Article Review

Antecedents of Performance of Multi-level Channels in

Transitional Economies

For Partial Fulfillment of the Course Marketing Channels

Management (MAMM 502-2)

Prepared by: Million Tekeste

Tenagnework Taye GSE/0109/03

Tinbit Worku GSE/0110/03

Wossen Belete GSE/0116/03

Yenus Fedlu GSE/0118/03

Yetseday Haregewoin GSE/0119/03

Submitted to: Getie Andualem (Dr.)

Addis Ababa University School of Commerce

Department of Marketing Management
Post Graduate program

October 2011

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Table of Contents
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Full Bibliographic Reference

  Authors: Laura Salciuviene (Lancaster University Management School, Lancaster,

UK)
: James Reardon (Monfort College of Business, University of Northern

Colorado, Greeley, Colorado, USA), and

: Vilte Auruskeviciene (ISM University of Management and Economics,
Vilnius, Lithuania)
  Title: Antecedents of performance of Multi-Level Channels in Transitional
Economics
  Journal Name: Emerald, Basic Journal of Management
  Volume: 6 No. 1

  Page number: 89-104

  Year : 2011

  Key words: Multilevel marketing, distribution channels and markets, relationship

marketing, Lithuania.
  Paper type: Research paper

1.  Abstract

All of the necessary information required for a review was presented. In our opinion, it could
have been better if some more key words had been used.

2. Introduction

This article, “Antecedents of performance of multi-level channels in transitional economies”

written by Laura Salciuviene (Lancaster University Management School, Lancaster, UK),
James Reardon (Monfort College of Business, University of Northern Colorado, Greeley,

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Colorado, USA), and Vilte Auruskeviciene (ISM University of Management and Economics,
Vilnius, Lithuania); appraises the antecedents of channel performance in a multi-level
marketing (MLM) channel.

The title of the research, “Antecedents of performance of multi-level channels in transitional

economies”, matches with the content of the research. For instance, when we see the theoretical
background part, it covers about

Introduction

It is our belief that the authors’ claims of “ were supported. However, the authors’ use of 
“ were
citations was incorrect in the first paragraph. Towards the end of the first citation, “Chen et al.,

1998”  (Chen et al., 2000a, b) should have listed all of the authors “… Chen, Y.F., Drezner, A.,
Ryan, J.K. and Simchi-Levi, D. 1998 or 2000a, b ….)  

the various marketing strategic composites, based upon the linkage of domestic and export
marketing strategies of small, medium sized manufacturing
manufacturing firms. This study has contributed to
to
the literature on export marketing
marketing strategy in several ways. First, it has demonstrated that
common strategic composites are used by firms operating out of different domestic markets.
Second, it illustrates the nature of the linkages between domestic and export marketing
strategies. Third, the study is focused on the strategic behavior of small and medium sized
exporting firms, rather than the larger organizations often found in empirical work upon
exporters. Finally, the study has illustrated the important
important role played by certain environmental
factors in determining the selected strategy.

The authors are keen to point out the contention that a common taxonomy of strategic
composites exists for SMEs involved in manufacturing.

In this paper it is argued that the congruence between two domains - domestic marketing strategy

and export marketing strategy - plays a role in determining the performance of an export venture.

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The paper seeks to determine whether a variety of strategic types exist, and if so, whether export
performance differs across these types and also to see the impact if any that the congruence
between domestic and export strategies has upon export performance. The research is conducted
within the context of small, medium sized enterprises since resource issues are more critical for
such organizations.

2. Statement of the Problem

The basic question of interest in this research concerns the impact, if any, that the fit between
these two strategies (domestic and export) has upon export performance. It is argued that the
congruence of the domestic marketing strategy utilized by the firm and the adopted export
marketing strategy plays a crucial role in determining the performance of an ex
export
port venture.

