Abstract

     Trade in digital goods and services have witnessed increasing growth in recent years, accompanied by a corresponding increase in data flows across national boundaries. At the same time, governments around the world have enacted data policies that restrict such cross border data flows in their effort to claim sovereignty over data generated from within their countries. However, scholars have long proclaimed that any restrictions to the Internet and associated digital trade will have serious economic consequences. Given this context, we analyze the impact of data policies that impose restrictions on digital trade, specifically on cross border data flows. We construct Market Data Restrictions Index (MDRI), that measures the data restrictions faced by an exporting country from their trade partners. We use a variation of random effect model on a panel data set consisting of 60 countries that contribute to more than 50 percent of IT services export during the period 2006–2017. The results indicate that apart from variables such as Foreign Direct Investment, and Service Value Added, the MDRI of partner countries has a moderate negative effect on IT services export. If countries move from liberal policies to stringent data restrictions, the economies of the country that exports its ICT services to these partner countries is affected substantially. Hence government regulators shall be cautious in imposing stringent data restrictions as it affects global digital trade.

Introduction

     Global flows of goods and services that contribute to international trade have reached US$25 trillion as of 2019 (UNCTAD, 2020). Over the last two decades, financial flows including Foreign Direct Investment (FDI) have become significant across countries (UNCTAD, 2020). Recently there is a growing interest amongst researchers to look at digital information flows as another factor of importance in international trade and consequently on growth of the economies (MGI, 2014; MGI, 2016). Between 2004 and 2014, it is estimated that digital trade increased world GDP by more than 10 per cent, equivalent to US$7.8 trillion (Meltzer & Lovelock, 2018). International digital trade that comprises of import and export of digital goods and services, involves significant data flows across national borders.

     Most of the data flows of the last decade were primarily attributable to Information and Communication Technology (ICT) services.IT outsourcing firms, especially in countries such as India, benefitted due to free flow of cross border data, thereby providing ICT services to business customers located mainly in the U.S. and Europe. For example, India – one of the world’s leading ICT outsourcing destinations, witnessed exports of ICT services worth US$105 billion in 2019, with an annual compounded growth rate of about 10.23 percent since 2010. Ubiquitous Internet connectivity, digitization of business processes, and large availability of skilled technical manpower has contributed to the growth of ICT outsourcing services in India and has established the country firmly in the global digital supply chain (Carmel & Tjia, 2005; Edwards & Sridhar, 2005).

Conclusions and future research directions

     This paper makes two unique contributions to the literature on impact of data related policies on trade, more specifically digital services exports. One, the paper has constructed an index to measure the data policy restrictions a country faces in the market using the restrictions on data cluster of the existing DTRI index. Two, the paper then estimates the impact of such restrictions on the digital services exports of a country along with the traditional variables that have been used in prior literature. The results indicate a negative impact of data policy restrictions on digital services exports.

     Since DTRI as a measure of restrictions on digital trade that is time invariant, further research into the impact of a time varying measure of data policy restrictions would add more rigor to the understanding the impact of data restrictions on trade. Furthermore, trade being a bilateral process, regulations imposed by both the trading partners have a bearing on the volume of trade. As such it would be valuable to understand such interactions.

Abstract

     It is important to unearth the role of structural change factors for sustainable growth in developed economies. Economic complexity, export product quality, and institutional indicators represent the overall structural change and transformation in an economy. This paper probed the influence of export product quality and economics of complexity on economic growth for 28 OECD (Organization for Economic Co-operation and Development) countries using the data from 1990 to 2019. In doing so, the study employs three-panel data econometric models to investigate the role of economic complexity, export quality, and institutional quality on economic development. The paper performs the empirical tests, including the cross-sectional related dependency methods and cointegration techniques. As per the results emerging from fully modified OLS (FMOLS) and dynamic OLS (DOLS) estimation, export quality and financial development positively and significantly strongly impact growth in the long run. The empirical conclusions report detailed discussion on sustainable growth and discuss novel implications concerning product quality and institutional performance. The conclusions stress the practical implications for sustainable economic growth of OECD economies.

