Stanford Business School Magazine

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Comparative strategies in marketing

Research by David Montgomery


THE common wisdom shared by many business journalists is that American business leaders look at corporate performance with a 10minute time horizon, while Japanese businesses look forward 10 years. "To read what most journalists write, you'd think this difference exists and that it causes everything including cancer," says David Montgomery, Sebastian S. Kresge Professor of Marketing Strategy.

A difference does exist, Montgomery acknowledges. American business leaders tend to see a 7.2year horizon, he has found, while for the Japanese, the horizon is 8.6 years. It is a difference Montgomery finds big enough to be important but not overwhelming. He is now gathering data on European attitudes, and says it appears that the horizon for most Europeans is about 10 years. "My European students are surprised at that. They thought they were somewhere between the American and Japanese figures. "

Time perspective is just one of the differences Montgomery has identified in his research into what business leaders look for in building strategic alliances with other firms. While his research shows that American firms prefer alliances with other American companies, their second choice, Japanese firms, ranks far ahead of firms from Great Britain, France, Germany, and Italy combined.

Montgomery also has attempted to learn what potential partners in strategic alliances want to get out of these relationships: learning, percent of market share, or profits. Using the technique of conjoint analysis, Montgomery has analyzed what American and Japanese business leaders want to get from their alliance partners and what they are willing to give up.

"The Japanese are more concerned with learning--with what they were going to get from an alliance. Americans are more interested in equity, " he said. Both Americans and Japanese rank capital as the least important element, although the Japanese consider it far less important than do U.S. companies.

Japanese and American firms take completely different approaches to creating alliances, says Montgomery. "It's really not that Japanese want this and Americans want the opposite. These two sets of values are unrelated--they're not opposites. What I'm interested in doing now is sorting out other differences by industry and culture."

His research interests have had a spillover effect on classes he teaches at the Business School. All of his sessions in the 1994 Stanford Executive Program and many of the discussions in the summer executive program "Marketing Management: A Strategic Perspective," which Montgomery directs, are set outside of the United States. In his spring elective MBA course, Global and International Marketing , 13 of the 17 cases used are international cases written within the past four years. Guest speakers in his courses have included Michael McNabb, with Coopers and Lybrand in Taiwan, who consults to food companies in China and Sachio Semmoto, the entrepreneurial executive vice president for DDI, Japan's second largest telephone company. DDI held the world's largest initial public offering in September 1993.

"I want to create a research infrastructure that goes well beyond a U.S. context, that is truly globalized," Montgomery said. To create the network of academics and business leaders necessary to generate his research data, Montgomery visited seven Asian and European countries as part of the GSB's program to support international research by faculty. "The essence of marketing strategy is understanding your customers, your competitors, and your company. I'm interested in the thought processes behind people's competitive reactions. I'm looking for cultural differences and similarities."

Cathy Castillo

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