Article

Journal of International Marketing

2019, Vol. 27(1) 74-94
Organizing and Implementing Export ª American Marketing Association 2019
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Pricing: Performance Effects sagepub.com/journals-permissions

DOI: 10.1177/1069031X18812718
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and Moderating Factors

Katharina Maria Hofer, Lisa Maria Niehoff-Hoeckner, and Dirk Totzek

Abstract
Relatively little is known about pricing in the export business, particularly how to organize and implement export pricing within
firms and how these issues affect export performance. Therefore, this study investigates antecedents of export performance,
specifically the organizational aspects of export pricing and price adaptation and the moderating role of export market charac-
teristics, including export market turbulence, enforcement of contracts, and corruption ranks of the export market. Using a large-
scale survey sample of 295 exporting firms in Austria and Germany and secondary data on the export markets involved, the
authors show that both the intensity of internal pricing coordination and price adaptation have a positive effect on export
performance. Specifically, in highly turbulent export markets, the intensity of internal pricing coordination contributes to export
performance. Furthermore, a high level of horizontal dispersion of pricing authority is advisable in countries in which the
enforcement of contracts is difficult.

Keywords
export pricing, export performance, price adaptation, pricing authority, export market turbulence

Introduction undermanaged process in many firms, incorporating major

Exporting, as a common strategy for internationalization, for-
eign market entry, and sales expansion, is a cornerstone of
international marketing (e.g., Chabowski et al. 2018; Morgan,
Kaleka, and Katsikeas 2004; Spyropoulou et al. 2018). The
ongoing globalization of markets has further increased the
importance of firms’ international marketing activities. The
firm’s pricing is a key marketing capability and crucial success
factor for its exporting activities (e.g., Morgan, Feng, and Whi-
tler 2018; Sousa and Bradley 2009). “Pricing is the only ele-
ment of the marketing mix that brings revenue to a firm” (Rao
2009, p. 9), and no other marketing activity has such powerful
and immediate effects on firm performance in both domestic
and international settings (Hinterhuber 2004; Stöttinger 2001).
Scholars’ past attention to export or international pricing
thus is not surprising (Kienzler and Kowalkowski 2017,
p. 104). However, given the high relevance of the revenues
generated by exporting, many scholars agree that pricing
deserves more attention (Lages and Montgomery 2005; Sousa
and Bradley 2009). This point is particularly true for the ques-
tion of how to manage export pricing and thus for the strategic
and organizational aspects of pricing (e.g., Dutta, Zbaracki, and
Bergen 2003; Sousa and Bradley 2009). Pricing is often an
input from marketing, sales, and finance departments
(Homburg et al. 2015; Özer and Phillips 2012). In this respect,
the role of organizational factors and both formal and informal
governance mechanisms of firms’ export and sales activities
must be addressed (Chabowski et al. 2018; Grewal et al. 2018).
More specifically, it is relatively unclear how firms’ organiza-
tional and behavioral characteristics can affect implementation
of pricing practices, for example, the pricing effectiveness of
the sales force (Liozu 2015). In addition, relatively little is
known about the relationship between firms’ pricing practices
and performance (Indounas 2009; Liozu and Hinterhuber
2013). In an international context, pricing is particularly chal-
lenging (Obadia 2013). Fast-changing environments and vary-
ing requirements of international target markets contribute to a
higher complexity of export pricing than of pricing in domestic
Katharina Maria Hofer is Associate Professor, Institute for Retailing, Sales and
Marketing, Johannes Kepler University Linz (email: katharina.hofer@jku.at).
Lisa Maria Niehoff-Hoeckner is Senior Lecturer, Institute for Retailing, Sales
and Marketing, Johannes Kepler University Linz (email: lisa.niehoff-hoeckner@
jku.at). Dirk Totzek is Professor of Marketing and Services, School of Business,
Economics and Information Systems, University of Passau (email: dirk.totzek@
uni-passau.de).
Hofer et al.
settings. The reason for the increased complexity is the large
number of variables that influence international pricing and the
uncertainty that is involved. Both internal and external vari-
ables must be considered; internal factors include the pricing
approach, the international experience of the firm, and the
design of the firm’s decision-making and control processes.
External factors are demand heterogeneity and uncertainty,
legal requirements, government regulations, the economic sit-
uation, and exchange rate fluctuations. In this respect, pricing is
one aspect of the complex intra- and interfirm decisions in
global value chains (Grewal et al. 2018). Furthermore, price
escalation frequently occurs as a result of increased shipping
costs and a longer distribution channel (Cavusgil 1988; Sousa
and Bradley 2009).
By addressing this complexity and highlighting the need for
a better understanding of how to manage pricing in export
firms, our study addresses three questions: (1) To what extent
should firms adapt their pricing to a specific export market?
(2) How should firms organize their pricing internally when
doing business with a specific export market? and (3) To what
extent are these decisions context dependent? More specifi-
cally, we focus on the performance effects and context depen-
dence of four key pricing issues: the horizontal dispersion of
pricing authority across departments within the exporting
firm, the vertical delegation of pricing authority to the firm’s
sales force, the intensity of the firm’s internal pricing coordi-
nation, and the degree of adaptation of the firm’s pricing to a
specific export market. In regard to export performance, we
focus on the performance of the export venture in terms of
both product-market-based metrics and accounting-based per-
formance metrics at the organizational level (Katsikeas et al.
2016). Pricing not only directly affects product-market per-
formance metrics such as sales, market share, and revenues
but also substantially affects firm profitability (Hinterhuber
2004; Homburg, Jensen, and Hahn 2012). In addition, we
focus on the organizational rather than the tactical level of
export pricing.
In a domestic setting, Homburg, Jensen, and Hahn (2012)
examine the performance effects (in terms of return on assets)
of a firm’s horizontal dispersion and vertical delegation of
pricing authority and the context dependence of these effects.
The horizontal dispersion of pricing authority captures how the
influence on strategic aspects of export pricing is divided
among a firm’s departments of marketing, sales, and finance.
Vertical delegation of pricing authority indicates how decen-
tralized the pricing authority is within the sales department and
shows how close tactical pricing decisions are to the customer
(Homburg, Jensen, and Hahn 2012). In addition, prior work
emphasizes that pricing processes within firms are often com-
plex because they require substantial coordination efforts to
address potential goal conflicts between divisions with respect
to prices (Dutta, Zbaracki, and Bergen 2003; Lancioni, Schau,
and Smith 2005). However, whether and how these findings,
which are related to organizational aspects of pricing, apply to
international pricing decisions is unclear.
75
The question of standardization versus adaptation is one of
the most vivid discussions in international marketing (e.g.,
Theodosiou and Leonidou 2003). However, few studies have
addressed adaptation in terms of pricing. Sousa and Bradley
(2009) identify key determinants of the degree of standardiza-
tion versus adaptation of a firm’s export pricing; however, it is
relatively unclear how the degree of price adaptation relates to
export performance and whether this effect is context depen-
dent. In this respect, our study also analyzes whether the per-
formance effects of organizing and adapting pricing in export
firms are contingent on key characteristics of the export market
under consideration, because prior research highlights the
major role of contingencies (Katsikeas, Samiee, and Theodo-
siou 2006; Obadia 2013). More specifically, we focus on the
turbulence of the export market (e.g., Olson, Slater, and Hult
2005; Wilden and Gudergan 2015), the legal uncertainty that
makes the enforcement of contracts more difficult (Brouthers,
Brouthers, and Werner 2008), and the degree to which corrup-
tion might affect the export business (Cuervo-Cazurra 2016).
Our study makes three major contributions to the inter-
national marketing literature, in which empirical studies on
pricing are comparatively scarce. First, we respond to calls
for more research on organizational factors and the role they
play as antecedents of export performance (Chabowski et al.
2018) by investigating the organization of export pricing
and the effect on export performance from a managerial
perspective. Second, to the best of our knowledge, this
empirical study is the first to include the construct of inten-
sity of internal pricing coordination in an international con-
text. Third, we support the stream of literature on the
positive consequences of marketing program adaptation
(e.g., Westjohn and Magnusson 2017) by demonstrating the
positive effect of price adaptation on export performance.
The remainder of this article proceeds as follows: In the next
section, we develop the theoretical background. In this context,
we build on agency theory and transaction cost economics.
Next, we discuss the standardization versus adaptation
approach and call on contingency theory. We also review the
literature on the determinants of export performance and its
different operationalizations. We then develop our main effects
and moderation hypotheses. We test our hypotheses with a
sample of 295 firms using a large-scale survey study we con-
ducted in Austria and Germany. More specifically, we focus on
firms that export their products to countries not in the European
Union (EU) or the European Economic Area (EEA) because
these firms are confronted with more-challenging conditions
than are found in a common market. Finally, we discuss the
theoretical and managerial implications of our findings, discuss
limitations, and offer avenues for further research.
Literature Review
Agency Theory and Transaction Cost Economics
Agency theory (e.g., Eisenhardt 1989) and transaction cost
economics (e.g., Williamson 1981) are common theoretical
76
foundations used to better understand governance in interna-
tional sales channels and the organizational aspects of interna-
tional pricing (Chabowski et al. 2018; Grewal et al. 2018).
According to agency theory, the principal (i.e., the firm) dele-
gates the work to an agent, such as the firm’s salespeople. In
this relationship, an agency problem can emerge when the
principal and the agent have a goal conflict or when the prin-
cipal cannot verify the appropriate behavior of the agent.
Furthermore, risk attitudes between the two parties can differ
(Eisenhardt 1989). The monitoring of agents’ desired behavior
in sales environments that are characterized by uncertainty and
information asymmetries is particularly challenging (Krafft
1999). For example, salespeople are closer to the customers
and the local markets and thus should have better information
about the local conditions and customers’ preferences (Frenzen
et al. 2010). Because target markets can differ substantially
from the home market and information about the local market
is often limited (Cavusgil 1988), international agency problems
can be unique in their nature and intensity, and their resolution
can be critical for the success of a firm’s operations (Dharwad-
kar, George, and Brandes 2000).
Transaction cost economics is particularly helpful in efforts
to better understand the organizational aspects of exporting
(Chabowski et al. 2018), international channel governance
(Grewal et al. 2018), and, more specifically, how firms should
address uncertainty concerning international expansion (e.g.,
Homburg, Vollmayr, and Hahn 2014). The basic question is
whether transactions should be done within the firm or outside
the firm using market contracting as the more cost-efficient
option. In sales channels, transaction costs emerge from the
governance of the exchange partners, including search costs,
contracting costs, bargaining costs, monitoring costs, and
enforcement costs (e.g., Homburg, Vollmayr, and Hahn
2014). The marketplace is at the extreme point of the govern-
ance structure. Because price information is public, the market-
place ensures the efficiency of basic transactions (Chabowski
et al. 2018). However, when uncertainty is high, the market
becomes inefficient, and integration is considered the superior
option (Krafft 1999). The dynamic international environment
tends to increase information asymmetries within the firm,
