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Applied mathematics in Engineering, Management and Technology 3(3) 2015:390-400
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Identifying the Factors Affecting on SMEs’ Export Performance
(Case Study: Sports Equipment’s Exporter)
Elahe Kinai Harchegani
Master of Entrepreneurship, Faculty of Entrepreneurship, University of tehran
[email protected]
Abolfazl Solati
Master of Entrepreneurship, Faculty of Entrepreneurship, University of tehran
[email protected]
Parisa Fataie
Faculty of Entrepreneurship, University of tehran Master of Entrepreneurship,
[email protected]
ABSTRACT
Marketing experts believe that “identification of determining factors of export
performance” is important for the firms in the competitive markets in order to
improve export performance. This research is conducted with the goal of identifying
and prioritizing the effect of Moore’s factors on export performance in sports
equipment’s exporter. The research reviews previous studies on export performance
and export performance models and identifies effective factors on export. Since the
number of the exporting firms in the sport equipment were limited to 32s firm, and
identifies effective factors on export performance through interview with 7 expert
that are in production sector. Findings show that all above factors are determining
the performance of export performance in sports clothing and equipment industry
and the priotrization of effective factors in the sports clothing and equipment
industry is as follows: 1. Environmental factors, 2. Managers’ commitment to
export, 3. Managers’ marketing strategy, 4. Export incentives, 5. Objective
characteristics of the firm. Finally, some suggestions and approaches are presented to improve the status of export
performance in sports clothing and equipment industry.
Key words: export, export performance, sports clothing and equipment industry
1. Introduction
Export is known as the most common way of leading enterprises, especially small and medium-sized
companies to enter foreign markets. One of the main reasons for this in comparison to other internationalization
methods is that it requires fewer resources. Therefore, export sales are increasingly regarded as a viable way of
company’s growth. Export plays an important role in economic development stems (Aarabi, 1388:39).
The analysis of 41 countries during 1963 to 1985 by the World Bank has showed that economic performance of
countries with extroverted economy was better than introverted economy in all aspects. Furthermore, in the
sport industry, from 1990s to the present, has a dramatic growth and has currently become 500 billion dollars
industry in America. Development of sport industry has created an important qualitative and quantitative
development of sport-related jobs. For example, a sport job growth up to 2010 in US has been created 20
million jobs opportunities; however, until 1998, the number of employee in the exercise (not jobs), was 4.5
million
people
(Parks
Janet
et
al,
2004).
Export has created growth and development opportunities for companies to expand their access to foreign
markets, and the company can reach a higher level of production. This reduces the cost of the unit and achieves
the higher interest rates. Export creates the opportunities of market diversification for companies. In addition, it
allows the company to exploit different growth rate in different markets and reduces the dependency to a
specific market. Export provides learning opportunities for companies and the ability to survive in unknown and
strange environments. The process of globalization has led to increase competition, integration and
liberalization in the international markets which increase the importance of export for governmental policy
makers and private sector (Crick and Chouri, 1997: 543).
Research done on small and medium sized enterprises shows that company has the capabilities and export
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potential. By motivation and behavior and efforts to encourage the export and non-export firms, they can be
encouraged to be active in the field of exporting. This is important since most of companies in the study are
small and medium-sized enterprises. Over the three last decades, the number of export incentive programs in
small and medium sized enterprises has been increased at all levels, whether local or national. However, due to
the lack of funding for this activity, poor results obtained in this field and companies did not encourage to do
export. Export capacity in the company plays an important role to determine which factors lead to encourage
these companies to do export. The impact of organizational and non-organizational on the success of
companies, which factors cause the companies to deliver service to their markets and may enhance it, these are
the main concern of firm owners. The emergence of a world without borders which facilitate the flow of the
information and resources is like double edge sword that causes the emergence of opportunities and threats for
companies (Hosseini, 1389:38).
In business environment, some companies in comparison to others have better performance and obtain higher
profit. The question is that how in same environment we can act more successful than others? In addition,
today’s companies operate in highly dynamic and competitive environment. Rapid technological changes,
shortening product life cycle and the globalization of markets and competitors are significant changes in the
business environment (Grant, 1990). Companies are faced with the challenges to succeed in the markets and
they need strategies to enjoy a sustainable competitive advantages and better performance than competitors.