The article focuses to fill the gap that was not answered through literatures by trying to answer to
the following question:
  What is the impact of the relationship between domestic and export strategies on export
performance?
  What actual marketing strategic combinations could be used by firms for the smooth
performance of domestic and export activities?
  Are there particular composites of domestic and export marketing strategies used by firms
that operate in their home market and also export? If there are, what is the nature of these
composite strategies?
  Are there common strategic composites used by exporters from
fr om different countries?
  What role, if any, does the type of industry, and the type of export market play in determining
the choice of strategy for an exporting firm?
  Does export performance differ across the strategic composites, for each of the national
groups of exporters?

3. Objectives
3.1 General Objective 

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The general objective of this Article is to examine the strategic behavior of SMEs that export,
and whether that behavior impacts upon the performance of an export venture. The article is also
focuses on the relationship between competitive strategy and performance, whether this interface
is affected by the national origin of the firm, and investigates the strategy-performance interface
for SMEs.

3.2 Specific Objectives

The specific objectives of this study are:
  To investigate if there are particular composites of domestic and export marketing


strategies used by firms that operate in their home market and also export. If there are, to
know what the nature of these composite strategies is.
  To look into common strategic composites used by exporters from different countries.


  To explore the role, if any, that the type of industry, and the type of export market play in


determining the choice of strategy for an exporting

ex porting firm.
  To examine whether export performance differ across the strategic composites, for each


of the national groups of exporters.

  To investigate the strategy-performance interface for SMEs.


Setting the above specific objectives helps the researcher to fulfill the gap that was not covered
by literatures.

4. Hypothesis

The following hypotheses were addressed by the study:

  The congruence of the domestic marketing strategy utilized by the firm and the adopted


export marketing strategy might play a crucial role in determining the performance of an
export venture.
  Some of the results obtained in the standardization/adaptation literature are applicable to


small and medium sized enterprises but it might also be applicable for exporting firms
that are the major form of foreign market entry.

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5. Methodology/Research Design

5.1 Sampling Techniques and Population Size 

In this article, the authors have relied on the data collected from the UK and Canada firms and

from the related studies done by different scholars. The study classifies its population in to two
strata:
1. Export contacts in SMEs manufacturing firms in Canada.
2. Export contacts in SMEs manufacturing firms in UK.
The authors used WIN database (Export database compiled by Industry Canada), and FAME
database (a financial database containing information on major public and private British
companies) with regard to the huge volume of data about exporting firms that are used to select
sample firms.

In the Canadian survey out of 30,000 exporters list found from WIN EXPORTS database, 517
firms were randomly selected as sample, and in the UK survey out of 270,000 firms found in
FAME database 600 firms were randomly selected as sample. In this article firms
firms were sampled
according to the following criteria:

Canadian survey:
  total annual sales less than $10 million;


  number of employees less than 100;



  export sales of between 5-75 per cent of total sales.



UK survey:
  Total annual sales less than 5 million BGP;


  Number of employees less than 100;



  Export sales between 5-75 per cent of total sales.



The researcher believes that the last criterion was imposed because it was necessary to sample
firms that were neither exclusively domestic nor totally internationally oriented, to enable the
investigation of potential relationships between domestic and export strategies.

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Table 1: Samples Firms taken from Each Country

Population No. of Exporters Sample %

Canadian 30,000 517 1.7%

UK 270,000 600 0.22%

Total 300,000 1,117 1.92%

5.2 Data Collection 

The data for the study were collected through mail survey with questionnaires being sent to
export contacts in random samples of small and medium sized manufacturers. Hence out of the
total of the Canadian sample 227 responses were obtained, of which 207 were usable, giving a
total response rate of 40%, and out of the total UK samples 173 responses were received of 

which 160 (26.6 %) were usable. Even though the study uses different measures to reduce the
effects of non-response in both surveys like promising to send a summary of the findings to
respondents, waiting for late respondents to complete and return the questionnaire, etc, it
couldn’t reduce the non-respondability of the questionnaires.

Two groups of strategic variables were

were included in the study. The first reflected
reflected aspects of 
domestic marketing strategy whereas the second measured the firms export marketing strategy.
Both variables were assessed in terms of scope and competitive positioning.

