Multinational companies in the Netherlands: relationship or transaction

The research among multinational companies in the Netherlands offers a systematic overview of the factors that underlie the pressure from non-market-oriented institutions and which strategy companies use to manage this pressure. The research shows that organisations invest either in a transactional or relational strategy to deal with this pressure. At non-market-oriented institutions in the field of regulations and standards, multinationals mainly use a transactional strategy. If there is pressure from politicians, interest groups or the media, companies often opt for a relational strategy.

Cosmina Lelia Voinea: 'Firms need to consider a relational strategy to the non-market institutions especially those concerned with safety, road transportation, traffic training requirements. Companies need to incorporate the advice, concerns and input from these non-market institutions. This is the only way to improve the product, to take all cautious measures against possible (internal and external) errors and to safe-guard the use of the product from external dangers: such as traffic, manoeuvring, crisis situations, to eliminate doubts about the controllability. Regrettably, many companies only have a transactional approach to non-market institutions, even though such institutions can offer valuable, vital input and advise.'

'In the business world there is too much focus on innovation, where many technological innovations penetrate the market due to political power games, compromising or ignoring precious advise and input from non-market institutions that are only thinking to the best interests of the people and their safety, well-being.'

'The consumer is unaware of possible risks surrounding a new product, a technological novelty. This lack of danger awareness comes from the fact that firms do not relieve to the consumer the assessment (critique, and possible hazard points) of public institutions regarding the specific product. The consumer and society blindly believe that the product is safe.'

Cosmina Lelia Voinea: 'Looking at the social debate surrounding whether or not to abolish dividend tax, a highly topical theme.'

Non-Market Strategic Management

Strategic management traditionally deals with mostly financial and commercial performance objectives, while non-market strategies contain social, political and legal agreements that go beyond pure market objectives. These non-commercial matters - although not directly related to the market – can strongly influence the performance of an organization and the competitive advantage (think for example of the demands of politics, which can conflict with the performance objectives of an organization). Non-market strategies affect performance and competitive advantage, especially where the interaction between national and supranational institutions reinforces these often conflicting requirements. The book Non-Market Strategic Management introduced a way to gain or maintain competitive advantage.

About the Authors

Cosmina Lelia Voinea works as assistant professor in Strategy and Sustainable Management at the Faculty of Management, Science and Technology of the Open University. Her research focuses non-market strategies, corporate social responsibility, institutional influences; strategies used by companies to respond to the influences of various actors in the business world, including stakeholders, institutions, non-governmental organisations (NGOs), interest groups and the media. She also focuses on strategy and corporate social responsibility (CSR) in emerging economies. Hans van Kranenburg is Professor of Business Strategy at the Nijmegen School of Management, Radboud University Nijmegen. He specialises in strategic behaviour, market development, internationalisation issues for companies and strategic media issues.

Read or download (in open access) the article Feeling the Squeeze: Nonmarket Institutional Pressures and Firm Nonmarket Strategies.