In the perspective of 1404 of Iran, export is the most important strategic issues of the ideals of Iran. Many
scholars know paying attention to export as the only solution to get rid of the export economy dependent on oil
monopoly. Now they look at the economy as a product of national economy, a surplus or the normal flow of
production to consumption. The notion of export mutation is distinct from the development or export growth,
and developing a strategy that includes all parts of the country. Export mutation is influential in all industrial,
agricultural, monetary policy, foreign exchange and financial decisions. In export mutation strategy, will focus
on competitive advantages. These benefits can be found in sectors such as industry, agriculture, mining and
service (Nahavandian, 1380:218).
Given the urgency and importance of export activities, companies need to identify the factors affecting the
survival and success of these activities and the effect of these factors in their export performance. Research in
the area of export equipments has not been comprehensive, so it is essential for improving the export
performance, a comprehensive review of factors affecting export performance occurs.
1.1.
Export Performance
Export performance is the extent to which a company’s strategic and economic objectives for the export of a
product to foreign markets are gained through export planning and implementing marketing strategy (Cavusgil
and Zou, 1994).
Export performance is known with one of the following concepts:
 Export Rate is considered the ration of export sales to total sales in export performance literature as a usual
proportion of export (Leonidou et al, 2002; Voral and Don Kerz, 2002, Wolf and Pat, 2000).
 Volume of export sales is the total sales of export goods (Zou andStan, 1998).
 Export sale growth is changes in export sales over a period of time. This criterion is considered an important
criterion in export performance (Cooper and Klein Schmit,1985).
 Extent of export strategic objective refers to the criteria to respond competitive pressures, experienced or
new technologies, increasing company profitability, improve market share, increase the level of awareness of a
particular company and gain a foothold in the export market (Cavusgil and Zou, 1994).
1.2. Factors and variables affecting export performance:
Researchers have investigated the factors affecting export performance. The various categories of factors that
have caused the river to the complexity and ambiguity of the result have been inconsistent. The following are
effective in aggravating this ambiguity:
 The variety of variables and parameters provided by the researchers to measure its impact on export
performance;
 Many ways that these factors are evaluated;
 Lack of strong theoretical framework or logic that guided the selection of independent variables;
Zou and Stan (1998) in their research have identified five variables on export performance:
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 Management variables, including personality, experience, attitudes, behavioral characteristics,
characteristics of the decision maker and export company…
 Organizational elements that include elements related to features, functions, resources and goals of the
export.
 Environmental factors, including the factors shaping the environment and the huge task which exporters
operate in both domestic and international environment.
 Setting goals, including factors related to the introduction, selection and segmentation of international
markets.
 Marketing mix variables that includes the company’s export product, pricing, distribution and promotion
strategies, classified in one of these variables are divided into three categories (Katsikeas et al, 2005:34):
o Organizational objective characteristics (size, experience, dating agencies);
o Variables related to perceptions of export (export motives, export barriers, competitive advantages);
o Commitment to exports, which includes parts of exports, foreign markets and customer selection criteria,
continuous observation of the export market, planning and control export;
Given the differences between the variables presented by the authors (Leonidou et al, 2002), there are some
elements of the research that has been highlighted such as: managerial, organizational and strategic
environment factors. To sum up the results of research on factors affecting export performance can be fairly
complete them in a table 1:
This table can be used by different factors affecting export performance regardless of the approach to
classification:
The table on the following categories of variables includes the following:
A) The internal versus external dimension, and B) controllable dimension versus uncontrollable one;
Classification of factors affecting export performance against internal and external aspects of the theory is
acceptable: because the dimensions to suit different theoretical principles are justified. In particular, the
following factors into internal and external are fully in accordance with the resource-based theory and the
theory of industrial organization supported by the external factors. These theories will be described fully in the
following sections.
The resource-based theory of the firm is considered as a portfolio of tangible and intangible resources (i.e.
assets, capabilities, processes, management characteristics, knowledge, etc) and considers that these resources
are controlled by a single company. This theory states that the main factors affecting the company’s competitive
strategy and export performance resources within their organization.
The resource-based theory is versus industrial organization theory. This theory states that the external factors
cause the formation of company strategy, and this strategy has led to the formation of economic performance
(Robertson, Chetty, 2005).
