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Export Information Uses and Performance of Horticultural and

Handicrafts SMEs in Tanzania

John Richard Mwakyusa Philemon

University of Dar-es-Salaam

November, 2010
ii

Export Information Uses and Performance of Horticultural and

Handicrafts SMEs in Tanzania

By

John Richard Mwakyusa Philemon

A Thesis Submitted in Fulfillment of the Requirements of the Degree of Doctor of

Philosophy of the University of Dar-es-Salaam

University of Dar-es-Salaam

November, 2010
i

CERTIFICATION

The undersigned certify that they have read and hereby recommend for acceptance by

the University of Dar-es-Salaam a thesis titled, Export Information Uses and

Performance of Horticultural and Handicrafts SMEs in Tanzania , in fulfillment of

the requirements for the degree of Doctor of Philosophy (Business Administration) of

the University of Dar-es-Salaam.


ii

DECLARATION

AND

COPYRIGHT

I, John Richard Mwakyusa Philemon, declare that this thesis is my own original work

and that it has not been presented and will not be presented to any other university for a

similar or any other degree award.

Signature:

This thesis is copyright material protected under the Berne convention, the Copyright

Act 1999 and other international and national enactments, in that behalf, on intellectual

property. It may not be reproduced by any means, in full or in part, except for short

extracts in fair dealing, for research or private study, critical scholarly review or

discourse with an acknowledgement, without written permission of the Directorate of

Postgraduate Studies, on behalf of both the author and the University of Dar-es-Salaam.
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ACKNOWLEDGEMENTS
Writing this thesis, like many others written before, involved an enormous amount of
work that would not have been possible without the assistance, cooperation and the
encouragement from many people. First and certainly most importantly, I thank the
Almighty God for his plenteous blessings, divine strength and love. I have also seen this
project growing in my hands like a baby with the invaluable and priceless counsels of
my understanding supervisors. I owe a lot to them and would like to extend my heartfelt
appreciation and gratitude to Dr. ke Gabrielsson, Dr. Karl Johan Bonnedahl, both of
Ume School of Business (USBE) and Dr. Lufumbi Jonathan Mwaipopo of the
University of Dar-es-Salaam for their incessant intellectual input and patience. Special
gratitude goes to Frances Graham for her punctilious editing, without which this work
would not have been in this shape.

Dr. T.H. Leedy and Dr. L. A.Villaln and all staff of the University of Florida Centre for
African Studies deserve special mention for their support and encouragement at a time
when I just had a nascent idea of what I would like to work on. Dr. Charles Bwenge and
Dr. William Mkanta and their families, who made me feel at home away from home
while I was in USA for a period of four months, deserve a mention in this limited space.
They could not have done better. To the University of Dar-es-Salaam in general,
University of Dar-Es-Salaam Business School (UDBS), Umea School of Business,
(USBE), Swedish Institute (SI) and Sida/SAREC in particular go my fondest thanks and
appreciation for all that these great institutions have done to build the capacity of
University academic staff. I feel privileged to have had the opportunity to benefit from
these programmes. Prof. Per Nilsson, Dr. Jan-Erik Jaensson, Professors Lettice .K.
Rutashobya, Erasmus. S. Kaijage and Dr. Marcellina M. Chijoriga deserve special
gratitude in this respect for being at the epicentre of the superbly coordinated
programme at different stages.
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Many thanks go to Dr. Goodluck Charles Urassa of the University of Dar-es-Salaam


with whom we survived hurricanes in the US at the University of Florida and winter
snow in Ume- Sweden at the beginning of our doctorate studies. My other University
of Dar-es-Salaam colleagues Lic Elly Tumsifu, Dr. Francis Michael and the amiable Dr.
Severine Kessy equally deserve their share of heartfelt gratitude for the cordial and
friendly company at USBE-Ume. Their presence made the PhD challenges surprisingly
surmountable.

