Karim Kirollos
Introduction
As with many terms in the field of management, there is no universally accepted definition of international strategy. However, there are very similar themes and research agendas which many scholars have incorporated and this is reflected in the various definitions put forward. As international strategy is a subset of a wider field of strategy, it is logical to build an understanding and definition of international strategy upon strategic management research (Ricart et al., 2004; Eden et al., Chapter 4, this edition). While it is not the aim of this chapter to come up with a new definition of international strategy, the process of synthesizing the key themes are important to capture the multidimensional sides of international strategy and ultimately gain a greater understanding of the field.
The domain of strategic management is defined by the Academy of Management as:
The roles and problems of general managers and those who manage multi-business firms or multi-functional business units; the performance of firms and other organizational forms that interface with a market environment, such as business units, alliances, and clusters of organizations. Major topics include: strategy formulation and implementation; strategic planning and decision processes; strategic control and reward systems; resource allocation; diversification and portfolio strategies; competitive strategy; cooperative strategies, selection and behaviour of general managers; and the composition and processes of top management teams.
This definition reflects the broadness of the field of strategic management and also highlights the streams within the strategic management domain. International strategic management (ISM) has been developed by the convergence of two fields, international business and strategic management. Interestingly, both fields are relatively young compared to other categories within the management domain and wider social sciences, and yet the intersection of strategy and international business has developed a very interesting niche. It was anticipated that the 1990s would show a high period of growth for research in ISM (Ricks et al., 1990; Lyles, 1990; Bartlett and Ghoshal, 1991). Reviews on the development and citation on global strategy showed that the 1990s indeed contributed to the high number of research articles and books on ISM and in turn helped develop our understanding of what is international strategy (Peng, 2001; Werner, 2002; Lu, 2003; Bruton et al., 2004; Peng and Zhou, 2006). With the rise of companies from emerging and developing countries as well as companies originating from developed countries continuing to conduct business abroad, the field of ISM looks set to continue to be a hot area of research for years to come. Differing definitions of strategic management since the development of the field and the engagement of different disciplines has led strategy and subsequently ISM to become a broad topic (Bruton et al., 2004; Nag et al., 2007). Work done by Lu (2003), who gave a comprehensive review of the research in ISM, and Peng and Zhou (2006), who looked at the most cited research in global strategy, also reflected the diversity in the field of international strategy.
While strategy is a domain of itself in management literature, strategy has converged with marketing, supply chain management, finance and human resource management. Common phrases in both management practice and academic literature include terms such as marketing strategy, supply chain strategy and so forth. As the field of management is now focusing on an international dimension, not just looking at the business operations in a domestic setting, terms such as international marketing strategy are also common. Moreover, strategy has been developed through various overlapping disciplines with the management literature and it is important to look at strategy through the lens of marketing, human resource management and supply chain management scholars.
The first section of the chapter will look at the question of what is strategy and will be followed and be the platform in addressing the second section that will focus more narrowly on international strategy.The second section will also introduce the multi-dimensional sides and the current research around the different elements of international strategy. In doing so it is hoped that the chapter will give the reader a greater understanding of what is international strategy.The latter section will conclude by summarizing the evolution of ISM and will attempt to convey the current understanding of international strategy.
What is strategy?
Strategy is one of the newest fields within the management domain and the literature and the theories in which strategy is built upon comes from a wide range of disciplines including sociology, economics, psychology and so forth.The difference between the disciplines used by scholars has led strategy to be researched through different approaches and theoretical backgrounds. This, along with the different research themes, has led to a lack of consistency in the meaning of strategy.The development of strategic management research has seen huge changes spanning the last three decades. Before the strategy field was coined, it had been a more applied member of the management domain known as business policy. The field of strategy has evolved from its applied oriented business policy predecessor to a field that is driven on empirical and theoretically grounded knowledge.
Earlier work looked at strategy from a resource-based view focusing on the firm's internal strengths and weaknesses and also looked at strategy through a contingency perspective interested in the links between structure and strategy (e.g. Chandler, 1962; Ansoff, 1965). Penrose (1959) introduced the bases of the resource-based view which has dominated the field of strategy since the late 1980s (e.g. Wernerfelt, 1984; Conner, 1991; Barney, 1991). During the re-emergence of the resource base view of the firms, other internal firm perspectives started to give rise, namely the knowledge-based view (e.g. Kogut and Zander, 1992; Spender and Grant, 1996) and strategic leadership (e.g. Cannella and Hambrick, 1993; Finkelstein and Hambrick, 1996; Kesner and Sebora, 1994). Michael Porter's work in the 1980s revolutionized strategy by looking at strategy through the lens of industrial organization economics and his work remains influential in strategic management research. Bringing in industrial organization economics to the field of strategy also made a methodological contribution by introducing the use of econometrics in research of strategic management. Other economic disciplines also helped enrich the strategic management field, most notably agency theory and transaction cost economics. The economics influence led to research to start and look at the external environment in which businesses operate with industrial organization economics focusing toward the competitive position of the industry.
When looking at the historical development of our understanding of what strategy is, it is perhaps best to start to look at Schendel and Hofer (1979). Their book reconceptualized business policy to strategic management in which they proposed 181 categories on what they believed strategy broadly sits. Although strategy research has evolved, much of what was put forward in their book is still relevant to many scholars' understanding of what is strategy. The 18 categories put forward were the bases in which subsequent scholars used to conduct studies in the field to offer a greater understanding of what strategy is. Saunders and Thompson (1980) argued that the 18 categories put forward by Schendel and Hofer (1979) were too broad and needed to be succinctly classified to help give a clearer structure and aid in the understanding of what is strategy. They argued that the 18 categories were in fact 18 sub-categories that should be divided into six major categories. This was done through reviewing past papers in the field of strategy and business policy. Saunders and Thompson (1980:122–123) believed that most of the categories identified by Schendel and Hofer were either ‘elements’ or ‘process’. ‘Process’ is the ‘broad treatment of several aspects either of traditional parts of the field — strategy formulation or strategy implementation — or of the entire sweep dealing with both — strategic management’. On the other hand, elements ‘dealt more narrowly with only one aspect of formulation or implementation, e.g. environmental analysis’. Thus Saunders and Thompson split the categories into:
• Strategy formulation process. From Schendel and Hofer's (1979) categories, strategic formulation process encompassed strategy concept, strategy formulation, strategy evaluation and strategy content.
