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Marketing renaissance: How research in emerging markets advances
marketing science and practice
Steven Michael Burgess a , Jan-Benedict E.M. Steenkamp b,⁎
a Business Administration in Marketing, Graduate School of Business, University of Cape Town, South Africa b University of North Carolina at Chapel Hill, Campus Box 3490, McColl Building, Chapel Hill, NC 27599-3490, USA
Abstract
In the last decades, our discipline has made tremendous progress in addressing scientific and managerial marketing problems. However, our
knowledge of marketing phenomena derives almost exclusively from research conducted in high income, industrialized countries. We believe it is
paramount for the future of marketing science and practice that we conduct more research in so-called emerging markets (EMs). EMs present
significant departures from the assumptions of theories developed in the Western world that challenge our conventional wisdom. In this article, we
take the view that marketing science is built on the generalizability of our findings across studies, across cultures, across national boundaries. EMs
are natural laboratories in which theories and assumptions about their underlying mechanisms can be tested, generalizations derived and boundary
conditions identified. We propose a framework delineating four stages through which EM research contributes to the growth of marketing science.
The four stages are 1) theory development, 2) acquisition of meaningful data, 3) analysis of the data to test one's theories, and 4) learning.
Through the process of deductive logic, general theories are operationalized in specific settings while, through the process of inductive logic,
specific findings are used to arrive at more general conclusions. We discuss the unique issues and contributions of EM research for each of the four
stages of this framework. Subsequently, we elaborate on the implications of EM research for development and implementation of marketing
strategies. Our discussion reveals that some research has started to address these issues, but we have only begun to scratch the surface. In this
spirit, we present an agenda for future research in EMs.© 2006 Elsevier B.V. All rights reserved.
Keywords: Emerging markets; Emerging economies; Developing countries
1. Introduction
The globalization of the marketplace is one of the most
important challenges facing companies today. Globalization is
due to many factors including worldwide investment, produc-
tion and marketing, falling national boundaries, regional
unification (e.g., ASEAN, EU, NAFTA), advances in telecom-munication technologies and the internet, increases in world
travel, and the growth of global media (Yip, 2003). Firms cannot
ignore this trend toward globalization. Even when they decide to
opt out of the global marketplace, they will still face increased
competition in their home markets from (local and foreign)
companies reaping benefits of global strategies. Given the
importance of globalization for marketing, it is not surprising
that various marketing scholars and editors have urged us to
study marketing issues on an international basis, rather than
staying “in relative security of our own backyards” (Bolton,
2003; Dekimpe & Lehmann, 2004; Farley, 1997; Gatignon,
2000; Monroe, 1993; Steenkamp, 1998, 2005; Winer, 1998).
In response to these exhortations, marketing academics have
begun to devote more attention to international marketing. This
research has yielded a valuable stock of theoretical andempirical findings, of which an important portion has been
published in the International Journal of Research in Marketing
(see Alden, Steenkamp, & Batra, 2006; Bijmolt, Paas, &
Vermunt, 2004; Cano, Carrilat, & Jaramillo, 2004; Deshpandé
& Farley, 2004; Desiraju, Nair, & Chintagunta 2004; Farley,
Hayes, & Kopalle, 2004; Nunn & Sarvary, 2004; Ozsomer &
Simonin, 2004; Steenkamp & ter Hofstede, 2002; Stremersch &
Tellis, 2004; Van Everdingen, Aghina, & Fok, 2005; Verlegh,
Steenkamp, & Meulenberg, 2005 for some recent examples). It
is fair to say that international marketing has become an
important domain within marketing science.
Intern. J. of Research in Marketing 23 (2006) 337 – 356
www.elsevier.com/locate/ijresmar
⁎ Corresponding author. Tel.: +1 919 962 9579; fax: +1 919 962 7186.
E-mail address: [email protected] (J.-B.E.M. Steenkamp).
0167-8116/$ - see front matter © 2006 Elsevier B.V. All rights reserved.doi:10.1016/j.ijresmar.2006.08.001
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However, the existing body of research suffers from an im-
portant limitation, viz., most of it has been conducted in high
income, industrialized countries (HICs). Although it is under-
standable that researchers in our maturingdiscipline wouldinitially
focus on the world's most advanced economies, we believe it is
paramount for the future of marketing science and practice that we
conduct more research in so-called emerging markets (EMs).Although EMs vary in human development and national
income, we will focus on common characteristics that shape
their institutional context and the ultimate success of marketing
programs there. Institutions are “the most enduring features of
social life…giving ‘solidity’ [to social systems] across time and
space” (Giddens, 1984, p. 24). EM institutional contexts present
significant socioeconomic, demographic, cultural, and regula-
tive departures from the assumptions of theories developed in
the Western world and challenge our conventional understanding
of constructs and their relations (Wright, Filatotchev, Hoskisson,
& Peng,2005). Conceptually, this renders it less than obvious that
our established theories and empirical generalizations are ap- plicable to these markets (Steenkamp, 2005). Practically, it im-
plies an urgent need for more research because success in EMs is
crucial to the future of many of our companies. As we will argue
in this article, we need to conduct more research in EMs, both to
further advance marketing as an academic discipline and maintain
its managerial relevance.
The remainder of this article is organized as follows. First,
we briefly discuss what constitutes emerging markets. Then, we
will propose a framework of marketing science as a process.
Next, we will discuss the unique issues and contribution of EM
research for each of the four stages of this framework. Sub-
sequently, we elaborate on the implications of EM research for
marketing practice. We will consider the content and imple-mentation of marketing strategies. Finally, we will draw con-
clusions and propose an agenda for future research in EMs. To
keep the discussion manageable, we focus on systematic differ-
ences between EMs and HICs and how this contributes to
marketing science and practice. It is outside the scope of this
article to discuss differences between EMs.
2. What are emerging markets?
There are a plethora of country classification schemes and
the use of the term “emerging markets” has been inconsistent in
the marketing literature and practice (e.g., Batra, 1999; Peng,
2000). Financial institutions such as ING and Morgan Stanley
distinguish between emerging markets and developed countries,using three criteria. To be categorized as a developed country, 1)
the country's income per capita has to exceed $10,000, 2) the
country has to follow a stable and responsible macroeconomic
policy, and 3) the market capitalization of publicly traded
companies and the volume of shares traded on the stock ex-
change have to “sufficient.” If one or more of these criteria is not
met, the country is considered an emerging market. Thus,
countries like Israel and South Korea would pass the income
criterion but nevertheless belong to emerging markets. The
political situation is not sufficiently stable to have confidence
that the macroeconomic development is irreversible. This ap-
proach makes no adjustment for purchasing power parity or currency fluctuations, as e.g., the World Bank (2006) does.
Moreover, an agreed operationalization of the second and third
conditions eludes us at present and firms would have difficulty
accessing and analyzing such information, even if it was.
The World Trade Organization (WTO) classifies its members
as either “developed” or “developing”, on the basis of self-
selection. There are no WTO definitions of “developed” or
“developing” countries. Two-thirds of the WTO's 149 member
countries are designated as developing countries, of which 50 are
designated as “least-developed” countries. Emerging markets are
for all practical purposes synonymous with developing countries.
Fig. 1 shows arguably the two most influential country
classifications, proposed by the United Nations and the WorldBank, respectively. The United Nations distinguish between four
categories of countries, based on their score on the human
development index. The human development index is a quan-
titative measure of the average achievements of a country on three
basic dimensions of human development, namely life expectancy
at birth, adult literacy rate and educational attainment, and gross
Fig. 1. Alternative country classifications, their number, and GDP per capita range.
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domestic product (GDP) per capita at purchasing power parity
(PPP). Countries low or medium on human development would
usually be considered as emerging countries, while high human
development countries might be considered as developed
countries. However, there are exceptions. For example, countries
like Panama and Mexico rate high on human development, but are
still considered emerging markets.1
The World Bank (2006) has developed a classification of
countries, based on gross national income per capita (GNI),
adjusted for currency fluctuations. This classification shows
considerable overlap with the classification scheme of the
United Nations, but is easier to use and because it focuses onavailable monetary resources in a country, it is more directly
relevant for marketing.
Our definition of emerging markets was influenced by the
desire to classify countries in a way that would allow others to
easily obtain data and classify countries of interest. We define
EMs broadly as countries in which PPP-adjusted GDP per
capita, converted to U.S. dollar and smoothed for three-year
currency fluctuations, is equal to or less than the highest ranked
country classified as “middle income” by the World Bank,
currently Equatorial Guinea ($19,780). Because the World
Bank classifies countries based on GNI, which is adjusted for
currency fluctuations but not purchasing power parity, Fig. 1shows some overlap in high income and middle income coun-
tries. We use GDP per capita, as opposed to gross national
income, because GDP excludes remittances from other coun-
tries. Remittances from abroad can be up to 30–40% of GNP
(Mahajan & Banga, 2006). Thus, GDP is a better measure of
domestic growth and economic performance. We use GDP after
adjustment for purchasing power parity and currency fluctua-
tions as these adjustments communicate development levels
better across countries for the purposes of most marketers.
Our group of 152 EMs includes all countries classified as
“middle income” or “low-income” by the World Bank (2006),
as “middle human development,” “low human development,” or
“developing” by the United Nations (2005), and as “developing
countries” by the WTO (2005). Geographically, EMs comprise
the “transition economies” of the former Soviet Union, the
Eastern Bloc, and Asia and the so-called “developing countries”
of Africa, Asia, the Middle East, and Latin America.
