International E-Tail PDF

Drivers of International E-Tail
Performance: The Complexities

of Orientations and Resources
Deborah A. Colton, Martin S. Roth, and William O. Bearden
ABSTRACT
Retail e-commerce (e-tail) continues to grow as an important channel of distribution in the global business environment. In this article, the authors present and test a conceptual model of the relationships among firm orientations,
strategic resources, and international e-tail performance. Specifically, they investigate the ability of important e-tail firm
resourcesbrand strength and supplier relationsto mediate the effects of market orientation, entrepreneurial orientation, and foreign market orientation on revenue growth and firm performance relative to objectives. Using survey
responses from a cross-national sample of 174 marketing and e-commerce decision makers, the authors find support
for the role of brand strength and supplier relations as mediators between market and foreign market orientations and
firm performance. The study provides managerial insights into the types of orientations and resources that can help
drive e-tail performance and contributions regarding the indirect effects of orientations on international marketing
performance.
Keywords: e-tail, resources, orientations, strategy, performance
etail e-commerce (e-tail) continues to be an

increasingly important channel for consumer purchases around the world. In 2008, e-tail sales
reached $133.6 billion in the United States and $116.6
billion in the United Kingdom (e-Marketer 2008a; U.S.
Census 2009). European e-tailing was expected to reach
124.1 billion in 2008 (Jongen 2008). In the AsiaPacific region, e-tail sales reached $73.3 billion in 2007
(e-Marketer 2008b). The global proliferation of e-tailing
Deborah A. Colton is Assistant Professor of Marketing and

International Business, Department of Management and Marketing, E. Philip Saunders College of Business, Rochester
Institute of Technology (e-mail: dcolton@saunders.rit.edu).
Martin S. Roth is a professor, Sonoco International Business
Department (e-mail: mroth@moore.sc.edu), and William O.
Bearden is Bank of America Chaired Professor of Marketing
(e-mail: bbearden@moore.sc.edu), Moore School of Business,
University of South Carolina.
is being fueled by not merely online-only firms such as

Amazon.com (often referred to as pure-play online
retailers) but also traditional bricks-and-mortar companies. For example, Tesco, the fourth largest retailer in
the world, indicated that home shopping over the Internet is an important growth market (Jones 2001). The
retailer monitors and analyzes online competitors
strategies in both its home market (the United Kingdom)
and foreign markets to determine when and how to
establish e-tail presences most effectively. Tescos efforts
to understand customers, competitors, and foreign markets have facilitated effective e-tail strategies in various
European and Asian markets.
Journal of International Marketing

2010, American Marketing Association
Vol. 18, No. 1, 2010, pp. 122
ISSN 1069-0031X (print) 1547-7215 (electronic)
Drivers of International ETail Performance 1
Prior research has shown that certain strategic resources

are critical to e-tail success. Specifically, brand strength
and supplier relations represent organizational resources
that drive e-tail competitive advantage. Online retailers
benefit from strong brands (Danaher, Wilson, and Davis
2003; Davis, Buchanan-Oliver, and Brodie 2000; Mathwick, Malhotra, and Rigdon 2001) in that consumers
use brands as extrinsic cues of e-tailers offerings (Griffith and Gray 2002). Strong brands pull online shoppers
to retail Web sites and help generate customer satisfaction and e-tail loyalty. Successful e-commerce also
requires quick and accurate order fulfillment (Wolfinbarger and Gilly 2003), necessitating that e-tailers work
closely with their suppliers on product availability, order
processing, transportation, and other logistics issues
(Korper and Ellis 2001; Lancioni, Smith, and Olivia
2000). Strong supplier relations are critical for enabling
e-tailers to deliver superior service. The challenge for
e-tailers is how to foster and leverage these intangible
and durable strategic resources. That is, what firm capabilities can e-tailers use to develop strong brands and
effective supplier relations?
Although research has shown the importance of strong

brands and relations with suppliers, this study demonstrates how firms can augment their stock of resources
by developing market, entrepreneurial, and foreign market orientations.
Our model of strategic resources, firm orientations,
and their effects on the performance of international
e-tailers is theoretically grounded in resource-advantage
(R-A) theory and the resource-based view (RBV) of the
firm. We proceed by presenting a conceptual model that
describes how e-tailer resources mediate the relationships between orientation capabilities and performance
and by developing hypotheses. Then, we describe the
research methods, including our use of survey data from
a cross-national sample of marketing and e-commerce
decision makers and structural equation procedures for
hypothesis testing. Next, we present our results. We
conclude with a discussion of the implications and directions for further research.
CONCEPTUAL FRAMEWORK
In this article, we present and test a conceptual model of
the relationships among firm orientations, strategic
resources, and international e-tail performance. In doing
so, we make the following contributions to the international marketing literature. First, we identify three
firm capabilities that affect e-tailers ability to create
strong brands and effective supplier relations: the firms
market orientation, entrepreneurial orientation, and
foreign market orientation. Furthermore, we propose
that the effects of these orientations on performance are
not direct but rather are mediated by brand strength and
supplier relations resources. Second, we examine the
outcome of the relationship between orientations and
resources in terms of financial performance. Specifically,
we study orientation and resource effects on e-tail revenue growth as well as performance relative to objectives.
As such, we assess e-tail performance beyond commonly
used Web-based research metrics, such as number of hits
or unique page views. Third, this research examines
these effects on performance across e-tailers competing
in international markets. Despite the global nature of
e-tailing, most studies on the drivers of online retail success focus on single countries. Our model incorporates a
global view of e-tail firm capabilities, and our empirical
work includes data from e-tailers operating across international markets. Together, these contributions emphasize the importance of understanding not only the
resources that are important to performance but also the
orientations that are likely to underlie those resources.
2 Journal of International Marketing
Resource-advantage theory (Hunt and Morgan 1995)

and the RBV of the firm (Barney 1991; Wernerfelt 1984)
provide a framework through which to assess how
e-tailers can achieve competitive advantage and superior
performance. Typically, firms that achieve superior performance possess and leverage important resources such
as assets, knowledge, and processes that enable them to
develop and implement successful strategies efficiently
and effectively. These strategies form the basis of
competitive advantage, and the more resistant the
resources are to duplication or imitation, the more sustainable the advantage and superior performance are.
As Day (1994), Hult and Ketchen (2001), Wilson and
Amine (2009), and others describe, firms often use
critical capabilities that independently and collectively
contribute to the creation of unique resources. Thus,
competitive advantage and subsequent performance are
contingent on firms managing capabilities to create
valuable and inimitable resources. These resources can
be leveraged for competitive advantage, leading to superior financial performance (Hunt and Morgan 1995).
Following Hult and Ketchens (2001) approach, we
identify certain capabilities that can contribute to
e-tailers abilities to create valuable resources. Critical
e-tail resources are brand strength (Danaher, Wilson,
and Davis 2003; Davis, Buchanan-Oliver, and Brodie
2000; Griffith and Gray 2002) and supplier relations
(Gregory, Karavdic, and Zou 2007; Korper and Ellis

