The effect of manufactures’ channel strategy and product strategy on firm performance in foreign market: Based on optimal distinctiveness theory

Abstract

When a manufacturer enters an overseas market, an important decision-making issue is how to achieve the firm’s performance while adapting to the environment of the entry market. This study aims to present a theoretical framework, grounded in the optimal distinctiveness theory, to examine how manufacturers can combine channel strategies and product strategies to enhance firm performance in foreign markets, and to validate its empirical relevance. The optimal distinctiveness theory is a framework that argues firms can improve performance by orchestrating actions that acquire legitimacy, based on institutional theory, and those that achieve distinctiveness, based on competitive strategy framework. An empirical analysis targeting Japanese industrial products manufacturers indicates that when the competitive intensity in the target market is high and either the regulatory/normative distance or cultural distance is significant, enhancing both channel strategy legitimacy and product innovativeness leads to higher performance.