Master thesis for MSc IB&M
International orientation and corporate performance: Content analysis of
CEO shareholder letters of manufacturing firms in the S&P 500
University of Groningen
Faculty of Economics and Business
Supervisor
Dr. Christopher Schlägel
Second Assessor
Prof. Dr. Tilo Halaszovich
Submitted by
Franziska Heinzmann
S3826155
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Acknowledgements
I would like to thank the persons that supported me throughout the process of writing this thesis. First, I want to thank my supervisor Dr. Christopher Schlägel. You guided me in a way that enabled me to develop my own solutions and improve my academic as well as analytic skills; yet when I faced difficulties, I could always count on quick, honest, and constructive feedback. You did not only teach me a lot academically, but you also motivated me in every step along the way. Thank you for being the best supervisor I could have asked for. By this, I was able to develop a work which I am proud of and sincerely enjoyed writing it.
Second, I would like to thank my boyfriend, Tobias Maier. Thank you for being there for me throughout the entire process. Your invaluable support and the believe in my abilities, enabled me to go beyond myself. I also want to thank my dear friend, Deni Obid, to take the time to proofread my thesis. Thank you for your dedication.
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Abstract
Purpose – The purpose of this thesis is to clarify the definition of the term international
orientation (IO) and examine its association with firm performance. Additionally, this thesis investigates unique and common effects of IO, market orientation (MO), and entrepreneurial orientation (EO) on firm performance.
Theory development – Based on IO literature, different definitions and conceptualizations of
IO are outlined and a representative definition is presented. Further, this work develops a set of hypotheses.
Methodology – This thesis draws upon a sample of 110 manufacturing firms included in the
S&P 500 from 2009 to 2017. Using computer-aided text analysis (CATA), this work analyzes 960 shareholder letters and thereby develops an objective IO measure. Further, panel regressions and a commonality analysis test the hypotheses empirically.
Results – The findings indicate that IO is positively associated with firm performance.
Furthermore, IO is the major determinant of firm performance when combined with MO and EO. However, this work cannot proof a strong positive common effect.
Discussion – While IO and EO individually contribute to firm performance, the findings imply
that companies with limited resources should rather focus on IO first and then pursue a combination with MO and EO.
Keywords – International orientation, market orientation, entrepreneurial orientation, content
IV
Table of contents
1
Introduction ... 1
2
Literature review and theoretical background ... 4
2.1 Literature review ... 4
2.2 Hypothesis development ... 16
3
Methodology ... 21
3.1 Data sample ... 22
3.2 Measures ... 23
3.3 Computer-aided text analysis (CATA) ... 26
3.4 Analytic approach ... 29
4
Results ... 30
4.1 Descriptive statistics and pairwise correlations ... 30
4.2 Hypotheses test ... 31
4.3 Robustness test ... 34
5
Discussion ... 35
5.1 Implications for theory ... 35
5.2 Implications for research ... 38
5.3 Implications for practice ... 39
5.4 Limitations ... 40
References ... 42
V
List of figures
Figure 1. Foreign market orientation construct ... 8
Figure 2. IO and related concepts ... 10
Figure 3. Conceptual framework ... 16
VI
List of tables
Table 1. Definitions of IO ... 6
Table 2. Previous assessment of IO ... 13
Table 3. Previous studies using CATA ... 24
Table 4. Variable operationalization and data sources ... 26
Table 5. Examples of contexts of keywords ... 28
Table 6. Keyword dictionary for IO ... 29
Table 7. Descriptive statistics and pairwise correlations – coefficients ... 31
Table 8. Panel regression models - Tobin's Q ... 32
Table 9. Commonality analysis for firm performance ... 33
VII
List of abbreviations
1
1 Introduction
The ongoing globalization exposes multinational enterprises (MNEs) to concurrent and often conflicting pressures for global assimilation or local responsiveness (Bartlett & Ghoshal, 1990; Prahalad & Doz, 1987). Consequently, executives have to organize and incorporate operations spread around the globe and integrate a workforce with diverse cultural backgrounds (Bartlett & Ghoshal, 1990). Further, companies must react to local preferences and coordinate internal and external stakeholders on a global level (Rosenzweig & Singh, 1991). As a result, a growing number of academics and practitioners view international orientation (IO), a strategic orientation, as a critical success factor that affects a range of business outcomes (e.g., Birru, Runhaar, Zaalberg, Lans, & Mulder, 2018). In that vein, research has suggested that IO strongly contributes to a company’s ability to pursue its international endeavors successfully (Knight, 2001). Similarly, Zou and Stan (1998) highlighted that firms with high IO are better at spotting and taking advantage of future international prospects.
Moen et al. (2016) described IO as proactively searching for global opportunities, seeing the world as one marketplace, tailoring products to global operations, sharing international goals with the members of the firm, and developing capabilities and resources needed for international endeavors. In a similar vein, Sapouna et al. (2018) defined IO as the managing board’s behavior and distribution of resources concerning global activities. However, an agreement has not been reached upon one single definition of IO. IO can be explained with the resource-based view of the firm, initiated by Barney (1991). Drawing from its internal resources, a firm develops its strategy influenced by strategic orientations (Hult, Ketchen, & Slater, 2005), such as IO. Strategic orientations represent strategic management decisions introduced in the pursuit of achieving a sustainable competitive advantage (Gatignon & Xuereb, 1997).
The increasing focus on strategic orientations serves the primary goal of accelerating total firm performance. When planning their investment in a company, investors’ main interest is corporate performance. Also, for prospective employees, the total firm performance is a major aspect in making their employment decision. As a result, executives are constantly driven by the aim to augment firm performance (Al-Matari, Al-Swidi, & Fadzil, 2014). The performance of a firm is significantly impacted by its strategic orientations. In other words, strategic orientations, such as IO, play a key role in firm performance.
2 IO is a crucial concept for the internationalization of a company and its success in markets abroad (Sapouna et al., 2018). However, until today, research has not investigated the association between IO and total firm performance. Additionally, in academia, there are several conceptualizations and various definitions of the IO concept. As indicated above, literature provides no universal definition of the term IO (Kraft, Dowling, & Helm, 2012). Moreover, several terms defining IO are used interchangeably. Thus, literature uses IO, global orientation, and foreign market orientation as synonyms (Machado et al., 2016; Nummela, Saarenketo, & Puumalainen, 2004). Additionally, some studies introduce IO as a unidimensional construct (e.g., Bartlett & Ghoshal, 1987a; Gupta & Govindarajan, 2002; Perlmutter, 1969), whereas other studies define subdimensions of IO (e.g., Dichtl, Leibold, Köglmayr, & Müller, 1984; Nummela et al., 2004).
