International Marketing: The Case of Management Contracts

Abstract

The past decade has witnessed a growing preference, particularly by the developing countries (IDC), for non-traditional mechanisms in the international business arena. One such non-traditional mechanism is management contracts. The preference for management contracts is based on the notion that this allows the local managers in the local firm a full control over its own decision making, including marketing decisions. This paper presents a case study of a management contract in a IDC whereby the Swedish firm successfully integrated the local firm in its own international marketing strategy in spite of the fact that the Swedish firm owned almost no equity shares in the local firm.