3. The process of scientific marketing research applied to
emerging markets
Philosophers of science have long argued that science is a
process. The marketing science process involves development
of theoretical explanations of marketing phenomena, empirical
testing of these explanations, and extension and/or revisions of
generalized explanations (Bass & Wind, 1995). This process
consists of four stages (see Fig. 2; Bagozzi, 1980).
The process usually starts with theory development . At this
stage, it is important to carefully delineate one's theoretical
constructs and the mechanisms underlying the hypotheses. It
makes sense to draw on the large body of existing theoretical
and empirical research as the point of departure, as this is how
science progresses. However, previous research must be as-sessed critically for relevance to the institutional context in
which research is being conducted, taking special care to
explicate hidden assumptions, such as levels of human devel-
opment and culture. After all, the institutional context is
arguably the most important aspect on which EMs differ from
HICs. For example, in the marketing literature, advertising
plays a large role in the theory on the diffusion of innovations
(Gatignon & Robertson, 1985), but media penetration is much
lower in many EMs (Arnould, 1989).
The second stage concerns acquisition of meaningful data.
Through deductive logic – going from general assertions to
relatively more specific instances – the marketing scholar
moves from a theory to a specific operational research design.
1
See http://hdr.undp.org/ for more information on the measurement andclassification procedure used by the United Nations.
Fig. 2. Basic processes in scientific marketing research in emerging markets.
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The researcher needs to specify (and justify) the choice of the EM
country(ies) in which data are collected, define the unit of
observation, choose appropriate data collection methods, develop
valid measurement instruments, and collect data. By imposing our
etic view on EMs, shaped by extensive data collection practice in
HICs, we run the danger of collecting wonderful, but invalid data.
The third stage concerns data analysis. Cross-national com- parability of data is clearly a key issue. The extreme within-
country heterogeneity which characterizes most EMs also has
ramifications for the statistical methods used to analyze one's
data. This stage will show that EMs not only provide a natural
laboratory for developing new theories and data collection
methods, but also a challenging setting, calling for cutting-edge
new analytical techniques.
Results are subsequently interpreted, leading to the fourth
stage in which learning takes place. The findings are critically
evaluated and new insights are generated. Through the process
of inductive logic, marketing science uses these specific
findings to arrive at more general conclusions concerning thevalidity of previous empirical generalizations and existence of
boundary conditions, if any. This leads to extension or revision
of generalized explanations, which subsequently can be tested
with new data. This last stage also holds the potential for, what
Brown and Hagel (2005) call, “innovation blowback.” Im-
proved theory, data collection, and data analysis techniques,
will also strengthen marketing science in HICs.
4. Theory development
4.1. Identification of constructs
4.1.1. Using existing constructs
Much EM research uses theoretically-grounded constructs
originally developed in HICs. Often this makes perfect sense as
there is no reason to assume that these constructs are not
applicable to EM settings. There is quite some evidence con-
cerning the universality of many consumer-related constructs.
Based on the universal human needs of individuals as biological
organisms, requisites of coordinated social conduct, and
requirements for the smooth functioning and survival of groups,
Schwartz (1992) has identified ten motivationally distinct types
of values that reflect a continuum of related motivations. This
continuum gives rise to a circular structure capturing the notion
that the pursuit of different value types can be compatible or inconflict, depending on how close the value types are. Nothing in
his theory suggests that this value structure is context specific.
On the contrary, being derived from universal human needs, it
should be equally applicable to EMs. Research in EMs has
indeed supported his claim (Burgess & Steenkamp, 1999;
Schwartz et al., 2001). Research in EMs also has supported the
validity of other constructs such as the Big Five personality
factors (McCrae & Terracciano, 2005) as well as consumer
constructs such as ethnocentrism (Batra, Ramaswamy, Alden,
Steenkamp, & Ramachandar, 2000).
In a programmatic series of studies dealing with organiza-
tional constructs, Deshpandé, Farley, and colleagues studied
organizational culture, organizational climate, market orienta-
tion, innovativeness, and firm performance, in HICs as well as
EMs (see Deshpandé & Farley, 2004 for an excellent overview).
These authors found that their organizational constructs are
relevant across a wide range of countries, attesting to the uni-
versality of the constructs. For example, everywhere, organiza-
tions turn out to be a mixture of four organizational cultures,
viz., externally-oriented competitive market and entrepreneurialad-hoc cultures, and internally-oriented bureaucratic hierarchy
and consensual clan cultures.
Theoretical equivalence is an issue when constructs are less
firmly grounded in theory. A point in case are lifestyles: “A life-
style is broadly defined as a mode of living that is identified by
how people spend their time (activities), what they consider
important in their environment (interests), and what they think
of themselves and the world around them (opinions)” (Assael,
1992, p. 294). Constructs so loosely defined and bereft of
rigorous theoretical grounding are unlikely to provide a basis
for further theoretical advances or meaningful cross-national
insights, due to the radically different contexts of HICs andEMs. When constructs are only informally defined, it becomes
very difficult to develop hypotheses to be tested in EMs based
on previous research, as we may be using apples to explain
oranges.
4.1.2. Identifying new constructs
EMs offer a fertile ground to develop new constructs that has
been overlooked in earlier research. For example, in Africa it is
important to understand the construct of ubuntu, a pervasive
spirit of caring and community, harmony and hospitality, humi-
lity, respect and responsiveness (Mangaliso, 2001). It stresses
group embeddedness, kinship ties, linking reward systems to
group performance, and consensus-based decision making. Inthe consumer context, ubuntu has relevance in the aspects of life
that interest marketers, such as family decision making and
reliance on word-of-mouth communication. In the organiza-
tional context, notwithstanding that senior managers typically
make final buying decisions when national cultures are high on
hierarchy and embeddedness, ubuntu suggests opportunities for
new research into intraorganizational networks of information
sharing and consensus building within buying centers. In the
sales management context, aligning organizational marketing
practices to ubuntu provides significant competitive advantages
related to intrinsic motivation, loyalty, and long-run effective-
ness. Including ubuntu in African intra- and inter-organizationalmodels will increase their validity and explanatory power.
Similarly, it is difficult, if not impossible, to understand
organizational relations in China without guanxi, a concept
“which carries expectations that, sometime, favors will be re-
turned” (Ambler, Styles, & Xiucun, 1999). An interesting
question is whether these and other constructs are purely indi-
genous constructs or can also be fruitfully employed in other
EMs and perhaps even in HICs. After all, ubuntu values are also
relevant in HICs (Schwartz, 1992) and inter-organizational
relations in Western markets also have certain guanxi
characteristics (Kumar, Scheer, & Steenkamp, 1995; Scheer,
Kumar, & Steenkamp, 2003). Moreover, substantial EM
populations have migrated to HIC markets, as birth rates have
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declined there in recent decades. Interestingly, even Hofstede's
(2001) seminal cultural analysis was enriched by inclusion of
EM countries. Analyzing data from (mostly) HICs, he dis-
tinguished four cultural dimensions: power distance, individu-
alism/collectivism, uncertainty avoidance, and masculinity/
femininity. Subsequent work in Eastern Asia identified a fifth
dimension, long-term orientation (or Confucian dynamism),which turned out to be relevant for HICs as well.
4.2. Hypotheses development
Institutional context (viz., socioeconomic, cultural, legal) has
not been explicitly acknowledged when developing many of our
theories. Thus, we implicitly assume that our theories generalize
across nations. Generalizability may be strong or weak. Strong
cross-national generalizability means that the magnitude of the
relation between two constructs is the same across countries.
Weak cross-national generalizability implies that the direction
(positive or negative) of the relation between two constructs isthe same across countries, although the magnitude of the effect
may differ across countries.
There is some evidence that strong empirical generalizations
may not be unrealistic in HIC contexts (Bijmolt, Van Heerde, &
Pieters, 2005; Deshpandé & Farley, 2004; Gielens & Steen-
kamp, 2004; Steenkamp, Nijs, Hanssens, & Dekimpe, 2005). It
is questionable though whether strong cross-national general-
izability extends from findings obtained in HICs to EMs. For
instance, several studies have attested to the generalizability of
Bass' diffusion theory to EMs (Dekimpe, Parker, & Sarvary,
1998; Dekimpe, Parker, & Sarvary, 2000; Talukdar, Sudhir, &
Ainslie, 2002). The magnitude of key diffusion parameters
differs, though, between HICs and EMs. The average pene-tration potential in EMs is only one-third of that for HICs, and
the adoption rate is slower than might be expected based on
results in HICs (Talukdar et al., 2002). Higher ethnic diversity in
EMs inhibits the social communication processes by which con-
sumers belonging to different groups learn about an innovation
(Dekimpe et al., 2000).
As another example, Hult, Keillor, and Hightower (2000)
found that attribute importances differ considerably between
Malaysian and French consumers. Malaysian consumers place
more importance on tangible product attributes, such as product
price, functionality, and safety, which is predictable given the
differences in product knowledge, disposable income, usageoccasions, and social influences on consumer decision making.
Even when consumers express similar wants and needs,
economic realities ultimately may be more influential on actual
behavior. Microeconomic theory predicts that the price
elasticity of demand should be higher in EMs, due to tighter
budgetary constraints. For most products, EMs have a con-
siderable pool of consumers who have never consumed the
product before. Generic advertising may draw some of them
into the marketplace, suggesting higher generic advertising
elasticities than typically found in HICs. Hanssens, Parsons, and
Schultz (2001, p. 329) propose, as empirical generalizations, an
average short-run (long-run) elasticity of brand advertising of
.1 (.2). We expect that brand advertising elasticities are higher in
EMs. Many consumers have only limited first-hand experience
with the brand, which increases the information function of
advertising. Thus, weak cross-national generalizability may be a
more realistic assumption in EMs.
