Effect of Organizational Factors on Development of Export Market- Oriented in Food Industry Companies

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1 Effect of Organizational Factors on Development of Export Market- Oriented in Food Industry Companies 1.Mona Hasanzadeh, MA in Business management, Naragh Branch,Islamic Azad University, Arak, Iran. 2. Zahra Alipour Darvish, Department of Business management, North Tehran branch, Islamic Azad University, Tehran,Iran. 3. Mahnaz Azari Ghelichi, MA in Business management, North Tehran branch, Islamic Azad University, Tehran,Iran. Abstract: This study attempts to examine the effect of organizational factors on the development of export (organizational structure, export systems and top management factors) with the moderating factor of experiencing export. This study came into force using confirmatory factor analysis and structural equation modeling among the export companies in the food industry. Data were collected by questionnaire and it was analyzed using SPSS and LISREL. The results confirm the impact of the variable of export systems on the level of export marketoriented. Also, the mediating role of the export experience on the relationship between organizational structure and the level of export, the relationship between export systems and the export were confirmed. Keywords: export, export experience, export systems, top management factors 1. Introduction Today, identifying and predicting the customers' needs is essential for the firm to obtain competitive advantage and for market segmentation. Customer is the key factor in enhancing organization agility and orientation of all objectives, strategies and resources is around attracting and maintaining the customers. Market understanding leads to long-term advantages for firms by planning and adopting strategies proper for making customers loyal and increasing their loyalty rates. Currently, export is one of the most important steps for organizations and the most important indicator for the development and investment to enter the global markets and expanding their international activities. The main concern of international companies is to improve export performance. Review of the literature on the international market shows that one of the ways to achieve success in the export is market orientation (Rose and Shoham, 2002).Market-orientation allows organizations to respond the strategic changes for coordinating the organizations with general operational environment and affects their performance. export is a market orientation strategic application in exports. Companies with high levels of export achieve more information about customers and their demands. (Morgan et al., 2009) In this case, they will be able to better understand the strategies and competitors' recommendations and the company can achieve better place than their competitors in response to their customer and market.(moore and Sarin, 2009) 2. Research background Concepts and origins of market orientation is originated from the theoretical development of marketing concepts and it refers to corporate capacities to create awareness and market information on present and future customer needs, dissemination of information and knowledge in the related area and sectors and responding this information (Kohli and Jaworski, 1993). Over the years, marketing research has shown that market orientation can affect the efficiency and performance of company. Although a review of the documents shows that a small number of researches on practical experiences of market orientation to the international trade environments are expanded (Cadogan et al., 2006). The documents illustrate the role of various factors such as triggers and modulators of performance of orientation of corporate market in the development of international trade. These 142

2 factors affect the functioning of the market orientation in internal market, and it is directly shifted on the modeling of triggers and modulators of export market operation (EMO) (Cadogan et al., 2001). 2.1 Export concepts Cadogan and Diamantopoulos (1995) have imagined that EMO includes three special treatment components that include information and knowledge of export, production and dissemination of knowledge and information in the field of export and responsiveness to export data. Cadogan et al. (2006) claimed that EMO records and predictions may change due to geographical locations and with respect to the previous factors analysis that facilitate and enhance the development of performance. (Murray et al., 2007) The variables affecting the EMO include organizational structures, export systems (rewards, market orientation and training), factors relating to top management, dependencies, and environmental factors export experience. In this study, the variables affecting the EMO are organizational structures, export systems and factors relating to the top management that all will be explained. In this study, the concept of market oriented export is derived from Kohli and Jaworski(1993)which include three key elements as following: 1. Intelligence generation Intelligence to market, i.e. to identify the customer's needs and demands in comparison with competitors as soon as possible. Therefore, market intelligence includes a close survey of the actions of competitors, identifying competitors' acts in understanding customer needs and analyzing environmental forces such as government laws and regulations and technology (Dood, 2005) 2. Intelligence dissemination Intelligence dissemination means to respond to market needs effectively that requires the participation of all sections of the organization. In order to adapt to market needs, market intelligence must be transferred to all sections and people and be basis for actions of the employees. It is not just the responsibility of the marketing department and all units are involved in it. Although formal procedures of intelligence distribution is important, but informal methods also have vital role and intelligence dissemination such communications horizon in service organization is emphasized.(kohli and Jaworski, 1990) 3. Intelligence responsiveness Intelligence responsiveness means to respond the produced and disseminated market intelligence. Two previous elements have no credit solely. Especially when the organization fails to respond the customer and market needs. Responsiveness to market intelligence as the target market selection, design and presentation of products / services complying with current and future customer needs, production, distribution and promotion of products is so that are considered by the final consumers. All units are also playing a role in this area (Murray et al., 2011) Organizational structure Organizational structure refers to both levels of formalization and centralization related to the export activities. formalization is defined as a degree that defines the roles of rules, authority relations, communications, norms, sanctions and methods. (Kohli and Jaworski, 1993) centralization is defined as the absence of board decision making of export market and, in particular, the lack of participation by members of the export in that decisions making (Cadogan et al., 2001). Therefore, hypothesis 1 is formed as follows: Hypothesis 1. The effect of organizational structure on the level of export 143

