Internationalization and Export Promotion Programs: Perspectives and Challenges. Growth of Exporting

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1 Internationalization and Export Promotion Programs: Perspectives and Challenges Constantine S. Katsikeas Editor-in-Chief, Journal of International Marketing Editor Marketing, Journal of International Business Studies Area Editor, Journal of the Academy of Marketing Science Arnold Ziff Research Chair & Professor of Marketing and International Management Leeds University Business School University of Leeds Growth of Exporting Globalization and the resultant opportunities for firms in foreign markets has generated heightened interest in pursuing international business Particular attention has been devoted to the role that foreign markets play for SMEs the engine of economic activity in each and every economy worldwide! There has been a surge of SMEs engaging in exporting activities as a means of: firm growth and expansion capitalizing on unique products and other company strengths responding to downturn or intensifying competition in the domestic market, etc. As firms export involvement has important macroeconomic benefits, public policy makers have paid focal attention to the design and implementation of effective export promotion programs 1

2 Growth of Research in Exporting The exporting field has grown enormously since the early seventies Increasing number of authors undertaking research in international marketing Number of journals interested in exporting and IM research has increased over time Systematic reviews of the literature integrate prior research and serve as a platform for future inquiry Several streams of excellent research have been pursued and influential articles published that have contributed to the of the field An area of particular interest among business practitioners, policy makers, and researchers lies in export promotion programs and their role in influencing firm internationalization and success in export markets Sporadic de-globalization or lesser globalization tendencies Are they a threat to international business and, in turn, to conducting research in exporting and IM? Challenges in Conducting Research in Exporting The multiplicity of forces shaping the international environment requires consideration of many factors influencing firms export practices and performance The need to collect data in more than one country For instance, investigating the impact of export promotion programs on building enduring export business relationships collecting cross-border B S relationship dyadic data is challenging Establishing cross-cultural measure equivalence Cross-cultural measure equivalence assessment may not always be possible Theory-based conceptualizations and empirical tests in exporting need to incorporate constructs specific to the international business/market context Consideration of new forces or trends in the international environment (e.g., sporadic de-globalization trends) in modelling performance effects of organizational resources and strategies in international market operations 2

3 National Export Promotion Promoting national exports is top priority for many public policy makers, as national exports involve macroeconomic benefits in terms of: generating income from overseas, often in foreign currency increasing employment of local people generating additional tax revenues improving economic growth and standards of living Given the important benefits from exporting for national economies as well as for local firms, governments are obliged to establish, develop, and maintain effective national export promotion and assistance policies National Export Promotion Programs National export promotion programs are government measures that (should) aim at helping indigenous companies to: Initiate internationalization Maintain ongoing export involvement Develop on the internationalization path by exporting to new foreign markets Achieve enhanced performance in export market operations Help reduce negative perceptions about the risks, costs, and complexities in exporting Create positive attitudes among managers toward pursuing attractive profit and expansion opportunities in foreign markets 3

4 National Export Promotion Programs (Cont ) Serve as external resource that assist companies in overcoming barriers to export and/or dealing with and challenges in penetrating overseas markets Such export barriers include: Informational knowledge about foreign markets and operations Pragmatic readiness to engage in exporting Motivational intention to initiate internationalization and maintain export commitment Operational capabilities to engage in ongoing exporting activities and serve foreign customers Broadly, effective export promotion programs can help firms cope with or overcome these problems and establish and develop successful exporting activities Evaluation of export promotion programs is important identifying modifications needed and guiding effective formulation and implementation Firm Assistance and Promotion Programs in the U.K. Goldman Sacks 10,000 Small Business Program UK Trade & Investment International Business Development Program Initiatives from Chambers of Commerce Programs and assistance from exporter associations Programs and assistance from local councils 4

5 National Export Promotion Programs Perspectives Two major perspectives Focus on the provider of the program consideration of the: content of specific programs mechanism for formulating individual programs structure of government export assistance agencies procedures that government agencies employ to target firms communication of export promotion programs to the business community methods of assessing the effectiveness of export promotion programs National Export Promotion Programs Perspectives (Cont ) Focus on the receiver (the firm) of the program Issues examined: Awareness, utilization, and usefulness of programs by exporters and non-exporters - Use and effectiveness of specific programs (e.g., participation in trade fairs, trade missions etc.) - Areas of government export assistance (e.g., marketing, finance, distribution, information) - Design of export promotion programs tailored to particular requirements of firms (e.g., firm size, managerial export knowledge and experience) Design of export promotion programs according to stage of export - In early stages: firms have greater need for help with obtaining foreign sales leads, export training services, and handling documentation - In advanced stages: attention is given to services concerning sales support, promotional activities, and logistics 5

