Export Concerns of Small and Medium-Sized Enterprises in Poland

This is an empirical investigation of export concerns of managers in small and medium-sized enterprises in Poland. Chisquare analysis is used to identify the major determinants of export orientation. The data refer to a random sample of 90 enterprises which engaged in exports in 1991 and 1992. It is shown that major determinants of export orientation among the Polish firms are foreign ownership, eiport arrangements based on joint-ventures with foreign partners and aualitv of exported products. Although there is no clear& formula fbr deGelopiig a su&essful export program, the study suggests a number of specific improvements in marketing strategy, government support and environmental characteristics which should help to increase exports by small and medium-sized firms in Poland. Findings of this study are systematically compared with the results of previous explorations into the determinants of export performance.     

Who Uses Intermediaries in International Trade? Evidence from Firm‐level Survey Data

The present paper uses data from the World Bank Enterprise Survey conducted in Turkey in 2005 to shed light on the firms that use intermediaries in international trade. It lends robust empirical support to recent theories which suggest that indirect exporters are mostly small firms that are not profitable enough to cover the high fixed costs of building an own distribution network abroad. Manufacturers who develop new products are more likely to use trade intermediaries, as are firms that produce low‐quality goods. In contrast, neither foreign ownership nor credit constraints are correlated with the choice of export mode. Moreover, firms that rely on trade intermediaries to sell their goods abroad also do so to source their foreign inputs, implying that the role of intermediaries in facilitating trade may be larger than previous studies suggest.     

Geography,knowledge spillovers and small firms’ exports: an empirical examination for The Netherlands

This study examines the impact of external and internal scale economies on the decision to start exporting and the level of exports of innovating firms. Based on new trade theory, increasing returns to scale—both internal and external scale economies—are considered an important source of comparative and competitive advantage. The empirical analysis of (small) innovating firms in The Netherlands leads to two main findings. First, firms that are located in technical Marshallian clusters seem less inclined to become exporters. Availability of technical knowledge alone does not help to reduce entry costs that come with the decision to export and/or marketing and sales costs in order to achieve a higher export performance. Second, firms that experience difficulties in appropriating innovation rents due to labour poaching also seem to be less inclined to become exporters. The explanation for this second finding is the importance of outgoing knowledge spillovers, which is particularly relevant for small, product innovating firms. This reduces their probability to export. However, if firms export, the knowledge leaking argument is not valid for the export performance of the firm.     

The Role of Systematic International Market Selection on Small Firms' Export Performance

This article hypothesizes that, on average, small and medium-sized enterprises (SMEs) that use a systematic methodology in selecting foreign target markets (what we call systematic market selection) perform better than SMEs using an ad hoc international market selection methodology. Using a sample of Greek exporting firms, we found that systematic international market selection is a significant determinant of export performance, even when controlling for decision-maker and firm-specific characteristics previous studies found to be related to export success. Implications for managers, trade promotion agencies, and future research are discussed.     

Indirect Exporters

Indirect exporters are defined as firms exporting through a trade intermediary. These firms have received rapidly expanding empirical and theoretical attention recently. I show that in Eastern Europe and Central Asia these firms do, as predicted by the theoretical literature, lie between domestic firms and direct exporters for a range of performance measures. Multi-product firms, despite their generally higher productivity, are shown to be more likely to use intermediaries than single-product firms, suggesting that “mixed exporting strategies” that use intermediaries are important for these firms. Analysis using a small panel subsample of the data suggests the sunk costs of indirect exporting are significantly lower than those for direct exporting, pointing to a role for intermediaries in “greasing the wheel” of entry to export markets.     

The Critical Role of Relationship Quality in Small- and Medium-Sized Enterprise Internationalization

ABSTRACT

Due to limited resources, small- and medium-sized enterprises (SMEs) carefully develop and leverage relationships with foreign, independent intermediaries. This article investigates “relationship quality,” a collection of intangible organizational resources in the exporter–intermediary relationship that support the internationalization and foreign performance of SMEs. Four dimensions of relationship quality—communication, cooperation, trust, and commitment—are modeled and linked to intermediary performance. Findings highlight the significance of relationship quality, its dimensions, and how they support intermediary performance. Cooperation and commitment are significant performance antecedents. Trust is a significant antecedent of commitment, and communication drives cooperation, trust, and commitment. The study provides SMEs a way to enhance the quality of relationships with, and to help improve the performance of, their intermediaries in export markets.     