We believe that the most realistic assumption is partial weak
generalizability, in that some previously-established proposi-
tions/hypotheses are supported in direction albeit not in mag-nitude, while some hypotheses are not supported. This, actually,
offers the potential to further marketing science as the EM
context can lead to richer theoretical and empirical insights. An
excellent example of such work is Arnould's (1989) research on
diffusion of innovations in Niger. Arnould collected ethno-
graphic data over a number of years, examining different as-
pects of the diffusion process. He subsequently compared his
findings with Gatignon and Robertson's (1985) seminal pro-
positional inventory for diffusion research. He concluded that a
number of the original Gatignon and Robertson propositions are
supported, while others need to be reformulated to render them
applicable to vastly different contexts, such as Niger. Combin-ing previous HIC insights with his work in Niger, Arnould came
up with a broadened theory of preference formation and the
diffusion of innovations that might be tested in other (EM or
HIC) markets. An important strength of Arnould's study is that
he explicitly evaluated his findings in the light of earlier work.
This avoids reinventing the wheel, a tendency not uncommon in
EM research. Another strength is that his work was among the
first to explicitly consider the institutional context in which
market-mediated behavior took place.
4.3. Structuring the institutional context
In principle, the institutional context is an important con-sideration in any study, especially when it differs significantly
from that of previous research. EMs are natural laboratories that
allow us to assess the generalizability of marketing theories and
the extent to which they are bounded by the institutional context
of HICs, most notably the U.S. Consequently, we learn more
about underlying mechanisms and develop true contingency
theories of marketing.
In this section, we identify some institutional characteristics
that typify EMs, although some EMs may not share every
characteristic we mention due to idiosyncratic influences on
their developmental trajectory. Expanding on work by the so-
ciologist Scott (2001) and the institutional economist North(1990), we distinguish three distinct but interrelated “ pillars of
institutions” that provide structure to society, albeit in different
ways — the socioeconomic, cultural, and regulative systems.
Social theorists have identified each of these systems as a vital
ingredient of a country's institutional context (Etzioni &
Lawrence, 1991; Scott, 2001) (Table 1).
The socioeconomic system comprises macroeconomic and
demographic characteristics, levels of within-country diversity,
and dynamics caused by rapid social, political, and economic
change. The cultural system represents culturally supported
beliefs, attitudes, habits, norms, and behaviors. It maintains that
external cultural frameworks shape internal interpretive pro-
cesses and shared understanding. The regulative system involves
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retail outlets near mass transit hubs. Culture, low product
knowledge, and demographic characteristics (e.g., constrained
incomes, large family size, low formal education) promote group
decision making about purchases of relatively small nominal
value. Products not normally considered luxuries, such as
shampoo or a visit to McDonald's, may take on luxury con-
notations and be reserved for special occasions such as amarriage or birthday or otherwise impart special meaning.
4.3.2. Cultural system
Attempts to understand the cultural system traditionally
focus on values. Cultural value priorities underlie most aspects
of everyday life and relate to generalized beliefs people hold
about themselves, their social and physical environment, and
the spiritual world (Bond et al., 2004). There have been many
approaches to national culture (Leung, Bhagat, Buchan, Erez, &
Gibson, 2005), the cultural framework developed by the Israeli
psychologist Schwartz (e.g., Sagiv & Schwartz, 2000;
Schwartz, 2004) being the one most firmly grounded in theory.His theory identifies three bipolar dimensions of cultural values
that derive from three universal societal problems: the nature of
the relations of the individual to the group (autonomy versus
embeddedness), guaranteeing responsible behavior that pre-
serves the social fabric (hierarchy versus egalitarianism), and
managing the relations of people to society and the environment
(mastery versus harmony). EMs may be distinguished from
HICs on two of these dimensions.
HICs tend to emphasize cultural autonomy and egalitarianism.
Autonomy cultures view people as independent, bounded entities
that are expected to cultivate and express their own preferences,
feelings, ideas, and abilities, and find meaning in their own
uniqueness. Egalitarianism in HICs fosters cooperation and con-cernfor the welfareof others by encouraging recognition of others
as moral equals and pursuit of equality, social justice, re-
sponsibility, help, and honesty. Egalitarian cultures emphasize
voluntary cooperation between people and organizations. Orga-
nizations are often flatter with lesscentralized authority structures,
and are likely to express egalitarianism by acknowledging the
legitimacy of cooperative negotiation.
In contrast, EMs emphasize cultural embeddedness and
hierarchy (Schwartz, 2004). Cultures that emphasize embedded-
ness view people as entities rooted in collective groups and expect
them to derive meaning in life largely from social relations, group
identification, pursuit of group goals, and participation in a sharedway of life. Embedded cultures emphasize maintenance of the
status quo and discourage behaviors that disrupt in-group soli-
darity. Cultural hierarchy emphasizes responsible behavior by
legitimizing the unequal distribution of power, roles, and
resources according to hierarchical systems of ascribed roles
within a society.
Cultural value priorities affect behaviors that interest
marketers by shaping and justifying individual, group, and
organizational beliefs and goals. As embedded cultures, EMs
emphasize social order, respect for tradition, security, obedi-
ence, and wisdom. Emphasis on hierarchy socializes people to
take a hierarchical distribution of roles for granted and comply
with the obligations and rules attached to their roles and status.
Social power, authority, humility, and wealth are very important
values in hierarchical cultures. Companies are more likely to
have a centralized structure, to emphasize the chain of authority
and assign well-defined roles in a hierarchical structure, and
demand compliance in the service of goals set from the top.
Decision making is more autocratic and there is less willingness
to share decision making. These differences in the overallendorsement of cultural values in society also shape institutional
arrangements and policies, laws, customs, and social norms.
4.3.3. Regulative system
The structures, processes, and legal rules that comprise the
regulative system reflect socioeconomic and cultural systems
that are prevalent in a society by affecting transaction costs and
providing a source of motivation and justification for alternative
formal regulative institutions (Licht, Goldschmidt, & Schwartz,
2005). We focus on two regulative system aspects that relate to
corporate governance and investor rights: rule of law and
stakeholder influence on corporate governance. Rule of law refers to the enshrinement of legal rights in
formal laws and codes that regulate individual and group
behavior and provide formal institutions for their enforcement.
Attempts to understand rule of law traditionally have focused on
variation in laws and their enforcement across countries. The 23
EMs (e.g., Argentina, Brazil, Russia, Hungary, Poland, India,
China, Indonesia, Thailand, South Africa, Zimbabwe) among
the 49 countries studied by La Porta, Lopez-de-Silanes,
Shleifer, and Vishny (1998) generally had moderate scores for
shareholder rights, creditor rights, judicial system efficiency,
enforcement of laws, risk of appropriation or contract repu-
diation, and accounting standards. La Porta et al. attributed
much of what they observed to the shared influence of commonlegal families (e.g., common law, civil law, French family
origin). Licht et al. (2005) argued that formal legal institutions
are insufficient to explain variation in rule of law. Instead, they
advance a new rigorous way of addressing informal social
institutions, using Schwartz' cultural values. According to their
theory, cultural embeddedness in EMs discourages head-on
confrontation (viz., the embodiment of economic interests in
strict legal form) and enforcement in courts of law, while
cultural hierarchy promotes giving power to authorities who are
charged with controlling uncertainty.
A final element of rule of law concerns corruption, which
Transparency International (2006) defines as the abuse of publicofficials for private gain. Corruption deters economic growth by
creating inefficiencies. Most EMs show moderate levels of
corruption, as measured by Transparency International's (2006)
corruption perception index. Recent conceptual work suggests
that, although common EM institutional characteristics (e.g.,
oligopolistic industries, manager's seeking to gain access to
external resources in resource-constrained firms) relate posi-
tively to levels of corruption, corruption can be resisted by
carefully planning organizational structures, corporate cultures,
and compliance systems (Luo, 2005).
Stakeholder influence on corporate governance concerns
formal and informal influence that individuals and groups exert
on the firm with the purpose of shaping its corporate governance
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structures and processes. In EMs, the low human development of
the majority of the population, uneven infrastructure develop-
ment, and competition for scarce resources compel governments
to rely on civic society and commercial organizations to assist in
achieving social and economic development goals. In turn,
business often needs the cooperation of government, civil so-
ciety, donor funding agencies, and other value-chain stake-holders in order to serve the needs of the mass market segment,
who lack the financial resources and authority to build the roads,
schools, and hospitals that they need. Hoskisson, Eden, Lau and
Wright (2000) observed that government and other stakeholders
exert greater influence in EMs than in HICs. They contend that
this makes institutional analysis preeminent in helping to explain
influences on enterprise strategies and performance, especially
in the early stages of market emergence.
4.4. Moderating role of a country's institutional context
A society's institutional priorities reflect the basic issues and problems that it must confront, and social and economic reward
contingencies it uses, to regulate human activity and facilitate
the smooth and effective functioning of society (Steenkamp &
Geyskens, 2006; Triandis, 1989). This presents individual and
organizational members of institutional systems with the need
to identify and respond to conflicts and compatibilities between
their own evaluative structures and the priorities of the in-
stitutional system. In this way, institutional priorities encourage
beliefs and behaviors that are aligned with shared priorities and
conducive to their maintenance, while discouraging those that
are not (Scott, 2001). Thus, as standards, these priorities in-
fluence how individual and organizational beliefs and behaviors
are evaluated and what kinds of expressions are encouraged or discouraged. These positive or negative institutional reinforce-
ment mechanisms give rise to interactions between society-level
and micro-level variables.