• Strategy formulation elements. From Schendel and Hofer's (1979) categories, strategic formulation elements encompassed goal formulation/structures, social responsibility, environmental analysis and public policy.
• Strategic implementation process. From Schendel and Hofer's (1979) categories, strategic implementation process encompassed strategy implementation.
• Strategic implementation elements. From Schendel and Hofer's (1979) categories, strategic implementation elements encompassed formal planning systems and strategic control.
• Strategy management process. From Schendel and Hofer's (1979) categories, strategic management process encompassed strategic management process, boards of directors and general management roles.
• Other. From Schendel and Hofer's (1979) categories, ‘other’ encompassed entrepreneurship and new ventures, multibusiness/multicultural firms, strategic management in not-for-profit, and organizations and research method.
What is perhaps most interesting here is that the strategy is captured in an evolutionary light, strategy formation to strategy implementation to strategy management process. The categories put forward by Saunders and Thompson (1980) seem to capture strategy through the lens of the manager as opposed to looking at the performance of the firm. However, despite the categories being more than three decades old they are till applicable today.
Early definitions only looked at strategy through one dimension and different definitions looked at different units of analysis, either through the role of managers (e.g. Jemison, 1981; Schendel and Cool, 1988; Fredrickson, 1990) or at the firm level (e.g. Learned et al., 1965). Some definitions only focused on internal resources and external environments (e.g. Bracker, 1980; Jemison, 1981), other definitions looked at the success or performance of the organization and some focused on the implementation of the strategy (e.g. Van Cauwenbergh and Cool, 1982). Nag et al. (2007) showed that in fact strategy is a multidimensional concept. The diversity in the disciplines used in the strategy literature makes it difficult to capture a consensual meaning of the field (Hambrick, 2004) and perhaps reflects that the understanding and meaning of strategy is one that can be seen as fragile and even lacking. That being said there is a paradox in that despite scholars approaching strategy research from different disciplines there seems to be consensus of what is strategy without a clear definition of the term. It is also important to note that while the definitions put forward by various scholars are not fully incompatible with each other, the diversity in their definitions conversely may show that there is ambiguity on what strategy is.
Previous papers (Saunders and Thompson, 1980; Schendel and Cool, 1988; Rumelt et al., 1994; Hoskisson et al., 1999; Ramos-Rodriguez and Ruiz-Navarro, 2004) have attempted to answer the question: What does it mean to do research in strategy? And: What are the requirements needed to be considered a strategic management scholar? These questions were examined through looking at the historical research of topics and theories and analysing the longevity of the research, the rise of new themes and the stagnation of others. By analysing the progression of research and doctoral education in strategy, Summer et al. (1990) proposed and answered the following research questions: What is the nature of strategy? What are the boundaries of strategy? And what are the major streams of literature of strategy? Hoskisson et al.'s (1999) research looked at the evolution of the field which had focused more on the firms' internal resources and external environments. Ramos-Rodriguez and Ruiz-Navarro's (2004) aim in their paper was to focus on which strategic management research had the most impact and they analysed the changes within the field of strategy; this was done through a citation count method to test.
While these prior studies and definitions have shed light on understanding aspects of strategic management research, they neglected to answer the fundamental question of what is strategic management, until Nag et al. (2007) attempted to answer the question. Answering the question, What is strategic management/strategy? is one that is complex due to the ambiguity and diversity in past definitions and the fact that strategic management comes from different fields (Hambrick, 1990; Spender, 2001; Bowman et al., 2002). Nag et al. (2007) wanted to capture a definition of strategy that would be widely accepted both in terms of its implicit and explicit meaning in the field. Such a definition would have to capture the various methodological and theoretical underpinnings done in strategic management research and in order to understand strategy from both an implicit and explicit meaning, Nag et al. (2007) conducted two distinct studies. In Study 1, they had 447 abstracts and asked a large number of strategic management scholars to classify whether the abstract reflected their view of whether it fell into the realm of strategic management research or not. Study 1 showed that despite strategic management scholars coming from different disciplinary backgrounds, there was a high consensus on what was considered a strategic management paper and what was not. The abstracts that were rated as a strategy paper were then categorized using key words via a text analysis and as a result allowed the authors to develop an implicit consensual definition of strategic management. To supplement Study 1, Study 2 surveyed 57 scholars who publish and do research in both strategy and in one of three adjacent fields (economics, sociology and marketing). The purpose of Study 2 was twofold: firstly, validating the definition that was derived from Study 1; and secondly, to understand the explicit definition of strategy. Study 2 validated the definition put forward from Study 1.
After running a text analysis, 54 words where generated and this led to the basis for Nag et al. (2007) to offer a consensual definition of strategic management. From the 54 words they grouped them into categories that had similarities, such as firm and company being grouped as an organizational unit of analysis, alliance, acquisition and investment categorized as organization initiatives, and Board and CEO referring to people who play a role in implementing the initiatives. The categories were then matched by previous definitions put forward by scholars. While there was not a generally accepted definition of strategy, there was some commonality, with some being performance oriented and others focusing on people and so forth. From this, the authors of the paper offered the following definition of strategic management:
The field of strategic management deals with (a) the major intended and emergent initiatives (b) taken by general managers on behalf of owners, (c) involving utilization of resources (d) to enhance the performance (e) of firms (f) in their external environments.
