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The Effects of E-Commerce Drivers on Export Marketing Strategy

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A key dimension of a firm’s export marketing strategy is the degree to which a firm adapts its marketing strategy to the export market environment (Cavusgil and Zou 1994). Not surprisingly, most prior studies have considered product adaptation, promotion adaptation, pricing adaptation/competitiveness, and distribution adaptation/support as key components of a firm’s export marketing strategy (Aaby and Slater 1989; Zou and Stan 1998).
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The Effects of E-Commerce Drivers on
Export Marketing Strategy

ABSTRACT
The emergence of e-commerce technology has had a significant
effect on firms’ export marketing. However, limited knowledge
exists as to how e-commerce drivers affect a firm’s export mar-
keting strategy. This study develops and tests a theoretical
model to delineate how e-commerce drivers affect export mar-
keting strategy. The empirical findings suggest that internal
e-commerce drivers (product online transferability and
e-commerce assets) directly increase a firm’s degree of promo-
tion adaptation, enhance communication and distribution effi-
ciencies, facilitate greater distribution support, and improve
price competitiveness for export ventures. Furthermore, both
internal and external e-commerce drivers (export market
e-commerce infrastructure and demand for e-commerce) mod-
erate the relationships between environmental factors and ele-
ments of export marketing strategy. Overall, the findings sup-
port incorporating e-commerce constructs into existing theory
on export marketing strategy. The authors discuss theoretical
and managerial contributions and offer directions for further
research.

Two major trends have characterized the modern business
Gary Gregory,
landscape: the advancement of e-commerce technologies and
Munib Karavdic, and
the rapid global expansion of firms. In the first trend,
e-commerce technologies (e.g., the Internet) have led to
Shaoming Zou
entirely new possibilities for exporters to access new mar-
kets and improve their efficiency in terms of receiving cus-
tomer orders and handling inquiries (Bennett 1997; Hamill
1997; Prasad, Ramamurthy, and Naidu 2001; Samiee 1998).
In the literature, several conceptual works have described
the implications of e-commerce and the Internet on market-
ing strategy (e.g., Hoffman and Novak 1996; Javalgi and Ram-
sey 2001; Karavdic and Gregory 2005). Several empirical
studies have also examined the influence of e-commerce on
firm internationalization (e.g., Berry and Brock 2004; Moen
2002), perceptions of barriers in the use of the Internet in
exporting (e.g., Bennett 1997), the role of the Internet in sup-
ply chains (e.g., Lancioni, Smith, and Oliva 2000), and the
importance of environmental forces on e-commerce activi-
Submitted November 2006
Accepted January 2007
ties (e.g., Jennex, Amoroso, and Adelakun 2004; Oxley and
Journal of International Marketing
Yeung 2001).
© 2007, American Marketing Association
Vol. 15, No. 2, 2007, pp. 30–57
In the second trend, the globalization of the world markets
ISSN 1069-031X (print)
1547-7215 (electronic)
has led to explosive growth of global trade and exporting
30