Further, when assessing IO, it is common to use survey and questionnaire designs (e.g., Dichtl, Koeglmayr, & Mueller, 1990; Madsen & Sørensen, 2012; Sapouna et al., 2018). However, these methods are subjective and imply several limitations, such as common method bias, hindsight bias, and single source bias. These limitations can lead to constraints in our understanding of IO. That can be, for example, the measurement of an organizational-level construct (i.e., IO) on the individual level by surveying only single persons in an organization. This effect is more pronounced if the questioned person is not the CEO but a middle manager, who is not directly involved in the strategic decision-making of a company (Zachary, McKenny, Short, & Payne, 2011). An alternative method for dealing with complex research issues, such as the assessment of strategic orientations, is content analysis. Several previous studies exploring strategic orientations introduced content analysis as an appropriate tool (e.g., Short, Broberg, Cogliser, & Brigham, 2010; Zachary, McKenny, Short, & Payne, 2011). Content analysis can analyze publicly available documents, such as shareholder letters, annual reports, press releases, and company mission statements, and thereby ensures the objective assessment of the study constructs. The commonly used narrative in previous studies on strategic orientations is the shareholder letter (e.g., Short, Payne, Brigham, Lumpkin, & Broberg, 2009).
In the first step, this study aims to contribute to the existing methodology by (1) clarifying the meaning of IO and (2) developing an objective measure for IO based on existing theory. Once the term IO is clarified, this study seeks to examine IO’s association with corporate performance. Thus, the first research question of this work is:
3 Additionally, previous literature has mainly focused on analyzing IO in isolation (e.g., Moen et al., 2016). However, it is shown that organizational performance is not influenced by only one strategic orientation and no strategic orientation works in isolation (Hakala, 2011). Much research has been conducted on the strategic orientations market orientation (MO) and entrepreneurial orientation (EO) and their influence on corporate performance (e.g., Cano, Carrillat, & Jaramillo, 2004; Ellis, 2006; Kirca, Jayachandran, & Bearden, 2005; Rauch, Wiklund, Lumpkin, & Frese, 2009), as well as on export performance (e.g., Kohli & Jaworski, 1990; Madsen & Sørensen, 2012; Rose & Shoham, 2002). In doing so, literature also proved that MO and EO lead to synergistic effects (e.g., Liu, Luo, & Shi, 2003; Tzokas, Kyriazopoulos, & Carter, 2001). Moreover, not only MO and EO interrelate, but these synergies were also found to be true for the combined set of MO, EO and learning orientation (LO) (Deutscher, Zapkau, Schwens, Baum, & Kabst, 2016). Such collaborations can be explained by the complementarity perspective which describes strategies as “independent pieces that ‘complete’ each other” or as pieces that when combined reinforce themselves and lead to synergies (Tanriverdi̇ & Lee, 2008: 384).
To this day, exploring the complementary effects of strategic orientations is still the exception; the majority of literature rather focuses on isolated effects on performance (Hakala, 2011). Therefore, it is no surprise that previous literature has not yet investigated the collaborative effects of IO, MO, and EO. However, especially in the context of pursuing international endeavors, the joint effects of these three strategic orientations may not be neglected. Taking EO as an example, Knight and Cavusgil (2005) showed its important contribution to international success, which, in turn, is attributable to IO to a significant extent (Sapouna et al., 2018).
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Research question 2: What are unique and common effects of the strategic orientations (IO, MO, EO) on firm performance?
My regression results show that IO is positively associated with firm performance. The analysis of unique and common effects supports this finding. Further, it shows that in a set with MO and EO, IO is the main antecedent of firm performance. Additionally, the commonality analysis shows a rather weak common effect among IO, MO, and EO. These results contribute theoretically as well as practically. For practice, this indicates that especially young firms should focus on the pursuit of single strategic orientations, particularly IO. If not limited by resource constraints, firms may still strive for an interplay of IO, MO, and EO.
In the remainder of this work, I first review relevant literature and develop a set of hypotheses regarding the associations between my study constructs. Second, I present my methodology and describe the execution of my analyses. Third, I outline my findings before discussing them in relation to relevant theory. My work concludes with implications for theory, research, and practice as well as limitations and suggestions for future research.
2 Literature review and theoretical background
Since academic contributions on the definition of IO are rather inconsistent, the following section of this paper aims to clarify the term IO. Further, in this section, I outline the strategic orientations MO and EO and formulate five central hypotheses.
2.1 Literature review
5
International orientation (IO). The first aim of this research is to clarify the definition and
conceptualization of IO. For several years now, the definition of IO has been the subject of much discourse. Table 1 displays an overview of definitions used in literature.
When analyzing IO, three main concepts dominate the literature (Kraft et al., 2012). First, Perlmutter (1969), the initiator of IO research, established the classification of ethnocentric, polycentric, regiocentric, and geocentric companies. The second concept introduced the transnational firm defined by Bartlett and Ghoshal (1987a, 1987b). The global mindset construct introduced by Gupta and Govindarajan (2002) is the third central concept . According to Kraft et al. (2012), all three perspectives are aligned with the Integration-Responsiveness Paradigm established by Prahalad and Doz (1987). Perlmutter (1969) defined IO as the “orientation towards foreign people, ideas, resources in headquarters and subsidiaries, and host and home environments” (p. 11). This definition refers to the managers’ beliefs, which can either be focused on the home or a host market or can perceive the whole world as one market. Perlmutter (1969) approached IO from a cultural perspective. His level of analysis is the managerial cognition. Consequently, his concept is unidimensional (Levy, Beechler, Taylor, & Boyacigiller, 2007).
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Table 1. Definitions of IO
Study Definition of IO Theoretic foundations
Perlmutter (1969) “The orientation towards foreign people, ideas resources in headquarters and subsidiaries, and host and home environments, becomes crucial in estimating the multinationality of a firm” (p. 11).
Beginning point of IO research Bartlett & Ghoshal (1987b) “… the way in which Management is thinking and management attitudes and actions” (p. 11). Perlmutter (1969)
Wind, Douglas & Perlmutter (1973)
“…attitudes [that] reflect the goals and philosophies of the company with respect to international operations and to lead to different and management strategies and planning procedures with regard to international operations” (p. 14).
Perlmutter (1969) Gupta & Govindarajan (2002) “...we would define a global mindset as one that combines an openness to and awareness of diversity across cultures and
markets with a propensity and ability to synthesize across this diversity” (p. 117).
Perlmutter (1969); Bartlett & Ghoshal (1987)
Knight & Kim (2009) “…tend to possess distinctive competences and outlook (…). They tend to be characterized by managerial vision and proactive organizational culture for developing particular resources aimed at achieving company goals in foreign markets” (p. 260)
McDougall, Shane & Oviatt (1994); Mort & Weerawardena (2006); Knight (2000); Knight & Cavusgil (2004)
Madsen & Sørensen (2012) “…question of mindset (whether managers see the world as their market place as well as their motivation to deal with international customers and partners), but it is also critical that top management has a clear commitment of resources and develops an organizational culture that motivates employees’ behavior in the direction of international activities” (p. 426).