Introduction

     Over the last decade, there has been rising research in describing and analyzing countries’ productive structures. New measures of the economic complexity index have been developed to determine the sophisticating nature of the procedure of production making and gains from trade. According to Hidalgo and Hausmann (2009), the economic complexity helps to analyze countries’ productive capacities and the product quality of exports. Since they are more effective in estimating economic growth than traditional predictors, like GDP per capita, they are now widely used (Hausmann et al., 2014). Economic complexity occurs in a country if it can produce diversified products and export products have a more complex production structure. More specifically, economic complexity is the expanse of productive knowledge a country possesses that impacts economic performance. According to Lapatinas et al. (2019), it has been observed empirically that countries with higher complexity tend to gain additionally from trade and have a high degree of trade openness. Countries with advanced levels of economic-based complexity have higher economic capabilities since they utilize more intensive technology and high skilled labor (Hartmann et al., 2017).

Concluding remarks and implications

     International trade and industrial activities are conducive to the economic development of emerging and developed economies. However, the bolster economic objectives come with the repercussions of environmental externalities and structural transformation challenges. The on-hand research study is an effort to examine the heterogeneous impacts of structural change and institutional quality on economic growth. In doing so, the current study draws novel conclusions and implications regarding the sustainable development goals and sustainable growth in developed economies. This research attempted to explore the nexus among economic growth, economic complexity, export quality, financial development, human capital, renewable energy, and institutional quality for 28 OECD economies. In doing so, the study employed the annual data from 1990 to 2019 and tested three model specifications using extensive empirical analysis such as cross-sectional dependency tests by Pesaran (2015), Westerlund cointegration tests, and Pedroni cointegration tests, FMOLS, and DOLS.

     The empirical results highlight that greener and renewable energy have an important role to play for industrial activities, economic development and it can act as an alternative to achieve sustainable economic growth. Export quality leads to strengthening the trade by improving the quality of products, ultimately it can lead towards the economic progress of countries. Further, it can be interpreted that overall economic complexity encompasses financial development and product complexity, both of which are conducive for the growth of the economy.

1- Introduction

2- Model

3- Mechanism

4- Quantitative analysis

5- Financial frictions, balance-sheet effects, and reallocation

6- Conclusion

References

Abstract

We study the role of financial frictions and balance-sheet effects in accounting for the dynamics of aggregate exports in large devaluations. We investigate a small open economy with heterogeneous firms and endogenous export decisions in which firms face financing constraints and debt can be denominated in foreign units. Despite the negative impact of these channels on capital accumulation and output at the firm-level, we find that they only explain a modest fraction of the gradual increase of exports observed in these episodes. Exports increase since financially-constrained exporters are able to reallocate sales across markets. We show analytically the role of this mechanism on exports adjustment and document its importance using plant-level data.

Introduction

Understanding the response of exports to aggregate shocks is key for determining the role of trade in driving the recovery from economic downturns. While a large class of open economy models imply that large devaluations are associated with a sharp contemporaneous increase of aggregate exports, Alessandria et al. (2015) and others show that aggregate exports increase gradually after large devaluations. Fig. 1 illustrates this observation for a sample of large devaluations over the period 1980 to 2013. A potential explanation for the slow response of exports in large devaluations are balance sheet effects due to the prevalence of foreign-denominated debt in emerging economies. Given limited access to finance in these economies, large devaluations increase the domestic value of firms’ debt burden, weakening their balance sheets and leading them to decrease investment and output. Moreover, recent studies also document the importance of these channels for the decisions of exporters at the firm-level.