2001; Lancioni, Smith, and Olivia 2000; Rugman, Li,
and Oh 2009). The capabilities include the firms market orientation, entrepreneurial orientation, and foreign
market orientation. Market orientation is the set of processes and activities used to understand customer needs
to satisfy customers (Deshpand and Farley 1996).
Entrepreneurial orientation is a firms inclination to take
risks, favor change and innovation, and compete aggressively (Miller and Friesen 1982). Foreign market orientation refers to an organizations knowledge about foreign markets (Simonin 1997). We define brand strength
as the extent to which customers are aware of and recognize brands and view them favorably (Keller 1993),
and we define supplier relations as the communication
and coordination between the e-tailer and its primary
supplier (Anderson and Narus 1990).
Firm orientations and resources affect performance
(Hunt and Morgan 1995; Lumpkin and Dess 1996).
Similar to Noble, Sinha, and Kumar (2002), we
hypothesize that the impact of orientations on performance is not direct but rather is mediated by the resources
they help create. Much of the extant research on e-tail
performance uses metrics associated with Web site hits
or number of unique visitors, which do not necessarily
correspond with ultimate financial success. Following
recent studies that assess effects on performance in the
e-commerce and global marketing contexts (e.g., Avlonitis and Karayanni 2000; Hewett, Roth, and Roth 2003),
we use financial measures of performance. Consistent
with Hult and colleagues (2008), we measure financial
performance in multiple ways, in terms of both revenue
growth and an overall index of performance objective
achievement. While the former captures an explicit percentage rate, the latter pertains to how well the e-tailer
met objectives relative to online sales, profitability,
market share, sales growth, and the number of new
customers.
Evidence of the direct effects of market orientation on
performance has been mixed, apparently dependent on
the research context (Kirca, Jayachandran, and Bearden
2005). For example, studies in international settings
have found inconsistent direct effects between market
orientation and performance. Yet one of the advantages
of e-tail stores is their ability to serve customers regardless of their geographic location. Thus, we propose that
market orientation (as well as entrepreneurial and foreign market orientations as described in the next section) has a first-order effect (e.g., Hult and Ketchen
2001) on strategic resources, which in turn affect e-tail
firm performance. This mediated view (Baron and Kenney 1986) of the market orientationperformance relationship also builds on the work of Noble, Sinha, and
Kumar (2002), who advocate a broader perspective
when considering the relationship between strategic orientations and performance. Thus, our model explores
how e-tailer resources mediate the relationships between
orientation capabilities and performance. Figure 1 summarizes the constructs and relationships that our
research investigates regarding global e-tail performance. We propose and test for mediating effects, and
then we hypothesize specific relationships between orientations and resources and between resources and performance.
HYPOTHESES
Orientation Effects on Resources
Market Orientation. Market orientation is the set of
cross-functional processes and activities directed at creating customer value (Deshpand and Farley 1996;
Kohli and Jaworksi 1990; Narver and Slater 1990). The
Internet is an information-rich medium that enables
companies to track customers, their purchase histories,
and preferences more easily than in traditional markets
(Reichheld and Schefter 2000); therefore, e-tailers have
much to gain by being market oriented.
The more market oriented a firm is, the more it is
focused on processes for creating customer value. One
of the central marketing activities for creating and capturing customer value is the development and marketing
of strong brands. Brands are complex resources that
encompass product, organization, person, and symbolic
components (Aaker and Joachimsthaler 2000), thus
requiring concerted efforts at understanding customer
needs, competitive dynamics, and other dimensions of
market orientation.
In addition, part of an effective market orientation is
determining which products and services to bring to
market. For most retailers, the products they offer customers are sourced from suppliers. Thus, creating customer value requires both sourcing products and developing attractive service offerings. The more oriented
e-tailers are to customers and competitive offerings, the
more effectively they can identify and select key suppliers. Furthermore, firms that are highly focused on the
marketplace will be more likely to extend this focus to
their channel partners, engaging in more open dialogue
and collaborative efforts with their suppliers. In doing
Figure 1. E-Tailing Orientations, Resources, and Performance
Market
orientation
H1a
H1b
Brand
strength
H2a
Entrepreneurial
orientation
Performance
relative to
objectives
H4b
H2b
H3a
H4a
H5a
Supplier
relations
Revenue
growth
H5b
H3b
Foreign market
orientation
so, the e-tailer and its suppliers can work together in

mutually beneficial ways that enhance each others
businesses.
In summary, a firms market orientation can enhance its
ability to create strong brands and build supplier relations. Therefore, we expect the following:
H1: The stronger the market orientation, the
greater is the effect on (a) brand strength and
(b) supplier relations.
Entrepreneurial Orientation. Entrepreneurial orientation is the set of processes managers use to stimulate
innovativeness, risk taking, and proactiveness (Lumpkin
and Dess 1996; Matsuno, Mentzer, and zsomer 2002;
Miller and Friesen 1982). E-commerce and Internet
shopping have revolutionized how companies distribute
information as well as products to consumers. Both
Internet start-ups and online stores of traditional bricksand-mortar firms have continually innovated and
aggressively experimented with new ways of attracting
and satisfying customers. Thus, an entrepreneurial ori-
entation can be an important asset for firms competing

in the e-tail environment.
Conceptually, entrepreneurship (entrepreneurship,
entrepreneurial proclivity, and entrepreneurial orientation are commonly labeled constructs that capture the
processes underlying innovativeness, risk taking, and
proactiveness) has been described as an antecedent of
market orientation (Deshpand, Farley, and Webster
1993; Grinstein 2008) as well as a common first-order
factor with market orientation (Hult and Ketchen
2001). We adopt the latter approach in our study of etail strategy, following Slater and Narvers (1994) and
Becherer and Maurers (1997) recommendation that the
complementary nature of constructs suggests that they
be examined together. Therefore, we examine the extent
to which the various firm orientations are related to
brand strength and supplier relations resources.
The Internet represents a fast-paced environment, one in
which firms can quickly change the online store to be
current, fresh, and novel. Strong e-tail brands must convey these benefits to shoppers. The virtues of an entre-
preneurial orientation lend themselves to creating and

maintaining an innovative brand presence on the Web.
Firms that are proactive, innovative, and willing to take
risks should be able to continually update and refresh
their brands and the related associations consumers
have with their online stores. In contrast, firms that are
less entrepreneurial risk having dated sites and brand
imagery as a result of their lack of processes for being
innovative and proactive. Thus, entrepreneurial orientation should be positively related to e-tail brand strength.
the Internet, thus making e-commerce inherently international (Kobrin 2001). Furthermore, compared with
the cost and maintenance of conventional bricks-andmortar stores, for an international Web presence, globalization costs are miniscule (Lynch and Beck 2001;
Quelch and Klein 1996). Despite fraud risks, logistic
and tax issues, and other barriers to international trade,
a recent survey of medium-sized and large online merchants showed that close to two-thirds accept overseas
orders (Cybersource Corporation 2004).
Another dimension of effective e-commerce is the firms

ability to make sought-after goods available on demand
to customers. Without the burden of physical goods
inventory, e-tail stores can promote a wide assortment
of products and fulfill orders only for those goods
ordered by their customers (Levy and Grewal 2000).
Success, however, requires strong supplier relations in
both determining the goods most likely to appeal to customers and ensuring adequate access and delivery of
those goods after ordered. An entrepreneurial orientation, in which the e-tailer is proactive, innovative, and
risk taking, will enable the e-tailer to communicate and
work effectively with suppliers in assessing the latters
product portfolio and determining the right mix of
products and promotions to appeal to online shoppers.
Being entrepreneurial also makes firms more willing to
engage in partnering and to seek out those with complementary assets (in this case, products) with whom they
can engage (Read et al. 2009). E-tailers lacking in entrepreneurial orientation will be less engaged with outsiders, communicate less, and be more resistant to
change, to the detriment of their relationships with key
suppliers.
Doing business internationally has many challenges,

including high levels of uncertainty, relational difficulties, and product and process adaptation (what Zaheer
[1995] labels liabilities of foreignness). At the root of
many of these challenges is a firms lack of local market
knowledge (Lord and Ranft 2000). The more resources
the firm devotes to acquiring local market knowledge,
the less likely it will be to incur these liabilities. With
greater local knowledge, e-tailers can better understand
how to manage their brands in and across national markets, as well as how to work with key suppliers to serve
customers around the world. Thus, a firms orientation
toward foreign markets relative to its international
knowledge and experience can help the e-tailer build
stronger brands and foster enhanced supplier relations.
More formally, we hypothesize the following:
H3: The stronger the foreign market orientation,
the greater is the effect on (a) brand strength
and (b) supplier relations.
Resource Effects on Performance
H2: The stronger the entrepreneurial orientation,

the greater is the effect on (a) brand strength
and (b) supplier relations.
A central tenet of R-A and RBV theories is that

resources can be leveraged for competitive advantage.
Such advantage leads to superior firm performance (Barney 1991; Hunt and Morgan 1995). Next,
we described how brand strength and supplier relations
resources can be valuable, rare, imperfectly
imitable, and nonsubstitutable, thereby enhancing firm
performance.
Foreign Market Orientation. Foreign market orientation involves the processes needed to acquire knowledge
and experience that are specific to individual country
markets. This knowledge pertains to the countrys
language, culture, politics, society, and economy
(Inkpen and Beamish 1997; Lord and Ranft 2000). An
important characteristic of online stores is their ability
to reach and serve customers around the world. Web
sites can be accessed by most computers connected to
Brand Strength. Two key sources of customer value