4.4.1. Consumer studies
Several studies have theorized and empirically tested the
moderating role of aspects of a country's institutional context on
consumer-level relations, using data on HICs and EMs. Lee and
Green (1991) found that the effects of personal and group-
oriented attitudes on purchase intentions are moderated by
national culture. In the embedded EM country (Korea), the
opinions of relevant others mattered more than the person's ownattitude. In the autonomous HIC (U.S.), only the person's own
attitude significantly influenced purchase intentions. Alden,
Hoyer, and Lee (1993) reported that ads in EMs (Korea, Thailand)
show individuals of unequal status and people in groups
significantly more often than ads in HICs (Germany, U.S.). This
is consistent with EMs's emphasis of hierarchy and embedded-
ness, respectively.
Steenkamp and Geyskens (2006) examined the antecedents
of the perceived value consumers derive from visiting a brand
manufacturer's Website in an internationalcontext, involving data
collected from individuals from 23 HICs and EMs on three
continents. They found that individuals living in more in-
dividualistic, autonomous cultures gave more weight to pleasure,
to privacy/security protection, and to website customization than
people from collectivistic, embedded cultures. People from
countries that are high on national identity gave more weight to
whether there was cultural congruity between the site and
themselves, while the effect of perceived privacy/security pro-
tection on perceived value is stronger for people from countries
with a weak rule of law.Steenkamp and Burgess (2002) found that in South Africa,
household income has a much stronger effect on innovative
behavior than consumer dispositions. Previous research in HICs
had not suggested this result (e.g., Steenkamp, ter Hofstede, and
Wedel, 1999). However, it can be explained by the classic
budget constraint in economics.
4.4.2. Organization studies
Deshpandé and Farley (2004) reported that customer
orientation and innovativeness had a consistent pattern of
positive effects on performance in HICs and EMs. However,
innovativeness appeared to be more important in the HICs whilemarket orientation was more important in EMs. Deshpandé and
Farley explained this difference by pointing out that in EMs,
marketing is less developed and investments in marketing may
have higher pay-offs. Recent research in EMs suggests a com-
plementary institutional rationale. In cultures that emphasize
embeddedness and hierarchy, managers prefer to rely on vertical
sources of guidance (superiors, formal rules) and widely-held
cultural beliefs (Smith, Peterson, & Schwartz, 2002). Thus,
market orientation in EMs may help overcome the inertia of
vertical information sources and traditional practices so that
firms can understand and respond to customer preferences.
The emphasis of social connectedness in EM institutions also
increases the importance of stakeholder relations. Luk, Yau, Tse,Sin, andChow(2005) found that customer orientation,competitor
orientation, and employee orientation have robust interaction
effects on financial and market performance in China. Peng and
Luo (2000) found that Chinese managers' personal ties with
government officials have a stronger effect on performance than
advertising, pricing, payment terms, or delivery. Ties with other
managers also affect performance by increasing product quality.
Thus, a stakeholder approach to market orientation (Greenley,
Hooley, Broderick, & Rudd, 2004), emphasizing strong relational
networks with donors, supply chain members, and beneficiaries,
may be an effective way to pursue appropriate product and
process innovations and keep prices low by leveraging internaland external resources to run efficient operations.
Even for an established and “rational” theory like transaction
cost economics, there is evidence for the moderating role of
country characteristics. Using meta-analysis, Geyskens, Steen-
kamp, and Kumar (2006) found that the institutional environ-
ment of the company systematically and predictably affects the
role transaction cost considerations play in governance
decisions. The ability of transaction cost theory to explain
departure from market governance is lower in countries char-
acterized by a strong rule of law, high societal cynicism, and
high cultural mastery. If the firm opts for non-market
governance, the transaction dimensions are more diagnostic
for predicting relational governance in countries lower on
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societal cynicism. Further, the explanatory power of transaction
cost theory is higher for hierarchical (relational) governance in
countries that are characterized by high (low) cultural
hierarchy.
Collectively, the consumer and organization studies reviewed
in this section underline the need to test even our most
established theories in EMs. To achieve this, we need to collect meaningful data.
5. Acquisition of meaningful data
5.1. Choice of the countries
In EM research, the choice of the country or countries for
theory testing often is guided by resources, previous collabo-
rative relationships, or even convenience. Given the vital role
that institutional context plays in shaping one's results, a more
systematic approach is needed, depending on the goal of the
study. We distinguish between generalizability studies andcontingency studies (cf. Van de Vijver and Leung, 1997).
Generalizability studies examine the (weak or strong) general-
izability of research findings obtained in previous, typically
industrialized, countries to EM countries. In this case, country
choice is largely a matter of convenience, as institutional factors
are neither part of one's conceptual framework nor are they
explicitly considered (Van de Vijver & Leung, 1997). Evidence
for generalizability is of course stronger the more the
institutional context of the EM country differs from industri-
alized countries. An example of a generalizability study is
Steenkamp and Burgess (2002) who examined the cross-
cultural generalizability of optimum stimulation level theory
(Steenkamp & Baumgartner, 1992) to an EM context. Meaning-ful and theoretically predictable nomological relations were
obtained with values, sociodemographics, and exploratory con-
sumer behaviors, providing evidence on the generalizability of
this consumer theory to EMs. This type of study has a
disadvantage. If generalizability is not established, it usually is
not clear why this is the case.
In contingency studies, institutional factors are explicitly
incorporated in the theoretical framework. A priori hypotheses
are developed as to the moderating role of specific institutional
factors on the effect of micro variables. Countries are sampled
to maximize the variation on the focal institutional factors.
Some contingency studies involve two countries, which createsthe challenge of ruling out alternative explanations (Van de
Vijver & Leung, 1997). A stronger test of contingency studies
involves inclusion of a larger number of countries, allowing for
a multi-level framework, in which the variation of the effects
(intercepts or slopes) is explained by country characteristics. An
example is Steenkamp and Geyskens (2006) who showed that
evaluation of brand manufacturer websites is systematically and
predictably moderated by a country's rule of law, cultural
individualism, and national identity. Given the large number of
23 countries, alternative explanations are not obvious. Parsi-
mony suggests that the variation in these effects across countries
are indeed due to the institutional factors considered rather than
to other, unobserved constructs.
5.2. Unit of observation
The primary unit of decision making in individualistic,
Western countries is typically the individual consumer or
manager. Consequently, academic research in marketing has
largely focused on individual decision making. However, group
decision making is relatively more important in EMs, which areoften characterized by high cultural embeddedness and by
complex webs of personal and business obligations. Moreover,
due to the influence of socioeconomic and cultural institutions,
family decision making units are larger in EMs. It is not
uncommon that countries will have an average household size of
six or more people, spanning three generations. We need more
theorizing and better marketing research tools 1) to conceptu-
alize, measure, and analyze these social networks, 2) to un-
derstand their role in group decision making, and 3) to examine
the reciprocal and dynamic relations between individual and
group norms, attitudes, and behavior. Such research will also
benefit marketing research in HICs, since blogs, buzz, and other social network phenomena are rapidly gaining importance.
5.3. Data collection
It is well-known that obtaining data from EMs is more
challenging than collecting data in HICs. The choice of data
collection method thus requires more careful consideration in
EMs, and may change as a particular research project proceeds,
due to within-country diversity of EMs. In this section, we
briefly explore some of these issues in respect of secondary and
primary data. Detailed secondary data on EMs are freely avail-
able from government and international trade organizations
such as the World Bank and the United Nations. These data can be very helpful when trying to get an overall view of a country
and when planning data collection. However, it is important to
consult the technical reports for EM data in these standardized
data sources, as data may vary in recency and accuracy across
countries in a report or even be estimated, and to ascertain how
representative the data are for the total population. For instance,
although consumer credit bureaus can provide marketing data
for many EMs, data typically is limited to the minority of
consumers with accounts at financial service providers or
commercial/retail credit firms.
Primary data collection is hampered by the absence of
sampling frames, lack of reliable and fast transportation in partsof EMs, unreliable mail delivery, and low penetration of the
Internet. The extreme heterogeneity of EM populations in-
creases the importance of considering possibly hidden institu-
tional context effects that are masked in primary data, even
when multi-nation data is provided in standardized formats by
global multinationals across countries and does not appear to
differ meaningfully in content or quality. For instance, super-
market scanner data collected in EMs typically reflects sub-
stantial differences in shopper profiles, not only across countries
but within and across stores in a country. If shopper profiles are
related to systematic differences in potentially confounding
institutional context variables, then it becomes necessary to
collect shopper and purchase data concurrently or, at the very
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least, in a way that allows confounding variables to be con-
trolled in the analysis. In this vein, approaches such as the
flexible hierarchical Bayes variance components approach
recently proposed by Steenburgh, Ainslie, and Engebretson
(2003) to take full advantage of masked information (e.g., in
postal codes) hold considerable promise.
On the positive side, collecting quantitative, primary data inEMs may be less daunting than one might think. Market re-
search tends to be much cheaper. For example, while business-
to-business interviews cost about $200–400 in France or Japan,
the cost per interview in Thailand or Vietnam EMs is about $40,
a reduction of 50–90%.2 The marketing research infrastructure
in EMs is also rapidly improving. Local research firms are
available in virtually all EMs and global market research
companies increasingly have agencies in EMs as well. Gallup
International has member agencies in most Eastern European
countries, India, China, Indonesia, and Vietnam, South Africa,
Kenya, Nigeria, Zimbabwe, Argentina, Mexico, among others.