3 2-1-2 Export Systems Applied mathematics in Engineering, Management and Technology 3(3) 2015: Export systems refer to systems of rewards and training of export. Rewards system is designed to encourage employees to focus on increasing customer satisfaction, while training system helps employees to make the customer-oriented exports better. The rewards and training system in export firms is higher, the greater the level of export will be (Cadogan et al., 2006). Therefore, hypothesis 2 is formed as following: Hypothesis 2. The effect of export systems on the level of export Top management factors: Top management factors include company management commitment to export and its emphasis on the importance of the export. One of the company management obligations is in relation to the degree to which a company's management expresses his positive attitude and expectations about the profitability and risks associated with the export. Emphasis of management on export refers to the extent that the management company shows the employees the clear signals about the importance of responding to customer needs in the export market. (Cadogan et al., 2001). Therefore, hypothesis 3 is formed in this way: Hypothesis 3. The effect of senior management factors on the export. 2-2 Moderator variables In addition to the factors mentioned, the variable of export experience is considered as the moderator of these relations established between these factors and the export that we introduce it Export experience Export experience consisted of the number of exporting countries (countries of destination) and the number of years of the export, which is used to reflect the level of export experience (Murray et al., 2011). Hypotheses 1-4 to 3-4examine the moderating role of export experience on the relationship between the factors mentioned in the export Examining the moderating role of export experience on the relationship between organizational structure and export Examining the moderating role of export experience on the relationship between export systems and the export Examining the moderating role of export experience on the relationship between senior management factors and the level of export. 3. Conceptual Model 144

4 Figure 1. Conceptual model 4. Research methodology The present study is applied in terms of objective and descriptive survey in terms of data collection. The statistical population is all exporting companies in the food industry in Tehran. Total population of the study is 140 and the number of sample for statistical population is 103. Sampling method was counting all the renowned companies in the food industry, and sampling was done at the level of experts and commercial managers. To collect the data, the questionnaires related to study by Chi et al. (2013) was used which consists of 62 closed questions. For determining the validity of the questionnaire, a pre-test consisted of 30 samples was used and to estimate the reliability, the Cronbach's' alpha was used. Total alpha coefficient for the questionnaire was estimated through SPSS equal to that is desirable. In this study, LISREL and structural equation modeling is used to confirm or reject hypotheses, and to assess the explain ability of each variable by the questions in the questionnaire, a confirmatory factor analysis has been used. To test the moderating hypotheses, SPSS and subgroup method were used. 5. Findings For modeling and determining the relationship between variables, structural equation method was used. Path analysis was used to evaluate hypotheses. Criteria for the approval or rejection of the hypothesis of this study are significance numbers. If the significant number of path is greater than1.96 or smaller than -1.96, the hypothesis is confirmed and if the significance number of the path is in the above interval, the hypothesis is rejected. Table 1 and 2 show the results of the research hypotheses. 145