6 National Export Promotion Programs Perspectives (Cont ) Focus on the receiver (the firm) of the program Issues examined: Association of export promotion programs with factors that: - stimulate firms efforts to initiate and develop export activities (e.g., possession of unique products, enhancement of export market knowledge) - inhibit company efforts to engage in and establish export operations (e.g., inadequate representation overseas, limited financial resources) Importance of export promotion programs in enhancing: - organizational competence (e.g., technical skills, foreign market knowledge, overseas contacts) - managerial competence (e.g., export commitment, international orientation, expertise in exporting) National Export Promotion Programs Perspectives (Cont ) Focus on the receiver (the firm) of the program Issues examined: Effect of export promotion programs on export performance (directly or indirectly) - Organizational (e.g., firm size) and managerial (e.g., international outlook) factors that are important to the awareness and use of export promotion programs - Export promotion programs enhance managerial perceptions, knowledge, and commitment to exporting - Export promotion programs thus are likely to facilitate deployment of effective export marketing and competitive strategies and, in turn, achievement of competitive advantage and enhanced performance in export venture operations 6

7 Export Promotion Programs Classification Information-related assistance Foreign country profiles Foreign business practices Foreign market customer leads, etc. Education, training, and programs Workshops on export marketing, logistics, finance, management, etc. Seminars on exporting procedures Export counselling, etc. Trade mobility programs Organization of and help to participate in international trade shows and exhibitions Foreign trade missions Help offered by trade offices overseas, etc. Financial aid/support programs Export credit guarantees Low interest rate loans Export subsidies, etc. Fundamental Question How are export promotion programs linked to the internationalization and export performance of the firm? Export Promotion Programs, Internationalization, and Performance Outcomes Export Promotion Programs Information assistance Conditions -Awareness/communication -Utilization effectiveness -Capabilities Conditions -Competitive Intensity -Dynamism -Complexity Education, training & Trade mobility Degree of Internationalization Level of Export Development - Export/total sales ratio - Number of export markets - Number of regions the firm exports to Export Performance -Sales/growth -Market share/growth - Profitability/growth Financial aid/support 7

8 Connecting Export Promotion Programs to Export Advantage and Performance Export Promotion Programs Information assistance Education, training & Trade mobility Financial aid/support Capabilities Informational Relationship building Product Resources Experiential Scale of operation Financial Physical Export Strategy - Competitive - Marketing Strategy Implementation Effectiveness Competitive Advantage Cost-based Differentiation -Product/brand -Service Investment & Learning Export Performance Outcomes - Market - Financial Connecting Export Promotion Programs to Export Competitive Advantage and Performance Information assistance Education, training & Trade mobility Financial aid/support Export Promotion Program Implementation Conditions Company size Internationalization Export experience Capabilities Informational Relationship building Product Resources Experiential Scale of operation Financial Physical Export Strategy - Competitive - Marketing Strategy Implementation Effectiveness Competitive Advantage Cost-based Differentiation -Product/brand -Service Investment & Learning Export Performance Outcomes - Market - Financial 8

9 Guidelines for Managers and Public Policy Makers Assessment of export promotion programs based on cost benefit analysis Consideration of fixed and variable costs Consideration of direct benefits (e.g., sales revenue, sales growth) and indirect benefits (e.g., employment, taxes) from increased exports Establishing extent to which firms benefit from export promotion programs Short-term: export sales revenue, sales growth, profitability, profitability growth, etc. Long-term: foreign market growth and expansion, balancing export product-market venture portfolio, improved competitiveness, etc. Segmenting firms according to degree of internationalization/export To more effectively target companies To more productively utilize resources and spend export promotion money Guidelines for Managers and Public Policy Makers (Cont ) Can export promotion programs help companies and nations deal with domestic market downturns (e.g., recession) and trade problems (e.g., Brexit)? Particular attention should be given to characteristics and differences between distinct groups of firms Nonexporters Different exporter groups (e.g., occasional exporters, regular exporters) Focus on those nonexporters that have the capabilities and intention to initiate internationalization and maintain export commitment is vitally important to export promotion policy effectiveness based on data concerning: Key managers characteristics, skills, and experience Firm s domestic market coverage Firm size Number of new products developed Recent domestic market expansion 9

10 Guidelines for Researchers Undertaking Relevant Research and Publishing in Scholarly Journals Fundamental elements: Specify gaps and contribution to export promotion literature Timeliness and relevance of specific research issue on export promotion Link export promotion programs to internationalization and performance Replications and contribution to literature on export promotion programs Rigorous research standards (e.g., conceptual & methodological rigor) Theoretical, managerial, and public policy implications of study findings Highly appealing elements: Guidelines for Researchers Elevating Research on Export Promotion Use of objective performance outcomes (if possible) Use of longitudinal research design Conditioning effects on relationships of export promotion programs with outcomes If relevant, common methods bias tests Attention to omitted variables and endogeneity issues in models of export promotion programs and their consequences Interesting and/or surprising results Readability, flow, and strong writing style is always helpful! 10

11 Thank you for your attention 11