an integrated theory of global advertising 201… · · 2010-04-04an integrated theory of global...

An integrated theory ofglobal advertising

An application of the GMS theory

Shaoming Zou and Yong Z. VolzUniversity of Missouri, Columbia

Although there has been an increasing interest In global advertising research, the litera-ture suffers from the lack of a broad theoretical foundation that could guide conceptuali-sation and theory' development in global advertising research. In this paper, the authorscontend that the GMS theory developed by Zou and Cavusgil (2(K)2) can serve as a broadtheoretical foundation for global advertising research. The ( J M S theory is described, andused to develop a nevv- conceptualisation of global advertising and prop<jse a theoreticalframework of global advertising. The implications of the framework for future researchare also discussed.

Introduction

Ever since the publication of the seminal work of Elinder (1965), Fatt(1967) and Buzzell (1968) a debate about whether international advertis-ing should be standardised across country markets or adapted to individualcountry markets has raged in the international advertising literature.The proponents of the standardisation approach argue that standardisingadvertising can help maintain a uniform global strategy and image of thefirm, maximise the firm's cost advantage and meet a universal need ofpeople across the world (Roostal 1963; Levitt 1983; Johansson & Thorelli1985; Jain 1989; Peebles 1989; Tip 1995; Solberg 2002). The adaptationapproach, on the other hand, contends that the cultural, linguistic, histori-cal, religious and socio-economic differences would affect the interpreta-tions of advertising messages by different customers and thus hinder afirm from transferring its advertising campaign from one country market toanother (Mueller 1987; Tanseyf/i//. 1990; Kanso 1992; Roth 1995; Shoham1996; Cateora & Graham 2002; An 2007).

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Recent literature called for viewing standardisation and adaptationas two extremes of the same continuum (Duncan & Ramaprasad 1995;Papavassiliou & Statbakopoulos 1997; Taylor 2002) and investigating thefactors that are associated with the standardisation or adaptation of inter-national advertising. Some studies in the last two decades have found a listof factors (e.g. consumer and market similarity, high market competition,high-involvement products, larger subsidiaries) tbat foster internationaladvertising standardisation (e.g. Florentbal & Shoham 1999; Laroche etal.2001; Samiee et al. 2003). With few exceptions (e.g. Jain 1989; Duncan& Ramaprasad 1995; Papavassiliou & Stathakopoulos 1997; Samieeet al. 2003), however, the international advertising literature still suffersfrom the lack of a broad theoretical foundation that explains when andwhy international advertising needs to be standardised, and what effectstandardised international advertising has on companies' performance(Theodosiou & Leonidou 2003; Taylor 2005). This is a major gap in theliterature because our knowledge cannot be advanced if only anecdotaland fragmented findings are available with regard to factors that are associ-ated with international advertising standardisation.

With the continuing trend towards globalisation, multinational corpora-tions (MNCs) are increasingly faced with tbe challenge of planning andexecuting global advertising campaigns. Companies such as Coca-Cola,McDonald's, Dell, Nokia and Apple have used global advertising cam-paigns to build their global brands. Yet, in the international advertisingliterature, the concept of global advertising remains elusive, offering littleguidance to MNCs' global advertising campaigns. Most studies have con-ceived global advertising simply as standardised advertising (e.g. planning,price, message, execution or media selection) across country markets.Although it has generated a significant amount of research in the past, thisnarrow conceptualisation of global advertising has limited both tbe insightthat can be gained from research and MNCs' ability- to take full advantageof the potential reach of global advertising campaigns.

The purpose of this study is to develop a broad conceptualisationof global advertising and a tbeoretical framework of global advertising.Specifically, we draw on the global marketing strategy (CMS) theorydeveloped by Zou and Cavusgil (2002) in the field of global marketingstrategy to advance a new global advertising construct, and to present abroad theoretical framework that illuminates the antecedents and out-

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comes of global advertising. We will first review the GMS conceptualisa-tion, followed by a discussion of the theoretical bases of the GMS theory.Then, we will propose a new conceptualisation of global advertising andan integrated theoretical framework of global advertising. Finally, we willdiscuss the implications of the new global advertising construct and thebroad theoretical framework for future research and for global advertisingmanagers.

The GMS: a broad conceptualisation of globalmarketing strategy

Zou and Gavusgil (2002) advanced a broad conceptualisation of globalmarketing strategy - the GMS - as the extent to which an MNC globalisesits marketing strategies in various country markets through the standardi-sation of the marketing mix variables, concentration and coordination ofits value-adding activities, and integration of its competitive moves acrossthe country markets. Essentially, the GMS was proposed to integrate threediverse perspectives of global marketing strategy that are prevalent in theliterature: the standardisation perspective, the eonfiguration/coordinationperspective and the integration perspective.

