Extending the Environment–Strategy– Performance Framework: the Roles of Multinational Corporation Network Strength, Market Responsiveness, and Product Innovation

Extending the Environment–Strategy–
Performance Framework: The Roles of Multinational Corporation Network
Strength, Market Responsiveness, and
Product Innovation
Ruby P Lee
.

ABSTRACT
The purpose of this study is to extend the traditional environment–strategy–performance framework by including network theory to examine when a foreign firm can use its multinational corporation (MNC) network strength to buffer market turbulence and technological turbulence and when the foreign firm can deploy it to support the influences of marketing strategic postures (i.e., market responsiveness and product innovation) on firm performance. The author tests the hypotheses on data collected from 140 foreign firms in China. Although prior research has demonstrated that firms often use multiple strategies and resources to cope with environmental forces, the findings illustrate that different environmental segments have unequal bearings on market responsiveness, product innovation, and MNC network strength. In addition, despite the direct positive influences of individual marketing strategic postures and MNC network strength on firm performance, their combined effects are mixed. The author concludes with a discussion of the implications of these results for research and practice.
Keywords: network strength, market responsiveness, product innovation, environmental forces, China

ncreasingly, multinational corporations (MNCs) no longer simply view emerging countries as manufacturing bases; instead, they recognize their market potential and have begun to develop firm strategies that suit these unfamiliar and turbulent host country environments (Luo and Park 2001; Tan and Litschert 1994).
This conjecture is consistent with the traditional environment–strategy–performance framework, which suggests that a firm must be able to scan and make sense of its external environments and then identify strategy to align with such external conditions for success (e.g.,
Child

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