According to this theory, the external pressure on the company, so the firm has to comply with them for their
survival and development. According to the theory of industrial organization, the primary factors influencing
the export performance are external factors and firm export strategies. Among other factors affecting the
performance of the export classification of controllable and uncontrollable aspects, although does not follow
from strong theory, but have a particular relationship with the activities of managers and investors. Such a
classification is usually done in the marketing models and many researchers have to be brought on the basis of
their research. For example Bilki (1987) created an export marketing mix theory in which they distinguished
among short-term controllable factors and uncontrollable factors. The studies that have been done mainly
handling the factors considered factors affecting export performance. Because research has the implicit
assumption that managers can handle the influence of these factors on the export performance of the company.
In contrast, studies have exclusively considered uncontrollable factors and basically depict the luck and success
for the company. Or the reasons mentioned above, the investigator considered the influential factors on export
performance of the company.
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Table 1, division of factors affecting export performance
 Perception and attitudes of
Controllable
management
 Management Features
 Industry Characteristic
 Firm Characteristics and
 External Market
Uncontrollable competencies
Characteristic
 Domestic Market
Characteristic
Internal
External
The most important factors affecting export performance are located in the controllable internal factors cell of
the table. This problem arises from the fact that researchers have had this attitude that export performance is
controlled by the company and its directors. As a result, according to this view, a better export performance of
the company was attributed to a good manager and for weak export performance he should be blamed (Lee and
Grift, 2004).
These are basically two types of controllable internal factors: a) export marketing strategy; b) the attitudes and
perception of management.
The first group is export marketing strategy of a company. The variables that have been repeatedly studied a
large part of the literature devoted to the export performance. The second dimension of controllable internal
factors includes attitudes and perceptions of management which contain international trends of management,
management commitment to export, and export motives. Sometimes classification, incentive was put in the
marketing strategies. For example, Dean et al (2000) have divided export marketing strategies of a company
into market diversification versus market focus and motives to export (active versus reactive).
2. Background of the Study
There are several studies that examine export in micro-level. There are many classifications for these studies
which are presented in the following:
Exieen et al (2004) have divided their studies into three categories as follow:
 First category: studying the factors by which we can detect export from non-export firms;
 Second category: examining the external factors influencing the export behavior of a firm like government’s
program;
 Third category: determine the factors related to firm behavior fit to export and its results. These factors are
directly related to trade literature in the field of growth, improvement, development and management in global
scale.
Igen and Pasternak (2005) have introduced various studies in the field of export behavior of the companies as
follow:
First division: one of the studies considers the process of internationalization of companies, which is divided
into two sub-areas:
1) A group of researchers are able to conduct this study to determine the behavior of the company before the
export. These researchers are interested in the export behavior of the firm and factors that provoked a company
for export to adopt the initial decision. In this school, researchers are seeking to introduce incentives for
companies to export/or not to export and aim to model the decision making process as a result of this process is
the decision to export. Researches in the field of exporting examine the factors affecting the export intention of
the firms. Export intentions mean “motivation, attitudes, beliefs and expectation about the impact of exports on
the growth of the company”. The company’s export intention can be divided into two categories: influential
factors affecting its strength and weakness can be explored inside and outside of the companies. Factors such as
perceptions, motivations of management, company capabilities, and organizational culture can be classified as
internal factors; some factors such as government incentive policies, trade barriers are among factors that are
outside the company and are effective on export intention.
2) Another group of researchers consider the process of internationalization as a result of gradual decision
making. They believe that export decisions formed from series of steps that each steps representing increasing
degrees of involvement in export. However, some studies have doubts about the “stage theory”, for example,
these studies considered the process of internationalization regardless of time, enough and comprehensive
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results. This school describes and studies the factors influencing company’s export performance or
achievements. This school advocates insist that if the requirements and success factors are introduced, the
company has export potential can be selected based on these criteria. You can also specify which factors most
influence on the company’s export success. In literature, company’s export success is generally examined by
export performance. Basically, different models have been proposed to investigate the export performance.
