THE ROLE OF ORGANIZATIONAL STRATEGIES, SOCIAL SUPPORT, AND TECHNOLOGICAL CAPABILITIES IN INTERNATIONAL MARKETING CHANNEL PERFORMANCE

Muhammad Zahid Nawaz, School of Business Administration, Dongbei University of Finance & Economics, China. Email: zahid.n@live.com

Shahid Nawaz, SBA, Dongbei University, China. Email: shahidnawaziub@gmail.com

Muhammad Nuaman Shafique, SBA, Dongbei University, China. Email: shafique.nouman@gmail.com

Mudassar Ali, The Islamia University of Bahawalpur. Email: mudasar.ali@sngpl.com.pk

Muhammad Ishaq, The Islamia University of Bahawalpur. Email: ch.ishfaq54@yahoo.com

Abstract. Information communication technologies increase the competitive intensity among organizations. The only way to get a sustainable competitive advantage is to focus on their resources, and capabilities to establish, and implement effective strategies to increase international marketing channel performance (IMCP). The target population of this study is the food industry in Pakistan, and the sample size is 400. Data has been collected through survey method based on an adapted questionnaire. Data was analyzed through partial least square – structural equation modeling method. Results showed that validity and reliability of data, and organizational strategies (OS) focused on relationship strategies (RS) and marketing integration strategies (MIS) has positive and significant effect on IMCP. Whereas, technological capabilities (TC) has moderated and significant effect between OS and IMCP. Furthermore, social support (SS) has insignificant effect. This study has theoretical and practical significance. Because this study opens the new horizons in literature and provide guidelines to align their strategies with their capabilities to gain sustainable competitive advantage, which will improve their IMCP.

Keywords: Trust, Commitment, Market Integration, Supplier Integration, Customer Integration, Social Support, International Marketing

1. Introduction

Information communication technologies have changed the game of business; it creates hyper-competition among organizations around the world. Every organization is trying to gain sustainable competitive advantage through the expansion of their boundaries, which will boost up their sales, and market values. In 2014, U.S. retail sale was $ 396.38 billion, while the world total retail sale is $ 22.3 trillion in the same year (Ling, 2018). In the first quarter of 2018, retail sales estimated up to $ 1306.7 billion in U.S. It has increased by 0.2% from the last quarter of 2017 in the U.S (Bureau, 2018).

Amazon has $ 777.8 billion, and Alibaba has $ 499.4 billion market value in the retail industry (Statista, 2018). But still, organizations need to move into new markets to increase their sales, and market value to gain sustainable competitive advantage and grow their IMCP. So, organizations need resources and robust competitive strategies to expand their borders. How organizational resources and strategies can improve IMCP?

This study has practical and theoretical significant, because the novelty in four aspects, first, this study has aligned OS with TC, and SS to improve IMCP, which has not established in the previous literature. Second, this study was conducted in the food industry, because around the world Halal food concept is widespread, and customer demanded. Third, this study enables organizations to develop effective marketing integration, and relationship strategies and implement these strategies in organizations to grow IMCP. Fourth, in this study, SS has taken as external and social aspects in international channel studies, So, the objective of this study is to fill the knowledge gap in international marketing literature and provide a guideline to organizations to improve their IMCP.

In this study, Resource-based theory (RBT) and strategic choice theory (SCT) has focused. RBT has focused on the value of vital resources and capabilities (Barney, 1991), their configuration, and procession. SCT has focused on the phenomenon to adapt and improve market integration continuously, and relationship strategies to respond to the environment (Child, 1997; Child, Chung, & Davies, 2003). Only organizational resources are not the guarantee to gain competitive advantage; resources must be effectively managed and exploited, taking into account changing external factors that an organization faces in its competitive business environment (Child, 1997; Craighead, Hult, & Ketchen Jr, 2009).