The decision to export: Firm heterogeneity,sunk costs,and spatial concentration

Integrating perspectives of the Uppsala model of internationalization process, international new ventures and trade theories of heterogeneous firms, this paper develops a dynamic discrete-choice model of export decisions by a profit-maximizing firm. Empirical analyses based on a panel data set of Chinese firms show that sunk costs, productivity, firm size, foreign ownership, industry competition and spatial concentration are positively associated with the decision to export, while state ownership has a negative association with the probability of exporting. However, we find that the relationships are not always uniform and depend on firm-specific idiosyncrasies. The results show that foreign-invested firms and large firms (regardless of ownership) rely on productivity performance related advantages for expanding overseas, while domestic firms, especially small- and medium-sized enterprises, build competitive advantage by leveraging agglomeration economies and the associated spillovers. Our results highlight the role of firm heterogeneity, sunk costs and spatial concentration in shaping the export behavior of firms.     

An empirical investigation of the antecedents and performance outcomes of export innovativeness

The present study develops and empirically tests a conceptual model of the organizational, strategic, and environmental drivers of export innovativeness. The relationship between export innovativeness and export performance is also examined. Using data collected from 168 small- and medium-sized direct exporters, we find that decentralization in decision making, export market orientation, information exchange and export market dynamism have a significant influence on exporting firms’ degree of innovativeness. Furthermore, export innovativeness has a significant positive effect on export performance. Several theoretical and managerial implications are derived from these findings. Directions for future research are also provided.     

The role of intermediaries in facilitating trade

This paper documents that intermediaries play an important role in facilitating international trade. We modify a heterogeneous firm model to allow for an intermediary sector. The model predicts that firms will endogenously select their mode of export - either directly or indirectly through an intermediary - based on productivity. The model also predicts that intermediaries will be relatively more important in markets that are more difficult to penetrate. We provide empirical confirmation for these predictions using the firm-level census of China's trade, and generate new facts regarding the activity of intermediaries. We also provide evidence that firms begin to export directly after exporting through intermediaries.     

Why Small Firms Export: Another Look

This article examines what factors motivate small firms to export. Specifically, this study looks at firms with 200 or fewer employees, dividing the sample into two groups: firms with 25 or fewer employees and firms with more than 25 employees. The results suggest that firms with 25 or fewer employees export for two main reasons: the firm has a unique product, and it has a technological advantage over competitors. Firms with more than 25 employees export for the above two reasons, plus two additional reasons: to achieve economies of scale and to avoid losing out on foreign opportunities. Due to the limitations of the size and scope of this research, future research should include additional SIC categories as well as firms outside California.     

Quantitative Evaluation of the Determinants of Export and FDI: Firm‐level Evidence from Japan

Using firm‐level data for Japan, this paper examines the determinants of the export and foreign direct investment (FDI) decision. We contribute to the literature by employing a mixed logit model, i.e. a multinomial logit model with random intercepts and random coefficients, to incorporate any unobserved firm heterogeneity and by paying special attention to the quantitative significance of the determinants. We find that while the impact of productivity on the export and FDI decision is positive and statistically significant, it is economically negligible. The effect of firm size, credit constraints and information spillovers from experienced firms is also small in magnitude. A quantitatively dominant determinant of the export and FDI decision is instead the prior status of firms in terms of internationalisation. In addition, the use of the mixed logit model enables us to find a substantial role of unobserved firm characteristics in internationalisation of the firm. These findings suggest that entry costs to foreign markets, which substantially vary in size across firms, play an important role in the export and FDI decision. In addition, given that the negligible effect of productivity and the dominant effect of prior status appear to be more prominent in Japan than in some other countries, this study helps highlight the uniqueness of Japanese firms.     