such as between the firm’s management and its salespeople,
increasing the need for monitoring and enforcement activities
and for information processing and coordination activities
within the firm.
Standardization Versus Adaptation
The question of standardization versus adaptation of marketing
strategy and activities has been the focus of a vivid and ongoing
debate in the international marketing literature. Theodosius and
Leonidou (2003) analyze 36 early studies on the question of
standardization versus adaptation and find that prior research
was often exploratory, leading to nonsignificant and contradic-
tory results, mostly due to inappropriate conceptualizations,
inadequate research designs, and a lack of analytical rigor. In
addition, research on the standardization versus adaptation
Journal of International Marketing 27(1)
question in pricing is relatively scarce, particularly concerning
performance outcomes (Theodosiou and Leonidou 2003).
Sousa and Bradley (2009) show that the degree of price adap-
tation is determined by the degree of product, promotion, and
distribution adaptation, because changes in these firm aspects
lead to changes in costs, which in turn influence the export
pricing strategy.
In this study, we adopt a contingency perspective to assess
the degree of adaptation of pricing and the organization of
pricing processes related to export performance. The question
of standardization versus adaptation should be analyzed from a
contingency perspective, which takes neither a total standardi-
zation nor a total adaptation stance (e.g., Hofer 2015; Sousa
and Bradley 2009; Zeriti et al. 2014). The central assumption of
the contingency approach is that both organizational and exter-
nal factors determine the optimal degree of standardization or
adaptation of international marketing strategy (Schilke, Reim-
ann, and Thomas 2009; Zou, Andrus, and Norvell 1997). Orga-
nizational factors include the firm’s competitive and
international marketing strategy, coordination of marketing
activities, product characteristics, and general firm or market
characteristics (Schilke, Reimann, and Thomas 2009). External
factors particularly address the similarity of home and foreign
markets, for example, concerning economic conditions, the
regulatory environments, culture, customer characteristics,
marketing infrastructure, and technological and competitive
intensity (Katsikeas, Samiee, and Theodosiou 2006).
Export Performance
The investigation of internal and external antecedents of export
performance remains a key aspect of current export research
(Chabowski et al. 2018). Research has thoroughly examined
the export performance of the firm (e.g., Hofer, Niehoff, and
Wuehrer 2015) and the factors associated with firms’ export
performance (e.g., Morgan, Kaleka, and Katsikeas 2004). Both
internal and external factors influence pricing and export per-
formance (Myers, Cavusgil, and Diamantopoulos 2002). Prior
work has largely focused on external factors, such as export
market characteristics, price sensitivity of customers, switching
costs, or entry barriers. Internal factors related to pricing deci-
sions, such as factory capacity utilization, international expe-
rience of the firm, or price-setting philosophy, have attracted
comparatively less attention (Forman and Hunt 2005; Myers,
Cavusgil, and Diamantopoulos 2002).
The literature has provided different approaches for opera-
tionalizing export venture success (e.g., Diamantopoulos et al.
2014; Katsikeas, Leonidou, and Morgan 2000; Oliveira, Cado-
gan, and Souchon 2012; Tan and Sousa 2011). Export perfor-
mance can be judged through both noneconomic and economic
outcomes (Katsikeas, Leonidou, and Morgan 2000). However,
economic outcomes are often the focal point of interest (Oli-
veira, Cadogan, and Souchon 2012) to better understand the
importance of the financial effects of the export business
(Gnizy et al. 2017; Wang and Lestari 2013).
Hofer et al.
Enforcing contracts ranking
H6 (+)
Horizontal dispersion of H1 (+)
pricing authority
Vertical delegation of H2 (+)
pricing authority
Intensity of internal pricing H3 (+)
coordination
H4 (+)
Price adaptation
H7 (+)
Corruption perceptions ranking
Figure 1. Conceptual model.
Katsikeas et al. (2016) highlight that the conceptualization
and operationalization of performance as an overall latent con-
struct capturing several different aspects should be avoided.
Instead, research should focus on specific aspects, for example,
product-market performance or financial performance
(Katsikeas et al. 2016). Export performance in terms of (prod-
uct-)market performance captures performance in terms of
marketing success, sales, market share, and revenue from prod-
ucts introduced (e.g., Kaleka and Morgan 2017). Financial per-
formance outcomes capture performance at the organizational
level in terms of profitability, profit margin, return on invest-
ment, export venture margins, and the achievement of export
venture financial goals (Katsikeas, George, and Brandes 2000;
Katsikeas et al. 2016; Spyropoulou et al. 2018).
Concerning the context of our study, Stöttinger (2001) con-
tends that firms often do not assess performance at the pricing
level or define specific criteria to measure pricing performance.
Thus, we focus on export performance in general. Because
pricing should affect both product-market and financial export
performance (Hinterhuber 2004; Homburg, Jensen, and Hahn
2012), we address both aspects, but separately. We rely on a
subjective assessment of both aspects of the firm’s export per-
formance, which is consistent with state-of-the-art research in
the field (e.g., Spyropoulou et al. 2018). To capture the strate-
gic dimension in terms of relative competitive position in the
export market, we evaluate all dimensions in relation to the
major competitors of the firm—an approach that is consistent
with current research (e.g., Kaleka and Morgan 2017).
Conceptual Framework and Hypotheses
Next, we develop hypotheses on how the organization of pric-
ing authority, the coordination of pricing processes within the
firm, and the degree of adaptation of pricing to the export
77
Export market turbulence
H5a–d (+)
Export performance:
market performance/
financial performance
Control variables: competitive
intensity, foreign market
ambiguity, customer
bargaining power, contract
specificity, export mode,
industry, and country
market are related to export performance. Figure 1 depicts our
conceptual model and research hypotheses.
Pricing Authority
Concerning the firm’s question of how to organize export pric-
ing, two key issues emerge. The first issue is the firm’s decision
about the locus of pricing authority, and the second addresses
the specific coordination efforts with respect to pricing within
the firm (Homburg, Jensen, and Hahn 2012; Joseph 2001). In
this respect, Homburg, Jensen, and Hahn (2012) distinguish
between the horizontal dispersion of authority over strategic
pricing decisions (e.g., strategic price positioning of new prod-
ucts) across sales, marketing, and finance and the vertical dele-
gation of authority over tactical pricing decisions within sales
(e.g., delegation from central management to decentralized
salespeople).
We apply this distinction and define the horizontal disper-
sion of pricing authority as the degree to which different
departments involved in firms’ export pricing “share influ-
ence on strategic pricing decisions” (Homburg, Jensen, and
Hahn 2012, p. 50). We define the vertical delegation of pric-
ing authority as the degree to which the salespeople respon-
sible for the foreign target market “are independent from
central sales management in their pricing decisions during
negotiations with customers” (Homburg, Jensen, and Hahn
2012, p. 50).
The role of organizational structure and its contribution to a
firm’s effectiveness was recognized early in the organizational
science literature. Organizational culture and structure involves
the question of flexibility versus discretion and of the extent of
authority in an organization. Flexibility within a decentralized
structure thus has the potential to drive a firm’s effectiveness
(Quinn and Rohrbaugh 1983). The decision-making structure
78
and its consequences in exporting firms have received com-
paratively little scholarly attention (Cavusgil and Zou 1994).
One of the few empirical studies indicates the necessity of
differentiating between centralized and decentralized
decision-making structures (Chung, Wang, and Huang 2012).
Prior research shows that the dispersion of pricing authority
across departments positively affects performance in domestic
settings (Homburg, Jensen, and Hahn 2012; Homburg, Work-
man, and Krohmer 2002). The key rationale for this positive
effect is that the quality of the firm’s price decision making
should increase with frequent interactions and information
exchange between different departments, and the interpretation
of information through different functional lenses should
increase decision quality (Homburg, Jensen, and Hahn 2012).
This improvement is particularly important because price-
related information is often spread across different departments
(Lancioni, Schau, and Smith 2005). Thus, internal conflict and
information asymmetries with respect to pricing can be
reduced. This general notion should also apply to export pric-
ing decisions that involve high uncertainty and complex and
diverse information (e.g., with respect to tariffs, taxes, and
other regulatory issues).
Delegating pricing authority means relying on an agent, a
situation in which agency problems such as goal conflicts or
inappropriate behavior of the agent can emerge (Eisenhardt
1989). In addition, the question of delegation of pricing
authority is difficult and often emotional, and it can have dire
consequences if it is not managed well (Liozu 2015). Dolan
and Simon (1996) favor price delegation because salespeople
are in the best position to assess customers’ willingness to
pay, which enables the firm to optimally customize prices.
In contrast, Homburg, Jensen, and Hahn (2012) show that
there is an optimal level of delegation to the sales force, that
is, an inverted U-shaped relationship, balancing the plausible
arguments both for and against price delegation (e.g., Kern
1989). When pricing authority is delegated, it is particularly
relevant to adjust salespeople’s compensation to gross mar-
gins to ensure that the firm and the salespeople have the same
objectives and to minimize agency problems (Homburg, Jen-
sen, and Hahn 2012).
Several market conditions should particularly support the
delegation of pricing authority: when demand is highly price
elastic, customers are aggressive price bargainers, the product
or service offering is complex, customer classes and sizes vary
widely, sellers operate with relatively autonomous sales per-
sonnel, prepricing is difficult, and products are perishable (Ste-
phenson, Cron, and Frazier 1979). In addition, Frenzen et al.
(2010) show that the level of pricing delegation increases with
growing information asymmetry between a firm’s management
and its salespeople. The positive effect on performance of dele-
gating pricing authority to salespeople increases when market-
related uncertainty is high and when salespeople are better
informed about the customers than are managers (Frenzen
et al. 2010). The last two arguments should be particularly
relevant in international contexts because of an increased need
for flexibility in a foreign market context (Thomas, Cuervo-
Journal of International Marketing 27(1)
Cazurra, and Brannen 2011). Thus, we expect that the positive
arguments of delegating pricing authority to the sales force
should particularly outweigh the potential downsides in an
international context, and we hypothesize the following:
H1: There is a positive relationship between horizontal dis-
persion of pricing authority and export performance.
H2: There is a positive relationship between vertical delega-
tion of pricing authority and export performance.
Intensity of Internal Pricing Coordination
As outlined in the development of H1, pricing involves inter-
nal coordination of departments, and it can be implemented
using various approaches (Lancioni, Schau, and Smith 2005).
In this respect, the market orientation literature further high-
lights the importance of interfunctional coordination of
market-related activities (e.g., Jaworski and Kohli 1993; Nar-
ver and Slater 1990), which also holds for export ventures
(Murray, Gao, and Kotabe 2011). Interfunctional coordina-
tion involves the coordination of a firm’s resources to create
value for customers. Through the integration of a company’s
human resources, a synergistic effect is achieved. Thus, the
functional areas must be aligned to ensure close cooperation,
and coordinating management must be responsive to the
needs of the different departments (Narver and Slater 1990).
However, both ex ante and ex post transaction costs can
emerge (Williamson 1981), in particular because of the com-
plexity of international pricing decisions.
In the context of our study, internal pricing coordination
captures the intensity of the coordination efforts across the
relevant departments within the firm to agree on prices for