creation and competitive advantage in e-tailing are
brand strength and supplier relations. It is widely recognized that brands are one of the most valuable assets
firms own (Aaker 1991; Lehman, Keller, and Farley
2008) For example, an executive at Coca-Cola
explained that it would be more difficult to recover from
deleting the Coca-Cola brand name and its associations
from consumers memories than from loss of its physi-
In summary, we propose that e-tailers entrepreneurial

orientation is positively related to brand strength and
supplier relations. Thus, we hypothesize the following:
cal assets (Dawar 1998). For a resource to be valuable,

it must enable the firm to exploit opportunities or neutralize threats (Barney 1991). Some examples of how
firms can use brand strength to exploit opportunities
include leveraging a brand name in new markets or
channels and extending a brand name to a new product,
category, or channel. Firms can also use brands to neutralize threats, such as defending against competitive
attacks.
Brand strength embodies a set of associations that existing and potential customers perceive a brand as having.
The multidimensionality of brand strength enables firms
to implement value-creating strategies that are not
simultaneously being implemented by competitors.
Thus, brands that have greater awareness and recognition or that customers view more favorably represent
valuable resources that are not shared or matched by
competitors. Even if resources are valuable and rare,
they might not lead to a performance advantage if other
firms are able to acquire them. In other words, a
resource also must be imperfectly imitable (Barney
1991). A resource can be imperfectly imitable for different reasons, including the following: The resource
is dependent on unique historical conditions, the link
between the resource and the competitive advantage
is causally ambiguous, or the resource is socially complex (Barney 1991). As Aaker and Joachimsthaler
(2000) describe, brands are complex resources that
are organized around four dimensionsnamely,
the brand as a product (e.g., quality, attributes), an
organization (e.g., organization attributes), a person
(e.g., customerbrand relationships), and a symbol (e.g.,
visual image, heritage). Thus, the various components
of brand strength are linked to the social complexity of
the firm.
A final requirement for a resource to generate performance advantage is that there must not be strategically
equivalent or substitutable resources (Barney 1991).
Strategically equivalent resources are those that enable
competing firms to formulate and implement the same
strategies but in different ways. This requirement pertains to the absence of substitutability. However, as
explained previously, brand strength is multidimensional and developed from socially complex links. Other
resources are unlikely to individually or collectively
replicate these complexities, nor can they facilitate the
same psychological and emotional impressions as do
strong brands. In summary, strong brands can meet the
requirements of being a potential source of a performance advantage.
Although price is a key driver of e-commerce transactions, retailer name and reputation are important criteria in e-tailer selection (Shop.org and Forrester Research
2009). The strength of consumers associations with a
brand, including perceived functional, social, and selfexpressive benefits (Keller 1993; Park, Jaworski, and
MacInnis 1986), create one of the most valuable assets
a firm can own (Aaker 1991), including those in the
retailing industry (Ailawadi and Keller 2004). Brand
loyalty in e-tailing translates into market share gains,
showing that stronger brands perform better online than
weaker brands (Danaher, Wilson, and Davis 2003,
Degeratu, Rangaswamy, and Wu 2000). Thus, creating
and leveraging a strong brand can be a strategic asset
and competitive advantage for online retailers. Moreover, branding is acutely important as a perceptual cue
because the online environment lacks much of the physical interaction between customer and retailer in traditional bricks-and-mortar stores that shape brand associations (Davis, Buchanan-Oliver, and Brodie 2000;
Griffith and Gray 2002). Effective branding can help
create experiential value that may otherwise be lacking
in the Internet shopping environment (Mathwick, Malhotra, and Rigdon 2001).
When consumers encounter strong brands, they may
have more favorable meanings and associations than
weaker brands (Okazaki 2005). The Web can have a
major impact on brand building and perceptions (Aaker
and Joachimsthaler 2000). From an international perspective, many e-tailers incorporate features on their
Web sites that contribute to a uniform global image in
an effort to enhance brand awareness, recognition, and
positive associations (Okazaki 2005). Retailers benefit
from strong brands (Ailawadi and Keller 2004), including those that operate online (Danaher, Wilson, and
Davis 2003; Davis, Buchanan-Oliver, and Brodie 2000;
Mathwick, Malhotra, and Rigdon 2001). Consumers
use brands as extrinsic cues of e-tailers offerings (Griffith and Gray 2002). Strong brands can attract customers to Web sites and facilitate greater e-tail loyalty,
thereby enhancing financial performance. Thus, we
hypothesize the following:
H4: The stronger the brand strength, the greater is
the effect on (a) performance relative to objectives and (b) revenue growth.
Supplier Relations. Although the stores brand name
and reputation may draw customers to the online store,
product availability and prompt delivery are also requisite conditions for consummating online transactions
(Korper and Ellis 2001; Lancioni, Smith, and Oliva

2000). E-tailers must work closely with their suppliers
on product availability, order processing, transportation, and other logistics issues, making supplier relations
a second source of performance advantage, so long as
these relations are valuable, rare, imperfectly imitable,
and nonsubstitutable. Olavarrieta and Ellinger (1997)
describe how supplier relations can be valuable assets if
they enhance efficiency or effectiveness and enable a
firm to exploit opportunities or neutralize threats. For
example, e-tailers can focus on quick and efficient consumer response when supplier relations facilitate rapid
and efficient product selection and fulfillment. Relationships with suppliers involve a complex mix of physical,
human, and organizational capabilities, which are not
obvious and require time to develop and integrate
(Olavarrieta and Ellinger 1997). For example, WalMarts distribution, by considerably reducing costs, has
enabled it to enter markets once deemed unprofitable.
Wal-Mart is able to reduce costs and manage inventory
through strong relationships with its key suppliers, as
evidenced by many suppliers having dedicated offices
near Wal-Marts headquarters. Wal-Mart and its competitors carry similar product offerings, but its supplier
relations, which are based on effective and efficient distribution, strengthen its market leader position (Olavarrieta and Ellinger 1997).
To be a source of a competitive advantage, supplier
relations also must be imperfectly imitable. Although
relationships with suppliers are tied to the unique histories of their companies, they are more likely to be imperfectly imitable because they are socially complex.
Finally, for supplier relations to be a source of advantage, they must be nonsubstitutable. Possible substitutes
for strong relationships with suppliers are not clearly
evident. Although conceptually an e-tailer could vertically integrate to produce the goods it sells, doing so is
usually unfeasible because of the significant resource
requirements (e.g., manufacturing, materials, labor,
inventory). Although competitors might try to replicate
relationships with suppliers, it is unlikely that these
actions will lead to the same strategies and outcomes.
Accurate fulfillment (what is displayed and described
online matches the order) and reliability (delivery of the
right product within the time frame promised) are key
determinants of consumer e-tail satisfaction and quality
perceptions (Wolfinbarger and Gilly 2003). E-tailers can
offer such services best to customers through effective
supply-chain management. Vendor-to-retailer linkages
in the supply chain (e.g., order processing, inventory
management, logistics) can facilitate retailer-tocustomer links, such as merchandise processing, fulfillment, and delivery (Levy and Grewal 2000). By managing their relationships with key suppliers, e-tailers can
ensure that their customers receive high-quality product
selection and provision. Therefore, for e-tailers, brand
strength and supplier relations represent organizational
resources that can lead to competitive advantage based
on increased site traffic and superior service, which subsequently lead to superior performance (Day 1994).
Such a focus on strategic resources is commensurate
with the R-A and RBV theories, which posit that unique
assets, such as strong brands and supplier relations, are
difficult for competitors to replicate and thus help differentiate their possessors (Barney 1991; Hunt and
Morgan 1995).
Distribution systems can be valuable resources that can
contribute to superior service delivery (Bowersox,
Mentzer, and Speh 1995; Olavarrieta and Ellinger
1997). E-commerce involves physical distance between
the buyer and the supplier, thus making quick and accurate goods delivery critically important (Wolfinbarger
and Gilly 2003). To do so, e-tailers must work closely
with their suppliers on product availability, order processing, transportation, and other logistics issues (Gregory, Karavdic, and Zou 2007; Korper and Ellis 2001;
Lancioni, Smith, and Olivia 2000). Thus, strong supplier relations can enable e-tailers to deliver superior
service, thereby satisfying customers, which in turn
leads to superior performance (Heskett et al. 1994).
More formally, our fifth hypothesis summarizes these
predictions:
H5: The stronger the supplier relations, the greater
is the effect on (a) performance relative to
objectives and (b) revenue growth.
METHODS
In this section, we present the procedures used to gather
the data. We first discuss the survey instrument and
selection of informants, and then we explain the procedures used to assess nonresponse bias. Finally, we
describe the measures and steps taken in validating the
multiple-item scales used in our survey.
Survey Instrument and Sample

