The Trinity of International Strategy: Adaptation, Standardization and Transformation

The significance of context has not escaped the attention of international strategy theorists. In entering foreign markets, firms are assumed to possess two choices: an adaptation to the context and/or a standardization strategy. A concern with adaptation or standardization would convey the idea that the context is given and management action is reduced to adapting or not adapting to it. Both such approaches downplay the role of management’s ability to transform the context, as argued by many researchers from diverse disciplines. In order to redress this imbalance, the present paper seeks to emphasize the significance of a transformation strategy the main concern of which is not only to passively adapt to the foreign context nor to settle for a standardization strategy, but also to transform the context in the image of the home context. Adopting a social constructionist approach, the paper argues that the context and content of strategy are intrinsically-bound up. Rather than just adapting or not adapting to the target context of the foreign market, it is contented that the extension of a strategy from one context to another entails or requires the transformation of that context. In illustrating this approach, the paper discusses the case of IKEA’s extension of its strategy into the Chinese context. The paper closes with some implications for the theory and practice of international marketing strategy.