A multiple contingencies approach is proposed that tests both the contingency and the process frameworks in the subsidiary context. Findings based on a two-phase longitudinal study provide initial support for the framework that suggests that marketing structure follows marketing strategy. In response to increased target market similarity, companies in the study opted for more standardized marketing strategies. Furthermore, centralization of structure mediated the relationship between marketing strategy and subsidiary performance. The performance impact of centralization, however, was cross-lagged and negative.
Results suggest adapting marketing strategies to local markets as a way of enhancing performance.
However, efforts to test the impact of psychological distance on export market selection have been sporadic and flawed. A single-item indicator of psychological distance is calibrated using an independent panel of experts. The predictive ability of the resulting instrument is then tested on the order in which Australian exporters select their first five foreign markets. This instrument is then compared with three other scales that are commonly employed as indicators of psychological distance. Geographic distance is found to be a significant predictor, but its effect is largely independent of psychological distance.