The definition put forward contained six elements that were derived from the 54 words (see Table 5.1). The first element, (a) ‘the major intended and emergent initiatives’, includes aspects and is reflected by papers that focus on entry strategies, acquisitions and other papers and streams that look at planned initiatives put forward.The first element also looks at the emergent activities of the firm and captures how the firm learns and innovates. The second element, (b) ‘taken by general managers on behalf of owners’, looks at strategy on the perspective of people and is heavily influenced by agency theory. This element only looks at the stakeholders who are the upper management positions, such as the board, the CEO and other directors and the owners. The third element, (c) ‘involving utilization of resources’, looks at the knowledge and resources which managers utilize in making strategic initiatives and the capabilities that are within the firm. The resource-based view and the knowledge-based view are two predominant theories within this element. One of the common words used is ‘ties’ which shows the link between the firm's resources to its environment. The fourth element, (d) ‘to enhance the performance’, is concerned with objectives and/or outcomes. The key words that were more attributed to this
| Element | Key words |
The major intended and emergent initiatives |
Strategy, innovation, acquisition, investment, operation, diversification, learning, entry, activity, alliances and transactions |
Taken by general managers on behalf of owners |
Top, incentives, board, director, compensation, CEO, succession, agency, general and ownership |
Involving utilization of resources |
Stock, capability, assets, technology, competency, financial, product, ties, slack, knowledge and resources |
To enhance the performance |
Growth, advantage, returns, decline, dominance and performance |
Of firms |
Firm, business, company, corporate, enterprise, multibusiness, SBU and subsidiary |
In their external environments |
Industry, competition, market, environment, contingency, uncertainty, threats and risk |
element were the ‘growth’ of the company, the ‘return’ on the investment and the ‘advantage’ the firm has over its competitors. The fifth element, (e) ‘of firms’, focuses on the actual company as the main unit of analysis in strategic management. As such, strategy should be looked at through the perspective of the firm. Even studies that are concerned at the industry or country level (e.g. Porter's work and other strategy scholars coming from organization industrial economics) looked at it through the lens of how the firm will adapt its strategy to deal with the external environment. This leads us to the sixth element, (f) ‘in their external environments’, which is interested in how the firm deals with competition, their industry and market they operate in and other environmental factors that can affect the firm.
Building to an understanding of what is international strategy
Previous papers (e.g. Lu, 2003; Peng and Zhou, 2006) examining the research trends of ISM have categorized the field into four broad areas: the environment, leadership and organization, strategy, and performance. Within each category there are sub-categories, which are expressed in Table 5.2.
Eden et al. (Chapter 4, this edition) argue that the six elements of strategic management put forward by Nag et al. (2007) should be extended at an international level. It is a logical step to build upon Nag et al.'s (2007) six elements which are arguably the most comprehensive and most reflective of our understanding of what strategy is. Building on the definition of Nag et al. (2007), Eden et al. (this edition) extended the definition to reflect what strategy is at an international level:
International strategy as a field of inquiry is the study of (1) the major intended and emergent initiatives, including cross-border initiatives, (2) taken by general managers on behalf of owners, (3)involving utilization of domestic and/or foreign resources (4) to enhance the performance (5) of firms (6) in the international environment.
| Main ISM categories | Topics in each category |
| The environment | Environmental/industry analysis Culture Scenario development/political risk analysis |
| Leadership and organization | Internal coordination Boards of directors Decision-making Structure Corporate culture |
| Strategy | Strategy typologies Enterprise strategy (social issues) Corporate strategy formulation Corporate strategy implementation International diversification Strategic alliances Business-level strategy formulation Business-level strategy implementation Turnaround/decline |
| Performance | Relative performance |
This definition is wide enough to incorporate the four broad areas of ISM that was adopted by previous papers. This section will examine each individual element in light of the recent research in international strategy and offer a clear understanding of what each element is in the context of international strategy. In doing so it will give not just an encompassing idea of what is international strategy, but also a clear idea of what the current research themes are in international strategy. This section will examine each element from above and cross-reference it with the most frequently cited work in the 1990s and early 2000s of each element by referring to the work of Lu (2003), Bruton (2004) and Peng and Zhou (2006) which all either looked at the most cited work or the latest themes of research in global strategy. It is important to note that the 1990s and early 2000s was an important period for the development of our current understanding of what is international strategy and is the foundation upon which current academic work in the field is building on. This section will give a brief overview of each element and refer to more up-to-date research to give an idea of the current state of each element within ISM.
Element 1
Building from the adapted element 1, ‘the major intended and emergent initiatives, including cross-border initiatives’, this element refers to papers interested in international entry strategies and entry modes such as cross-boarder acquisitions, greenfield investments and international joint ventures. It also includes international operations, diversification of entry strategies and the ability of the firm to learn from its international activities. It is arguably (Lu, 2003) the most vested area of research within ISM. These research topics are akin to Summer et al.'s (1990) classification of corporate strategy which, if adapted to an international context, would contain themes on international diversification and mergers and acquisitions (M&A). M&A literature in this field has been partly developed from drawing on finance literature, especially when looking at the financial benefits of cross-boarder M&A.
This element also incorporates Summer et al.'s (1990) business strategy, which in an international context would focus on the international product/market selection and competitive weapons (e.g. cost, differentiation, focus). This area is one that has mainly been dealt with in an international marketing strategy domain. International product/market selection research shows how marketing research has helped develop the strategy domain. Predominant marketing themes that have helped foster this area are research on standardization and adaptation (Schmid and Kotulla, 2011) and international market selection (Cavusgil, 1997). Lu (2003) added a new section, what he calls turnaround strategy, examining how firms deal with financial problems, and this area has been partly developed by the inclusion of finance literature. In their review, Peng and Zhou (2006) found that the most cited work within turnaround/decline was by Stopford and Baden-Fuller (1994).