firms around the world. Correspondingly, a considerable
amount of research has been conducted to identify factors
that affect exporting performance (e.g., Leonidou, Katsikeas,
and Piercy 1998; Morgan, Kaleka, and Katsikeas 2004; Sou-
chon and Diamantopolous 1996). Thus far, research in export
marketing has established that the key determinants of a
firm’s export performance are its export marketing strategies
(e.g., Zou and Stan 1998) and that a firm’s export marketing
strategies must fit its internal and external forces (Cavusgil
and Zou 1994).
Given these major trends and the voluminous related
research, it is surprising that little progress has been made to
integrate the two streams of research. Because of the lack of
integration of e-commerce with export marketing strategy
studies, little is known about how e-commerce influences a
firm’s export performance, how to incorporate e-commerce
into export marketing, and what theoretical framework is
appropriate to integrate e-commerce drivers into export mar-
keting (Karavdic and Gregory 2005). This is a major gap in
the export marketing literature because without incorporat-
ing e-commerce into a firm’s export marketing strategy, the
current export marketing theories would be incomplete, and
current knowledge of the determinants of export perform-
ance would be biased.
In the current research, we attempt to examine the effect of
e-commerce drivers on a firm’s export marketing strategy.
Specifically, we identify the underlying dimensions of
e-commerce and integrate them into the existing theory of
export marketing strategy. Internal and external e-commerce
drivers are theorized both as the antecedents of export mar-
keting strategy and as the moderators of the relationship
between environmental factors and export marketing strat-
egy. We also offer an empirical test of the proposed theoreti-
cal relationship. We believe that by focusing on the effects of
e-commerce drivers on export marketing strategy, we can
shed light on how e-commerce can be used to enhance a
firm’s export performance and contribute to the export mar-
keting literature.
The current vision for e-commerce is that it is a universal
and ubiquitous electronic marketplace relevant to all com-
E-COMMERCE AND EXPORT
mercial activities and trading partners. As such, e-commerce
MARKETING STRATEGY
has been defined as the process of buying and selling or
exchanging products, services, and information through
E-Commerce and E-Commerce
computer networks, such as the Internet (Turban, McLean,
Drivers
and Wetherbe 2002). However, e-commerce is more than
simply buying and selling goods electronically. For the pur-
pose of this study, we define e-commerce as an environment
for presenting, trading, distributing, servicing customers,
E-Commerce Drivers and Export Marketing Strategy
31

collaborating with business partners, and conducting trans-
actions using electronic technologies.
On the basis of a literature review, we identify four major
e-commerce drivers, both internal and external, in terms of
their relevance to export marketing strategy. Internal
e-commerce drivers include product online transferability
and e-commerce assets, and external drivers include
e-commerce infrastructure and demand for e-commerce.
Product online transferability is the extent to which a prod-
uct can be digitized for transfer over the Internet. A firm’s
e-commerce assets are defined as allocated technology and
human resources in the service of e-commerce activities.
E-commerce assets represent a means to acquire resources
that are critical to developing technical infrastructure and
human skill sets. As for external e-commerce drivers, export
market e-commerce infrastructure is defined as the set of
resources that enable reliable and affordable access to all par-
ties involved in e-commerce transactions in the export mar-
ket. Several layers of infrastructure can be identified (e.g.,
infrastructure for Internet access, Internet infrastructure soft-
ware necessary to facilitate transactions). Demand for
e-commerce is defined as the extent to which the parties
involved in the export business pursue a greater usage of
e-commerce in business relationships and transactions.
Demand for e-commerce development by importers puts
pressure on exporters to develop e-commerce business tools
because exporters rely on the importers’ continuous business
for their success (Samiee 1998).
There is a rich body of literature on the impact of environ-
Export Marketing Strategy
mental forces on export marketing strategy (e.g., Cavusgil
and Zou 1994; Crick 1995; Lim, Sharkey, and Kim 1996). A
key dimension of a firm’s export marketing strategy is the
degree to which a firm adapts its marketing strategy to the
export market environment (Cavusgil and Zou 1994). Not
surprisingly, most prior studies have considered product
adaptation, promotion adaptation, pricing adaptation/
competitiveness, and distribution adaptation/support as key
components of a firm’s export marketing strategy (Aaby and
Slater 1989; Zou and Stan 1998).
In line with the existing literature, the current study concep-
tualizes export marketing strategy as a multidimensional fac-
tor that incorporates Cavusgil and Zou’s (1994) four dimen-
sions of product adaptation, promotion adaptation, price
competitiveness, and distribution support, as well as two
additional dimensions of communication efficiency and dis-
tribution efficiency. The rationale for adding two efficiency
dimensions to export marketing strategy is the central role of
e-commerce in helping reduce the cost of communication
and distribution. A comprehensive export marketing strategy
32
Gary Gregory, Munib Karavdic, and Shaoming Zou