The research was conducted using online survey procedures. When possible, we operationalized the constructs
of interest using existing measures. We administered the

survey in English because target respondents were from
English-speaking countries. First, we pretested the survey using the responses of 15 academic experts and marketing managers in an effort to assess the clarity of
instructions and scale items and the ease of use with the
online delivery. Follow-up interviews after survey completion provided comments on the draft questionnaire
that were used to make minor modifications, primarily
with regard to question wording and format (e.g., use of
radio buttons versus drop-down menus).
Key informants were marketing or e-commerce decision
makers responsible for the operations of online retailing
and marketing activities. Informants were sought from
firms headquartered in various countries. To qualify as
appropriate study participants, the firms Web sites
needed to allow complete transactions (i.e., both order
and payment) of physical consumer products. We
excluded digitized delivery services, such as music and
news, because these services do not necessarily involve a
supplier in the value chain. Selecting key informants on
the basis of their e-commerce roles, so that they are
knowledgeable about the phenomena under study, is
critical in marketing organizational research (Barclay
1991; John and Reve 1982). Therefore, the sampling
procedure required the identification of e-commerce
firms and respondents with the appropriate e-tailing and
marketing responsibilities.
We developed the sample using the following steps:
First, we obtained a database of online U.S. retailers
offering transactions in the following physical product
categories: apparel and accessories, auto and marine
accessories, beauty, computer-related, consumer electronics, garden, gifts, health care, home accessories,
jewelry, office, pet-related, specialty occasion, sporting
goods, and toys. We included a range of product categories to enhance the generalizability of the results.1 The
database contained contact information for Internet
managers, direct marketing managers, and Internet decision makers. Elimination of duplicate entries and those
with incorrect or no contact information yielded 936
U.S. online retailers.
Second, we identified non-U.S. headquartered online
retailers in the same product categories using Yahoo
portal country-specific searches. Initial Internet searches
to determine the countries in which the majority of
online retailers operate Web sites with English textual
content identified the following countries: Australia,
Canada, Ireland, India, New Zealand, Singapore, and
the United Kingdom, in addition to the United States.

Multiple searches using variants of the product categories in each Local Yahoo country domain identified
617 online retailers from these eight different countries
for which Internet marketing or e-commerce manager
contact information could be obtained. In some cases,
the Internet marketing or e-commerce manager was
listed on the companys Web site. When precise contact
information was not disclosed, an e-mail was sent or
a telephone call was placed requesting the name
and contact information of the Internet marketing or
e-commerce manager.
We used two contact methods according to the contact
information acquired. The international sample was
contacted by e-mail because direct postal addresses for
the majority of the targeted decision makers were not
available. Conversely, the database used for the U.S.
sample included specific postal addresses for the decision makers but no e-mail addresses. We attempted to
search for direct e-mail addresses; however, most were
not publicly available. Therefore, informants from the
database sample were contacted by postal mail. Informants from the portal sample were initially contacted by
sending direct e-mails to specific people.
Both sets of potential respondents were initially contacted within two weeks of each other, receiving an
identical letter inviting them to participate in the study.
The letters outlined the nature of the study and emphasized respondent confidentiality. As an incentive for participating, respondents were offered a summary report
based on the studys findings (see Robertson, Eliashberg,
and Rymon 1995). In line with Dillman (1978), followup reminder postcards and e-mails were sent to nonrespondents after two and four weeks of the initial mailing. The letters and e-mails contained the link for the
online survey, with each sample being directed to a
separate URL. The follow-up e-mails and postcards
included two URLs to keep the two samples separate.
This process enabled tracking by method of contact.
When respondents reached the Web site, the questionnaires were identical, including the same questions and
formatting. The data from each sample were stored in
separate databases. The data were later merged into one
database and coded by collection method to test for
sample differences. Informants were asked to base their
responses on the online portion of their retail operations
if the company operated both online and physical stores.
Furthermore, if respondents companies operated more
than one e-commerce site, they were asked to focus on
the Web site considered their companies primary site.
From the initial combined postal and e-mailing of 1553

letters (936 plus 617), 30 were returned as not applicable to the firms operations. In total, 195 online surveys
were completed (128 from the United States and 67
from non-U.S. firms, of which 174 were usable), for an
effective response rate of 12.8%. Response rates were
similar from both the database and the portal samples
(13.8% and 11.2%, respectively). Respondents represented all eight countries and the 15 product categories
described previously. The average sales in U.S. dollars
were $2.34 million. Respondents averaged more than
five years of employment with their companies. The
product categories most frequently represented are
health (n = 24), sports (n = 23), and jewelry (n = 22).
The results of one-way analyses of variance on each
construct showed no significant response differences
based on product category.
Nonresponse Bias
First, we examined nonresponse bias using the procedures that Armstrong and Overton (1977) recommend:
We compared the responses from the initial mailing with
those received after the first and second reminder mailings for both the database and the portal samples. In
addition, we compared responses from each of the two
samples. Comparisons were made on all variables in the
study, including firm characteristics. The results of these
comparisons showed no significant differences across
the waves of responses or between the two samples (all
p-values > .10). Second, we collected secondary data
regarding the locations and product categories of nonresponding firms. Comparisons of these data with those
responding showed no significant differences.
Measurement
We used multi-item measures based on preexisting
scales for the majority of variables investigated. The
Appendix summarizes these measures, their original
source, and response format. In general, the scales used
were adapted to fit the e-tailing context with only minor
phrasing adjustments. We assessed market orientation
using a scale adapted from Deshpand and Farleys
(1996) condensed market orientation scale, developed
from a prospective market orientation meta-analysis.
This measure included nine items regarding customer
and competitive norms in their companies. We used
adaptations of items that Miller and Friesen (1982) and
Covin and Slevin (1991) developed to assess entrepreneurial orientation. This scale comprised seven items
reflecting the companys risk inclination, innovativeness,
and proactiveness. We developed a foreign market

orientation measure by adapting scales from Simonin
(1997) and Lord and Ranft (2000). From the collaborative know-how scale (Simonin 1997), we learned that
know-how must encompass the requisite knowledge
specific to the phenomena under study. Then, from Lord
and Ranfts (2000) transfer of local market knowledge
scale, we identified items that pertained to foreign
market knowledge. We used four items to measure
the degree of foreign market knowledge within the
e-commerce operations.
To assess brand strength, we drew on Kellers (1993)
brand equity work, in particular the dimensions related
to brand knowledge. We generated the initial pool of
items for brand strength from a review of the literature,
other brand-related scales, and consultation with marketing professionals. In his conceptualization of brand
equity, Keller (1993) outlines dimensions of brand
knowledge, including brand awareness and brand
image. Brand image consists of type, favorability,
strength, and uniqueness of brand associations, and
brand awareness consists of brand recall and recognition. We used a five-item scale capturing the strength of
the firms online brand relative to that of its competitors
in this study. The first item pertains to the strength of
the retail brand on the Internet compared with that of
online competitors. The next three items capture Internet retail brand awareness, quality, and favorability
relative to other brands in the same retail category. The
fifth item pertains to how strongly the brand is recognized with its retail category on the Internet. We
assessed supplier relations using a scale adapted from
Gaski and Nevin (1985). We restructured Gaski and
Nevins marketing channel power scale items to a
Likert-type format, and we included factors specific to
e-tailing that assessed the online retailers relationship
with its primary supplier.
We measured online retail performance in terms of
objective achievement (Avlonitis and Karayanni
2000)that is, how well the e-tailer performed relative
to the objectives it set for online sales, profitability, market share, sales growth, and number of new customer
objectives in the most recent annual fiscal period
(Hewett and Bearden 2001). In addition, we included a
measure to capture actual percentage change in revenue
as an absolute measure of financial performance to complement the relative measure of objective achievement of
performance. Because the performance relative to objectives scale and the revenue growth measures were not
highly correlated (r = .16), and consistent with our theo-
retical predictions (i.e., H4 and H5), we inferred that