It claims to have fieldwork capacity in most other countries. Theresearch network of other leading agencies such as AC Nielsen,
GfK, Research International, and Taylor Nelson Sofres also
spans dozens of EM countries. However, operations in EMs
often do not offer a multinational research firm's full range of
services. For example, although GfK is active in over 60 EMs,
its vaunted consumer tracking service is only available in about
a dozen Eastern European countries.
Primary data collection should not necessarily involve
structured surveys or scanner data. Qualitative techniques ap-
pear more suitable than quantitative techniques to uncover new
constructs. Simply testing one's existing theories in a vastly
different context may lead to an imposed-etic view — i.e.,
committing the fallacy of assuming that constructs and theoriesdeveloped in HICs are automatically valid in EMs too. EMs
typically have evolved differently than HICs and have more
recent experiences with institutional forces such as colonization,
widespread poverty, and frontier expansion.
Historical analysis and content analysis are examples of
qualitative approaches that can be employed to explore the
effects of institutions on consumers and organizations at the
individual and group level. For instance, Zhou and Belk (2004)
used content analysis to understand how consumer perceptions
of advertising content were affected by the competing goals of
global cosmopolitanism, which drives consumption of status
goods for the sake of mianzi (prestige face), and the desire toinvoke more traditional Chinese values. Arnould (1989, 2001),
Arnould and Mohr, (2005) used ethnographic data collection
methods to study consumer and market behavior in Niger. Joy
(2001) used depth interview techniques to identify four types of
social ties that have distinctive influences on gift giving
behavior in Chinese culture.
A word of caution is in order. Imposed-etic, standardized
data collection methods are problematic and we can learn a lot
about marketing phenomena by studying EMs with an open
mind. However, the opposite view – extreme emic – which
holds that everything is different in EMs, is equally problematic.
In our experience, the extreme emic philosophy is more com-
mon than the imposed-etic view, especially among qualitative
researchers. Marketing science progresses by building on
previous work. Assuming that everything is different in EMs
fails to recognize the social, cultural, and economic universals
that are also part of human civilization. It leads to reinventing
the wheel and proliferation of new constructs, simply because of origin elsewhere.
Qualitative procedures may be fruitfully employed 1) if used
prudently as to avoid statements regarding the generalizability
of a phenomenon, and 2) in conjunction with follow-up quan-
titative data collection. Rigorous, quantitative construct valida-
tion is critical in the development of new constructs and
theories. Econometric and psychometric modeling techniques
should be used 1) to assess discriminant validity with existing
scales, 2) to evaluate the power of the new constructs over and
above existing constructs in explaining key criterion variables,
and 3) to test rival models in nomological nets (Steenkamp &
Baumgartner, 2000).
5.4. Measurement
We have seen that EM populations on average are char-
acterized by lower levels of formal education. Unfortunately,
many established measurement instruments (see Bearden &
Netemeyer, 1999 for an excellent overview) require a fairly high
degree of respondent sophistication. They often are too long and
too difficult for use in EMs. Consider the important construct of
values. Values are among the most central determinants of
consumer behavior. They underlie a large and important part of
human cognition and behavior, and have been found to be
valuable in explaining a variety of attitudes and behaviors in theconsumer context (Burgess, 1992).
The Schwartz Value Survey (SVS; Schwartz, 1992) is the
most rigorous instrument to measure consumer values. Respon-
dents rate the importance of 57 values as “a guiding principle in
my life,” on a 9-point scale, ranging from −1=opposed to my
values, 0=not important, 3=important, 6=very important, and
7=of supreme importance; the other categories are unlabeled.
This judgment task requires one to think about and evaluate
abstract value concepts without providing specific life context
references within which to weigh one's application of them.
However, although people combine, apply, and choose among
guiding principles in life on an almost constant basis, theyusually are only loosely aware that they are doing so and seldom
are so precise and self-conscious (Schwartz, 1994). Accordingly,
respondents find this task novel and intellectually demanding
and take 25 min to complete it, on average.
There are serious problems with completing the SVS in EMs,
especially among the less educated and the elderly, and in rural
areas (Schwartz, Lehmann, & Roccas, 1999). In response to
these limitations, Schwartz et al. (1999) developed a new
instrument, called the Portraits Values Questionnaire (PVQ).
The PVQ includes short, textual portraits of 29 different people.
Value importances are measured indirectly, as they are inferred
from the self-reported similarity to a person of the respondent's
gender holding a particular value to be important. Each portrait 2 We thank an anonymous reviewer for providing this information.
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describes a person to whom certain goals, aspirations, and
wishes – all expressive of the same single value type – are
important. For example, “Being very successful is important to
her. She likes to stand out and to impress other people”, describes
a person who considers achievement values important. For each
portrait, respondents answer: “how much like you is this
person?” They check one of the six boxes labeled: very muchlike me, like me, somewhat like me, a little like me, not like me,
and not like me at all. The PVQ takes less time to complete
(usually less than 10 min) than the SVS, is less demanding
cognitively, and has been used successfully in EM contexts
(Schwartz et al., 1999, 2001; Steenkamp & Burgess, 2002).
Steenkamp and Baumgartner (1995) developed and validat-
ed a 7-item short-form of a 95-item scale to measure optimum
stimulation level, which has subsequently been used in South
Africa (Steenkamp & Burgess, 2002). A short-form of the Big
Five personality questionnaire also has been developed (Benet-
Martinez & John, 1998). Researchers have sometimes con-
structed their own short-form of existing consumer behavior scales on an ad-hoc basis, by including only the highest loading
items in their EM study (e.g., Alden et al., 2006; Batra et al.,
2000).
Shorter, simpler scales are also needed in organizational
research, as otherwise the response rate among time-harassed
managers will drop to unacceptably low levels. Take market
orientation, one of the most widely used organizational constructs
in marketing. Based on a pool of 44 items drawn from three
established market orientation scales, Deshpandé and Farley
(1996) developed a short-form 10-item scale that exhibited high
loadings on the first factor, good reliability, and low nonresponse.
This scale might be fruitfully employed in EMs.
Existing, Western, scales may not only be too long andcomplex, they also may contain items that are inappropriate in
EM contexts. Consider this item from the well-known Paulhus
(1991) social desirability scale: “I never read sexy books or
magazines.” It is potentially offensive and assumes easy
availability of such materials. An item like “I am not a safe
driver when I exceed the speed limit ” may not be offensive, but
is inappropriate because it assumes that everybody has a car,
which simply is not the case in EMs.
It also appears that the direction of the items can cause
problems in EMs. Several studies (Steenkamp & Burgess, 2002;
Wong, Rindfleisch, & Burroughs, 2003) have found that
negatively worded items cause problems in EMs. The reasonfor this phenomenon is not clear, but it is worrisome as item
reversal is an effective way to neutralize acquiescence bias
(Baumgartner & Steenkamp, 2001).
In sum, some work has started to address the validity and
usefulness of measurement instruments for EMs. Existing
scales may require at least partial adaptation to the EM context.
Typically, adaptation has been approached informally, selecting
items that appear cross-culturally appropriate and exhibit high
factor loadings in previous (Western) studies. De Jong,
Steenkamp, and Veldkamp (2006) recently proposed a more
systematic approach. They integrate a hierarchical item
response theory (IRT) model with optimal test design to con-
struct country-specific, short-form measurement instruments
based on a common pool of items. Items are selected subject to
researcher-specified constraints, such as the length of the scale
or the minimum amount of information retained in the short-
form. Despite the fact that the items can differ between coun-
tries, construct scores can still be compared across countries and
across different studies, due to calibration of the model on a
common scale, and the sample-invariant characteristics of IRT parameters.
6. Data analysis
6.1. Heterogeneity
Compared to HICs, EMs exhibit a much greater degree of
within-country heterogeneity on key aspects of human
development such as income and educational attainment, as
well as on other aspects, varying from marketing infrastructure
to lifestyle. In such a context, “fixed-effects” models and
techniques are problematic. The established method for as-sessing scale reliability is Cronbach's alpha, which ignores
heterogeneity. This may be one of the reasons why scale re-
liability in EMs often is lower than in HICs (Alden et al., 2006;
Batra et al., 2000; Deshpandé & Farley, 2004). Factor analysis
and OLS regression are arguably the most frequently employed
multivariate techniques in marketing research to uncover
relations between items and constructs. In their standard form,
both assume fixed-effects. When there is considerable hetero-
geneity in the sample, these techniques will yield biased results.
Heterogeneity can be discrete or continuous (Wedel,
Kamakura, & Böckenholt, 2000). Discrete heterogeneity implies
that there is a limited number of more or less homogeneous
groups in a country. If the source of heterogeneity can beidentified a priori, analyses should be conducted on each group
separately. Results can be compared across groups if the
measurement scales exhibit invariance across groups (Steen-
kamp & Baumgartner, 1998). For example, Steenkamp and
Burgess (2002) studied the nomological relations involving
optimum stimulation level and exploratory behavior in South
Africa, a country characterized by extreme within-country di-
versity. They argued that cultural–ethnic groups are a systematic
source of heterogeneity. They first established measurement
invariance across these groups, and subsequently estimated and
compared nomological relations for each group separately.