specific offerings for an export market. Because goal conflicts
concerning prices naturally arise between departments (e.g.,
Dutta, Zbaracki, and Bergen 2003; Lancioni, Schau, and Smith
2005), substantial internal coordination efforts are required to
help reduce them. Although a high intensity of internal pricing
coordination means higher coordination efforts and likely
requires more resources in terms of both people and financial
aspects, we state that a high intensity of pricing coordination
does yield positive effects. The underlying rationale is that
considerable information from various functional areas of the
firm is integrated to arrive at pricing that is based on various
input factors.
Because our study focuses on markets with challenging
conditions, the integration of various viewpoints should be
even more critical, because uncertainty concerning these mar-
kets is comparatively high. A complex internal approach to
pricing can thus be a means of coping with uncertainty and
of optimizing pricing in terms of the firm’s profit goals. Thus,
although upfront coordination costs increase, the risk of ex post
transaction costs and of suboptimal pricing decisions should be
reduced. Therefore, as the intensity of the internal pricing coor-
dination increases, the performance of the export venture
should increase:
Hofer et al.
H3: There is a positive relationship between the intensity of
internal pricing coordination and export performance.
Price Adaptation
Prior research concerning the performance effect of price adap-
tation versus standardization is mixed. Some studies find a
positive effect of marketing program standardization on target
market performance (Özsomer and Simonin 2004; Zou and
Cavusgil 2002). Other studies find evidence of a positive rela-
tionship between marketing-mix adaptation and performance
in the target market (Calantone et al. 2004; Cavusgil and Zou
1994), and some studies find no evidence (O’Cass and Julian
2003; Samiee and Roth 1992).
Birnik and Bowman (2007) highlight that in terms of
marketing-mix activities, product and brand aspects are more
likely to be standardized than is pricing. In a similar vein,
Sousa and Bradley (2009) show that the degree of price adap-
tation is higher when the environmental differences between
the home and export markets are greater and when the degree
of adaptation with respect to the other marketing-mix activities
is higher. However, Sousa and Novello (2014) find no signif-
icant effect of price adaptation on export performance in the
context of small and medium-sized enterprises and thus suggest
a nonlinear (U-shaped) relationship.
We state that in markets with challenging conditions in the
environment, the firm is more likely to encounter an environ-
ment that differs to some extent from the home market. Thus,
when the firm conducts business operations in these foreign
markets, pricing strategies from the domestic market might not
be applicable. They must be modified by considering the dif-
ferent market conditions to ensure a successful strategy in the
foreign market. Therefore, we suggest a positive relationship
between price adaptation and export performance attributable
to comparatively high differences between the home market
and the foreign target market in the context of our study. Thus,
we formulate the following hypothesis:
H4: There is a positive relationship between price adapta-
tion and export performance.
Export Market Turbulence
Market turbulence has been considered a moderating factor in
empirical studies in both domestic and international market
contexts (e.g., Olson, Slater, and Hult 2005; Wilden and
Gudergan 2015). Market turbulence refers to “the rate of
change in the composition of customers and their preferences”
(Jaworski and Kohli 1993, p. 57). Jaworski and Kohli (1993)
suggest that firms operating in turbulent markets should mod-
ify their products on a continuous basis to consider different
customer preferences, whereas little modification is necessary
in stable markets because of comparatively unchanging cus-
tomer preferences.
Market turbulence is particularly relevant in an international
context (Thomas, Cuervo-Cazurra, and Brannen 2011). Com-
pared with stable markets, markets with more turbulence can
79
spark opportunities for firms to realign their marketing capabil-
ities and activities, while relying on external knowledge and
sensing processes (Wilden and Gudergan 2015). However,
empirical results concerning the moderating role of market
turbulence in an international context remain conflicting
(Morgan, Feng, and Whitler 2018). For example, Murray, Gao,
and Kotabe (2011) find that market turbulence weakens the
positive effect of market orientation on new product develop-
ment capability. Hanvanich, Sivakumar, and Hult (2006) show
that a firm’s learning orientation and memory affect organiza-
tional performance, contingent on the level of turbulence in the
market environment. Specifically, under conditions of low
environmental turbulence, both learning orientation and orga-
nizational memory are positively related to performance,
whereas under conditions of high environmental turbulence,
learning orientation is a predictor of performance (Hanvanich,
Sivakumar, and Hult 2006).
In the context of our study, we expect that market turbu-
lence should strengthen the positive relationships previously
hypothesized (Andersson, Cuervo-Cazurra, and Nielsen
2014). In this respect, Homburg, Jensen, and Hahn (2012)
show that price-related market dynamism positively moder-
ates the performance effect of horizontal dispersion of pric-
ing authority, whereas no empirical support is available for
the hypothesized positive moderation with respect to verti-
cal delegation. First, we suggest that high export market
turbulence with respect to customers’ preferences should
require a more decentralized approach to pricing, that is,
delegating pricing authority to salespeople close to the
export market. The rationale is that the vertical delegation
of pricing authority to salespeople enables the firm to better
capture the dynamics of these markets because of the sales-
people’s country-specific knowledge and proximity. Second,
bringing together information from various departments of
the firm should increase price decision quality in a highly
turbulent environment, as occurs in the case of horizontal
dispersion of pricing authority and coordinated pricing
across departments. Although ex ante transaction costs and
conflict and coordination efforts between departments might
increase, firms should reduce the risk of suboptimal pricing
decisions and ex post coordination efforts by using multiple
and close-to-market sources for their pricing decisions. In
addition, the consideration of close-to-market sources in the
pricing process very likely makes price adaptations neces-
sary, because the dynamics of highly turbulent markets are
most likely different from the home market. Thus, when
turbulence is high, price adaptation should be more neces-
sary to ensure the success in these markets. Thus, we
hypothesize the following:
H5: Export market turbulence positively moderates the rela-
tionship between (a) horizontal dispersion of pricing author-
ity, (b) vertical delegation of pricing authority, (c) the
intensity of internal pricing coordination, and (d) price adap-
tation and export performance.
80
Country-Specific Factors: Enforcing Contracts
and Corruption Perception
In addition to turbulence, the environmental conditions in the
foreign target market must be considered in international busi-
ness operations. For example, uncertainty related to the foreign
market’s legal environment leads to an increase in transaction
costs related to the negotiation and enforcement of contracts
(Brouthers, Brouthers, and Werner 2008). International busi-
ness and marketing research addressing the question of contract
enforcement has largely tied the discussion to foreign entry
mode choice (e.g., Brouthers and Brouthers 2003). Griffith and
Zhao (2015) focus on the role of contract specificity and con-
tract violation for the success of buyer–supplier relationships.
However, these contracting issues should also be important
from an international pricing perspective. Thus, in addition to
the perceptual data that serve as the basis for the previous
hypotheses, we introduce secondary data derived from data-
bases. Specifically, we rely on the enforcing contracts indicator
issued by the World Bank (2017), which “measures the time
and cost for resolving a commercial dispute through a local
first-instance court.” A high enforcing contracts indicator is
unfavorable because it implies that firms would need to invest
time and financial resources that could be used elsewhere.
We state that in countries with high enforcing contracts
indicators, a higher degree of horizontal dispersion of pricing
authority is necessary to include various departments in the
pricing process. This inclusion results in a joint effort in dif-
ferent organizational functions with complementing compe-
tences that support each other to reach the common goal of
enforcing the contract in the foreign market. Thus, we formu-
late the following hypothesis:
H6: As the enforcing contracts indicator increases, the rela-
tionship between horizontal dispersion of pricing authority
and export performance becomes increasingly positive.
In addition to the enforcement of contracts, we address the
problem of corruption. Corruption is of interest to international
business scholars in various contexts, such as examination of
the effect of corruption on foreign direct investment (e.g.,
Habib and Zurawicki 2002). Research has identified several
country-level institutional and cultural factors in foreign target
markets as antecedents of corruption, including culture, ethnic
diversity, ethnolinguistic diversity, and foreign direct invest-
ment (Cuervo-Cazurra 2016). For example, Davis and Ruhe
(2003) investigate the relationship between culture and the
perception of a country’s corruption, finding that power dis-
tance, individualism, and masculinity explain perceived cor-
ruption. Furthermore, country risk, trade flow, foreign
investment, and per capita income can explain perceived cor-
ruption. Studies have investigated these issues from both the
demand and supply sides. Research adopting the former per-
spective involves analyzing incentives for why public officers
engage in such behavior, whereas studies on the latter investi-
gate the incentives for managers to support corrupt behavior,
Journal of International Marketing 27(1)
which can buttress both the objectives of the firm and the
personal goals of a manager. For the payment of a bribe, pri-
marily organizational rather than personal funds are used
(Cuervo-Cazurra 2016).
Concerning the consequences of corruption, research sug-
gests that corruption usually has a negative effect at the coun-
try level. In countries in which corruption is comparatively
high, the development, investment, and foreign direct invest-
ment levels are rather low. In these countries, exporting activ-
ities are also lower and occur in different markets, and the
number of nonperforming bank loans is higher (Cuervo-
Cazurra 2016). The level of corruption of a country is
available in the corruption perceptions index issued by Trans-
parency International (2016). The more risk a country bears in
terms of corruption, the more firms must trust their employees
and build on their expertise.
Research in marketing has widely acknowledged the role of
market knowledge and cross-functional collaboration in the
success of firm activities (e.g., De Luca and Atuahene-Gima
2007). In an international marketing context, market knowl-
edge competencies are deemed central to the creation of a
global market advantage (Yeniyurt, Cavusgil, and Hult
2005). In a similar vein, we assert that employees with local
market knowledge can better assess and therefore handle local
market conditions of the foreign target market environment.
We state that decentralized pricing enables the firm to achieve
superior export performance. The reason is rooted in the ver-
tical delegation of pricing authority to the local market-based
salespeople, who have the flexibility and knowledge necessary
to handle a level of corruption in the foreign target market that
the firm is highly unlikely to be familiar with from previous
experience in the home market. Thus, we formulate the follow-
ing hypothesis:
H7: As the perception of corruption increases, the relation-
ship between vertical delegation of pricing authority and
export performance becomes increasingly positive.
Methodology
Sample and Data Collection
This study examines a sample of exporting firms, mostly in a
business-to-business context, in Austria and Germany. We
used a multi-industry survey to increase observed variance and
to strengthen the generalizability of the results (Morgan,
Kaleka, and Katsikeas 2004). We focused on the firms’ export-
ing businesses in countries outside the EEA. The EEA (i.e., the
European Union and Iceland, Liechtenstein, and Norway; Eur-
opean Union 2018) guarantees the free movement of goods,
services, people, and capital; thus, from a regulatory perspec-
tive, doing business with other EEA countries is not actually
