Dynamic marketing capabilities, foreign ownership modes, sub-national locations and the performance of foreign affiliates in developing economies

The purpose of this paper is to examine the role of dynamic marketing capabilities (DMC), foreign ownership modes and sub-national locations on the performance of foreign-owned affiliates (FOAs) in developing economies.

Based on a sample of 254 FOAs in the Indian manufacturing sector (covering the period of 2000-2008 leading to 623 firm-year observations), the empirical paper adopts the panel data regression approach.

The study confirms the significant importance of DMC to assist FOAs to gain better sales performance in an emerging market such as India. The findings indicate that wholly owned foreign affiliates (WOFAs) have better sales performance than international joint ventures (IJVs), and majority-owned international joint ventures (MAIJVs) perform better than minority-owned international joint ventures in the Indian manufacturing sector. The results confirm that effective deployment of DMC leads to better sales performance in WOFAs and to some extent in MAIJVs. Perhaps the most interesting finding is that developing DMC in non-metropolitan areas is associated with higher sales growth than in metropolitan locations.

The study contributes to the literature by examining the impact of DMC on performance of FOA by considering the organised manufacturing sector in a large and fast growing developing economy. In addition, the results for the moderating effects provide novel evidence of the conditions under which DMC of FOA interact with different ownership modes and influence firm performance.