The influence of institutional factors on the effectiveness of global product launch

Abstract: In today’s fast-changing markets, many international firms invest a significant amount of money in terms of marketing and technology to launch their products globally. To reduce such costs, a better understanding of the factors that affect the performance of global products launch is needed. However, little is known about how institutional factors of the type social, legal and political could influence the performance of global products launch. Accordingly, this thesis aims to investigate whether the simultaneous action of institutional factors of the type social, legal and political influence the performance of a new global product launch. Considering a single case study of Tesla’s products in 21 European countries between 2014 and 2019, a quantitative approach was followed using panel regression analysis. The sales of Tesla’s were used as dependent variable to represent the market performance of Tesla. For independent variables, data was collected for institutional factors including social indicators based on Hofstede framework (i.e., Uncertainty avoidance, Power distance, Individualism), political (i.e., Government Effectiveness, Voice and Accountability) and legal indicators (i.e., Rule of Law, Strength of legal rights) based on the World Bank indices. Seven hypotheses were formulated and tested. The results indicated that the market performance of Tesla’s products is positively associated with political factors in terms of voice and accountability. Moreover, the establishment of supercharger network from Tesla was found to have a significant positive impact on its products’ sales. Due to multicollinearity, some of the independent variables were removed and hence their respective hypotheses were not tested. For future research, it is recommended to use more data which incorporate a wide variety of countries including non-European countries as well as other companies offering electric cars.