China is the largest power producer and consumer and has the largest installed capacity of wind turbines (WTs) worldwide. In the last two decades, China’s installed capacity of WTs has exploded, significantly impacting its wind power (WP) industry and promoting the development of the industry globally. This paper examines China as one part of the world and elucidates its role, status, and impact on global WP development from a global perspective. Research indicates that China has become the global leader in WP, its WP development has greatly promoted the growth rate of global WP, and it has become an indispensable force in global WP development. However, the comprehensive capability of China’s WP generation is not only lower than that of other major WP countries but also lower than the global average. China’s WTs have low global recognition and are difficult to export. In addition, the proportion of WP in China’s power structure is lower than that of most other major WP countries. Fortunately, these gaps between China and other major WP countries are gradually narrowing. The goal of this paper is to help researchers and investors better understand China’s situation and to provide a reference for the rational investment in and development of China’s WP.

Introduction

Many countries have signed agreements to address global climate change, such as the Kyoto Protocol and the Paris Agreement, and these countries are striving to fulfill their commitments [1,2]. There is consensus on the need to reduce fossil energy and to accelerate the development and utilization of renewable energy among most countries, and they are engaging in concerted action [3,4]. As a source of clean energy with high storage, no pollution, and using mature technology, many countries are seeking to utilize wind energy [5] and consider wind power (WP) to be a promising energy [6]. China, a major energy-consuming carbon emission country, is one of many countries that have installed wind turbines (WTs) (as shown in Fig. 1). The Chinese government is actively supporting the development of clean energy through laws, regulations, finance, and taxation. With the strong support of the Chinese government, the country’s WP has experienced explosive growth [7,8]. In 2018, the cumulative capacity of WP installed in China accounted for a record high of 35.7% of the total globally, ranking first. China’s WP development has attracted worldwide attention. To date, a high volume of literature has reported on country’s WP status, development and policies.

The learning-by-exporting effect can vary by mode of export (direct or indirect via intermediaries), which raises the importance of understanding factors associated with how firms export. This paper investigates the effect of political connections, one form of informal institutions particularly important in China, on the choice of export mode by Chinese private enterprises. By using firm-level survey data and addressing endogeneity, we find that having political connections significantly increases the probability of direct exporting, while it has no effect on indirect exporting through trade intermediaries. We further test the underlying mechanisms behind these findings. The results show that corporate political connections can help alleviate financial constraints by promoting the (external) access to bank credits and by reducing the (internal) extra-tax burdens, which are disproportionately important for direct exporting relative to indirect exporting. In addition, we find limited evidence supporting the importance of contract enforcement and managerial efficiency as channels though which political connections affect the choice of export mode.

Introduction

At the current state of economic development, one fundamental question for China’s growth is how to shift from input-led growth to innovation-led growth (Wei, Xie, & Zhang, 2017). This puts the issue of competence building for innovation center stage. Recent studies have shown that an important mechanism of innovation and productivity improvement for developing economies is to enter the foreign markets through exporting (Van Biesebroeck, 2005; De Loecker, 2007; Aw, Roberts, & Xu, 2011; Bustos, 2011; Atkin, Khandelwal, & Osman, 2017). The so-called learning-by-exporting mechanism suggests that exporting firms may learn and absorb new knowledge and technology through the access to new markets, production methods, products design, or management practices. As one of the world’s leading export economies, China seems to have a large potential to generate growth opportunities by exploiting the learning-by-exporting effect. Nevertheless, recent studies have pointed out that how much firms can learn from exporting to a large extent depends on how firms export and particularly how they choose between direct trading and indirect trading (Bai, Krishna, & Ma, 2017). More precisely, it has been documented that compared with firms exporting through intermediaries, firms exporting directly have better access and more opportunities to learn about foreign technology and preferences.

This study examines the impact of exchange rate volatility on Indonesia’s primary export commodities to the top five export destination countries, namely China, India, Japan, South Korea, and the United States. This study uses a GARCH model to obtain an estimated value of exchange rate volatility, using monthly data covering from 2006 to 2018. The ARDL method helps to measure the effect of exchange rate volatility on exports to destination countries in both the short and the long-term. Aggregate exports are compared employing a linear (ARDL) and a non-linear autoregressive distributed lag model (NARDL). The findings suggest that exchange rate volatility has a significant effect on exports of commodities under code 26 (ores), 38 (chemicals), 40 (rubber), and 47 (pulp paper) to India, Japan, South Korea, and the United States, either in the short or long-run. The exchange rate volatility of exports to China only affects plastics goods (code 39), although many goods experience negative effects due to exchange rate depreciation. In India, exchange rate volatility affects the largest number of export commodities. The Index of Industrial Production (IIP) has a strong long-term effect on exports to Asian countries. Impacts due to exchange rates offer both negative effects and positive effects (expected) in exports at commodity and trade partner case-to-case levels. Both aggregate ARDL and NARDL models suggest that Indonesian exports are negatively affected by exchange rate fluctuations.

