Examination of cognitive and relational factors in the benchmark selection of MNCs Online publication date: Mon, 05-Feb-2018
by Kwang-Ho Kim
International Journal of Multinational Corporation Strategy (IJMCS), Vol. 2, No. 2, 2018
Abstract: MNCs acquire information and knowledge through benchmarking; thus, determining whom to benchmark is a critical concern. Although members in the same strategic group commonly serve as benchmarks, MNCs occasionally select their benchmark outside of their strategic group. Since benchmark selection is a cognitive and relational phenomenon, we explored when MNCs select their benchmark outside of their strategic group by focusing on cognitive and relational factors. Results confirm that a focal firm identifies a firm outside of its strategic group as its benchmark when the performance of the focal firm is better than that of the strategic group members and when the partnership density of the strategic group is high. The results further verify that structural equivalence between a focal firm and a target firm also influences benchmark selection. This study contributes to the literature on benchmarking and strategic groups by showing situations where strategic group members cannot serve as benchmarks.
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