More profound thanks and heartfelt gratitude are due to Ms. Katarina Pousette (USBE-
Secretary), Mr. Anders Hellquist- (USBE- System Manager), Mr. Anania Kyulule
(UDSM Systems Administrator) and SMEs owners or managers whose names I conceal
for confidentiality reasons. Ms. Jacqueline Mkindi (Executive Director of Tanzania
Horticultural AssociationTAHA) deserves mention for her support in providing
information about the horticulture industry in the country.

A few other people who contributed indirectly to the thesis are Salay (daughter),
Samuel (son), Emmanuel (nephew), Jonathan (nephew), Flossie (sister), and Furaha
(brother). They silently and without lifting their hands, pumped and ignited energy that
sometimes seemed to ebb away from my body, mind and soul. I would also like to thank
my great and true friends Chado Mwakapola, Ephraim Mwasanguti, and Raphael
Mwakagali for being there for me. My uncle Mithali Angundile, Aswile Nkyumu
Mwasilembo and Festo Boaz Mwaipaja families have been incredibly supportive. My
father Philemon Basuke Mwakyusa, Pastor Anyingisye Mwasandube, my dear brothers
and sisters of Magomeni Baptist Church all deserve my warm gratitude for their love,
prayers and encouragement. There is one special person who encouraged me on through
prayers, untiring support and seemingly unlimited belief in me. This is none other than
my beloved wife, Teddy A.C.M. Mwakyusa. Thank you very much Mama Salay.
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To all and anyone that I have not mentioned hitherto, thank you for your kindness and
may God bless you in whatever good things you are doing. My heart rejoices in the fact
that whereas, With men it is impossibleto God all things are possible (Matthew
19:26) and that "Everything is possible for him who believes." (Mark 9:23).

Despite my deliberate and concerted efforts to have no errors in this thesis, I solely
remain responsible for any shortcomings that might have cropped up.

John R.M. Philemon

University of Dar-es-Salaam
November, 2010
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DEDICATIONS

I dedicate this thesis to you, my beloved mother, the late Salay Sambogo (SS). Mama, I

am constantly reminded with every step I take that you are watching and inspiring me to

become what a man is capable of becoming. Mama, may your soul rest in eternal

peace-Amen.
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ABSTRACT
The study applies the Resource Based View (RBV) and the Upper Echelons Theory
(UET) to examine the uses of export information and their effects on the performance of
SMEs engaged in exporting horticultural and handicraft products. It was the thesis of
this study that what leads to improved export performance is not merely the possession
of export information but its appropriate use. Descriptive and multivariate Canonical
Correlation Analysis (CCA) and Structural Equation Modeling (SEM) were used to test
the research model using a survey of 158 SMEs in Dar-es-Salaam, Arusha, Kilimanjaro
and Zanzibar.

The findings revealed that instrumentalconceptual use of information for particular,


general and future decision-making purposes was positively and significantly related to
SMEs export performance. Symbolic uses of export information (justifying actions
already taken based on instinct or intuition, or legitimizing views already held) were, as
hypothesized, found to be negatively related to SMEs export performance.
Furthermore, it was found that the perceived quality of export information has an effect
on the uses of export information. Owners or managers demographic characteristics
were not found to have an effect on the use of export information, while Entrepreneurial
Orientation relationship with uses of export information was partially supported.

This study has also presented structural models for explaining uses of export
information and export performance. It has demonstrated the relevance of the Resource
Based View (RBV) and the Upper Echelons Theory (UET) - two of the increasingly
important schools of thought in the business strategy literature. The overriding
recommendation of the study is for owners or managers and other SME development
stakeholders to address issues of uses and perception of quality of export information as
they have ramifications on the export performance of SMEs.
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What information consumes is rather obvious: it consumes the attention of its

recipients. Hence, a wealth of information creates a poverty of attention and a need to

allocate that attention efficiently among the overabundance of information sources that

might consume it Herbert Simon


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TABLE OF CONTENTS

Certification ................................................................................................................ i
Declaration and Copy Right .............................................................................................. ii
Acknowledgements .......................................................................................................... iii
Dedications .............................................................................................................. vi
Abstract ............................................................................................................. vii
Table of Contents .................................................................................................... ix
List of Tables ............................................................................................................. xv

