Levels of Corporate Globalization

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1 Levels of Corporate Globalization

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3 Levels of Corporate Globalization Developing a Measurement Scale for Global Customer Management Petra Kuchinka Assistant Professor, Johannes Kepler University, Austria

4 Petra Kuchinka 2004 Foreword Gerhard A. Wührer 2004 Softcover reprint of the hardcover 1st edition All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London W1T 4LP. Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The author has asserted her right to be identified as the author of this work in accordance with the Copyright, Designs and Patents Act First published 2004 by PALGRAVE MACMILLAN Houndmills, Basingstoke, Hampshire RG21 6XS and 175 Fifth Avenue, New York, N.Y Companies and representatives throughout the world PALGRAVE MACMILLAN is the global academic imprint of the Palgrave Macmillan division of St Martin s Press, LLC and of Palgrave Macmillan Ltd. Macmillan is a registered trademark in the United States, United Kingdom and other countries. Palgrave is a registered trademark in the European Union and other countries. ISBN ISBN (ebook) DOI / This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. A catalogue record for this book is available from the British Library. Library of Congress Cataloging-in-Publication Data Kuchinka, Petra, 1976 Levels of corporate globalization : developing a measurement scale for global customer management/petra Kuchinka. p. cm. Includes bibliographical references and index. 1. Relationship marketing Mathematical models. 2. Customer relations Management Mathematical models. 3. Globalization Economic aspects Mathematical models. 4. International business enterprises Management Mathematical models. I. Title. HF K dc

5 Contents List of Tables and Figures Foreword by Gerhard A. Wührer Preface vii x xi 1 Introduction 1 Measurement of the level of corporate globalization (LoCG) as a marketing problem 1 Justification 4 Research structure 6 Definition of concepts 6 2 Theoretical Framework 15 Corporate globalization 15 Customer-relationship management 41 Global customer management 44 Research issues 59 3 Research Methodology 65 Construct measurement 65 The LISREL approach 72 Excursion: exploratory versus confirmatory factor analysis 78 Cluster analysis 79 Discriminant analysis 83 4 Empirical Study 87 Procedure of LoCG development 87 Data collection and basis 90 Data analysis: qualitative 91 v

6 vi Contents Data analysis: quantitative 110 Hypotheses 146 Quantitative study: summary of results Conclusions 155 Theoretical implications 155 Managerial implications 156 Limitations and future research questions 161 Appendix 1: Questionnaire 164 Appendix 2: NVivo Chart 171 Notes 174 Bibliography 179 Index 189

7 List of Tables and Figures Tables 2.1 Configuration and coordination issues by category of activity Global strategy: an organizing framework Syllabus of measurement approaches Dimensions and indicators of globalization according to the literature Summary of findings in the literature The hypotheses linked to the literature Guidelines used for the evaluation of the LISREL measuring model Comparison of effective and expected industry distributions Cross tabulation: total turnover and country affiliation Cross tabulation: ratio of foreign turnover to total turnover and country affiliation Cross tabulation: number of foreign markets and country affiliation Cross tabulation: number of foreign affiliates and corporate globalization Cross tabulation: number of foreign affiliates and statement regarding globalization Cross tabulation: how global the company is and start of business Cross tabulation: companies statements regarding globalization and start of business (a) Cross tabulation: companies statements regarding globalization and companies statements (b) Cross tabulation: industry and corporate globalization Empirically confirmed measurement dimensions and literature references Exploratory factor-analytical examination of the indicators 125 vii

8 viii List of Tables and Figures 4.13 Factor 1: standardization to coordinate enterprise units Factor 2: decentralization/localization Factor 3: integration Factor 4: personal interaction Results of the confirmatory factor analysis of the entire model Fornell Larcker criterion Equality test of the groups mean values with ANOVA Eigenvalues (factor scores used) Wilks lambda (factor scores used) Mean discriminant coefficient for the four factors Structure matrix for the four factors Results of classification according to the factors Factor means comparison regarding the three groups based on ANOVA Cluster demographics of the three groups based on ANOVA Results of the hypotheses tests 150 Figures 1.1 Overview of the research issue Problem definition Overview of concepts National integration differentiation grid Types of international strategy A general framework for organizing CRM CRM approach of Rapp A contingency model of GCM effectiveness Framework for global account management Measurement process of abstract constructs Systematization of abstract constructs Path diagram, including the measurement model Steps in the clustering procedure Design linking qualitative and quantitative data Research design Example of possible tree structure in NVivo Distribution of contact persons Total turnovers: a country comparison 112