distinct from national business. In the survey, we asked parti-
cipants to focus on the largest export market outside the EEA in
terms of sales revenue in the last 12 months.
We focused on manufacturing firms and excluded firms
offering only services. We extracted the Austrian sample from
Hofer et al.
a business database and contacted the firms by telephone first
to identify the person most appropriate to participate in the
study. For the German sample, we collaborated with a com-
mercial online panel provider and a regional chamber of indus-
try and commerce that provided access to its export-oriented
member firms. In both samples, we targeted key informants
who were knowledgeable about their export business, such as
export marketing or export managers and senior managers/
chief executive officers (CEOs). The survey was executed
online. We sent an invitation email to all potential informants,
including the URL to the online questionnaire. After two to
three weeks, we followed up with a reminder. In the case of
the German online panel, we screened out potential participants
working in firms with fewer than ten employees and those who
had not been involved in export pricing and related contracting
issues for at least one year in their current position.
These efforts resulted in 295 usable questionnaires (108
firms headquartered in Austria, 173 in Germany, and 14 head-
quartered in another country). A substantial portion of the
participating firms do considerable business with countries
outside the EEA (37% of the firm’s annual revenue on aver-
age; median ¼ 34%). The main export markets outside the
EEA are the United States (28%), China (18%), Switzerland
(14%), and Russia (6%). In this respect, our sample matches
the most important export markets outside the EEA for Ger-
many and Austria. In total, 49 different countries were eval-
uated by our informants.
A table summarizing the key sample characteristics is pro-
vided in Appendix A. The sample covers a broad range of
industries, including chemicals and electronics (24.4%);
machinery (22.0%); consumer goods (15.2%); construction
(6.8%); wood, stone, ceramics, and glass (4.4%); automotive
(4.4%); heavy industry (4.1%); nonferrous metal (3.0%); util-
ities (1.4%); and other industries (14.2%). An analysis of the
distribution of sectors in the Austrian and German samples
shows that the two countries are similar. A plurality of the firms
belong to the chemicals and electronics sector (23.2% of Aus-
trian firms, 24.9% of German firms), and 19.4% of the Austrian
and 22.5% of the German firms operate in the machinery busi-
ness industry. Consumer goods rank third, represented by
13.9% of the Austrian firms and 16.8% of the German firms.
Therefore, we expect no systematic structural differences
between the Austrian and the German samples.
Most of the firms (176 firms) have export departments and
export directly (203 firms) to customers in the export market
under consideration. From a regulatory perspective, 261 firms
regularly use the Incoterms standards of the International
Chamber of Commerce (2018). However, the specific terms
used are diverse. For example, 57 firms predominantly use
EXW Ex Works, 47 use CFR Cost and Freight, and 40 use CIF
Cost, Insurance and Freight. Furthermore, the products
exported tend to be customized (on a scale from 1 ¼
“completely standardized” to 7 ¼ “completely customized,”
the mean rating was 4.56; SD ¼ 1.79, median ¼ 5.00). A
similar picture in terms of variation emerges for the complexity
and the structure of specific offers to their customers.
81
Consistent with prior work on exporting and export pricing,
we relied on a key informant approach (e.g., Morgan, Kaleka,
and Katsikeas 2004; Obadia 2013). However, the reliability
and validity of a key informant survey approach has been crit-
icized (e.g., March and Sutton 1997). Homburg, Jensen, and
Hahn (2012) show that key informants provide reliable
responses for constructs that refer to present, salient events,
and point to objectively verifiable referents. For the last two,
this point also holds with respect to key informant validity. The
average time of our informants in their current export-related
position is 12.3 years (SD ¼ 10.2, median ¼ 10; see Appendix
A). Furthermore, a substantial proportion (27.8%) of our infor-
mants held positions in general management or were CEOs (see
Appendix A). Thus, our informants were sufficiently knowl-
edgeable, and the topic of our survey was relevant to them
(Homburg, Jensen, and Hahn 2012; Kumar, Stern, and Ander-
son 1993). Finally, the informants’ functional background does
not significantly affect their responses concerning the indepen-
dent and dependent variables in our model.
Measures
We operationalized our survey measures based on the litera-
ture. We assessed our measures with Likert-type rating scales.
All scales together with their items appear in Appendix B. We
adapted the measures for horizontal dispersion of pricing
authority and vertical delegation of pricing authority from
Homburg, Jensen, and Hahn (2012). Regarding horizontal dis-
persion of pricing authority, we asked informants to evaluate
the influence of sales, marketing, finance, and export depart-
ments on key facets of export pricing decisions. More specif-
ically, informants initially indicated which departments
contributed to export pricing decisions. Then, for each depart-
ment, they rated the impact of that department on four aspects
related to pricing: strategic price positioning of new products,
adaptation of list prices/price guidelines, design of discount
and bonus terms, and monitoring of prices (each on a scale
from 1 ¼ “very low” to 5 ¼ “very high”). On average, two
different departments were involved in export pricing (SD ¼
.90). We initially summarized the ratings on each dimension
across the departments involved. We used these summary
scores on each dimension as reflective indicators of the latent
construct for further analyses.1
We assessed the intensity of internal pricing coordination
using a scale originally developed by Homburg, Jensen, and
Schuppar (2004). To measure price adaptation, we used items
from Sousa and Bradley (2009). The measures to assess export
market turbulence are based on the studies of Jaworski and
Kohli (1993) and Murray, Gao, and Kotabe (2011), which we
adapted to our context.
1
The scores increase with the number of departments involved in export
pricing decisions and being evaluated by our informants (F(3, 291) ¼
405.52, p < .01). However, the number of departments involved does not
affect the export market (F(3, 291) ¼ .44, p > .10) or financial (F(3, 291) ¼
.15, p > .10) performance.
82
Finally, we assessed export performance using the two four-
item measures of market (i.e., product-market-related) and
financial performance of Morgan, Katsikeas, and Vorhies
(2012). Informants evaluated these items in relation to the per-
formance of their competitors during the last 12 months. In our
further analyses, we considered both dimensions separately.
We collected secondary data for the country-level factors.
To capture potential legal problems with enforcing contracts,
we used the enforcing contracts indicator issued by the World
Bank, which depicts the time, cost, and procedural complexity
to resolve a commercial dispute through local courts. The indi-
cator also includes the quality of judicial processes, covering
good practices in the areas of court structure and proceedings,
case management, court automation, and alternative dispute
resolution. The data come from studies of codes of civil pro-
cedure and court regulations and from surveys of lawyers and
judges (World Bank 2017). The final indicator is a country
rank, in which 1 is the best country worldwide (i.e., the country
in which enforcing a contract is easiest).
The corruption perceptions index, which was launched in
1995, includes the informed view of analysts, managers, and
business experts. The scale ranges from 0 ¼ “highly corrupt” to
100 ¼ “very clean.” The global average is 43, a score that
indicates endemic corruption in the public sector of a country.
More than two-thirds of the 176 countries included are below
the scale’s midpoint (Transparency International 2016). We
used the Transparency International country rank in terms of
corruption, in which 1 indicates the least corrupt country in the
world, as an indicator in our study. We were able to match these
two variables with our survey data for 290 firms. Because the
distribution of both ranking scores was highly skewed, we log-
transformed both scores for further analyses.
We assessed several control variables. We assessed whether
the firm’s export mode to this country was predominantly
direct (coded as 0) or indirect (coded as 1). We also assessed
competitive intensity using the three-item reflective scale of
Homburg, Grozdanovic, and Klarmann (2007), foreign market
ambiguity using an extension of the formative index of Obadia
(2013). Finally, we assessed the customers’ bargaining power
(Slater and Narver 1994) and contract specificity (Griffith and
Zhao 2015) with reflective four-item scales.
We initially assessed reliability and validity for each of our
reflective multi-item measures using confirmatory factor anal-
ysis (CFA; e.g., Bagozzi and Yi 2012). We used Stata 15.1 for
the CFA and all further analyses. The results of the correspond-
ing analyses show that, with two exceptions (i.e., factor load-
ings [individual item reliabilities] of .60 and .50 [.36 and .25]),
our scales exhibit desirable psychometric properties. Second,
the overall measurement model including all latent variables
shows a good fit to the data (w2/d.f. ¼ 1.69, comparative fit
index [CFI] ¼ .95, Tucker–Lewis index [TLI] ¼ .94, root mean
square error of approximation [RMSEA] ¼ .05, standardized
root mean square residual [SRMR] ¼ .05). Third, we find no
major issues with respect to discriminant validity because the
squared correlations between each pair of latent variables are
below the corresponding average variances extracted (Fornell
Journal of International Marketing 27(1)
and Larcker 1981). Table 1 provides descriptive statistics, CFA
model fit indices, average variances extracted, composite reli-
abilities, and correlations between constructs. Item factor load-
ings appear in Appendix B.
Common Method Variance
To statistically assess the issue of common method bias, we
applied two post hoc tests because we could not identify the
source(s) of a potential method bias (Hulland, Baumgartner,
and Smith 2018; Podsakoff et al. 2003). First, we included a
latent method factor in our measurement model including all
latent variables. We constrained all loadings of the latent
method factor to be equal across items to ensure model iden-
tification. The results show that the loadings of the common
method factor on the measurement items are significant at
p < .01 (with standardized l-values between .12 and .35).
However, the fit of the model including the latent common
method factor is not significantly better (p ¼ .34).
Second, we relied on a version of Lindell and Whitney’s
(2001) marker variable technique (Malhotra, Kim, and Patil
2006) to retrospectively control for common method variance
because we did not include an a priori, theoretically unrelated
marker in our survey. More specifically, we used the second-
smallest positive correlation (rM2) between the manifest vari-
ables in our main effects model as a conservative indicator of
common method variance. We did not consider the control
variables (see also Auh et al. 2011). In our sample, we identi-
fied the correlation between the last item of the horizontal
dispersion measure and the first item of price adaptation (rM2
¼ .0075) as the second smallest. We analyzed the 253 correla-
tions between the manifest variables in our main effects model
before and after adjusting for rM2. Of the 175 correlations that
were initially significant at the 5% level, only two lost signifi-
cance. Compared with the results of previous studies (e.g., Auh
et al. 2011; Malhotra, Kim, and Patil 2006), these values are
rather low. From these results, we conclude that common
method bias is not a serious threat.
Endogeneity
Endogeneity can substantially affect the estimation of cause-
and-effect models based on cross-sectional survey data, partic-
ularly because the effects between the independent variables
and the dependent variable in our model could be affected by
omitted variables, selection bias, simultaneity, and measure-
ment errors (Sande and Ghosh 2018, p. 187). More specifically,
both the degree of price adaptation and how firms organize
their pricing when doing business with an export market are
not randomly chosen strategy alternatives. They should be
affected by a multitude of firm-, industry-, and country-level
factors. More specifically, export performance is not only
shaped by how firms organize and adapt their pricing (e.g.,
Leonidou, Katsikeas, and Samiee 2002), generally implying
an omitted variable bias risk. In addition, every firm should
organize and adapt pricing on the basis of the specific situation
 Table 1. Correlations and Scale Information.
Variable M SD CFI TLI SRMR CA CR AVE 1 2 3 4 5 6 7 8 9 10 11 12 13 14

