AJIBM  Vol.3 No.3 , July 2013
Winning Consumers through Experience: Competition between Domestic and International Businesses
Abstract: Retail internationalization has received increasing attention due to its popularity as a business practice. Previous studies have focused on two main factors in the process of retail internationalization: resources and environment. In the resources category, one of the key factors that has been extensively studied is social capital [1]. And in the environment category, one of the most influential environmental factors is cultural distance and its consequence, psychic distance [2]. However, few studies have investigated social capital from the consumers’ perspective and considered the influence of psychic distance perceived by international retailers’ targeted consumers in the host market on their acceptance. This study aims to investigate how to decrease consumers’ psychic distance to obtain initial acceptance from the targeted consumers in the host country. Previous studies have found that perception is shaped through experience [3,4]. Therefore, the main argument in our study is that international businesses should focus on experiential marketing to reduce consumers’ psychic distance. In order to understand this argument in the host market competition, experiential marketing strategies in the domestic businesses framework, as well as in the international businesses framework, will be compared.


Cite this paper: Y. Liu and D. Dong, "Winning Consumers through Experience: Competition between Domestic and International Businesses," American Journal of Industrial and Business Management, Vol. 3 No. 3, 2013, pp. 341-348. doi: 10.4236/ajibm.2013.33040.

[1]   J. Nahapiet and S. Ghoshal, “Social Capital, Intellectual Capital, and the Organizational Advantage,” Academy of Management Review, Vol. 23, No. 2, 1998, pp. 242-266.

[2]   T. Clark and D. S. Pugh, “Foreign Country Priorities in the Internationalization Process: A Measure and an Exploratory Test on British Firms,” International Business Review, Vol. 10, No. 3, 2001, pp. 285-303. doi:10.1016/S0969-5931(01)00017-8

[3]   W. S. Cain, “Odor Intensity: Differences in Exponent of Psychophysical Function,” Percept Psychophys, No. 6, 1969, pp. 349-354. doi:10.3758/BF03212789

[4]   A. Dravnieks, “Odor Quality: Semantically Generated Multidimensional Profiles Are Stable,” Science, Vol. 218, No. 4574, 1982, pp. 799-801. doi:10.1126/science.7134974

[5]   B. Sternquist, “International Retailing,” 2nd Edition, Fairchild Publications, New York, 2007.

[6]   A. Oxenfeldt and A. Kelly, “Will Successful Franchise Systems Ultimately Become Wholly-Owned Chains?” Journal of Retailing, Vol. 44, No. 4, 1969, pp. 69-83.

[7]   M. Jensen and W. Meckling, “Theory of the Firm: Managerial Behavior, Agency Costs, and Ownership Structure,” Journal of Financial Economics, Vol. 3, No. 4, 1976, pp. 305-360. doi:10.1016/0304-405X(76)90026-X

[8]   J. H. Dunning and M. McQueen, “The Eclectic Theory of International Production: A Case Study of the International Hotel Industry,” Managerial & Decision Economics, Vol. 2, No. 4, 1981, pp. 197-210. doi:10.1002/mde.4090020401

[9]   W. R. Scott, “Institutions and Organizations,” Sage, Thousand Oaks, 1995.

[10]   J. Johanson and F. Wiedersheim-Paul, “The Internationalization of the Firm: Four Swedish Cases,” Journal of Management Studies, Vol. 12, No. 3, 1975, pp. 305-322. doi:10.1111/j.1467-6486.1975.tb00514.x

[11]   C. Pornpitakpan, “The Effects of Cultural Adaptation on Business Relationships: American Selling to Japanese and Thais,” Journal of International Business Studies, Vol. 30, No. 2, 1999, pp. 317-338. doi:10.1057/palgrave.jibs.8490072

[12]   C. M. P. Sousa and F. Bradley, “Global Markets: Does Psychic Distance Matter,” Journal of Strategic Marketing, Vol. 13, No. 1, 2005, pp. 43-59. doi:10.1080/0965254042000328668

[13]   G. Albaum and D. K. Tse, “Adaptation of International Marketing Strategy Components, Competitive Advantage, and Firm Performance: A Study of Hong Kong Exporters,” Journal of International Marketing, Vol. 9, No. 4, 2001, pp. 59-81. doi:10.1509/jimk.

[14]   J. W. Lu and P. W. Beamish, “The Internationalization and Performance of SMEs,” Strategic Management Journal, No. 22, 2001, pp. 565-586.

[15]   A. Shoham and G. S. Albaum, “Reducing the Impact of Barriers to Exporting: A Managerial Perspective,” Journal of International Marketing, Vol. 3, No. 4, 1995, pp. 85-105.

[16]   R. Fletcher and J. Bohn, “The Impact of Psychic Distance on the Internationalization of the Australian Firm,” Journal of Global Marketing, Vol. 12, No. 2, 1998, pp. 47-68. doi:10.1300/J042v12n02_04

[17]   K. Eriksson, A. Majkgard and D. D. Sharma, “Path Dependence and Knowledge Development in the Internationalization Process,” Management International Review, Vol. 40, No. 4, 2000, pp. 307-328.