9 List of Tables and Figures ix 4.6 Percentage of foreign sales: a country comparison Activities on foreign markets: a country comparison The scree plot as determinant of the number of factors The canonical discriminant function presented as a scatter plot Territorial map Companies clustered by factor 2 and factor The final clusters 151

10 Foreword Globalization has as many facets as the perspectives of the different scientific disciplines that deal with it. It is also true that it has become the centre of political, societal and managerial debates all over the world. The more that nations are faced with the good and evil outcomes of dynamics which are partly autonomous and partly induced by transnational companies, the more that managerial science has to deal with the implications on decision-making in companies, besides other developments which impede or accelerate the transformation of industries and business. Dr Kuchinka s dissertation, which was written at the Department of Marketing at the Johannes Kepler University, focuses on the measurement of the level of corporate globalization (LoCG) as a marketing problem. From the marketing point of view, the issue of globalization is mostly addressed in the field of global marketing and key account management. The value of the dissertation is based on the theoretical framework developed and the appropriate measurement concept, which gives new insights into global key-account management. The developed model is further empirically tested by a representative sample of globally operating companies, Austrian and German. Readers of both academia and practice will draw their own useful conclusions from the research findings. For that reason, I wish the text every attention and success. GERHARD A. WÜHRER Chair and Head of Department of Marketing Faculty of Business, Economics and Social Sciences Johannes Kepler University, Linz, Austria x

11 Preface A rising level of globalization, in the sense of rising internationalization and globalization, affects not only the business world but, to a considerable extent, also the whole economic, political-legal, social and cultural environment. In fact, it is a phenomenon people cannot avoid and one that provokes two conflicting mental attitudes. For some people and companies it creates anxiety and uncertainty, which manifest themselves in major aversions to such development. For others, these developments create new challenges, chances and also risks. But a generally positive attitude towards rising globalization enables people and companies to adapt to changes over time. A prevention of this phenomenon from today s viewpoint is not realistic. Therefore, it is necessary to cope with it especially from a scientific viewpoint and this fact constitutes the reason why the author was highly interested and personally involved in this research. According to the author s opinion, the task of science is the exploration and explanation of environmental developments with the objective of communicating with people and companies to reduce anxiety and uncertainty. This research aims to contribute to this objective by answering the central questions of which dimensions characterize companies different degrees of globlization, and how these dimensions can be measured in order to classify companies. I would like to express my thanks to my first supervisor, Prof. Dr Gerhard A. Wührer, who supported me with professional advice, a readiness to discuss and personal free space, giving the chance to tackle the research problem intensively. I also gratefully acknowledge the help of Prof. Dr Lars Hakanson, my second supervisor, who always enriched research discussions with his professional competence in international management, an essential completion of my marketing perspective, as well as with his personal commitment. Furthermore, I would like to thank Dr Atul Parvatiyar from Georgia State University, Atlanta for his support, as well as all my colleagues from the Marketing Department at the Johannes Kepler University, Linz. Last but not least, I would like to thank my family xi

12 xii Preface and my partner, Martin, for their encouragement, which helped me in difficult stages of my research to follow up my objectives and intention. The author and publishers thank the following publishers and individuals for permission to reprint copyright material: Harvard Business School Publishing Corporation; Marketing ZFP, Vahlen; Atul Parvatiyar; D.J. Lecraw, A.J. Morrison and J.H. Dunning, and Routledge; Sales Profi; Fachverlagsgruppe Bertelsmann-Springer; Springer. Linz PETRA KUCHINKA

13 ... absolutely no one who wants to understand our prospects at the century s end can ignore it [globalization]. (Giddens, Runaway World, 1999, p. 7)