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Journal of International Business Studies (2008) 39, 304–325
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The role of past performance in export
ventures: a short-term reactive approach
Luis Filipe Lages1,2,
Sandy D Jap3 and
David A Griffith4
1
Faculdade de Economia, Universidade Nova
de Lisboa, Portugal; 2Deshpande Center for
Technological Innovation, MIT School of
Engineering, USA; 3Goizueta Business School,
Emory University, Atlanta, USA; 4Eli Broad
Graduate School of Business, Michigan State
University, East Lansing, USA
Correspondence:
Luis Filipe Lages, Marketing and
International Business, Faculdade
Economia, Universidade Nova de Lisboa,
Lisboa 1099-032, Portugal.
Tel: þ 351 21 3801601;
Fax: þ 351 21 3886073;
E-mail: [email protected]
Abstract
This paper employs organizational learning theory to examine the short-term
effect of past export performance, and internal (management) and external
(market) forces on marketing strategy adaptation and current export
performance. Results from a survey of over 500 export managers indicate that
current-period performance improvement (in terms of performance achievement, export intensity, and performance satisfaction in the current year) is
influenced by the firm’s commitment to exporting. Further, the authors found
that while performance satisfaction feeds performance improvement in the
following year, both the previous year’s export intensity and export
performance achievement produce a negative impact on current-period
performance improvement. More importantly, the level of development in
the export market facilitates marketing strategy adaptation in the short term, as
does export intensity in the previous year. However, satisfaction with previousyear performance negatively influences the degree of distribution adaptation.
Implications for international business researchers and practitioners are also
discussed.
Journal of International Business Studies (2008) 39, 304–325.
doi:10.1057/palgrave.jibs.8400339
Keywords: past performance; short term; export performance; export marketing;
organizational learning; adaptation-standardization
Received: 4 November 2003
Revised: 19 January 2006
Accepted: 20 April 2007
Online publication date: 29 November 2007
INTRODUCTION
As competition in world markets has intensified, researchers and
practitioners have called for an increased understanding of the
drivers of export performance (Cavusgil & Zou, 1994; Morgan,
Kaleka, & Katsikeas, 2004), where export performance is defined as
the extent to which a firm’s objectives, both strategic and financial,
with respect to exporting a product to a market are achieved via the
execution of the firm’s export marketing strategy (Cavusgil & Zou,
1994). While a significant amount of research has been conducted
in the area of exporting, and the drivers of export performance, a
review of the literature reveals several shortcomings that have
limited our understanding of these issues.
First, Morgan et al. (2004) note that although much research has
been conducted on export activities, there are few strong theoretical
frameworks for researching marketing aspects of export activity.
Rather, they note that the majority of studies are descriptive, are
largely atheoretic, or draw upon divergent theoretical perspectives,
thus making it difficult to integrate findings from prior work.
Given the lack of theory in this area, they argue that the field is at a
standstill. Responding to this call, we adopt an organizational
Role of past performance in export ventures
Luis Filipe Lages et al
305
learning approach to better understand the theoretical aspects of managerial decisions driving export
marketing strategy and export performance.
Second, a synthesis of prior research on marketing strategy within the exporting literature suggests
that the main purpose of marketing activity is
learning about local environments and the development of capabilities that facilitate adaptation
(Dickson, 1992). Given this focus, the majority of
the marketing strategy export literature has focused
on the issue of marketing strategy adaptation/
standardization. However, as Ryans, Griffith, and
White (2003) conclude, with rare exception the
majority of this research has been without a strong
theoretical foundation. The introduction of organizational learning theory to the export marketing
strategy literature provides a theoretical foundation
for the seminal issue in the field of international
marketing. Specifically, the organizational literature reveals the importance of learning about a
firm’s environment as a basis to develop internal
capabilities that facilitate adaptation (Dickson,
1992; Lord & Ranft, 2000; Özsomer & Gençtürk,
2003). Under this perspective, firms are theorized to
develop core competencies that allow them to
learn at least at the same baseline rate as that at
which environments change (Stata, 1992). Therefore, building on prior international business
literature (e.g., Luo & Peng, 1999; Sullivan &
Nonaka, 1986), we adopt the organizational learning perspective of marketing strategy adaptation to
consider how these strategies are formulated as a
function of internal (management) and external
(market) forces, thus informing our overall understanding of how marketing strategy is crafted in an
exporting context. Thus we offer a more comprehensive, theoretically founded, understanding
of the simultaneous links among the internal and
external market forces of the firm, marketing
strategy adaptation, and past and current export
performance.
Third, although the majority of the export literature undertakes a long-term perspective of performance, research suggests that managerial emphasis
within Western firms is more specifically focused
on maintaining short-term performance (Doyle,
Saunders, & Wong, 1992; Lages & Lages, 2004;
Madsen, 1998), a key aspect of strategy modification under an organizational learning perspective.
We therefore focus on the determinants of shortterm performance as a means to understand the
building blocks of long-term performance. Specifically, we investigate key determinants of short-term
adaptation of marketing strategies and short-term
performance using a 1-year period as a reference
(cf. Cooper & Kleinschmidt, 1985; Lages & Lages,
2004; Lages, Lages, & Lages, 2005b). This approach
helps to shed light on the initial managerial
reactions and immediate adjustments to marketing
mix strategy and their effects on annual performance, thus providing a short-term reactive
approach to managerial action.
Taken together, the shortcomings in the existing
literature not only create theoretical and empirical
gaps, but leave international business academics
and practitioners without a clear understanding of
the factors influencing export performance. As the
underlying aspects of export marketing strategy are
driven by managerial action, greater understanding
of managerial learning from past performance can
provide international business academics and practitioners with strategic insights into enhancing
export performance (Lages, 2000). The purpose of
this study is to contribute to the literature by addressing these issues within the context of exporters.
THEORETICAL BACKGROUND
Organizational Learning
A large body of literature addresses the field of
organizational learning (e.g., Crossan, Lane, &
White 1999; Hult, Ketchen, & Nichols, 2002).
Although many definitions and conceptualizations
of organizational learning have been put forth in
the literature (e.g., Levitt & March, 1988; March,
1991), consensus has not been reached (Fiol &
Lyles, 1985; Tsang, 1997). However, as Lant,
Milliken, and Batra (1992) argue, common themes
to models of organizational learning exist. These
include the following:
(1) Managers are assumed to have set performance
goals, which are compared with performance
outcomes (Lant, 1992; Lant et al., 1992).
(2) The discrepancy between goals and resultant
performance acts as a signal of success or failure
(Cyert & March, 1963; Lant, 1992; Lant et al.,
1992; Levinthal & March, 1981).
(3) Discrepancies between the managers’ goals and
resultant performance influence managerial
action and organizational change (Levitt &
March, 1988; Lant & Mezias, 1992).
Given the common themes identified by Lant
et al. (1992), in this study we build upon the
conceptualization of organizational learning
developed by Levitt and March (1988), whose
Journal of International Business Studies
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Luis Filipe Lages et al
306
conceptualization incorporates these themes when
defining organizational learning as the organizational encoding of inferences from past experiences
into routines that guide behavior. While exploration learning capabilities are associated with longterm issues such as risk taking, radical innovation/
disinnovation, discovery and less certain returns,
exploitation learning capabilities are associated
with issues such as adaptation to the local market,
refinement of current strategies, incremental innovation/disinnovation, and a higher probability of
short-term efficiency. Since we are particularly
interested in better understanding the short-term
effects of past performance, we will focus primarily
on exploitation learning capabilities.
At a managerial level, managers attempt to
understand the causal linkages between actions
and organizational outcomes within the environment that the firm operates. Managerial reasoning
then shapes managerial actions and firm-level
outcomes (Lant et al., 1992; Luo & Peng, 1999).
Therefore much of the research on organizational
learning has focused on the interactive process of
trial and error (e.g., Levinthal & March, 1981;
Sullivan & Nonaka, 1986). Under this perspective, it
has been argued that managers work to identify
associations between firm-level behaviors that are
associated with positive and negative outcomes,
repeating those behaviors that drive positive outcomes and eliminating behaviors that result in
negative outcomes (Cyert & March, 1963, Levinthal
& March, 1981; Sullivan & Nonaka, 1986). Central
to this stream of organizational learning has been
organizational outcomes of firm performance and
antecedents of prior firm performance and strategy.
Alternatively stated, managers examine past performance in accordance with performance expectations. When performance has not met managerial
expectations managers modify strategies, enhancing emphasis on those strategies that are believed
to enhance performance and de-emphasizing those
believed to decrease performance. Therefore a
general model of organizational learning in this
setting views the antecedents of export performance as derived from strategies that are the result
of managerial decisions after an assessment of past
performance, managerial forces and environmental
forces (Ferrier, 2001; Lant et al., 1992; Luo & Peng,
1999; Prietula & Watson, 2000).
