Lund Institute of Economic Research Working Paper Series

A market and network based model for retailers foreign entry strategies1
2004/3 Ulf Elg Pervez Ghauri Rudolf R. Sinkovics

Abstract
Foreign entry in retailing involves a large number of challenges. Many have to do with building network relationships to actors on different societal levels involving governments and international bodies as well as business partners. Another critical part is to understand the host market well enough to adapt the retail proposition in a sufficient way. This paper especially considers a retailers networking and market orientation activities. Networking is discussed on several levels including international activities and specific business alliances. We also argue that market orientation has to be studied especially for each host market and not only on a corporate level.

Jel-code: M31, F23 Keywords: retailing, foreign market entry, market orientation, interfirm networks, matching

ISSN 1103-3010 ISRN LUSADG/IFEF/WPS-004/3-SE

The authors would like to thank Handelsbankens Research Foundations and The Swedish Council for Research in Humanities and Social Sciences for supporting the research

Market oriented Matching: foreign market entry strategies for retailers Introduction
Retailing has rapidly become more and more internationalised. American and European firms are leading this development. The twenty biggest retail companies the year 2000 included ten American companies, nine European and one Japanese (Deloitte & Touche Tomasu 2002). In Europe, however, there is still a very strong dominance of European retailing companies. Wal-Mart as well as other American retailers investing in Europe has faced substantial difficulties, demonstrating that even for world leading retailers to enter a new foreign market is a complex and difficult challenge. When companies start operations in foreign markets, dissimilarities in the economic, political and legal environment, and the level of technology and culture create obstacles (Buckley and Ghauri 1999). On top of this, retailing is especially problematic and complex. Several authors have stressed this complexity and perhaps this is one reason why there is still no general framework developed especially for managing the complexities of retail internationalisation (Alexander and Myers 2000; Vida 2000). To a large extent, retailing have been studied based on the more general internationalization theories that are, in turn, developed mostly for large manufacturing companies (Alexander and Myers 2000; Dawson 1994; Hollander 2000; Pellegrini, 1994). Developing a comprehensive framework is beyond the scope of this paper, but the purpose is to discuss some critical dimensions in international retailing that need to be included in such a framework. We especially focus on networking and market orientation (MO), and suggest a model that highlights these aspects and their impact on retailers foreign entry. Retailers have to interact and build relationships with actors on a societal level, in acquiring permissions for land in order to build stores, making sure that there are appropriate road accesses and parking spaces for the store, public communications, import licenses and approvals for products from other countries. Networking also becomes more significant due to an increasing importance of outsourcing efficient purchasing and supplier management. In all, since the building and management of relationships is such a critical factor, a network approach is very relevant in order to understand successes and failures of retailers. A network view on internationalization is, in turn, very different from traditional internationalization perspectives (Axelsson and Johansson 1992). Still, a lot of research on international retailing is thus based on the more traditional internationalization theories developed mainly based on studies of manufacturers and not paying much interest to networking aspects. Another key factor is the ability to understand consumer behaviour as well as competitors on foreign markets. This implies that a high degree of MO will be necessary in order to increase the retailers ability to interpret the specific consumer needs and the cultural differences on that market and to modify the retail proposition accordingly. Critical factors for retailers are, for example, to understand how a certain format has to be adapted in order to fit culturally different markets (Burt and Carralero-Encinas 2000), how to manage logistics and how to advertise. Some previous studies have investigated MO in a retail and distribution setting (Harris and Piercy 1999; Soehadi et al 2001, Siguaw, et al 1998). However, they have not related MO activities specifically to the entry to new foreign markets. Neither have they re-investigated the nature of MO in retailing with regard to its specific characteristics.

