Pricing Decisions in International Industrial Markets – The Link between Standardization at Market Entry, Pricing Capability, and Price Reactions

Abstract

International pricing decisions are one of the most paramount decisions managers face. By linking international marketing and competitive dynamics this paper reveals a relationship between product and price standardization at international market entry and defensive price reactions after market entry based on the concept of path dependencies. The empirical evaluation of a structural model shows that standardization positively influences slack resources after adaptation decision and in addition price formation capabilities. In line with the awareness-motivation-capability framework our results show a negative impact of price adaptive capabilities on price reaction.