Dichtl et al. (1990); Knight & Cavusgil (2004)
Knight & Kim (2009); Kraft, Dowling & Helm (2012) “Basic principle of international business, and as an important factor in business functions, decisions, and structures”
(p. 294).
Perlmutter (1969); Bartlett & Ghoshal (1987); Gupta & Govindarajan (2002) Moen, Heggeseth & Lome
(2016)
“…firm that actively seek international opportunities, see the world as their market, adapt their products to international operations, communicate their international ambitions throughout the organization, and develop the resources required for international activities” (p. 661).
Knight (2001)
Cho, Kim & Jeong (2017) “…managerial vision and proactive organizational culture that supports the development and utilization of organizational resources to achieve objectives in international markets” (p. 232).
Knight & Cavusgil (2004); Knight & Kim (2009)
Sapouna, Dimitratos & Larimo, Zucchella (2018)
“The extent to which top management team of the firm are the committed champions in international endeavors…” (p. 285).
Dichtl, Leibold, Köglmayr, Müller (1984); Aharoni (1966); Welch & Luostarinen (1988); Gupta & Govindarajan (2002); He & Wei (2011), Nielsen & Nielsen (2011) Definition in this study The ability to proactively search for global growth options, regard the world as unique marketplace and adjust products
to global operations. Further, it aims to encourage an organizational culture which engages the dissemination of global goals throughout the firm, as well as facilitating the development of necessary capabilities for international endeavors.
7 Elaborating on Perlmutter’s perspective, Bartlett and Ghoshal (1987b) also approached IO from a unidimensional, yet strategic point of view (Levy et al., 2007). Bartlett and Ghoshal (1987b) defined IO as “the way in which management is thinking and management attitudes and actions” (p. 11). They considered strategic orientation together with the mentality of executives, with a strong focus on company characteristics. The authors’ level of analysis is the company. The subjects analyzed are the related strategic complexities observed in a firm’s management. Bartlett and Ghoshal (1987b) argued that the degree of IO depends on the forces that characterize an industry. Therefore, they distinguished between (1) international, (2) global, (3) multinational, and (4) transnational companies. First, if an industry is highly innovative and driven by exchanging know-how, companies are likely to pursue international strategies. The focus is set on passing know-how from the mother company to subsidiaries abroad. Adaptation to host country preferences is not intended. Second, globalization-driven industries lead to global strategies, which means that globally oriented companies do not focus on the requirements of particular countries. They, instead, develop globally integrated products with low adaptation to local preferences. Third, if an industry is determined by localization requirements, enterprises tend to adopt multinational strategies. This involves the adaptation to local markets. Last, a transnational strategy means that a company sees the world as one global marketplace for which it develops its strategies. The transnational company considers local responsiveness and global integration as highly relevant (Bartlett & Ghoshal, 1987a, 1987b).
8 (Bartlett & Ghoshal, 1987b) and a geocentric orientation (Perlmutter, 1969) of the management (Kraft et al., 2012). Several studies focused their research on the global mindset concept (e.g., Levy et al., 2007). However, for successful international operations, a global mindset alone is not sufficient. Executives need not only the awareness of and openness to global markets but also the know-how and the capabilities to act upon their knowledge (Kedia & Mukherji, 1999). Kraft et al. (2012) argued that for analyzing the concept IO, all of the abovementioned approaches by Perlmutter (1969), Bartlett and Ghoshal (1987a, 1987b), and Gupta and Govindarajan (2002) have to be considered. Finally, Kraft et al. (2012) described the term IO rather general as a basic standard for international business and a fundamental aspect in business operations, arrangements, and decision making. Following the authors’ argumentation, the concept should be considered multidimensional. Further, it allows subdividing IO into cultural, strategic, and managerial mindset dimensions.
The IO conceptualizations above are not the only ones to find in literature. Further research on IO shows that various other relevant operationalizations of the term exist. Dichtl, Leibold, Köglmayer, and Müller (1984a) developed one conceptualization of IO, labeled foreign market orientation in their work, displayed in figure 1.
The authors defined IO as the managerial ability to cope with external influences, such as market opportunities and government stimulation. In the multidimensional operationalization, Dichtl et al. (1984a) focus on individual traits, an internationally oriented manager should possess. Focusing on small and medium-sized enterprises (SMEs), they set their focus on decisions related to internationalization, including stimuli influencing these decisions. Based on existing concepts developed by Welch and Wiedersheim-Paul (1977) and Olson and
Figure 1. Foreign market orientation construct
Foreign market orientation
Psychic distance Objectice managerial characteristics Subjectice managerial characterisitcs Risk preference Rigidity Willingness to change Future perspective Attitude toward export
9 Wiedersheim-Paul (1978), Dichtl et al. (1984a) suggested that external as well as internal influences are perceived differently by every manager. Dichtl et al. (1984a) subdivided the construct into two sublevels. Accordingly, foreign market orientation includes the four measurement levels (1) psychic distance, (2) objective managerial characteristics, (3) subjective managerial characteristics, and (4) attitude toward export on the first level. On the second level, subjective managerial characteristics involve risk preference, rigidity, willingness to change, and future perspective.
Following their theoretical construct, Dichtl et al. (1984a) formulated four hypotheses aligned with the four levels of management (first sublevel) and the indicators of the second sublevel. These hypotheses describe the characteristics of foreign-oriented executives. First, foreign-oriented managers are capable of high degrees of psychic distance. Consequently, they perceive foreign markets as familiar and similar to the home market. Second, with reference to objective managerial characteristics, decisionmakers are foreign-oriented, if they are mastering foreign languages, if they are keen on visiting countries abroad, and if they are well educated. Third, decisionmakers are foreign-oriented if they show significant subjective managerial characteristics. This includes them avoiding less risk and being less resistant to change. Furthermore, they show a low level of rigidity and see international assignments as enrichment for their career. Last, executives are considered foreign-oriented, if their attitude toward export is high, meaning that managers consider exporting as beneficial to their firm.
Sapouna et al.’s (2018) IO definition is based on Dichtl et al.’s (1984a) conceptualization as well as Gupta and Govindarajan’s (2002) global mindset operationalization. Accordingly, Sapouna et al. (2018) solely reflect the individual cognitive characteristics of decisionmakers, which enable the decisionmakers to bear international activities. Consequently, their IO construct is unidimensional.