should help a firm achieve cost efficiency while maintaining
local responsiveness.
Industrial organization theory focuses on external markets to
identify drivers of a firm’s export marketing strategy. The
THEORETICAL FRAMEWORK
industrial organization framework is captured by the notion
OF E-COMMERCE DRIVERS OF
of coalignment, or the fit between a firm’s strategy and its
EXPORT MARKETING
environment (Venkatraman and Prescott 1990), in which
STRATEGY
strategy is viewed as a firm’s deliberate response to the exter-
nal industry/market imperatives. The premise is that the
Theoretical Foundation
external market (or industry) imposes selective pressures (or
drivers) to which a firm must respond. According to indus-
trial organization theory, external environmental factors,
such as export market competitiveness, export market infra-
structure, entry barriers, and technology orientation of
industry, are major drivers of a firm’s export marketing strat-
egy (Cavusgil, Zou, and Naidu 1993). We include these tradi-
tional external drivers in the current study.
In contrast to industrial organization theory, the resource-
based view (RBV) considers a firm’s internal organizational
resources (assets, capabilities, processes, managerial attrib-
utes, information, and knowledge) key drivers of its strategy
and performance (Deligonul and Cavusgil 1997; Wernerfelt
1984). The RBV conceptualizes a firm as a unique bundle of
resources and argues that the differential endowment of
strategic resources is the ultimate determinant of its perform-
ance (Grant 1991; Wernerfelt 1984). The RBV regards strategy
as a firm’s move to capitalize on its resources. Thus, accord-
ing to the RBV, internal factors, such as export experience,
management commitment, and unique product offering, are
among the major drivers of a firm’s export marketing strategy
(Zou and Stan 1998). The current study investigates these
traditional internal drivers.
Because e-commerce drivers include internal drivers (e.g.,
product online transferability, e-commerce assets) and exter-
An Integrated Theoretical
nal drivers (e.g., e-commerce infrastructure, demand for
Framework
e-commerce), we combine industrial organization theory and
the RBV to build a theoretical framework of the effect of
e-commerce drivers on export marketing strategy. Given that
internal e-commerce drivers can be viewed as organizational
capabilities that can modify the relative power of buyers and
suppliers by lowering the cost of finding and distributing
market information (Mahadevan 2000), they are more than
just antecedents to export marketing strategy. Indeed, a firm’s
e-commerce capabilities can influence the relationship
between traditional environmental drivers of export market-
ing strategy. This is because the developments in interactive
decision aids in an e-commerce environment alter how cus-
tomers search for information and make purchase decisions
(Haubl and Trifts 2000). The dissemination of information
E-Commerce Drivers and Export Marketing Strategy
33

through e-commerce further enables firms to adapt their
strategy to the changes in the export market environment
(Varadarajan and Yadav 2002) and to customize goods and
services specifically to each customer’s needs (Kiang, Raghu,
and Shang 2000). Thus, e-commerce drivers can function as
“enablers” of a firm’s adaptation of export marketing strategy
to export market conditions. In other words, in addition to
driving export marketing strategy directly, e-commerce driv-
ers also moderate the effects of traditional (external and
internal) drivers on export marketing strategy.
By integrating e-commerce drivers into the existing frame-
works of export marketing strategy (e.g., Cavusgil and Zou
1994), we present an expanded theoretical framework in Fig-
ure 1 to summarize the direct and moderating effects of
e-commerce drivers on export marketing strategy. This
framework contains two major extensions of the existing lit-
erature. First, none of the export marketing strategy frame-
works (e.g., Cavusgil, Zou, and Naidu 1993; Leonidu, Kat-
sikeas, and Piercy 1998) in the existing literature incorporate
e-commerce as drivers of export marketing strategy. Our pro-
posed framework explicitly incorporates internal and exter-
nal e-commerce drivers as new antecedents to export market-
ing strategy, thus expanding the existing frameworks.
Second, the existing frameworks have considered only direct
Figure 1.
A Contingency Model of the
Antecedents and Drivers of
Export Venture Marketing
Strategy
34
Gary Gregory, Munib Karavdic, and Shaoming Zou

