JAPAN MNE Insights
Volume 5, Issue 1
July 2018

Japan Academy of Multinational Enterprises
TABLE OF CONTENTS

1. Special Essay:
Platform Strategy for
Global Markets：The
Strategic Use of Open
Standards and theManagement of Business
Ecosystems
2. Special Essay:
Evolution of International
Marketing Study in Japan:
From Export Marketing toInternational Marketing
Capability

www.mne-jp.org

Special Essay:
Platform Strategy for Global Markets：The
strategic use of open standards and the
management of business ecosystems
Hirofumi Tatsumoto, Ph.D.
Graduate School of Business Sciences,
Professor of Strategic Management,
University of Tsukuba, Tokyo, Japan

In a world being rapidly reshaped by digitalization and globalization,
the presence of platform firms is becoming increasingly conspicuous in
global markets (Gawer, 2009). This book addresses two questions
from theoretical and empirical perspectives: Why do platform firms
grow their global presence as open standards internationally prevail?;and ii) How does the growing presence of platform firms influence
global industrial structures?
The answers this book presents can be summarized as follows.
i)
Because a platform firm a) creates network effects
advantageous to the firm by actively engaging in theformation of open standards; b) gains competitive advantage
by positioning itself at the hub of transaction networks andoperating in between multiple markets and industries inadvanced and emerging countries; and c) seeks competitive
advantage using two-sided market and bundling strategies bymanaging relations with the suppliers of complementary
goods while implementing other strategies based on a special
market structure, a so-called “business ecosystem,” that has
many network effects among products.
ii)
When a platform firm implements strategies a) to c) above,
industries in emerging countries are encouraged to catch up
with the developed countries. By doing so, they trigger asudden transformation of the structure of the international
division of labor by accelerating a new structure rather thanreinforcing the existing structure (d)).

1Vol.5 Issue 1"This book addresses twoquestions fromtheoretical and empiricalperspectives: Why doplatform firms grow theirglobal presence as open
standards internationallyprevail?; and ii) How
does the growing
presence of platform
firms influence global
industrial structures? ""Chapter 1 introduces
how platform firms havemanaged to expand theirinfluence as more andmore open standards are
created in the global
economy."JAPAN MNE Insights
Although d) is a byproduct of strategies a) to c) above, this byproductmatters more to many business practitioners and policymakers thanthe platform strategies.
The difficulty in research on platform business stems from theinterdisciplinary nature of platform studies. Management scholars
started the platform studies in the 1990s (Cusumano, 1998; Gawer &Cusumano, 2002). Most of the studies focused on the secret of platformbusiness as a successful business model while completely disregarding
the dimension of internationality (e.g., international standards or
differences between the developed and developing economies). In the
2000s, economic studies using mathematical models to explain themechanism of platform strategy based on the network effects became
the mainstream on this topic (Rochet & Tirole, 2003; Hagiu, 2006;
Eisenmann, Parker & Van Alystyne, 2011). These studies, however,neglected the question of what elicits such network effects while priorstudies reported that the industry-wide standardization are a powerfulsource of network effects (David & Greenstein, 1990). This bookattempts to fill in these gaps by demonstrating that platform firms
generate network effects through the twofold approach of creating
open international standards to open up the technological andindustrial contexts, and exploiting network effects by positioning
themselves at the hub between industries in developed and developing
economies. With the strategic use of open standards, platform firms
gain competitive advantage and stimulate the growth of businessecosystems by encouraging the new entry of firms from developing
countries. These strategic behaviors of platform firms drasticallychange the structure of the international division of labor in global
ecosystems. They promote the catch-up of developing country
industries that often provide complementary goods for platform firms
and sometimes defeat traditional firms in the developed countries. The
global success of platform firms completely transforms theinternational division of labor between developed and developing
economies. Though only byproduct of platform strategies in a global
ecosystem, this transformation is more important to many businesspractitioners, whose business might not be the platform business but
still be greatly influenced by this transformation; for it changes therules of competition, which inevitably brings about changes in theirprofitability and competitiveness. The transformation cannot beignored even to policymakers since it affects their countries’ economic
development and presence in the global market.
The following summarizes the composition of this book, chapter bychapter.
Chapter 1 introduces how platform firms have managed to expand
their influence as more and more open standards are created in the
global economy. In the 1980s, the EU and the U.S. changed their policies
on industry-wide standards, relaxing anti trust laws and promoting
consortiums for joint development of open standards (David &Greenstein, 1990; Farrell & Saloner, 1988; Bessen & Farrell,1991; Link,