10 Within this general concept, international entrepreneurial orientation and IO are located. International entrepreneurial orientation is characterized by a high proactiveness, innovativeness, as well as the willingness to take risks. It is related to the behavioral aspects of global orientation. IO, according to Nummela et al. (2004), is related to several psychological and demographic indicators. The authors ascribed internationally oriented executives the same characteristics as Dichtl et al. (1984a). That is why IO involves subjective and objective managerial characteristics, aspects that are beyond the scope of the superordinate concept of global orientation. IO further includes two concepts, global mindset and international outlook. The global mindset concept is partly included in IO but also overlaps with international entrepreneurial orientation. The global mindset construct includes attitudinal and behavioral aspects, referring to executives’ perception of the world. More specifically, it describes a manager’s attitude and sensemaking of cultural differences and the competence to deal with it (Gupta & Govindarajan, 2002). The last concept mentioned, international outlook, is related to a firm’s understanding of the difference between domestic and international markets. The international outlook construct is similar to the concept of psychic distance (Nummela et al., 2004).
Freeman and Cavusgil (2007) drew upon the framework of Nummela et al. (2004), with emphasis on the unresolved overlap and relation of different IO terms. Freeman and Cavusgil
Figure 2. IO and related concepts
11 (2007) saw IO as one measure of internationalization. According to the authors, inter-nationalization is assessed by the evaluation of (1) performance, (2) structure, and (3) attitudes. IO, as a multidimensional construct, is located within attitudes.
Knight and Kim (2009) derived their termination of IO from several scholars (e.g., McDougall, Shane, & Oviatt, 1994; Sullivan Mort & Weerawardena, 2006). The authors ascribed internationally oriented firms “distinctive competencies and outlook” (p. 260). Furthermore, they emphasized a supporting corporate culture, which seeks to build up relevant capabilities necessary for achieving goals in international markets. Thus, the authors are the first ones to bring up the organizational culture in an IO definition. The combination of a cultural and cognitive perspective labels IO as a multidimensional concept. In the same vein, drawing upon previous research, such as Dichtl et al. (1984a), Madsen and Sørensen (2012) argued that IO does not only refer to the mindset of the top management but goes beyond. IO includes the clear allocation of resources and the appropriate organizational culture that engages and promotes the behavior of the staff towards cross-national endeavors, which goes further than the cognitive characteristics of decisionmakers of Nummela et al.’s (2004) conceptualization. The clear combination of culture, strategy, and mindset indicates a multidimensional definition of IO.
Similarly, yet deriving their conceptualization from a different source, namely Knight (2001), Moen et al. (2016) focused on the active search for international endeavors and the perception of the world as a firm’s unique marketplace. In their definition, the authors included concrete strategic actions such as adjusting products to international endeavors and involving the whole company in their international objectives. Furthermore, the scholars stressed proactive search for international growth options, the sharing and implementation of global visions, and the creation of necessary firm-intern resources. Accordingly, IO is defined as a multidimensional construct.
12 is aligned with management visions distinguishes Knight and Kim’s (2009), Madsen and Sørensen’s (2012), Moen at al.’s (2016), and Cho et al.’s (2017) IO definitions from previous ones (e.g., Bartlett & Ghoshal, 1987b; Gupta & Govindarajan, 2002; Perlmutter, 1969; Sapouna et al., 2018).
Several scholars also mentioned the ambiguity of the abovementioned concepts and definitions (e.g., Nummela et al., 2004). This leads to authors using some concepts as equivalents. For example, Nummela et al. (2004) equated global orientation with the global mindset construct. At the same time, Moen (2002) used global orientation as equivalent to IO. In the same vein, Machado et al. (2016) raised the question if IO and global orientation are interchangeable terms for the same concept. In Nummela et al.’s (2004) framework, however, IO is differentiated from the global mindset concept. Additionally, scholars used different terms of the concept of IO. As a result, the same concept is defined as IO, foreign market orientation, or the “motivation toward foreign involvement” (Nummela et al., 2004: 53). This indicates the necessity of a clear and concise definition of IO.
The literature review shows the various perceptions of IO. Furthermore, it highlights discrepancies in the aspects included in the concept. In addition, it indicates that the lines between each dimension of IO are blurry, and a clear conceptual delimitation is complicated. However, even though definitions of IO differ, literature agrees upon the importance of this concept. Therefore, to combine all relevant dimensions of IO, strategy, culture, and the managerial mindset, I follow Madsen and Sørensen’s (2012) and Moen et al.’s (2016) termination for my multidimensional IO working definition:
IO is this ability to proactively search for global growth options, regard the world as their unique marketplace and adjust products to global operations. Further, it aims to encourage an organizational culture which engages the dissemination of global goals throughout the firm, as well as facilitating the development of necessary capabilities for international endeavors.
The assessment of IO. Various studies assessed companies’ level of IO. Because IO is a
13
Table 2. Previous assessment of IO
Study Methodology Context Key Findings
Kleinschmidt & Cooper (1988)
Personal interviews with 125 Canadian firms
IO and product innovation
− IO has a significant impact on the success of new products
Freeman & Cavusgil (2007)
In-depth interviews with
executives of 12 Australian SMEs
IO and accelerated internationalization
− The overlapping of IO terms remains unresolved Knight & Kim (2009) Case study interviews with 16
American SMEs
IO and international performance
− IO is a significant dimension of international business competence Madsen & Sørensen
(2012)
Web-based surveys to 249 Danish CEOs
IO and export market success
− IO is positively related to export market success
Kraft, Dowling & Helm (2012)
Surveys to 259 German managers (of which 55% CEOs)
IO and marketing mix and performance
− The coordination of IO and marketing mix influences company performance substantially
Moen, Heggeseth & Lome (2016)
Surveys to 247 Norwegian senior managers
IO and revenue-, employment-, and future growth
− IO is a consistent predictor of revenue and export growth. − IO of the firm is interrelated with
motivation for growth. Cho, Kim & Jeong
(2017)
Surveys to 188 Korean firms IO and new product performance
− IO and functional integration determine the international success of new products.
Sapouna, Dimitratos, Larimo & Zucchella (2018)
Postal survey to 574 Finnish, Italian & Greek managers
IO and international performance
− IO is positively associated with international performance. − In case of strong IO, withdrawal
decisions have a positive influence on international performance. Birru, Runhaar,
Zaalberg, Lans & Mulder (2018)
Interviews with 195 Ethiopian managers
IO and export performance
− IO as part of international business competence is positively related to export performance
Kraft et al. (2012) assessed the IO of German “mittelstand” companies, relying upon survey design. Similarly, Madsen and Sørensen (2012) conducted web-based surveys addressed to Danish CEOs. Freeman and Cavusgil (2007) held in-depth interviews to assess the IO of Australian managers. Knight and Kim (2009) conducted case study interviews with SMEs to assess the relationship between IO, international business competence, and international performance. Most recently, Birru et al. (2017) conducted interviews with Ethiopian managers to evaluate the relationship between IO and export performance.
