Foreign firms’ strategic positioning and performance in a host market

Abstract

Purpose Strategic positioning of foreign firms in a host market is vital for their success. By integrating the resource partitioning theory and the resource-based view, this study aims to investigate foreign firms’ strategic positioning (i.e. their choice of generalist or specialist positioning strategy) and its performance implications in the US market. Design/methodology/approach The final sample includes 212 foreign companies from 28 countries operating in the US market. Multiple data sources were used to collect data of these foreign companies’ subsidiaries in the USA This study used logistic regression to test its major hypotheses. Findings The results of this study suggest that a generalist positioning strategy is positively related to performance in a host market. It is also found that market concentration and local market knowledge moderate this strategic positioning – performance relationship. Research limitations/implications For a foreign firm that enters a host market, market concentration (an industry-level factor) in the host market and the firm’s local market knowledge (a firm-specific factor) play prominent roles in the strategic positioning – performance relationship. Originality/value This study offers a novel perspective of international business strategy by applying the lens of resource partitioning theory to study the relationships between multinational enterprises’ strategic positioning and performance. This study contributes to the strategy literature in that it examines the performance implications of firms’ strategic positioning (i.e. generalist or specialist positioning).