2

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Paton & Siegel, 2002). After the policy change, many firms in new
industries such as IT, electronics and network services began toincreasingly rely on the consensus standardization, the third approachfor setting up open standards following the de-facto and de-jureapproaches. Hence, the influence of platform firms came to the surface
against a backdrop of frequently emerging open international
standards.
Chapter 2 sorts out earlier studies on the competitive strategies ofplatform firms and extracts issues therein. In doing so, it explains how
platform firms gain bargaining power through the supply of products tomultiple markets under open standards, based on the economic studies.
Open standards create network effects. In a market with many network
effects, a so-called business ecosystem (Iansti & Levine, 2004), uniquestrategies contribute to the competitive advantages. The keys are twosided market and bundling strategies (Rochet & Tirole, 2002; Nalebuff,
2004; Eisenmann, Parker & Van Alystyne, 2011) .
The strategy of platform firms makes use of network effects
produced by open standards, which in turn promotes the entry of newcompanies (David & Greenstein, 1990). Thus, the operation of platform
firms globally will increase the entry of new companies across theworld. Drawing from a theoretical mechanism formulated based onprior studies, I present case studies and empirical studies premised on
the following propositions:
Fundamental Proposition: “When an open standard prevails in a
global ecosystem, the platform firm gains a dominant competitive
position. The success of the platform firm triggers a suddentransformation of the structure of the international division of labor.”
Subordinate Propositions:(1) Platform firms make strategic use of open standards to gain
competitive advantage.
(2) Platform firms gain competitive advantage by positioning
themselves at the hub of transaction networks and passing
information on between multiple markets.
(3) Platform firms gain competitive advantage by implementing twosided market and bundling strategies, managing relations with
suppliers of complementary goods, and adopting other strategies
based on the market structure.
(4) The rise of a platform firm during the formation of a global
ecosystem triggers a sudden transformation of the structure of theinternational division of labor.

"Chapter 2 sorts out
earlier studies on thecompetitive strategies ofplatform firms andextracts issues therein.""Fundamental Proposition:“When an open standard
prevails in a global
ecosystem, the platform firm
gains a dominantcompetitive position. The
success of the platform firm
triggers a suddentransformation of thestructure of the international
division of labor.” "Subordinate propositions (1) to (3) concern the corporate behaviors
in which platform firms engage to gain competitive advantage, andthus are about the main effects of platform strategy. Subordinate
proposition (4) concerns the results yielded as byproducts of theaforesaid behaviors of platform firms, and thus is about secondary3Vol.5 Issue 1

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effects.
Chapters 3 to 7 analyze the strategic behaviors of platform firms:
Chapters 3 and 4 cover the phase of establishing an ecosystem; Chapters 5
to 7 cover the phase of expanding the ecosystem.
Chapter 3 sheds light on why global ecosystems form through the open
standardization processes often carried out by platform firms. In order tobuild a theoretical model of how platform firms strategically use open
standards, I investigate the standardization process of the GSM mobile
communication industry, which originally started in the EU, and the entry of
the GSM standard into the Chinese market. The case study suggests thatwhile the emerging country industries with little accumulated technology orexpertise can take advantage of a newly opened area where open
standardization allows for access to technological information to catch up
with the developed countries, the platform firms that promote
standardization can perform competitively in closed areas. Chapter 3
explains how this dichotomization of the architecture by strategic
standardization creates a global ecosystem.
Chapter 4 presents an empirical study of platform strategies usingtransaction network data and panel data created from the market sales
values of the semiconductors manufacturing equipment industry from 1994
to 2007. Platform firms have a basic strategy of positioning themselves at
the hub of trade networks. The study investigates how the sales ratio of
open-standard-compliant products and the sales ratio of products inemerging countries relate with this basic strategy. Empirical evidence
indicates the existence of strong interaction effect among three variables(the degree of positioning at the hub, the sales ratio of open-standardcompliant products and the sales ratio of products in emerging countries).
This suggests that the platform strategy has different outcomes according to
the level of the sales ratio of products in emerging countries.
Case i) The sales ratio of products in emerging countries is above theaverage:
An increase in the degree of positioning at the hub is positively associatedwith market performance. The sales ratio of open-standard-compliant
products steps up this effect.
Case ii) The sales ratio of products in emerging countries is at the averageor below:
An increase in the degree of positioning at the hub is negatively
associated with market performance. The sales ratio of open-standardcompliant products weakens this effect.
The basic platform strategy works well in Case i) but not in Case ii). Fromthe empirical evidence, the study concludes that the international expansion
into emerging markets is one of the essential keys to the success of theplatform strategy, and the effect of the platform strategy increases as theopen standards prevail in the emerging markets. These findings hence
endorse the fundamental proposition.
Chapter 5 analyzes ecosystem management at Intel Corporation, one of
the most well-known platform firms, by describing a case study of Intel’splatform strategy for the Pentium CPU in the 1990s. The case study reveals"Chapter 3 sheds light on
why global ecosystems
form through the open
standardization
processes often carriedout by platform firms.""Chapter 4 presents anempirical study ofplatform strategies usingtransaction network
data and panel data
created from the market
sales values of thesemiconductors
manufacturing
equipment industry from1994 to 2007. ""Chapter 5 analyzes
ecosystem management atIntel Corporation, one of
the most well-known
platform firms, bydescribing a case study ofIntel’s platform strategy
for the Pentium CPU in
the 1990s."