5.3 Data Analysis & Interpretation

In the article, a total of 29 variables (17 for domestic and 12 for export) were used to assess the
domestic and export marketing strategies of SMEs to avoid the likely problems in interpreting
the results for 29 variables the researchers decides to use factor analysis to achieve some
parsimony. The 29 strategy variables were standardized and submitted to a factor analysis. For
both data sets, nine factors were isolated. For the Canadian exporters, four of the nine factors are
concerned with aspects of export marketing strategy and the remaining five explains aspects of 

domestic marketing strategy. For UK data sets, three of the nine factors are concerned with

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aspects of export marketing strategy and the remaining six describes aspects of domestic
marketing strategy. Also Cluster analysis was applied to factors isolated in each data set to try to
isolate strategic composites.

The domestic marketing strategy was measured using the instrument developed by Dess and
Davis (19984; Robinson and Pearce (1988) and McDougall and Robinson, 1990). Whereas
export marketing strategy was measured using the instrument developed by (Cavusgil and Zou,
1994).

A smaller sample of both countries exporting firms would have

h ave aided in the data analysis,
particularly when looking for possible correlation between domestic and export strategies of 
SMEs. The results reported
reported in this article
article referred to this population of firms, and not to all
small, medium sized manufacturers involved in exporting. This shows that it is not possible to

infer the findings to the whole SMEs.

The following analyses were done using different statistical tools throughout the study:
   Factor analysis was done to assess the domestic and export marketing strategies of SMEs.
Also Cluster analysis was applied to factors isolated in each data set to try to isolate
strategic composites.

   Two statistical techniques were used to try to determine strategic types that were similar
between the national groups. First, a proximity matrix based on Euclidean distances was
calculated. Second, several post hoc tests (least significant difference (LSD) and
Scheffe's) were conducted to see which strategic dimensions did not differ significantly.

   Single factor analyses of variance were used to investigate whether there was export
performance difference among the four strategic types for both the Canadian and UK
exporters.

   The study again underscores the importance of conducting a detailed environmental

analysis when selecting a strategy. In particular, two
two environmental characteristics

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appear to be associated with strategic choice - the sophistication of the marketing

infrastructure of the export market and the degree of technological sophistication in the
industry.

  In order to explore the nature of any relationships between the environment and selected
strategic alternatives, Crosstabs and Chi-squared tests were run for each of the seven
environmental variables against the four composites for both groups of exporters.

  Crosstab analyses were done for the five export market variables indicated that one
characteristic was significantly related to the choice of strategy for both samples

In order to investigate whether similar strategic composites were used by Canadian and UK
exporters, comparisons were made between individual strategic types across the Canadian and

UK groups. One objective of this research is to investigate how domestic marketing strategy is
adapted for an export venture. Consequently, the domestic strategies used by firms in the two
national groupings were compared first. The following process was used to compare strategic
types within the national groupings.

The four Canadian strategic composites are:

  The competitor (Cluster 1):  This group consisted of 56 firms (27% of the sample). It
was characterized mainly by a relative lack of concern for developing brand identity and

for keeping promotional expenditures low in the domestic market. The emphasis is upon
maintaining current products rather than
than on product innovation. These firms provide a
broad product mix that is competitively priced. These firms have moderate market scope
and provide minimal support to the foreign channel.
  The top-end nicher (Cluster 2): This group consisted of 40 firms (10% of the sample).
This group was characterized as hiving products that had been on the market for a
considerable amount of time (on average 29 years). They believe in providing prime
product at a premium price. The highlights of their exporting strategies are: their narrow
scope, the moderate degree of product adaptation that they employ, and the relatively low
level of support that they provide to the foreign channel.

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   The innovative nicher (Cluster 3): This group consists of 44 firms (21% of the sample).
These firms employ a niche strategy in the domestic markets, with an emphasis upon new
product development, and brand recognition. They have the least amount of experience
of international markets.
   The branded broadliner (Cluster 4): This group consisting of 67 (33% of the sample).
These firms have a very broad market scope and strong concerns about developing a
brand identity. They provide average product quality at a competitive price. They are
relatively experienced in international markets.