The standardisation perspective sees a firm as pursuing a global mar-keting strategy if its marketing strategies across different national mar-kets are standardised, particularly with regard to its product offering andpromotional campaigns (Jain 1989; Samiee & Roth 1992). Advocates ofstandardisation believe that the world's markets are increasingly converg-ing, fuelled by the advances in interactive communication and transporta-tion technology, increased worldwide travel and the liberalisation of trade.Consumers in different parts of the world are being more exposed to thesame brands and products, and thus have cultivated similar tastes and life-styles and formed a global consumer culture (Levitt 1983; Ford & Phillips2000). In turn, they increasingly prefer the same brands, similar products,and similar product features and functionality. The source of competitiveadvantage in the global market, therefore, is the ability to produce high-quality, low-price products. A standardised product through standardisedmarketing programmes across countries is what it takes to achieve a low-cost position due to its purported benefits of economies of scale in produc-tion and marketing (Levitt 1983), consistency in dealing with customers

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(Buzzell 1968; Hamel & Prahalad 1985) and the ability to exploit goodideas on a global scale (Buzzel! 1968). Arnold Schuh's (2000) study, forexample, shows that MNCs entering Central Eastern Europe rely heav-ily on marketing standardisation to keep investments and additional costslow, even though varying market conditions seem to favour adaptation andcustomisation.

The configuration/coordination perspective considers global marketingas the means to exploit the interdependencies between different countrymarkets as well as the comparative advantages associated with variouscountries. To achieve global efficiency a firm must configure its value-adding activities properly and coordinate its activities across differentcountry markets (Porter 1986; Roth 1992). According to the configuration/coordination perspective, proper configuration allows the firm to exploitlocation-specific advantages (Ghoshal 1987), whereas cross-national coor-dination captures economies of scale, scope and learning (Bartlett &Ghoshal 1987; Roth 1992). The worldwide success of the entire MNGrequires the balance of the sub-units' functional specialisation and thecoordination requirements (Mauri & Sambharya 2003). According toPorter's (1986) theory of global competition, a major aspect of configura-tion is the degree of concentration of value-adding activities. Since differ-ent countries possess different compararive advantages, it is important fora firm to concentrate its global marketing activities in a few country loca-tions where they can be performed most efficiently and effectively, andhave the most potential to achieve large economies of scale. Foreign sub-sidiaries are not expected to carry out the whole range of value activitiesbut to focus on those activities that can contribute to the global efficiencyof the MNG (Bartlett & Ghoshal 1998).

According to the integration perspective, the global environment andindustrial forces necessitate that an MNG deploy worldwide resourcesand integrate dispersed subsidiaries across national boundaries (Roth &Morrison 1990). The key to a firm's global marketing success is to par-ticipate in all major world markets and effectively integrate the firm'scompetitive moves across these markets (Yip 1989; Yip & Goundouriotis1991). In global industries, since a firm's marketing operations in dif-ferent countries are interdependent, the firm must be able to subsidiseoperations in some markets with resources generated in others (Hamel& Prahalad 1985; Ghoshal 1987), make strategic decisions that can yield

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synergies across the markets and minimise overall costs (Hout etal. 1982),and respond to competitive attacks in one market by counterattacking inothers (Yip 1989).

While the three perspectives of global marketing strategy have gener-ated a great deal of research interest and empirical investigations, each ofthem is focused on a unique aspect of MNCs' global marketing operationsto prescribe a winning global marketing strategy. For example, standardi-sation is focused on generating economies of scale through standardisedproducts and marketing, whereas the configuration/coordination perspec-tive emphasises taking advantage of different countries' unique compara-tive advantages and creating cross-country synergies, and the integrationperspective stresses fighting competitors through cross-subsidisation andintegrated competitive moves. However, the aims of the three perspec-tives are the same: helping MNCs to achieve competitive advantages inthe global market. The GMS is proposed by Zou and Cavusgil (2(K)2) as abroad global marketing strategy that integrates all three perspectives.

Specifically, Zou and Cavusgil (2002) identified eight dimensions span-ning all three perspectives. Product standardisation, promotion stand-ardisation, standardised channel structure and standardised price are fourdimensions that refiect the standardisation perspective. Concentration ofmarketing activities and coordination of marketing activities across coun-tries are two dimensions that are derived directly from the configuration/coordination perspective. Global market participation and integration ofcompetitive moves are two dimensions that tap the integration perspec-tive. Put together, the eight dimensions of the GMS offer a comprehen-sive view of what MNCs' global marketing strategy will entail. The GMSsuggests that MNCs' global marketing strategies do not need to rely solelyon standardisation to help them gain competitive advantage in the globalmarket.

The GMS theory

The bases of the GMS theory

After developing the broad conceptualisation of the GMS, Zou andCavusgil (2002) proposed and tested an integrated theoretical model ofthe GMS that delineates the cause and effect of the GMS construct. Two

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theories serve as the foundation of the GMS theor>: the industrial organi-sation (IO) theory and the resource-based view (RBV).

The !0 theoryThe structure-conduct-performance (SCP) paradigm of Bain (1956) isthe most common IO theory used to explain the cause and performanceeffect of the GMS (Bartlett & Ghoshal 1991; Collis 1991). The IO theoryviews competitive advantage as a position of superior performance thata firm attains and sustains hy pursuing a sound strategy that deliberatelyresponds to industry/market forces (Porter 1980; Scherer & Ross 1990). Akey premise of the IO theory is that the external forces impose selectivepressures on a firm. Only firms that respond with a successful strategy willsurvive and prosper (Scherer & Ross 1990). As summarised by the princi-ple of co-alignment in the IO theory, the 'fit' (or 'congruency') betweena firm's strategy and its environment has a significant positive effect onits performance (Scherer & Ross 1990; Venkatraman & Prescott 1990).Therefore, Zou and Cavusgil (2002) posited that the principal effect ofthe GMS is a firm's performance in the global market, whereas a primarycause of the GMS is external market forces.