Theoretical Background
Several studies present factors important for foreign market entry more generally (Cateora and Ghauri 1999, Root 1994). These models generally look at internal and external aspects about the firm and its market, then providing tools to screen a market for its suitability for a specific product. They are quite useful for traditional manufacturing firms and can also provide a more general basis, but are not enough in analysing the service and networking firms that retailers are. Just a few decades ago retailing was a domestic industry dominated by relatively small firms. Early internationalization attempts did not have much success (Hollander 1997). Although retailing concepts such as super markets, department stores and hyper markets spread internationally, most often it was transfer of know how and not the internationalization of retailing firms that took place (Kacker 1985; Pellegrini 1999). Most studies available on international retailing also deal with histories and activities of single firms, retail sectors, store formats and transfer of retail concepts from one environment to another (Burt 1993; Hamill and Crosbie 1990; Sternquist 1997; Treadgold and Davies 1988). Other studies rely mostly on the general internationalization theories that do not stress networking aspects and appear to be more appropriate for manufacturing firms. It has been argued that long lasting relationships between different actors in a market have been the main marketing and competitive tools (Arndt 1979; Ghauri 1999). When entering new markets retailers have to build a supportive network that includes relationships to business partners, e.g. suppliers and transporters, as well as to various decision makers on a societal level. Studies undertaken under the network approach (see e.g. Ford et al. 1998) have presented a model with three main elements; actors, resources and activities. These three factors interact with each other and help a firm to enter and establish a position in a new market or network. They have been discussed for manufacturing firms as well as for service and distribution firms Axelsson and Easton 1992; Ford 1998). A retailer will most likely need to develop and extend a net of relationships for each new market entry that includes business partners as well as actors on a more general, societal level. Matching (Ghauri and Holstius 1996) is a concept that further increases the understanding of how successful business networks can be facilitated, by means of establishing relationships with the right type of actors and appropriate adaptations of objectives and resources in dissimilar markets. It refers to the company level but also to facilitating contacts, resources and actions provided by governments, international organizations and other third parties. It thus considers all steps taken at global, macro and micro levels to facilitate the development of business relationships on new markets. It draws upon the network approach in that each level of matching is discussed in terms of actors, activities and resources. At a global level, matching includes international, multilateral, agreements, communications and relations. Actions taken by World Bank and European Bank of Reconstruction and Development (EBRD) for providing soft loans is one example. Another one is activities by the EU that may facilitate or restrict the entry and mergers of foreign retail companies on the European market. At the macro level, matching includes bilateral agreements between specific governments to facilitate business relationships between firms. They can concern, for instance, financial matters such as export credit and guarantees, and legislative matters aiming to avoid double taxation of employees or to protect investments. Here, retailers have incentives to interact in order, for example, to facilitate the access to land for building stores, getting permission to import global products for their stores, etc. Matching at the micro level refers to the steps to be taken by the firm in order to get a successful market entry through establishing business relationships with different partners, adaptation of products and technology, acquiring knowledge about the infrastructure and culture of the foreign counterpart, etc. The matching approach thus stresses that different actors perform activities and exchange resources at different levels. Most of them are part of the firms network, but it does not always have to be the case. Matching at the global and macro level is necessary in order to create favourable preconditions for market entry and for developing business relationships. Matching at the macro and micro level especially supports the company in building relationships with different actors on the new market.

Without this and the development of mutual trust and relationships a firm cannot have a successful entry into a foreign market (Cavusgil, et al 2002; Ghauri 1999). The benefit of the matching perspective is that it allows us to look at any level of a retailers entry process in order to explain its success or failure. Most MO research is based on the Kohli and Jaworski (1990) or the Narver and Slater (1990) approach. We draw upon the first, because it stresses behaviour, whereas the latter stresses MO as culture (Harris and Piercy 1999). In a retail and network setting it appears more feasible to study behavioural aspects. Kohli and Jaworskis approach has been used successfully in some previous studies of distribution channels and retailers (Siguaw, et al 1998). With some exceptions (e.g., Soehadi et al 2001) MO has not been studied very much in the context of international retailing. A more general framework for export MO has also developed in previous research (Cadogan, et. al. 1999), assuming that Kohli and Jaworskis three components that define MO can still be applied within a new setting, whereas the indicators that should be used will be have to be modified in order to capture the special nature of exporting. We would also like to add that MO has to be studied separately for each new host market, in order to consider the actual activities that the retailer undertakes there. The study by Cadogan et. al. also stressed that MO has various implications depending on the type of business, market and company. It thus appears relevant to especially study retailers. Here, the specific characteristics of retailing (e.g. Alexander, 1997; McGoldrick 2002) should be considered, as well as service and networking aspects. For example, a recent study (Elg 2003) found that aspects such as the different types of data sources that a retailer uses, training of staff in how to handle consumer contacts and use of market data in the buying process, should be given more attention when analysing MO in retailing. Suggesting the notion of inter-firm MO, it has been stressed that network activities is especially relevant for retailers MO because the retailer is dependent on suppliers and other partners in order to respond to consumer demands (Elg 2003). As a retailer enters a new market, partnering with firms on that market may help to get access to relevant market data and to make the right decisions concerning how to adapt to consumer needs there. Drawing on Kohli and Jaworskis three basic components inter-firm MO is suggested to include three components. Inter-firm intelligence generation may take place through joint activities involving the retailer and some key suppliers on the market. One example of inter-firm intelligence dissemination is when the retailer decides to design an information system that makes it possible to share market data with its suppliers on that market, or with other key partners. Collective responsiveness occurs as members of a marketing channel plan the marketing activities of the channel together, or discuss how to manage quality problems or consumer dissatisfaction caused by the distribution system. For example, today many international retailers, such as IKEA or Tesco, put a lot of emphasis on controlling and coordinating the activities of manufacturers. Elg (2003) also suggests specific aspects that should be incorporated in the Kohli, et al (1993) instrument in order to acknowledge the activities needed to develop a high degree of MO in a retail firm.

