International Competitive Strategy Choices: Comparing Firms in China and India

Abstract

The international business literature has yet to adequately explore international competitive strategy choices made by firms in developing countries. This study aims to address this gap by investigating the types of international competitive strategies followed by Chinese and Indian firms. Using firm-level primary data, the study analyzes factors that affect strategy choices and whether these factors differ between the two countries. The empirical results indicate that besides cost leadership strategies, firms have already developed international differentiation strategies and strategies combining cost and differentiation advantages (hybrid strategies). This confirms that firms from China and India are moving to international markets not only because of their low cost advantage but also because they are upgrading their capabilities to compete in the global market. The study highlights the fact that firms’ resources and capabilities influence firms’ propensity to choose a specific international competitive strategy and that the strategies can also differ in relation to the destination market. In general, the pursuit of well-articulated international competitive strategies (in particular differentiation strategy) is more common among Indian firms than among Chinese firms.