these relative and absolute measures are different, and
thus we retained both for subsequent analyses. Including both is also consistent with Hult and colleagues
(2008) prescription to use multiple measures of
performance.
We used procedures based on Anderson and Gerbing
(1988) and Fornell and Larcker (1981) to assess discriminant validity, reliability, and dimensionality for
all reflective scales. In addition, because respondents
consisted of two groupsU.S.-based and non-U.S.based online retailerswe used multigroup analyses to
evaluate measurement invariance, as Steenkamp and
Baumgartner (1998) suggest. To check for multicollinearity, we computed variance inflation factors for
each construct. The variance inflation factors ranged
from 1.34 for supplier relations to 2.26 for entrepreneurial orientation. These values are below the
suggested value of 10 (Kline 2005), indicating an
absence of multicollinearity. Before measure validation,
we analyzed whether the data were appropriate for factor analysis. To determine data appropriateness, we
examined the data using the KaiserMeyerOlkin Measure of Sampling Adequacy (KMO) and Bartletts Test of
Sphericity (BTS), employing all initial items for each of
the multi-item scales. The KMO for this studys data is
.832, which is meritorious (see Sharma 1996), suggesting that the data are appropriate for factor analysis.
The BTS for this study resulted in an approximate chisquare of 2786 with 2080 degrees of freedom and a
.000 level of significance. Both the KMO and the BTS
statistics indicate that the data were appropriate for
factor analysis.
Using exploratory factor analyses, we examined each
multi-item measure by evaluating the factor structures,
loadings, and interitem correlations. To establish the
unidimensionality associated with each multi-item
measure, we examined scree plots and the number of
components extracted on the basis of the eigenvaluegreater-than-one rule. For each scale, only a single unidimensional factor resulted. Moreover, across all the
scales, no items had low factor loadings (all > .50).
The initial factor structure for the market orientation
scale resulted in two factors. When we deleted the fifth
and ninth items (We measure customer satisfaction
infrequently and Data on customer satisfaction are
dissemination at all levels in our e-commerce unit on a
regular basis), a one-factor solution with seven items
resulted. The factor loadings and the pattern and magnitude of the interitem correlations were similar for the
U.S. and international samples. The initial factor structure for the foreign market orientation resulted in one
factor. We retained all four original items measuring foreign market orientation. For entrepreneurial orientation, the initial structure with all seven items resulted in
a two-factor solution. After several iterations, the
reduced scale included all but one of the original items
(In general, our e-commerce top managers favor lowrisk projects [i.e., project with certain rates of return]).
Loadings for the six-item scale (two items for each
dimensioninnovativeness, proactiveness, risk taking)
ranged from .522 to .823. In addition, the structure of
the loadings and interitem correlations were similar
across the different samples (U.S. and international).
The factor structure for brand strength (loadings for the
five items ranged from .704 to .890) was similar for
both the U.S. and the international samples. The results
from the exploratory factor analysis for the supplier
relations measure led to a two-factor solution. After we
deleted three items (Our most important supplier does
not offer products to end users on their Web site,
There is an overlap in products offered to end users on
our Web site and our most important suppliers Web
site [reverse coded], and Our most important supplier
makes it difficult for our e-commerce business to do its
job), the reduced scale included four items that loaded
on a single factor. Again, the Appendix indicates the
final measurement scales, as well as Cronbachs alpha
values. All scales had alpha values greater than .77, providing evidence of acceptable reliability (Peter 1979). In
a series of additional exploratory factor analyses, no
substantial cross-loadings occurred for any of the items
across the different constructs. We assessed discriminant
validity using confirmatory factor analysis to compare
the average variance extracted for each construct in
pairs of all possible combinations of constructs with the
squared correlation between the constructs (Fornell and
Larcker 1981). As Table 1 shows, the squared phi coefficients between each of the pairs of constructs were less
than the average variance extracted, indicating discriminant validity.
Last, we investigated cross-national measurement
invariance to examine the strength and generalizability
of scales between the U.S. and non-U.S. respondents.
Using Steenkamp and Baumgartners (1998) prescribed
hierarchical confirmatory factor analysis procedure, we
evaluated the multi-item measures for invariance.
Specifically, we analyzed data from the U.S. and international samples concurrently to determine the level of
equivalency that existed across the two samples.
Steenkamp and Baumgartner suggest testing for invari-
ance cross-culturally. Given the relatively small sample

sizes from the individual countries, we assessed invariance between the U.S. and international samples. Confirmatory factor analysis indicated that we achieved partial equivalence for the foreign market orientation and
supplier relations scales. Full equivalence was established for all the remaining scales. On the basis of these
results, we deemed the scales to be appropriate for use
across the countries included in this study. Although full
equivalence is ideal according to Steenkamp and Baumgartner, they explain that it is not expected to be realized. In addition, they state that full metric equivalence
often does not hold in practical applications. Thus, the
level of equivalence obtained in this study seems to be
appropriate.
ANALYSIS AND RESULTS

Table 2 shows the summary statistics, variable intercorrelations, and coefficient alpha estimates of reliability
for all measures included in the study. Consistent with
the mediation analyses of Andrews and colleagues
(2004), we employed structural equation methods in
tests of the hypotheses. For the six multi-item variables,
we used average scores to reflect each of the constructs,
with error variance fixed at a level appropriate to its
coefficient alpha reliability (Anderson and Gerbing
1988; MacKenzie, Podsakoff, and Ahearne 1998;
Table 1. Discriminant Validity

1
Market
orientation
.64
Entrepreneurial
orientation
.23
.50
Foreign market
orientation
.07
.18
.68
Brand strength
.23
.16
.14
.73
Supplier relations
.14
.03
.03
.11
.60
Performance
relative to
objectives
.21
.18
.16
.37
.12
.75
Notes: The bold diagonal elements are the average variance extracted for each
construct. Off-diagonal elements are the squared correlations between the construct pairs.
Steenkamp, Batra, and Alden 2003). For the single-item

revenue growth performance measure, we set the item
loading to 1.0 and the error term to .0.
To investigate the relationships among the antecedent
firm orientations, the firm resources, and online retail-
Table 2. Means, Standard Deviations, and Correlations Among Constructs

M
SD
Items
1. Market orientation
5.28
1.23
.90
2. Entrepreneurial orientation
4.21
1.21
.48
.77
3. Foreign market orientation
3.33
1.79
.26
.42
.82
4. Brand strength
4.68
1.39
.48
.40
.38
.90
5. Supplier relations
5.04
1.44
.38
.17
.18
.33
.84
6. Performance relative
to objectives
3.78
1.53
.46
.42
.40
.61
.34
.92
51.69
75.28
.10
.06
.01
.21
.28
.16
7. Revenue growth
Notes: n = 174. Constructs 16 are measured using seven-point scales. Construct 7 is measured using percentage; italicized numbers on the diagonals for constructs
16 are coefficient alpha estimates of internal consistency. All correlations higher than .258 are statistically significant (p < .01).
ing performance, we estimated three path analysis models (Andrews et al. 2004; Baron and Kenney 1986).
Table 3 summarizes the results of these model estimations. First, we estimated the fully mediated Model 1
proposed in Figure 1, in which the two resource factors
(i.e., brand strength and supplier relations) mediate the
effects of the antecedent firm orientation variables (i.e.,
market orientation, entrepreneurial orientation, and
foreign market orientation) on the two performance
outcomes. We estimated two additional models to determine whether the relationships between the orientation
antecedents and the performance outcomes are mediated by the resource factors. Second, we estimated
Model 2, which was composed of only the direct effects
of the three antecedent firm orientations on performance relative to objectives and revenue growth. Third,
we estimated Model 3 (i.e., the no-mediation model).
In this latter analysis, we included the direct effects of
the antecedents, as well as the effects of the two hypothesized mediator resource variables. As Baron and Kenney (1986) describe, if full mediation exists, the nomediation model (Model 3) should not be significantly
better than the fully mediated model (Model 1).
The first column of Table 3 summarizes the results of
the hypothesized fully mediated Model 1. In addition,
Figure 2 graphically depicts the path coefficients from
Model 1. Overall, the model provides a reasonable fit to
the data. The chi-square fit statistic was 13.79 (p = .09,
8 d.f.); the root mean square error of approximation
(RMSEA) value was .07. The goodness-of-fit index
(GFI), comparative fit index (CFI), and nonnormed
fit index (NNFI) statistics were .97, .97, and .93,
respectively.
Effects of Orientations on Resources: H1H3