effects of drivers of export marketing strategy. Our frame-
work enriches the literature by conceptualizing e-commerce
drivers as organizational capabilities that moderate the rela-
tionships between traditional drivers and export marketing
strategy.
In addition to e-commerce drivers and export marketing
strategy, the proposed theoretical framework also incorpo-
rates traditional environmental drivers of export marketing
strategy that have been studied in many prior studies.
Although there are several classifications of traditional driv-
ers of export marketing strategy (Zou and Stan 1998), for the
purpose of this research, they are classified into two cate-
gories: internal forces and external forces. Among traditional
internal drivers of export marketing strategy, research find-
ings tend to suggest that international experience, product
uniqueness, and management commitment are important
drivers of export marketing strategy adaptation (Cavusgil and
Zou 1994; Katsikeas, Piercy, and Ioannidis 1995).
International experience refers to the amount of experience a
firm has in international marketing. Experienced firms are
more likely to identify unique market demand and possess a
better understanding of how to adapt to foreign market
forces. Product uniqueness, which is defined as the degree to
which a product incorporates features to satisfy unique
needs or to be used for unique purposes (Cavusgil, Zou, and
Naidu 1993), helps firms gain competitive advantage in over-
seas markets (Louter, Ouwerkerk, and Bakker 1991). Manage-
ment commitment, along with attitudes and perceptions, has
been identified consistently as an important determinant of
export marketing strategy in prior studies (Zou and Stan
1998). A committed management gives a higher priority to
exporting with carefully planned business objectives and
tends to adapt marketing strategies that lead to better per-
formance (Leonidou, Katsikeas, and Piercy 1998). The
importance of this factor to exporting implies that it is desir-
able to extend this concept by considering management com-
mitment to e-commerce in exporting.
We include four traditional external drivers in the proposed
theoretical framework: technology orientation of industry,
export market competitiveness, export market entry barriers,
and an export market’s infrastructure. Technology orienta-
tion of industry refers to the degree to which technological
innovation and application affect success in the industry
(Holzmuller and Stottinger 1996). In industries in which
technology orientation is high, firms can use technology to
shape demand and practices, which leads to less need for
adaptation of product and promotion (Cavusgil, Zou, and
Naidu 1993). Export market competitiveness refers to the
intensity of competition that a firm encounters in the export
E-Commerce Drivers and Export Marketing Strategy
35

market. In a highly competitive market, competitive pres-
sures may necessitate customization to gain an advantage
over rivals by matching local conditions more precisely.
Entry barriers are defined as the degree to which extensive
regulations (e.g., health, safety, technical) exist in the export
market. In an export market in which the legal regulations
are extensive, firms are forced to modify their products and
promotional programs to meet health, safety, or technical
standards (Cavusgil and Zou 1994). Although advances in
communication technologies create distribution efficiencies,
increased usage of electronic channels has resulted in addi-
tional legal and regulatory concerns related to e-commerce
(Karavdic and Gregory 2005). An export market’s infrastruc-
ture consists of the systems and institutions necessary to
develop and service demand in a market, including the avail-
ability and capabilities of intermediaries and of warehousing
and transportation necessary for success. In export markets
with a developed marketing infrastructure, standardized
products and marketing programs could be a better strategic
choice.
In this section, we discuss the relationships between
RESEARCH HYPOTHESES
e-commerce drivers and export marketing strategy. Because
the direct effects of traditional environmental drivers (both
internal and external) on export marketing strategy have
been well documented in the existing literature (Zou and
Stan 1998), we discuss these effects but do not advance spe-
cific hypotheses for them to avoid repeating what has been
done in prior studies (for the rationale of these relationships,
see Cavusgil and Zou 1994; Leonidu, Katsikeas, and Piercy
1998). Instead, our focus is on developing hypotheses that
highlight the moderating effects of e-commerce drivers on
the relationship between these traditional drivers on export
marketing strategy, as well as on the direct effects of
e-commerce drivers on export marketing strategy.
To some extent, product online transferability relies on the
Product Online Transferability
degree of product intangibility or digitalization—that is, a
product’s ability to be transformed into a digital signal. Tra-
ditional products and services with significant information
content are susceptible to becoming highly digitized, from
design to production to delivery (e.g., music, news, financial
services), and products that manage information (e.g.,
copiers, telecommunications) are adopting digital technolo-
gies for more of their components. Product online transfer-
ability enables a marketer to tailor the products more easily
to fit customers’ needs in an export market, which leads to a
higher degree of adaptation, increased efficiency, greater dis-
tribution support, and even a more competitive price. Prod-
uct online transferability positively influences export mar-
keting strategy. In addition, product online transferability
36
Gary Gregory, Munib Karavdic, and Shaoming Zou