The resource-based view

In the RBV, a firm is viewed as a bundle of tangible and intangibleresources, and its uniqueness lies in the nature of those resources andthe organisational routines that link them together (Wernerfelt 1984),The term 'resource' is used in a ver>' broad sense by the theorists. Barney(1991) defines internal organisational resources as all assets, capabilities,organisational processes, firm attributes, information, knowledge, andso forth, controlled by a firm and enabling the firm to pursue a strategyto improve its efficiency and effectiveness. The most critical resources,however, are those that are superior in use, hard to imitate, difficult to sub-stitute for, and more valuable within the firm than outside (Porter 1991).

The RBV contends that differential endowment of strategic resourcesamong firms is the ultimate cause of their strategy and performance(Bartlett & Ghoshal 1991). Competitive advantage is said to reside inthe inherent heterogeneity of the immobile strategic resources that eachfirm controls (Wernerfelt 1984; Barney 1991; Grant 1991). Strategy, then,is a firm's conscious move to capitalise on its idiosyncratic endowment

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of Strategic resources (Wernerfelt 1984; Barney 1991; Lado et al. 1992).Following this logic, Zou and Cavusgil (2002) theorised that another prin-cipal cause of the CMS is internal to the firm, and the effect of the CMSis a firm's performance.

The QhAS theoretical model

Zou and Cavusgil (2002) contended that the lO and the RBV each pro-vides only a partial explanation of the cause and effect of the GMS, andthat both the external forces and internal organisational attributes mustbe combined to offer a complete explanation of the causes and effects ofthe GMS. They proposed an integrated GMS theory in which MNCs'global orientation and international experience - two key internal organi-sational attributes - and the external industry globalisation conditions - akey external force - are theorised as the causes of the GMS. Tbe GMSis further theorised to be the major determinant of MNCs' global marketperformance in global industries.

The GMS theory has several major characteristics. First, since the broadGMS construct is the focal point in the model, this GMS model has inte-grated the three major perspectives of global marketing strategy. Second,both the IO theory and the RBV have been incorporated into the GMSmodel because both external industry globalisation conditions and inter-nal organisational characteristics have been theorised as the factors thatmotivate MNCs' pursuit of a global marketing strategy-. Third, tbe GMSmodel essentially presents a 'fit' theory, which argues that it is the fit of anMNCs global marketing strategy to its external industry environment andinternal organisational characteristics that determines tbe MNCs perform-ance in the global market. When tbe external industry environment exertspressure on an MNC to adopt a high degree of global marketing strategy(i.e. high degree of standardisation, concentration and coordination, andintegration) and when its internal organisational characteristics are con-ducive to global marketing strategy, an MNC that pursues a high degreeof global marketing strategy will achieve a good fit between its strategyand its external and internal environments, and this will lead to improvedperformance in the global market. In contrast, when the external industryenvironment forces it to seek greater adaptation to individual countrymarkets' unique culture, and when its internal organisational structure and

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value promote local autonomy at the country subsidiary level, an MNCthat pursues a low degree of global marketing strategy (i.e. a high degreeof local adaptation, dispersed value-adding activities, autonomous localsubsidiaries and independent competitive campaigns in local markets)will achieve a better fit between its strategy and its external and internalenvironments, enhancing its performance in various country markets.

In essence, the GMS theory is a contingency theory, and the type ofmarketing strategy that works best for an MNC depends on the MNCsexternal and internal environments. This theory suggests that, for exam-ple, a high degree of standardisation, concentration and coordination, andintegration works well for an MNC that competes in global industrieswhere the industry environment enables fast globalisation and that has aglobally orientated internal value and organisation structure. In traditionaland non-global industries, in contrast, a high degree of adaptation, auton-omy and independence works better. Thus, instead of advocating blindpursuit of a global marketing strategy, the GMS theory emphasises the fitof an MNCs marketing strategy to its external and internal environments.

A broad conceptualisation of global advertising

The broad and integrative nature of the GMS conceptualisation offersinsight into how global advertising should be conceptualised. In the cur-rent international advertising literature, researchers have consistentlyviewed global advertising from a standardisation perspective (e.g. Harris1994; Onkvisit & Shaw 1999; Karande et ai 2006; Okazaki et ai 2006).Recognising the limit of advertising standardisation, some researchershave found patterns of global advertising in chat the general advertis-ing strategy is standardised while execution and languages are modifiedfor individual markets (e.g. Ramaprasad & Hasegawa 1992; Duncan &Ramaprasad 1995; Tai 1997; Taylor & Johnson 2002; Samiee z- y/. 2003;Ran & Jiang 2005). However, global advertising as currently viewed in theliterature is mostly a matter of standardisation, even with the distinctionbetween advertising strategy (including themes, positioning and overallcharacter of messages), advertising execution (referring to the selection ofadvertising appeal and copy), media selection and languages. Moreover,as Samiee et al. (2003) rightly observe, current cross-cultural studies ofadvertising standardisation 'typically focus on the contents of advertise-

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ments (i.e. content analysis) rather than corporate policies or executiveviewpoints'. This leads to a lack of connection with and contribution tothe central theoretical approaches outside the advertising and marketingfield, such as organisation economics, institutional theory and resourcemanagement (Birnik & Bowman 2007).