As summarized by the estimates in the top section
of fully mediated Model 1 in Table 3, and as Figure 2
graphically depicts, three of the six hypothesized path
coefficients regarding the effects of the antecedent firm
orientation variables on the two firm resource variables
(i.e., brand strength and supplier relations) were
significant. In support of H1a and H1b, market orientation was positively associated with brand strength ( =
.39, p < .01) and supplier relations ( = .45, p < .01), as
we predicted. However, neither path involving entrepreneurial orientation was significant. Therefore, H2a and
H2b were not supported, and the expected influence of
entrepreneurial orientation on brand strength and supplier relations was not evident. The results for H3
regarding the effects of foreign market orientation were
mixed. Specifically, the hypothesized relationship

between foreign market orientation and brand strength
was positive and significant ( = .28, p < .05), as we predicted and in support of H3a. However, we found no
support for the predicted positive relationship between
foreign market orientation and supplier relations (i.e.,
H3b).
Effects of Resources on Performance: H4H5

As summarized by the estimates in the bottom portion
of the Model 1 results in Table 3, and as Figure 2 graphically depicts, all four of the hypothesized path coefficients regarding the effects of the firm resource variables
on the two performance measures (i.e., performance
relative to objective and revenue growth) were significant. First, the path coefficients between brand strength
and performance relative to objectives and revenue
growth were .63 (p < .01) and .15 (p < .10), respectively.
These results offer strong support for the effects of
brand strength on the measure of performance relative
to stated objectives (i.e., H4a) and modest support for
the effects of brand strength on the percentage measure
of revenue growth (i.e., H4b). Note that this latter relationship is estimated using measures that differ substantially in terms of measurement response format. Strong
brandsones that have superior awareness, recognition, and favorable quality perceptionsare associated
with better performance.
Second, support for our fifth two-part hypothesis on the
effects of supplier relations on performance was also
revealed by the fully mediated Model 1 results. In support of H5a and H5b, the path coefficients between firm
resource supplier relations and performance relative to
objectives and revenue growth were .18 (p < .05) and
.19 (p < .05), respectively. These significant path estimates indicate the importance of effective supplier relations on long-term performance outcomes.
Direct and Indirect Effects

In an effort to investigate the direct and indirect (mediating) effects of the three antecedent resource variables,
we estimated two additional models. Table 3 summarizes these results as well. First, in tests of the direct
effects Model 2, we estimated only the six paths
between the three firm orientation variables (i.e., market, entrepreneurial, and foreign market orientations)
and the two performance measures. The overall fit of
this simpler conceptualization was unsatisfactory. The
chi-square fit statistic was 64.94 (p < .01, 4 d.f.); the
RMSEA value was .34, and the GFI and CFI statistics
were .84 and .45. None of the paths involving the effects
of the orientation variables on the revenue growth
variable were significant. However, the three paths
involving the relationships between market orientation
( = .37, p < .01), entrepreneurial orientation ( = .19,
p < .05), and foreign market orientation ( = .28, p <
.01) and performance relative to objectives were

significant.
Second, we estimated the no-mediation model (Model
3). The third column of Table 3 summarizes these
results. In this analysis, we included all direct and indirect effects. In contrast to the direct effects Model 2
Table 3. Results of Mediation Analysis
d.f.
2
Difference
d.f.
Difference
GFI
NNFI
RMSEA
Model 1: fully mediated
13.79
.97
.97
.93
.07
Model 2: direct antecedent effects
64.94
51.15
.45
.84
.38
.34
2.51
11.28
1.00
.99
.98
.04
Model 3: no mediation
CFI
Model 1:
Fully
Mediated
Model 2:
Direct Antecedent
Effects
Model 3:
No
Mediation
Market orientationbrand strength
.39***
.39***
Market orientationsupplier relations
.45***
.46***
Entrepreneurial orientationbrand strength
.13
.12
.10
.11
Entrepreneurial orientationsupplier relations

Foreign market orientationbrand strength
.28***
.27**
Foreign market orientationsupplier relations
.15
.15
Market orientationperformance relative to objectives
.37***
Market orientationrevenue growth
.10
Entrepreneurial orientationperformance relative to objectives
.19**
.11
Entrepreneurial orientationrevenue growth
.04
.04
Foreign market orientationperformance relative to objectives
.28***
.13
.10
Foreign market orientationrevenue growth

Brand strengthperformance relative to objectives
.63***
Brand strengthrevenue growth
.15*
.24**
Supplier relationsperformance relative to objectives
.18**
.12
Supplier relationsrevenue growth
.19**
.24**
R2
Brand strength
.40
.38
.21
.21
Supplier relations
.02
.13
.13
.46***
Performance relative to objectives
.50
.29
.53
Revenue growth
.07
.01
.09
*p < .10.
**p < .05.
***p < .01.
Notes: Fit difference between Models 1 and 3 is 2 diff. = 11.28, d.f. difference = 6, p = .08. Standardized path estimates are shown.
results, the overall fit of this more complex model was

satisfactory. Specifically, the chi-square fit statistic was
2.51 (p = .28, 2 d.f.); the RMSEA value was .04, and the
GFI, NNFI, and CFI statistics were .99, .98, and 1.00,
respectively. If full mediation exists, the fit of Model 3
(no mediation) should not be significantly better than
the fit of Model 1 (full mediation), and the direct effect
path estimates in Model 3 associated with the
antecedent variables to the dependent variables should
not be significant (Andrews et al. 2004, p. 118).
As Table 3 shows, substantial evidence of mediation and
the strong intervening effects associated with brand
strength and supplier relations on performance was provided. The chi-square fit statistic difference between
Models 1 and 3 was only marginally significant at 11.28
(p = .08, 6 d.f.). In addition, none of the direct effect
parameter estimates reflecting the relationships between
the antecedent firm orientation variables and the two
performance outcomes were significant. Moreover, all
but one of the original path coefficient results reported
here in support of the hypotheses and tests of Model 1
remained significant. Overall, then, these results support