Export Marketing Strategy
Organizational learning theory argues that learning
will occur when firms build on their strategies to
Journal of International Business Studies
extract knowledge from their local environment,
thus learning to cope with local market conditions
(Özsomer & Gençtürk, 2003; Sinkula, Baker, &
Noordewier, 1997). Since exporting activity is considered to be an early stage of the internationalization process, exporting firms are viewed as engaging in low-risk exploitation-type learning (Özsomer
& Gençtürk, 2003). Exploitation-type strategies are
typically associated with issues such as adaptation
to the local market, refinement of current strategies, and a higher probability of short-term efficiency (cf. March, 1991). Hence, we draw on the
exploitation side of the organizational learning
literature to understand export marketing strategy
implementation.
Export marketing strategy is the means by which
a firm responds to the interplay of internal and
external forces to meet the objectives of the export
venture involving aspects of the conventional
marketing plan (i.e., product, price, promotion,
and distribution) (Cavusgil & Zou, 1994). Therefore, the exploitative side of organizational learning
is aligned with the prevailing opinion in the export
marketing strategy literature that marketing strategies incorporate differences in the politico-legal,
economic, and sociocultural characteristics of any
host country (Cavusgil & Zou, 1994; Lee & Griffith,
2004). Specifically, the key issue within the export
strategy literature has been the determination of
the degree to which export marketing strategy
elements (i.e., product, price, promotion, and distribution) are adapted, and of the internal and
external forces that influence these adaptations
(Buzzell, 1968; Cavusgil & Zou, 1994; Douglas &
Craig, 1989; Ryans et al., 2003; Samiee & Roth,
1992).
Export Performance
Export performance, both past and present, plays a
critical role in organizational learning. Whereas
past export performance motivates managerial
strategy actions, current export performance not
only signals the effectiveness of the strategy modifications made by managers, but also sets forth new
strategy actions. Export performance is defined as
the extent to which a firm’s objectives, both
strategic and financial, with respect to exporting a
product to a market, are achieved via the execution
of the firm’s export marketing strategy (Cavusgil &
Zou, 1994). In the export marketing literature,
researchers have used a wide array of measures for
performance (Diamantopoulos & Winklhofer, 2001;
Katsikeas, Leonidou, & Morgan, 2000). Broadly
Role of past performance in export ventures
Luis Filipe Lages et al
307
speaking, the literature considers both objective
(financial) and subjective (non-financial) measures
of export performance (Zou & Stan, 1998); we employ
a similar approach in this research. Specifically, we
consider three dimensions of export performance:
export intensity (i.e., the proportion of production output to exports evidenced by the percentage of exports to the firm’s total sales and profits);
export achievement (i.e., the extent to which
firms achieve their export objectives in terms of
sales, profitability, and market share, as well as
overall performance); and
export satisfaction (i.e., a compound psychological variable (an affective state) assessing the effectiveness of a marketing program in terms of its
sales, profitability, and market share, as well as its
overall performance).
HYPOTHESIS DEVELOPMENT
Figure 1 presents a conceptual model of the short-term
reactive approach to export marketing performance
under an organizational learning perspective. This
MANAGEMENT FORCES
•Firm’s commitment
to exporting
•Management international
experience
model incorporates financial and non-financial
measures of past performance, as well as managerial
and environmental forces as antecedents of export
marketing strategy and financial and non-financial
export performance. In line with most recent
research (e.g., Morgan et al., 2004; Lages, Lages, &
Lages, 2005a, b), the unit of analysis throughout
the discussion is an individual product–market
export venture of the firm, involving a specific
product in a specific export market.
Export Marketing Strategy
Export marketing strategy is the means by which a
firm responds to the interplay of internal and
external forces to meet the objectives of the export
venture involving all aspects of the conventional
marketing plan (i.e., product, price, promotion,
and distribution) (Cavusgil & Zou, 1994). Researchers argue that by adapting a firm’s marketing
strategy to market-specific characteristics a firm
can delivery greater value in the local market by
meeting local market needs, thereby improving its
export performance (e.g., Cavusgil & Zou, 1994;
Koh, 1991; Shoham, 1999). These arguments are
h3 (+)
h5 (+)
h2
)
(+
h4
)
(+
EXPORT
PERFORMANCE IN
PRECEDING YEAR
•Export intensity
•Performance achievement
•Performance satisfaction
CURRENT YEAR
ADAPTATION
OF MARKETING MIX
•Product adaptation
•Promotion adaptation
•Pricing adaptation
•Distribution adaptation
h8 (-)
h9
h1 (+)
EXPORT
PERFORMANCE
IMPROVEMENT IN
CURRENT YEAR
•Export intensity
•Performance achievement
•Performance satisfaction
(+
h6 (+
)
h7 (+
)
)
EXPORT MARKET FORCES
•Export market development
•Export market competition
Figure 1
? (+/-)
Conceptual framework.
Journal of International Business Studies
Role of past performance in export ventures
Luis Filipe Lages et al
308
supported by numerous empirical studies that
have found a positive relationship between
product adaptation and export performance within
the United States (e.g., Cavusgil & Zou, 1994;
Koh, 1991; Shoham, 1999; Zou, Andrus, & Norvell,
1997). Similar findings have been found related to
promotion adaptation (e.g., Seifert & Ford, 1989;
Shoham, 1996, 1999), pricing adaptation (e.g., Das,
1994; Koh, 1991; Leonidou, Katsikeas, & Samiee,
2002) and distribution adaptation (e.g., Koh, 1991;
Shoham, 1996).
However, this is not to suggest that the literature
examining the relationship of international marketing strategy to performance is consistent (see
Katsikeas, Samiee, & Theodosiou, 2006). Rather,
some research has found that standardization of
marketing strategy elements can enhance export
performance. For example, Lages and Montgomery
(2001, 2005) found that standardization of price
improves export performance. However, findings
contrary to adaptation may be due to inappropriate
adaptation efforts. For example, Cavusgil and Zou
(1994) note that a negative adaptation effect can
occur if the adapted marketing strategies are inappropriate (e.g., when an adaptation eliminates the
universal appeal of the product, or if the adaptation
is costly). As the fundamental element of value
delivery entails satisfying customers’ needs and
desires, adaptation (which accommodates local
competitive practices, customs, traditions, religions,
levels of education, ways of living, communication
infrastructures, and government restrictions), of at
least some degree, is theoretically justifiable and
suggestive of a positive effect. Hence, we theorize
that performance improvement in the current year
is positively associated with the exporter’s adaptation of marketing strategy elements. This finding
leads to the following hypothesis:
Hypothesis 1: Current-year export performance
is positively influenced by:
(a)
(b)
(c)
(d)
product adaptation
promotion adaptation
pricing adaptation
distribution adaptation.
strategies that are the result of managerial decisions
influenced by managerial forces (Ferrier, 2001; Lant
et al., 1992; Luo & Peng, 1999; Prietula & Watson,
2000). Specifically within the context of export
marketing strategy, Cavusgil and Zou (1994) argue
that marketing strategy adaptation decisions are
influenced by management forces, such as a firm’s
international experience and its extent of international business involvement. We therefore examine
the firm’s commitment to exporting and management’s degree of international experience as drivers
of marketing strategy adaptation and current-year
export performance.
The influence of commitment to exporting on export
marketing strategy and current-year performance.
The firm’s commitment to exporting refers to the
degree to which organizational and managerial
resources are allocated to an export venture. As
increasing levels of resources are committed to the
export venture, the venture is able to improve
its planning procedures and implement more
adaptive strategies, as adaptations require greater
resources. When the firm demonstrates a strong
commitment to exporting, managers are motivated to work harder on demanding tasks such as
strategy adaptation. Without appropriate resources
committed to the export venture the firm is unable
to engage in the necessary adaptations of the
firm’s marketing strategy in order to meet local
market needs.
The firm’s commitment to an export venture
should also directly influence the performance of
the export venture, as the firm’s commitment will
direct greater resources to the task, better enabling
the venture to achieve its exporting goals (Aaby
& Slater, 1989; Bilkey, 1978; Diamantopoulos &
Inglis, 1988; Shoham, 1999; Tookey, 1964; Zou
& Stan, 1998). For example, the firm’s commitment
to a particular direction may also enhance employees’ feelings of loyalty and duty to the organization,
as well as increase clarity in the prioritization
of tasks (Wiener & Vardi, 1980). We therefore
hypothesize:
Hypothesis 2: A firm’s commitment to exporting
positively influences:
Internal (Management) Forces
As discussed previously, a general model of organizational learning in this setting views the antecedents of export performance as derived from
Journal of International Business Studies
(a)
(b)
(c)
(d)
product adaptation
promotion adaptation
pricing adaptation
distribution adaptation.
Role of past performance in export ventures
Luis Filipe Lages et al
309
Hypothesis 3: A firm’s export performance in the
current year is positively influenced by a firm’s
commitment to exporting.