Despite the volume of research that has been generated and the insightthat has been gained into intemational advertising standardisation, it is ourcontention that standardisation is a relatively narrow and limited perspec-tive of global advertising. It ignores the opportunities for an MNG to coor-dinate the development and execution of advertising campaigns acrosscountry markets even if the standardisarion level is low. It also fails to rec-ognise the advantage of using advertising campaigns in various countriesas an integrated competitive tool for global success. For example, when anMNG faces a fierce competitor's advertising blitz in one country, its globaladvertising strategy should allow it to initiate a counterattack, perhaps inanother country where the competitor is most vulnerable. Ifour concept ofglobal advertising were limited to standardisation, our work could not offerthe MNG much guidance in how to use global advertising in challengingits competitor. Furthermore, advertising standardisation can be effectivein terms of exploiting scale economies, but the gains from standardisationmight disappear in the long run or be weakened in different contexts. Inother words, standardisation alone cannot guarantee an MNG's sustainableglobal competitive advantage in the global markets. The keys to long-term success also include the firm's capacity to coordinate across differentsubsidiaries and integrate its advertising strategies across countrymarkets.

Building on the GMS conceptualisation, and recognising that globaladvertising is part of an MNG's broader global marketing strategy, wedefme global advertising as *the extent to which an MNG standardises itsadvertising messages, copy/visualisations and media use, coordinates theprocess of developing and executing advertising campaigns, and integratesits advertising campaign objectives and strategies across country markets'.This conceptualisation is illustrated in Figure 1.

The conceptualisation of global advertising depicted in Figure 1 hasseveral features. First, it is broader than the standardisation perspectiveof global advertising that dominates the current literature. It includesnot only the standardisation of advertising messages, copy/visualisationsand media use, but also the coordination of advertising planning and

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Figure 1: A broad conceptualisation of global advertising

>/5tandardisat ior i \( - Messages )\ -Copies/visualisations J

Integration- Campaign objeaives- Campaign strategies

Coordination- Planning- Execution

execution, and the integration of advertising objectives and strategiesacross countries. Second, this new conceptualisation of global advertis-ing incorporates three major perspectives of global marketing and pointsout more options that MNCs can use to enhance the effectiveness oftheir global advertising campaigns and gain a competitive advantagein the global market. Third, this new concept of global advertising isconceived as a formative construct of three components that can func-tion independently of each other and yet are essential. On one hand,although standardisation, coordination and integration may be related toeach other in a particular MNCs case, there is no theoretical reason toexpect high correlations among the three. For example, an MNC couldconceivably seek a high degree of standardisation of messages, copy/vis-ualisations and media selection for its international advertising withoutseeking a correspondingly high degree of coordination or integration. Inother words, the three components can be independent of one another.On the other hand, each of the three components is essential to theoverall conceptualisation of global advertising. Dropping one or moreof these components of global advertising would fundamentally changethe meaning ofthe concept of global advertising. For example, if coor-dination and integration are dropped, global advertising would revert tomere standardisation, something that is fundamentally different from

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our conceptualisation. Based on Jarvis et al (2003), therefore, we arguethat global advertising should be conceived as a formative construct.

A theoretical model of global advertising, and researchpropositions

The global advertising construct defined in the previous section does notsuggest total standardisation, coordination and integration. Instead, it is amatter of degree of standardisation, coordination and integration. An MNCcould decide to select an appropriate degree of standardisation, coordina-tion or integration based on its situation. Although existing studies haveproduced mixed results regarding global advertising, there is a generaltendency towards a medium level of advertising standardisation (Shoham1996; Yip 1997), while some other studies have shown a stronger degreeof advertising standardisation across all or most markets (Rosenthal 1994;Harris & Attour 2003), especially among those firms with accepted brandnames and identity (Hite & Fraser 1988). It is argued that MNCs can useglobal advertising to at least build a successful global brand (Hill & James1990; Duncan iSc Ramaprasad 1995; Taylor 2002). To better understandthe drivers and consequences of our new construct of global advertising, itis imperative to develop a sound theoretical model of the antecedents andconsequences of global advertising.

Drawing on Zou and Cavusgil's (2002) GMS theory and the existinginternational advertising literature, we propose an integrated theoreticalmodel of global advertising in Figure 2. In this theoretical model, globaladvertising is theorised to be driven by both the MNCs external indus-try characteristics and internal organisational attributes. In addition, anMNCs global advertising is posited to affect its global brand perform-ance. Similar to the GMS theory, the proposed theoretical model ofglobal advertising is founded on an integration of industrial organisation(IO) theory and the resourced-based view (RBV). The external industrycharacteristics as drivers of an MNCs global advertising are suggestedby the IO theory, whereas the internal organisational attributes as driversof an MNCs global advertising are derived from the RBV. Essentially,the proposed theoretical model of global advertising is founded on theprinciple of fit. when an MNCs global advertising fits its external industrycharacteristics and its internal organisational attributes, its global brand

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Figure 2: A theoretical model of global advertising

internal organisationalattributes- Global orientation- International experience- Subsidiaries' autonomy- Brand-building capability

External industrycharacteristics- Convergence of consumer

demand- Similarity of advertising

regulations- Media availability- Similarity of competitive

position- Ad agency competency

Global advertising- Standardisation- Coordination- Integration

Global brandperformance

performance is enhanced. Thus, the proposed theoretical model depictedin Figure 2 is a broad theory that integrates the IO and the RBV theories.In the following, we will explicate tbe dimensions of the external industrycharacteristics and internal organisational attributes in tbe model, and linkthem to global advertising in a set of research propositions.