Effectiveness of Export Support Programs: Impact on the Relational Capital and International Performance of Early Internationalizing Small Businesses

This article evaluates the impact of public export support programs on the internationalization of early internationalizing small businesses. We build and test a conceptual model of the link between export support services and early internationalizing firms’ relational capital and international performance in terms of both economic international performance and the number of foreign markets in which they are present. The results show that financial support is effective in enhancing firm performance only in terms of the number of foreign markets but not in terms of economic performance, that informational support is effective through its influence on relational capital, and that operational support is not. Our findings contrast with those of previous studies on firms that internationalize through stages and suggest that new export support services adapted to early internationalizing firms are needed.     

Does external technology acquisition determine export performance? Evidence from Chinese manufacturing firms

Although technology profile has been one of the key determinants of firms’ export performance in the international business literature, most research has focused on only the role of internal technology efforts rather than the role of external technology. This study thus aims to extend our understanding of the determinants of export performance by examining the impact of the inter-organizational dimension of innovation strategy to export performance, which has been ignored in the prevailing “strategy tripod” perspective of exporting research. This study is based on a sample of 141 Chinese indigenous manufacturing firms that engaged in inward technology licensing between 2000 and 2003. The empirical results indicate that external technology acquisitions positively influence Chinese firms’ export performance. Moreover the exporting performance of using external technology varies depending on the their sources (domestic and foreign). The exporting firms that acquired technology from foreign countries outperformed those relied on domestically developed technology.     

Does foreign investment benefit the exporting activities of Vietnamese firms?

Using firm-level data, this paper examines the effects of foreign investment on the exporting behaviour of domestic firms in the Vietnamese manufacturing and service sectors. Applying the Heckman selection model on panel data and following the Wooldridge approach, we find that investment by foreign firms has a significant positive effect on the decision of domestic firms in the same and upstream sectors to export. The proportion of exports of domestic firms declines through horizontal and forward linkages, but increases through backward linkages in the manufacturing sector. However, there is only weak evidence in support of export spillovers on domestic firms in the service sector. We also find that the presence of foreign firms has differing effects on the exporting activities of low- versus high-tech firms in the manufacturing sector.     

The internationalization of new and small firms: A resource-based view

This paper seeks to enhance understanding of the internationalization of small- and medium-sized enterprises (SMEs). The study focuses upon the following issues: Can the characteristics of principal founders, businesses, and the external environment at one point in time be used to `explain' at a later date whether a firm is still an exporter or a nonexporter, whether exporting firms are larger in size than nonexporting firms, whether exporting firms report superior performance than nonexporting firms, and whether exporting firms are more likely to survive than nonexporting firms? To address these questions, this study draws upon a sample of 621 manufacturing, construction, and services businesses located in twelve contrasting environments in Great Britain surveyed first in 1990/91 and then re-interviewed in 1997.A resource-based view is reviewed to identify the range of factors encouraging some owner-managed SMEs to enter export markets. Four categories of human and financial capital are examined: general human capital resources, the principal founder's management know-how, the principal founder's specific industry know-how, and a principal founder's ability to obtain financial resources that can act as a buffer against random shocks. Variables relating to resource availability in the external environment were also collected and considered control variables. Previous studies have highlighted substantial industry differences in the propensity for businesses to enter export markets as well as to survive. The principal industrial activity of each business in 1990/91 was, therefore, considered a control variable.Variables collected during the 1990/91 survey were selected to explain variations in the propensity to export reported by surviving independent firms in 1997. After elimination of missing values, the working sample was reduced to 116 independent firms for this study (86 nonexporters and 30 exporters in 1997). In addition, the 21 variables were selected to explain variations in business size in 1997, profit performance relative to competitors reported in 1997, changes in employment over the 1990/91 to 1997 period, and business survival over the 1990/91 to 1997 period (213 survivors and 395 nonsurvivors).Multivariate statistical analysis confirmed that previous experience of selling goods or services abroad is a key influence encouraging firms to export. Businesses with older principal founders, with more resources, denser information and contact networks, and considerable management know-how are significantly more likely to be exporters. Further, businesses with principal founders that had considerable industry-specific knowledge are markedly more likely to be exporters. Businesses principally engaged in the service sectors and those located in urban areas are significantly less likely to be exporters.A key finding of this study is that the explanatory variables significantly associated with the propensity to export sales abroad are not the same as those significantly associated with selected size and performance measures. The resource-based explanatory variables selected fail to significantly detect employment-growing firms over the 1990/91 to 1997 period. They also fail to significantly distinguish surviving independent firms from nonsurviving firms.Results from this study will provide policy-makers and practitioners with additional insights into the key resource-based factors associated with the decision by new and small independent firms to export sales abroad. Practitioners and policy-makers can focus upon the characteristics of principal founders, businesses, and the external environment to predict the subsequent propensity of an independent firm to be an exporter. Policy-makers and practitioners who want more new and small firms to export outside their local areas may prefer to target their resources and assistance to the relatively smaller proportion of firms that have the business and principal founder profiles that are significantly associated with a firm being an exporter.     