Introduction

After the collapse of the Bretton Woods system, the impact of floating exchange rates on international trade has become an attractive object of research as the shift from fixed exchange rates exposed currencies to volatility, likely affecting trade flows. Although the exchange rate fluctuates typically beyond its fundamental condition, macroeconomic forces, market sentiment, global shocks, speculation, among others, could cause currency exchange rates to move beyond their underlying conditions. More recently, the interest has gained force as currency misalignments are seen as a source of global imbalances (Auboin and Ruta, 2013). Exchange rate volatility could potentially lead to market uncertainty, volatility in profits of traders, increase in risk, inflation uncertainty, unfavorable balance of trade, and impacts on production and transaction cost (Juhro and Phan, 2018). Economic theory proposes that exchange rate volatility is negatively associated with trade flows as changes in currency rates are linked to uncertainty (Clark, 1973), leading to changes in price expectations, and to potential changes in demand for goods (Clark et al., 2004) as traders aim to reduce risk exposure (Obstfeld and Rogoff, 1998). At the empirical level, a large body of research offers evidence on the discouragement of exports due to exchange rate fluctuations, supporting trade theory (Bahmani-Oskooee and Gelan, 2018; Chit et al., 2010; Hayakawa and Kimura, 2009). Nevertheless, some findings suggest positive or mixed effects of exchange rate volatility on exports (Chi and Cheng, 2016), while others find no evidence of impacts of volatility in exports (Nishimura and Hirayama, 2013).

The export of Chinese firms is facing problems of low added value and high energy consumption. Various environmental control methods have emerged to promote the sustainable development of exports. Environmental information disclosure has an important impact on the development of enterprises in recent years. Can it promote exports? Based on the Heckman model, this study uses matched data from the China Industry Business Performance Data and China Stock Market and Accounting Research Database to investigate whether environmental information disclosure can influence the export of enterprises. Findings show that environmental information disclosure can promote decision-making for exports. Nonlinear results show that environmental information disclosure and hard environmental information disclosure showed a U-shaped relationship to export scale, whereas EIDS displayed an inverted U-relationship with export scale. To further verify the impact paths, the cost effect of environmental information disclosure is unconducive to export, whereas innovation, financing, and subsidy effects can increase export scale. However, the social trust effect of environmental information disclosure remains unclear.

Introduction

In recent years, “Made in China” has become a common phrase around the world. An explosive growth in exports has made China one of the world’s largest exporter. However, the competitive advantage of manufacturing in China is the high consumption of cheap labor and energy rather than relying on technological innovation. This context partly explains why China’s exports show great vulnerability when faced with external shocks and even experience continued deterioration amid the boom of exports. Departing from high consumption, high pollution, and cheap exports is urgent if China wants to upgrade from the context of “Made in China” to “Created in China.” Environmental information disclosure, as a new type of environmental supervision mode, is significant in achieving the coordinated control of environmental pollution. This mode is not only beneficial to the harmonious coexistence in society, the government, and enterprises, but also has an important strategic significance for the future development of enterprises. In recent years, environmental information disclosure has received increased attention. The publication of the “governance guidelines for listed companies” in 2002 provided the top-listed enterprises in China with increased environmental and social responsibility with emphasis on disclosing environmental information behavior. Environmental information disclosure can not only strengthen the government’s supervision of enterprise environmental governance, but also aggravate the pressure of enterprise cost and technological innovation, which may be unconducive to the accumulation of profits and export behavior (Zeng et al., 2010).

