Purpose The purpose of this study is to examine the conundrum between engage or non-engage nonmarket strategy approaches and its impact on firm internationalization strategy process. Engage or not to engage: the host market’s political and institutional business environment has become a key question that managers must consider during the internationalization strategy process. Design/methodology/approach By leveraging a comprehensive search of international business, management and political journals, the authors synthesize empirical and conceptual articles through a systematic literature review to clarify when firms choose engagement versus non-engagement, the mechanisms through which each strategy creates value or imposes costs and the consequences for firm internationalization performance, legitimacy and public welfare. Findings In advancing international business and NMS literature, the authors aggregated previous research under the framework of engaged and non-engaged NMS approaches and provided an interactive NMS model that organizations can use to enhance their internationalization performance. The authors reveal the role of the Dynamic Capabilities (DC)-Nonmarket Strategy (NMS) relationship and propose how DCs can be used to strategically influence corporate political activity, corporate social responsibility and enhance firm legitimacy in a foreign country. They show the performance implications of integrating both market and nonmarket strategies as a means to achieve sustainable internationalization performance. Originality/value The authors’ contributions enable to provide future research directions on the relationship between NMS-DCs and offer justification for the engaged approach adopted by NMS scholars in the International Business literature.
Adejare et al. (Fri,) studied this question.