4Vol.5 Issue 1"Chapter 6 discusses the
management of relations
between a platform firmand symbiont firms basedon a case study on joint
efforts by Intel Corporation(the platform firm) andTaiwanese motherboard
manufacturers (symbiont
firms) to solve problems in
the process of developing
the most advanced CPU
motherboards of the day."" Chapter 7 presents
another case study on the
management of relations
between platform firms
and user firms."

JAPAN MNE Insightsthat a firm’s new entries into peripheral markets carry a significant
meaning. Intel forged ahead into two peripheral markets, one for chipsetsand the other for motherboards. The study finds that the platform strategy
of entering peripheral markets had two purposes: to strengthenbargaining power based on customer lock-in and to revitalize peripheral
markets by providing stimuli for complementor investments. Intel locked
in Taiwanese motherboard manufacturers in its ecosystem by providing
its chipsets and promoting their investments in the latest motherboard
production. On the other hand, Intel itself invested in the production of
motherboards and signaled its strategic stance by sending out a message,“Taiwanese firms should quickly invest in the latest motherboard
production otherwise Intel itself will make them and the opportunities will
be no longer available.”
Chapter 6 discusses the management of relations between a platform
firm and symbiont firms based on a case study on joint efforts by Intel
Corporation (the platform firm) and Taiwanese motherboard
manufacturers (symbiont firms) to solve problems in the process ofdeveloping the most advanced CPU motherboards of the day. As theplatform firm continuously incorporates new technology into the platformproduct, major symbiont firms come together to form a core problemsolving network. A core network of joint problem-solving may pose abarrier to newcomers and hamper the expansion of the ecosystem. The
core networking thus becomes a dilemma, where the platform firm wants
to realize forefront technology for its products while avoiding the entry
barrier by the formation of core networks. The case study in Chapter 6
reveals that Intel develops reference designs with certain symbiont firms
and gives them when it provides its latest chipset to Taiwanesemotherboard manufactures. The platform firm successfully maintains the
openness of the business ecosystem by actively disseminating thereference designs to other symbiont firms as technological information.
Chapter 7 presents another case study on the management of relations
between platform firms and user firms. The study conducts a comparative
case study to reveal the difference in inter-firm relationships, especiallywhen making relations with user firms, between platform firms andproduct firms. The study investigates how the manufacturers Bosch andDenso built relations with their user (automotive) firms in the Chinese
market for engine control units (ECUs). Bosch adopted a platformstrategy-like action, while Denso acted as a firm with a product strategy.
The former followed a standard interface model to construct an inter-firm
relationship based on its platform strategy. The standard interface modelallowed the platform firm to trade with automotive firms in any segmentof the Chinese automotive industry, where the ECU industry was broken
down into multiple segments according to the levels of technologicalaccumulation. This made it possible for the platform firm to expand theecosystem while maintaining the openness of the business ecosystem. The
case study in Chapter 7 also clearly shows that user firms in emerging
countries lacking technological accumulation gained the opportunity tocatch up with developed countries through the standard interface model
offered by platform firms.