External industry characteristics

Cotroergence of consumer demandA major aspect of globalisation is tbe convergence of consumer demandand preferences across the world. Due to technological advancement andincreased worldwide travel, consumers in different parts of the worldarc exposed to the same knowledge, values, lifestyles and tastes, andare therefore increasingly demanding similar products, product featuresand services (Levitt 1983; Ford and Phillips 2(X)0). Research has showna general degree of consumer homogeneity across national borders, andglobal consumers or consumer segments have emerged as a reality inmany industries (Yavas etal. 1992). In this paper, convergence of consumerdemand is defined as the degree to which consumer preference for a

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product or service is similar across the world. Although different industriesmay face different degrees of convergence of consumer demand, the trendis especially strong in high-tech industries and fashion-based industries.In high-tech industries such as telecommunications, computers, con-sumer electronics, machine tools, pharmaceutical products, and bankingand investment, there is little cultural tradition of consumer demand andpreferences because the products and services never existed until technol-ogy brought them to consumers. Indeed, consumers in different parts ofthe world were taught to use the product or services in these industries,carrying few culturally specific preferences. As a result, the convergenceof consumer demand in these industries is especially strong (Cavusgil etal. 1993). In contrast, in industries where there has been long-standingdemand - such as skincare, food, clothing and entertainment - the conver-gence of consumer demand is relatively weak (Johansson 2003).

When the convergence of consumer demand is high, MNCs would findit advantageous to seek a high degree of standardisation in their advertis-ing messages, copy/visualisations and media use across the world, in orderto coordinate their advertising planning and execution in different coun-tries, and to integrate their advertising campaign objectives and strategies(Zou & Gavusgil 2002). Thus, MNCs would seek a greater degree of glo-bal advertising. Therefore, we expect:

Proposition 1: Convergence of consumer demand is positively relatedto MNCs' degree of global advertising.

Similarity of advertising regulationsIn the post-Second World War period, there has been a steady trendtowards trade liberalisation. A significant part of this trend is that gov-ernment regulations of business, including advertising, have becomeincreasingly similar. In the era of globalisation and increasing internationaltrade, governments in different countries share similar challenges, andefforts have been made by international and regional trade organisationsto harmonise advertising regulations (Gao 2005). The European Union,for example, has passed legislation to standardise advertising regulationsamong its members. In this study, the similarity of advertising regulationsis defined as the extent to which government regulations on advertisingare similar across the globe. When the similariry between advertising

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regulations is high, MNGs would find it easier to standardise their adver-tising because the same set of advertising regulations could be expectedin different countries, making it feasible and desirable to standardise admessages, copy/visualisations and media use (Rau ÔC Prebte 1987; Harvey1993; Duncan & Ramaprasad 1995; Papavassiliou & Stathakopoulos 1997;Onkvisit Sc Shaw 1999). Similarly, when government regulations aresimilar, it would be easier for MNGs to coordinate their ad planning andexecutions between foreign subsidiaries, and integrate their advertisinggoals and strategies across the world. Hence:

Proposition 2: Similarity of advertising regulations is positively relatedto MNGs' degree of global advertising.

Media availabilityThe advances in telecommunications technology have led to an explo-sion of media and media outlets. Yet, the extent to which a particularmedium is accessible varies in different countries. For example, thoughdigital television is spreading in developed countries like the US, in ruralIndia and some African countries even a black-and-white television setis still a luxury. In western rural Ghina, smaller-screen colour TVs withpicture tube still dominate the market. Similarly, internet media and cel-lular phones have achieved significant penetration in developed countriesand some emerging markets, but they are available only to a minority ofthe population in less developed countries. The significant variability inmedia availability- across the world could pose significant challenges forMNGs in contemplating global advertising campaigns. In addirion, dif-ferent degrees of technical quality and capacity of the media may alsoaffect the effectiveness of the advertising message to be delivered to thetarget audience (Jones 2000). Depending on their target markets, someMNGs could find that global advertising built on crisp video images andstereo sound is simply unworkable in other markets. Studies have shownthat a crucial difference in advertising execution in different countries isthe variability of advertising media availability (Synodinos et al. 1989).Here, media availability refers to the extent to which the media an MNGintends to use for its advertising campaigns are available across all majormarkets in the worid. When media availability is high, MNGs should findit feasible and desirable to standardise their advertising message, copy/

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visualisations and media use (Sriram & Gopalakrishna 1991). They shouldalso find it easier to coordinate their advertising planning and execution,and integrate their advertising objectives and campaign strategies acrossthe world. Consequently:

Proposition 3: Media availability is positively related to MNCs' degreeof global advertising.

Similarity of compétitive positionSimilarity of competitive position is defined as the degree to which anMNCs competitive strength and advantage is similar across differentnational markets. The globalisation of markets is accompanied by theglobalisation of competition. It is not uncommon to find that MNCs arebattling the same foes in different national markets. For example, thefight between Oica-Cola and Pepsi has raged in many countries acrossthe world, as has that beuveen P&G and Unilever, between McDonald'sand KFC, between GM and Toyota, between Motorola and Nokia, andbetween Boeing and Airbus. In some industries, MNCs have to battlefiercely with local competitors too. It has been argued that the similarity- ina firm's competitive position across markets will enhance its likelihood ofadopting advertising standardisation in order to achieve an advantage overits competitors (Jain 1989; Laroche etal. 2001). Especially when competi-tive intensity is high on the global scale, an MNC may fmd it imperativeto match its global rivals' global advertising campaign with its own globaladvertising, or to gain a competitive advantage over its rivals by adoptingglobal advertising. The efficiency and effectiveness of global advertisingin building a dominant global brand could be irresistible to MNCs seekinga competitive edge over their global or local rivals. Therefore:

Proposition 4: Similarity of competitive position across different mar-kets is positively related to an MNCs degree of globaladvertising.