A second approach to account for discrete heterogeneity is by estimating relations on groups that are formed post-hoc,
using finite mixture modeling techniques. Jedidi, Jagpal, and
DeSarbo (1997) have developed a finite mixture structural
equation model to account for unobserved heterogeneity in
measurement and structural relations. Ter Hofstede, Steenkamp,
and Wedel (1999) proposed a finite mixture model to estimate
the psychological associations between product attributes,
benefits of consumption, and value priorities, incorporating
within- and between-country heterogeneity.
Allenby and Rossi (1999), among others, have argued that
the assumption of discrete heterogeneity is overly restrictive.
They advocate the use of continuous heterogeneity distribu-
tions, allowing the effect of a parameter to vary across entities.
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The standard assumptions are that the distribution of the
parameters is unimodal and normal. Procedures like random
coefficients regression analysis and hierarchical Bayes can be
used to estimate the modus and variance of the normal dis-
tribution. To the best of our knowledge, neither finite mixture
models nor continuous heterogeneity models have been used to
deal with heterogeneity within EM countries. This is remarkableas the advantages of these complex models are likely to be much
more compelling in the EM setting than in the HIC context in
which they were developed and tested.
6.2. Measurement invariance
Measurement invariance refers to whether the observed
scores are comparable across groups (Steenkamp & Baumgart-
ner, 1998). Marketing scholars recognize that this is an
important issue in cross-national comparisons but, in fact, it is
equally relevant when comparing disparate groups within one
country. Measurement invariance is especially pertinent in EMresearch, given within-country heterogeneity and the vast dif-
ferences in institutional context with HICs in which most
previous research has been conducted. Lack of measurement
invariance can be due to cross-group (national) differences in
responses to 1) individual items and/or to 2) complete sets of
measures (Baumgartner & Steenkamp, 2001, 2006; Steenkamp
& Baumgartner, 1998).
Steenkamp and Baumgartner (1998) outlined a procedure to
test for measurement invariance at the level of individual items,
using multi-group confirmatory factor analysis. If specific
invariance constraints are met, this procedure yields construct
scores corrected for lack of measurement invariance. These scores
can be used in subsequent analyses, such as means comparisonsand estimation of structural relations. Baumgartner and Steen-
kamp (1998) extended this approach to combined emic–etic
scales. They showed how the multi-group confirmatory factor
analysis model can be modified to yield cross-nationally
comparable scores on scales consisting of a combination of
country-specific and cross-nationally standardized measures.
Lack of measurement invariance can also be due to cross-
national differences in response styles (Baumgartner & Steen-
kamp, 2001). Response style refers to a person's tendency to
systematically respond to questionnaire items on some other
criterion than what the items were supposed to measure (Paulhus,
1991). Stylistic responding tends to affect all items and as such isnot easily detected by the procedure outlined by Steenkamp and
Baumgartner (1998), which is based on differential item
functioning. The most prevalent response styles are acquiescence
bias, extreme responding, and social desirability responding
(Paulhus, 1991). There is evidence that countries may differ
systematically on these response styles. Steenkamp, De Jong, and
Baumgartner (2006) found that leading EM countries such as
China, Argentina, Poland, and Brazil are among the highest in
socially desirable responding. Countries like China also are high
on acquiescence bias. These systematic results can be explained
by a country's culture (Chen, Lee, & Stevenson, 1995; Steenkamp
et al., 2006), which provides yet more evidence that marketing
research results are affected by a country's institutional context.
Baumgartner and Steenkamp (2001), Rossi, Gilula, and
Allenby (2001), and Ter Hofstede et al. (1999) have described
procedures to purge observed scores from stylistic responding.
More recently, De Jong, Steenkamp, and Fox (2007) proposed a
model that corrects for cross-national differences in responses to
individual items and sets of items. This procedure no longer
requires cross-national invariance. The model also takes intoaccount that rating scales often lack interval-scale properties.
They applied this procedure to data from 11 countries, including
EM countries like Brazil, China, Russia, and Thailand and
showed that failing to account for response styles leads to
erroneous conclusions.
The foregoing discussion may suggest that measurement
invariance is only an issue for survey data. Unfortunately though,
that is not the case. It is our experience that scanner data are
difficult to compare across HIC countries, let alone between HICs
and EMs or among EMs. One reason is that definitions of
categories (e.g., what are softdrinks?) and store types (e.g., whatis
considered a discounter?) are not standardized across countries.Further, the coverage of scanner data may systematically vary
across countries. In EMs, retail scanner data (if available) will only
cover a small part of the total market, as few stores have this
technology. But even in HICs, this yields problems. Powerful
discounters like Wal-Mart in the U.S. and Aldi in Germany are not
included in retail scanner data. Obviously, this threatens the
within-country usefulness of retail scanner data, and reduces the
comparabilitywith countries where retail coverage is much higher.
Measurement invariance concerns also apply to secondary
data. Employment data are sometimes manipulated for political
purposes and the wealth of countries is difficult to compare due
to different tax morals, (although these concerns are not limited
to EMs only).3 The very fact that the data have been collected by a reputable organization does not assuage the need for
evaluating metric invariance, e.g., by comparing estimates from
different sources and by constructing composite indices. Multi-
group confirmatory factor analysis can also be used to examine
the measurement invariance of secondary data, provided the
number of observations is sufficiently large and multiple
indicators/estimates per construct are available.
7. Learning from results
7.1. Direct interpretation
Learning can occur at several levels. At the most basic level,
we learn something about the phenomenon at hand in the
country in question. In our discipline, there is a strong focus on
statistical significance. Findings that are significant at pb .05 are
considered important while findings with a significance level
above .05 – or, more liberally, above .10 – are not. Similarly,
scales are considered to demonstrate internal reliability when
coefficient alpha exceeds .70. Generally, these are reasonable
3 For example, an article in the Wall Street Journal Europe (1999) stated that
“The government and international institutions explicitly recognize that a large
part of the Italian economy goes unreported, and add a certain percentage to
GDP to make up for these leakages when measuring its size.”
Needless to say,such adjustments are estimates, suffering from reliability problems.
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conventions in well-researched, Western contexts. In fact, one
could argue that traditional significance testing against a null
result makes little sense if previous research has established that
the effect is different from zero (Farley & Lehmann, 1994).
However, there are several reasons why traditional signifi-
cance levels are of more doubtful value in EMs. First, since we
do not know much about marketing phenomena in an EMcontext, in a Bayesian spirit, any information lifts marketing
science above relative ignorance. Traditional significance
testing minimizes the probability of erroneously concluding
that there is an effect. This ignores the scientific and managerial
“costs” of overlooking effects that are in reality present (Type-II
error). Second, the power to detect effects generally (although
not invariably) is affected adversely by lower reliability and
within-country heterogeneity, both of which are especially
pertinent in EMs. Hence, it is reasonable to accept more liberal
significance criteria when conducting research in EMs (e.g.,
pb .20). After all, conventions are just that and our goal must
be to advance science. This recommendation is similar in spirit to Lodish et al.'s (1995) use of pb .20 for managerially relevant
decisions and to Nunnally's (1978) suggestion to accept lower
reliabilities in the early stages of research than in later research
stages. Perhaps it was also in this spirit that Deshpandé and
Farley (1999, p. 10) defended the low reliability of their
measures in a Vietnamese study “… reliabilities of the scale
measurement in Vietnam, while directionally correct, were
weaker than in Japan.”
7.2. Marketing relevance of theoretical explanations
A second level of learning takes place by examining the
marketing relevance of our theoretical explanations. An effect may be significant but does it really matter? We can assess this
by evaluating the effect size, for which the correlation
coefficient r is the most common metric. It is relatively simple
to convert t -values and other significance statistics associated
with multivariate analyses into r (Lipsey & Wilson, 2001).
Researchers often more or less blindly adopt Cohen's (1988)
interpretation of effect sizes: small: r =.1; medium: r =.3; large:
r =.5, where small is often equated with irrelevant.4
We believe that this interpretation does not accurately reflect
the marketing relevance of our theoretical explanations. First,
small r 's actually can represent a substantial effect. For
example, Rosenthal (1991) showed that a correlation of .10corresponds to an increase of the hit rate by 10%. Second, in
EMs, scale reliabilities are often lower and this will generally
(although not always) decrease effect sizes. Third, marketing
costs are not taken into account. We will illustrate this with a
simplified example, based on real company experience. Con-
sider a large consumer packaged goods company that regularly
introduces new products in the Brazilian market and typically
spends annually $20 million on new product development and
introductions. It conducts a study into drivers of new product
success and finds an effect size of r = .11 for income. A
segmented approach, based on income, translates into a
predicted increase in new product success of 11%, generating
expected savings of $2.2 million. Thus, even if an effect size
of .11 may not seem large, the marketing savings can be
substantial.
7.3. Empirical generalizations
The most abstract level of learning is when the researcher
attempts to integrate the findings obtained in the specific EM
study with previous research to arrive at, or update (weak or
strong) empirical generalizations. Bass and Wind (1995, p. G1)
eloquently outlined the role of empirical generalizations in the
evolution of marketing science: “Science is a process in which
data and theory interact leading to generalized explanations of
disparate types of phenomena. Thus, empirical generalizations
are the building blocks of science.” Perhaps this more than
anything else underlines the importance of EM research. To be a
true science, marketing must establish generalizability and boundary conditions in disparate settings. EMs offer research
contexts which are widely disparate to the ‘traditional’ research
context of the HICs. We believe that examining empirical
generalizations to EMs is necessary to arrive at, what Farley and
Lehmann (1994) call, “cross-national laws” of marketing.