A foreign entry model for retailing companies based on networking and MO

The attempt to integrate the theoretical approaches discussed above has led to the research model presented in Figure 1. The model comprises of two levels of perspectives, corporate and host market, which ultimately decide whether a retailers attempt to enter a certain foreign market will be successful. Our general view is that global matching activities are likely to be carried out mostly on a corporate level. These are likely to generate resources and relationships that support a retailers positioning on the host market. As stressed above, it is important to study MO activities as well as matching activities directed at each host market. Otherwise it will not be possible to analyse how the company adapts to the different characteristics of that particular market. In addition to specific host market MO activities it is necessary to

consider the retailers overall MO approach, whether the company as a whole rewards and promotes a thorough customer understanding and whether it is committed to the host market. Figure 1: The Role of MO and Networking Aspects in a Retailers Market Entry

Retailers Corporate Level

Global level matching of actors, activities and resources.

Retailers Activities on Host Market

Macro and micro level matching of actors, activities and resources.

Host market position

The retailers strategic customer orientation and commitment to host market

Inter and intra- firm MO at the host market

Several additional antecedents to MO have been suggested in previous research (Cadogan et al 1999; Elg 2002; Kohli and Jaworski 1990; Narver and Slater 1990). Not being the focus of this paper, we do acknowledge that additional antecedents to MO relevant to our approach exist in a wider perspective. Their impact on MO has been investigated by previous research on both an intra-firm (e.g. Harris 2000; Jaworski and Kohli 1993) and an inter-firm (e.g. Elg 2002; Siguaw et al 1998) level, and is thus not considered further in this paper. Below, we present a set of propositions further clarifying the relationships between the constructs in Figure 1. The two empirical examples of American retailers ToysRUs and WalMart entering European markets are used as illustrations when presenting the propositions. The ToysRUs case concerns mostly its attempt to enter Sweden. It got substantial media coverage at the time and we draw upon a large number of reports from Swedish daily newspapers, magazines and journals as well as a more detailed case description (Altstadt 2001) of this process. The Wal-Mart examples concern primarily the entry in the UK and Germany. It is based on newspaper reports and internal ASDA material as well as a comprehensive study done on MO activities of Wal Mart/ASDA in the UK (Itabor, 2002) and other, more general, articles on the subject (see Arnold 1999, Arnold and Fernie 2000, Fernie and Arnold 2002). Commitment to host market has been used as an important aspect of success in the internationalisation and channel area (Anderson and Weitz 1992; Petersen and Pedersen 1999). In view of accelerating levels of competitive intensity, internationalisation processes of retailers involve both high levels of resource commitment (Johanson and Vahlne 1977; Petersen and Pedersen 1999) and relationship commitment (Gundlach et. al 1995). The pace by which retailing companies commit resources to foreign markets, is expected to differ significantly from that of other internationalising industries but also with respect to experience with foreign markets, company size and other factors (Petersen and Pedersen 1999). The international business literature has generally reconciled towards the perspective that the devotion of resources to foreign markets is not simply a one-off operation but an issue of gradual and incremental increase in commitment. Increasing commitment can also be explained as a process of accumulating