Agency competencyFollowing in the footsteps of their clients, many advertising agencies haveembarked on their own global expansion. Some have achieved globalscale and are able to provide their clients with services across the world.

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Earlier studies have shown that advertising agencies tend to adopt thestandardisation approach in order to take advantage of their own interna-tional networks and to maximise their profit potential from their clients'intemational advertising budgets (Ryans 1969). Yet, not all advertisingagencies are equal when it comes to their knowledge, creativity and capa-bilities to serve their clients in different parts of the world. In this study,agency competency refers to the ability of an advertising agency to serveits clients' global needs in planning and executing global advertisingcampaigns. It involves the agency's knowledge of the cultural, political,legal and competitive environments in which its clients operate across theworld, its expertise in selecting advertising themes, messages and formatsto appeal to the audience that its clients wish to target, and its ability tohelp its clients plan, develop and execute effective advertising campaigns.Since many multinational corporations have increasingly depended ontheir advertising agencies for their advertising campaigns, their use ofglobal advertising is infiuenced by their advertising agencies' competencyin understanding their global market, and in planning, developing andexecuting global advertising campaigns.

When an MNCs advertising agency possesses a high competency, it ismore likely that it could advise the MNC about the benefits and feasibil-ity of standardised advertising, help the MNC coordinate the planningand execution of advertising campaigns across the world, and facilitate theMNCs integration of its advertising objectives and strategies in the globalmarket. Hence:

Proposition 5: Agency competency is positively related to an MNCsdegree of global advertising.

Internal organisational attributes

Global otientattoti

Global orientation is defined as the degree to which an MNC has anorganisation-wide emphasis on success on a global scale, as opposed toon a country-by-country basis (Zou & Cavusgil 2002). Traditionally, manyMNCs had stressed the importance of succeeding in each country marketthat they entered - namely a polycentric orientation (Douglas & Craig1989). With the trend towards globalisation, many have now realised that

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their market position in one country may be dependent on their marketposition in other countries. As a result, an increasing number of MNCshave started to foster an organisation-wide value focusing on their world-wide performance - namely a geocentric orientation (Douglas & Craig1989). Yet, due to their historical organisational set-up, it's not easy forMNCs to foster a global orientation, and it takes time and gradual organi-sational change to transform MNCs' value. Consequently, MNCs typicallyhave different degrees of global orientation at any given time.

When an MNC has a high degree of global orientation, its organisationalemphasis is placed on enhancing the firm's worldwide performance. Itsperformance in a single country is of secondary importance to the firm'soverall performance in the global market. A coherent global orientationdefines the firm's overall policies, influences the headquarters-subsidiaryrelationship, and sets the stage for the coordination and integration ofthesub-units of the firm (Samiee et al. 2003). As a result, its country subsidi-aries are more willing to yield to the firm's overall strategy, even if thismeans that they have to sacrifice their local advantages and benefits. Insuch a globally orientated MNC, it's much easier to standardise the adver-tising messages, copy/visualisations and media use across national mar-kets, to coordinate the planning and execution of advertising campaignsin various countries, and to integrate the advertising campaigns' objectivesand strategies. This is because, in a globally orientated MNC, the countrysubsidiaries will understand the importance of building a global brandthrough global advertising campaigns, and will have less tendency to resistthe MNCs attempt to seek high degrees of standardisation, coordinationand integration of advertising campaigns. Consequently, we expect:

Proposition 6: An MNCs global orientation is positively related to itsdegree of global advertising.

International experience

Due to their different paths to internationalisation, MNCs are not all thesame when it comes to the knowledge and skills related to operating inter-nationally (Douglas & Craig 1989). An MNCs international experiencerefers to the extent of its knowledge of international markets, and its skillsin operating effectively in international marketing. As Douglas and Craig(1989) argued, when a firm has little international experience, its emphasis

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in international marketing is to find a market similar to its home marketand sell its existing product to the market. When it gains internationalexperience, it will start to find ways to adapt its product to each marketit enters. Eventually, when it becomes a very experienced internationalmarketer, it will realise the interdependency of markets and figure outa way to integrate its operations across the markets. Similarly, Zou andCavusgil (2002) find that international experience is positively related toMNCs' pursuit of a global marketing strategy. Solberg's (2002) study alsoshows that a firm with more international experience and a higher-levelknowledge of its local markets is more likely to find similarities across dif-ferent national markets, which will lead to more advertising and marketingstandardisation. Consistent with Douglas and Craig's (1989) and Solberg's(2002) argument, we contend that an MNC with significant internationalexperience is more likely to understand the interdependency of variouscountry markets, and seek an effective way to standardise its advertisingmessages, copy/visualisations and media selection, to coordinate the plan-ning and execution of advertising campaigns in various countries, and tointegrate the advertising strategies across countries. Hence:

Proposition 7: An MNCs international experience is positively relatedto its degree of global advertising.