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Chapter 8 verifies whether the case studies and empirical studies
support subordinate propositions (1) to (4) along a framework ofestablishing and expanding an ecosystem up to the global scale. It
confirms that the findings from Chapters 3 to 7 underpin subordinate
propositions (1) to (3). It also reveals that the subordinate
proposition (4) holds true with complicated outcomes. The rise of aplatform firm is very likely to transform the industrial structure
involving newcomers and existing companies into an international
structure. Although this transformation may happen to the symbiont
and/or user segment(s), it likely impacts the symbiont segment much
more severely than the user segment. The transformation implies thecatch-up by newcomer firms, who are from emerging economies, andthe decline of incumbents, who are traditional firms in developed
countries. The transformation may not occur as easily in the user
segment, for two reasons: i) regulatory restrictions are imposed onmarket entry and ii) the transformation of the industrial structure,that is, the newcomers’ catch-up with existing companies, occurs
fairly quickly inside domestic firms. If, on the other hand, nointernational transformation takes place in the user segment, a proxywar between the new and old user firms arises in the symbiont
segment, potentially leading to a more serious impact on symbiont
firms.
Chapter 9 summarizes the findings from the case studies andempirical studies presented in Chapters 3 to 7. It derives a set ofconclusions from these findings, discusses the conditions needed forthe fundamental proposition to be true, and closes by presenting
future challenges.
Studies on platform strategies and ecosystem management areclearly becoming more important going forward against the
backdrop of globalization and digitalization. I would be greatly
delighted if this book contributed to further studies on platformbusiness and helped both academicians and business practitioners
who have an interest in the impact of platform firms on the global
markets.

"Chapter 8 verifies
whether the case studies
and empirical studies
support subordinate
propositions (1) to (4)along a framework ofestablishing andexpanding an ecosystem
up to the global scale. ""Chapter 9 summarizes
the findings from the casestudies and empiricalstudies presented in
Chapters 3 to 7."6Vol.5 Issue 1

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References
Besen, S. M. & Farrell, J. (1991). The role of ITU in standardization: pre-eminence,
importance or rubber stamp? Telecommunications Policy, 1991 Aug: 311-321.
Cusumano, M. A. (1998). Microsoft Secrets: How the Worlds’s Most Powerul Software
Company Creates Technology, Shapes Markets, and Manages People, Free Press.
David, P. A. & Greenstein, S. (1990). The Economics of Compatibility Standards: An
Introduction to Resent Research. Economics of Innovation and New technology, 1 (1-2): 3- 41.
Eisenmann, T., Parker, G. and Van Alystyne, M. (2011). Platform Envelopment. Strategic
Management Journal, 32 (12): 1270-1285.
Farrell, J. & Saloner, G. (1988). Coordination through Committees and Markets. Rand
Journal of Economics, 19 (2): 235-252.
Gawer, A. (Eds.) (2009). Platforms, Markets and Innovation, Cheltenham, UK and MA, US:
Edward Elgar.
Gawer, A. & Cusumano, M. (2002). Platform Leadership: How Intel, Microsoft, and Cisco
Drive Industry Innovation, Harvard Business Press.
Hagiu, A. (2006). Pricing and Commitment by Two-sided Platforms. RAND Journal of
Economics, 37(3): 720-737.
Iansiti, M. & Levin, R. (2004). The Keystone Advantage, Harvard University Press.
Link, A., Paton, D. & Siegel, D., S. (2002). An analysis of policy initiatives to promotestrategic research partnerships. Research Policy, 31(8-9): 1459-1466.
Nalebuff, B. (2004). Bundling as an entry barrier. The Quarterly Journal of Economics, Feb
2004: 159 - 187.
Rochet, J. and Tirole, J. (2003). Platform competition in two-sided markets. Journal of theEuropean Economic Association, 1(4): 990 - 1029.