This study addresses the effects of the firm’s level of engagement with trade associations located at the company’s export market on export performance. It analyzes firm-level data from a South American emerging economy, Chile. Results show that a stronger engagement with trade associations located at the company’s export market has a positive effect on export performance. Environmental uncertainty on customer needs is confirmed as an export performance barrier, but unexpectedly, this obstacle only diminishes in a negligible factor as the level of engagement with trade associations located at the firm’s export market increases. This study contributes to the international management literature by investigating the direct and moderating effects of overseas trade associations on the firm’s export performance, and by scrutinizing on the distinctions among the cooperation determinants of local networks and networks situated at the firm’s export market. Practical implications are discussed.

Introduction

Export performance of small and medium sized firms (SMEs’) remain a relevant research area in a global environment with increasing technological change, lower trade barriers and a growing interest in country and firm-level export developing strategies (Ngo, Janssen, Leonidou, & Christodoulides, 2016; Cieślik, Kaciak, & Thongpapanl, 2015), despite the fact of emerging new global trends on de-globalization (Ghemawat, 2017). The understanding and modeling of export performance is typically grounded on the Resource Based View (RBV). The resource-based theory posits that firm´s internal tangible and intangible resources result in competitive advantage and export performance (Barney, 1991; Zou & Stan, 1998). On the contrary, the contingency approach suggests that the interdependence of firm external and internal factors determines firm´s export performance (Cavusgil & Zou, 1994; Yeoh & Jeong, 1995; Sousa, Martínez-López, & Coelho, 2008). This study approaches export performance from the contingency perspective. Institutional networks need more attention in the study of export performance, especially within SMEs (Chetty & Agndal, 2007). At the same time, external networks and horizontal relationships, such as engaging with trade associations are factors that require further study (Boehe, 2013; Guimón & Paraskevopoulou, 2017). This is because external networks may facilitate access to resources that are essential for internationalization. These resources might include, for instance, information benefits or access to pooled resources oriented at international operations (Lavie, 2006; Yiu, Lau, & Bruton, 2007), as well as collective action in the creation of crucial public goods (Porter, 1998). In addition, the peculiar conditions on the export market environment are also relevant factors impacting the firm´s export performance within the contingency approach. These circumstances include the management´s perceived environmental uncertainty on customer´s needs (Lee, Yeung, & Cheng, 2009; Phua, 2007). Nevertheless, very few studies that surpass national borders have addressed the relationship between environmental uncertainty on customer needs and inter-organizational collaborations (Matanda & Freeman, 2009). The evidence on the effect of such relationships is scarce when emerging markets are the context of study. In particular, Kiss, Danis, and Cavusgil (2012), emphasize the necessity to comprehend the connection between firms and international networks in the context of emerging economies. For emerging markets, the predominance of networks is a mechanism to replace formal institutions, which are declining when the latter are strengthened and improved. They ask for a deeper understanding on how firms manage the complexity of resource acquisition while engaging with international networks (Kiss & Danis, 2008; Kiss et al., 2012).

چکیده

این مقاله به بررسی اثرهای سطح تعامل یک موسسه بازرگانی با انجمن های تجاری در بازار صادرات شرکت، بر روی عملکرد صادرات می پردازد. به این منظور این مطالعه داده های موسسه های بازرگانی از یک اقتصاد نو ظهور از یک کشور آمریکای جنوبی، یعنی شیلی، را مورد تجزیه و تحلیل قرار می دهد. نتایج نشان می دهد که تعامل قوی تر با انجمن های تجاری در بازار صادرات، اثری مثبت بر روی عملکرد صادرات دارد. نبود اطمینان محیطی در زمینه نیازهای مشتری به عنوان یک مانع در عملکرد صادرات به اثبات رسیده است اما، به طور غیر منتظره ای، با افزایش سطح تعامل با انجمن های تجاری در بازار صادرات شرکت، این مانع تنها به یک عامل ناچیز تنزل پیدا می کند.