Sttbsidiary autonomyMNCs grant different degrees of autonomy to their country subsidiaries.Some MNCs, such as Nestle and P&G, had traditionally given significantdecision-making power to their relatively independent country subsidiar-ies. In such MNCs, headquarters won't intervene in local subsidiaries'marketing and advertising decisions. The country managers are free todecide what products to introduce into their local markets, how to positionand promote the products, what prices to charge and where to distributethe products. The headquarters only evaluate the performance of eachcountry subsidiary and reward the subsidiary based on its performance.In recent years, more and more MNCs have begun to rein in their sub-sidiaries' decision-making power in an effort to develop a more coherentglobal brand through global marketing. Even P&G initiated Project 2005to increase its headquarters' ability to influence local subsidiaries' deci-sions. Studies have shown that fully integrated or substantially controlled

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subsidiaries are more likely to use standardised marketing and advertisingstrategies (e.g. Rau ÔC Preble 1987; Duncan & Ramaprasad 1995; Larocheet al. Z00\).

Subsidiary autonomy is defined as the degree to which an MNC grantsits country subsidiaries the power to determine their marketing and adver-tising strategies. When subsidiary autonomy is high, an MNC will havevery limited involvement in tbe subsidiary's advertising budgeting processand fewer communication channels to influence its subsidiaries' advertis-ing decisions in their local markets. Instead, in an MNC with a decentral-ised organisational structure, the subsidiaries will have power to decidewhat is most appropriate in their local markets, and will be more likely toresist headquarters' attempts to standardise advertising messages, copy/visuahsations and media use, to coordinate the planning and executionof advertising campaigns, or to integrate the advertising objectives andstrategies across the country markets if they don't think it's to their ben-efits to follow headquarters' move. Thus, in an MNC with high subsidiaryautonomy, it will be very difficult to pursue global advertising. Hence:

Proposition 8: Subsidiary autonomy is negatively related to an MNCsdegree of global advertising.

Erand-huilditig capability

In today's global market, it is extremely important to have a well-positioned and widely recognised global brand (Johansson 2003), becauseglobal brands are widely regarded by consumers to be the symbol of qual-ity, trend, global ideals and social responsibility (Holt etal. 2004). Yet, notall MNCs are capable of building successful global brands. Brand-buildingcapability refers to the level of an MNCs ability to build a successfulglobal brand. It involves the ability to understand global consumers, todevelop and introduce new products into the global market, to advertiseand promote tbe brand in the global market, and to render high-qualitycustomer service. Studies have found that MNCs with well-acceptedglobal brands are the more likely candidates to use advertising stand-ardisation (e.g. Hite & Fraser 1988; Hill & James 1990). When an MNCpossesses a strong brand-building capability, it is more likely to recognisethe global market trend towards interdependence and the need to useglobal advertising to build a successful brand. As a result, it is more likely

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to Standardise advertising messages, copy/visualisations and media usein order to present a consistent brand image to consumers in the globalmarket. In addition, it is more likely to coordinate the planning and execu-tion of advertising campaigns and integrate advertising strategies acrosscountries. Therefore:

Proposition 9: An MNCs brand-building capability is positively relatedto its global advertising.

The effect of global advertising on global brand performance

At a strategic level, multinational corporations often use global advertisingto build a uniform brand image (Duncan & Ramaprasad 1995). A uniformbrand image can propel a brand into a global brand and increase its appeal.According to Holt etal. (2004), consumers in the global market see a glo-bal brand as a key symbol of quality, a global myth for being trendy andmodern, and even a stamp for social responsibility. As a result, a globalbrand possesses significant brand equity that isn't available to national orregional brands.

Global brand performance is referred to as the extent to which a brandhas achieved global awareness, a uniform and positive image amongconsumers across the world, and a loyal base of consumers in the globalmarket Qohansson 2003). Indeed, global brand performance is indicativeof a global brand's equity. It is what MNCs are striving to achieve in theirglobal advertising campaigns. In industries in which the degree of globali-sation is high, global brand performance is vital to the business success ofMNCs. In fact, global brand performance is an important determinant ofMNCs' competitive advantage in the global market (Johansson 2003).

By using global advertising, an MNC can increase its global brand per-formance (Duncan & Ramaprasad 1995) and build competitive advantagein the global market. When an MNC seeks a high degree of standardisa-tion of its advertising messages, copy/visualisations and media use, it couldenhance its chance of projecting a uniform positive image throughout theworld (Jain 1989). Due to economies of scale, the MNC could cut thecosts of developing different versions of advertising for different mar-kets. Instead, it could concentrate its resources to increase the exposureof worldwide consumers to its standardised advertising, leading to the

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brand's higher global awareness and uniform image. Similarly, when anMNG coordinates the planning and execution of its advertising campaignsacross the world, it could ensure that the brand is positioned uniformlyand positively in the ads, and that the advertising campaigns are executedin various countries in a way that ensures they lead to greater consumerawareness and positive brand image across the countries. It could alsomake sure that loyal consumers across countries are targeted properlyand well served in advertising campaigns, which leads to increased brandloyalty. Finally, when an MNG attempts to integrate the objectives andstrategies of its advertising campaigns across the countries, it could ensurethat advertising campaigns in different countries have clear objectives andstrategies that are strategically set to help the MNG's global campaignobjectives. For example, when a subsidiary of the MNG is attacked in acountry by a competitor, the MNG could direct other subsidiaries to stageaggressive advertising campaigns in their countries to counterattack thecompetitor in its key markets. In this way, the competitor would haveto divert its resourees to protect its key markets, lessening the force ofits attack on the MNG. Thus, the MNG could better fend off the com-petitor's attack and protect its positive global brand image. Therefore, weexpect that:

Proposition 10: An MNG's global advertising is positively related to itsglobal brand performance.