Many researchers in the context of their studies have presented different layout or presentation of influential
factors and variables that influences from other criteria. The influence of variables on export performance and
dependent criteria can be summarized in two categories; direct and indirect influence (Douglas, 2000). For
example in the model provided by Leonidou (2002), they believed that export marketing strategy, directly, and
some factors such as management characteristic, organizational factors and environmental factors, indirectly,
can influence export performance. Researchers believe that the factors affecting the export performance, both
external and internal, have direct impacts on export performance. Factors affecting export performance in the
previous studies are summarized in table 2:
Table 2, Summary of factors affecting the performance of exports in previous research
Influential Factors
Researchers (Year)
Environmental Factors
1-psychic Distance
Bilky the Tsar (1997), Dow(2000), Johnson and Vahland(1997),
Johnson and Powell(1975), Madsen(1987), Madsen (1989), Agari
and Leen (1996), Shuham and Elbaum(1995)
2- Export market attractiveness Christie, Rocha and Gertner(1987), Cooper and Klein Schmith(
1985), Dou Minguiz and Skoeira(1993), Madsen ( 1989- 1987),
Biskari and Monti (2000).
3- Trade barriers
Tsar and Bilky(1977), Cavusgil and Nevin(1981), Leonidou
(1995), Hudson( 1987), Mack Guins and Eithel (1981),Shuham
and Elbaum( 1995)
Organizational Characteristic and Features
1. Size
Aaby and Slater (1989), Auxin(1988), Baldauf, Krauns and
Wagner( 2000), Bunakrsy(1992), Cavusgil (1984), Cooper and
Klein Schmidt (1985), Katz Kyas, Pierce and levan Nids(1996),
England (1988), Mavin(1999), Reed (1983), Samei and Walters
(1990)
2. Management Commitment
Cavusgil and Zou (1994), Dean, and Yuk Meng(2000),Dou
to Export
Mingouz and Sekoeira (1993), Huang (1998), Kouh (1991),
Leonidou (1995), Madsen( 1989-1987), Yoursik and Zin Kota
(1984), chati and Robertson (2000)
3. Export Experience
Auxin(1988),Baldauf, Kravans and Wagner (2000), Cavusgil and
Zou (1994); Cooper and Klein Schmidt(1985); Dean Yuk Meypres
(2000), Dyamantupulus and England (1988),Dominguez and
Skuyyra(1993), Huang (1998), Katsykyas, Purys and
LevanNudys( 1999), Kouh 1991, Leonidou and 1995; Madsen(
19889- 1987),Yursik and Zinkuta( 1984)
1. Price Competition
2. Standardization and
Product Customization
3. Distribution Channel
Strategy
Export Marketing Strategy
Bilky(1982-1994), KupruKausigl and Zou (1994); Klein and
Schmidt (1985), KatsiKias, Pierce and LevanNidis(1996),
Kayrpalany and Makyntush (1980), Kouh (1991), Leonidou
(1995), Madsen (1989)
Baldauf, Krauns and Wagner (2000), Kausygl and Zou (1994),
Christensen, Rocha Gertner (1987), Schmidt (1985), Madsen
(1987), Samei and Roth (1992), Shuham(1999), Tukey(1964)
Rusen
and
Ford
(1982),Shuham(1999),
Kouh(1991),
Madsen(1989-1987), Christensen, Gartner Rocha (1987),
Bilkey(1982), Cavusgil and Zou(1994)
Based on the extensive research, which was built from various sources, only three researches about export
performance were done:
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Dehdahsti (1386) evaluated three factors in the development of SMEs such as firm competencies, company
profile or characteristics and export marketing strategy in 33 secondary variables. These factors have direct and
positive effect on export performance.
Yadegari (1383) has investigated the relationship between competitive advantages and firms’ performance in
Iranian companies. In this research, derived from a resourced-based approach, with the aim of responding to
one of the main reasons for the low level of exports in the stone industry, the impact of competitive advantage
(quality, efficiency, innovation and responsiveness to customers) on export performance has been evaluated.
Then, presents a conceptual model of the relationship between competitive advantage of firms exporting stones
and their export performance has been tested. The results revealed that: 1) although the export companies of
ornamental rocks have desired level of quality, but in their aspect of competitive advantage (efficiency,
innovation, and responsiveness to customers) located in low level and 2) there is a meaningful relationship
between competitive advantages and export performance of decorative stones.