The influence of international experience on export
marketing strategy and current-year performance.
Management’s international experience refers to
the degree to which the firm’s management has
overseas experience, having lived or worked abroad,
as well as the accumulated skills and abilities that
support the achievement of the organization’s
exporting objectives and goals (Cavusgil, Zou, &
Naidu, 1993; Das, 1994). Experience is a primary
source of organizational learning (Penrose, 1959).
Experience in a wide range of markets provides
managers with a variety of insights, leading to a
more extensive knowledge base (March, 1991). Once
a firm has international experience, managers will
better learn the specific contingencies of each export
market, and the complex issues of marketing
adaptation to the different markets will be easier to
implement (Cavusgil et al., 1993; Douglas & Craig,
1989; Levinthal & March, 1993; Seifert & Ford, 1989;
Sinkula, 1994).
Further, as management’s experience in international markets increases, the firm is better
able to achieve its exporting goals because international experience promotes exploitative learning
by helping the firm to identify and take advantage of exporting opportunities while avoiding
international threats (Özsomer & Gençtürk, 2003;
Zou & Stan 1998). Madsen (1989) contends that
international experience leads to a better understanding of market mechanisms and a network of
personal contacts, resulting in improved marketing
decisions, and ultimately better performance.
Therefore we theorize:
performance as derived from strategies that are
the result of managerial decisions influenced by
market forces (Ferrier, 2001; Luo & Peng, 1999;
Prietula & Watson, 2000). A firm’s ability to adapt
quickly is associated with its ability to learn from
market opportunities and environmental changes
(Özsomer & Gençtürk, 2003; Ulrich, Von Glinow, &
Jick, 1993). Export market development and export
market competition determine demand potential
in a foreign market (Theodosiou & Leonidou, 2003)
and affect the firm’s marketing strategy.
The influence of export market development on export
marketing strategy. Export market development
refers to the overall standard of living in the export
market, as evidenced by the level of economic
development and education levels in that market.
As the level of development in an export market
increases, firms adapt their marketing strategies. The
rationale for strategy adaptation is derived from
multiple factors. First, more developed countries
have more developed regulatory environments,
often necessitating product modifications to local
standards (Cavusgil & Zou, 1994). Second, more
educated and sophisticated consumers are less
willing to accept products that do not specifically
fit their needs and/or consumption patterns. Third,
exploitation learning flourishes in more stable and
predictable environments, characteristic of more
developed markets, allowing managers to adapt
marketing strategies more effectively (Jaworski &
Kohli, 1993). Export ventures in more developed
markets are therefore in a better position to
build on existing routines and follow a strategy
refinement approach of the firm’s existing strategy
to the foreign market (Duncan, 1974).1 Hence, we
theorize:
Hypothesis 4: A firm’s international experience
positively influences:
Hypothesis 6: Export market development positively influences:
(a)
(b)
(c)
(d)
(a)
(b)
(c)
(d)
product adaptation
promotion adaptation
pricing adaptation
distribution adaptation.
Hypothesis 5: A firm’s export performance in the
current year is positively influenced by a firm’s
international experience.
External Market Forces
A general model of organizational learning in
this setting views the antecedents of export
product adaptation
promotion adaptation
pricing adaptation
distribution adaptation.
The influence of export market competition on export
marketing strategy. Export market competition
relates to the extent to which businesses vie for
the economic rents of an industry. Competition
may vary along multiple dimensions, such as the
number of competitors, price competitiveness, and
Journal of International Business Studies
Role of past performance in export ventures
Luis Filipe Lages et al
310
service/delivery. Research indicates that as the level
of competition in the export market increases,
firms engage in marketing strategy adaptation to
differentiate their offerings from others in the
market and maximize value delivery (Cavusgil &
Zou, 1994; Cavusgil et al., 1993). Without differentiation, a firm cannot gain an advantage over its
competitors to produce higher rents. Hence we
theorize:
Hypothesis 7: Export market competition positively influences:
(a)
(b)
(c)
(d)
product adaptation
promotion adaptation
pricing adaptation
distribution adaptation.
Past Export Performance
As discussed previously, a general model of organizational learning in this setting views the antecedents of current export performance as derived
from strategies that are the result of managerial
strategy decisions, such as marketing strategy
adaptation. However, both strategy decisions and
current-year performance, under an organizational
learning perspective, can be viewed as driven by
managerial assessment of past performance.
The influence of past export performance on marketing
strategy adaptation. Under an organizational learning
perspective, managers are viewed as assessing past
performance in accordance with specified goals and
then determining necessary actions to be taken.
Hence, managers can be viewed as reactive to past
performance in the determination of current
strategies. Empirical research in organizational
learning demonstrates that past performance
influences current managerial decisions (Lant &
Hurley, 1999; Lant et al., 1992; Lant & Montgomery,
1987). These findings are consistent with a central
assumption of the organizational learning literature,
which argues that organizations and individuals set
goals and adjust their behavior in response to
favorable and unfavorable feedback (Cyert & March,
1963; March & Simon, 1958). For example, Greve
(1998) reveals that if performance increases, adaptive
behavior declines. This decline occurs because organizations exhibit political resistance to change, and
managers face uncertainty regarding the opportunities that exist in the environment (Hannan &
Journal of International Business Studies
Freeman, 1977). In a similar manner, it can be
theorized that a firm may be more likely to take a
standardized approach to its marketing strategy in an
export venture when its past export performance has
been particularly strong (Lages & Montgomery, 2004).
In contrast, when an export venture is not performing
well, managers do not have the privilege of
maintaining the status quo. Hence, we theorize that
the firm will rely less on standardized strategies in
favor of adaptive strategies. More formally:
Hypothesis 8: A firm’s export performance
in the preceding year is negatively related to
the firm’s:
(a)
(b)
(c)
(d)
product adaptation
promotion adaptation
pricing adaptation
distribution adaptation.
The influence of past export performance on currentyear export performance. Organizational learning
theory also argues that past actions have a cumulative effect on current actions and outcomes. For
example, past performance plays a major role in the
context in which current marketing strategy
decisions are taken (Lages & Jap, 2003). These
prior decisions also influence future performance,
which forms the basis for future decisions. The
reinforcing effect of this feedback loop is related to
the phenomenon of path dependence, where
success in the past produces a tendency toward
similar behavior in the future (Cyert & March,
1963; Helfat, 1994; Nelson & Winter, 1982). As
part of this discourse we theorize that past export
performance sets the stage for current export
marketing decisions and also for current export
performance (as the current strategies incorporate
prior strategy adjustments based upon learning).
Thus we hypothesize that:
Hypothesis 9: A firm’s export performance in the
preceding year is positively related to export
performance in the current year.
METHODOLOGY
To examine the hypotheses we focused on the main
export venture of exporters from Portugal. We
selected this setting for three specific reasons.
First, our focus on a firm’s main export venture
derived primarily from exploratory interviews that
Role of past performance in export ventures
Luis Filipe Lages et al
311
indicated that Portuguese exporters typically developed a marketing strategy only for their main
export venture. Further, the focus on a single
export venture allowed us to associate marketing
strategy more precisely with its antecedents and
outcomes, as the main export venture involved a
single product or product line exported to a single
foreign market. Second, Portugal was selected
because of the small size of the domestic market,
which puts pressures on domestic firms to become
internationally oriented (Sousa & Bradley, 2006).
Third, Portugal is an interesting context owing to
the importance of exporting in the country and its
membership of the European Union (EU). The EU is
the world’s largest exporter of goods, maintaining a
stable share of approximately one fifth of total
world exports (intra-EU trade excluded) since 1990
(European Commission, 2000). As in many countries in the EU, economic growth in Portugal
depends heavily on the exporting success of its
firms. Since entering the EU in 1986, the country’s
export growth has boomed. In fact, exporting is
viewed as an important means for quickly decreasing the nation’s budget deficit (Financial Times,
2002).
Sample
Collectively, these characteristics indicate that both
Portuguese firms and the national government are
motivated to develop successful export marketing
strategies in the short term, an ideal context for
considering the activities of export marketing
performance and strategy definition.
Data used to test the model were collected
through a self-administered questionnaire sent to
exporters in Portugal. A sample of 2500 firms was
randomly generated from a government agency
database of ICEP-Portugal.
Pre-test. Pre-testing was conducted of three stages.
The first stage consisted of refining the English
version of the survey instrument and cover letter.
The initial survey format was developed based upon
pre-existing measures developed for and used
within the United States (see Measures section
and Appendix). Next, the survey instrument was
translated and back-translated. In order to avoid
translation errors, a different researcher translated
the questionnaire into English. During this stage
the content and face validity of the items were
assessed by four Portuguese judges (university
lecturers in marketing); each judge was asked to
assess how representative each item was of the final
construct. The survey was revised according to their
comments. Finally, the revised instrument was then
pre-tested with a sample of 15 managers involved
in export operations. Pre-test results were used to
refine the questionnaire further.