1. Horizontal dispersion of pricing 7.26 3.47 1.00 .99 .00 .98 .98 .91 1.00
authorityb
c c c
2. Vertical delegation of pricing authoritya 3.74 1.69 — — — .90 .90 .75 .01 1.00
3. Intensity of internal pricing 3.34 1.69 .96 .88 .03 .92 .92 .75 .27*** .22*** 1.00
coordinationa
4. Price adaptationa 4.04 1.53 1.00 .99 .02 .84 .84 .58 .01 .27*** .04 1.00
5. Export market turbulencea 4.37 1.30 —c —c —c .72 .74 .50 .22*** .15** .41*** .02 1.00
6. Enforcing contracts rankd 2.97 1.11 — — — — — — .07 .07 .10* .03 .15** 1.00
7. Corruption perceptions rankd 3.35 1.07 — — — — — — .06 .04 .11* .32*** .15** .08 1.00
8. Competitive intensitya 5.04 1.54 —c —c —c .93 .93 .81 .20*** .02 .23*** .05 .30*** .16*** .12** 1.00
9. Foreign market ambiguitya 3.64 1.53 —e —e —e —e —e —e .18*** .00 .33*** .11* .41*** .08 .50*** .33*** 1.00
10. Customer bargaining powera 4.28 1.39 .99 .97 .02 .88 .88 .65 .22*** .14** .38*** .00 .53*** .06 .07 .45*** .37*** 1.00
11. Contract specificitya 5.23 1.37 .93 .80 .05 .81 .82 .53 .18*** .02 .26*** .00 .22*** .06 .07 .18*** .10* .32*** 1.00
12. Export modef .31 .46 — — — — — — .00 .12** .12** .17*** .08 .01 .01 .05 .07 .04 .12** 1.00
13. Export market performancea 4.49 1.12 .99 .96 .02 .87 .87 .63 .11* .20*** .29*** .21*** .28*** .09 .01 .03 .10* .13** .22*** .17*** 1.00
14. Export financial performancea 4.55 1.15 1.00 1.00 .01 .93 .93 .78 .11* .20*** .18*** .24*** .19*** .04 .05 .03 .04 .04 .10* .14** .73*** 1.00