Conclusion and implications for future research

With globalisation in many industries, especially high-tech and fashion-driven industries, it is critical that MNGs develop and sustain a successfulglobal brand. Global advertising plays an indispensable role in developingand sustaining a global brand. In the current study, we build on Zou andCavusgil's (2()O2) GMS theory to propose a new broad conceptualisationof global advertising. This new construct goes beyond the traditionalview of global advertising as simply standardisation, to incorporate twonew dimensions: coordination and integration. In addition, we develop anintegrated theory of global advertising by delineating the antecedents andoutcomes of global advertising. The key theoretical logic of the proposedtheory of global advertising is that an MNG's global advertising must fit

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both its external industry characteristics and its internal organisationalattributes in order to enhance its global brand performance. It is a directapplication ofthe GMS theory to the field of global advertising.

We hope that the new conceptualisation of global advertising and theintegrated theory of global advertising can help open the global advertis-ing field to more exciting research. A study by Ko etal. (2007) has alreadyadopted the GMS theory in exploring cross-national market segmentation.We note that the current body of research in global advertising often lacksbroader theoretical foundations, which has led to a limited contributionto the key theoretical debates in other related fields such as internationalmarketing and organisational management. Our model is an attempt to linkglobal advertising with other literature, and integrate global advertisingwith industrial organisation economics (IO theory) and the resource-basedview (RBV). We also note that, despite the vast number of empirical stud-ies in global advertising, the findings regarding whether an MNC shouldstandardise or adapt its advertising strategies across national borders arefar from conclusive or consistent. Moreover, while the global advertis-ing literature has increasingly favoured adaptation over standardisation,many MNCs seem to continue to adopt the standardisation approach intheir advertising strategies in order to gain large economies of scale. Thediscrepancies between research and its managerial applications are partlydue to the current literature's narrow focus on the content of advertising,and having not closely examined the dimension of multinational valuechain configuration and coordination as a key component of global adver-tising strategy. An academic debate that is only limited to standardisationvs adaptation of advertising content wilt not lead to effective and crediblemanagerial prescriptions for MNCs' management practitioners.

Based on the new model we have proposed in this paper, the follow-ing are productive directions for future research for scholars to pursue.First, future researchers could enrich our proposed conceptualisation ofglobal advertising by investigating more and more specific aspects ofglobal advertising that could be standardised, coordinated and integrated.This could help build a stronger theoretical foundation for the globaladvertising field, and help MNCs to explore different aspects of globaladvertising and make appropriate marketing decisions. Second, futureresearch could identify, conceptualise and test additional external indus-try and consumer characteristics that are conducive to global advertising.

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For example, similarities of media-use patterns and perceived impor-tance of information sources among different consumer markets can beuseful predictors for global advertising strategies (Choi & Ferle 2004).Also, cultural similarity and socio-economic similarity can be identifiedas important external industry factors (Karande et al. 2006). Third, futureresearchers could investigate more internal organisational attributes thatfacilitate or hinder global advertising. An MNCs country of origin or thesize of an MNCs subsidiaries can be important factors influencing globaladvertising. We especially hope to see more studies on those MNCs thatoriginate from emerging economies; such studies will significantly enrichour understanding of the key issues of global advertising. Fourth, in addi-tion to global brand performance, future researchers should identify andconceptualise additional outcomes of global advertising and find boundaryconditions in which our proposed theory of global advertising applies.

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About the authors

Shaoming Zou (PhD, Michigan State University) is Robert J. Trulaske,Sr. Professor of Marketing and Associate Professor at University ofMissouri. His research focuses on international nf^arketing strategy andfirm's performance. He has published m Journal of Marketing, Journal ofInternational Business Studies, Journal of the Academy of Marketing Science,Journal of Advertising and Journal of Intemational Marketing among others.His work is among the most cited in international marketing and has wonseveral major research awards, including the AMA Global Marketing SIG'sinaugural ^Excellence in Global Marketing Research Award' for 10-yearresearch impact. Dr Zou is editor oï Advances in IntertiationalMarketing 2iX\áa consulting editor oï Joutytal of International Business Studies.

Yong Z. Volz (PhD, University of Minnesota) is Assistant Professor at theSchool of Journalism, University of Missouri. Her research interests lie intranscultural and comparative perspectives of mass communication. Shehas published in Media, Culture & Society, Jounialism Studies, IntertiatiotialCotntnunication Gazette, Journalism and other academic journals. Dr Volzhas earned several top paper awards from the Association for Educationin Journalism and Mass Communication (AEJMC) and the Chinese

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Communication Association (CCA), including the 2007 Asian Joumal ofCommunicatiott Award for Intemational Communication Research.

Address correspondence to: Shaoming Zou, Department of Marketing,Trulaske College of Business, University of Missouri, Columbia, MO 65211.

Email:zou(§'missouri.edu

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