If at least weak generalizability holds for both HICs and
EMs, we can start to have confidence in the universality of a
theory. If on the other hand, the results do not hold, we can
establish boundary conditions. In both cases, marketing as a
science progresses. Let us illustrate this with two EM studies.
Steenkamp and Burgess (2002) found that consumers' optimum
stimulation level significantly affect the extent to which they
engage in exploratory behavior. This result was found acrossthree cultural–ethnic groups and replicated previous research in
HICs. Given the vastly different contexts in which this effect is
found, we may start to formulate this relationship as a cross-
national law, subject to further confirmation in other EMs.
On the other hand, the study by Burgess and Nyajeka (2006)
suggests boundary conditions on drivers of a company's market
orientation. Research in Western countries has supported the
adverse effects of formalization and centralization on market
orientation. Burgess and Nyajeka showed that this does not
apply to countries characterized by cultural hierarchy and
embeddedness and lower formal education of employees. In
such countries, formalization and centralization are consistent with cultural expectations and moderate levels of market orien-
tation may stimulate information acquisition and dissemination
by informing employees with less formal education about
market orientation and clarifying their role in its delivery. The
emphasis on cultural hierarchy also suggests that employees
may prefer relatively higher levels of formalization and
centralization, because they will rely on rules to proscribe their
roles and behaviors within the hierarchical structures they value.
8. Implications for marketing practice
Marketing research in EMs not only plays a considerable role
in the evolution of marketing science, it is also of great 4 Note that Cohen (1988) himself does not suggest this.
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relevance to marketing practice. In this section, we will consider
a number of issues specific to the development and implemen-
tation of marketing strategies in EMs.
8.1. Development of marketing strategies for EMs
8.1.1. Focusing on the affluent segment To compete in EMs, global companies should develop two
distinct strategies. Firstly, for the elite segment typically con-
centrated in urban areas, companies can build profitable posi-
tions by rolling out their global marketing strategies. These
consumers tend to prefer global brands over local brands, due to
the associations of global brands with higher quality and
prestige (Batra et al., 2000; Steenkamp et al., 2003). Global
brands also communicate cosmopolitan sophistication and
modernity. Although these qualities are sought after in most
countries, they are appreciated by the elite who often admire
HIC lifestyles and the products that symbolize them. This
generalized status preference for global/foreign brands has beenreported in a wide range of EM countries such as China, India,
Korea, Vietnam, Congo, Ethiopia, Nigeria, Zimbabwe, Roma-
nia, Turkey, and Peru (Batra et al., 2000). Distribution channels
in large cities often are advanced and price sensitivity among the
elite segment typically will be modest. In fact, purchasing brands
that cannot be purchased by the majority of the population caters
to the elite's typical desire for social distinction.
Note that catering to the elite segment and building global
brands is not the prerogative of companies based in HICs. EM
firms can build equally compelling international brand images.
Consider the fast-food chain Nando's. Starting from South
Africa, it has rapidly expanded to over 30 countries on five
continents, challenging one of the perennial symbols of globalculture, McDonald's. Some EM companies underline their
credentials by emphasizing their emergence on the global stage.
For example, for its Chinese-language home page, computer
maker Lenovo selected a map of the world with pictures of its
PC towering over globally recognized landmarks as the Eiffel
Tower, the Statue of Liberty, and the Sydney Opera House. Its
global ambitions were expressed in the slogan: “in step with
global technology” (Lane, St-Maurice, & Dyckerhoff, 2006).
Nevertheless, the traditional business focus on relatively
expensive, large unit, over-engineered global brands is unlikely
to be successful in EMs beyond the elite segment, at least for the
foreseeable future.
8.1.2. Innovation blowback: focusing on the base of the pyramid
A second way to compete in EMs focuses on serving the
needs of the mass market segment with a radically different
strategy. This entails the challenge of developing (disruptive)
strategies to serve the extremely price sensitive and resource-
constrained mass market segment while maintaining profitabil-
ity. Although this can be daunting, it can be done.
The lower-income segment of EMs is an ideal market for
disruptive innovations for at least two reasons (Hart &
Christensen, 2002). First, if a firm has developed a profitable
business model to cater to this segment in one EM, its business
model can be expected to travel well to other places. After all, it
has built up the skills necessary to offer a product profitably at
very low prices and the proposition is likely to be attractive in
other EMs. Also, the proposition may be attractive to the
significant low price/value-focused segment in HICs. For
example, the Dacia Logan is a no-frills car priced at about
5,000 that Renault developed for Eastern Europe but later
introduced into Western Europe too.Second, disruptive innovations also compete against non-
consumption. In EMs, nonconsumption is a realistic option for
the vast majority of the mass market segment. Disruptive
innovations potentially expand the market by offering a product
to consumers who would otherwise be left out of the market.
Many Eastern Europeans purchasing the Dacia Logan would
not be able to buy a car otherwise. They are quite happy to own
a simpler, more modest version of cars marketed in HICs. In less
affluent EMs, penetration of even basic consumer products,
such as toothbrushes, remains low. This challenges global
manufacturers to develop basic, low cost products that satisfy
the needs of the mass market segment without jeopardizingendorsements in HICs. For example, marketing affordable
toothbrushes at affordable prices may require “transitional”
designs without modern design elements that improve perfor-
mance (e.g., angled necks and bristles, end-rounded bristles) but
also increase production costs beyond affordable levels.
As existing products from high-end markets are out of reach for
all but a small segment of the EM market, disruptive innovations
will encounter limited competition from established products.
Consequently, they can incubate their businesses in the relative
safety of low-income segments (Hart & Christensen, 2002). As
such, EMs provide an invaluable ground to develop a low cost,
efficient business model that can be transferred to the low-income
segment of other EMs. In the longer run, these business modelseven can be moved upward, in EMs as well as in HICs, by
successively attacking market tiers that are the least attractive to
established high-end products. It is in this vein that Brown and
Hagel (2005) introduced the term “innovation blowback ” in that
they expect that EMs will become important catalysts for dis-
ruptive innovations. Companies that are able to develop the new
innovation skills to be successful in these markets are likelyto gain
competitive advantage in the global marketplace.
Although Western companies are active in EMs, EM-based
companies may be benefiting optimally from the disruptive
potential of their huge ‘ base of the pyramid’ potential. For these
companies, it is either survive or go bankrupt. Companiesranging from India's Mahindra and Mahindra (tractors) and
Ranbaxy (generic pharmaceuticals) to Egypt's Orascom
(telecom) and Brazil's Embraer (aerospace) have learned to
make a profit at prices unheard of the HICs. Orascom earns a
margin of 49% selling cellular services for 2–3 cents a minute,
while Ranbaxy profitably sells generic ciprofloxacin (to treat
bacterial infections) for $0.69 for 10 tablets compared to the
going price of $51 in the U.S. (Engardio, 2006).
8.2. Implementation of marketing strategies
The best-crafted and most appropriate strategy will not lead
to superior performance if it cannot be implemented in the
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operational context. EM contexts are marked by institutional
turbulence, complexity, and within-country diversity that can
attenuate and even disrupt implementation (Wright et al., 2005).
Hence, performance is likely to be superior when organizational
structures and processes encourage strategic flexibility, innova-
tion, and entrepreneurship and implementation stresses continual
market-oriented intelligence gathering, dissemination, sense-making, and responsiveness (Liu, Luo, & Shi, 2002; Luo &
Peng, 1999). We distinguish four key factors that critically affect
the implementation of marketing strategies in EMs: leadership,
organizational systems, intraorganizational relations, and learning.
Leadership concerns top management attitudes and behav-
ior. Top management emphasis and commitment is important to
the implementation of marketing strategy in any organization,
but even more so in EMs, due to socioeconomics (low formal
education, high unemployment) and culture (high embedded-
ness and hierarchy). Accordingly, it is important for top man-
agement to understand how institutional, normative, and
organizational elements of context animate implicit, cultural-ly-endorsed beliefs affecting leadership acceptance and effec-
tiveness (House, Hanges, Javidan, Dorfman, & Gupta, 2004).
Top management may need to be more explicitly involved in
management and policy setting than in HICs, in order to
encourage effective implementation. Cultural preferences for
risk avoidance may make this especially true when strategies
emphasize entrepreneurship and risk-taking (Hofstede, 2001).
Top management also needs to clearly understand corporate
governance issues and the governance effects of domestication
and internationalization strategies (Wright et al., 2005).
Organizational systems concern organizational structure,
reward, and training systems. Cultural preferences for order and
hierarchical coordination in working relations suggest that higher levels of centralization and formalization may be appropriate in
EM organizational structures and processes (Burgess & Nyajeka,
2006). Consequently, employees may prefer to work in small
groups and teams when implementing strategies and to be
evaluated and rewarded, at least partially, on group performance
(Ping Ping Fu et al., 2004; Wei, Chen, & Zhang, 2004). Training
can play an important role in addressing competency deficits in
functional skill areas and helping overcome difficulties in
intraorganizational relations that derive from within-country
diversity (Cadogan, Sundqvist, Salminen, & Puumalainen,2005).
Intraorganizational relations comprise process-related choices
about internal connectedness, coordination, and conflict manage-ment. When these choices are appropriate to the institutional
context, they improve implementation by facilitating social capi-
tal formation, trust building, and endorsement of shared goals and
organizational culture (Inkpen & Tsang, 2005; Kirca, Jayachan-
dran, & Bearden, 2005). Hierarchy and embeddedness naturally
encourage market orientation by facilitating information dissem-
ination and use and encouraging cooperation during implemen-
tation ( Nakata & Sivakumar, 2001), but it remains necessary to
promote this natural tendency by designing processes that will
encourage cooperative relations.
