Can Marketing Enable Firms to Counter Import Competition? Evidence from the China Shock

Increasingly, U.S. firms have been threatened by import competition. For example, Chinese imports to the United States increased from USD 18.97 billion in 1991 to USD 536.26 billion in 2022. Yet little research has examined the role of marketing in combating import competition. Addressing this gap, the author combines developments in the upper echelons, dynamic capabilities, and resource-based view perspectives to develop hypotheses of how marketing can help incumbent firms overcome import competition. To achieve identification, the author exploits the exogenous shock that occurred when the United States conferred permanent normal trade relations status on China, which differentially exposed U.S. industries to import competition. The hypotheses are tested using a differences-in-differences estimation on 7,197 firm-year observations. The findings indicate that import competition hurts incumbent firms’ revenue growth. However, incumbent firms’ marketing department power and market-based assets (strategic differentiation and customer relationship capital) mitigate the adverse effects of import competition on revenue growth. The findings, which highlight the hitherto overlooked role of marketing in countering import competition, extend theory and generate practical implications.