6. Discussion and conclusions
The aim of this study was to explore the preference of firms to use a particular type of proactive nonmarket strategy in a host environment and to identify which firm’s resources and role are underlying the preference. In this study, we used Hillman and Hitt (1999) categories of proactive nonmarket strategies: transactional and relational strategies. Based on international business, resource based view, and corporate political strategy literature, we identified the firm’s resources and role which could influence the predilection for implementing a relational or transactional nonmarket strategy. As control factors we considered the number of other firms from the same parent in the host country and the industry in which the firm operates. The setting of this study is a corporatist host country, the Netherlands. Based on the intensity of use of particular tactics related to information, financial incentive, and constituency strategies, our evidence showed that foreign firms generally preferred either a relational strategy or a transactional strategy. They did not prefer to use both strategies simultaneously. This is an interesting finding because the literature emphasized that firms can use both types of nonmarket strategies simultaneously (Hillman et al., 2004; Mellahi et al., 2016). This study also shows that the preference for a relational or transactional nonmarket strategy depends on different available resources and role of firms. Our evidence confirms that large foreign firms prefer to use relational strategies while small and medium sized ones prefer transactional strategies. This result is consistent with Bhuyan’s ideas (2000), and partially consistent with Wan and Hillman (2005) who also found a positive relationship between firm size and firm’s preference for a particular type of strategy. Our nonmarket approach is overarching political aspects of the business environment, reason for which we affirm the partiality in results with the above mentioned scholars. Large firms with substantial employment base in the host country need to consider certain nonmarket issues regarding the provisions for their employees. Due to their significance in the host economy, large foreign firms have the resources and capacity to develop and maintain long term co-operations with diverse nonmarket related actors. They have more assets at risk; this increases their incentives to foresee and engage within nonmarket context (Masters & Keim, 1985).