Data collection. Individuals identified in the source
directory were contacted via mail and asked to have
the person most involved with the daily administration of the exporting relationship complete the
survey. In the first mailing, a cover letter, a questionnaire, and an international postage-paid
business reply envelope were sent to the person responsible for exporting in each of the 2500
Portuguese firms. A follow-up survey packet was
sent after a 4-week interval. To enhance the
response rate, respondents were offered a list of
potential overseas importers or clients in return for
a completed survey.
Of the 2500 surveys mailed, 29 were returned
indicating that they no longer exported, and 119
questionnaires were returned by the postal service
as undeliverable. These firms had either closed
down or had moved without leaving a forwarding
address. Thus the sample size was reduced to 2352.
Of these, 519 usable questionnaires were returned,
a 22% response rate.
The Portuguese exporting industry consists primarily of small to mid-sized firms. Exporters from
all the Portuguese regions participated in the
survey. The average annual sales of these firms
ranged from h1.5 million to h5 million, with 27% of
the firms having sales below h1.5 million, 31%
from h5 million to h35 million, and 8% of the
companies having annual sales over h35 million.
With regard to the number of employees, 19% had
fewer than 20 employees, 27% had between 20 and
49, 22% between 50 and 99, 27% between 100 to
500, and 5% had more than 500 employees. Over
75% of the respondents reported on ventures with
other European countries, while the remainder
occurred with the United States and other nonEuropean countries. The average sales volume of
the main export venture ranged from h400,000 to
h1.5 million. The vast majority of firms had
significant experience in international business:
22% had 2–7 years, 39% had 8–15 years, 26% had
16–30 years, and 13% had over 30 years.
Respondents held positions such as president,
marketing director, managing director, and exporting director. Thirty-nine percent of the respondents
indicated that they had been responsible for the
exporting operations of their firm for 8–15 years,
Journal of International Business Studies
Role of past performance in export ventures
Luis Filipe Lages et al
312
while 81% of the respondents ranged from 3 to 30
years of responsibility for the operations. Respondents were also asked to indicate their degree of
experience in exporting, on a scale where 1¼none
and 5¼substantial. The mean response was 3.6
(s.d.¼0.84, range 1–5). Collectively, this indicates
that although the title of the respondents’ positions
may be wide ranging, the individuals appear to
have significant knowledge in the specific exporting activities of the firm, and are experienced with
exporting in general.
Non-response bias was tested by assessing the
differences between the early and late respondents
with regard to the means of all the variables
(Armstrong & Overton, 1977). Early respondents
were defined as the first 75% of the returned
questionnaires, and the last 25% were considered
to be late respondents. These proportions approximate the actual way the questionnaires were
returned. No significant differences among the
early and late respondents were found, suggesting
that response bias was not a significant problem in
the study.
Measures. Table 1 provides an overview of the
construct means, standard deviations, and correlation matrix among the 14 constructs.
Export performance is conceptualized as the
extent to which a firm’s objectives, both strategic
and financial, with respect to exporting a product
to a market are achieved via the execution of the
firm’s export marketing strategy (Cavusgil & Zou,
1994). The export literature considers both objective (financial) and subjective (non-financial) measures of export performance (Zou & Stan, 1998). We
therefore consider three dimensions of export
performance: export intensity, export achievement,
and export satisfaction. All three dimensions were
measured for both the preceding year and the
current year.
Export intensity refers to the proportion of
production output to exports, as evidenced by the
percentage of exports to the firm’s total sales and
profits. This variable is one of the most widely used
measures of performance in the literature on
international marketing (Katsikeas et al., 2000).
Although objective assessments of actual performance may be regarded as trustworthy, this type of
approach can also raise various measurement problems. We therefore also consider two forms of
subjective measure: performance achievement and
satisfaction with performance. The measure of export
intensity consisted of a three-item scale adapted
Journal of International Business Studies
from Kaynak and Kuan (1993) (apreceding¼0.96;
acurrent¼0.96).
Management’s expectations and perception of
the achievement of exporting goals play a key role
in the definition of firms’ export activities. Performance achievement refers to the extent to which
firms achieve their export objectives in terms
of sales, profitability, and market share, as well
as overall performance (cf. Katsikeas, Piercy, &
Ioannidis, 1996). Export performance achievement
was measured via a five-item scale adapted from
Katsikeas et al. (1996) (apreceding¼0.92; acurrent¼0.95).
Finally, performance satisfaction is defined as a
compound psychological variable (an affective
state) assessing the effectiveness of a marketing
program in terms of its sales, profitability, and
market share, as well as its overall performance
(cf. Bonoma & Clark, 1988). Satisfaction with
export performance was measured via a five-item
scale adapted from Shoham (1998) (apreceding¼0.94;
acurrent¼0.97). By measuring performance achievement and satisfaction with performance, instead of
performance per se, we were able to capture the
degree to which performance matched the goals
and aspiration levels of the firm, and compare it
across a variety of exporting firms. In this manner, a
boundary was incorporated from the perspective of
the firm and used as a reference point for perceived
success and failure under a learning orientation
perspective.
Export marketing strategy was assessed along the
elements of product, promotion, price, and distribution. Product adaptation was measured via a
four-item scale adapted from Zou et al. (1997)
(a¼0.81). Promotion adaptation was measured via a
five-item scale adapted from Zou et al. (1997)
(a¼0.89). Price adaptation was measured via a
four-item scale adapted from Shoham (1999)
(a¼0.85). Distribution adaptation was measured
by a four-item scale adapted from Shoham (1999)
(a¼0.87).
Measures for firm’s commitment to the export
venture (a¼0.81), management’s international
experience (a¼0.75), export market development
(a¼0.77), and export market competition (a¼0.79)
were also developed for this study, based upon
existing conceptualizations and items (e.g., Cavusgil
& Zou, 1994). Further, to minimize spuriousness of
results, a number of covariates were included in the
analysis. Specifically, size of the firm, distance of
export market from home country, number of
export markets and export sales volume were
included.
Table 1
Means, standard deviations, and correlations among constructs
Construct
s.d.
Min
Max
1
2.2
0.88
1.0
5.0
1
2.5
0.81
1.0
5.0
0.22
1
2.8
0.93
1.0
5.0
0.35
0.37
1
3.1
0.97
1.0
5.0
0.14
0.41
0.44
1
3.3
0.87
1.0
5.0
0.17
0.08
0.02
0.09
1
3.0
0.74
1.0
5.0
0.01
0.07
0.06
0.09
0.39
1
3.7
0.87
1.0
5.0
0.14
0.11 0.02
0.14
0.30
0.14
1
3.8
0.73
1.0
5.0
0.06 0.01
0.04
0.22
0.14
0.25
1
3.3
1.02
1.0
5.0
0.03
0.02 0.02 0.00
0.14
0.09
0.05
0.06
1
3.3
0.89
1.0
5.0
0.10
0.08 0.08 0.04
0.14
0.15
0.04
0.07
0.74
1
3.1
0.92
1.0
5.0
0.08 0.02 0.10 0.05
0.13
0.14
0.02
0.00
0.72
0.86
2.7
1.31
1.0
5.0
0.18
0.05 0.01
0.02
0.54
0.25
0.20
0.20
0.00 0.02 0.02
3.2
0.76
1.0
5.0
0.01
0.08 0.07
0.00
0.34
0.27
0.14
0.04 0.01
0.15
0.09
0.35
1
2.8
0.75
1.0
5.0
0.00
0.02 0.07 0.05
0.27
0.24
0.16
0.02
0.04
0.15
0.20
0.29
0.77
1
2.6
0.98
1.0
5.0
0.04
0.18
0.19
0.25
0.04
0.06
0.06
0.06
0.03
0.14
0.18
0.13
3.6
2608
3.6
1.37
2305
1.66
1.0
502
1.0
0.06 0.07
0.08 0.08
0.03 0.43
0.16
0.01
0.37
0.00
0.07
0.10 0.02
0.04 0.15
0.11 0.00
4
0.10
5
6
7
8
9
0.10 0.07 0.13
0.16 0.11 0.06
0.17 0.16 0.17
10
11
12
13
14
15
16
17
18
1
1
0.12 0.09 0.01 0.09 0.04
0.01 0.02 0.12 0.03 0.04
0.20 0.16 0.39 0.39 0.31
1
0.32
0.09
0.44
1
0.11 1
0.52 0.12
1
313
All correlations p0.09 or X0.09 are significant at a¼0.05.