مقدمه

عملکرد صادراتی در شرکت های کوچک و متوسط (SMEs ) با افزایش تغییرات فنی ، موانع تجاری کمتر و علاقه رو به رشد در استراتژی های توسعه ی صادرات در سطح شرکت و کشور برخلاف تمایلات جدید جهان در زمینه تجزیه و جدا شدن، یک منطقه تحقیقاتی مرتبط را در یک سطح جهانی به وجود می آورد. درک و مدلسازی عملکرد صادراتی بر اساس نظریات مبتنی بر منابع پایه گذاری شده است (RBV) نظریه مبتنی بر منابع فرض می کند که منابع داخلی ملموس و غیر ملموس شرکت باعث برتری رقابتی و عملکرد صادراتی می شود برعکس عملکرد احتمالی اشاره به این موضوع دارد که وابستگی متقابل فاکتورهای داخلی و خارجی شرکت عملکرد صادراتی شرکت را تعیین می کند . این مقاله به عملکرد صادراتی از دیدگاه احتمالی نزدیکتر است .

1- Introduction

2- Financing of SME export activities

3- Sample selection and variable definitions

4- Descriptive statistics and univariate tests

5- Multivariate analysis

6- Robustness checks

7- Conclusions

References

Abstract

Using detailed financial and exporting data from Belgian small and medium-sized enterprises (SMEs) between 1998 and 2013, we find that exporters have to finance relatively more working capital than their nonexporting peers and that they resolve this financing need by carrying more short-term financial debt. In addition, while controlling for working capital needs, we find that the positive association between pledgeable short-term assets and short-term debt financing is more pronounced for exporters. In particular, we show that the linkage between pledgeable short-term assets and short-term debt financing is stronger for export-intensive firms and firms that serve distant and risky export destinations.

Introduction

Over the past decades, considerable effort has been devoted to enhancing our understanding of the complexity of corporate financing decisions. To date, studies on corporate capital structure and debt maturity choices have mainly focused on firm characteristics and industry determinants (De Jong, Kabir, & Nguyen, 2008; Titman & Wessels, 1988), as well as on the influence of the national culture, legislation and other country characteristics (Demirgüç-Kunt & Maksimovic, 1999; Fan, Titman, & Twite, 2012). Studies investigating the relationship between internationalization and corporate financing policy, however, are much more limited and are mostly confined to large, stock exchange quoted firms. One of the main insights of this literature is that multinational corporations (MNCs) have lower longterm debt ratios and higher short-term debt ratios than those of comparable domestic corporations (DCs) (Burgman, 1996; Doukas & Pantzalis, 2003; Fatemi, 1988). This leverage differential between MNCs and DCs is explained by the fact that the positive effect of geographic sales diversification on long-term debt financing is offset by the increased risk stemming from exchange rate exposure and unforeseen political events. Furthermore, due to their operational complexity, MNCs are more informationally opaque, which increases the agency costs of debt. To mitigate the problems associated with a riskier borrower profile and agency conflicts, loan maturities are shortened (Barclay & Smith, 1995; Myers, 1977). Building on these studies, the aim of this article is to advance the current literature by empirically investigating the impact of exporting on the corporate financing decisions of another important class of exporters, viz., small and mediumsized enterprises (SMEs). Since SMEs cannot substitute short-term and long-term debt financing as easily as large companies – due to difficulties in obtaining long-term debt financing from financial institutions (Ortiz-Molina & Penas, 2008) – the mechanism through which export activities affect SME financing policies may very well be different from what is demonstrated in the MNC literature. According to the World Trade Organization (WTO), access to financial resources to support export activities is a key concern for SMEs since, besides the one-time upfront sunk costs (e.g., costs related to compliance with foreign market regulations and preparatory market research), exporting requires substantial ongoing investment in working capital, as export activities considerably lengthen the cash conversion cycle of the firm (e.g., through longer shipment periods and the administrative burden associated with trading internationally) (WTO, 2016). Hence, understanding how exporting SMEs cope with these financing needs may yield useful insights for exporters, banks and policy makers.