This manuscript has organized as follow. In the initial stage background of the study, and research question has been established, which were answered through two related theories. Then the in-depth literature review on RBV, SCT, trust, commitment, SI, CI, SS, TC, and IMCP has been conducted to develop a theoretical framework. The methodology based on population, sampling, common method bias and measurement has mentioned. After this advanced statistical technique of PLS-SEM based on measurement and the structural model was used to analyze the data. At the end conclusion, discussion, theoretical and practical implications, limitations and future directions for further studies have been mentioned.

2. Literature Review

In this competitive era, the primary objective of each organization is to gain a sustainable competitive advantage. It is only possible when organizations have different and unique resources and capabilities from their competitors. RBT has provided the guideline to develop and implement organizational strategies effectively to get a sustainable competitive advantage. Resources can be tangible or intangible (Barney, 1991). In this study, TC has been considered; technological capabilities are the essential element to gain a sustainable competitive advantage (Barney, 1991).

The key to success in an international environment is to adjust to the external environment. Organizations must consider the dynamic political situation; leaders must have to develop their relationship with political parties to align organizational, operational processes according to the environment (Child, 1997; Child et al., 2003). SCT provides the choices of individuals, and groups to adjust themselves according to a dynamic environment; the ultimate goal is to achieve organizational performance. SCT can also provide guidelines to reduce common disputes and make the relationship more strengthen between individuals and groups (Keating, Pruitt, Eberle, & Mikolic, 1994).

Trust among international marketing channel increase the performance. Trust between stakeholders increases the mental satisfaction of stakeholders because they feel their suggestions are essential and they are considered the important part in decision making (Ashnai, Henneberg, Naudé, & Francescucci, 2016). When stakeholders can trust on each other then they feel more protected and safe, they think the organization will defend their rights, employees will be frank and friendly with them, stakeholders consider themselves an essential part in problem-solving, organizations do work for their wellbeing (Fernández-Sabiote & Román, 2016; Wu, Chuang, & Hsu, 2014). So, trust is a crucial factor; trust can increase organizational performance especially IMCP. In literature, trust has a impact on performance (Fernández-Sabiote & Román, 2016; Ferro, Padin, Svensson, & Payan, 2016; Wu et al., 2014).

The commitment between stakeholders increases organizational performance, especially IMCP. If stakeholders are committed to each other, then their trust level will increase automatically, and organizations can operate smoothly (Ferro et al., 2016; Skarmeas, Zeriti, & Baltas, 2016). When stakeholders are committed with each other, then they are ready to scarify and help each other. They spend a higher amount of time, effort and resources to continue the relationship, which will lead to strong bonding between them to achieve higher performance. In previous studies, the empirical relationship between commitment and performance was found (Ferro et al., 2016; Wu et al., 2014).

Customer integration is the linkage between customer and organization. The purpose of CI is to share market information between an organization and their primary customers. Organizations frequently contact their customers to share information (Ataseven & Nair, 2017; Chang, Ellinger, Kim, & Franke, 2016; Lii & Kuo, 2016; Zhang, Zhao, Voss, & Zhu, 2016). Both face to face and internet interaction methods used for CI. It will increase communication between customer and organization to strengthen the relationship between them. CI is beneficial for both customer and organizations because customers can order their product through information technologies or at the point of sale. On the contrary, organizations can forecast customer demands and satisfy their individual needs (Ataseven & Nair, 2017; Chang et al., 2016; Lii & Kuo, 2016; Zhang et al., 2016). So, CI create a friendly environment between organization and customer to smooth organizational processes, which will increase organizational performance especially IMCP. There is a relationship between CI and performance was established in the literature (Ataseven & Nair, 2017; Chang et al., 2016; Lii & Kuo, 2016; Zhang et al., 2016).

Supplier integration is the connection between supplier and organization. Both organization and supplier wants to establish a good relationship with each other to gain a competitive advantage (Ataseven & Nair, 2017; Chang et al., 2016; Lii & Kuo, 2016; Zhang et al., 2016). SI enable organizations to a partnership with their supplier, order smoothly, share information, manage inventory, schedule the order, quick the ordering process, share the information, demand forecast, production planning, and establish the friendly relationship between organization and supplier to smooth organizational processes and procedure between organization and supplier (Ataseven & Nair, 2017; Chang et al., 2016; Lii & Kuo, 2016; Zhang et al., 2016). When both buyer and supplier are comfortable with each other, then it will increase organizational performance especially IMCP. In previous literature, the relationship between SI and performance has found (Ataseven & Nair, 2017; Chang et al., 2016; Lii & Kuo, 2016; Zhang et al., 2016).