*p < .10.
**p < .05.
***p < .01.
a
Underlying items assessed on seven-point rating scales.
b
Underlying items assessed on five-point rating scales.
c
Latent construct with no degrees of freedom.
d
Natural logarithm of the rank.
e
Formative index.
f
Binary variable (0 ¼ direct, 1 ¼ indirect).
Notes: Two-tailed tests of significance.CA ¼ Cronbach’s alpha; CR ¼ composite reliability; AVE ¼ average variance extracted.

83
84
and the expectations concerning the performance implications
of strategic choices, leading to essential heterogeneity or “slope
endogeneity” concerning the effect of the independent vari-
able(s) on the dependent variable (Hult et al. 2018; Sande and
Ghosh 2018, p. 190).
The most common approaches to address these issues are
instrumental variable (IV) estimation techniques or control
function approaches (e.g., Angrist and Pischke 2009; Sande
and Ghosh 2018). In addition, instrument-free approaches such
as the use of Gaussian copulas have been developed (e.g.,
Papies, Ebbes, and van Heerde 2017; Park and Gupta 2012).
We carefully evaluated our available survey measures and
secondary data sources. However, we could not identify appro-
priate (i.e., relevant and exogenous) instruments for the inde-
pendent variables in our model using our primary and
secondary data. Thus, we refrained from implementing an IV
approach because “the cure (ill-chosen IVs for example) can be
worse than the disease” (Papies, Ebbes, and van Heerde 2017,
p. 620). In addition, we evaluated the applicability of the Gaus-
sian copula approach as an instrument-free approach to account
for endogeneity. However, we could not apply this approach
because the nonnormality assumption does not hold for our
independent variables. To address endogeneity at least to some
extent, we included a large set of control variables in our model
(Germann, Ebbes, and Grewal 2015, p. 4).
Control Variables
We initially included industry dummy variables to account for
structural industry differences and country dummy variables
for the eight most important export markets to account for
potential specifics of these strongly represented markets. In
addition, we included the firm’s export mode (direct vs. indi-
rect; e.g., Westjohn and Magnusson 2017). We also included
competitive intensity and foreign market ambiguity because
they affect the specific form of export pricing policy imple-
mentation that is chosen (Obadia 2013). In addition, competi-
tive intensity affects both export market and financial
performance (Morgan, Katsikeas, and Vorhies 2004). In a sim-
ilar vein, the customers’ bargaining power should affect the
distribution of rents between suppliers and customers and the
prices and margins negotiated (Gaski 1984). Contract specifi-
city is a key aspect of international interfirm governance, cap-
turing the level of explicitness, specification, and precision of
contractual agreements with customers (Griffith and Zhao
2015, p. 22).
Results: Hypothesis Testing
We used regression analysis to test the hypotheses on our main
and moderating effects. We used an ordinary least squares
estimator and heteroskedasticity-robust standard errors. Table 2
summarizes our results. The two facets of export performance,
that is, market and financial performance, served as our depen-
dent variables. We initially estimated a baseline model includ-
ing the control variables. To address our main effects
Journal of International Marketing 27(1)
hypotheses, we then estimated a model (Model 1) with hori-
zontal dispersion of pricing authority, vertical delegation of
pricing authority, intensity of internal pricing coordination, and
price adaptation as independent variables. For market (finan-
cial) performance, our main effects model explains 24% (21%)
of the variance of export performance. The values of the var-
iance inflation factors are well below 10; therefore, we con-
clude that multicollinearity is not an issue (Myers 1990).
We find no support for H1 because the corresponding
effects concerning the horizontal dispersion of pricing author-
ity are nonsignificant for both market (b ¼ .01, p > .10) and
financial (b ¼ .06, p > .10) export performance (Table 2). We
find a significant positive effect of vertical delegation on
export financial performance (b ¼ .13, p < .05) but not on
market performance (b ¼ .08, p > .10). We thus find partial
support for H2. The opposite holds for the intensity of internal
pricing coordination: we find a significant effect on market
performance (b ¼ .15, p < .05) but not on financial perfor-
mance (b ¼ .11, p > .10). For price adaptation and H4, the
support is more consistent (bmarket ¼ .14, p < .10; bfinancial ¼
.18, p < .05).
We also ran two structural equation models with the control
variables as determinants of both the four key independent
variables and our two export performance measures. Both mod-
els have a good fit to the underlying data (market performance:
w2/d.f. ¼ 1.49, CFI ¼ .94, TLI ¼ .93, RMSEA ¼ .04, SRMR ¼
.04, r2 ¼ .29; financial performance: w2/d.f. ¼ 1.40, CFI ¼ .96,
TLI ¼ .94, RMSEA ¼ .04, SRMR ¼ .04, r2 ¼ .23). When
controlling for the effects of the control variables on both the
dependent and our independent variables, the effect of horizon-
tal dispersion on export performance is again nonsignificant
(bmarket ¼ .02, t ¼ .40, p > .10; bfinancial ¼ .05, t ¼ .86,
p > .10). The other three independent variables have positive
and significant effects consistent with our hypotheses: vertical
delegation (bmarket ¼ .14, t ¼ 2.15, p < .05; bfinancial ¼ .16,
t ¼ 2.49, p < .05), intensity of internal pricing coordination
(bmarket ¼ .15, t ¼ 2.01, p < .05; bfinancial ¼ .14, t ¼ 1.89,
p < .10), and price adaptation (bmarket ¼ .17, t ¼ 2.44, p < .05;
bfinancial ¼ .21, t ¼ 3.07, p < .01). These results provide addi-
tional support for H2 through H4.
To examine our moderation hypotheses, we included the
moderators and all interactions between the moderator and our
independent variables in the regression models (Table 2). We
mean-centered the independent variables before computing the
interaction terms to enhance the interpretability of our results.
With respect to the moderating role of export market turbu-
lence, we find a positive and significant interaction between
export market turbulence and the intensity of internal pricing
coordination for both market (b ¼ .14, p < .05) and financial
(b ¼ .20, p < .01) export performance.
To further examine this interaction, we plotted the effect of
intensity of internal pricing coordination on export perfor-
mance for one standard deviation below and one standard
deviation above the mean of export market turbulence. The
results show that in highly turbulent export markets, intensity
of internal pricing coordination is positively related to export
 Table 2. Results of Regression Analysis.
Basic Model Main Effects Model Moderating Effects Model

Dependent Variable: Export Performance Market Performance Financial Performance Market Performance Financial Performance Market Performance Financial Performance

t- t- t- t-
Independent variable B (SE) Beta Value B (SE) Beta Value B (SE) Beta Value B (SE) Beta Value B (SE) Beta t-Value B (SE) Beta t-Value

Constant 3.65 (.45) 4.48 (.43) 3.05 (.49) 3.60 (.47) 4.17 (.26) 4.40 (.30)
Horizontal dispersion of pricing authority (H1) .00 (.02) .01 .15 .02 (.02) .06 .80 .02 (.03) .06 .71 .02 (.03) .05 .67
Vertical delegation of pricing authority (H2) .06 (.04) .08 1.26 .09 (.04) .13 2.04** .04 (.04) .05 .82 .06 (.04) .09 1.40
Intensity of internal pricing coordination (H3) .10 (.05) .15 2.16** .08 (.05) .11 1.50 .03 (.04) .05 .74 .01 (.05) .02 .22
Price adaptation (H4) .10 (.05) .14 1.94* .14 (.05) .18 2.53** .10 (.05) .14 1.87* .11 (.05) .14 2.00**
Horizontal dispersion of pricing authority  Export market turbulence (H5a) .01 (.02) .06 .66 .01 (.02) .02 .37
Vertical delegation of pricing authority  Export market turbulence (H5b) .01 (.03) .03 .42 .00 (.03) .00 .08
Intensity of internal pricing coordination  Export market turbulence (H5c) .06 (.03) .14 2.32** .09 (.03) .20 3.66***
Price adaptation  Export market turbulence (H5d) .01 (.04) .01 .20 .01 (.03) .03 .40
Export market turbulence .23 (.07) .27 3.44*** .26 (.06) .30 4.27***
Horizontal dispersion of pricing authority  Enforcing contracts rank (H6) .04 (.02) .14 2.23** .03 (.02) .09 1.50
Vertical delegation of pricing authority  Enforcing contracts rank .01 (.04) .01 .16 .01 (.04) .02 .27
Intensity of internal pricing coordination  Enforcing contracts rank .06 (.04) .10 1.52 .05 (.04) .08 1.27
Price adaptation  Enforcing contracts rank .02 (.05) .03 .41 .04 (.04) .07 1.03
Enforcing contracts rank .03 (.11) .03 .28 .00 (.01) .00 .00
Horizontal dispersion of pricing authority  Corruption perceptions rank .01 (.02) .04 .52 .01 (.02) .03 .41
Vertical delegation of pricing authority  Corruption perceptions rank (H7) .00 (.04) .00 .07 .01 (.04) .02 .34
Intensity of internal pricing coordination  Corruption perceptions rank .05 (.04) .08 1.43 .04 (.04) .06 .94
Price adaptation  Corruption perceptions rank .01 (.05) .01 .15 .01 (.05) .01 .22
Corruption perceptions rank .22 (.16) .21 1.36 .12 (.21) .11 .57
Control Variables
Competitive intensity .06 (.05) .09 1.33 .05 (.05) .07 1.08 .06 (.05) .09 1.32 .05 (.05) .07 1.14 .08 (.05) .11 1.72* .06 (.05) .08 1.21
Foreign market ambiguity .04 (.05) .05 .73 .06 (.06) .08 1.01 .02 (.05) .03 .40 .05 (.06) .07 .84 .01 (.05) .00 .03 .01 (.06) .01 .10
Customer bargaining power .06 (.05) .08 1.16 .07 (.06) .08 1.15 .02 (.05) .02 .31 .11 (.06) .14 1.92* .06 (.06) .07 .95 .21 (.06) .26 3.47***
Contract specificity .14 (.06) .17 2.44** .08 (.05) .10 1.64 .12 (.06) .15 2.17** .07 (.05) .09 1.41 .11 (.05) .14 2.27** .05 (.05) .06 1.01
Export mode .28 (.14) .11 1.98** .27 (.15) .11 1.75** .17 (.13) .07 1.25 .13 (.14) .05 .92 .15 (.13) .06 1.16 .09 (.14) .04 .65
R2 .19 .14 .24 .21 .34 .30
n 295 295 295 295 289 289