3
Luis Filipe Lages et al
6.0
0.07
11286
0.01
8.0
0.04
2
Role of past performance in export ventures
Journal of International Business Studies
1. Product
adaptation
2. Promotion
adaptation
3. Pricing
adaptation
4. Distribution
adaptation
5. Firm’s
commitment to
exporting
6. Management
international
experience
7. Export market
development
8. Export market
competition
9. Export intensity
improvement in
current period
10. Performance
achievement
improvement in
current period
11. Satisfaction with
performance
improvement in
current period
12. Export intensity
in preceding
year
13. Performance
achievement in
preceding year
14. Satisfaction with
preceding year’s
performance
15. Number of
countries
16. Size
17. Distance
18. Export sales
value
Mean
Role of past performance in export ventures
Luis Filipe Lages et al
314
ANALYSIS
Larcker (1981) test; all possible pairs of constructs
passed this test. Evidence of discriminant validity
was revealed by the fact that the shared variance
among any two constructs (i.e., the square of their
intercorrelation) was less than the average variance
explained in the items by the construct (Fornell &
Larcker, 1981; MacKenzie, Podsakoff, & Rich, 2001).
Confirmatory Factor Analysis
In order to assess the validity of the measures, the
items were subjected to a confirmatory factor
analysis, using full-information maximum likelihood (FIML) estimation procedures in LISREL 8.3
(Jöreskog & Sörbom, 1993). In this model, each
item was restricted to load on its pre-specified
factor, with the 14 first-order factors allowed to
correlate freely. The chi-square for this model was
significant (w2¼3975.79, 1393 d.f., po0.00). Since
the chi-square statistic is sensitive to sample size,
we also assessed additional fit indices: the comparative fit index (CFI), the incremental fit index
(IFI), and the Tucker–Lewis Fit Index (TLI). The CFI,
IFI, and TLI of this model are 0.90, 0.90, and 0.89,
respectively. The RMSEA was 0.061.
As shown in the Appendix, all constructs present
the desirable levels of composite reliability (cf.
Bagozzi, 1980). Convergent validity was evidenced
by the large and significant standardized loadings
of each item on its intended construct (average
loading size was 0.81). Discriminant validity among
the constructs was assessed using the Fornell and
Structural Model Estimation
The hypotheses were tested using FIML estimation
procedures in LISREL 8.3. The estimation results for
the significant structural paths are exhibited in
Figure 2. The results of the structural equation
model testing indicate an acceptable fit (w2¼4356.82,
d.f.¼1577, po0.00, CFI¼0.90, IFI¼0.90, TLI¼0.89,
RMSEA¼0.058). Significance of the parameter estimates was assessed using t-values.
Hypothesis 1 indicated that current-year export
performance would be positively influenced by (a)
product adaptation, (b) promotion adaptation, (c)
pricing adaptation, and (d) distribution adaptation.
The hypothesis was examined employing three
measures of export performance (intensity, achievement and satisfaction). In all, only one of the relationships was significant (i.e., product adaptation
γ71 = 0.17
Management forces
γ61 = 0.16
γ51 = 0.20
Firm’s commitment
to exporting
ξ1
γ1 =
1 0.1
Current year adaptation
of marketing mix
4
Management
international experience
ξ2
γ56 = -0.26
γ76 = -0.32
γ57 = 0.19
4
0.
14
=
γ 13
1
0.
Pricing
adaptation
η3
=
γ67= 0.16
γ77 = 0.40
γ4 =
7 -0.2
0
Export performance
improvement in
current year
Export
intensity
η5
Performance
achievement
η6
γ
Performance
satisfaction
ξ7
Promotion
adaptation
η2
23
Performance
achievement
ξ6
γ 15 = 0.20
γ65 = -0
.18
γ55 = -0.12
γ75 = -0
.18
11
Export
intensity
ξ5
-0.
Export performance
in preceding year
Product
adaptation
η1
Performance
satisfaction
η7
Export market forces
Export market
competition
ξ4
Distribution
adaptation
η4
5
γ43 = 0.18
Number of markets
Size
Distance
0.0
6
0.1
Export market
development
ξ3
5
0.0
Export
sales value
0.09
0.11
0.10
Figure 2 Summary of significant relationships. For simplicity of depiction we do not include non-significant relationships, observable
indicators, factor loadings, measurement and latent errors, inter-factor correlations, or t-values.
Journal of International Business Studies
Role of past performance in export ventures
Luis Filipe Lages et al
315
has a significant negative effect on performance
achievement; b61¼0.11, po0.05). Hence we did
not find support for H1a–H1d.2
Hypothesis 2 indicated that a firm’s commitment
to exporting would positively influence (a) product
adaptation, (b) promotion adaptation, (c) pricing
adaptation, and (d) distribution adaptation. Supportive of H2a, the firm’s commitment to exporting
has a significant, positive effect on product adaptation (g11¼0.14, po0.05). Support was not found for
H2b (g21¼0.02, n.s.), H2c (g31¼0.01, n.s.), or H2d
(g41¼0.06, n.s.).3
Hypothesis 3 argued that a firm’s export marketing performance in the current year would be
positively influenced by the firm’s commitment
to exporting. The hypothesis was examined employing three measures of export performance
(intensity, achievement, and satisfaction). Firm
commitment to exporting significantly influenced
export intensity (g51¼0.20, po0.01), performance
achievement in the current period (g61¼0.16,
po0.01), and performance satisfaction (g71¼0.17,
po0.01).4 Thus H3 was fully supported.
Hypothesis 4 indicated that a firm’s international
experience would positively influence (a) product
adaptation, (b) promotion adaptation, (c) pricing
adaptation, and (d) distribution adaptation.
Management’s international experience was not
significantly related to product (g12¼0.11, n.s.),
promotion (g22¼0.02, n.s.), pricing (g32¼0.07, n.s.),
or distribution adaptation (g42¼0.08, n.s.). Thus
H4a–H4d are not supported.5
Hypothesis 5 indicated that a firm’s export
performance in the current year would be positively
influenced by the firm’s international experience.
The results indicate that management’s international experience is not significantly related to
export intensity (g52¼0.02, n.s.), performance
achievement in the current period (g62¼0.04, n.s.),
or performance satisfaction (g72¼0.06, n.s.). Thus
H5 is not supported.6
Hypothesis 6 indicated that a firm’s international experience would positively influence (a)
product adaptation, (b) promotion adaptation,
(c) pricing adaptation, and (d) distribution adaptation. The results indicate that export market
development was positively related to product
(H6a: g13¼0.14, po0.05), promotion (H6b: g23¼0.14,
po0.05), and distribution (H6d: g43¼0.18,
po0.01) adaptation, but is not significantly
related to pricing adaptation (H6c: g33¼0.00, n.s.).
Thus the results provide support for H6a, H6b
and H6d.7,8
Hypothesis 7 indicated that export market competition would positively influence (a) product
adaptation, (b) promotion adaptation, (c) pricing
adaptation, and (d) distribution adaptation. Export
market competition has no significant effects on
product (g14¼0.04, n.s.), promotion (g24¼0.08,
n.s.), pricing (g34¼0.01, n.s.), or distribution
adaptation (g44¼0.02, n.s.). Thus no support was
found for H7a–H7d.9
Hypothesis 8 indicated that a firm’s export
performance in the preceding year would negatively relate to the firm’s (a) product adaptation, (b)
promotion adaptation, (c) pricing adaptation, and
(d) distribution adaptation. The results indicate
that prior period export intensity exerts a positive
significant effect on product adaptation (g15¼0.20,
po0.01), but has no significant effect on promotion (g25¼0.00, n.s.), pricing (g35¼0.01, n.s.), or distribution (g45¼0.02, n.s.) adaptation. Prior period
performance achievement has a marginally significant, positive effect on promotion adaptation
(g26¼0.13, po0.10), but non-significant effects on
product (g16¼0.05, n.s.), pricing (g36¼0.09, n.s.),
and distribution (g46¼0.09, n.s.) adaptation. Prior
period performance satisfaction produces a significant negative effect on distribution adaptation
(g47¼0.20, po0.05), and a marginally significant
effect on promotion adaptation (g27¼0.13, po0.10),
but does not have a significant effect on product
(g17¼0.05, n.s.) or pricing (g37¼0.03, n.s.) adaptation. Thus there is partial support for H8a–H8d.
Hypothesis 9 indicated that a firm’s export performance in the preceding year is positively related to
export performance in the current year. The results
indicate that there is a significant negative effect of
prior-period export intensity on current-period
export intensity (g55¼0.12, po0.05), performance
achievement (g65¼0.18, po0.01), and performance
satisfaction (g75¼0.18, po0.01). Prior-period performance achievement has significant negative
effects on export intensity (g56¼0.26, po0.01) and
performance satisfaction (g76¼0.32, po0.01), but
not on current performance achievement (g66
¼0.08, n.s.). Prior-period performance satisfaction
has significant positive effects on export intensity
(g57¼0.19, po0.01), performance achievement (g67
¼0.16, po0.05), and performance satisfaction (g77
¼0.40, po0.01). Thus there is partial support for H9.
