5.2. Outer model estimation results
Second, we used the CFA approach to further test common method
variance (Menon, Bharadwaj, & Howell, 1996; Sabherwal & In order to ensure the validity of each construct, we had to
Becerra-Fernandez, 2005). We linked all items of dependent and exclude items with low and insignificant loadings. Two items did
independent factors and subsumed that a single factor underlies all not exceed the recommended values. The loading of the item
the variables, which was not confirmed. Therefore, the results of innovativeness for the construct of international entrepreneurship
this CFA test show that the likelihood of method bias is rather low is still under the advised value of .7, but we follow Hulland (1999)
(Sabherwal & Becerra-Fernandez, 2005). and allow loadings greater than .4. All remaining items have
significant factor loadings at the levels of p < .01, with bootstrap
5. Results critical ratios (using 1000 subsamples) greater than 2.59 (Chin,
1998a). Since not every criterion of a set of chosen criteria has to be
5.1. Method fulfilled, we believe we have a suitable operationalization (Bagozzi
& Yi, 1988). The composite reliability of all constructs exceeds the
We applied path modeling, using SmartPLS to test the requested value of .6 (Bagozzi & Yi, 1988). Every construct meets
hypotheses. Partial least squares (PLS) is a structural equation the minimum AVE value of .5 that Fornell and Larcker (1981)
model based on the variance technique. PLS is still at an early stage, recommended. Thus convergent validity of the constructs is
but the empirical contributions of the PLS application are being supported. The variance explained by the model in terms of R2 is
recognized more and more by several authors (Jarvis, MacKenzie, .137 for marketing strategy uncertainty, which is slightly under the
Podsakoff, Mick, & Bearden, 2003; MacKenzie, Podsakoff, & Jarvis, requested value of .19 (Chin, 1998a). However, R2 is greater than
2005; Noonan & Wold, 1983). This method using regression the recommended .1 by Falk and Miller (1992). Table 1 shows the
analytical features aims to forecast the data observed instead of results of the outer structural model:
reproducing the co-variance matrix. The so-called outer model
reflects the relationship of latent and manifest variables. The inner 5.3. Inner model estimation results
model measures the linear relations of the latent variables (Chin,
1998a). Given the research context within our study, which aims to Table 2 shows the results of the inner model. For each
achieve a rather predictive relational model, PLS seems suitable as corresponding path, sign and significance of t-values are tested.
method of analysis. Following the recommendations of Chin and All the paths, except for product and place adaptation, exceed the
Table 1
Results of the outer structural model.
Components and manifest variables Loading Critical ratio AVE Composite reliability
International entrepreneur .552 .6951

Innovativeness .5114 2.7513
Proactiveness .9179 14.3954
Use of network .6518 .7877
Intensity network .881 6.943
Support network .7262 3.7612
Marketing strategy uncertainty .5656 .8384
Assessment place .7122 11.2981
Assessment promotion .7565 14.0083
Assessment price .8230 24.3433
Assessment product .7109 11.0754
Table 2
Results of the inner structural model.
Predicted variables Predictor variables Hypothesis Path Critical ratio
Adaptation product Marketing strategy uncertainty H3a .03 .3245