the important role of firm resource factors as mediators
of the relationships between organizational orientations
of the firm and overall firm performance.
Previous research suggests that drivers of firm performance are consistent cross-nationally (Hult et al. 2007).
To examine the cross-national generalizability of our
results, we conducted moderated regression analyses.
First, we examined the extent to which headquarter
location (U.S. versus non-U.S.) moderated the relationship between the orientations (market, entrepreneurial,
and foreign market) and resources (brand strength and
supplier relations). We used headquarter location
because marketing management practices may differ
as a result of national differences in markets, competition, and other aspects of the business environment
(Hewett and Bearden 2001; Hewett, Roth, and Roth
2003; Roth et al. 2009). The results indicated that headquarter location did not significantly moderate the
orientationsresources relationships (p > .05). Second
we investigated whether headquarter location moder-
Figure 2. E-Tailing Orientations, Resources, and Performance: Path Analysis Results
14444444443 1444444443
1444444444444444444443
.30**
Market
orientation
.39**
.45***
.56**
Brand
strength
.13
Entrepreneurial
orientation
.63***
Performance
relative to
objectives
.15*
.10
.18**
.28***
.53**
Supplier
relations
.15
Foreign market
orientation
*p < .10.
**p < .05.
***p < .01.
Notes: 2 = 13.79 (8 d.f., p = .087); RMSEA = .07; GFI = .97; CFI = .97; and NNFI = .93.
.19**
Revenue
growth
ated the relationships between the resources and performance. These also were not statistically significant,
with the exception of the relationship between brand
strength and revenue growth (p < .05). These results
suggest that the relationships among orientations,
resources, and performance are relatively generalizable
cross-nationally.
DISCUSSION
Implications
The overall objective of this research was to enhance
understanding of the capabilities international e-tailers
can deploy to foster and leverage key strategic resources.
We used the R-A and RBV theories to develop a conceptual model of firm orientations, strategic resources,
and financial performance. We analyzed cross-national
data from e-tailers; they supported our contention that
the effects of market orientation and foreign market
knowledge on performance are mediated by e-tailer
brand strength and supplier relations. Thus, this
research shows how certain unique resources important
to e-tailing are established and how different types of
capabilities and resources (i.e., orientations, brand
strength, and supplier relations) are related to one
another to create competitive advantage.
The implications of this study for e-tail highlight the
importance of understanding customers and markets.
Knowledge of customers expectations can help facilitate a competitive advantage. Research has shown the
importance of brands and relationships with suppliers
to business success. However, understanding the firm
orientations requisite to build strong brands and
develop supplier relations is not as clear. Specifically, the
organizational culture of an e-tailer manifested in its
market and foreign market orientations can facilitate its
stock of unique resources. To strengthen their firms
market orientation, international marketers could
develop customer-centric processes that include sharing
information about customers across business functions,
communicating with customers, and understanding customers needs. Similarly, firms should apply their knowledge of differences between international markets to
their e-commerce strategies. If firms lack foreign market
knowledge or do not consider the different characteristics of international markets, they may want to invest in
strategies to acquire those skills. Developing a foreign
market orientation is especially important for firms
wanting to attract sales from outside their domestic
market. A one-size-fits-all e-commerce strategy seems
less likely to lead to better performance than strategies

that consider market differences. A more marketoriented, customer-centric organizational culture will
help a firm strengthen its brand and relationships with
suppliers by understanding its customers both domestically and internationally.
In addition to developing market and foreign market
orientations, firms should consider investments in other
brand-building efforts to help position them for better
performance. The value of developing relationships with
suppliers is another aspect of e-tailing that deserves the
attention and effort of managers. Specifically, e-tail
managers should consider their network of suppliers
and focus on ways to strengthen those relationships.
Overall, this study illustrates the importance of identifying elements of organizational culture that enhance the
understanding of customers and markets that can
strengthen brands and relationships with suppliers.
Furthermore, stronger brands and relationships with
suppliers can lead to a competitive advantage.
This study included a sample of e-tailers from different
countries and measures adapted to fit e-tailing. Despite
the e-tail focus, the findings might be applicable to other
business contexts and markets because the conceptual
framework and hypotheses considered the extant international marketing and strategy literature streams.
Firms not in e-tailing that develop the orientations in
this study may find that the strength of their brands and
relationships with suppliers are enhanced. The mediating role of resources may hold under different contexts
as well.
These findings support the R-A and RBV theories contention that competitive advantages can be accrued
through the development and deployment of unique and
inimitable assets (Barney 1991; Hunt and Morgan 1995;
Wernerfelt 1984). Furthermore, the study reinforces the
importance of key capabilities, specifically market and
foreign knowledge orientations, on resources and ultimately performance (Day 1994; Hult and Ketchen
2001). Specifically, the results suggest that the impact
of orientations on performance was mediated by
the resources that the orientations help create. That
orientation effects on performance are indirect
(see Noble, Sinha, and Kumar 2002) contributes to
knowledge of the interrelationships among capabilities,
resources, and performance (Kirca, Jayachandran, and
Bearden 2005). Thus, resources such as brand strength
and supplier relations are critical mediators of the
orientationperformance relationship. This study
demonstrates the antecedent nature of market and

foreign market orientations to brand strength and supplier relations. Identifying other orientations (e.g., strategic orientation, technological orientation) that are
related to brand strength and supplier relations would
contribute to both academic research and practitioner
understanding. Similarly, there may be other resources
that mediate the orientationsperformance relationships.
Limitations and Further Research

As with any study that assesses effects on business performance, there are likely additional measures that may
help explain variance in performance. In the e-tail
domain, cost to serve the customer, reflecting the total
supply chain cost from the source to the customer
(Laseter, Rabinovich, and Huang 2006), warrants consideration for inclusion in further research. The cost of
serving customers varies across product categories. For
example, the cost of serving luggage customers is much
less than serving shoe customers because of fewer differences in packaging, product life cycles, return rates,
inventory requirements, and shipping (Laseter, Rabinovich, and Huang 2006). Thus, further e-tail research
could control for cost-to-serve rates when assessing performance. The nature of the product is another avenue
for further research. Although the focus of this study was
on physical products, future work could consider digital
productssuch as music, news, e-books, software, and
informationto determine whether differences exist
across product types. Last, this study considered the
brand strength of e-tailers. Specific dimensions of brand
strength warrant consideration. For example, perceptions of e-tail brand imagery and their fit with the international environments they serve (Roth 1995) would
provide insights on leveraging brand strength. Also of
interest might be the brands of the products that e-tailers
offer. For example, e-tailers often carry products with
brand names that vary in strength. Future studies might
consider the moderating effects of product-level and
e-tailer brand strengths on performance.
This study presented a model of e-tailing within the
context of the R-A and RBV theories. The orientations,
resources, and performance relationships may be
applicable to other types of businesses. Although the
sample included e-tailers and the scales were adapted
for e-tailing, future studies could consider the orientations and resources and adapt the measures to fit other
types of business. Research has shown that resources
are related to performance. Thus, firms that operate
in other markets or industries may find that the
resources identified in this study also mediate the

orientationsperformance relationships. Future studies
might consider identifying other resources that are likely
to mediate the relationships as well. Furthermore, examining other orientations would be beneficial from theoretical and practical perspectives.
Both practitioners and academics have noted the importance of cross-functional input in new product development and other areas of international marketing efforts.
Given that e-tailing involves an online presence built on
information technology, it too has cross-functionality
aspects to its management and performance. Our sample
included responses from both marketing and technology
managers. Post hoc analysis suggested that though decision makers in marketing and technology generally had
similar perceptions of their orientations and resources,
they tended to differ on their firms brand strength and
foreign market orientation. Future studies will continue to
benefit from cross-functional, multisample perspectives.
Caveats are warranted regarding the research methods.
The finding that entrepreneurial orientation does not
have a positive association with brand strength or
supplier relations may be due to different factors. The
multi-item measure might not have fully captured
the entrepreneurial spirit of e-tailers. Given that
e-commerce is a relatively young market compared with
traditional markets, there may be other elements that
also reflect an entrepreneurial orientation. Competing
online is different from competing in long-established
markets. The time frame of market entry is much
shorter than traditional market time frames in which
many firms may have decades of experience. In
addition, initial e-tailing market entry was swift and
massive, implying that many of the firms may have had
similar characteristics that reflect new or different
dimensions of entrepreneurial orientation. Future
studies should consider how to measure entrepreneurial
orientation in early-stage markets.
Although the surveys were conducted among knowledgeable e-retailer decision makers, the problems associated with self-reported data from online and mail surveys are possible. The study employed perceptual
measures for all but one of the constructs, and we recognize the potential for single-informant response bias.
Despite the high internal consistency reliability estimate
for the performance relative to objectives outcome scale,
we also acknowledge the formative nature of this measure. In addition, the outcome measures were collected
contiguously with the other construct indicators. As
such, the potential exists for common methods variance

(see Hewett and Bearden 2001). However, analyses of
the multi-item scales provided supportive evidence
regarding the reliability and discriminant validity of
the measures. The correlational nature of the research
design also precludes causal assertions regarding the estimated relationships. In addition, larger national samples
would be beneficial for comparing and testing potential
international differences using structural equation methods. Last, although eight different countries were represented, the study was restricted to respondents from
English-speaking countries. Further research should consider a broader combination of countries and cultures.
APPENDIX: FINAL SCALE ITEMS