Social support is the essential element in organizational success when they move internationally. If the organization could not get the SS from society then its very hard for an organization to survive in that specific market. So, organizations focus on social factors when they move internationally (Farooq et al., 2018). SS can measure through four significant dimensions. First, emotional and moral support, second, business information and knowledge support, third, financial support in the shape of the initial capital, and fourth, in the form of additional business contacts. Some organizations get all types of these SS, but some of them found few of them, but these four dimensions are too much important for every organization to get social support. SS is critical to operational and enterprenurial studies (Farooq et al., 2018), the same logic is applicable on IMCP.

Technological capabilities are the most prominent factor to manage organizational processes and gain a sustainable competitive advantage in this era. The organizationis implemented new technologies to systemize their marketing channels (Hao & Song, 2016; Ross, 2016; Wu et al., 2014). TC enable organizations to maintain, analyze, and improve all type of activities from plan, design, implement, collaborate, investigate, share information, and integrate internal and external factors at just in time to improve their efficiency and effectiveness. On the contrary, organizations cannot survive without focusing on their TC. So, TC is the most critical factor to increase organizational performance especially concentrated on IMCP. In the previous literature, the relationship between TC and organizational performance has empirically analyzed (Hao & Song, 2016; Ross, 2016; Wu et al., 2014).

International marketing channel performance (IMCP) can measure through three essential dimensions. First, strategic performance based on marketing, distribution, promotion and pricing strategies for foreign markets. Second, selling performance based on establishing, managing and strengthen the relationship with customers through both online and offline sources. The primary objective of the relationship between organization and customer is to increase the sale,after-sales services is also an important factor in selling performance. Third, economic performance based on economic, sales, growth, and profit goals of organizations to gain from foreign markets. The ultimate goal of this study is to increase IMCP, through different strategies and capabilities. The relationship between organizational strategy and IMCP has found in the literature. The association is positive and significant. So, if organizations focus on their resources and strategy then they can increase their channel performance, which is consistent with previous literature (Palmatier, Stern, & El-Ansary, 2016; Yang, Su, & Fam, 2012).

Organizations develop their strategies according to their resources to gain a competitive advantage and increase their organizational performance. In this study, two types of OS, first RS, second, MIS has aligned with TC, and SS to increase IMCP, because if organizations are successful in aligning their TC with their strategies and got SS then their IMCP enhance automatically. In this way, all stakeholders got integrated with each other than organizations can do their operations efficiently to gain sustainable competitive advantage and IMCP.

3. Methodology

3.1 Sample and Population

In this study, food manufacturing companies in Pakistan have targeted population. The sample has been selected through simple random sampling technique, and sampling size is 400, employees from four famous food companies, Shan Food, National food, Dalda foods, and K&N’s. Data has been collected through questionnaire method based on adapted Likert scale questionnaire. The data has been collected from April 2018 to May 2018.

3.2 Measurement Scale

In this study, IMCP has focused on the dependent variable, which has measured through four items (Bello & Gilliland, 1997; Yang et al., 2012). On the contrary, organizational strategies (OS) has measured through relationship strategies (RS) and market integration strategies (MIS), RS has measured through two dimensions of trust, and commitment. Whereas, MIS has also measured through two aspects of SI and CI. Trust has measured through four items (Doney & Cannon, 1997; Zacharia, Nix, & Lusch, 2009), the commitment has measured through three questions (Zacharia et al., 2009), SI has measured through thirteen items (Morash & Clinton, 1998; Narasimhan & Kim, 2002), and CI has measured through eleven questions (Morash & Clinton, 1998; Narasimhan & Kim, 2002). Only two moderators of SS and TC have been considered in this study. SS has measured through four items (Farooq et al., 2018), and TC has measured through three questions (Choi & Hartley, 1996; Lee, Lee, & Pennings, 2001; Sambamurthy, Bharadwaj, & Grover, 2003). All items have adapted from previous studies and measured on a Likert scale.