facilitates a firm’s strategic response to traditional drivers,
magnifying the effects of traditional drivers. Thus:
H1: Product online transferability has a positive, direct
effect on export marketing strategy.
H2: The effects of traditional drivers on export market-
ing strategy are stronger when product online trans-
ferability is high than when product online transfer-
ability is low.
The transaction costs and management costs are dependent
on a firm’s capabilities and resources (Tsang 2000). One such
E-Commerce Assets
resource associated with technological development is that
of e-commerce assets. E-commerce assets represent a means
to acquire resources that are critical to develop technical
infrastructure and human skill sets. As a result, it is expected
that a firm with greater e-commerce assets (i.e., investments
in information technology [IT] and e-commerce technology)
tends to enjoy a source of competitive advantage in value
creation. We argue that the overall development of
e-commerce assets, especially human resources and capital,
not only gives a firm the capability to be flexible with its
export marketing strategy but also enables the firm to
respond more effectively to its internal and external forces
with a properly adapted export marketing strategy. Thus:
H3: E-commerce assets have a positive, direct effect on
export marketing strategy.
H4: The effects of traditional drivers on export market-
ing strategy are stronger when e-commerce assets
are high than when e-commerce assets are low.
Export market e-commerce infrastructure facilitates a firm’s
flexibility to respond to export market demands for effi-
Export Market E-Commerce
ciency, creates a structure to support e-commerce export
Infrastructure
sales activities, and provides a mechanism to provide online
technical support to foreign distributors and subsidiaries.
With well-developed e-commerce infrastructures in an
export market, exporters are able to exploit the full potential
of e-commerce technologies, to adapt their export marketing
strategies to fit the export market conditions, and to make
e-commerce technologies more effective in initiating strate-
gic responses to traditional drivers. In contrast, in an export
market in which the e-commerce infrastructure is poorly
developed, exporters are constrained in their strategy
choices and in their ability to respond to environmental con-
ditions presented by traditional drivers. Thus:
H5: Export market e-commerce infrastructure has a posi-
tive, direct effect on export marketing strategy.
E-Commerce Drivers and Export Marketing Strategy
37