Market Orientation (Adapted from Deshpand
and Farley 1996; Cronbachs = .90)
Please rate the following questions from a rating of 1 to 7,
with 1 as strongly disagree and 7 as strongly agree.
Satisfying our customers is our most important
business objective.
We constantly communicate our commitment to
serving customer needs.
We share information about our successful and
unsuccessful experiences across all business
functions.
Our strategy for competitive advantage is based
on our understanding of customers needs.
We have regular performance measures of customer service.
Our competitors are more customer focused than
we are. (reverse coded)
I believe that our business exists primarily to
serve customers.
Entrepreneurial Orientation (Adapted from

Covin and Slevin 1991; Miller and Friesen
1982; Cronbachs = .77)
In the past year, my firm has marketed many new

lines of products on the Web site.
In dealing with competitors, our e-commerce
approach is to respond to actions which competitors initiate. (reverse coded)
In dealing with competitors, our e-commerce
approach is to pursue and aggressive, competitive
posture.
In general, our e-commerce top managers believe
that bold, wide-ranging acts are necessary to
achieve the firms objectives.
When confronted with decision-making situations involving uncertainty, our e-commerce
approach is to adopt a cautious, wait-and-see
posture. (reverse coded)
Foreign Market Orientation (Adapted from

Lord and Ranft 2000; Simonin 1997;
Cronbachs = .82)
Please focus on your primary e-commerce operations.
Before we started our primary Web site, some
people in my company had experience in international markets.
My company knows how to market products in
other countries.
Few people in my companys primary Web site
operations are knowledgeable about foreign markets. (reverse coded)
Our e-commerce strategy considers differences
between the home market and foreign markets.
Brand Strength (Cronbachs = .90)

Please consider your primary e-commerce Web site and
the retail category you selected. Please rate the following
questions from a rating of 1 to 7, with 1 as the weakest and 7 as the strongest.

Compared to your online competitors, how

would you rate the strength of your companys
retail brand on the Internet?
In general, our e-commerce top managers favor a

strong emphasis on marketing tried and true
products. (reverse coded)
Overall, compared to other brands in your retail

category, how would you rate the level of awareness of your retail brand name on the Internet?

category, how would you rate the level of quality
associated with your retail brand name on the
Internet?
category, how would you rate the level of favorability associated with your retail brand name on
the Internet?
Overall, please rate the level to which your brand
is recognized with its retail category on the
Internet.
Supplier Relations (Adapted from Gaski and

Nevin 1985; Cronbachs = .84)
Considering the relationship with your most important
supplier with which you are familiar, please indicate
your level of agreement with each of the following statements on a scale of 1 to 7, with 1 as strongly disagree
and 7 as strongly agree.
There is open communication between our
e-commerce business and our most important
supplier.
Our e-commerce business and our most important supplier share common objectives.
Sales growth
Number of new customers
NOTE
1. We excluded certain product categories for the following reasons: food because it is perishable; digital
products because they are delivered electronically;
pharmaceuticals because a prescription is required;
consumer durables and large-ticket home repair
products because delivery costs are substantially
higher than for other consumer products; and industrial products because our focus is on e-tailing, which
does not include business-to-business marketing.
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THE AUTHORS
Deborah A. Colton is Assistant Professor of Marketing
and International Business in the E. Philip Saunders College of Business at the Rochester Institute of Technology.
Her research interests combine Internet marketing and
global marketing with an emphasis on cross-national
studies of e-commerce, branding, and corporate blogging. Her research has been published in Journal of
International Marketing and Journal of World Business.
She teaches Internet Marketing, Global Marketing, and
Marketing Concepts at both the graduate and the
undergraduate levels. In addition, she teaches the online
program at Rochester Institute of Technology. She
received her doctoral degree in International Business
with a concentration in Marketing from the University
of South Carolina in 2004.
Martin S. Roth is a Professor in the Sonoco International Business Department, Moore School of Business, University of South Carolina. His areas of expertise include global corporate and marketing strategy.
His research has been published in leading journals,
including Journal of Marketing Research, Journal of
International Business Studies, Journal of Consumer
Research, Journal of International Marketing, and
many others. He currently serves on the editorial review
boards of Journal of International Business Studies,

Journal of Advertising, Journal of World Business, and
Journal of Public Policy & Marketing. He has received
undergraduate and graduate teaching awards at University of South Carolina. Before joining the Moore School,
he held faculty positions in the Carroll School of Management at Boston College and has also taught at the
Katz Graduate School of Business (University of Pittsburgh), the Arthur D. Little School of Management
(Boston), and at universities in Austria, France, Hong
Kong, and Thailand.
William O. Bearden is Bank of America Chaired Professor of Marketing at the University of South Carolina.
His areas of expertise include consumer behavior, marketing research, pricing, and the evaluation of promotions. He has published more than 25 articles in Journal
of Marketing Research, Journal of Marketing, and Journal of Consumer Research. He has received universitywide teaching awards, including the Amoco Teaching
Award, the Mungo Award for Teaching Excellence, and
the Trustee Professorship Award, and has twice received

the Moore School of Business Teacher of the Year
Award. He serves as the University SEC Faculty Athletic
Representative. He is on the editorial review boards of
Journal of Consumer Research, Journal of Marketing
Research, Journal of Marketing, and Journal of Consumer Psychology and was Associate Editor for Journal
of Consumer Research from 1999 to 2002. He was honored with the first-ever Distinguished Service Award
from Journal of Consumer Research in 2006. Finally,
he coauthored Marketing Principles and Perspectives
and the Handbook of Marketing Scales.
ACKNOWLEDGMENTS
The authors appreciate the support of the Center for
International Business Education and Research at the
University of South Carolina and are grateful to Seyda
Deligonul and Varun Grover for their comments and
guidance.
Copyright of Journal of International Marketing is the property of American Marketing Association and its
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Drivers of International E-Tail

Performance: The Complexities

etail e-commerce (e-tail) continues to be an

Deborah A. Colton is Assistant Professor of Marketing and

is being fueled by not merely online-only firms such as

Journal of International Marketing

Drivers of International ETail Performance 1

Prior research has shown that certain strategic resources

Although research has shown the importance of strong

2 Journal of International Marketing

Resource-advantage theory (Hunt and Morgan 1995)

(Gregory, Karavdic, and Zou 2007; Korper and Ellis

Drivers of International ETail Performance 3

Figure 1. E-Tailing Orientations, Resources, and Performance

so, the e-tailer and its suppliers can work together in

4 Journal of International Marketing

entation can be an important asset for firms competing

preneurial orientation lend themselves to creating and

Another dimension of effective e-commerce is the firms

Doing business internationally has many challenges,

Resource Effects on Performance

H2: The stronger the entrepreneurial orientation,

A central tenet of R-A and RBV theories is that

Brand Strength. Two key sources of customer value

In summary, we propose that e-tailers entrepreneurial

Drivers of International ETail Performance 5

cal assets (Dawar 1998). For a resource to be valuable,

6 Journal of International Marketing

(Korper and Ellis 2001; Lancioni, Smith, and Oliva

Survey Instrument and Sample

Drivers of International ETail Performance 7

of interest using existing measures. We administered the

8 Journal of International Marketing

the United Kingdom, in addition to the United States.

From the initial combined postal and e-mailing of 1553

and proactiveness. We developed a foreign market

Drivers of International ETail Performance 9

retical predictions (i.e., H4 and H5), we inferred that

10 Journal of International Marketing

ance cross-culturally. Given the relatively small sample

ANALYSIS AND RESULTS

Table 1. Discriminant Validity

Steenkamp, Batra, and Alden 2003). For the single-item

Table 2. Means, Standard Deviations, and Correlations Among Constructs

3. Foreign market orientation

Drivers of International ETail Performance 11

Effects of Orientations on Resources: H1H3

12 Journal of International Marketing

mixed. Specifically, the hypothesized relationship

Effects of Resources on Performance: H4H5

Direct and Indirect Effects

.01) and performance relative to objectives were

Table 3. Results of Mediation Analysis

Model 1: fully mediated

Model 2: direct antecedent effects

Market orientationbrand strength

Market orientationsupplier relations

Entrepreneurial orientationbrand strength

Entrepreneurial orientationsupplier relations

Foreign market orientationsupplier relations

Market orientationperformance relative to objectives

Market orientationrevenue growth

Entrepreneurial orientationperformance relative to objectives