3.3 Common Method Bias

Common method bias (CMB) is the method bias or variance which can affect the results of the study. It can be occurred when dependent and independent variables have measured at the same time, with the same method, from same respondents. Independent and dependent variables have inquired at the same time from same respondents. CMB can reduce if questions for each variable has been asked in different sections or on different pages. It can measure through various techniques. In this study, Bagozzi et al. Method have followed. It is the easiest method to calculate CMB (Bagozzi, Yi, & Phillips, 1991). If the correlation between variables is less than 0.9, except SI and CI, but it can be ignored. So, there is no CMB. In table 1, the correlation between variables is less than 0.9, which shows there is no CMB issue in this study.

Table 1: Fornell - Larcker Criterion Method

Variables	1	2	3	4	5	6	7
1. Commitment	0.87
2. Customer Integration	0.74	0.79
3. Channel Performance	0.79	0.82	0.80
4. Social Support	-0.42	-0.37	-0.38	0.71
5. Supplier Integration	0.79	0.92	0.86	-0.40	0.77
6. Technological capability	0.72	0.70	0.80	-0.38	0.74	0.88
7. Trust	0.34	0.34	0.39	-0.41	0.35	0.35	0.86

3.4 Measurement Model

In this study, partial least squares structural equation modeling (PLS-SEM) method was used to analyze the data. SEM founded on two models, First, measurement model, it can be measured thorough reliability and validity of data. Second, structural model, it can be estimated through path coefficients (Barclay, Higgins, & Thompson, 1995).

Reliability of data has measured through cronabech alpha and composite reliability. The minimum acceptable value for both reliabilities is 0.6 (Fornell & Larcker, 1981; Nunnally & Bernstein, 1994). In this study, both cronabech alpha and composite reliabilities have measured and values mentioned in table 2. All the values are higher than 0.6, that’s why data has individual and composite reliability.

Validity has measured through content validity, convergent validity, and discriminant validity method. Content validity is related to the logical flow and grammatical aspect of the item. If items have content validity, then respondents can understand the questionnaire flow and meaning clearly (Fornell & Larcker, 1981). Convergent validity shows the theoretical relationship between constructs. So, convergent validity makes and test the relationship between constructs. Both content and convergent validities can measure through factor loadings. The minimum acceptable factor loadings are 0.6 (Fornell & Larcker, 1981). In table 2, factor loadings of items have mentioned, the factors have loadings less than 0.6, were removed from the analysis. Discriminant validity is the opposite of convergent validity. It shows the difference between constructs. It has measured through Fornell - Larcker Criterion Method in PLS (Fornell & Larcker, 1981). The values have mentioned in table 1; allvalues are in favor of discriminant validity. So, this data has content, convergent and discriminant validity.

Table 2: Measurement Model Analysis

Construct	Item Loading	t-statistics	Cronbach Alpha	CR & AVE
Commitment
C1	0.887	79.72	0.832	CR = 0.899 AVE = 0.749
C2	0.860	65.14
C3	0.849	58.37
Technological capability
TC1	0.883	78.66	0.846	CR = 0.907 AVE = 0.765
TC2	0.886	76.57
TC3	0.854	61.05
Trust
T1	0.847	41.31	0.898	CR = 0.929 AVE = 0.766
T2	0.885	75.50
T3	0.919	103.3
T4	0.847	39.97
Customer Integration
CI1	0.789	36.22	0.876	CR = 0.906 AVE = 0.617
CI2	0.827	47.42
CI3	0.777	30.04
CI4	0.747	23.91
CI5	0.775	30.51
CI6	0.796	33.77
Supplier Integration
SI1	0.754	28.91	0.931	CR = 0.941 AVE = 0.594
SI2	0.811	49.63
SI3	0.797	35.86
SI4	0.729	26.95
SI5	0.781	33.86
SI6	0.742	24.12
SI7	0.764	30.74
SI8	0.764	29.22
SI9	0.707	23.00
SI10	0.819	50.97
SI11	0.799	36.11
Social Support
SS1	0.675	6.93	0.523	CR = 0.751 AVE = 0.504
SS2	0.650	5.74
SS3	0.796	11.13
Channel Performance
CP1	0.747	27.57	0.815	CR = 0.878 AVE = 0.644
CP2	0.807	41.75
CP 3	0.848	58.64
CP4	0.805	34.03