H6: The effects of traditional drivers on export market-
ing strategy are stronger when export market
e-commerce infrastructure is highly developed than
when export market e-commerce infrastructure is
poorly developed.
A challenge to global competitors is the need to respond to
Demand for E-Commerce
ever-increasing uncertainty, particularly at a time when
e-commerce has resulted in a remarkable growth in competi-
tion by providing more and more companies with access to
export markets (Etemad and Wright 1999). Because techno-
logical changes are largely uncontrollable by individual
firms in an export market, firms form networks to develop
and/or borrow new technologies or products in cooperation
with their partners (Overby and Min 2001). To respond
quickly to changes (i.e., customer preference changes and
technological change), firms need to achieve greater agility
with the help of supply chain partners (Christensen, Da
Rocha, and Gertner 1987). Powerful importing customers are
in an advantageous position for implementing e-commerce-
based export processes because of their dominant position to
coordinate and, to some extent, dictate channel activities
and exert pressure on exporters to adopt such a process.
Demand for e-commerce development puts pressure on
exporters to develop e-commerce business tools and to adapt
their marketing strategies to fit customers’ demands. Such a
demand drives a firm’s export marketing strategy and facili-
tates its strategic response to changing export market condi-
tions. Thus:
H7: Demand for e-commerce has a positive, direct effect
on export marketing strategy.
H8: The effects of traditional drivers on export market-
ing strategy are stronger when demand for
e-commerce is high than when demand for
e-commerce is low.
To collect data to test our research hypotheses, we conducted
METHODOLOGY
a cross-sectional survey of firms currently using e-commerce
in exporting. The unit of analysis in the research is the indi-
vidual export venture (Cavusgil and Zou 1994). We expect
the key variables in our proposed theoretical model, includ-
ing traditional drivers, e-commerce drivers, and export mar-
keting strategy, to vary across individual export ventures,
thus generating variances needed for hypothesis testing.
We conducted 15 interviews with both Australian exporting
Questionnaire Development
manufacturers and service firms in the Sydney area in the
initial stage of research. The major objectives of these inter-
views were (1) to gain an in-depth understanding of how
e-commerce is currently being used in developing export
38
Gary Gregory, Munib Karavdic, and Shaoming Zou

marketing strategy and (2) to identify “key” e-commerce
drivers (both external and internal). During the interviewing
process, we also discussed the validity of prior research con-
structs and explored administration issues in conducting
online surveys (e.g., incentive, timing, technology).
We developed the initial measures of export marketing
strategies and traditional drivers in accordance with prior
export research, and we developed preliminary new meas-
ures of e-commerce drivers in accordance with extant litera-
ture on e-commerce. In the 15 in-depth interviews, we dis-
cussed these preliminary measures and modified them into a
draft questionnaire. Before finalizing the survey, we
pretested it with managers in companies that have adopted
electronic business practices, faculty members who are
familiar with the e-commerce and/or export marketing
research, and other industry experts. Each item was
reviewed for its content, scope, and purpose. We used a five-
point Likert-type scale to collect most responses; some ques-
tions involved actual numbers, percentages, or categories.
Export Marketing Strategy. Scales adapted from Cavusgil and
Zou’s (1994) research instrument included measures of prod-
uct adaptation, promotion adaptation, support to foreign dis-
tributor, and price competitiveness. We developed and
adapted some new e-commerce scale items using the follow-
ing guidelines: (1) Scales needed to be consistent with previ-
ously established measures, (2) previous scales related to
export marketing strategy were taken into consideration and
adapted when necessary, and (3) industry surveys’ items
related to e-commerce in domestic or international markets
were taken into consideration and modified for this study.
We also developed additional e-commerce measures related
to communication efficiency and distribution efficiency in
accordance with previous work (e.g., Hoffman and Novak
1996; Varadarajan and Yadav 2002).
Traditional Environmental Drivers. We adapted measures for
three internal drivers (export experience, management com-
mitment, and product uniqueness) and four external drivers
(technology orientation of industry, export market competi-
tiveness, export market entry barriers, and export market
infrastructure) from the work of Cavusgil and Zou (1994) and
expanded them on the basis of extant literature. We devel-
oped and adapted additional e-commerce-related measures
for these constructs. The survey also contained questions
that collected company profile/characteristics data, such as
the company size, the number of export markets, years of
export experience, years of experience using e-commerce,
and the number of foreign markets supported by
e-commerce. The additional data helped us understand the
profile of the sample and interpret the results.
E-Commerce Drivers and Export Marketing Strategy
39

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