Market Orientation or Managerial Ties? How Foreign Firms Achieve Competitive Advantage in Emerging Economies

Abstract

On what should foreign firms focus more, market orientation or managerial ties? This study investigates how managerial ties and market orientation affect positional advantages and, consequently, firm performance in an emerging economy, China. On the basis of a study of 179 foreign firms in China, we find that both managerial ties and market orientation can lead to firm success--but in different ways. Market orientation enhances firm performance by providing differentiation and cost advantages, whereas managerial ties improve performance through an institutional advantage (i.e., superiority in securing scarce resources and institutional support). Institutional advantage, in turn, leads to differentiation and cost advantages and consequently superior performance. (For more information, please contact: Kevin Zheng Zhou, University of Hong Kong, Hong Kong: kevinzhou@business.hku.hk)