CHAPTER ONE: INTRODUCTION .......................................................................... 1


1.1 Background Information ................................................................................................ 1
1.2 Statement of the Research Problem ............................................................................... 8
1.3 Main Objective ................................................................................................... 11
1.3.1 Specific Objectives ................................................................................................... 11
1.4 Rationale for the study ................................................................................................. 12
1.5 Tanzania: Developing Sub-Saharan African Countries Context ................................ 14
1.6 Developed Countries Contexts ................................................................................... 21
1.7 Structure of the Thesis ................................................................................................. 25

CHAPTER TWO: . THEORETICAL AND EMPIRICAL LITERATURE REVIEW 27


2.1 Introduction ................................................................................................... 27
2.2 Deterministic and Voluntaristic Perspectives .............................................................. 27
2.2.1 Deterministic Perspective ............................................................................................ 28
2.2.1.1 Porterian Approach ................................................................................................... 30
2.2.2. Voluntaristic Perspective ............................................................................................. 32
2.3 Internationalization: Definition and Perspectives ........................................................ 34
2.4 Internationalization Theories ....................................................................................... 36
2.4.1 Uppsala Internationalization Model ............................................................................. 37
2.4.2 Criticisms of the Uppsala Internationalization Model ................................................. 39
2.4.3 Psychic Distance and Uppsala Internationalization Model.......................................... 42
2.4.4 Problems associated with the use of psychic distance ................................................. 45
2.5 The Resource Based View ............................................................................................. 46
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2.5.1 Types of Firm Resources ............................................................................................. 51


2.5.2 Criticisms of the Resource Based View....................................................................... 56
2.5.3 Empirical Studies on the Resources Based View ........................................................ 60
2.6 Conceptualizing the Upper Echelon Theory ................................................................ 69
2.6.1 Upper Echelons Model ................................................................................................ 72
2.6.2 Criticisms of Upper Echelons Theory......................................................................... 74
2.6.3 Empirical Studies on the Upper Echelons Theory ...................................................... 77
2.7 Conclusion ................................................................................................... 86

CHAPTER THREE: EXPORT INFORMATION AND OWNERS OR


MANAGERS CHARACTERISTICS.......................................................... 90
3.1 Introduction ................................................................................................... 90
3.2 Understanding Information Use ................................................................................... 91
3.3 Export performance and Competitive Advantage ....................................................... 95
3.4 Export Information Use and performance ................................................................... 97
3.5 Forms of export information use.................................................................................. 99
3.6 Quality and Perceived Quality of Export Information ............................................... 101
3.7 Empirical Findings on Export Information and its Quality ....................................... 104
3.8 Business Information Empirical Studies in the Context of Developing Countries .... 109
3.9 Owners or Managers Factors in Export Information Use and Performance ........... 113
3.10 Description of the Owners or Managers Characteristics ......................................... 115
3.10.1 Owner or Manager Language Proficiency ................................................................. 116
3.10.2 Education Level ................................................................................................. 118
3.10.3 Age ................................................................................................. 119
3.10.4 International Experience ........................................................................................... 121
3.10.5 Export experience ................................................................................................. 123
3.10.6 Gender ................................................................................................. 124
3.11 Entrepreneurial Orientation (EO) .............................................................................. 126
3.11.1 Risk Behaviour ................................................................................................. 128
3.11.2 Proactiveness ................................................................................................. 128
3.11.3 Innovation ................................................................................................. 129
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CHAPTER FOUR: RESEARCH MODEL AND HYPOTHESES


