Standardization or customization? Research on the transnational channel management of Chinese firms under the background of the Belt and Road

【Author】

WANG Yonggui;HONG Aoran

【Institution】

College of Business Administration, Capital University of Economics and Business;Business School, University of International Business and Economics

【Abstract】

With the progress of the Belt and Road Initiative and the internationalization of Chinese firms, it is important to deeply explore the key influencing factors that affect the transnational channel management performance of Chinese firms. Among them, such issues as whether Chinese firms should implement a product standardization strategy based on the economies of scale or a product customization strategy aiming at meeting the heterogeneous demands of customers have increasingly becoming much more significant. Through reviewing the literature, it is found that prior studies fail to explore product customization strategy and its key influencing factors in the context of transnational channels. Therefore, based on the incomplete contract theory, this paper explored the paradox of the impact of product customization strategy on the transnational channel management performance of Chinese firms, and then analyzed the influences of external environment factors (institutional environment and market ambiguity) and internal capabilities (innovation capabilities and trans-national market capabilities) on product customization strategies. With the help of the China Council for the Promotion of International Trade, we randomly distributed electronic questionnaires to export equipment manufacturers in China, and finally obtained 509 valid responses. By matching these survey data with host country-level secondary data, this paper developed empirical models and concluded that the advantages of the product customization strategy in transnational channel management outweigh disadvantages. Although the product customization strategy as investment in specific asset has potential moral hazards, it helps solve the problem of information asymmetry between two parties of transaction and enables the manufacturing firms to obtain superior performance of transnational channel management. Furthermore, as far as the external environment factors are concerned, institutional environment of the host country weakens the positive impact of product customization strategy on firms’ transnational channel management performance by decreasing the information asymmetry between the two parties. Whereas, market ambiguity of the host country increases the level of information asymmetry between the two parties, which strengthens the positive impact of product customization strategies and transnational channel management performance on firms’ transnational channel management performance. In addition, in terms of internal capabilities, innovation capabilities strengthen the role of product customization strategy in eliminating information asymmetry, which improves the positive relationship between product customization strategy and firms’ transnational channel management performance. Whereas, trans-national market capabilities weaken the role of customized products in eliminating information asymmetry, and therefore weaken the positive relationship between product customization strategy and firms’ transnational channel management performance. Against the background of transnational channel, this paper studies the implementation of Chinese firms’ product customization strategy, discovers new mechanisms for how product customization strategy may influence firms’ transnational channel management performance, and expands the boundary conditions of product customization strategy in the context of transnational channel operation. In addition, this paper also provides implications for Chinese firms to better participate in the Belt and Road Initiative, gaining continuous international competitive advantage, and continuously improving their transnational channel management.

【Keywords】

product customization strategy;transnational channel management;incomplete contract theory;information asymmetry;specific asset

References

To explore the background and basis of the node document

Springer Journals Database

Total: 45 articles

  • [1] Huang Jiuli;Zhou Xuan;, Customization and Local Protectionism: Empirical Evidence and the Implication to the Construction of Free Trade Zone, Management World,
  • [2] Yang Zhenning;Zhao Hong;, Chinese Enterprises' Open Innovation:Institutional Environment, Co-Opetition Relationship and Innovation Performance, Management World,
  • [3] Peng Zhenzhen;Gu Ying;Zhang Jie;School of Economics & Management Northwest University;, Research on the Relationship between Alliance Coopetition, Governance Mechanism and Innovation Performance Under Dynamic Environment, Management World,
  • [4] Richard J. Martinez, Efficiency motives and normative forces: Combining transactions costs and institutional logic, Journal of Management,

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