Within the ISM domain, international corporate strategy was among the more popular areas of research and during the period 1991 to 2000 accounted for approximately half the research output of ISM. Within international corporate strategy, the two largest streams of research are within strategic alliances and international diversification topics. During the 1990s, ISM looked at the relationship between the diversification choices with performance. Prominent studies in the field of international diversification also looked at what leads the firm to opt to diversify by either M&A, through licensing, greenfield investments, joint ventures and other entry modes (Barkema and Vermeulen, 1998; Pan and Tse, 2000). Such factors that have been investigated to examine the impact on international diversification decisions include a cultural perspective (e.g. Brouthers and Brouthers, 2000), a purely strategic line (Delios and Beamish, 1999) and some have looked at the impact through an economics perspective through the transaction cost theory (e.g. Agarwal and Ramaswami, 1992). Parkhe's (1993) paper is the most cited within international diversification literature (Peng and Zhou, 2006). This paper integrated organizational learning to the field of international diversification. More recent papers in the field are interested in international geographical diversification and the impact this has on a firm's performance (e.g. Wiersema and Bowen, 2011; Glaum and Oesterle, 2007; Hitt et al., 2006). Qian et al.'s (2010) paper, for example, compared intra- and inter-regional geographical diversification and looked at the difference in the firm's performance.
Other prominent topics in element 1 include the formation and implementation of corporate strategy and corporate strategy typologies. Peng and Zhou (2006) mostly cited work within element 1 including Morrison and Roth (1992), which heavily influenced work on strategy typologies. They presented a business-level taxonomy of the strategies in global industries. After doing research they found that there are four categories of strategies: exporting high-quality offerings, domestic product niche, quasi-global combination and domestic product niche. Within corporate strategy formulation, Dunning (1998) was the most cited work with the paper looking at the role of location in the internationalization of the multinational. The corporate strategy implementation's most cited work (at the time of the publication of Peng and Zhou, 2006) was Nohria and Garcia-Pont; their paper proposed a theoretical framework that gave insight into the structure of networks of strategic linkages in global industries.
International entry mode choice literature had previously focused on the choice of foreign direct investment (FDI) versus licensing to now focusing more on the type of FDI. Predominantly during the late 1990s and early 2000s the interest was the choice of entering a foreign market through an acquisition or greenfield investment (e.g. Brouthers and Brouthers, 2000; Hennart and Reddy, 1997). Another area of interest is the ownership structure of the subsidiary (Makino and Neupert, 2000; Delios and Beamish, 1999; Hennart and Larimo, 1998; Makino and Beamish, 1998). The infusion of marketing literature led to an interesting research area within international diversification. The rich strategic alliance literature from marketing led scholars (Isobe et al., 2000; Pan andTse, 2000; Luo, 1998; Mitchell et al., 1994; Mascarenhas, 1992) to investigate the benefits and shortcomings of forming international alliances. This area of research was then extended to look at the management of these alliances (Tallman and Shenkar, 1994). The rise of this area of research coincided with the interest in Western companies internationalizing to emerging and developing countries, sparking questions on the alliance formation and the benefits to do so to enter the market (Demirbag et al., 1995; Luo, 1995; Lyles and Baird, 1994; Lawrence and Vlachoutsicos, 1993). Hamel (1991) was the most cited paper in strategic alliance literature and the most cited in ISM. Hamel's (1991) paper looked at learning between partners within international strategic alliances. Recent research in international strategic alliances has been developed by overlapping other strategy elements and other social science disciplines. There is a line of research interested in the role of trust in the performance (e.g. Robson et al., 2008) and learning between partners (e.g. Nielsen and Nielsen, 2009) in international strategic alliances. Other research is looking at the role of the firm's capabilities in the international strategic alliance and the impact this has on learning (e.g. Chen et al., 2009).
Within the area of the international business strategy domain, scholars looked at the implementation of strategies (e.g. Roth et al., 1991) and the impact of strategic choice on the performance of the firm (e.g. Reitsperger et al., 1993). In business-level strategy implementation, the most cited paper was by Dyer (1997), who looked at the strategies firms use to minimize transaction costs and maximize transaction value. The more recent area of research has been developed by the introduction of the institutional theory and examining the impact this has on business-level implementation (e.g. Peng et al., 2008). Other research has been interested in the link between the business model and product market strategy (Zott and Amit, 2008). Business models are now seen as a new unit of analysis, which will offer a greater perspective on how firms do business and are seen as a potential research avenue in which future research will concentrate (Zott et al., 2010).
Element 2
Element 2 is ‘taken by general managers on behalf of owners’ and is reflective of the intersection of leadership and organization literature within ISM. Key areas of research are looking at the top management's (e.g. CEOs, directors, etc.) implementation of strategic goals. The most cited work on decision-making by upper management was done by Calori et al. (1994); their paper incorporated psychology literature and looked at the cognitive maps of the CEOs who make decisions. Recent research in the field has looked at the impact of top management team diversity on decision-making and firm performance (e.g. Boone and Hendriks, 2009), top management decision-making in high-growth industries (e.g. Souitaris et al., 2010; Clark and Maggitti, 2012) and the role of ethics in decision-making (e.g. De Cremer et al., 2010). One of the more popular areas of research was internal coordination and this has been developed through research done on subsidiaries, particularly on how firms manage their foreign subsidiaries. Work during the 1990s focused on the coordination (e.g. Martinez and Jarillo, 1991), the issue of control (Nobel and Birkinshaw, 1998) and the firm's internal control (Roth, 1995) of its international subsidiaries. Gupta and Govindarajan (1991) is the most cited paper in the area of internal coordination and their paper focused on knowledge flows. Research also branched out toward examining knowledge flows between the parent firm and the subsidiary (e.g. Li et al., 2010). Research on decision-making has looked at the role of planning and how effective it is (Jones et al., 1992) and this research has also been extended to the boards of directors level (Kriger, 1991). Some research has also looked at the corporate culture and, in an international setting, has looked at the relationship between the headquarters and subsidiary and how they deal with differing corporate settings, Nohria and Ghoshal (1994) is the most cited work in this area. The strategic relationship between the parent firm and the subsidiary has continued to build upon the same line of research. The area of research has also been partially developed by bringing in human resource management literature to the debate (e.g. Fang et al., 2010).