This research generally supports the contention that a common taxonomy of strategic composites
exists for SMEs involved in manufacturing. The taxonomy covers a range of export entry
strategies encompassing both broadly based and niche targeting. Empirical evidence from two
national groups of exporters suggests that five distinct strategic composites are being used. These

are Broadliner, Top-ender, Competitor, Innovator and Value strategies. Three strategies were
common to both groups, namely the Broadliner; Top-ender; Competitor strategies.
In order to investigate whether similar strategic composites were used by Canadian and UK
exporters, the study made comparisons between individual strategic types across the Canadian
and UK groups. In this study the first comparisons were based on whether the comparable
strategies were built around commodity or specialty products. The second comparisons were
based on the dimensions of domestic strategy, initially, to check for similar strategies across
national groups.

In the article, potential effects of a variety of environmental factors like characteristics of the
industry and the potential effects of characteristics of the selected export market were examined
on the pattern
pattern of deployment of the various composites. Consequently, the effects of five
characteristics of the
the export market were examined. These were:
   The degree of legal and regulatory barriers
barriers present;
   the demand potential;
   the sophistication of the marketing infrastructure;
   the competitive intensity; and
   the degree of product exposure in the market.

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As the Article was conducted by making use of the documentary analysis and mail-out
questionnaire, its process are based on empirical evidences which provide detailed analyses. It
tries to analyze the relationships between domestic and export market strategies. The qualitative
and quantitative research design was applied for this research.

6. Major Findings

The following findings are based on the cumulative result of the analysis done on UK and
Canada sample firms:
  56(27%) of the Canada sample respondents believe that emphasis is given upon


maintaining current products

products rather than on product innovation. These firms also believe
in providing a broad product mix that is competitively priced. Moreover, these firms
firms
believe in having moderate market scope and provide minimal support to the foreign
channel.
  40(19%) of the Canada sample respondents believe in providing a prime product at a


premium price. Distributional intensity is selective rather than

than intensive. The highlights
of their strategies
strategies are: their narrow scope; moderate degree of product adaptation that
they employ, and the relatively low level of support that they provide to the foreign
channel.
  44(21%) of the Canada sample respondents employ a niche strategy in their domestic


markets, with an emphasis upon new product development, and brand recognition.
  67(33%) of the Canada respondents employ a very broad scope and strong concerns


about developing a brand identity. They provide average product quality at a competitive
competitive
price. They adapt their promotional
promotional approach to suit their target markets, and provide
moderate support in the foreign channel.

In order to investigate whether similar strategic composites were used by Canadian and UK
exporters, comparisons were made between individual strategic types across the Canadian and
UK groups.

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Domestic Strategies
  The domestic strategies adopted by these two groups are similar.


  The dimensions of domestic strategy were not significantly different on LSD tests


  Three specified domestic strategies are common across the national groups  – Broadliners,


Top-enders, and Innovators.

Export Strategies
  Both countries followed similar export strategies.


  The major differences between the two national groups were with respect to targeting and


pricing.
  Both groups followed the same export strategy.


  In the case of Innovator groups of both country: The major differences were with respect


to training for the distributor, adjustments to labeling and the number of export
customers. Canada exporters had a smaller number of export customers, placed more
emphasis on training for the foreign distributor, and did not adapt their promotion
activities as much as their UK counterparts. UK exporters use a market spreading
approach, entered more export markets than their Canadian counterparts.
  In the case of Top-ender of both groups the major differences were with respect to export


goals training and promotional support for the foreign distributor. But both groups had
similar degrees of product adaptation and tended to standardize their promotional
activities.

7. Conclusions

Based on the above findings and data analyzed, the article concluded as follows:

  The findings should be viewed as restricted since the sample was drawn from a single


industrial sector, namely manufacturing. More research across industrial sectors and
additional national economies is needed.