4. Structural Model

A structural model has measured through path coefficients and significant values. The most important is significant values, the minimum acceptable significantvalue must be less than 0.05 (Chin, 2010; Sanchez, 2013). In this study, path coefficients of each factor have measured through and interpreted in table 3. Most of the values are significant except SS. When SS is insignificant, that’s why all moderated effects of SS are also insignificant. Only TC as moderated with trust hasinsignificantimpact on IMCP. The results of the structural model based on path coefficients, t – values and p values have mentioned in table 3.

Table 3: Structural Model Analysis

Hypothesis	Path Coefficients	T Statistics	Hypothesis Supported
H₁: Commitment -> IMCP	0.15***	3.229	Yes
H₂: CI -> IMCP	0.18***	2.43	Yes
H_3B: SS*C -> IMCP	-0.02	0.26	No
H_3C: SS*CI -> IMCP	0.01	0.05	No
H_3D: SS*SI -> IMCP	-0.02	0.20	No
H_3E: SS*T -> IMCP	0.03	1.16	No
H_3A: SS -> IMCP	0.01	0.36	No
H₄: SI -> IMCP	0.31***	3.85	Yes
H_5B: TC*C -> IMCP	-0.09**	1.95	Yes
H_5C: TC*CI -> IMCP	-0.19**	2.07	Yes
H_5D: TC*SI -> IMCP	0.18**	2.05	Yes
H_5E: TC*T -> IMCP	-0.00	0.10	No
H_5A: TC -> IMCP	0.25***	4.97	Yes
H₆: Trust -> IMCP	0.06***	2.47	Yes

***Significant at 0.001, **Significant at 0.005

Overall model fitness can analyze in smart PLS-SEM through the model fit indexes (Ringle, Wende, & Becker, 2015). These indexes can achieve through bootstrapping method under quality criteria. Model fit can be analyzedthrough the estimated model. The threshold accepted value of standardized root mean square residual (SRMR) is less than 0.08 (Hu & Bentler, 1998, 1999). The output value of SRMR is 0.065 which is acceptable. So, SRMR can be showed the goodness of model fit (Henseler et al., 2014).

Normed fit index (NFI) is the other measure for goodness of model fit. This measure is related to chi-square index values. The range of NFI is between 0 and 1. The higher the values are better to fit the model. The minimum acceptable value for NFI is 0.9 (Lohmöller, 1989). The value of NFI in this study is 0.725 represent that model is fit. So, the overall, goodness of fit measured through SRMR and NFI, and the results of both tests accepted for fitness of research model.

The structural equation model has calculated graphically in PLS 3, the output diagram of the structural model showed path coefficients between constructs and factor loadings values has mentioned on each item. The overall diagram showed factor loadings and path coefficients together, this diagram had imported form PLS and mentioned as figure 1.

Figure 1: Structural Model for International Marketing Channel Performance

5.1 Conclusion and Discussion

In this study, the relationship among OS, SS, TC, and IMCP has established and empirically tested through PLS-SEM. The results showed that both RS and MIS has a positive and significant effect on IMCP. So, organizations need to focus on their RS especially focus on trust and commitment to enhancing their IMCP. Trust and commitment will cause to smooth organizational internal and external procedures.If employees do trust in others, then they can share the right information on time. So, if any change will occur in the external environment or a change in organizational procedures is required it can doin real time. But trust can be developed with the passage of time, after fulfilling commitments, that’s why both commitment and trust are essential in IMCP. The results of this study are also consistent with previous literature, which has developed the relationship between governance strategies and marketing channel performance (Yang et al., 2012).