The Characteristics and Performance of Affiliates of Small and Medium-Size Multinational Enterprises in an Emerging Market

Little has been reported on the characteristics and performance of affiliates of small and medium-sized multinational enterprises (MNEs) operating in emerging markets. The paper has two research objectives: to assess characteristics of Korean affiliates of small and medium-sized MNEs, and identify the determinants of performance. Seven hypotheses were formulated and tested on a sample of Korean subsidiaries of small and medium-sized MNEs by using a bootstrap method of regression analysis. We found that: affiliates of small and medium-sized MNEs in Korea favored joint ventures with local firms rather than wholly-owned subsidiaries; ownership rate was directly related to the degree of control from the parent firm; and performance was determined significantly by the degree of control exercised by parent firms and their exporting levels. Age, size, and R&D expenditures had no relationship with the performance of affiliates of small and medium-size MNEs in Korea.     

R&D and Firm Size in the Information and Telecommunicatons Industry of Korea

This study examines, through empirical analysis, whether the Schumpeter hypothesis that the amount of R&D activities by firms increases more than proportionately with firm size can be directly applied to the information and telecommunications industry of South Korea. The results of this study indicate that small and medium-sized firms are more active than large-sized firms in R&D activities in the information and telecommunications industry. This revised version was published online in August 2006 with corrections to the Cover Date.     

ICT as facilitator of internationalisation in small- and medium-sized firms

Based on harmonised and uniquely linked firm-level datasets for a large group of European countries, this study investigates the role of different information and communication technology (ICT) capacities in the internationalisation of small- and medium-sized firms (defined as having 10–249 employees). Both the decision to export and the export intensity are explored in this respect. The different ICT capacities are captured by online presence (having a website), online transactions (e-sales activities) and proportion of employees with broadband internet access or post-upper secondary ICT education. The results show a significant and positive relationship between the ICT capacities and the engagement in exporting activities of small- and medium-sized firms, although the kind of ICT capacity of importance seems to vary across countries. In countries where the ICT usage in firms is less developed, mainly basic capacities such as online presence are related to the decision to export. There are also indications that the export intensity is more strongly related to advanced ICT capacities than the pure decision to export.     

Information acquisition and export entry decisions in small firms

Consistently low usage of export promotion programs and incentives has been observed among small firms. This has led researchers to argue that these firms operate on a limited information basis and deprive themselves of cheap export market knowledge. This study disputes these conclusions and finds that small firms discriminately use alternative sources to acquire foreign market information and assistance. Furthermore, such information acquisition, irrespective of source, is found to have a substantive and significant association with new export market entry. The implications of these findings for government export policy, small firm decision makers, and export literature are explored.     

Ready to export? The role of export readiness for superior export performance of small and medium-sized enterprises

Drawing on the entrepreneurship perspective and the network-based view on internationalisation, this exploratory study contributes to our understanding of why some exporters succeed while others do not, through an empirical examination of export readiness factors. The paper provides an operationalisation of export readiness for small and medium-sized enterprises (SMEs). Based on a sample of 96 New Zealand SMEs, we find that export readiness is a complex construct involving finance, trade and exchange, and marketing. The study provides evidence that internal export stimuli are important antecedents of export readiness, while factors traditionally assumed to be critical to export success, such as importing and pre-export domestic expansion, may not be prerequisites to being export-ready. Finally, the study examines the link between export readiness and subsequent, initial export performance and finds a strong, positive relationship. Our study contributes to the export literature by providing a deeper and more integrated understanding of the antecedents of export readiness in a small, open economy, and its implications for subsequent export performance.