1- Introduction

2- Literature review and hypotheses

3- Methodology

4- Results

5- Conclusions and discussions

6- Limitations

References

Abstract

This study uses an organizational change perspective to analyze firms’ export market selection (EMS) to adapt to home country market pressures. We argue that firms’ strategic objectives influence whether they will enter institutionally proximal or distal markets. A model with two curvilinear (U-shaped and inverted U-shaped) relationships is found by testing 1940 Taiwanese export firms based on two official datasets. The model shows that firms are more likely to increase their exports to institutionally proximal markets and to decrease their exports to institutionally distal markets if they have an increasing but still controllable degree of competitive and marketing pressures in the home country. This response represents an incremental change by exporting firms. However, firms increase their exports to institutionally distal markets while decreasing their exports to institutionally proximal markets if they have an excessively increasing degree of competitive and marketing pressures in the home country. This response represents a radical change by exporting firms. We find that export firms’ strategic objectives in choosing different organizational change styles (incremental or radical) are highly related to this trade-off in their EMS decision making.

Introduction

For native firms in a small country, exporting is an easy non-entry mode to quickly pursue foreign markets (Krammer, Strange, & Lashitew, 2018). Firms can use business-to-business (B2B) arrangements (e.g., their outsourcing supply chains and intermediary channels) to export, or they can serve only B2B foreign customers (Lindsay, Rod, & Ashill, 2017; Narula, 2002; Peng, Wang, & Jiang, 2008). In both cases, export market selection (EMS) is a critical marketing issue for the firms (Brewer, 2007; He, Lin, & Wei, 2016). Many studies have examined the impact of differences in institutional profiles between the home and host countries, i.e., the impact of institutional distance on firms’ EMS decision making (Hernández & Nieto, 2015; Magnani, Zucchella, & Floriani, 2018). Institutional distance can raise strategic concerns regarding the liability of foreignness and transaction costs that create barriers to exporting to an unknown foreign market (Hutzschenreuter, Kleindienst, & Lange, 2016). While most studies emphasize that firms should accumulate the necessary resources to satisfy the customized demands of markets at different institutional distances (Papadopoulos & Martin, 2011), few studies analyze the strategic meaning of institutional distance for firms’ EMS decisionmaking from the perspective of B2B marketing management (Beugelsdijk, Kostova, Kunst, Spasafora, & van Essen, 2018). This study argues that the meaning of institutional distance for exporting firms should be analyzed by understanding how the firms’ managers “subjectively” evaluate the institutional distance of different markets, which will influence the firms’ strategic objective in choosing different export markets (Williams & Grégoire, 2015).

1- Introduction

2- Literature review and hypotheses development

3- Research methodology

4- Analysis and results

5- Discussions and implications

6- Conclusions, limitations and future research

References

Abstract

Purpose – The purpose of this paper is to understand the direct impact of social capital and the influence of market-based capabilities as intervening variables on the export performance of small and medium-sized enterprises (SMEs) in Ghana.
Design/methodology/approach – Questionnaire-based survey was used to collect data from top executives and senior managers of exporting companies in Ghana. Data obtained were analysed using the structural equation modelling.
Findings – The findings revealed that social capital of SMEs exert the greatest influence on their export performance. Innovation and marketing capabilities are also key drivers of export performance among SMEs as they fully mediate the social capital–export performance relationship. Notwithstanding, marketing capabilities appear to exert a greater influence than innovation capabilities on the export performance of SMEs.
Research limitations/implications – The study used perceptual measures of international performance by managers of SMEs in the Ghanaian exporting sector making it difficult to determine respondent bias. Practical implications – Managers of exporting firms should build stronger relationships with their customers and suppliers who contribute significantly to their export performance. SMEs would also have to hone their innovation and marketing skills as strategic components in enhancing their export performance.
Social implications – Market-based resources such as marketing and innovation should not be taken for granted by SMEs in the export business. Originality/value – The study offers some lessons on how small firms can sharpen their marketing and innovation capabilities to derive export performance benefits from social capital. Theoretically, while the findings offer strong evidence reinforcing the DC theory, an exploration of the nexus of the theories brings to the fore the need to reassess the resource-based view and SC theories.

