When are innovativeness and responsiveness effective in a foreign market?

Abstract

Good managerial understanding of the mechanisms underlying the effectiveness of entrepreneurial orientation (EO) and market orientation (MO) in dynamic foreign markets improves the international competitiveness of the entire firm. Drawing on the dynamic capability view, this study contributes to the international strategy and entrepreneurship literature by extending our understanding of the actionable components of the EO/MO of firms’ foreign units, that is, innovativeness and responsiveness. The study examines relationships between the actionable components and the performance of industrial firms’ wholly owned subsidiaries and cooperative arrangements in foreign markets. The results indicate that innovativeness and responsiveness are directly and positively associated with the performance of the foreign unit. Higher institutional barriers make innovativeness less effective, while full ownership strengthens the positive relationship with responsiveness. Contributions to the literature are discussed.