14 (Chang, van Witteloostuijn, & Eden, 2010). Single-source bias arises if responses are given by one source only. Another concern of survey methods is the so-called hindsight bias introduced by Fischhoff (1975). Hind-sight bias refers to the variation in respondents’ judgment of a situation if they already know the outcome of it. Consequently, knowledge about the outcome of a situation affects the perception and evaluation of situation-descriptive data (Fischhoff, 1975). In other words, the knowledge of event outcomes influences the assessment of inevitability of occurrences (Christensen-Szalanski & Willham, 1991).
Regarding IO, the dependence on survey tools and in-depth interviews to measure IO has impeded the advance in research since these instruments do not enable the analysis of longitudinal data as datasets cannot be built up. Additionally, surveys and interviews are time- and cost-intensive, research depends on subjective measures, response rates are often low, and answers are incomplete (Raman, Chadee, Roxas, & Michailova, 2013). Furthermore, with regard to single-source bias in surveys and questionnaires about IO, an organizational-level concept is measured on the individual level (e.g., Dichtl et al., 1990). Reasons for that can be the type of respondents, such as the middle management which is chosen because of the unavailability of the top management (Zachary et al., 2011). Additionally, Lyon, Lumpkin, and Dees (2000) stated that self-report methods capturing managerial perception, such as surveys, may lead to subjective information about organizational orientations. According to the authors, this subjectivity can be avoided by using narratives that represent the whole organization, such as annual reports or financial statements.
Market orientation (MO). MO is a frequently studied strategic orientation. MO refers to a
15 to market intelligence. To act upon the findings gathered in the two previous steps, actions must follow. Based on the market information collected, target markets have to be chosen, and products have to be adjusted (Diamantopoulos & Hart, 1993; Kohli & Jaworski, 1990).
Narver and Slater (1990) approached MO by subdividing it in different aspects. These aspects are (1) customer orientation, (2) competitor orientation, and (3) inter-functional coordination. Customer orientation and competitor orientation involve all actions needed for generating target market information, such as customer and competitor information. Furthermore, they entail the sharing and distribution of this information within the company. The third dimension, inter-functional coordination, in a subsequent step, rests upon the previously collected information and includes all actions taken to increase the value for customers. Narver and Slater (1990) recognized similarities to Kohli and Jaworski’s (1990) conceptualization.
Entrepreneurial orientation (EO). Another strategic orientation, well-introduced in export
literature, is EO. Lumpkin and Dess (1996) define EO as the “processes, practices, and decision-making activities that lead to new entry” (p. 136). Entrepreneurship is one key indicator of success in a globalized environment (Covin & Slevin, 1991). Entrepreneurship activates businesses to expand, allows technological advance, and enables rising prosperity. More specifically, entrepreneurship is a significant driver of economic growth (Business Week, 1993). Consequently, firms feel the necessity of pursuing an entrepreneurial character, to survive in a continuously changing world (Lyon et al., 2000). At the beginning of EO research, the so-called entrepreneurial problem (Miles, Snow, Meyer, & Coleman, 1978) was the center of attention. This strategic problem refers to a company’s development of entrepreneurial understanding, especially concerning market and product selection as well as entry choices. In a later stage, the center of attention shifted from this strategic problem to a focus on operations-related matters. The problem related to means which enable entrepreneurial actions of managers. Eventually, EO was defined as the strategic actions leading to new market entry options (Lumpkin & Dess, 1996).
16 Drawing on Miller’s (1983) dimension, Lumpkin and Dess (1996) introduced two additional dimensions, (4) competitive aggressiveness and (5) autonomy. Consistent with MO, EO is positively associated with corporate performance (Rauch et al., 2009). Also, when combined with other strategic orientations, such as LO and MO, EO is beneficial to firm performance (Deutscher et al., 2016).
2.2 Hypothesis development
In the following part, I develop five central hypotheses. Figure 3 shows the conceptual framework of this work, which builds upon one hypothesis relating to the relationship between IO and firm performance.
IO and firm performance. This study is based on the resource-based view of the firm. The
resource-based view argues that a company is defined by its tangible and intangible assets (Barney, 1991; Wernerfelt, 1984). These internal resources and capabilities are the source of a firm’s competitive advantage (Russo & Cesarani, 2017). To secure a competitive advantage, the assets of a firm must be unique. Further, the resources must add value to the firm, must not be easy to substitute, and must not be able to be adopted or imitated by competitors. These characteristics refer to Barney’s (1991) “VRIO” framework. Literature argues that firm strategy grounds on internal resources. According to Hult et al. (2005), within the resource-based perspective, a firm’s strategic orientation, such as IO, can present a core capability that influences strategic activities. Hence, a competitive advantage can be obtained.
As mentioned above, MO and EO have a positive relationship with firm performance (e.g., Ellis, 2006; Kirca et al., 2005; Rauch et al., 2009; Rodriguez Cano et al., 2004). Concerning IO, its positive influence on the international performance of a company is stated (Sapouna et al., 2018). First of all, high IO enables managers to adequately lead international activities (Dichtl, Leibold, Köglmayr, & Müller, 1984b). Consequently, this may result in more successful
Figure 3. Conceptual framework
17 operations, and hence in higher company performance. Further, Stan and Zou (1998) argued that IO is a good indicator of exporting performance. In the same vein, Madsen and Sørensen (2012) proofed a positive relationship between IO and export market success. Also, with regard to exporting, Moen et al. (2016) found that firms with higher IO experience have “higher export growth” and “higher revenue growth” (p. 668). Additionally, Belderbos et al. (2017) found a significant association between global mindset, which is an aspect of IO, and the performance of a firm. Similarly, Levy et al. (2007) highlighted the contribution of global mindset to superior long-term performance. Bartlett and Ghoshal (1990) stated that the transnational orientation of a firm, one aspect of IO, leads to long-term competitive advantage. In accordance with the findings reported above, I propose a positive association between IO and the performance of a firm. Thus, I hypothesize:
Hypothesis 1. A firm’s IO is positively associated with its performance.
To answer the exploratory research question, figure 4 shows the methodological framework of this study. It is built upon four further hypotheses regarding the collaborative effects among IO, MO, and EO and firm performance.
Figure 4. Unique and common effects of strategic orientations on firm performance
Note: Figure adjusted from Wales (2018). UE1, 2, 3 = unique effects of IO, MO, and EO on firm performance; CE4, 5, 6 = first-order commonalities of IO-MO, MO-EO, and IO-EO; CE7 = second-order commonality of IO-MO-EO.