foreign market knowledge (Autio, et.al 2000; et al. 1997). Following Kohli and Jaworski (1990), the strategic customer orientation is the central element of a market orientation on the corporate level. It involves a general interest in obtaining information from customers about their needs and preferences, and is a strategy. This will encourage the retailer to proactively develop new strategies, and services for serving current as well as future needs of customers on its different markets, It is a critical dimension, representing the central units willingness and ability to reward local behaviour attempting to increase the understanding of customers in the retail organization. Both ToysRUs and Wal-Mart are usually characterised as customer oriented retailers in the sense that the employees are encouraged always to put the customer in focus. Still, their approach towards many European countries appears standardized and often more suitable for US that for Europe. This has sometimes implied a limited commitment and interest in acknowledging host-market conditions. For instance, Wal-Mart has used the strategy of putting Americans on the top positions within the acquired companies on the German markets, which may be one explanation to why it failed to understand the specific characteristics of that market. An example from ToysRUs is that a handbook that is handed out to every employee has usually just been translated to the native language when entering a foreign market. In Sweden, an external law firm was given the assignment to simply translate the book into Swedish without any further considerations about Swedish working life. The low level of understanding of the conditions specific to the different new markets can also be regarded as a sign of a limited commitment to the host markets. This standardized approach may explain why both retailers have been more successful on the UK market, being more similar to the US, while Wal-Mart had substantial difficulties in Germany, and ToysRUs has struggled in Sweden and the Netherlands. Both firms also work with standardized low cost solutions in relationships with manufacturers and other partners that have been more or less replicated when entering the European markets. Wal-Mart and ToysRUs thus appear to base their relationships to different stakeholders more on the power that their market size gives them than on long term trust building, and none of the firms appear to have the kind of networking competencies that other retailers, such as IKEA, base a lot of their international activities on (Larsson et al 2003). This, for instance, created substantial problems for Wal-Mart in Germany. For ToysRUs a lack of interest in Swedish conditions made it more difficult to succeed in macro level networking with politicians, local government, union representatives, etc. In all, if the retailer is more committed to a market and has a corporate strategy emphasising customer orientation it is likely to devote more resources to the host-market, and increase its ability to build trustful relationships and to understand the market. The later will facilitate the matching activities. Therefore: P1a: The retailers corporate strategic customer orientation and its commitment to a host market will have a positive influence on the MO of its retail system on the host-market. P1b: The retailers commitment to the host market will have a positive influence on its macro and micro level matching on the host-market. There is little evidence that Wal-Mart and ToysRUs have spent much effort on global level matching in order to facilitate the entry to foreign markets. Wal-Mart is big enough to manage without any financial back up, global alliances or support. Still, a stronger international network may have given both retailers a better understanding of the conditions in different European countries and the regulatory frameworks concerning consumer marketing, employee relationships, etc. For example, EU directives state that all multinational companies should have an advisory committee for labour issues at the corporate level, thus emphasizing the labour unions possibility of global networking. ToysRUs neglected both this

aspect and others when deciding to challenge Swedish labour unions. As a result of the conflict in Sweden, labour unions took global initiatives to co-ordinate efforts and to put pressure on ToysRUs. A worldwide campaign was started in order to organise labour within ToysRUs and to improve the employee conditions. In more general terms, it can be argued that retailers international networking activities with key actors is likely to be carried out mostly on a corporate level, and that it is likely to generate resources and relationships that support a retailers positioning on a certain host market. A retailer that recognizes the value of global matching activities will thus be more likely to succeed when entering a new market. Consequently: P2: Matching on the global level will have a positive influence on the retailers MO and matching activities on the host-market.