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  There are three specific domestic strategies that are common across the national groups


of UK and Canada – Broadliners, Top-enders, and Innovators.

  Both national groups export strategies, that small, medium sized manufacturing exporters


use three distinct composite strategies, namely the Broadliner, Top-ender, Competitor
strategies.

  This study has contributed to the literature on export marketing strategy in several ways.


First, it has demonstrated that common strategic composites are used by firms operating
out of different domestic markets. Second, it illustrates the nature of the linkages between
domestic and export marketing strategies. Third, the study is focused on the strategic
behavior of small and medium sized exporting firms, rather than the larger organizations
often found in empirical work upon exporters. Finally, the study has illustrated the
important role played by certain environmental factors in determining the selected
strategy.

  The article emphasizes that further testing is required of the reliability of the strategic


composites constructs established in this study since they are based on self reporting
measures only.

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8. Summary of the Reviewers

From the student reviewers’ point of view, this article possesses most of the entire criteria that
should be included in a scientific journal and all these elements are briefly discussed as follows;

A. Title
The authors clearly spelled out the title and so it is “Congruence of domestic and export
marketing strategies - an empirical investigation of its performance implications”.

B. Problem Statement
The researchers clearly formulated the research problems and so seek to determine whether a
variety of strategic types exists, and if so whether export performance differs across these types.

C. Objectives or Purpose of the Study

One of the main questions or problems to be answered in the research was to examine the
particular composites of domestic and export marketing strategies used by firms that operate in
their home market and also export. Throughout the research this idea was discussed separately
and together with other factors.
factors. The researchers able to show the magnitude of the relationships
that exist between the above variables. As the result the conclusion arrived at the end of the
research is conclusive and based on the empirical data which enable the main question of the

research solved. The purpose of the article is described clearly.

D. Review of Relevant Literatures

The literatures included in the articles are relevant and supportive the justifications behind this
are, the available literatures are reviewed comprehensively and they are important to depict the
view points of different authors on the title under discussion. Moreover almost all the references
are journals which help to get useful research findings and debates even though they are
published before ten years.

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E. Researcher’s Research Methodology

Since this section is the corner stone of the research, the authors of the article have consulted
primary and secondary data. The authors have clearly sated study participants that are small and
medium sized manufacturing enterprises in UK and Canada, who have the capacity to export.

The researchers clearly state the populations and also make the sample appropriately. The
authors conduct the study by using a   mail out questionnaires sent directly to the sample export
firms in both countries. prior to sending the final questionnaire to the respondents tthe
he
researchers tested the questionnaires upon a convenience sample of ten exporters and   some items
were eliminated on the grounds that they were not relevant to either the size of the firm included
in the study, or the activities of exporters.

The data analysis method is clearly explained and the researcher utilized the appropriate data

analysis methods such as factor analysis and Chi-square methods .

Empirical approach was used to conduct this research. The information collected was well
analyzed in reaching valid conclusion.  

F. Insights to Further Studies

As we see from the article, the authors suggest fruitful areas for further research. First does the

taxonomy of strategies isolated here, apply to services firms or do the distinct characteristics of 
service generates different strategies? Second, do firms switch from broadly based strategies
towards more focused strategies as they move further in to internationalization process?

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G. Review of References
References are properly used and discussed in the main body of the article as well as cited in

Harvard system. Comprehensive reference lists are

are not given in the article.
article. Based on convention

writers are recommended to incorporate forty and above texts in their work. Unfortunately in this

article only thirty four references are cited. The other problems with respect to references are that
most references are old. Based on convention ten years back texts are considered as old and
sixteen of them were written before ten year.

9. Weakness of the Articles

The weakness of the article in the minds of the reviewer includes:

  The numbers of references are not adequate and old.



  The Authors did not mention the rationales behind the selection of research site, Canada


and UK.

Our overall assessment concludes that the authors have represented the strategies in a useful way
by employing a well-structured, logical and understandable methodology.

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