Hosseini (1389) has explored the effect of export incentive schemes on the export performance of the electricity
industry. In this study, by adopting the outside view to the organization (contingency approach), the impact of
government incentive program on export performance is evaluated.
3. Research Methodology
This research is developmental and applicable based on its purpose and according to the method of gathering
information, it is qualitative. The research sample is top export entrepreneurs in the field of sport equipment and
instructors in the field of decision making and entrepreneurs. Purposive and snowball sampling to reach the
saturation point (to the extent that the new criteria will not be considered as an indicator of success) as a method
for the selection of exports were used. Seven persons were interviewed as CEOs of export equipment
manufacturers. After seventh interview, we reach the data saturation and no new information from the
respondents did not provide.
In the current study to assess the validity of extracted semi-structured interview questions, these questions were
given to the experts to reform them. Furthermore, during the interview, he was asked to describe his perception
of the questions and raise his questions if there is any, until his answer is consistent with the objectives of the
study and characterization of the measure. To ensure the reliability of the end of each questions or interview,
the summary of his speech and the comprehension of interviewer was given to him and asked him to confirm it
to transfer their meaning truly.
To data analysis, the following steps must be taken:
 Overview articles, interviews, and segmenting them;
 Select the segments of data and encoding them;
 Merge codes in all major categories of information;
 Reduce redundant categories and determine the main categories;
 Conversion the issues to main subjects.
Data encryption is done manually which is given in table 3:
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Person code
P1,P2,P3, P4, P5,P6
P1, P2, P3, P4, P5,
P6,
P1, P2, P3, P4, P5
P6,
P1, P3, P5, P6
P1, P2, P3, P5,
P1, P2, P3, P5, P6,
P7,
P1, P2, P3, P7,
P1, P2, P3, P4,
P1, P2, P3, P4, P5,
P6, P7,
P1, P3, P5,
P1, P2, P3, P4, P5,
P6, P7,
P1, P2, P3,P4, P5,
P6, P7,
P1, P2, P3, P5, P6,
Verbal statement
Knowledge and understanding of
target markets, market knowing
Planning and marketing
programs to more powerful,
suitable presence in the market
and getting feedback from
customers
Participation in international
exhibitions, holding international
exhibitions, holding seasonal
markets in the border areas of
common markets
Separate foreign trade or export
department in the organization
Suitability and
comprehensiveness of products
compared to competitors in the
target markets
Export product in harmony with
the taste and customer
requirements in the host country
Using new technologies such as
nanotechnology in the
production or use of water
disposal fabrics by applying high
quality fabrics
Using new technologies such as
nanotechnology in the
production or use of water
disposal fabrics
-Using new technology in
sewing, designing and cutting,
-Promote the downstream
technology and standardization
of products that meet the needs
of the world
-Provide the technology to
standardize products and
compete with high brands
Using Iran Press TV satellite
network to advertise such
products in order to showcase a
comprehensive portable Iranian
manufacturers web
An entity to facilitate the export
and support exporters, the
presence of a coordination entity
for commercial activities
-Not allow for the sale of raw
materials (cotton, fabrics,
leather, etc) and to convert them
into valuable products such as
sports apparel
-Improving the business
environment and internal
problems and internal
cumbersome rules (labor law,
insurance, taxes, tariffs, timeconsuming process of exporting,
promiscuous expensive energy
carriers, raw material quality,
leading to empowerment and to
facilitate the business
atmosphere and consequently a
competitive advantage in
production cost
An office or a system or a
396
Open Code
Using export marketing
research
Axial Code
Export Commitment
Paying attention to
planning and export
control
Export Commitment
Regularly visit export
markets
Export Commitment
Create a separate export
unit
Export Commitment
Price Adaptation strategy
and using competitive
pricing
Export marketing strategy
Product adaptation strategy
Export marketing strategy
Taking advantage of the
new product development
strategy
Export marketing strategy
Taking advantage of
innovations in production
Export marketing strategy
Leading in technology
(Technological
capabilities)
Export marketing strategy
Foreign advertisement
Export marketing strategy
Export Motives
Export Incentive
Problems related to export
Export Incentives
Competitive advantages
Export Incentives
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P7,
P1, P2, P3, P5, P6,
P1,P2, P3
P1,P4,
P1, P2, P3, P4, P5,
P6, P7,
P1, P2, P3, P4, P5,
P7,
P1, P2, P3,
P1, P5,
database of information for those
interested in export trade with
neighboring countries of
destination to create effective
business communication as a
competitive advantages
Specialization in the production
of export-led production