Adaptation price H3b .21 2.8056
Adaptation place H3c .03 .4099
Adaptation promotion H3d .25 3.6804
Marketing strategy uncertainty International entrepreneur H1 .32 4.4747
Use of network H2 .15 2.1649
bootstrap critical ratios (t > 1.96; p < .05) and the path coefficient sales system. Furthermore, the results show a positive relationship
exceed the recommended value of .1 (Chin, 1998a). These data between the international entrepreneurial and networking abili-
show that H1, H2, H3b, and H3d are supported. ties of a company and the ability to reduce uncertainty about their
H1, indicating the path between the construct of international marketing mix strategy.
entrepreneur and the construct of marketing strategy uncertainty, Our findings confirm that it is not possible to derive general
is significant at the level of p < .01, with a positive value of .32. H1 advice for a standardized or an adapted marketing mix approach.
is therefore supported. H2, indicating the path between the The results show that each of the four elements of the marketing
construct use of network and the construct of marketing strategy mix has to be considered separately. We filled the research gap by
uncertainty, is significant at the level of p < .05, with a positive examining the marketing strategy for all four elements of the
value of .15. H2 is supported. The support of H1 and H2 shows that marketing mix within one study. Theodosiou and Leonidou (2003)
international entrepreneurship and the use of networks positively complained that research on the question of standardization
influence the reduction of marketing strategy uncertainty. versus adaptation of the marketing mix is contradictory. Therefore,
However, the impact of the construct ‘‘use of network’’ is weaker we concentrated our investigations within the clearly defined
than the impact of the construct ‘‘international entrepreneurship.’’ constraints of the project business. Industrial markets, in particu-
At the level of p < .01, both hypotheses H3b and H3d are lar, are too complex to derive clear and common implications. For
significant. The construct of marketing strategy uncertainty shows example, we stated that the customization of the outcome of a
a positive correlation with the adaptation of price, indicating a project business is essential due to the idiosyncrasies of the project
value of .21. The correlation of the construct of marketing strategy business. The marketing mix strategy related to the product
uncertainty and the adaptation of promotion shows a stronger strategy seemed theoretically clearly defined: adaptation. By
correlation at .25. This suggests that a company that is able to contrast, results showed no significance for the strategy of product
assess the necessary degree of adaptation of the marketing-mix adaptation across markets. The assumption that a negative
elements adapts, in reality, the pricing and promotion strategy to a adaptation to lower product standards in foreign emerging
foreign market. markets is the appropriate strategy has to be rejected. In turn,
H3a is not supported as indicating a critical ratio value of .33 the need for a certain project standard seems to imply the
and an insufficient path value of .03. The theoretically derived standardization of at least the components, procurement, and
assumption of product standard adaptation has to be rejected. H3c product details across market boundaries. However, these results
indicates a negative path value of .03 and a critical ratio value of may not be valid for and transferable to the product or relational
.41. The path H3c is insignificant. However, the assumed sign is business, as defined by Backhaus and Muehlfeld (2005).
correct. The theoretically derived suggestion that a company when The statement that international differences are on the decline
acting within the project business is not adapting the marketing and that there is a drift toward transnational similarities (Sheth,
mix elements of sales systems is supported. In consequence, the 2001) has to be critically reviewed. This assumption might
data enforce the recommendation of the adaptation of price and influence the marketing strategy concerning the product element.
promotion (H3b and H3d), but the general adaptation of product But nevertheless, an increasing homogenization of product needs
and place (H3a and H3c) has to be rejected. does not imply a homogeneous promotional approach to foreign
markets. Cultural differences still play a decisive role in the
6. Discussion, implications and future research complex and negotiation-intensive b2b-markets and have to be
considered within international marketing studies. Our results
6.1. Discussion of research findings show that the adaptation of price and, above all, of the promotional
tools is necessary. These two elements are highly influenced by
Our objective was to identify which elements of the marketing culture and thus have to be adapted to foreign project business
mix of business-to-business companies, particularly those acting markets. The adaptation of these marketing mix elements can
on project business markets, have to be standardized or adapted to ensure the cultural awareness of a company.
foreign market conditions. The degree of adaptation of the Moreover, we argued for the importance of international
marketing mix elements was defined as being dependent of the entrepreneurship and network capabilities. Up until now, no study
construct ‘‘marketing strategy uncertainty.’’ Furthermore, we has considered these aspects to be important within the context of
looked at the influence of international entrepreneurship and the international marketing mix strategy. We connected the
the use of networks within the whole decision context. We abilities of international entrepreneurship and networking to the
examined the possibility of reducing the perception of marketing ability to reduce marketing strategy uncertainty. The significant
strategy uncertainty with these two abilities. The findings show influence of international entrepreneurship reinforces the impor-
that there exists a need for a different view on every single element tance of this research stream. The lesser importance of the
of the marketing mix strategy. The data indicate that there is a networking capabilities revealed is in line with previous findings
positive relationship between the ability of a company to assess within the research of early internationalizing firms. For example,
the given market environment, and the adaptation of the pricing the existence of a network did not appear to be of significant
strategy and the promotional elements. In contrast, there is no importance to company founders, as assumed by Rasmussen,
evidence for the general adaptation of the elements product and Madsen, and Evangelista (2001).
6.2. Managerial implications company from adapting their price structure to the foreign market
conditions.
Managers always have to be aware of the idiosyncrasies of their
businesses and industry sectors. The marketing mix implications 6.3. Limitations and future research
depend on these constraints, especially within complex industrial