FORMULATION ......................................................................................... 130
4.1 Introduction ................................................................................................. 130
4.2 Presentation and Description of the Research Model ................................................ 130
4.3 Description of the Research Model............................................................................ 133
4.4 Research Hypotheses Developed from Literature Review and Research Model....... 135
4.4.1 Owner or Manager Demographic Characteristics and Export Information Use ....... 136
4.4.2 Perceived Quality and Use of Export Information.................................................... 142
4.4.3 Entrepreneurial Orientation, Export Information Use and Export Performance ....... 143
4.4.4 Export Information Uses and Export Performance. ................................................... 146
4.5 Observations on the Proposed Research Model......................................................... 148

CHAPTER FIVE: RESEARCH METHODOLOGY .............................................. 150


5.1 Introduction ................................................................................................. 150
5.2 Research Philosophy, Strategy and Approach ........................................................... 150
5.3 Research Design ................................................................................................. 152
5.3.1 Areas of the Study ................................................................................................. 152
5.3.2 Sample and Sampling Frame ..................................................................................... 153
5.3.3 Sample Size ................................................................................................. 155
5.3.4 Unit of Analysis ................................................................................................. 157
5.4 Sources of Data ................................................................................................. 157
5.5 Data Collection Methods ........................................................................................... 157
5.6 Rehearsal and Pilot Testing ....................................................................................... 159
5.7 Operationalization of Variables ................................................................................. 159
5.7.1 Measurement of Dependent Variable: Export Performance ...................................... 160
5.7.2 Measurement of Independent Variables ................................................................... 164
5.7.2.1 Export Information Use ............................................................................................ 164
5.7.2.2 Quality of Export Information .................................................................................. 165
5.7.2.3 Owners or Managers Demographic Characteristics ............................................... 165
5.7.2.4 Owners or Managers Entrepreneurial Orientation ................................................. 166
5.8 Validity and Reliability .............................................................................................. 167
5.9 Data Analysis ................................................................................................. 169
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CHAPTER SIX: DESCRIPTIVE ANALYSIS OF THE SAMPLE SMES ........... 171


6.1 Introduction ................................................................................................. 171
6.2 Data Coding, Cleaning and Non-response Analysis .................................................. 171
6.3 Management of Missing Data .................................................................................... 171
6.4 Management of Outliers ............................................................................................ 172
6.5 Descriptive Statistics of SMEs Owners or Managers ................................................ 173
6.5.1 Age ................................................................................................. 174
6.5.2 Gender ................................................................................................. 174
6.5.3 Level of Education ................................................................................................. 175
6.5.4 International Experience ............................................................................................ 176
6.5.5 Exporting Experience ................................................................................................ 176
6.5.6 Foreign Language ................................................................................................. 177
6.5.7 Highest Educational Level and Gender of the Owner or Manager ............................ 179
6.5.8 Education and age of the SMEs Owners or Managers............................................... 180
6.5.9 Highest Education Level and Primary Export Market ............................................... 181
6.5.10 Export Markets and Gender Distribution ................................................................... 182
6.6 Profiles of the Surveyed SMEs .................................................................................. 184
6.6.1 Sectoral Distribution ................................................................................................. 185
6.6.2 Size (Number of Employees) ..................................................................................... 185
6.6.3 SMEs Regional Distribution..................................................................................... 186
6.6.4 Choice of Primary Export Markets and Psychic Distance ......................................... 187
6.6.5 Size (Total Number of Employees) and Gender of the owner or manager ................ 190
6.6.6 Size (Total Number of Employees) and Age (Years) ................................................ 192
6.7 Conclusions on the Descriptive Statistics .................................................................. 193

CHAPTER SEVEN: RESEARCH FINDINGS (MULTIVARIATE) .................... 194


7.1 Introduction ................................................................................................. 194
7.2 Assumptions of Multivariate Analysis....................................................................... 194
7.3 Presentation of the Model Fit Measures .................................................................... 195
7.4 Hypotheses Testing ................................................................................................. 198
7.4.1 Owners or Managers Demographics and Uses of Export Information ................... 199
7.4.2 Perceived quality of Export Information and Use of Export Information ................. 203
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7.4.3 Owners or Managers Entrepreneurial Orientation, Use of Export Information ....... 207
7.4.3.1 Owner-Managers Risk Taking and ICEIU................................................................. 207
7.4.3.2 Owner-Managers Innovation and ICEIU ................................................................... 209
7.4.3.3 Owner-Managers Proactiveness and ICEIU ............................................................. 211
7.4.3.4 Owner- Managers Risk Taking and SEIU ................................................................. 213
7.4.3.5 Owner-Managers Innovation and SEIU ................................................................... 214
7.4.3.6 Owner-Managers Proactiveness and SEIU ................................................................ 215
7.4.4 Uses of export Information and Export performance ................................................ 217