Macro level matching refers to host-market activities on a societal level involving government officials, local politicians, interest groups, etc (Ghauri and Holstius 1996). In spite of the aspiration within the EU to develop a common structural framework, retailers are still very dependent on the conditions of the individual markets that they enter. It is not possible to apply a single strategy for Europe. The legal part is one important aspect. Most European countries have different laws and regulations relevant to retailers that concern social issues as well as external shopping centres, allowed shopping hours, etc. For example, German rules concerning opening hours made it difficult for both these retailers to fully implement their strategies. Wal-Mart faced additional difficulties due to the strict German rules concerning city planning and social issues. The same thing happened to ToysRUs in Sweden. These problems could have been anticipated at an earlier stage if the retailers had built a stronger macro-level networks. Relationships to local authorities are especially important. In Sweden, for instance, the local government and the locally developed plans for where retailing is to be allowed, the allowed size for store units, etc., can be a severe restriction. Domestic retailers have adapted to this and often have well developed political network relationships. ToysRUs appeared not to be able to build such relationships, either at the local or national level. If the firm had done so it may have been more aware of the labour market conditions. In fact, ToysRUss initial attempt to enter the Swedish market more or less collapsed due to an insufficient understanding of the political conditions. At an early stage, ToysRUs decided to implement their American rules for employees and employee relationships. This meant that the retailer encouraged employees not to join labour unions, refused to sign any general agreements with labour unions concerning salaries, working conditions, etc. Here, ToysRUs obviously underestimated the power of the labour union and the workers determination, as well as the differences in culture between Sweden and the US. It also failed to understand that relationships with unions are closely related to other macro level relationships with government authorities, politicians, media, etc. In protest, the labour union for retail employees started a strike and the conflict then escalated. For example, labour unions managed to stop ToysRUss advertisements in the press while the workers had a big advertising campaign, the transport workers stopped any deliveries to ToysRUss stores and refused to handle shipments of products from ToysRUss central European warehouses, employees in local banks refused to handle transactions involving ToysRUs money, etc. Additionally, the Swedish blue and white-collar labour unions encouraged all members not to shop at ToysRUs. The retailer more or less refused to talk to the media during the conflict. This was another central corporate policy that undermined the firms position. After almost 6 months ToysRUs had to give up and sign an agreement that was adapted to Swedish labour market conditions. By then, however, relationships to employees, customers and other stakeholders were damaged. ToysRUs had a bad image as an actor on the Swedish market, a weak net of relationships to strategic actors and activities, etc.

This may be an extreme case, but it is nevertheless likely that macro level matching will help a retailer to manage its complex set of relationships to the society, support its local MO activities and contribute to its overall host market position. Therefore: P3: Matching on the macro level will have a positive influence on the retailers MO and position on the host market.

Matching at micro level refers to activities that create an efficient business network on the market. It emphasises relationships to partners such as suppliers and middlemen. This is another area that stresses that the European market consists of a number of national markets with very different characteristics. Both the discussed retailers have tried to develop their businesses in the same way that had turned out to be successful in the US. Both companies had problems with the German market because of this. Wal-Mart tried to implement its US strategy concerning logistics and centralised distribution. Suppliers were thus asked to deliver to distribution centres instead of directly to the stores. This worked out well in the UK, but it was very different from the German system that was based on direct store deliveries. German national suppliers would not and could not adapt to the new system introduced by Wal-Mart. This made deliveries fail to arrive on time and out-of-stock rates increase to up to 20 per cent. Again, it appears that Wal-Mart tried to base relationships to local actors more on power and size than on mutual adaptations and trust. In Germany this failed partly because Wal-Mart did not have the size required for such an approach. ToysRUs also had supplier conflicts in Germany due to their standardized strategy, leading to a propaganda campaign that stated that ToysRUs would threaten consumer safety due to low quality. Later, however, problems were overcome as ToysRUs grew and became more and more profitable. As discussed matching involves developing mutual trust and relationships at personal level. A high level of trust and co-operation can be expected to facilitate MO at an inter-firm level and in channel relationships (Elg 2002; Langerak 2001). It is also likely that strong business relationships on the host-market will provide the retailer with a flow of information concerning competitors, customers and the host market culture in general. This will contribute to the firms level of MO on that particular market. Consequently: P4: Matching on the micro level will have a positive influence on the retailers MO and position on the host market.