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Strategic orientations and their unique and shared effects. Previous research suggested
that the combination of distinct strategic orientations leads firms to perform better than if only one isolated strategic orientation was pursued (Boso, Cadogan, & Story, 2012; Farrell, 2000; Ho, Plewa, & Lu, 2016). These findings accord with the complementarity perspective, which states a “beneficial interplay of the elements of a system where the presence of one element increases the value of the others” (Ennen & Richter, 2010: 207). Further, this perspective argues that the combination of resources may result in additional value which cannot be created by one single resource (Tanriverdi & Venkatraman, 2005). In this vein, every strategic orientation covers different determinants of superior performance, which, as a complementary set, generates more value than one strategic orientation in isolation. Previous literature studied the combination of MO and EO and the effect on company performance (e.g., Slater & Narver, 1995). Slater and Narver (1995) regarded MO as the foundation that when complemented by EO leads to superior performance.
Other studies showed that a firm’s entrepreneurial behavior leads to higher MO (e.g., Miles & Arnold, 1991). Both argumentations indicate a sequential emergence of strategic orientations. However, studies demonstrated that strategic orientations correlate (Slater & Narver, 2000) or complement each other (e.g., Hult & Ketchen, 2001). Due to the high correlation of various strategic orientations, a simultaneous implementation may lead to superior performance. In this work, I propose that the strategic orientations IO, MO, and EO are completing each other and when pursued in combination, reinforce each other’s influence on performance. Thus, I argue that there are collaborative effects of these orientations on firm performance.
19 modification in another strategic orientation. Hence, a joint effect of two strategic orientations presupposes an equivalent modification in both strategic orientations (Nimon & Oswald, 2013). In general, among the three fundamental strategic orientations analyzed in this study, I expect IO to provide a unique explanation as to why some firms achieve above-average performance. While the collaboration of these orientations may also considerably matter, IO entails unique characteristics which are not captured by either MO or EO. To increase firm performance in an international environment, I argue that individual traits of executives can make a difference. IO, in contrast to MO and EO, includes the management’s mindset by looking at subjective and objective managerial characteristics. Furthermore, IO is concerned with the corporate culture and the development of necessary resources for international endeavors. Additionally, IO, in comparison to MO, is much more forward oriented. It entails the understanding of which opportunities there are abroad. Therefore, I argue that when investigating three strategic orientations altogether, IO explains one part of the variance which is not described by either MO or EO. Thus, I hypothesize:
Hypothesis 2. All else being equal, IO, rather than MO or EO, provides a dominant explanation for variance in firm performance.
The interrelation of IO and MO. MO, in isolation and combination with other strategic
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Hypothesis 3. There is a positive common effect of IO and MO on firm performance.
The interrelation of IO and EO. International markets offer ample opportunities for
entrepreneurial ventures. Therefore, McDougall and Oviatt (2000) introduced the notion of international entrepreneurship. Firms can be described as internationally entrepreneurial oriented if they enter into new markets because of their extensive entrepreneurial capabilities and outlook. Internationally entrepreneurial oriented firms obtain distinctive EO, which allows them to spot and approach opportunities abroad when combined with other competencies. A combination of IO and EO refers to a firm’s general innovativeness and proactiveness with regard to global markets (Knight & Cavusgil, 2004). The combination is connected to the innovativeness, managerial outlook, and the proactiveness, described in the conceptualization of EO (Covin & Slevin, 1991). When entering international markets, companies should possess an innovative, visionary, and proactive image. This may be crucial when considering the uncertain environment in various markets abroad. Instead of unrestrained risk searching, high EO may facilitate the achievement of strategic goals in international markets and thus increase international performance (Knight & Cavusgil, 2004). According to Knight (2001), EO is crucial to master the challenges related to penetrating a different market abroad. Especially in countries that appear to be psychically distant, the willingness to take risk is a critical success factor. Additionally, empirical research has found a positive relationship between entrepreneur-ship and expanding strategic operations (Davis, Morris, & Allen, 1991).
Following Knight (2001), I claim that EO attitudes, which are crucial to achieving strategic goals, are not only needed for firms active in domestic markets but also a prerequisite for international operations. In other words, companies may be successful with either IO or EO. However, once IO and EO are combined, a firm may gain more significant value because both, international and entrepreneurial endeavors, are pursued more efficiently. Thus, I hypothesize:
Hypothesis 4. There is a positive common effect of IO and EO on firm performance.
The interrelation of IO, MO, and EO. Prior research suggested that different combinations
21 be considered. MO alone may unintentionally direct companies’ attention on existing customers and competition, hence, limiting attention to emerging markets and therefore, staying within established borders (Wales, Beliaeva, Shirokova, Stettler, & Gupta, 2018), for example, saturated markets. And with regard to EO, innovativeness alone does not lead automatically to success. The fact that MO and EO affect the process of internationalization is indicated by studies conducted in an export environment (e.g., Rose & Shoham, 2002). Moreover, MO’s and EO’s contribution to international success was shown by various scholars (e.g., Knight & Cavusgil, 2004; Madsen & Sørensen, 2012).
Not only MO’s and EO’s contribution to international success suggests a close connection to IO, but also characteristics of the three strategic orientations are related to each other. For example, Machade et al. (2016) argued that Knight (1997) derived the concept of global orientation, which is used as a synonym to IO in their study, from the market orientation construct of Narver and Slater (1990) and Jaworski and Kohli (1993). Companies that can tailor the right products to the right markets, and that have the entrepreneurial know-how, will be more successful in an international environment. In the case of saturated home markets, the entrepreneurial and international orientation of a firm will lead it to search for opportunities abroad. Then, having the capability to generate and process information from a market abroad can lead to a quick and successful introduction of new products. Following the notion that no strategic orientation operates isolated (Hakala, 2011), firm performance is influenced by an interplay of different strategic orientations. In accordance with the proofed interrelation between MO and EO, the predicted interrelation between IO and MO on the one hand, and IO and EO on the other hand, I predict a collaborative effect of all three orientations. Thus, I hypothesize:
Hypothesis 5: There is a positive common effect of IO, MO, and EO on firm performance.
3 Methodology
This study uses a mixed-methods research approach. First, to examine the magnitudes of IO, MO, and EO within CEO shareholder letters, I relied upon content analysis (qualitative approach). Secondly, for testing my hypotheses, I conducted regressions and a commonality analysis on the content analysis results and company data derived from the database Compustat (quantitative approach).
22 as a factor of analysis to make assumptions about conceptualizations (Tetlock, Saar‐Tsechansky, & Macskassy, 2008). This approach assumes that the terms individuals use in their written narrations display their cognitive processes (Pennebaker, Mehl, & Niederhoffer, 2003). Corresponding with this assumption, the terms used in organizational publications convey essential insights about a company’s strategy (Belderbos et al., 2017).