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Special Essay:
Evolution of International Marketing
Study in Japan: From Export Marketing toInternational Marketing Capability
Hajime Baba
Associate Professor of International Marketing,
Faculty of Business and Commerce, Kansai University, Osaka, Japan

Introduction
Evolutional path of international marketing study varies depending
upon the research context in each country, especially in the early stage ofinvestigation. The comparative marketing studies emerged in the U.S. in
1960s, partly due to the entry of U.S. companies into foreign markets and thefailure to adapt to these markets (Wind & Douglas 1980). The U.S. MNEs
expanded their operations to overseas market after the World War Ⅱ – socalled Americanization- and intensively made investment into European
countries in the 1960s –the American Challenge labeled by Servan-Schreiber.
American multinational enterprises (MNEs) of the time confronted
challenges arose from practices in heterogeneous management environment
and were needed to understand foreign marketing/distribution systems incomparison with their domestic marketing/distribution system.
The export marketing was the main focus of early international
marketing study in Japan. Because the FDI by Japanese companies werelimited in the 1950s and 1960s due to the lack of capital and managerial
resources, most Japanese companies accessed foreign markets via export.
Isamu Hisinuma visited the U.S. in 1955 as the chair of marketinginvestigation team by Japan Productivity Center and published a book Export
Marketing in 1957. This book devoted chapters to promotion of export fromJapan to foreign markets, international market research, international
marketing channel and merchandising of export goods.
In the course of time, international marketing study in Japan has
experienced paradigm shifts as the result of the internationalization ofJapanese firms and the inflow of marketing knowledge mainly from the U.S.
This essay briefly reviews the evolution process of international marketing
study in Japan and aims to introduce state-of-the-art research agenda.

"This essay briefly
reviews the evolution
process of international
marketing study in Japanand aims to introduce
state-of-the-art research
agenda. "Early International Marketing Study in JapanThe early international marketing study in Japan was originated fromtwo research streams: trade practice theory and Marxist view. The tradepractice theory was systematized by Torizo Kousaka, emeritus professor of
Waseda University, with trilogy: Trade Custom in 1960, Trade Contract in1960 and Trade Practice in 1961. His seminal work was decartelized by
Sadao Ishida of Meiji University and Genzou Hamatani of Waseda University
and became essential knowledge for business persons engaging in tradeactivities in Japanese trading company. Professor Ishida published8Vol.5 Issue 1" The earlyinternational marketing
study in Japan was
originated from two
research streams: tradepractice theory andMarxist view."

JAPAN MNE Insights
export/international marketing papers from the late 1960s and early
1970s and regarded large Japanese trading companies as the key players
for international marketing; this thought had partial explanation power
until Japanese manufactures stared FDI without the support of Japanesetrading companies. This research stream had more practical rather thantheoretical nature but contributed to gathering attention to theimportance of international marketing study.
Another stream came from Marxists view that had an enormous
impact on early marketing study in Japan around the 1960s. Before
describing international marketing study from Marxists view, I will
briefly mention to the logic of Marxist view in the marketing study.
Fujiya Morishita, emeritus professor of Osaka City University,
historically analyzed the formation of marketing in his influential work
“The Modern Nature of Managerial Marketing” in 1959, arguing thatmarketing thought was formed in the U.S. because of transition ofAmerican capitalism from atomistic to oligopolistic system and thatmanagerial marketing took important role in whole organization after
the World War Ⅱ(see Usui 2000). This view led to the narrow definitionof marketing by Japanese scholars as “market domination activities byoligopolistic manufacturing firms” as compared with the broader
definition as “exchange” by American Marketing Association in 1985.
Morishita (1967) ascribed the formation of international
marketing to the historical conditions of the U.S. after the middle of the
1950s when the capital export by the U.S. government drasticallydecreased and European and Japanese firms emerged as toughcompetitors to American companies due to the economic recovery fromthe World War Ⅱ. Although Morishita (1967) used the word “world
marketing” as the meaning of international marketing activities by“world enterprise”, it correctly described some characteristics of MNE as
local production by FDI, integration of domestic and florigen marketingand profit maximization as a whole. This Morishita’s Marxist andhistorical view exercised a lasting impact over international marketing
study in Japan for decades.
Whereas trade practice theory approach to international
marketing provided practical ideas to international marketers, Marxist
approach imparted fundamental principles for theory building. These
two approaches were normative, abstractive, and descriptive, but not
empirical: international marketing studies using quantitative andqualitative techniques had not appeared at that time.
Diversification of International Marketing Study in Japan
Internationalization of Japanese firms affected international
marketing study in Japan. In the late 1970s, FDI by Japanese companies
started to grow rapidly and marketing challenges for Japanese firms
became increasingly complex ones depart from export to local
marketing/selling. Shirou Takeda, emeritus professor of Yokohama
National University, observing international marketing activities ofJapanese firms, emphasized the importance of precedent channel

