Strategic marketing researchers say experiences with international partnerships help firms survive economic shocks

When environmental jolts happen, why do some companies survive while others struggle? A new study from Clemson University’s Wilbur O. and Ann Powers College of Business suggests that experiences with international partnerships may play an important role in helping firms succeed in turbulent times.

Environmental jolts are defined as sudden, unpredictable events that can disrupt industries. One well-known example is the dot-com bubble of the late 1990s and early 2000s. During this period, online startups began to surge with the introduction of the World Wide Web and the Internet. Many of these companies were successful until the early 2000s, when the market suddenly crashed. Firms lost market value, some shut down entirely and others scrambled to adapt.

Another more recent example of an environmental jolt includes the 2020 pandemic, which created a similar shock and forced businesses around the world to adjust rapidly.

It was during the pandemic that Annette Popp Tower, assistant professor of marketing, and Pravin Nath, assistant professor of marketing, decided to investigate the impact of these disruptions and explore what makes some firms more resilient than others. In their recent study, published in the Journal of International Marketing, they looked specifically at the effects of international partnerships on firm success during environmental jolts.

The power of global partnerships

To explore this, Tower and Nath analyzed data from domestic firms affected by the dot-com bubble. They looked at firms’ performance 10 years before and 10 years after the crisis and found that “experience with certain characteristics of international partnerships help firms fare better, which the researchers attribute to the ability to adapt to changes often referred to as dynamic capabilities.”

“Dynamic capability is a firm’s ability to adapt to disruptions by gaining new resources, information and market access through partnerships,” Nath explains. “Businesses that can quickly adjust and rely on strong external relationships are better prepared to handle disruptions.”

“Our findings show that firms with a history of international collaboration, especially with a diverse range of partners, are better at overcoming the effects of an environmental jolt,” Tower explains. “Furthermore, firms that focus on value creation relative to appropriation are in a stronger position to adapt and grow, especially during environmental jolts.”

The results from their study extend beyond domestic firms, having implications for businesses around the world.

“Strong global networks give firms the flexibility and resources they need to turn challenges into opportunities,” says Tower. “Even though environmental jolts are rare, their past occurrences have had major impacts on firms everywhere. Companies that build strong international networks may have a better chance at long-term success if one happens again.”

Visit our research website to learn more about research at the Powers College of Business.