Content analysis of company publications has several advantages. First, it is especially useful for complex and difficult-to-measure research issues, avoiding recall bias, and obtrusiveness of survey designs (Duriau, Reger, & Pfarrer, 2007). Furthermore, content analysis allows to collect data on organizational-level, rather than on the individual-level (Short et al., 2009) and hence, overcomes survey-related limitations. Moreover, it can be applied to qualitative as well as quantitative research, and it can be combined with longitudinal research (Duriau et al., 2007). Another beneficial aspect of content analysis is its objectivity. Moreover, and of particular importance to this study, content analysis facilitates the understanding of cognitive characteristics, ethics, beliefs, and individual as well as collective goals (Carley, 1997).
The most often-used document for performing content analysis is the CEO letter to shareholders (Duriau et al., 2007). I relied on CEO letters as company narrative for several reasons. First, the letter to shareholders is a valuable source of executive cognitive characteristics as they reflect the perceptions and beliefs of the author (D’Aveni & MacMillan, 1990). Therefore, philosophies and beliefs, which include strategic orientations, can be captured using content analysis. Second, the shareholder letter is the most commonly read part of the entire annual report (Courtis, 1982). Third, evidence shows that CEOs are sincerely engaged in writing the shareowner letter (e.g., Amernic, Craig, & Tourish, 2007). Moreover, it is proven that the composition of these letters is referring to company activities and results (Bowman, 1984). So far, shareholder letters have been used to learn about MO (Zachary et al., 2011), EO (Short et al., 2010), and organizational virtue (Payne, Brigham, Broberg, Moss, & Short, 2011). Following these previous examples, IO, MO, and EO can be captured within the rhetoric evident in CEO letters.
3.1 Data sample
23 2017. Within this sample, all companies have an interest in conveying their values, beliefs, and strategic orientations to their stockholders in organizational publications, such as shareholder letters (Short et al., 2009). Furthermore, it allows using additional data (e.g., financial performance measures) from secondary data sources without common methods variance.
Moreover, the firms included in the S&P 500 are large, well-established organizations that are all exposed to internationalization (Brzenk, 2018). To provide a stable sample, I included only companies that were listed in the S&P 500 for the whole study period. Further, I only included firms that provided a sufficient number of shareholder letters. To be considered as having sufficient shareholder letters, a company had to have at least seven shareholder letters available, and a gap no larger than three years between letters. Thereby, I could ensure that no strategic trend of a company was neglected. In accordance with previous studies (e.g., Belderbos et al., 2017; Cho, Kim, & Jeong, 2017; Madsen & Sørensen, 2012), I only focused on manufacturing firms. The shareholder letters for this study were available from annual reports, published yearly by each firm. Out of 305 manufacturing firms listed in the S&P 500 for the entire period, 110 had enough shareholder letters available online, which results in 960 shareholder letters. Additional data, for the years 2008 – 2018 (to control for lagged effects) such as financial performance measures, I derived from the database Compustat.
3.2 Measures
To analyze the shareholder letters, I relied upon computer-aided text analysis (CATA). I followed previous research, which suggested the use of CATA to assess strategic orientations (see table 3). CATA is an approach to content analysis, which ensures near perfect reliability (Neuendorf, 2002). It enables researchers to process large numbers of data and is as accurate as manual coding by experts (King & Lowe, 2003). Moreover, in contrast to human coding, CATA is less expensive and faster.
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Table 3. Previous studies using CATA
Study Methodology Strategic orientation
Context
Short, Broberg, Cogliser & Brigham (2010)
Analysis of shareholder letters of 405 firms; 1,512 pages of text from S&P 500 for one year, compared with Russell 2000 index.
EO Demonstration of CATA attractivity, development of an extensive CATA guide, including an empirical illustration
Zachary,
McKenny, Short & Payne (2011)
Analysis of 1,120 shareholder letters of 224 family firms from the S&P 500 for five years.
MO Comparative analysis of MO in family and non-family businesses McKenny,
Aguinis, Short & Anglin (2016)
EO: Analysis of Short et al.’s (2010) sample for two years. 745 shareholder letters from 401 firms representing 169 industries MO: Analysis of Zachary et al.’s (2011) sample. 1,112 shareholder letters from 224 firms representing 124 industries.
Organizational ambidexterity: 2,460 MD&A statements from 10-K documents for 205 firms representing four industries.
EO, MO and organizational ambidexterity
Demonstration of CATA potential and implications for future CATA use, including an empirical illustration
Belderbos, Grabowska, Leten, Kelchter & Ugur (2017)
Analysis of news articles published about 180 European, American and Japanese companies from the Industrial R&D Scoreboard for nine years
Global mindset
Demonstration of CATA potential and critical validity steps, including an empirical illustration
Beutel (2018) Analysis of 5,480 shareholder letters of 478 firms from the S&P 500 for 16 years
Digital orientation
Investigation of the relationship between and digital orientation with firm performance
McKenny, Short, Ketchen, Payne & Moss (2018)
Analysis of 2,268 10-K documents (MD&A section) from 399 firms over six years, derived from high-tech industries in Compustat
EO Examination of the different aspects of entrepreneurial orientation
Dependent variables. This study tests the relationship between firms’ IO (with and without
interrelation with MO and EO) and their corporate performance. To measure firm performance, I took the logarithm of Tobin’s Q. This measure allows to capture both, the short-term as well as the long-term performance and thus, it is a commonly used measure for such research endeavors (e.g., Hall, Jaffe, & Trajtenberg, 2005; Lavie, Kang, & Rosenkopf, 2011). The forward-looking approach of Tobin’s Q is important as I predict IO to have a longer-term effect on firm performance. The Tobin’s Q gives information on how good a firm’s investments pay off. For comparison and robustness tests, I used the return on assets (ROA), return on sales (ROS), and return on investments (ROI) as dependent variables.
Independent variables. The strategic orientations IO, MO, and EO, are the independent
25 Previous studies used different approaches to calculate strategic orientation coefficients, which are (1) calculating a ratio, (2) normalizing word counts, and (3) calculating an average. The first approach, introduced by Short et al. (2010), accounts for variance in the length of shareholder letters. The mean number of total words used in the shareholder letters was 1,684 with the shortest document using only 82 words and the longest using 5,872. To control for this divergence in document length, I divided the number of each orientation’s keywords per letter by the total word count of the shareholder letter. This approach is a recognized control step in previous content analysis studies (e.g., Doucet & Jehn, 1997). To use this approach, however, the researcher has to make sure that the letter does not contain sections of irrelevant information, which would lead to noise (Belderbos et al., 2017). The second approach to calculating a measure for strategic orientations was applied by Beutel (2018) and also accounts for different lengths of shareholder letters. Therefore, I multiplied the number of keywords (individually for each strategic orientation) in each letter with 1,000 and divided the product by the total word count of this letter. The third approach aims to eliminate distorted word counts, caused by year-to-year variability in shareholder letters. Following Zachary et al. (2011) I averaged each firm’s strategic orientation total values over all nine years. In my main model, I applied the first approach, which is also mentioned by Belderbos et al. (2017). Further, I present the regression analysis using the third approach in the appendix, for comparison and robustness check (table A4). The second approach is similar to the first one and hence, not used in the robustness checks.