DISCUSSION
This study was motivated by a desire to gain a
better understanding of managerial learning from
past performance in the enactment of marketing
Journal of International Business Studies
Role of past performance in export ventures
Luis Filipe Lages et al
316
strategy and implications for export performance.
We employed an organizational learning perspective, within a short-term reactive approach, to
understand how internal, external, and past performance influenced marketing strategy and current-year performance. Our findings offer insights
into these issues and provide significant implications for international marketing academics and
practitioners.
Theoretical Implications
In this study we adopted the organizational learning perspective to consider current export performance as a foundation of export marketing strategies, preceding-year export performance, internal
(management) and external (market) forces. The
central element of the study was the short-term
impact of past export performance on export
marketing strategy and current-year export performance. Surprisingly, the results suggest that in the
short term the preceding year’s export performance
has little influence on current-year marketing
strategy adaptation, and that current-year marketing strategy adaptation has little influence on
current-period performance improvement. In fact,
the only significant relationships identified between
preceding-year export performance, marketing strategy adaptation, and current-period performance
improvement were related to product adaptation
(i.e., preceding-year export intensity positively influences product adaptation, and product adaptation
negatively influences current-year export performance achievement) and distribution adaptation
(i.e., preceding-year export performance satisfaction
is negatively related to distribution adaptation).
One rationale for the significant findings is that
product standardization might improve performance, particularly if it enables the alleviation of
gray markets or economies of scale in marketing
efforts. Another possible explanation might be
based on the fact that managers use mental models
to interpret reality. It might be possible that the
assumptions about the market that led to actions
are not completely accurate (Day, 1994; Day &
Nedungadi, 1994; Senge 1990, 1992). For example,
if a firms does a market study that determines that
it is important to adapt to the foreign market brand
name, product design, product labeling and variety
of the main exporting product line, and managers
have flawed models that lead them to act on the
assumption that brand name is the key criterion,
‘‘then misinterpretation of the information is
likely to lead to flawed learning and thus flawed
Journal of International Business Studies
organizational actions’’ (Sinkula et al., 1997: 308).
In these situations it is better to standardize the
domestic strategy to the foreign market rather than
adapt wrongly (Cavusgil & Zou, 1994). Further, in
terms of distribution adaptation, the results are
supportive of organizational learning, which would
imply that lower satisfaction with performance
would require adjustments in strategy. For example,
Greve (1998) argues that when performance
increases, adaptive behavior declines, because organizations exhibit political resistance to change, and
managers face uncertainty regarding existing
opportunities (Hannan & Freeman, 1977).
However, the general lack of a higher number of
short-term effects related to the performance–
strategy–performance relationship should not be
viewed as disconfirmation of organizational learning theory, but rather within the context of
organizational learning theory. Specifically, according to organizational learning theory, learning may
affect strategy definition without affecting shortterm performance. For example, Sinkula et al.
(1997: 307) argue: ‘‘In the short run, measures of
market performance may mask real improvements
in the learning capabilities of an organization
[because] before market performance changes can
be expected, absolute thresholds of improvement
must be surpassed.’’ Therefore the general lack of
findings in this study related to the influence of
preceding-year export performance on export marketing strategy may be due to the short-term focus,
as it may take longer than the current year to
observe the impact of adapting marketing strategies
on export performance. Furthermore, the lack of
findings may result from differences in product
types. In fact, the extant adaptation/standardization literature suggests that type of product may
significantly influence marketing strategy adaptations. Post hoc analysis conducted along product
type supports this conclusion, providing further
insights into the hypotheses (see notes 2–8), thus
suggesting the complex relationships that can be
uncovered via the employment of organizational
learning theory.
The results also indicate complex relationships
between measures of preceding-year export performance and current-year export performance, and
therefore highlight the importance of employing
multiple measures of export performance. For instance, satisfaction with the preceding year’s
performance reinforces export performance improvement (in terms of performance achievement,
export intensity, and export satisfaction) in the
Role of past performance in export ventures
Luis Filipe Lages et al
317
short term. It can be argued that satisfaction with
past performance facilitates the availability of more
resources, which in turn enables the firm to search
broadly for information and to conduct the indepth analyses necessary to promote and sustain
strong performance into the future.
However, it is important to note that export
intensity in the preceding year was found to
negatively influence current-year export performance achievement and satisfaction with export
performance. One explanation for the negative
effect of past-period export intensity might be that
when export intensity in the prior period is high,
the firm increases slack and decreases effort on the
exporting operations, which may negatively affect
performance achievement, satisfaction, and export
intensity in the short run. This finding is supported
to some extent by the negative relationship found
between the preceding year’s export performance
achievement and current-year export satisfaction.
An alternative explanation for why past performance achievement and export intensity would
yield a negative effect on current-year performance
improvement is the possibility that maintaining
high levels of export intensity or ambitious performance goals is difficult year to year.
Since the majority of the firms in the sample are
in medium to high stages of exporting involvement
(over 80% of the sampled firms have maintained
international operations for more than eight years),
these firms may have high goals and expectations
for the following year. Consequently, the likelihood
of frustrating or falling short of expectations
increases. At these levels, little room exists for
improvement, and more often than not firms
might only reduce or slightly increase their export
intensity and achievement of objectives in the
short term. This inability to improve might explain
the lack of a significant relationship between past
and current performance achievement, as well as
the lack of influence of the preceding year’s export
performance on marketing strategy adaptation
when viewed within organizational learning theory. Specifically, organizational learning suggests
that managers work to identify associations between firm-level behaviors that are associated with
positive and negative outcomes, repeating those
behaviors that drive positive outcomes and eliminating behaviors that result in negative outcomes
(Cyert & March, 1963, Levinthal & March, 1981;
Sullivan & Nonaka, 1986).
Further, the findings of this study present insights
into the influence of internal and external forces on
marketing strategy adaptation and current-year
export performance. In relation to the influences
of internal (management) forces, the results indicate that a firm’s commitment to exporting, as
opposed to having significant international experience, facilitates performance improvement in the
current year. A possible explanation of this result is
that management experience might affect performance primarily in the long term, rather than the
short term. Additionally, as managers’ commitment
to exporting activities increases, a firm tends to
allocate more financial and human resources to
these activities, which improves performance in the
current period. In relation to the influences of
external (market) forces, our results indicate that
export market development significantly influenced product, promotion, and distribution adaptation. These findings suggest that external forces
play a significant role, and more importantly a
more significant role in marketing strategy adaptation than preceding-year export performance or
internal forces.
The employment of the covariates also added
insights into the model. Specifically, as would be
expected, as a firm’s export volume increases, there
is a positive effect on current performance achievement, satisfaction, and export intensity. This is
reflective of organizational learning theory’s reinforcing behavior. Moreover, the results indicate that
the further away the export market is, the more
pricing and distribution are adapted to the export
market. Additionally, as the number of countries
exported to increases, promotion mixes are adapted
to the export market. This suggests that, as firms
gain experience with more markets, they are better
able to understand and recognize the specific
contingencies of those markets and alter their
strategies to fit those markets.
Managerial Implications
The model presented in this paper helps managers
to systematize the short-term relationships operating in the complex export-marketing phenomenon
and, simultaneously, might help to improve their
marketing expertise and enhance their ability to
protect and perform better in the domestic market.
First, the results indicate that firms are likely to
improve their export performance in the short term
if they are more committed to export operations.
Hence, companies may profit by investing in exporting operations by allocating more human and
financial resources to these activities. However,
marketing strategy may be more difficult to adapt
Journal of International Business Studies
Role of past performance in export ventures
Luis Filipe Lages et al
318
so as to alter performance in the short term. Export
managers are particularly encouraged to reflect on
the fact that quite often it will not be possible to see
the effects of preceding strategies in the long run
because strategies are determined every year as a
reaction to the previous year’s results.
Second, results suggest that marketing strategy
definition in the short term is strongly influenced
by internal and external forces of the firm as well as
by past performance levels. Short-run adaptive
strategies require significant resources (both financial and human), and should be used when the firm
is exporting to developed markets, or has a strong
commitment to those markets. Additionally, the
findings might also be informative when a firm is
assessing its propensity to explore new markets, as
at this stage the firm may have to take into account
the degree of competition and market development
in making the decision.
Third, the results highlight the importance of
action, in that if the previous year’s performance is
unsatisfactory, failure to adapt will result in continued failures. It is particularly interesting to
observe the negative relationship between past
export intensity and current-period performance.
This might suggest that firms chase annual performance when the importance of the export activity
within the firm is lower. By better understanding
the relationship between past and current-period
performance, and by making the appropriate coalignment with the internal and external context of
the export venture, managers can avoid repetition
of unsatisfactory export performance.