Element 3
The third adapted element, ‘involving utilization of domestic and/or foreign resources’, looks at the knowledge and resources which managers utilize in making international strategic initiatives and the capabilities that are within the firm. This element has been heavily influenced by the resource-based view and subsequently the knowledge-based view of the firm. The resource-based view (RBV) of the firm is arguably the most significant and influential framework in ISM. The main argument of the RBV is that for the firm to sustain its competitive advantage, it must hold rare, inimitable and non-substitutable resources and capabilities. The firm must also have the organization to be able to absorb and utilize them (Barney, 2002). The RBV runs parallel to other studies that have helped foster our understanding of ISM within this element, including the dynamic capabilities (Teece, Pisano and Shuen, 1997) and core competences (Hamel and Prahalad, 1994). From their analysis, Peng and Zhou (2006) showed that the most cited paper within the element was by Collis (1991). The paper found that the integration of the RBV with economic analysis (i.e. the external environment) is important to have a ‘complete understanding’ of ISM. This element of strategy has helped develop other fields in management, like supply chain management (e.g. Hunt and Davis, 2012). Current research is still heavily influenced by the RBV. This theoretical framework has been applied to innovation (Terziovski, 2010), environmental management (e.g. Aragón-Correa et al., 2008) and entrepreneurship (Foss et al., 2008).
Element 4
Element 4 is ‘to enhance the performance’ and ISM research is interested in the performance from the strategic choices businesses make (Summer et al., 1990). Earlier research on performance was the debate about what is performance? What are the best indicators to measure performance? (Venkatraman and Ramanujam, 1986). There have also been comparative performance studies between different countries, such as the Brown et al. (2004) paper, which compared financial statements of companies from Japan with US companies. There are not many studies in this area, but the comparative studies give a validation on the ability to compare financial performance between two or more countries. The reason why the reliability of being able to compare financial performance is important is that performance is frequently used as a dependent variable in many studies from organization and leadership literature to business strategy.
Element 5
While strategy is interested in research at the firm level, it is not limited to the parent firm but also includes the subsidiary level. This is clear with the subsidiary being the main unit of analysis of research in element 2, ‘taken by general managers on behalf of owners’. Many scholars have argued that the future of international business research should focus at the subsidiary level with Rugman andVerbeke (2001) arguing to look at the subsidiary's firm specific advantage. These scholars argue that looking at the subsidiary level will offer a clearer understanding of the international strategy of the firm in a foreign market.
Element 6
Element 6, ‘in the international environment’, looks at how the environment has an effect on the firm. Lu (2003) categorizes research on the external environment into three streams of research. The first stream of research looks at the environmental uncertainty of the firm's industry or even wider environment (e.g. Shrader et al., 2000), the role of the environmental forces in a location on the firm's output (e.g. Shaver and Flyer, 2000; Sanchez and McKinley, 1995) and the firm's decision to invest in certain places due to the influences of the environment (e.g. Loree and Guisinger, 1995). The second stream of research looks at the impact of the cultural environment on the firm which has been very popular in ISM. Early research on culture had been interested in constructing and identifying what culture is and the dimensions to measure culture. This work was heavily influenced by Hofstede (1980) with recent research in the field trying to reconceptualize his measurement of culture (Taras and Steel, 2006). Research has looked at the impact of culture on the firm's entry mode, strategy, performance and international operations (e.g. Kogut and Singh, 1988; Hennart and Larimo, 1998). Another stream of research brings in research from political science and, in particular, political risk analysis. There has been research on the link between the firm's profit and the political state of a given location (Clegg et al., 1996). ISM develops by bringing in other disciplines to help foster our understanding, such as sociology, which helps develop and shape new research avenues. One of these research themes within this element is the introduction of the institutional theory. Research in ISM is interested in how the organization reacts to the formal and informal institutions such as political, economic and social forces (e.g. Meyer et al., 2009; Carney, 2008; Dunning and Lundan, 2008).
Conclusion
It is clear that ISM as a field is one that is hard to define in a few sentences and this is indicative of the nature of the field of management as a whole that builds from different disciplines. As ISM research is, in part, progressing by integrating the latest research from different disciplines, the boundaries of ISM are expanding, and as such it is hard to see ISM as a static research area, but as an area that is dynamic and always evolving. What this chapter attempted to do was to try to show the multidimensional side of ISM and how past scholars have tried to define the area of research. The infusion of theories from different fields such as sociology and economics has helped produce a greater understanding of ISM such as transnational cost, institutional, organizational learning and social network theories. The area of ISM has also been developed from finance literature, which has helped define performance measurements and marketing that has developed literature in international alliances. There have also been frameworks and theories that have laid the foundation of earlier research on ISM which is still very relevant today, particularly the resource-based view of the firm and industrial organization.
While the chapter splits ISM into six elements, they are not independent from one another, but rather complementary. Though the research themes expressed by the six elements will stay consistent, it does have a limitation in that future research, such as business models or the inclusion of institution theory, can develop new research avenues that are not captured from the six elements used in this chapter. As a result, future research on citations and research themes in ISM after 2005 would help to identify new themes and give an indication of the direction of the field. However, for the time being and with the way ISM and strategy as a whole has been developed, one could argue that the adapted Nag et al. (2007) definition by Eden et al. (this edition) is the most reflective of the current field. Therefore, it is fitting to conclude that:
International strategy as a field of inquiry is the study of (1) the major intended and emergent initiatives, including cross-border initiatives, (2) taken by general managers on behalf of owners, (3)involving utilization of domestic and/or foreign resources (4) to enhance the performance (5) of firms (6) in the international environment.
Note
1 The 18 categories put forward by Schendel and Hofer (1979) are Strategy concept, Strategy formulation, Strategy evaluation, Strategy content, Goal formulation/structures, Social responsibility, Environmental analysis, Public policy, Strategic implementation, Formal planning systems, Strategic control, Strategic management process, Boards of directors, General management roles, Entrepreneurship and new ventures, Multibusiness/multicultural firms, Strategic management in not-for-profit, and Organizations and research method.
Bibliography
Agarwal, S., Ramaswami, S. 1992. Choice of foreign market entry mode: Impact of ownership, location and international factors. Journal of Intentional Business Studies, 23: 1–27.
Ansoff, H., 1965. Corporate Strategy. New York: McGraw-Hill.