Control variables. When examining firm performance, previous research considered several
control variables (Belderbos et al., 2017; Hall et al., 2005). Therefore, I controlled for age, firm size, R&D intensity, and lagged Tobin’s Q. Belderbos et al. (2017) use the lagged Tobin’s Q because they predict a lagged effect of strategic orientations. Other studies do not include lagged effects; therefore, I consider both options in my regression model. Additionally, I included company and year fixed effects.
Sample period. As mentioned above, the shareholder letters span the years 2009 – 2017.
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Table 4. Variable operationalization and data sources
Variables Operationalization Source
Dependent variables
Tobin’s Q Logarithm of the Tobin’s Q
Tobin’s Q = (total assets + (common shares outstanding * price close annual) – common ordinary equity) / total assets;
whereas common ordinary equity = book value of equity
Compustat
Tobin’s Q t+1 One-year future value of logarithm Tobin’s Q Compustat ROA Logarithm of net income over total assets Compustat ROS Logarithm of net income over revenues Compustat ROI Logarithm of net income over total invested capital Compustat
Independent variables
IO The number of IO keywords per letter divided by the total word count of the shareholder letter
Shareholder letter MO The number of MO keywords per letter divided by the total word
count of the shareholder letter
Shareholder letter EO The number of EO keywords per letter divided by the total word
count of the shareholder letter
Shareholder letter
Control Variables
Firm age Logarithm of firm age Compustat
Firm size Logarithm of total assets of the firm Compustat R&D intensity Ratio of the firm’s R&D expenditures to its total assets Compustat Tobin’s Q t-1 One-year lagged value of logarithm Tobin’s Q. Compustat
Dummies and standard error
Time period Dummy variable for each year in the sample - Company Dummy variable for each company in the sample - Industry Clustered standard error on industry-level according to the
first two digits of the Standard Industrial Classification (SIC) code
Compustat
3.3 Computer-aided text analysis (CATA)
27 For IO, in the second step, I developed a new dictionary. Following Belderbos et al. (2017), I developed a dictionary based on theory which addresses the multidimensionality of the concept used in this study. When creating such a dictionary, a researcher can use two techniques: (1) deductive and (2) inductive (Doucet & Jehn, 1997). Short et al. (2010) suggested starting with a deductive keyword list. The deductive keyword list is based on terms defined and used by literature, but independently from CEO shareholder letters. Accordingly, I first developed my IO dictionary with words from IO definitions and supplemented it with synonyms from The
Synonym Finder (Rodale, 1978). Short et al. (2010) recommended combining the deductive
keyword dictionary with inductively generated keywords. For my IO dictionary, I complemented the deductive keyword list with inductive terms derived from expressions displayed in shareholder letters. Following Beutel (2018) and Belderbos et al. (2017), I randomly checked (across firms and years) CEO letters and added frequently used terms related to IO to my keyword dictionary.
In the third step, I checked the appropriateness of ambiguous keywords via keyword-in-context (KWIC) analysis (Krippendorff, 2004). KWIC analysis investigates the keyword-in-context in which keywords are used. Therefore, I analyzed all 960 shareholder letters with a list of ambiguous deductive and inductive keywords. The aim of this step is to avoid keywords that are generally used in a context different than IO. For example, the inductive keyword “diverse” is used in IO context when it is used in the meaning of “diverse environments” or “diverse geography”. But in the sample of shareholder letters, it was used in unrelated contexts such as “diversified business model” or “diverse products”. In my final keyword dictionary, I included only ambiguous keywords with an in-context occurrence share above 50% (Belderbos et al., 2017). I provide further examples of contexts in which keywords are used in table 5.
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Table 5. Examples of contexts of keywords
Keywords Examples of keywords used in international orientation context
Around the world “We expect to maintain double-digit sales growth internationally as we further expand our
presence in emerging markets and bring new, innovative products to consumers and patients
around the world” (Abbott Laboratories, 2010).
Emerging market “Their strong double-digit growth (…) are widening the reach and awareness of Kellogg
brands, and they represent a key element of our strategy to expand in emerging markets” (Kellogg Co, 2018).
Expand geographically
“We also continue to expand geographically to meet the ever-increasing need for our therapies in developing and emerging markets” (Baxter International Inc., 2010).
Geographic footprint
“As described earlier in this letter, we are adapting our products, geographic footprint and organization to address the needs of our leading customers and more globally connected consumers” (McCormick & Company Inc., 2013).
Global expansion “For Biogen Idec, global expansion and focus on new markets is taking two simultaneous
tracks — one based on building strategic organizations in markets where there are clear regulatory and reimbursement paths and, in others, creating distribution models that enable us to get therapies to patients in the short term while maintaining an ability to build and grow our presence in the coming years” (Biogen Idec, 2014).
Global leader “PACCAR’s 23,000 employees enable the company to distinguish itself as a global leader
in the technology, capital goods, financial services and aftermarket parts businesses” (Paccar Inc., 2016).
Global presence “We focus on four growth enablers—products, pipelines, global presence and people—that
support the model and enable accelerated growth” (Johnson & Johnson, 2011).
Growing regions “The outstanding leadership positions our businesses have built thus far are not sustainable
over the next decade unless we also lead in the faster growing regions of the world” (Danaher Corp, 2012).
Multinational “The company has grown rapidly from a biotech start-up to a multinational
biopharmaceutical company with over 5,000 employees spanning 26 countries on four continents” (Gilead Sciences, Inc., 2013).
Overseas “We are also connecting with members of the public to help them navigate health care
decision- making through programs such as Get Old, which focuses on healthy aging, and Get Healthy Stay Healthy, now expanding from the U.S. to major markets overseas” (Pfizer Inc., 2017).
Dropped keywords
Diverse “With a diversified business model and strong balance sheet, DENTSPLY stands prepared
to take advantage of renewed growth as the global dental industry rebounds from the difficult recession of 2008 and 2009” (Dentsply International, 2010).
Diverse employer “Realigned our Senior Leadership Team to strengthen its global composition and activated
an Executive Inclusion & Diversity Council to further advance our efforts to be a more inclusive and diverse employer (…)” (VF Corporation, 2018).
Merger “This merger is an outstanding strategic fit, and it will create superior long-term value for
our shareholders” (Weyerhaeuser Co, 2016).
Subsidiary “Beginning in the first quarter of 2017, we began operating Backflip as a