LIMITATIONS AND DIRECTIONS FOR FUTURE
RESEARCH
Although this study provides a number of new
insights, it is important to note its limitations. We
will address future research directions in the context of, and as extensions to, the limitations. First,
this study employed a cross-sectional survey method, and therefore suffers from the common limitations of the method, for example, cross-sectional
design, common method. Although we attempted
to capture the dynamics of the exporting phenomenon by focusing each question on specific time
periods, thus building in a logical progression, the
study is cross-sectional. Future research should seek
to overcome this limitation. Also, the survey
methodology may have created common method
variance, which could have inflated construct
relationships. This inflation could be particularly threatening if the respondents were aware
Journal of International Business Studies
of the conceptual framework of interest. However,
if common method bias exists, a CFA containing
all constructs should produce a single method
factor (Podsakoff & Organ, 1986). The goodnessof-fit indices (CFI¼0.60, IFI¼0.60, TLI¼0.58) indicate a poor fit for the single-factor model, which
suggests that biasing from common method variance is minimal. Future research could address this
issue via data collection from multiple sources,
such as other elements involved in the supply
chain (see Skarmeas, Katsikeas, & Schlegelmilch
(2002) for the importer side).
Further, the research context limits the findings.
The fact that the research context involved only
one country and small to moderate size firms may
limit the generalizability of the results to some
degree. However, Western countries in situations
similar to that of Portugal may also benefit from the
findings. For example, since American and British
firms tend to be more orientated to short-term
objectives than their Japanese rivals (Doyle,
Saunders, & Wong, 1986, 1992), the framework
presented here might better explain export marketing reality within their context. Nevertheless, it
would be interesting to apply this framework, for
example, to Japanese exporters to better understand possible short-term reactions of firms that are
typically long-term oriented (Doyle et al., 1986,
1992; Wong, Saunders, & Doyle, 1987).
Extending beyond the limitations, we believe
that this research provides a foundation for significant research endeavors to advance the field.
For example, this research has shown the empirical
link between previous year and current performance improvement. However, research still needs
to investigate this link systematically and thoroughly. As stated by Sinkula et al. (1997: 308), ‘‘the
extent to which organizations are able to store and
access past lessons of history will affect their ability
to maintain a steady pace of long-term learning
that continuously builds from the past.’’ By considering how strategy is affected in the short term,
we provide insight into the building blocks of longterm learning. Our results indicate that, in the short
term, performance satisfaction tends to be perpetuated, so that negative past performance satisfaction leads to negative current-period performance
satisfaction, and vice versa. However, is it possible
through marketing strategy development to break a
negative cycle and improve performance satisfaction in the short term?
Conversely, both past export performance
achievement and export intensity lead to lower
Role of past performance in export ventures
Luis Filipe Lages et al
319
export performance (in terms of performance
achievement, export intensity, and performance
satisfaction) in the short term. This finding suggests
that prior performance exerts complex effects on
marketing strategy and current performance, and
that this effect varies, depending on which dimension of performance is being considered. Specifically, additional research should explain how past
performance affects current performance, particularly when different measures of past performance
are negative or positive. Overall, this remains an
intriguing direction for future work. We hope that
the empirical findings of this study will encourage
academic researchers to reflect more often on the
importance of previous export performance for
current export marketing strategy and current
export performance.
Further, past research suggests that long-term
success is founded upon the capability not only to
learn when faced with environmental changes, but
also to adapt continuously in the short term, even
when the firm is performing well (Sinkula et al.,
1997). Hence, research opportunities exist in the
investigation of learning simultaneously through
exploration- and exploitation-type capabilities
(cf. Atuahene-Gima, 2005; March, 1991; Özsomer &
Gençtürk, 2003). Research indicates that, through
the refinement of existing knowledge, export
managers are expected to exhibit a self-reinforcing
bias toward exploitation learning – more short-term
oriented – which will damage their capacity for
explorative learning – more long-term oriented
(Levinthal & March, 1993). We therefore argue that
future export marketing research relating to understanding the balance between exploitation and
exploration learning capabilities and their influence on short- and long-term export marketing
performance could provide new insights into the
field. Additionally, the majority of organizational
learning theorists accept that organizational learning ultimately manifests itself through organizational actions (Sinkula et al., 1997). In this study we
focus on marketing strategy modifications (export
adjustments of domestic strategies) as a consequence of previous performance. Future research
is strongly encouraged to analyze whether a
strategy (e.g., degree of innovation vs disinnovation) has been changed from one year to the
following in response to past performance, and
the rationale behind this change.
In summary, the findings of this study provide
theoretically founded contributions to the extant
literature related to export marketing performance.
This study was motivated, to some extent, by
Morgan et al.’s (2004) call for more theory-driven
export performance research. Through the employment of organizational learning theory, and more
specifically exploitation learning capabilities, we
were able to develop and test a model of short-term
export performance. The findings of this research
echo Madsen’s view (1998: 82) that ‘‘the real world
is not as simple as the economic theory, according
to which the long-term profitability or maximization of rent-earning abilities are the ultimate goals
for the firm.’’ Clearly, managers appear oriented
toward the short term when they define their
strategies and assess the performance of an export
venture. By better understanding this phenomenon, we increase our understanding of strategy
definition and its evolution in international marketing exchanges.
ACKNOWLEDGEMENTS
This research was funded by the following research
grants to the first author: by FCT-EU (2000–2001)
while a Visiting Scholar at MIT Sloan School of
Management and Stanford University Graduate School
of Business; by NOVA EGIDE (2001–2007) and 6th
European Framework Program (2004–2006) while
affiliated with Universidade Nova de Lisboa; and by
FCT-EU (2006) while a Visiting Scholar at London
Business School. The authors acknowledge Tim
Ambler, Pedro Pita Barros, James Harris, Jose Mata,
David Montgomery, Aviv Shoham, Jose Tavares, JIBS’
editors, and three anonymous reviewers for comments
on earlier versions of the manuscript.
NOTES
Earlier research on the impact of export market
forces on export performance yields mixed findings
(cf. Austin, 1990; Beamish, Craig, & McLellan, 1993;
Sriram & Manu, 1995). In light of these mixed results,
and the lack of strong theory based upon organizational learning to posit such relationships, we do not
hypothesize the relationships between the export
market forces and performance improvement in the
current period.
2
However, while taking into consideration the
comment of an anonymous reviewer, we split the
sample into exporters of consumer products (n¼416)
and exporters of industrial products (n¼103). After
analyzing the correlation matrices we found some
support for H1. An analysis of the correlations revealed
that, for industrial exporters, distribution adaptation is
significantly correlated with current-period export
intensity (r¼0.21, po0.05). This split also indicated
1
Journal of International Business Studies
Role of past performance in export ventures
Luis Filipe Lages et al
320
that our initial finding, that product adaptation is
negatively correlated with performance achievement,
is found to be significant only in the case of consumer
goods (r¼0.12, po0.05).
3
After splitting the sample, we found additional
support for H2d because for industrial exporters a
firm’s commitment to exporting is significantly correlated with distribution adaptation (r¼0.21, po0.05).
While taking into consideration the comment of an
anonymous reviewer, we used the mean of the past
performance factors to divide the sample into exporters with low/high past export intensity (n¼265/
n¼254), low/high past performance achievement
(n¼240/n¼279), and low/high past satisfaction
(n¼212/n¼307). After splitting the sample, we found
that commitment is correlated with promotion adaptation when past intensity (r¼0.20, po0.01) and past
satisfaction (r¼0.14, po0.05) are high. Moreover,
commitment is also correlated with distribution adaptation when both past intensity (r¼0.16, po0.05) and
past satisfaction (r¼0.12, po0.05) are high.
4
Surprisingly, we found that the correlations
between commitment and the three dimensions of
current performance (intensity, achievement, and
satisfaction) are positive only for exporters of consumer goods (r¼0.15, po0.01; r¼0.15, po0.01;
r¼0.13, po0.01, respectively). We also found that
the relationship between commitment and the three
dimensions of current performance is positive only
when past intensity is low (r¼0.20, po0.01; r¼0.17,
po0.01; r¼0.16, po0.05, respectively), past achievement is low (r¼0.24, po0.01; r¼0.19, po0.01;
r¼0.19, po0.01, respectively), and past satisfaction
is low (r¼0.21, po0.01; r¼0.17, po0.05; r¼0.20,
po0.01, respectively).
5
However, after dividing the sample we found
some support for H3. For exporters of consumer
products, experience is significantly correlated with
distribution adaptation (r¼0.10, po0.05). Moreover,
we also found that when satisfaction with past performance is low there is a positive correlation between
experience and distribution adaptation (r¼0.17,
po0.05).