In the market, both supplier and customers are the essential elements. In this study, SI, and CI has considered as MIS. Because organizations are sharing their information with their customers and supplier through the use of technologies, the primary objective is to gain their trust and make organizational strategies more customer and supplier-oriented. If both of them are satisfied with organizations then ultimately organizational performance will increase because SI and CI provide the competitive advantage (Chang et al., 2016; Flynn, Huo, & Zhao, 2010; Narasimhan & Kim, 2002). On the other hand, Organizations cannot survive in this competitive market without the integration of customers and suppliers. So, SI and CI have a positive effect on IMCP, same results have found in the literature (Chang et al., 2016; Flynn et al., 2010; Narasimhan & Kim, 2002).

Society plays a vital role in organizational decisions because society can provide a business contact for organizations to gain more business information. Furthermore, sometimes society give emotional and financial support to the organization in their cooperate social responsibilities. SS has taken moderated variables, but the empirical results showed the insignificant effect. Because SS is external variable and it must be taken with environmental or external variables to find the SS to organizational performance, otherwise without SS it's difficult for organizations to sustain in this competitive global market.

Information communication technologies have changed traditional processes to modernized. Organizations can gain a competitive advantage by their TC, because TC enables organizations to share real-time information, and manage their internal processes efficiently and effectively. TC would allow organizations to design, analyze and develop strategies, manage internal operations, enable to communicate with suppliers and customers, and maintain inventory level. So, TC has a positive effect to enhance the supply chain and IMCP. The results of this study are consistent with supply chain and network channel literature (Hao & Song, 2016; Ross, 2016; Wu et al., 2014).

The overall conclusion of this study, enable to understand the IMCP, which can be enhanced if organizations develop their strategies based on trust, commitment, supplier and customer integration, and use their TC to boost overall IMCP. SS does not empirically support this model, but it has a vital role in international marketing. So, organizations must focus to develop competitive strategies and must evaluate it through their TC, if they want to survive in this competitive era and enhance their IMCP.

5.2 Theoretical and Practical Implications

This study has both theoretical and practical implications. RBT and SCT has focused. RBT has focused on the value of strategic resources and capabilities, their configuration, and procession. SCT has focused on the phenomenon to continuously adapt, and improve market integration, and relationship strategies to respond the environment (Child, 1997; Child et al., 2003). Only organizational resources are not the guarantee to gain competitive advantage, resources must be effectively managed and exploited, taking into account changing external factors that an organization faces in its competitive business environment (Child, 1997; Craighead et al., 2009).

Organization utilizes their maximum tangible and intangible resources to develop and implement their strategies to enhance their performance especially IMCP. Trust, commitment, SI, CI, and SS are the intangible organizational resources while TC is the physicalcorporate resources to improveIMCP. So, this study has contributed to RBT in the supply chain, network channel, and international business literature.

This study has practical implementation because this study enables organizations and managers to develop their strategies based on trust, commitment, SI, CI, SS, and TC to enhance IMCP. This study was conducted in the food industry in Pakistan, which can strengthen the channel performance of multinational food companies in Pakistan. It also provides the guidelines to local companies and to improve their marketing channel performance. This study also enables organizations to compete with their competitor to gain a sustainable competitive advantage.

5.3 Limitations and Future Directions

This study has only focused on the organizational strategies, TC, SS to enhance IMCP, but many other factors like operational responsiveness, organizational structure, and learning, culture, collaboration, innovation, internal integration, other external factors havebeen ignored in this study. It is highly recommended to consider these factors in future studies to consider these factors to enhance IMCP.

In this study, the adapted questionnaire was used to collect the data from respondents. But in the future, other techniques like ISM or interview techniques can use to find other relevant factors before to use SEM. In this study, data has been collected from the food industry in Pakistan, but in future other sectors like retail, logistics, pharmaceutical industries can be considered. Furthermore, data can be obtained from other developing countries like India, Bangladesh, Sri Lanka, Malaysia, and China to generalize the study model.

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