markets. We established the peculiarities of the project business, However, we have to admit some constraints of our study. The
such as complex products sold through direct customer contact. measurement of the construct uncertainty is already a controver-
Project business deals are often rather focused on the implemen- sially discussed issue within the research field of international
tation of the project and strictly factual. But industrial market marketing. We defined this construct as the perceptual uncertainty
players have to attach the necessary importance to the cultural associated with the degree of adaptation needed within the
idiosyncrasies of every foreign market. Our findings demonstrate marketing mix decision process. This formulation already con-
the importance of and the need to rethink the international siders the level where uncertainty arises, thus the subjective one.
challenges of every single market. Thus, it is crucial for firms acting However, the measurement of perception is an ex-post measure-
within the technically knowledge-intensive project business to ment. In general, it is practically impossible to measure perception
open their minds to the global market place and cultural immediately prior to a decision and, therefore, we risk confound-
peculiarities. In every project deal, people are directly involved ing causality (Dow & Karunaratna, 2006). In our study, we assumed
and thus cultural traditions have to be considered. Uncertainties that managers consider and assess all relevant facts and derive an
about business conditions arise. However, uncertainty must not appropriate marketing strategy. However, Schmid and Kotulla
prevent action. Under uncertainty, firms tend toward intensive (2011) ask for a simultaneous integration of the subjective as well
information research, market scanning, and sometimes even a later as objective perception and the matching of these two elements.
market entry. There is also the risk that the standardization of the Furthermore, we have to admit that the model does not reflect
marketing mix is only a consequence of uncertainty and not a all of the factors that influence marketing strategy uncertainty and
strategic decision. The standardization of the marketing mix is, therefore, not sufficient for explaining the phenomenon of the
elements could be a somewhat easier alternative to realize than ability to reduce uncertainty. However, the purpose of the study
the adaptation. If, however, no effort is paid to adapting any of the was not to maximize the percentage of variance explained of the
marketing mix elements and, therefore, no consideration is given construct ‘marketing strategy uncertainty.’ The low R2 of the model
to cultural differences, a low business performance may result. indicate the existence of additional determinants of marketing
Therefore, it is necessary to reduce uncertainty associated with the strategy uncertainty reduction. Thus, further research is necessary
marketing mix strategy. to identify other possible variables contributing to the explanation
In order to reduce uncertainty, results show that it is critical that of variance of this construct.
the international entrepreneurial spirit within the company be Finally, the most important missing link is the measurement of
fostered, in order to be able to cope with cultural uncertainties. the effect on performance. How does the adaptation of the
However, our results revealed that the networking abilities of a marketing mix elements really influence the performance of a
company are of less importance. We assume that the character of a company in a foreign market? Future research has to concentrate
project business restricts the use of a business network when on the marketing mix strategy as a performance enhancing one. It
dealing with the question of marketing mix adaptation. A network is is still necessary to link the strategic choices within the marketing
important for compensating insufficient market information and a mix to a firm’s performance, especially within industrial marketing
potential lack of resources. But it seems that network partners are research. Schmid and Kotulla (2011) called for more industry-
not the perfect counterpart to the strategic issue concerning the segment and country-specific research. By concentrating on the
standardization versus adaptation of the marketing mix. Moreover, project business, we automatically concentrated on particular
the project business is often characterized by an individual industry segments. However, this call for more detailed research
transaction with a single customer focus. Thus, long-lasting network has to be pursued further. The focus of our paper was on the project
relations are simply not useful. Internal company abilities such as business, which we considered to be the most representative and
international entrepreneurship seem to be more important than the complex field within industrial markets. We found it important to
potential to connect businesses to external networks. International examine the marketing mix approach, given the idiosyncrasies
entrepreneurial ability helps to identify global business opportu- within the project business. However, in line with the systemati-
nities and to identify strategically appropriate responses. zation of Backhaus and Muehlfeld (2005), detailed studies within
Furthermore, our findings confirm the importance of the every business type are further required. It is time to acknowledge
adaptation of the marketing mix element promotion. Every the importance of business-to-business markets and to further
interaction during the selling process and any information enhance research on industrial markets.
provided to signal business competences and credibility is crucial
to international success. Managers, consequently, have to ensure Acknowledgements
the adaptation of any promotional tool to the foreign market
idiosyncrasies. Furthermore, we identified that a uniform and The authors would like to thank the various Chambers of
standardized personal sales system is the most promising means of Commerce for their helpful cooperation and Marc Tobias for his
ensuring success within project business. The outcome of any assistance with the survey. Furthermore, we would like to thank
project business is customized to every single customer, whereas the helpful comments and constructive suggestions of the
the quality level of a project business has to be standardized as anonymous reviewers for improving our work.
much as possible. A so-called negative-differentiation of the
product standard is not practical. Firms operating in emerging
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International Business Review: Roland Helm, Stephanie Gritsch

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International Business Review 23 (2014) 418–428

Contents lists available at SciVerse ScienceDirect

International Business Review

Examining the inﬂuence of uncertainty on marketing mix strategy

Fig. 1. Overview of explanatory model.

International entrepreneur .552 .6951

Predicted variables Predictor variables Hypothesis Path Critical ratio

Adaptation product Marketing strategy uncertainty H3a .03 .3245

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