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building among the other marketing mix elements in initial entry stage. It
is notable that this notion was extracted from the analysis of Japanese MNE
behaviors based on critical review of Western marketing theory. In
another word, international marketing study in Japan started to develop
considering research context specific to Japan.
Along with internationalization or globalization of Japanese MNEs
from the late 1980s to 2000s, Japanese international marketing study had
diversified. It covers global strategy, international marketing management,international market entry, international marketing segmentation,international marketing research methodology, international consumer
behavior and so on (Kadomatsu 2000). This partly results from knowledge
influx from international business and international marketing studies inWestern countries. Some of most influential authors include Howard
Perlmutter, Michael Porter, Gary Hamel, C. K. Prahalad, Christopher A.
Bartlett, Sumantra Ghoshal, Theodore Levitt, Susan Douglas, Samuel Craig,
Masaaki Kotabe, Tamer Cavusgil.
Among the subcategories of international marketing study, one of
the most studied topics in Japan was standardization – adaptation
problem. Standardization – adaptation studies were conducted by twoleading scholars in Meiji University: Professor Shigeto Morokami andprofessor Yoshihiro Oishi. Oishi theoretically organized antecedents andconsequences of standardization and argued the critical role ofinternational marketing duplication, i.e., simultaneous achievement ofstandardization and adaptation strategy. Morokami statistically analyzed
standardization – adaptation behavior of Japanese MNEs and questioned
the explanation power of analytical framework of standardization –adaptation decision making. Behind these studies, a research question “Do
standardization – adaptation decisions contribute to competitive
advantage and consequently performance of firms?” does exists. Morokami(2000) concluded that not only standardization – adaptation decisions but
also international logistics, production, service, and information system
would relate to firm performance.
To the present, researchers in international marketing field in Japan
expanded their areas of investigation and employed quantitative andqualitative techniques, but most books and articles were written in
Japanese with some exceptions. Thus, intellectual exchange withresearchers from all over the world were limited. More importantly, there
are some problems for international marketing scholars to solve: thetheoretical and empirical relationships between international marketing
activities and firm performances.

" To the present,
researchers ininternational marketing
field in Japan expanded
their areas ofinvestigation andemployed quantitativeand qualitativetechniques, but mostbooks and articles were
written in Japanese withsome exceptions."

Current Research Agenda
There are at least two current research agenda in Japaneseinternational marketing study. The first agenda is how to overcome thefailure of international marketing by Japanese MNEs especially in emerging
countries. For example, the sales of Samsung electronics accounted forapproximately half of the sum of sales earned by 8 Japanese electronics
companies (Hitachi, Panasonic, SONY, Toshiba, Fujitsu, Mitsubishi Electric,10Vol.5 Issue 1

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SHARP and NEC) and operating profit was twice in 2013. Poor
performances of Japanese MNEs are sometimes attributable to “dilemmaof emerging market strategy.” According to Amano (2010), the resourcesof MNEs created in successful operations in developed markets are notapplicable to emerging markets because of the existence of market
discontinuity between developed and emerging markets. Given themarket discontinuity, the more MNEs strive to build competitive
advantage with new product development and product differentiation indeveloped market, the less MNEs can allocate enough resources to lower
layer volume zone segment in emerging markets. Usui and Uchida(2012) proposed “continuity – discontinuity framework of resources”
and argued that continuity or discontinuity varies depending on
utilization of home-based resources. These studies suggested somefundamental notions for Japanese MNEs to build strategies and toallocate resources in emerging markets.
Another research agenda is to answer a simple question “Whichcompany is capable of international marketing?” This question is driven
by the difficulty that Japanese MNEs are confronting and closely relatedwith the relationship between international marketing activities andfirm performance. For instance, previous studies concerning
standardization – adaptation decisions, the empirical relationshipbetween these decisions and performance are confusing (Theodosiou
and Leonidou 2003). This implies that performance of MNEs cannot be
explained only by international marketing decision making. Thus,
international marketing capability emerges as new research topic forJapanese international marketing scholars.