-specialized personnel in
business department and
international negotiations
-Sufficient financial resources
for acceptance by the
international federations and
national negotiations with the
world
-Sufficient resources to allow the
presence in international
exhibitions and using new
technology
Export experience in managers
and understanding the issue of
export
Lack of exchange rate
fluctuations
Stability of state regulation
The lack of international
disputes between host and guest
countries
No restrictions on the financial
transactions
Relations with other countries
An entity to facilitate export and
supporting exporters (the data
identifying the various target
markets, financial support to
attend in international
exhibitions, facilitate exporters,
An center or an information
system or a database for those
interested in export trade with
neighboring countries of
destination and that there is a
possibility to create effective
business communication
Proximity to the host device
considered as attractive export
markets
Overproduction and
competiveness of domestic firms
convinced them to enter
international markets
Expert Human resource
Objective Characteristic of
firms
Sufficient financial
resources
Objective firm
characteristics
Export experience
Objective characteristics
Stability in legal,
economic, and political
environment
Environmental factors
Access to market
information
Environmental factors
Attractiveness of export
market
Environmental factors
Intensity of competition
Environmental factors
4. Analyzing the findings and conclusions
According to data collected, the model is presented to identify the influential factors on export performance:
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Environmental Factors:
- Stability in political,
economic and legal
environment
- Database to access taste
of export markets
- Attractiveness of
export markets
- Having production
Environmental
surplus
Factors:
- A separate export unit
- Regular visit of export
markets
- Using export market
research
- Planning and export
Export control
marketing strategy:
Export
Performance
(Financial)
-
Product adaptation
strategy
- Pricing adaptation
strategy
- Innovation strategy in
product
- Foreign advertisement
- New product
development strategy
Export Incentives:
- Export motives
- Export problems
- Competitive
advantages
Objective Characteristics:
-
Size
Export Experience
Expert human
resource
-
Sufficient financial
Resources
The model presented in this
study is the extended model of Lee and Gryfis in 2007. Environmental factors due
to lack stability in political and legal environment and changes and fluctuation in exchange rate, restrictions on
the relationship between the banking and financial relationship between Iran and other countries and blocked
the swift network, the impact of sanction,… are important factors influencing export of sport equipments and
clothing. While in other models proposed by researchers, the environmental factors are ignored.
Proximity to specific markets and neighboring Arabic countries and some Asian countries and CIS are the most
important focus of our exporters. On the other hand, by the presence of expert human resources, it was added to
objective characteristic of the firm. It seems that the lack of understanding international trade rules lack of
proficiency in English and familiarity with credit documents are important factors that play an important role in
export-oriented companies. Using expert human resources, designers, technical managers familiar with industry
instead of simple workers in production part can lead to high quality production and provide successful
presence in international markets. One of the major concerns of these companies was lack of financial resources
to attend in international markets (presence in exhibitions and booth and etc). Financial resources can facilitate
accepting sponsors in international federation and bring the possibility of import high quality and up-to-date
raw materials. It seems that if we look at it by resource approach, financial resources are more important than
human resources. This research shows that higher export performance can obtained from commitment to
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achieve adaptive marketing strategies.
Adaptation f export marketing strategy like adaptation of export products with foreign customer preference
allows the exporters to satisfy the needs of foreign customers. So, exporters instead of focus and attention on
low-cost strategy tend to adaptation strategy.
5. Limitations of study
- Relatively small size of the sample: exporting apparel and equipment companies are very limited and are
part of the ongoing and unsuccessful export activities.
- Most likely, respondents have positive view to their capabilities and potentials and negative look at
government and external factors.
6. Suggestions for future research
- This study is associated with one industry, to obtain conclusive results we suggest that future studies include
variety of industries will be investigated.
- Recommended for future studies, other factors like political, social and cultural ones will be considered.
- Recommended that in future studies consider the service firms.
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