*p < .10.
**p < .05.
***p < .01.
Notes: Two-tailed tests of significance. Industry dummy variables were included for all items, and country dummy variables were included for the eight most frequent export markets.

85
86 Journal of International Marketing 27(1)

A: Effects of Internal Price Coordination and Market Turbulence on Export Performance

4.8 5.0

4.6 4.8
Export Market Performance

Export Financial Performance

4.4 4.6

4.2 4.4

4.0 4.2

3.8 4.0

3.6 3.8
Low Internal Price High Internal Price Low Internal Price High Internal Price
Coordination Coordination Coordination Coordination

Low export market turbulence Low export market turbulence

High export market turbulence High export market turbulence

B: Effects of Horizontal Dispersion and Difficulty of Contract Enforcement on Export Performance

5.0 5.0
Export Market Performance

Export Financial Performance

4.8 4.8

4.6 4.6

4.4 4.4

4.2 4.2
Low Horizontal Dispersion High Horizontal Dispersion Low Horizontal Dispersion High Horizontal Dispersion

Low enforcing contracts rank Low enforcing contracts rank

High enforcing contracts rank High enforcing contracts rank

Figure 2. Interpretation of moderating effects.

performance, whereas the opposite holds when export market
turbulence is low (Figure 2, Panel A). However, export market
turbulence does not interact with our other independent vari-
ables (Table 2). Thus, we find support for H5c but not for H5a,
H5b, or H5d.
Concerning the export countries’ ranking in terms of enfor-
cing contracts, we find a significant and positive interaction
with horizontal dispersion of pricing authority for export mar-
ket performance, as hypothesized (b ¼ .14, p < .05). With
respect to financial export performance, we only find direc-
tional support (Table 2). More specifically, high horizontal
dispersion pays off when firms are exporting to countries in
which enforcing contracts is difficult, in support of H6. The
opposite holds when firms are exporting to countries with no
major contract enforcement issues (Figure 2, Panel B). Con-
cerning the export market’s ranking in terms of corruption,
however, we do not find evidence for H7, the hypothesis that
delegation of pricing authority to the sales force is positively
related to firm performance because corruption risk increases
(bmarket ¼ .00, p > .10; bfinancial ¼ .01, p > .10).
Discussion
The goal of this study was to better understand how firms
should adapt and organize their pricing in export business to
positively affect their export performance. Although pricing in
an exporting context is a key topic of international marketing
research, prior work has largely neglected the issue of how to
manage pricing (e.g., Dutta, Zbaracki, and Bergen 2003; Sousa
and Bradley 2009). To address this research void, we con-
ducted a large-scale survey study, to which we added
country-level secondary data. In particular, we examined how
Hofer et al.
the horizontal dispersion and vertical delegation of pricing
authority, the intensity of the firm’s internal pricing coordina-
tion, and the degree of price adaptation relate to a firm’s export
performance. In addition, we examined the moderating influ-
ence of export market turbulence, legal issues that hinder con-
tract enforcement, and corruption.
Theoretical Implications
The results of our study do not corroborate the hypothesized
relationship between horizontal dispersion of pricing authority
and vertical delegation of pricing authority, for which we found
only partial support; thus, our results imply that the results
obtained in previous studies in a national context (Homburg,
Jensen, and Hahn 2012) do not hold in an international market
environment. One reason could be that international pricing
decisions are more complex, and therefore, the necessity of
centralizing authority at the firm headquarters might be more
important. Concerning the horizontal dispersion of pricing
authority, the reason for the nonsignificant result might be that
spreading pricing authority over various departments does not
address the challenges specifically arising from the interna-
tional nature of business operations. Thus, our findings extend
the current knowledge about the influence of organizational
aspects of export pricing on export performance and offer new
opportunities for this stream of research.
Our study provides partial support for a positive relationship
between the intensity of internal pricing coordination and
export market performance. To the best of our knowledge, this
empirical study is the first to include the construct of intensity
of internal pricing coordination and investigate this relation-
ship in an international context. Intensity of internal pricing
coordination, as Homburg, Jensen, and Schuppar (2004) con-
ceptualize it, includes items related to the number of employees
and departments taking part in pricing decisions, thus high-
lighting the positive aspects of intrafirm cooperation. Regard-
ing price adaptation, we found a positive effect on export
financial performance. Therefore, our study contributes to the
literature arguing in favor of the adaptation of marketing activ-
ities (e.g., Calantone et al. 2004; Cavusgil and Zou 1994) and
pricing in particular.
Concerning the moderating effect of export market turbu-
lence, the results reveal that the interaction between intensity of
internal pricing coordination and export market turbulence has
a significant and positive effect on export financial and market
performance. Specifically, in highly turbulent export markets,
the intensity of internal pricing coordination contributes to
export financial performance. This point is consistent with pre-
vious findings (e.g., Hanvanich, Sivakumar, and Hult 2006)
and therefore adds to current knowledge. The results do not
support the interactions of horizontal dispersion of pricing
authority, vertical delegation of pricing authority, or price
adaptation, respectively, with export market turbulence. The
reason might be that the general effect of market turbulence
on business operations in foreign target markets is not as strong
as asserted. Firms should be wary of the challenges and take
87
actions to cope with them, investing time in research, analysis,
and preparation.
Furthermore, we included contract enforcement and corrup-
tion perception rankings derived from secondary data research
as moderators in our model. The results show partial support
for the hypothesized positive relationship between horizontal
dispersion and the difficulty of enforcing contracts. Regarding
corruption, we found no support for the effect of delegation of
pricing authority, which adds to calls for additional research on
the topic of corruption in the international business field (e.g.,
Cuervo-Cazurra 2016) to further investigate and clarify the
antecedents and consequences of corruption.
Managerial Implications
Our findings lead to several managerial implications. First,
firms should include multiple employees and departments in
export pricing decisions. In other words, decision makers
must know which departments (e.g., marketing, sales, and/
or finance) take part in the pricing process and know how to
coordinate the departments, their members, and potential goal
conflicts between them. Moreover, managers should be aware
that export pricing decisions require continuous and coordi-
nated efforts to set prices. However, these complex processes
are likely to result in superior export performance. Particu-
larly when export markets are turbulent, a considerable num-
ber of employees and departments should be involved in
pricing decisions.
Second, when targeting export markets, managers should
consider adopting price discounts, margins, and credit con-
cessions. In a similar vein, accounting for specific market
characteristics (i.e., adaptation) when determining the pricing
strategy might enhance export performance. Therefore, man-
agers must be aware of these specific market characteristics,
fast-changing environments, and other developments and
requirements in the export markets because they might call
for adaptation strategies.
Third, high horizontal dispersion of pricing authority is
advisable for firms exporting to countries in which the enforce-
ment of contracts is challenging. Thus, managers should be
able to delegate responsibility to allow for a high level of dis-
persion of pricing authority. In contexts in which contract
enforcement is not an issue, a high level of horizontal disper-
sion of pricing authority is likely not necessary.
Limitations and Further Research
Several limitations of this study must be mentioned. First, we
measured performance on a subjective basis (i.e., the percep-
tion of CEOs and marketing and export managers), which is
consistent with current international marketing research (e.g.,
Westjohn and Magnusson 2017). We did not include objective
performance data, because obtaining these data would not have
been feasible for various reasons, including a lack of archival
data. Research suggests that a subjective measurement of per-
formance is acceptable under certain conditions (Dess and
88 Journal of International Marketing 27(1)