Aragón-Correa, J. A., Hurtado-Torresn, N., Sharma, S., García-Morales, V.J. 2008. Environmental strategy and performance in small firms: A resource-based perspective. Journal of Environmental Management, 86: 88–103.
Barkema, H.G., Vermeulen, F. 1998. International expansion through start-up or acquisition: A learning perspective. Academy of Management Journal, 41(1): 7–26.
Barney, J.B. 1991. Firm resources and sustained competitive advantage. Journal of Management, 17: 99–120.
Barney, J. 2002. Gaining and Sustaining Competitive Advantage. 2nd Ed. Upper Saddle River, NJ: Prentice Hall.
Bartlett, C., Ghoshal, S. 1991. Global strategic management: Impact on the frontiers of strategy research. Strategic Management Journal, 12(summer special issue): 5–16.
Boone, C., Hendriks, W. 2009. Top management team diversity and firm performance: Moderators of functional-background and locus-of-control diversity. Management Science, 55: 165–80.
Bowman, E.H., Singh, H., Thomas, H. 2002. The domain of strategic management: History and evolution. In Handbook of Strategy and Management, Pettigrew, A., Thomas, H., Whittington, R. (eds). London: Sage, 31–51.
Bracker, J. 1980. The historical development of the strategic management concept. Academy of Management Review, 5(2): 219–224.
Brouthers, K.D., Brouthers, L.E. 2000. Acquisition or greenfield start-up? Institutional, cultural and transaction cost influences. Strategic Management Journal, 21(1): 89–97.
Brown, P., Soybel, V., Stickney, C. 1994. Comparing US and Japanese corporate-level operating performance using financial statement data. Strategic Management Journal, 15: 75–83.
Bruton, G., Lorhke, F., Lu, J. 2004. The evolving definition of what comprises international strategic management research. Journal of International Management, 10: 413–429.
Calori, R., Johnson, G., Sarnin, P. 1994. CEOs cognitive maps and the scope of the organization. Strategic Management Journal, 15: 437–457.
Cannella, A. A., Hambrick, D.C. 1993. Effects of executive departures on the performance of acquired firms. Strategic Management Journal, 14: 137–152.
Carney, M. 2008. The many futures of Asian business groups. Asia Pacific Journal of Management, 25: 595–613.
Cavusgil, S. T. 1997. Measuring the potential of emerging markets: An indexing approach. Business Horizons, 40: 87–91.
Chandler, A. 1962. Strategy and Structure. Cambridge, MA: MIT Press.
Chen, H., Lee, P., Lay, T. 2009. Drivers of dynamic learning and dynamic competitive capabilities in international strategic alliances. Journal of Business Research, 62(12): 1289–95.
Clark, K. D., Maggitti, P.G. 2012. TMT potency and strategic decision-making in high technology firms. Journal of Management Studies, 49(6): 1–26.
Clegg, J., Kamall, S., Leung, M. 1996. European multinational activity in telecommunications services in the Peoples' Republic of China: Firm strategy and government policy. Management International Review, 6(1) (special issue): 111–137.
Collis, D. 1991. A resource-based analysis of global competition: The case of bearings industry. Strategic Management Journal, 12(special issue): 49–68.
Conner, K. 1991. A historical comparison of resource-based theory and five schools of thought within industrial organization economics: Do we have a new theory of the firm?. Journal of Management, 17: 121–154.
De Cremer, D., Mayer, D. M., Schminke, M. 2010. On understanding ethical behavior and decision making: A behavioral ethics approach introduction. Business Ethics Quarterly, 20(1): 1–6.
Delios, A., Beamish, P. W. 1999. Geographic scope, product diversification and the corporate performance of Japanese firms. Strategic Management Journal, 20: 711–728.
Demirbag, M., Mirza, H., Weir, D. T. H. 1995. Dynamics of manufacturing joint ventures in Turkey and the role of industrial groups. Management International Review, 35(special issue): 35–51.
Dunning, J.H. 1998. Location and the multinational enterprise: A neglected factor. Journal of International Business Studies, 29(1): 45–66.
Dunning, J.H., Lundan, S.M. 2008. Institutions and the OLI paradigm of the multinational enterprise. Asia Pacific Journal of Management, 25: 573–593.
Dyer, J.H. 1997. Effective interim collaboration: How firms minimize transaction costs and maximize transaction value. Strategic Management Journal, 18(7): 535–556.
Fang, Y., Jiang, G.L.F., Makino, S., Beamish, P. W. 2010. Multinational firm knowledge, use of expatriates, and foreign subsidiary performance. Journal of Management Studies, 47(1): 27–54.
Finkelstein, S., Hambrick, D. (1996). Strategic Leadership. St Paul: West Publishing.
Foss, N.J., Klein, P.G., Kor, Y.Y., Mahoney, J.T. 2008. Entrepreneurship, subjectivism, and the resource-based view: Toward a new synthesis. Strategic Entrepreneurship Journal, 2: 73–94.
Fredrickson, J. W. 1990. Introduction: The need for perspectives. In Perspectives on Strategic Management, Fredrickson, J. W. (ed.). New York: Harper Business, 1–8.
Glaum, M., Oesterle, M.J. 2007. 40 Years of research on internationalization and firm performance: More questions than answers? Management International Review, 47(3): 307–317.
Gupta, A.K., Govindarajan, V. 1991. Knowledge flows and the structure of control with multinational corporations. Academy of Management Review, 16: 768–792.
Hambrick, D.C. 1990. The adolescence of strategic management 1980–85: Critical perceptions and reality. Perspectives on Strategic Management. In Frederickson, J. W. (ed.), New York: Harper & Row.
Hambrick, D.C. 2004. The disintegration of strategic management: It's time to consolidate our gains. Strategic Organization, 2(1): 91–98.
Hamel, G. 1991. Competition for competence and inter partner learning within international strategic alliances. Strategic Management Journal, 12(special issue): 83–103.
Hamel, G., Prahalad, C.K. 1994. Competing for the Future. Boston, MA: Harvard Business School Press.