As discussed, a number of previous studies support the idea that MO has a positive influence on performance. Recently, Elg (2002) has added the idea that inter-firm MO is also relevant. We develop this view further by stressing MO on the particular host market. Inter-firm MO, i.e. joint activities by firms that make a retail system more sensitive to market demands (Elg 2002; 2003), has been a part of the entry processes for both retailers discussed here. Getting access to an established competitors or suppliers market knowledge by the use of alliances or acquisitions is one form of inter-firm MO. One important part of the Wal-Mart strategy is to acquire companies that can be shaped the Wal-Mart way. In the UK taking over the third biggest supermarket retailer Asda realized this. Asdas strategy was similar to WalMarts, including the well-developed systems for information, distribution and logistics and the management philosophy. This meant that Wal-Mart could easily build upon Asdas previously developed programmes for collecting and disseminating market data within the organization in order to get to know the UK market. Wal-Mart then added its original customer oriented policies and organizational culture, and its competencies regarding how to improve retail efficiency. The match between the organizations led to an ambitious approach to MO, perhaps especially significant at the local level (Itabor 2002). In Germany, Wal-Mart bought the supermarket chains Wertkauf and Interspar. These acquisitions appear to have been less successful in terms of inter firm MO, because the companies acquired by Wal-Mart were not very market oriented; being weak at providing customer value, having poor internal information systems, etc. In comparison, Wal-Marts entry to the UK can be regarded as successful by many standards.

Grocer 33 has voted Asda as the best value supermarket, and its business performance is constantly improving in terms of sales and profitability (Itabor, 2002). Wal-Mart/Asda is currently approaching Sainsburys position as number two on the UK grocery market. However, it can still be questioned whether the achievements live up to initial expectations. One reason may be that Wal-Mart over estimated British consumers the price sensitivity (Fernie and Arnold, 2002). Again, this indicates that there are shortcomings in Wal-Marts overall MO activities that are a handicap when developing a strategy for European markets. ToysRUs s Swedish problems were finally solved by forming an alliance with the Danish retailer Top Toy, that already had an efficient distribution network, a good knowledge on the Scandinavian market, higher credibility among employees, etc. Top toy was given the right to operate the ToysRUs stores in Sweden on a franchise basis. This alliance strategy was not the retailers preferred choice. The strategy for Europe has been to replicate the success formula for the US market, and then to learn from competition and from the companies own experiences on the host markets. This has, however, meant a low level of MO at an initial stage, and making mistakes that might have been avoided by using a more collaborative strategy. For instance, the UK customers did not feel familiar with ToysRUss initial warehouse approach and low service level. The firm therefore had to rebuild the units into a number of smaller shops/departments within the store that were to appeal to different segments and needs. In Sweden, the lack of understanding of the role of labour unions was the most crucial mistake, perhaps along with the initial rejection of Top Toys alliance proposal. Top-Toy contacted ToysRUs in the early 1990s and suggested that the companies should form an alliance for the Scandinavian market, but ToysRUs turned down the offer because it regarded itself as much stronger that the Danish potential competitor. However, ToysRUs failed to grasp the key success factors on the Scandinavian market and the strength of the competitors there, and did not see that the Danish competitor had a number of substantial strategic advantages. In fact, as ToysRUs turned down the alliance offer Top-Toy concentrated on building a chain of large toy stores in Sweden that were to attract the same customer segments as ToysRUs. This made Top-Toy well prepared to face the new competitor, and also meant that the margins for toys could not be squeezed to the same extent as in the UK and Germany. In fact, it may have been difficult for ToysRUs to succeed regardless of the labour market conflict because, ToysRUs approach stimulated internal MO to a lesser degree. For example, communication among employees was discouraged as the employee handbook prohibited any small talk during working time. This restricted intelligence dissemination as well as the staffs responsiveness to customers. Top Toy had well-developed systems for internal communication and intelligence dissemination between stores and employees at different levels, formal and informal routines for discussing MO activities and market trends, a more decentralised management style, etc. Top-Toy also had an internal educational program for employees (the toy academy). In all, the firm had developed a market-oriented culture that was very much in line with Scandinavian tradition and working life. The discussion above as well as a large body of previous research suggests that: P5: A retailers inter- and intra-firm MO at the host market will have a positive influence on its host market position.