5 Figure 2. The research model at significance state Table 1. Results of confirming or rejecting the mainresearch hypotheses Standard Explained Significance Research hypothesis Result rate variance coefficient 1 The organizational structure has a significant positive effect on the level of export marketoriented Rejected 2 3 Export system has significant positive effect on the level of export Top management factors have a significant positive impact on the level of export Confirmed Rejected 146

6 Table 2. Results of accepting or rejecting research moderating factors Regression Regression Moderating Moderating coefficients test coefficients Result hypotheses variable third statistic first quarter quarter The impact of organizational structure and the level of export The impact of export systems and export level The impact of top management factors and the export Export experience Export experience Export experience Rejecting null hypothesis Rejecting null hypothesis Confirming null hypothesis From Table 3, it can be concluded that the conceptual model has a good fit with the data collected. Table 3. Fitting indices of research model Index title Acceptable range Value Result X 2 / df X 2 /df Approved model RMSEA RMSEA < Approved model GFI GFI> Approved model AGFI AGFI> Approved model CFI CFI> Approved model IFI IFI> Approved model 6. Conclusions and recommendations The results indicate that the variable of export systems has a positive impact on the export marketoriented. Moderating role of export experience variable in relation to the organizational structure and level of export, moderating role of the variable of export experience on the relationship between export systems and export are approved. Given the positive impact of export system on the export, in the field, the export industry leaders are recommended to strengthen this factor to achieve an appropriate level of export. For example, constant training of customer-orientation to staff of export sector, creating an export marketing expertise, investment in the education of export, export sales performance evaluation through customer feedback, and rewards to staff of the export sector based on the customer satisfaction can be an example of measures to strengthen the export system and improving export. In the case of moderating role of export experience variable on the relationship between organizational structure and the level of export, export systems and the export, one of the factors that effects directly on the exporting performance of company is the export experience of 147

7 managers. When the company's experience in global markets increases, identifying sources of export information and knowledge of their productivity increases. Lack of sufficient knowledge of information sources is the reason for failure of smaller exporters, especially start-ups, and therefore with the increase of export experience, familiarity of company with the information resources in its knowledge of how to exploit them increases. In addition, companies with more experience can better identify the detailed and appropriate information. Regarding the effective role of experience in the relationship between organizational structure and level of export, export systems and the level of export, the export industry executives are recommended to create special database for identifying sales opportunities in export markets and creating a database about the laws and regulations related to the business in foreign markets and use experience to improve export and their company performance. References 1. Cadogan, J. W., Cui, C., Morgan, R. E., & Story, V. (2006). Factors facilitating and impeding the development of export behavior : A study of Hong Kong manufacturing exporters. Industrial Marketing Management, 35, Cadogan, J. W., Paul, N., Salminen, R. T., Puumalaien, K., & Sundqvist, S. (2001). Key antecedents to export behaviors: A cross national empirical examination. International Journal of Research in Marketing, 18(3), Dodd, C. (2005). Export Market Orientation and Performance: An Analysis of Australian Exporters, ANZMAX 2005 conference: Marketing in international and cross-cultural environments, Retrievedfrom Marketing-Int-C Cultural-Env/9-Dodd.pdf. 4. Kohli A.K., Jaworski, B.J. (1993), Market oriented: Antecedents and consequences. Journal of Marketing, 57. PP Kohli A.K., Jaworski, B.J. (1990). Marketing orientation: the construct, research propositions and managerial implication. journal of Marketing, No. 54.pp Morgan, N.A., Vorhies, D.W., Mason, C. (2009). Market orientation, marketing capabilities, and firm performance. Strategic Management Journal, 30(8): Mohr, J., Sarin, S. (2009). insights on market orientation and innovation: implications for emerging areas in high technology marketing. Journal of the Academy of Marketing Science, 37(1): Murray, J. Y., Gao, G. Y., Kotabe, M., & Zhou, N. (2007). Assessing measurement invariance of export market orientation: A study of Chinese and non-chinese firms in China. Journal of International Marketing, 15, Rose, G. M., & Shoham, A. (2002). Export performance and market orientation: Establishing an empirical link. Journal of Business Research, 55(3),