[18]   H. Trabold, “Export Intermediation: An Empirical Test of Peng and Ilinitch,” Journal of International Business Studies, Vol. 33, No. 2, 2002, pp. 327-344. doi:10.1057/palgrave.jibs.8491019

[19]   D. Sethi, S. E. Guisinger, S. E. Phelan and D. M. Berg, “Trends in Foreign Direct Investment Flows: A Theoretical and Empirical Analysis,” Journal of International Business Studies, Vol. 34, No. 4, 2003, pp. 315-326. doi:10.1057/palgrave.jibs.8400034

[20]   R. Grosse and L. J. Trevino, “Foreign Direct Investment in the United States: An Analysis by Country of Origin,” Journal of International Business Studies, Vol. 27, No. 1, 1996, pp. 139-155. doi:10.1057/palgrave.jibs.8490129

[21]   J. Evans, A. Treadgold and F. T. Mavondo, “Psychic Distance and the Performance of International Retailers: A Suggested Theoretical Framework,” International Marketing Review, No. 17, 2000, pp. 373-391.

[22]   W. C. Hunter and M. B. Walker, “The Cultural Affinity Hypothesis and Mortgage Lending Decisions,” Journal of Real Estate Finance and Economics, No. 13, 1996, pp. 57-70.

[23]   K. L. Keller, “Strategic Brand Management: Building, Measuring, and Managing Brand Equity,” 2nd Edition, Prentice Hall, Upper Saddle River, 2003.

[24]   K. E. Reynolds and M. J. Arnold, “Customer Loyalty to the Salesperson and the Store: Examining Relationship of Customers in an Upscale Retail Context,” Journal of Personal Selling and Sales Management, Vol. 20, No. 2, 2000, pp. 89-98.

[25]   B. Schmitt, “Experiential Marketing,” Journal of Marketing Management, Vol. 15, No. 1-3, 1999, pp. 53-67. doi:10.1362/026725799784870496

[26]   J. S. Coleman, “Social Capital in the Creation of Human Capital,” American Journal of Sociology, Vol. 94, 1988, pp. 95-120. doi:10.1086/228943

[27]   W. Tsai and S. Ghoshal, “Social Capital and Value Creation: The Role of Intra-Firm Networks,” The Academy of Management Journal, Vol. 41, No. 4, 1998, pp. 464-476. doi:10.2307/257085

[28]   M. A., McFadyen and A. A. J. Cannella, “Social Capital and Knowledge Creation: Diminishing Returns of the Number and Strength of Exchange Relationships,” The Academy of Management Journal, Vol. 47, No. 5, 2004, pp. 735-746. doi:10.2307/20159615

[29]   D. Narayan and M. F. Cassidy, “A Dimensional Approach to Measuring Social Capital: Development and Validation of a Social Capital Inventory,” Current Sociology, Vol. 49, No. 2, 2001, pp. 59-102. doi:10.1177/0011392101049002006

[30]   S. Fournier and L. Lee, “Getting Brand Communities Right,” Harvard Business Review, No. 4, 2009, pp. 105-111.

[31]   C. Yoo, J. Park and D. J. Maclnnis, “Effects of Store Characteristics and In-Store Emotional Experiences on Store Attitude,” Journal of Business Research, Vol. 42, No. 3, 1998, pp. 253-263. doi:10.1016/S0148-2963(97)00122-7

[32]   K. De Ruyter and J. Bloemer, “Customer Loyalty in Extended Service Settings: The Interaction between Satisfaction, Value Attainment and Positive Mood,” International Journal of Service Industry Management, Vol. 10, No. 3, 1999, pp. 320-336. doi:10.1108/09564239910276917

[33]   K. P. Gwinner, D. G. Dwayne and M. J. Bitner, “Relational Benefits in Services Industries: The Customer’s Perspective,” Journal of the Academy of Marketing Science, Vol. 26, No. 2, 1998, pp. 101-114. doi:10.1177/0092070398262002

[34]   K. W. Thomas and B. A. Velthouse, “Cognitive Elements of Empowerment: An ‘Interpretive’ Model of Intrinsic Task Motivation,” Academy of Management Review, Vol. 15, No. 4, 1990, pp. 666-681.

[35]   N. Strauss, “Behind the Grammys, Revolt in the Industry,” New York Times, Vol. 24, No. 4, 2002.

[36]   J. Spohrer and P. P. Maglio, “The Emergence of Service Science: Toward Systematic Service Innovations to Accelerate Co-Creation of Value,” Production and Operations Management, Vol. 17, No. 3, 2008, pp. 1-9. doi:10.3401/poms.1080.0027

[37]   M. Granovetter, “Economic Action and Social Structure: The Problem of Embeddedness,” American Journal of Sociology, Vol. 91, No. 3, 1985, pp. 481-510. doi:10.1086/228311