So Close Yet So Far: Integrating Global Strategy and Nonmarket Research

• Date: 01 May 2013
• Author: Rafael Lucea,Jonathan P. Doh
• Published date: 01 May 2013
• DOI: http://doi.org/10.1111/j.2042-5805.2013.01053.x

SO CLOSE YET SO FAR: INTEGRATING GLOBAL

STRATEGY AND NONMARKET RESEARCH

JONATHAN P. DOH1* and RAFAEL LUCEA2

1Villanova School of Business, Villanova University, Villanova, Pennsylvania,

U.S.A.

2GW School of Business, The George Washington University, Washington,

D.C., U.S.A.

The reciprocal influence that market and nonmarket (governments and civil society organiza-

tions) actors exert on one another has grown more direct and forceful during the last decade.

However,whether current global strategy research sufficiently accounts for nonmarket aspects

of the global environment is still a contested issue. In this article, we provide some perspective

to this debate through a three-pronged approach. First, we evaluate the extent to which

international strategy articles published in business and management journals from 2001 to

2011 integrate market and nonmarket aspects of the global environment. Our study reveals

limited advancement in this direction, albeit with some encouraging signs. Second, we illustrate

the potential benefits of more integrative research by showcasing the new insights provided by

three articles of recent publication that explicitly chose to investigate the interaction of market

and nonmarket actors in the global context. Finally, we suggest new directions for theoretical

and empirical integrative research. Copyright © 2013 Strategic Management Society.

INTRODUCTION

The impact that recent events such as the ‘Arab

Spring,’the ‘Occupy’ movement, and the Fukushima

disaster have had on thousands of businesses around

the world is just a reminder of the dramatic changes

that have characterized the global business environ-

ment since the turn of the century. As political,

social, and natural aspects of the global arena

become increasingly intertwined and progressively

salient for the performance and survival of multina-

tional enterprises (MNEs), however, practitioners

and scholars have been pondering whether MNEs

have sufficiently adjusted their strategies in response

to such changes; whether firms that integrate their

market and nonmarket strategies fare better than

those that do not; and how the increasingly cross-

country (not just multinational) nature of many of

these nonmarket dimensions has been addressed by

MNEs.

With increasing awareness of the nature and mag-

nitude of these changes, prominent academics in the

fields of international business (IB) and global strat-

egy (GS) proposed that the research paradigm that

had so far informed IB/GS scholarship was in need

of revision (Buckley, 2002; Eden and Lenway, 2001;

Lambell et al., 2008; Nielsen and Thangadurai,

2007; Peng, 2004; Rodriguez et al., 2006; Teegen,

2003; Teegen, Doh, and Vachani, 2004; Young,

2001). However, these calls span a full decade and

the relevance of IB/GS scholarship has recently

come under renewed scrutiny (e.g., Buckley, 2002),

which prompted us to examine whether nonmarket

aspects of the global environment have indeed

Keywords: global strategy; nonmarket; CSR; MNE social

strategy; MNE political strategy

*Correspondence to: Jonathan P. Doh, Villanova School of

Business, Villanova University, 800 Lancaster Avenue, Vill-

anova, PA19085, U.S.A. E-mail: jonathan.doh@villanova.edu

Global Strategy Journal

Global Strat. J., 3: 171–194 (2013)

Published online in Wiley Online Library (wileyonlinelibrary.com). DOI: 10.1111/j.2042-5805.2013.01053.x

Copyright © 2013 Strategic Management Society

become a substantive part of the GS research agenda.

We believegaining some perspective on the progress

made in this direction will facilitate the identification

of new and promising avenues for future GS

research.

In order to carry out such an assessment, we have

organized the remainder of this article in four main

sections. In the first one, we summarize in very

broad strokes the main nonmarket themes addressed

in the IB/GS literature so far. Next, we present a

bibliometric analysis of the articles published in all

business and management journals from 2001 to

2011. The results of our study,comprising more than

8,000 articles from 13,000-plus authors, reveal that

progress toward integration of market and nonmar-

ket dimensions of the global environment has been

limited, with some incremental improvement. In the

third section, we highlight four recent articles that,

by explicitly exploring the influence of market and

nonmarket forces on firms, have been able to provide

new and interesting insights on the behavior and

success of today’s MNEs that would not have been

obvious through a single paradigm or theoretical per-

spective. In the final section, we take stock of our

findings and suggest a number of areas for future

research.

MARKET AND NONMARKET

ENVIRONMENTS IN IB/GS:

WHY INTEGRATE?

In 2003, an international consortium of oil compa-

nies led by BP started the construction of the 1,099

mile long Baku-Tbilisi-Ceyhan pipeline designed to

transport oil from the Caspian Sea to the Mediterra-

nean. Before this massive project could even be ini-

tiated, BP and its partners had to gain the support of

not only the three national governments through

which the pipeline would travel, but also of thou-

sands of local city councils, farmers associations,

individual landowners, and a myriad of local envi-

ronmental, human rights, and economic develop-

ment NGOs. Moreover, because of the scale of the

initiative and the growing interest that activistgroups

around the globe had been taking in such projects,

BP and its associates were compelled to engage with

dozens of other NGOs scattered around the (mostly

developed) world. Many of these organizations

joined forces and created the Baku Ceyhan Cam-

paign, an international network of NGOs concerned

primarily with the impact that the project might have

on the economic fortunes and the human rights of the

populations along the right of way of the pipeline.

Considering that this was but one of many projects in

which BP was engaged at the time and that some of

the same governments and NGOs also had an inter-

est in the evolution of BP’s other projects, it is fair to

say that BP’s market and nonmarket environments

have grown tightly intertwined, increasingly

complex, and geographically interconnected. And

the stakes were and are extremely high: BP has tens

of billions of dollars of exposure in just this one

project (Lucea and Doh, 2012).

The BP example offers a vivid picture of what we

consider the contours or dimensions of the global

nonmarket environment of contemporary MNEs.

While this portrayal agrees broadly with early

(Hirschman, 1970) as well as more contemporary

(Baron, 1995, 1996, 1997) definitions of the nonmar-

ket environment—‘(the) set of forces [that] are

manifested outside of markets but often work in con-

junction with them [and] consists of the social,

political, and legal arrangements that structure inter-

actions among companies and their public’ (Baron,

1995: 48)—what is (perhaps) new is the multifac-

eted, globally connected, and multidimensional

nature of these relationships and the concurrent and

reflexive role of a spectrum of actor types in multiple

geographies and at all levels of analysis.

For simplicity of exposition, we will use the term

nonmarket environment in this article as it pertains

to the relationships that a company establishes

with two specific types of external stakeholders

(Donaldson and Preston, 1995; Mitchell, Agle, and

Wood, 1997): governmental bodies and NGOs. This

simplification leaves out of the scope of this review

and of the subsequent bibliometric analysis the

nonmarket activities of some other internal (for

example, workers and unions) and external (for

example, the natural environment or the media)

stakeholders. Our decision to focus on governments

and NGOs does not mean that these other stakehold-

ers are any less important or influential in determin-

ing MNE performance and behavior. Proof of their

relevance is that they have been the object of exten-

sive analysis in other business subfields.

Government and political actors in

IB/GS studies

In assessing the interest of the IB/GS community on

the role of nonmarket environments, it becomes

readily apparent that scholars have long paid atten-

172 J. P. Doh and R. Lucea

Copyright © 2013 Strategic Management Society Global Strat. J., 3: 171–194 (2013)

DOI: 10.1111/j.2042-5805.2013.01053.x