The way that individuals define themselves affects their
thoughts and interactions with others. The characteristics of EM
societies accentuate social and relational identities, which often
are expressed in an individual's connectedness within social
networks (Brewer & Brown, 1998). In the organizational
context, connectedness communicates important identity infor-
mation about status and roles, which helps confirm identities,
define appropriate others with whom to interact and the nature
of those interactions, increase well-being and self-esteem, and
enhance cooperation, implementation, and performance (Gel-fand, Major, Raver, Nishii, & O'Brien, 2006; Milton &
Westphal, 2005). Equally, inability to develop and affirm con-
nections can be a source of distress and negative feelings that
frustrate implementation. (Cross, Gore, & Morris, 2003).
The EM context also requires adaptation in day-to-day
interactions with subordinates who must implement strategies.
Consistency in behavior and transparency are considered to be
good managerial characteristics in Western contexts. Diploma-
cy and tact, even evasiveness, and avoidance of negative public
evaluations, may be preferable in EMs if it means saving face
for an important colleague or subordinate (House et al., 2004).
Thus, although top management is required to be moreavailable, physically or symbolically, to act as vertical sources
for guidance, facilitate internal connectedness across the
organization, and encourage middle managers to take appro-
priate risks, they must also ensure that their interactions are
appropriately designed so as to enhance implementation.
Learning systems focus on facilitating learning in the firm.
Complexity and dynamism in EMs increase the importance of
knowledge-producing behaviors and knowledge-questioning
values (Sinkula, Baker, & Noordewier, 1997). The positive
effects of learning on performance in EMs increase with
experience intensity and diversity (Luo & Peng, 1999), hence it
is important to leverage experience within the firm and its
supply chain using formal and informal learning and knowledgemanagement systems.
9. Conclusions
9.1. Summary
In this article, we argued that marketing scientists need to
conduct more research in EMs, both to further the advance of
marketing as an academic discipline as well as to maintain the
managerial relevance of our discipline. We viewed marketing
science as a process, and proposed a framework delineating four
stages through which EM research contributes to the growth of marketing science. The four stages are 1) theory development,
2) acquisition of meaningful data, 3) analysis of the data to test
one's theories, and 4) learning. Through the process of
deductive logic, general theories are operationalized in specific
settings, while through the process of inductive logic, specific
findings are used to arrive at more general conclusions. We
discussed the unique issues and contributions of EM research
for each of the four stages of this framework. Subsequently, we
elaborate on the implications of EM research for development
and implementation of marketing strategies. Our discussion has
revealed that some research has started to address these issues,
but we have only begun to scratch the surface. In this spirit, we
present an agenda for future research in EMs.
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9.2. Research agenda
9.2.1. Theory development
In order to move forward, we need to systematically explore
the EM institutional context and its effects on marketing phe-
nomena. Although we should be open to constructs and theories
developed in EMs, it is natural that the large existing body of work be a primary point of departure. Only in this way can we arrive at
contingency theories of marketing thatmay possibly be applicable
across a wide range of countries and environments.
Our journey will challenge us to become more truly global in
our theory development. The overwhelming body of current
marketing research considers consumers as highly independent
persons, making their own decisions. Marketing theories that
consider group dynamics and social influences are underdevel-
oped. This limits their applicability in embedded EM contexts,
as does lack of clarity about whether constructs developed in
HICs are theoretically equivalent in EMs. Theoretical equiva-
lence is difficult to establish but a wide range of procedures,ranging from qualitative techniques to structural equation
modeling can be used for this purpose.
9.2.2. Acquisition of meaningful data
The appropriate unit of observation in EMs may sometimes, if
not often, be the group rather than the individual. But how do we
measure group influences and group dynamics? Can we measure
them at the individual level using constructs like Fishbein's
subjective norm (Assael, 1992) or Bearden, Netemeyer and Teel's
(1989) susceptibility to normative influence? In that case, it is
worrisome that only 5 out of nearly 200 scales included in
Bearden and Netemeyer (1999) deal with social influences. If
those effects should be measured at the group level, how shouldwe do that?
The choice of the countries typically is driven by con-
venience rather than by design. A more deliberate approach
where countries are purposefully selected to provide maximum
variation on relevant institutional factors will increase the
generalizability of our findings.
One of the great success stories in marketing is that we have
developed an impressive body of rigorously validated market-
ing scales (Bearden & Netemeyer, 1999). However, few of
these validation efforts have taken place in EMs. We hope that
future editions of the well-known Handbook of Marketing
Scales (Bearden & Netemeyer, 1999) will contain more in-formation on the validity of marketing scales in EMs. This will
be a major step in opening up EMs to advanced marketing
research, and allows EM researchers to build on previous
efforts and insights.
Notwithstanding the importance of previous work, we expect
that scales often will have to be adapted to render them
cognitively less demanding. Much work remains to be done to
construct shorter, simpler versions of existing scales, using
different wording and response formats, as well as new scales
for concepts that are particularly relevant in EMs (e.g., guanxi,
ubuntu). We except that marketing research in the U.S. and
other Western countries will also profit from the development of
scales that are cognitively less demanding.
9.2.3. Data analysis
Data collected in EM research have a tendency to have
higher noise levels. This has four important implications. First,
Western standards of reliability (e.g., alpha greater than .7) often
are not met in EMs. These standards were developed, based on
research among relatively more homogeneous, higher educated
groups.5 To what extent is this cutoff criterion realistic for EMresearch, where so little is known about the context and with
considerable within-country heterogeneity? What are the
substantive effects of lower reliabilities?
Second, measurement invariance is an issue in EM research.
In research contexts characterized by higher levels of noise, the
multi-group confirmatory factor analysis framework is likely to
indicate that even partial measurement equivalence is not
achieved. Some research is under way to relax the measurement
equivalence constraint altogether (De Jong et al., 2007). Their
method is applicable to data measured on 5-point agree–
disagree scales. More research is needed, e.g., for other
response scales. In addition, although measurement invarianceis generally recognized to be an issue for survey data, it is
usually ignored for other types of data such as scanner data and
secondary data. Future research should investigate the effect of
lack of measurement invariance on substantive results for
various types of data.
Third, higher noise levels in EM research adversely affect
model fit and significance tests. We need models that are better
able to correct for these influences, and statistical rules-of-
thumb that can be used fruitfully and validly with EM data.
Fourth, within-country heterogeneity is an important prob-
lem in EM contexts. In principle, finite mixture models, random
coefficients regression analysis, and hierarchical Bayesian
analysis can deal with this. However, do the theoretical ad-vantages of these advanced techniques show up in practice,
given that EM data contain more error? Perhaps the simpler but
more robust fixed-effects models work better in practice, just
like metric conjoint analysis and maximum likelihood structural
equation modeling usually outperform their nonmetric alter-
natives although theoretically, the latter should perform better?
9.2.4. Learning
The practice of relying almost exclusively on achieving .05
significance levels in null-hypothesis statistical tests has limited
value in EM research. Instead, we need to use all of the
information at hand, focusing attention also on effect sizes,statistical power, and the cost of “false negatives” in our re-
search. Where our knowledge of marketing phenomena in EMs
is most limited, it seems reasonable to suggest that more liberal
significance and reliability criteria may be appropriate. In a
similar vein, researchers must not disregard effect sizes that
seem small by traditional expectations, but rather seek to
understand the relevance of effects in the context of EMs, which
often include the largest markets in the world. All these efforts
5 In fact, the standard of .7 may also be problematic for research in HICs.
Baumgartner and Steenkamp (2006) show that scale reliability using
conventional procedures such as Cronbach's alpha is substantially over-estimated, once the error term is properly decomposed.
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should contribute to the Holy Grail of marketing science —
empirical generalizations.
However, a word of caution is needed here. International
marketing has gained much of its current respect among
marketing academics since researchers started to apply rigorous
data collection and analytical techniques to address substantive
international issues. The EM context should not be used as anexcuse for sloppy research. Rather, given the complexities of
the EM research context, we expect a great future for rigorous
techniques that extract the maximum information with the
minimum data collection burden for the respondent. Surveys in
which questions are adapted based on an individual's previous
responses (Balasubramanian & Kamakura, 1989) and data
collection tasks that use respondents' own vocabulary (e.g.,
Steenkamp, Van Trijp, & Ten Berge, 1994; Steenkamp & van
Trijp, 1996) seem especially useful in EMs. Again, marketing
research in HICs may benefit from this too.
Science is built on the generalizability of our findings across
studies, across cultures, across national boundaries. EMs should be used as a natural laboratory in which theories and as-
sumptions about their underlying mechanisms can be tested.
Confidence in the universality of our findings is greatly
enhanced when strong generalizability is supported, while we
can be encouraged in this respect when (partial) weak gene-
ralizability is established. Where generalizability does not exist,
we learn about the boundary conditions of our theories.
9.3. Conclusion
The hard sciences derive much of their greater respect from
their ability to comeup with generalizations or “laws.” Apart from
using the scientific method, marketing's claim to be a science isgrounded in its ability to develop scientific generalizations
(Hanssens et al., 2001). In this article, we have detailed how
marketing research in EM contributes to marketing science. Just
as contact between European and Islamic societies once resulted
in the great Renaissance which has shaped today's world, we
believe that extending our research and collaborations to these
regions in which the majority of humankind reside will lead to a
renaissance in marketing theory, marketing research, and
marketing practice.
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