"Examining marketing
capability in international
field, it is important todistinguish two dimensionsof marketing capability:
contents (general –international) × actors(headquarter – subsidiary)."

International Marketing Capability
Marketing capability studies are applied to international fieldin recent days. Examining marketing capability in international field, it isimportant to distinguish two dimensions of marketing capability:
contents (general – international) × actors (headquarter – subsidiary).
As to marketing capability contents, general marketing capabilities
include all marketing capabilities not specific to international context. In
terms of international marketing capabilities, Morgan, Feng and Whitler(2018), reviewed previous studies and identified marketing capabilities
specific to international marketplaces: (1) MNCs’ transnational productinnovation capability, (2) global brand management capability, (3)overseas market–related exploitative and explorative capabilities, (4)international customer- support capability, (5) adaptive capability, (6)local market competence, and (7) global account management capability.
Generally, headquarter of MNE acts as the repository of general andinternational marketing capabilities and subsidiaries exercise theirgeneral marketing capabilities for local markets and their international
marketing capabilities for neighboring international markets in somecases. Thus, the scope of marketing capability study in international
context includes (1) international marketing capabilities of headquarter,(2) general marketing capabilities of subsidiaries, and (3) international

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marketing capabilities of subsidiaries.
We can find the missing link between international marketing
study and marketing capability study. Whereas international marketing
literature has sought to illustrate the relationship between international
marketing activities/decisions and firm performances, most of
marketing capability literature has focused on explaining competitive
advantage and firm outcomes. This result from some kind ofcompartmentalization among theories or concepts that researchers
employ. It is helpful to show the distinction between activity-based viewand resource-based view. Michael Porter’s activity–based view sees theorganization as a bundle of activities and emphasized configuration of
the value chain. Jay B. Barney’s resource-based view sees theorganization as a bundle of resources and marketing capabilities are thesubset of resources. In another word, the activity–based view is thematter of decision making on combination of activities and resourcebased view is that of the existence of ability, together with contributing
to (sustainable) competitive advantage. Taking these two approaches ascomplementary, we can propose some simple propositions:
P1: International marketing decisions are positively related to firm
performance.
P2: International marketing capabilities are positively related to firm
performance.
P3: Positive impact of marketing decisions on firm performance isstronger when firms have superior international marketing
capabilities.
These three propositions will bridge research gap between previous
international marketing studies and marketing capability studies. About
Proposition 3, international marketing capabilities work as the mediator,
because decision making is ubiquitous for every company and the extent
of marketing capability that specific firm has enhanced the impact on
outcomes.
Finally, a research team is established under the leadership ofprofessor Morokami of Meiji University to investigate international
marketing capability of Japanese MNEs. This research has threecharacteristics. First, as mentioned above, this research aims to integrate
decision making and capability in the same conceptual framework.
Second, overseas subsidiaries of Japanese MNEs especially in Asian
countries are targeted for the survey. To the best of my knowledge, there
is no empirical work of international marketing capability surveying
network of MNEs in emerging countries. Third, this research team willconduct not only survey but also case studies. By combining quantitativeand qualitative method, it will be possible to examine the complex
phenomenon represented by “adaptive capability.”"About Proposition 3,
international marketing
capabilities work as themediator, because decision
making is ubiquitous forevery company and theextent of marketing
capability that specific firm
has enhanced the impact on
outcomes. "12

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Main Reference
Amano, T. (2010). “Perspectives of Emerging Market Strategy and International Business:
Adapting to the Discontinuous Markets.” Journal of International Business 2(2): 1-12.
[in Japanese]
Kadomatus, M. (2000). “International Marketing Study in Japan.” in M. Takai,(ed.)
Evolution to Global Marketing and its Challenges. Doubunkan. pp.55-70. [Japanese]
Morishita, F. (1967). “What World Marketing Means.” Journal of Economics 56(6): 58- 75.
[in Japanese]
Morgan, N., Feng, H. & Whitler, K. (2018). “Marketing Capabilities in International
Marketing.” Journal of International Marketing 26(1): 61-95.
Morokami, S. (2000). “Is Standardization – Adaptation Framework in International
Marketing Barren?” JAFT Annual Report 37:109-115. [in Japanese]
Theodosiou, M. & L. Leonidou (2003). “Standardization versus Adaptation of International
Marketing Strategy: An Integrative Assessment of the Empirical Research.”
International Business Review 12(2): 141-171.
Usui, K. (2000). “The Interpretation of Arch Wilkinson Show’s Thought by Japanese
Scholars.” Journal of Macromarketing 20(2): 128-136.
Usui, T. & Uchida, Y. (2012). “Issues of Continuity and Discontinuity of Home-based
Resources Transfers in Emerging Markets.” Journal of International Business 7(2):115-132. [in Japanese]
Wind, Y. and S. Douglas (1980). “Comparative Methodology and Marketing Theory.” inTheoretical Developments in Marketing. pp.30-33.