Discussion
The approach suggested here separates aspects on a general and corporate level from those that concern a specific host market. It thus especially emphasizes that it is important to study MO and matching activities on each host market separately, in order to analyse how the retailers attempts to adapt to a particular market will influence its position there. The paper suggests that an understanding of retailers foreign market entry process calls for the consideration of different levels of analysis, and for an in-depth exploration of feasible ways to integrate existing theoretical approaches. To this end matching, networking and MO aspects have been integrated in a comprehensive conceptual model. This is deemed to serve as a framework for empirical examination in the retail setting. Before the propositions can be tested empirically, measurement tools have to be developed especially for retailing and for considering a companys different host markets. Even though the general components of MO suggested by Jaworski and Kohli (1993) can still be applied, the indicators need to be adapted. For the retailing part, this has been done to some extent (Elg 2003) but further work is needed. Such an approach will enable us to understand better why a retailer may be very successful in some national contexts whereas it has failed to establish itself in other parts of the world, It will also enable us to better capture the specific activities needed for service and retailing firms. A practical insight is that both Wal-Mart and ToysRUs searched for partners on the new markets that were well suited for implementing the existing retail proposition, based mostly on experiences from the American market. Perhaps new market entry would be more successful if the retailer also evaluates partners based on who can provide them with the best knowledge about the characteristics of the new market. This would have enabled the firms to reach a higher level of MO when entering the new markets. It can also be suggested that retailers should spend relatively less effort on global level matching and considerably more on macro and micro level matching. Most retailers do not have to make the same vast and concentrated global investments on a single market as manufacturers do when they go international and may therefore have a lesser need for global level matching and general support in terms of soft loans etc. In addition, it is normally more difficult for retailers to apply a single marketing strategy for its global enterprises, because retailing demands larger adaptations to each host market than manufacturing do. Retailers also depend more on the legal and political system, networking contacts on different levels of society, consumer trends and preferences concerning shopping, etc. A final issue is how to capture performance on the host market. This is especially difficult to assess in retailing (Dawson 2000). On a particular host-market, performance can be measured on the overall national level as well as at the store level (Harris and Piercy 1999). On the single firm level, a large number of measures are suggested in previous research that makes it possible to capture both objective and judgmental aspects. To some extent, they have been found useful also for retailers. In addition, given our network perspective, it is also important to be able to measure the strength of the retailers interorganizational position on the market. However, performance will have to be further investigated by future research.

Ulf Elg Department of Business Administration, School of Economics and Management, Lund University, P O Box 7080, SE-220 07 Lund, Sweden, phone +4646 222 4664 Email: ulf.elg@fek.lu.se Pervez Ghauri Manchester School of Management, UMIST United Kingdom Email: Pervez.Ghauri@umist.ac.uk Rudolf R. Sinkovics Manchester School of Management, UMIST United Kingdom Email: Rudolf.Sinkovics@umist.ac.uk

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School of Economics and Management Lund University

Working Paper Series
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Year 2004 2004 2004 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2002 2002 2002 2002 2002 2001 No 3 2 1 10 9 8 7 6 5 4 3 2 1 5 4 3 2 1 9 Author Title

Elg, Ulf A market and network based model for retailers foreign entry Ghauri, Pervez strategies Sinkovics, Rudolf R. Macheridis, Nikos The Specific Costing Problems of Project Form How those can be managed with activity based costing Holmqvist, Mikael Interlevel Learning Dynamics: Balancing Exploitation and Larsson, Rikard Exploration Within and Between Organizations Dedijer, Stevan Development & Intelligence 2003-2053 The impact of changes in the corporate governance system on Jonnergrd, Karin the boards of directors experiences from Swedish companies Krreman, Mats Svensson, Claes Alvesson, Mats Collectivity a cultural and processual view Krreman, Dan Forsbck, Jens Do Exchange-Rate Regimes Matter for Monetary-Policy Oxelheim, Lars Autonomy? The Experiences of 11 Small, Open European Economies in the 1980s and 1990s Krreman, Dan Understanding ethical closure in organizational settings - the Alvesson, Mats case of media organizations Alvesson, Mats Managers Doing Leadership: The extra-ordinarization of the Sveningsson, Stefan Mundane Oxelheim, Lars The quality of bond markets. The dynamic efficiency issue Rafferty, Michael Schewe, Charles Age Matters. Segmenting Swedish Markets by Generational Carlson, Benny Cohorts Noble, Stephanie The Globalization of Values. A Comparison of the United M. States and the Kingdom of Jordan Schewe, Charles D. Sveningsson, Stefan Managing Managerial Identities. Organizational Fragmentation Alvesson, Mats Discourse and Identity Struggle Landstrm, Hans Why do European Venture Capital Companies Syndicate? Oxelheim, Lars The Effect of Internationalization on CEO-Compensation Randy, Trond Kalling, Thomas Enterprise Resource Planning Systems: Strategic and Organisational Processes. Alvesson, Mats Up-or-out versus Fun-and-profit: A Study of Personnel Concepts and HR Themes in two IT/Management Consulting Firms. Johansson, Ulf Information Technology in Supplier-Retailer Relationships. Some Possible Consequences Hedman, Jonas The Business Model: A Means to Understand the Business Kalling, Thomas Context of Information and Communication Technology