Introduction

Firms have undertaken cross-border activities for over centuries. Yet the unpredictable business environment, technological growth and accelerated globalisation have created an even greater need for not only large but, to a higher extent, smaller firms to seek business opportunities across borders. Internationalisation has therefore become an essential strategy that all businesses may have to pursue (Fernández and Nieto, 2005) and a valuable tool for expansion and growth in organisations (Graves and Thomas, 2008). Exporting has been identified as an attractive foreign market entry and expansion mode of internationalisation, particularly for firms whose economic conditions in their local markets are not too favourable (Hultman et al., 2009). Indeed, the increase in sales and improved profitability among small firms has been linked to earnings from exports (Lages and Montgomery, 2004). Small and medium-sized enterprises (SMEs) are typically regarded as resource-constrained compared to large corporations, thus limiting the possibilities of taking advantage of opportunities in foreign markets (Lu and Beamish, 2001). Even though they possess less tangible and financial resources than large multinational corporations (Knight and Kim, 2009), lately the internationalisation trend for smaller firms has been on the ascendancy. Pinho (2011) opines that SMEs could still be successful if they accessed valuable and rare resources through social network relationships. Early researchers such as Penrose (1959) first recognised the importance of resources, contending that a firm consists of a collection of productive resources and whose growth depends on the manner in which its resources are deployed. The key role of resources in the exploitation of opportunities in foreign markets has been espoused by international marketing scholars, particularly in successful export ventures of SMEs (Kaleka, 2012; Tseng et al., 2007; Lu and Beamish, 2001). Several studies have outlined performance challenges SMEs face due to resource constraints, particularly in relation to their size. Meanwhile, social capital, derived from social networks, is considered one of the critical resources that a firm can develop to enhance its competitive advantage and reap above-average rates of return (Chrisholm and Nielsen, 2009). For some scholars social capital, which is rooted in inter-firm relationships and managerial ties, constitutes a vital resource. SME export performance has been studied from a number of perspectives including the macro and micro levels of success (Zou and Stan, 1998). Research at the macro level has assessed policies and programs at the national level, where governments the world over support SMEs to improve their export performance leading to economic growth (Zou and Stan, 1998).

Globalization has led to increased competition and risk of business failure for firms venturing abroad over the last decades. A particularly challenging situation is seen for SMEs from developed economies entering emerging markets. We theorize and empirically show that prior market experience with domestic and developed countries helps to reduce the hazard of exit from emerging markets. We further develop competing hypotheses from complementary and compensatory perspectives about the moderating influence of firm-specific resources (reflected by size, productivity and innovation). Using data from all Canadian SMEs having exported to emerging markets between 1993 and 2008, we find that SMEs can compensate for less accumulated experience through being larger, more productive and more innovative. SMEs that lack prior market experience are – with a sufficient set of compensatory resources – thereby able to be resilient in dissimilar export markets.

Introduction

A key challenge for small and medium-sized enterprises (SMEs) is to stay in business and not become a victim of business failure in the highly competitive global market (Arasti, Zandi, & Talebi, 2012; Baldwin, Bian, Dupuy, & Gellatly, 2000; Franco & Haase, 2010; Sui & Baum, 2014). Research on business failure has increased in recent decades (Amankwah-Amoah, Boso, & Antwi-Agyei, 2018; Devece, Peris-Ortiz, & Rueda-Armengot, 2016) but has not reached consensus (Amankwah-Amoah, 2016; Matthyssens & Pauwels, 2000; Mellahi & Wilkinson, 2004). In particular research on export market exit has received limited attention (Bernini, Du, & Love, 2016; Chen, Sousa, & He, 2016; Gima, Greenaway, & Kneller, 2003), which is critical for SMEs (Sui, Baum, & Malhotra, 2018) that commonly use exports to grow and tap into international market potential (Lu & Beamish, 2001).