6
After splitting the sample we found partial support
for H5. In the case of exporters of consumer products,
experience is significantly correlated with currentexport intensity (r¼0.12, po0.05), current performance achievement (r¼0.16, po0.01), and current
performance satisfaction (r¼0.15, po0.01). Surprisingly, we also found that experience is correlated with
the three dimensions of current performance (intensity, achievement and satisfaction) only when past
intensity is high (r¼0.12, n.s.; r¼0.20, po0.01; r¼0.16,
po0.01, respectively), past achievement is low (r¼0.18,
po0.01; r¼0.17, po0.01; r¼0.17, po0.01, respectively), and past satisfaction is low (r¼0.18, po0.05;
r¼0.21, po0.01; r¼0.23, po0.01, respectively).
7
After splitting the sample, we found that only in the
case of consumer goods is export market development
positively correlated to product (r¼0.16, po0.01),
promotion (r¼0.15, po0.01) and distribution (r¼0.16,
po0.05).
8
Although we did not hypothesize specific effects
between export market forces and current-period
performance improvement, we estimated the effects,
only to find that export market forces produces no
significant effects on current-period export intensity
(g53¼0.01, n.s. for market development and
g54¼0.06, n.s. for competition), performance achievement (g63¼0.02, n.s. for market development and
g64¼0.08, po0.10 for competition) or current-period
performance satisfaction (g73¼0.04, n.s. for market
development and g74¼0.01, n.s. for competition).
9
However, we found some support for H7. When
past export intensity is low, competition is correlated
with product adaptation (r¼0.14, po0.05).
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APPENDIX: SCALE ITEMS AND RELIABILITIES
Scale: 1¼much worse in 1998 than in 1997;
5¼much better in 1998 than in 1997
a¼Internal reliability (Cronbach, 1951)
rvc(n)¼Variance extracted (Fornell & Larcker, 1981)
r¼Composite reliability (Bagozzi, 1980)
Preceding Year’s Performance
Performance achievement in preceding year (a = 0.92;
qvc(n) = 0.67; q = 0.91)
Question: How well did your company achieve the
following objectives for the main export venture in
1997?
Scale: 1¼very badly; 5¼very well
Export sales volume (unit sales)
Export sales revenue
Export profitability
Market share in the main importing market
Overall export performance
Export intensity in preceding year (a = 0.96; qvc(n)¼0.86;
q = 0.95)
Question: With regard to your main export venture
in 1997, how do you assess the following?
Scale: 0–9%; 10–29%; 30–59%; 60–84%; 85–100%
Percentage of exporting venture to total sales
volume (unit sales)
Percentage of exporting venture to total sales
revenue
Percentage of exporting venture to total profitability
Satisfaction with preceding year’s performance (a = 0.94;
qvc(n) = 0.77; q = 0.94)
Question: How satisfied are you with the 1997
results of your main export venture?
Scale: 1¼not satisfied at all; 5¼extremely satisfied
Export sales volume (unit sales)
Export sales revenue
Export profitability
Market share in the main importing market
Overall export performance
Export sales volume (unit sales)
Export sales revenue
Export profitability
Market share in the main importing market
Overall export performance
Export intensity improvement in current period (a = 0.96;
qvc(n)¼0.87; q = 0.95)
Question: With regard to your main export venture,
to what extent did the following change from 1997
to 1998?
Scale: 1¼large decrease from 1997 to 1998; 5¼large
increase from 1997 to 1998
Percentage of exporting venture to total sales
volume (unit sales)
Percentage of exporting venture to total sales
revenue
Percentage of exporting venture to total profitability
Satisfaction with performance improvement in current
period (a = 0.97; qvc(n)¼0.84; q = 0.96)
Question: How satisfied are you with the results of
your main export venture from 1997 to 1998?
Scale: 1¼much less satisfied in 1998 than in 1997;
5¼much more satisfied in 1998 than in 1997
Export sales volume (unit sales)
Export sales revenue
Export profitability
Market share in the main importing market
Overall export performance
Adaptation of the Marketing Mix
Question: Consider the main export venture over
the past year (1998). To what extent do the
following aspects differ in comparing the main
export market to the domestic market?
Scale: 1¼no adaptation; 5¼extensive adaptation
Current Performance Improvement
Performance achievement improvement in current
period (a = 0.95; qvc(n)¼0.79; q = 0.95)
Question: How well did your company achieve the
following objectives for the main export venture
from 1997 to 1998?
Product adaptation (a = 0.81; qvc(n) = 0.52; q = 0.81)
Product brand name
Product design
Product labeling
Variety of the main exporting product line
Journal of International Business Studies
Role of past performance in export ventures
Luis Filipe Lages et al
324
Promotion
q = 0.89)
adaptation
(a = 0.89;
qvc(n)¼0.62;
Advertising theme
Media channels for advertising
Promotion objectives
Budget for promotion
Direct marketing
Pricing adaptation (a = 0.85; qvc(n)¼0.59; q = 0.85)
Determination of pricing strategy
Concession of credit
Price discounts policy
Margins
Distribution adaptation (a = 0.87; qvc(n)¼0.63; q = 0.87)
Criteria for selection
Transportation strategy
Distribution budget
Distribution network
Internal (Management) Forces
Firm’s commitment to exporting (a = 0.81; qvc(n)¼0.53;
q = 0.82)
Question: Consider the main export venture over
the past year (1998). To what extent do you agree or
disagree with the following statements?
Scale: 1¼strongly disagree; 5¼strongly agree
There was substantial planning for this export
venture
There was a significant amount of human
resources involved in the exporting activity
There was a significant degree of management
commitment to exporting
There were more financial resources for exporting
than those used for the domestic market
Management international experience (a = 0.75;
qvc(n)¼0.45; q = 0.76)
Question: Consider the people involved in your
main export venture during the past year (1998).
How would you classify their:
Scale: 1¼None; 5¼Substantial
Degree of professional exporting experience
Degree of overseas experience–live/work abroad
Degree of training in international business, for
example, attended formal courses and export
seminars
Journal of International Business Studies
Ability to follow up on trade leads in the main
importing market
External (Market) Forces
Export market development (a = 0.77; qvc(n)¼0.63;
q = 0.77)
Question: Considering the main export venture
over the past year (1998), how would you characterize the following aspects of the export market?
Scale: 1¼none; 5¼substantial
Degree of country’s development
Level of consumer education in the importing
country
Export market competition (a = 0.79; qvc(n)¼0.56;
q = 0.79)
Question: Considering the main export venture
over the past year (1998), how would you characterize the following aspects of the export market?
Scale: 1¼none; 5¼substantial
Extent of price competition in the industry
Competition in the accomplishment of delivery
deadlines
Competition in the industry
Covariates
Size of the firm
Question: What was the total number of full-time
employees working in your firm last year (1998)?
Scale: 1–9; 10–19; 20–49; 50–99; 100–499; X500
Distance of export market to Portugal
Question: Please indicate which was, in 1998, your
company’s main importing country of your main
exporting product (or group of products): _______
(please indicate one country only)
Scale: The distance in kms was computed as the
difference between Lisbon (Portugal) and the
capital of the country.
Number of markets
Question: Last year (1998), how many countries
imported your main exporting product?
Scale: 1; 2–4; 5–9; 10–25; 425
Export sales value
Question: What was your company’s total export
sales for last year (1998)?
Scale: ph100,000; h100,001–350,000; h350,001–
1.5m; h1.5m–3.5m; h3.5m–5m; h5m–35m; h35m–
145M; Xh145M
Role of past performance in export ventures
Luis Filipe Lages et al
325
ABOUT THE AUTHORS
Luis Filipe Lages is Associate Professor of Marketing and International Business at Universidade
Nova Lisboa, Portugal, and Visiting Scholar at MIT’s
Deshpande Center for Technological Innovation.
Born in Portugal, he is a Portuguese citizen. He
received his PhD in marketing and international
business from Warwick University, UK. His research
interests include international marketing, measurement of intangibles, innovation/disinnovation
strategy, and technology-market transfer. His publications have appeared in the Journal of International Marketing, Journal of Business Research,
Industrial Marketing Management, among others. He
can be reached at [email protected].
Sandy D. Jap is the Caldwell Research Fellow
Associate Professor of Marketing at the Goizueta
Business School at Emory University. Born in
Indonesia, she is a US citizen. She received her
doctorate in marketing from the University of
Florida, USA. Her research interests include the
development and management of interorganizational relationships and e-procurement processes
such as online reverse auctions. She has published in
the Journal of Marketing Research, Journal of Marketing,
Management Science, and Organization Science. She
can be reached at [email protected].
David A. Griffith is Associate Professor of Marketing in the Eli Broad Graduate School of Management at Michigan State University. His research
interests include international marketing strategy
and the employment of firm resources for strategic
marketing effectiveness. He has published in the
Journal of Marketing, Journal of International Business
Studies, Journal of Operations Management, etc. He
earned his PhD at Kent State University and is a
native of the US. He can be reached at griffith@
bus.msu.edu.
Accepted by Arie Y Lewin, Editor-in-Chief, 20 April 2007. This paper has been with the authors for three revisions.
Journal of International Business Studies