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2001 2001 2001 2001 2001 2001 2001 2001 2000 2000 2000 2000 2000 2000 2000 2000 2000

8 7 6 5 4 3 2 1 9 8 7 6 5 4 3 2 1

Andrn, Niclas Oxelheim, Lars Oxelheim, Lars Rafferty, Michael Elg, Ulf Stavsudd, Anna Johansson, Ulf Johansson, Ulf Alvesson, Mats Willmott, Hugh Oxelheim, Lars Randy, Trond Oxelheim, Lars Wihlborg, Claes Elg, Ulf Alvesson, Mats Due-Billing, Yvonne Alvesson, Mats Sveningsson, Stefan Larsson, R Lubatkin, M Henriksson, K Eneroth, K Malm, Allan, T Alvesson, Mats Johansson, Anders W Elg, Ulf Johansson, Ulf Alvesson, Mats Alvesson, Mats Pushkala, Prasad, Birdsell, Judith M Zerbe, Wilfred Oxelheim, Lars, Stonehill, Arthur Randy, Trond

Exchange-Rate and Interest-Rate Driven Competitive Advantages in the EMU. On the Static Efficiency of Secondary Bond Markets. Market Orientation in Retailing: An Approach Based on Interand Intra-Firm Activities Managers in the Context of Strategic Content Industrial Organization Theory and Resource-Based view Predictions for the Selection of Managers Food Retail Buying Processes. A Study of UK, Italy and Sweden Retail Buying; Process, Information and IT use. A Conceptual Framework Identity Regulation as Organizational Control: Producing the Appropriate Individual (published in Journal of Management Studies, Vol 39 (5): pp 619-644, 2002) The Impact of Foreign Board Membership on Firm Value: A Study of Corporate Governance in Scandinavia. (Forthcoming in Journal of Banking and Finance Recognizing Macroeconomic Fluctuations in Value Based Management. (Forthcoming in Journal of Applied Corporate Finance.) The Meaning and Antecedents of Market Orientation in a Distribution Network Beyond Body-counting - a Discussion of the Social Construction of Gender at Work, with the Scandinavian Public Sector as an Example. Knowledge Work: Ambiguity, Image and Identity (Published in Human Relations,vol 54 (7): pp 863-886, 2001) Strategy as a Disciplinary Technology. Discursive Engineering in the Newspaper World Achieving Acculturation in Mergers and Acquisitions: A Case Survey Study When Communities of Practice Came to Town. On Culture and Contradiction in Emerging Theories of Organizational Learning. Strategic Identity. Visions as Catalysts for Competence Dynamics (published in Advances in Applied Business Strategy, vol 6A (2000) pp: 121-146) Professionalism and Politics in Management Consultancy Work (forthcoming in T Clark & R Fincham (eds): Critical Consulting: Perspectives on the Management Advice Industry. Oxford: Blackwell) The Contributions of International Alliances when Managing the Firms Set of Interorganizational Dependencies. (Published in the Journal of Strategic Marketing, 9 pp 93-110 2001) Methodology for Close up Studies. Struggling with Closeness and Closure Beyond Neo-Positivists, Romantics and Localists. A Reflexive Approach to Interviews in Organization Research Translated Myths: The Mirroring of Institutional Expectations in the Formal Structure of the Canadian Breast Cancer Research Initiative (CBCRI) Finance-Specific Factors and Theories of Foreign Direct Investment (Published in International Business Review, Vol. 10, (4), 2001) 14

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Working papers are published and distributed as a professional service of the Institute of Economic Research. Direct inquiries to: Elsbeth Andersson Institute of Economic Research P.O. Box 7080 SE-220 07 Lund, Sweden Tel: +46 46-222 7824, Fax +46 46-222 44 37 E-mail: Elsbeth.Andersson@fek.lu.se You can also find the working paper series on our home page (pdf-format): http://www.lri.lu.se

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