Hennart, J., Larimo, J. 1998. The impact of culture on the strategy of multinational enterprises: Does national origin affect ownership decisions? Journal of International Business Studies, 29(3): 515–538.
Hennart, J.-F., Reddy, S. 1997. The choice between mergers/acquisitions and joint ventures: The case of Japanese investors in the United States. Strategic Management Journal, 18: 1–12.
Hitt, M. A., Tihanyi, L., Miller, T., Connelly, B. 2006. International diversification: Antecedents, outcomes, and moderators. Journal of Management, 32: 831–867.
Hofstede, G. 1980. Culture's Consequences: International Differences in Work Related Values. Beverley Hills, CA: Sage.
Hoskisson, R.E., Hitt, M. A., Wan, W.P., Yiu, D. 1999. Theory and research in strategic management: Swings of a pendulum. Journal of Management, 25(3): 417–456.
Hunt, S.D., Davis, D.F. 2012. Grounding supply chain management in resource-advantage theory: In defence of a resource-based view of the firm. Journal of Supply Chain Management, 48(2): 14–20.
Isobe, T., Makino, S., Montgomery, D. 2000. Resource commitment, entry timing, and market performance of foreign direct investments in emerging economies. Academy of Management Journal, 43(3): 468–484.
Jemison, D.B. 1981. The contributions of administrative behaviour to strategic management. Academy of Management Review, 6(4): 633–642.
Jones, R., Jacobs, L., van't Spijker, W. 1992. Strategic decision processes in international firms. Management International Review, 32: 219–236.
Kesner, I.F., Sebora, T.C. 1994. Executive succession: Past, present, and future. Journal of Management, 20: 327–372.
Kogut, B. 1988. Joint ventures: Theoretical and empirical perspectives. Strategic Management Journal, 9: 319–332.
Kogut, B., Singh, H. 1998. The effect of national culture on the choice of entry mode. Journal of International Business Studies, 19(3): 411–432.
Kogut, B., Zander, U. 1992. Knowledge of the firm, combinative capabilities, and the replication of technology. Organization Science, 3: 383–397.
Kriger, M. 1991. The importance of the role of subsidiary boards in MNCs: Comparative parent and subsidiary perceptions. Management International Review, 31: 317–331.
Lawrence, P., Vlachoutsicos, C. 1993. Joint ventures in Russia: Put the locals in change. Harvard Business Review, 71(1): 44–51.
Learned, E.P., Christensen, C.R., Andrews, K.R., Guth, W.D. 1965. Business Policy: Text and Cases. Homewood, IL: RD Irwin.
Li, J.J., Poppo, L., Zhou, K.Z. 2010. Relational mechanisms, formal contracts, and local knowledge acquisition by international subsidiaries. Strategic Management Journal, 31(4): 349–370.
Loree, D., Guisinger, S. 1995. Policy and non-policy determinants of US equity foreign direct investment. Journal of International Business Studies, 26: 281–299.
Lu, J. W. 2003. The evolving contributions in international strategic management research. Journal of International Management, 9: 193–213.
Luo, Y. 1995. Business strategy, market structure, and performance of international joint ventures: The case of joint ventures in China. Management International Review, 35: 241–264.
Luo, Y. 1998. Timing of investment and international expansion performance in China. Journal of International Business Studies, 29(2): 391–407.
Lyles, M. A. 1990. A research agenda for strategic management in the 1990s. Journal of Management Studies, 27: 363–375.
Lyles, M.A., Baird, I.S. 1994. Performance of international joint-ventures in two Eastern European countries: The case of Hungary and Poland. Management International Review, 34: 313–329.
Makino, S., Beamish, P. W. 1998. Performance and survival of joint ventures with non-conventional ownership structures. Journal of International Business Studies, 29(4): 797–818.
Makino, S., Neupert, K.E. 2000. National culture, transaction costs, and the choice between joint venture and wholly owned subsidiary. Journal of International Business Studies, 31(4): 705–713.
Martinez, J., Jarillo, J. 1991. Coordination demands of international strategies. Journal of International Business Studies, 22: 429–444.
Mascarenhas, B. 1992. Order of entry and performances in international markets. Strategic Management Journal, 13(7): 483–558.
Meyer, K.E., Estrin, S., Bhaumik, S.K. and Peng, M. W. 2009. Institutions, resources, and entry strategies in emerging economies. Strategic Management Journal, 30(1): 61–80.
Mitchell, W., Shaver, J., Yeung, B. 1994. Foreign entrant survival and foreign market share: Canadian companies' experience in United States medical sectors. Strategic Management Journal, 15: 555–567.
Morrison, A., Roth, K. 1992. A taxonomy of business-level strategies in global industries. Strategic Management Journal, 13: 399–418.
Nag, R., Hambrick, D., Chen, M.-J. 2007. What is strategic management, really? Empirical induction of a consensus definition of the field. Working Paper. Penn State University.
Nielsen, B.B., Nielsen, S. 2009. Learning and innovation in international strategic alliances: An empirical test of the role of trust and tacitness. Journal of Management Studies, 46(6): 1301–1056.
Nobel, R., Birkinshaw, J. 1998. Innovation in multinational corporations: Control and communication patterns in international R&D operations. Strategic Management Journal, 19(5): 479–496.
Nohria, N., Garcia-Pont, C. 1991. Global strategic linkages and industry structure. Strategic Management Journal, 12(special issue): 105–124.
Nohria, N., Ghoshal, S. 1994. Differentiated fit and shared values: Alternatives for managing headquarters-subsidiary relations. Strategic Management Journal, 15: 491–502.
Pan, Y., Tse, D.K. 2000. The hierarchical model of market entry modes. Journal of International Business Studies, 31(4): 535–554.
Parkhe, A. 1993. Messy research, methodological predispositions, and theory development in international joint ventures. Academy of Management Review, 18: 227–268.
Peng, M.K., Wang, D.Y.L., Jiang, Y. 2008. An institution-based view of international business strategy: A focus on emerging economies. Journal of International Business Studies, 39: 920–936.