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JAPAN MNE Insights

Japan Academy of Multinational Enterprises
2017-2019 Executive Board
President
Kazuhiro Asakawa (Keio University)
Vice President
Masahiro Ida (Hannan University)
Tetsuya Usui (Nihon University)
General Affairs
Yoshihiro Oishi (Meiji University)
Takeshi Fujisawa (Kwansei Gakuin University)
Hiroshi Hoshino (Kyusyu University)
Takeshi Ohtowa (Kanto Gakuin University)
General Planning and Publications Commitee
Yasuro Uchida (Toyama University)
Tomokazu Seki (Rikkyo University)
Syohei Tabata (Kindai University)
Akio Tokuda (Ritumeikan University)
Best Book and Paper Award Commitee
Masayuki Furusawa (Kindai University)
Shigeto Morokami (Meiji University )Takeshi Ohtowa (Kanto Gakuin University)
Syohei Tabata (Kindai University)
International Relations
Chie Iguchi (Keio University)
Masashi Arai (Asia University)
Tamiko Kasahara (University of Shizuoka)
Takahide Yamaguchi (University of Hyogo)
Program Commitee
Naotoshi Umeno (University of Hyogo)
Hiroshi Hoshino (Kyusyu University)
Motoyuki Kanetsuna (Nanzan University)
Yukiko Shinomiya (Kindai University)

MNE Academy Journal, Editorial Team
Editor-in-Cheif
Akio Tokuda (Ritumeikan University)
Editors
Yasuro Uchida (Toyama University)
Tomokazu Seki (Rikkyo University)
Takahide Yamaguchi (University of Hyogo)
Public Relations
Tamiko Kasahara (University of Shizuoka)
Masashi Arai (Asia University)
Motoyuki Kanetsuna (Nanzan University)
Takeshi Fujisawa (Kwansei Gakuin University)
Eastern Chapter
Tomokazu Seki (Rikkyo University)
Chie Iguchi (Keio University)
Shigeto Morokami (Meiji University )Yasuro Uchida (Toyama University)
Western Chapter
Hajime Baba (Kansai University)
Yukiko Shinomiya (Kindai University)
Akio Tokuda (Ritumeikan University),
Takahide Yamaguchi (University of Hyogo)
Executive Secretariat and Directors
Head Office: Yoshinori Yasuda (Soka University)
Eastern Chapter: Masashi Arai (Asia University)
Western Chapter: Hajime Baba (Kansai University)
AuditorTakuya Fukazawa (Tokyo Fuji University)
Shingo Nishii (University of Hyogo)

14Vol.5 Issue 1

JAPAN MNE Insights

Japan MNE Insights will be published twice a year on the AMNE official website(www.mne-jp.org). Please feel free to contact with the editorial team if you have any question
or request.

Japan MNE Insights Editorial Team
Editor-in-Cheif
Tamiko Kasahara, University of Shizuoka
EditorMasashi Arai, Asia Universit
Hironori Uchibori, Hakuoh University
Motoyuki Kanetsuna (Nanzan University)
Takeshi Fujisawa (Kwansei Gakuin University)
Japan MNE Insights Editorial Team is currently located at
Office of Dr. Tamiko Kasahara,
University of Shizuoka, School of Management and Information
52-1 Yada, Suruga-ku, Shizuoka, 422-8526, Japan
TEL/FAX:+81-54-264-5435 (direct)
Contact e-mail address: kasahara@u-shizuoka-ken.ac.jp
Copyright @ Japan Academy of Multinational Enterprises (Japan)

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