Robinson 1984; Richard et al. 2009). However, we did include
objective data on the foreign target markets derived from sec-
ondary sources (i.e., World Bank and Transparency Interna-
tional databases). Second, we could not find support for all
of our moderating hypotheses. In addition, we could not iden-
tify further contingencies between the independent variables as
well as between our independent variables and other country-
level indicators such as market potential. Thus, other and more
complex contingencies, such as the firm’s stage in the inter-
nationalization process, might influence the effectiveness of
organizational aspects of pricing (Chabowski et al. 2018).
Third, we performed the empirical study with respect to firms
located in Germany and Austria, which limits generalizability.
Assessing firms in other countries might change our findings.
Fourth, we employed a cross-sectional research design, which
might not be the ideal means of accounting for the dynamic
nature of the international business environment. Fifth, we
relied on a key informant approach. Including multiple infor-
mants in the data collection phase might lead to other findings.
Sixth, variables other than those we included in our conceptual
model, for example, product-related constructs, might affect
export performance. Finally, we focus on the organizational
aspects of export pricing. However, export pricing is diverse
and interacts with the questions of direct vs. indirect exporting,
the use of Incoterms, the role of transfer prices, and contract-
ing, legal, and tax issues.
These limitations have several implications for future
research. First, to support findings and to broaden the perspec-
tive, future studies should include both subjective and objective
data in terms of export performance. Second, further research
could examine other empirical settings (i.e., other countries and
continents) to determine what similarities and differences exist.
Third, a longitudinal approach to capture the dynamic nature of
the international business environment might be advisable for
future studies. This approach could also alleviate remaining
concerns concerning the endogeneity of our independent vari-
ables. Although we included a large set of control variables to
address the endogeneity problem to some extent, future
research could apply a more rigorous approach. Fourth, a
multi-informant study could examine cross-functional issues
in more detail. However, we are confident that our informants
were sufficiently knowledgeable to evaluate export pricing and
the related organizational-level aspects. Fifth, “exporting” and
pricing of services in an international context deserve more
attention (Kienzler and Kowalkowski 2017). Whereas we
focused on exporting products, other researchers could conduct
studies in the service industry. Sixth, further research could
analyze at a more fine-grained level how several specifics of
export price setting, such as the use of Incoterms, transfer
prices, and contracting, legal, and tax issues, interact with
marketing-related concepts. This research could identify fur-
ther contingencies in terms of export performance. This sug-
gestion also holds for the topic of corruption. Finally, it would
be interesting to study the effect of export pricing practices on
diverse indicators of export performance to assess specific
company performance trade-offs (Katsikeas et al. 2016).

Appendix A. Sample Composition

Austria Germany Other Overall

(n ¼ 108) (n ¼ 173) (n ¼ 14) (n ¼ 295)

Industry % % % %

Chemicals and electronics 23.2 24.9 28.6 24.4

Machinery 19.4 22.5 35.7 22.0
Consumer goods 13.9 16.8 7.1 15.2
Construction 12.0 4.0 0.0 6.8
Wood, stone, ceramics, and glass 8.3 1.7 7.1 4.4
Automotive 1.8 6.4 0.0 4.4
Heavy industry 2.8 5.2 0.0 4.1
Nonferrous metal 1.8 4.0 0.0 3.0
Utilities 0.0 2.3 0.0 1.4
Other industries 16.7 12.1 21.4 14.2

Number of Employees

<10 employees 22.2 0.0 0.0 8.1

10–49 employees 38.9 11.0 7.1 21.0
50–249 employees 22.2 34.1 21.4 29.2
250–499 employees 5.6 20.2 14.3 14.6
500 or more employees 11.1 34.7 57.1 27.1
(continued)
Hofer et al. 89

Appendix A. (continued)

Austria Germany Other Overall

(n ¼ 108) (n ¼ 173) (n ¼ 14) (n ¼ 295)

Annual Revenue (in €)

<10 million 55.6 11.0 14.3 27.5

10–49.9 million 17.6 26.0 21.4 22.7
50–399.9 million 14.8 31.2 21.4 24.7
400 million or more 3.7 29.5 35.7 20.3
Not available 8.3 2.3 7.1 4.8

Informants’ Functional Background

Sales 31.5 42.2 71.4 39.7

CEO/general management 35.2 25.4 0.0 27.8
Export 17.6 11.6 7.1 13.6
Product management 0.9 13.9 7.1 8.8
Marketing 4.6 6.9 14.3 6.4
Other 10.2 0.0 0.0 3.7

Informants’ Exporting Experience

<5 years 14.8 15.0 14.3 14.9

5–9 years 25.9 37.6 35.7 33.2
10–14 years 15.7 21.4 28.6 19.7
15–19 years 14.8 13.3 0.0 13.2
20 or more years 28.7 12.7 21.4 19.0

Appendix B. Measures
Measures (Scale Anchors; Key Sources) FL t-Value

Horizontal Dispersion of Price Authority

Please rate the influence of those firm departments (sales, marketing/product management, export, and accounting) involved in pricing
decisions on the following aspects.
(seven-point scale: 1 ¼ “very low,” and 5 ¼ “very high”; Homburg, Jensen, and Hahn 2012)

Strategic price positioning of new products .96 157.16

Adaptation of list prices/price guidelines .95 152.59
Design of discount and bonus terms .95 144.56
Monitoring and analyzing prices .95 145.93

Vertical Delegation of Price Authority

(seven-point scale: 1 ¼ “strongly disagree,” and 7 ¼ “strongly agree”; Homburg, Jensen, and Hahn 2012)

Sales employees in the decentralized/local units are autonomous in their pricing decisions. .84 37.18
The sales force has much freedom to set discounts. .92 50.85
Sales employees can make pricing decisions quite independently and flexibly. .95 38.82

Intensity of Internal Pricing Coordination

(seven-point scale: 1 ¼ “strongly disagree,” and 7 ¼ “strongly agree”; adapted from Homburg, Jensen, and Schuppar 2004)

Internally many employees contribute to the price decision. .82 36.78

Many departments have an influence on prices. .92 60.76
It takes several internal decisions to determine the offer prices. .88 49.35
Generally, our internal coordination processes to determine prices are very complex. .83 38.44

Price Adaptation
Please rate the following price-related features with respect to your main export market compared with your home market.
(seven-point scale: 1 ¼ “very different,” and 7 ¼ “very similar”; Sousa and Bradley 2009)
(continued)
90 Journal of International Marketing 27(1)

Appendix B. (continued)

Measures (Scale Anchors; Key Sources) FL t-Value

Price discount policy .78 26.11

Margins .82 29.84
Credit concession .66 17.03
Determination of pricing strategy .76 23.54

Export Market Turbulence

(seven-point scale: 1 ¼ “strongly disagree,” and 7 ¼ “strongly agree”; Jaworski and Kohli 1993; Murray, Gao, and Kotabe 2011)

Customers’ product preferences change quite a bit over time. .73 14.23
Customers tend to look for new products all the time. .85 16.09
Customers demand products that they have never bought before. .50 9.56

Competitive Intensity
(seven-point scale: 1 ¼ “strongly disagree,” and 7 ¼ “strongly agree”; Homburg, Grozdanovic, and Klarmann 2007)

Competition in our industry is cutthroat. .93 68.00

Our competitors are relatively strong. .89 56.82
Competitive activities are a hallmark in our industry. .88 53.12

Foreign Market Ambiguity

To what extent are the following aspects of the markets a problem for your company?
(seven-point scale: 1 ¼ “no problem at all,” and 7 ¼ “a major problem”; adapted from Obadia 2013)

Formative index across the following dimensions: culture, language, way of thinking of the people, how business is organized, N.A. N.A.
personal relationships, economic environment, political environment, legal environment

Customer Bargaining Power

(seven-point scale: 1 ¼ “strongly disagree,” and 7 ¼ “strongly agree”; Slater and Narver 1994)

Our customers have high bargaining power. .78 28.18

Our customers can play off suppliers against each other. .83 33.98
Our customers can impose something on their suppliers. .76 25.30
We operate in a demand-based environment, with powerful customers. .85 37.47
Contract Specificity
How specific are the contractual features of agreements with your customers?
(seven-point scale: 1 ¼ “not very specific,” and 7 ¼ “very specific”; adapted from Griffith and Zhao 2015)

Customer specifications .76 20.77

Implementation procedures .70 17.64
Financial conditions .71 18.21
Legal conditions .74 19.52

Export Performance
Please evaluate your firm’s export performance over the past year relative to your major competitors.
(seven-point scale: 1 ¼ “much worse,” and 7 ¼ “much better”; Morgan, Katsikeas, and Vorhies 2012)

Export market performance

Market share growth .90 49.42

Growth in sales revenue .88 45.87
Acquiring new customers .60 14.64
Increasing sales to existing customers .77 27.19

Export financial performance

Export venture profitability .89 56.86

Return on investment .87 51.29
Export venture margins .87 50.27
Reaching export venture financial goals .90 60.85
Notes: FL ¼ standardized factor loading (confirmatory factor analysis); N.A. ¼ not applicable.
Hofer et al.
Acknowledgment
The authors wish to thank Martin E. Frantz for supporting the data
collection.
Associate Editor
Kelly Hewett served as associate editor for this article.
Declaration of Conflicting Interests
The author(s) declared no potential conflicts of interest with respect to
the research, authorship, and/or publication of this article.
Funding
The author(s) received no financial support for the research, author-
ship, and/or publication of this article.
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