Peng, M. W. 2001. The resource-based view and international business. Journal of Management, 27(6): 803–829.
Peng, M. W., Zhou, J.Q. 2006. Most cited articles and authors in global strategy research. Journal of International Management, 12(4): 490–508.
Penrose, E. T. 1959. The Theory of the Growth of the Firm. New York: Wiley.
Qian, G., Khoury, T., Peng, M. W., Qian, Z. 2010. The performance implications of intra- and inter-regional geographic diversification. Strategic Management Journal, 31: 1018–1030.
Ramos-Rodriguez, A-R., Ruiz-Navarro, J. 2004. Changes in the intellectual structure of strategic management research: A bibliometric study of the Strategic Management Journal, 1980–2000. Strategic Management Journal, 25(10): 981–1004.
Reitsperger, W., Daniel, S., Tallman, S., Chismar, W. 1993. Product quality and cost leadership: Comparable strategies?. Management International Review, 33: 7–21.
Ricart, J.E., Enright, M.J., Ghemawat, P., Hart, S.L., Khanna, T. 2004. New frontiers in international strategy. Journal of International Business Studies, 35(3): 175–200.
Ricks, D., Toyne, B., Martinez, Z. 1990. Recent developments in international management research. Journal of Management, 16: 219–253.
Robson, M.J., Katsijeas, C., Bello, D. 2008. Drivers and performance outcomes of trust in international strategic alliances: The role of organizational complexity. Organization Science, 19(4): 647–665.
Roth, K. 1995. Managing international interdependence: CEO characteristics in a resource-based framework. Academy of Management Journal, 38: 200–231.
Roth, K., Schweiger, D., Morrison, A. 1991. Global strategy implementation at the business level: Operational capabilities and administrative mechanisms. Journal of International Business Studies, 22: 369–402.
Rugman, A.M., Verbeke, A. 2001. Subsidiary-specific advantages in multinational enterprises. Strategic Management Journal, 22: 237–250.
Rumelt, R.P., Schendel, D.E., Teece, D.J. 1994. Fundamental issues in strategy. In Fundamental Issues in Strategy: A Research Agenda, Rumelt, R.P., Schendel, D.E., Teece, D.J. (eds). Harvard HBS Press, Boston.
Sanchez, C., McKinley, W. 1995. The effect of product regulation on business global competitiveness: A contingency approach. Management International Review, 35: 293–305.
Saunders, C.B., Thompson, J.C. 1980. A survey of the current state of business policy research. Strategic Management Journal, 1(2): 119–130.
Schendel, D., Cool, K. 1988. Development of the strategic management field: Some accomplishments and challenges. In Strategic Management Frontiers, Grant, J.H. (ed.). Greenwich, CT: JAI Press, 17–31.
Schendel, D., Hofer, C. W. 1979. Strategic Management: A New View of Business Policy and Planning. Boston, MA: Little Brown.
Schmid, S., Kotulla, T. 2011. 50 years of research on international standardization and adaptation—From a systematic literature analysis to a theoretical framework. International Business Review, 20(5): 491–507.
Shaver, J.M., Flyer, F. 2000. Agglomeration economies, firm heterogeneity, and foreign direct investment in the United States. Strategic Management Journal, 21(12): 1175–1193.
Shrader, R.C., Oviatt, B.M., McDougall, P.P. 2000. How new ventures exploit trade-offs among international risk factors: Lessons for the accelerated internationalization of the 21st century. Academy of Management Journal, 43(6): 1227–1247.
Souitaris, V., Maestro, B., Marcello, M. 2010. Polychronicity in top management teams: The impact on strategic decision processes and performance of new technology centuries. Strategic Management Journal, 31(6): 652–678.
Spender, J.-C. 2001. Business policy and strategy as a professional field. In Rethinking Strategy, Volberda, H., Elfring, T. (eds). London: Sage, 26–40.
Spender, J.C., Grant, R.M. 1996. Knowledge and the firm: Overview. Strategic Management Journal, 17(special issue): 5–9.
Stopford, J., Baden-Fuller, C. 1994. Creating corporate entrepreneurship. Strategic Management Journal, 15: 521–536.
Summer, C.E., Bettis, R. A., Duhaime, I.H., Grant, J.H., Hambrick, D.C., Snow, C.C. 1990. Doctoral education in the field of business policy and strategy. Journal of Management, 16(2): 361–398.
Tallman, S., Shenkar, O. 1994. A managerial decision model of international cooperative venture formation. Journal of International Business Studies, 25: 91–113.
Taras, V., Steel, P. 2006. Improving Cultural Indices and Rankings Based on a Meta-analysis of Hofstede's Taxonomy. Beijing: Academy of International Business.
Teece, D.J., Pisano, G., Shuen, A. 1997. Dynamic capabilities and strategic management. Strategic Management Journal, 18: 509–533.
Terziovski, M. 2010. Innovation practice and its performance implications in small and medium enterprises (SMEs) in the manufacturing sector: A resource-based view. Strategic Management Journal, 31: 892–902.
Van Cauwenbergh, A., Cool, K. 1982. Strategic management in a new framework. Strategic Management Journal, 3(3): 245–264.
Venkatraman, N., Ramanujam, V. 1986. Measurement of business performance in strategy research: A comparison of approaches. Academy of Management Review, 11: 801–814.
Werner, S. 2002. Recent developments in international management research: A review of top 20 management journals. Journal of Management, 28(3): 277–305.
Wernerfelt, B. 1984. A resource-based view of the firm. Strategic Management Journal, 5(2): 171–180.
Wiersema, M., Bowen, H. 2011. The relationship between international diversification and firm performance: Why it remains a puzzle. Global Strategy Journal, 1(1/2): 279–282.
Zott, C., Amit, R. 2008. The fit between product market strategy and business model: Implications for firm performance. Strategic Management Journal, 29(1), S. 1–26.
Zott, C., Amit, R., Massa, L. 2010. The business model: Theoretical roots, recent developments, and future research. Heruntergeladen von http://ssrn.com/abstract=1674384.