The effects of globalization on marketing strategy and performance

by Thoumrungroje, Amonrat

by Amonrat Thoumrungroje, Ph.D. Washington State University May 2004 Chair: Patriya Tansuhaj Building on international business, strategic management, and marketing literature, this dissertation advances prior knowledge on globalization and business by analyzing different effects of globalization on firms. Globalization—the process of increasing social, cultural, political, and economic interdependence—has resulted in several changes in business environment. Global market opportunities and threats are major effects of globalization. While the former refers to the increases in market potential, trade and investment potential, and resource accessibility, the latter refers to the increases in number and level of competition, and the level of uncertainty. Two empirical studies included in this dissertation explore how these effects influence firms’ international marketing activities and performance. The first empirical study investigates the effects of globalization on firm performance. The second study examines the role of firms’ cooperation in alliances in enhancing their performance amid globalization by specifically focusing on co-marketing alliances and international marketing performance of firms. Conceptual models are developed based on environment-organization literature, transaction cost economics, and market power perspective. Results from both empirical investigations lend support to theoretical conjectures. Specifically, the first study found that while firm performance is enhanced by increased market opportunities v evoked by globalization, it is also hampered by growing competitive threats. Moreover, the second study indicates that globalization drives more collaboration in international marketing activities among firms in co-marketing alliances, and such cooperation enables firms to enhance their international marketing effectiveness. Thus, central contributions of this dissertation include: first, it classifies the effects of globalization on firms into global market opportunities and global competitive threats; second, it integrates literature on international business, strategic management, and marketing to address the effects of globalization on firms’ marketing conduct and outcomes; third, it demonstrates the generalizability of the transaction cost economics, the market power perspectives, and the literature on environment-organization interfaces in the domain of globalization; fourth, it confirms that globalization acts as a two-edged sword and that alliance cooperation presents a viable alternative for firms to navigate successfully in this new competitive landscape. vi