CHAPTER EIGHT:DISCUSSION OF FINDINGS AND CONCLUSIONS ........ 222


8.1 Introduction ................................................................................................. 222
8.2 The revised Research model ...................................................................................... 223
8.3 Export Information Use and Export Performance among Exporting SMEs. ............. 224
8.4 Perceived Quality of Export Information and Export Information Use ..................... 224
8.5 EO of Owners or managers of SMEs to both Export Information Uses .................... 226
8.5.1 Owners or Managers Innovation ............................................................................. 227
8.5.2 Owners or Managers Risk Taking ........................................................................... 228
8.5.3 Owners or Managers Proactiveness ........................................................................... 229
8.6 Effects of Demographic Characteristics of SMEs Owners or Managers on uses of
Export Information ................................................................................................. 230
8.7 Concluding Remarks ................................................................................................. 231

CHAPTER NINE: CONTRIBUTIONS, IMPLICATIONS AND STUDY


LIMITATIONS............................................................................................. 232
9.1 Introduction ................................................................................................. 232
9.2 Theoretical Contributions of the Study ...................................................................... 232
9.2.1 Intergration of the RBV and UET into a Model ........................................................ 232
9.2.2 Role of Owners or Managers Demographic Characteristics .................................. 235
9.2.3 The Role of Perceived Quality of Export Information .............................................. 240
9.2.4 Pioneering Role of the Study ..................................................................................... 240
9.3 Implications of the Findings ...................................................................................... 241
9.3.1 Managerial Implications ............................................................................................ 241
9.3.2 Policy Implications ................................................................................................. 241
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9.4 Limitations and Suggestions for Future Research ..................................................... 244


9.4.1 Direction and Suggestions for Future Research ........................................................ 246
9.4.1.1 Diversity of Uses of Export Information ................................................................... 246
9.4.1.2 Diversity of Export Performance Measures ............................................................... 247
9.4.1.3 Longitudinal Study ................................................................................................. 247
9.4.1.4 Sectors and Geographical Coverage ......................................................................... 248
9.4.1.5 Comparative Studies ................................................................................................. 248
REFERENCES ................................................................................................. 249
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List of Tables

Table 2.1: Porter's Generic Strategies ....................................................................... 31


Table 2.2: Classification of Organizational Perspectives ......................................... 48
Table 2.3: Classification of the Firms Resources Pool ............................................ 53
Table 3.1: Theories and corresponding variables...................................................... 91
Table 3.2: Definitions of Entrepreneurial Orientation ............................................ 127
Table 5.1: Strength of Association between Subjective and Objective Measures of
Performance. .......................................................................................... 163
Table 5.2: Reliability of Exogenous and Endogenous Variables ............................ 168
Table 5.3: Research Philosophy, Approach and Strategy ...................................... 170
Table 6.1: Profile of the Surveyed SMES Owners or Managers ............................ 178
Table 6.2: Highest Educational Level and Gender of the Owner or Manager ....... 180
Table 6.3: Highest Educational Level and Age of the SMEs Owner or Manager .. 181
Table 6.4: Highest Education Level and Primary Export Market ........................... 182
Table 6.5: Export Markets and Gender Distribution .............................................. 184
Table 6.6: Profiles of the Surveyed SMEs .............................................................. 189
Table 6.7: SMEs Age and Gender of the Owner or Manager ................................ 190
Table 6.8: SMEs size and Gender of the Owner or Manager ................................ 192
Table 6.9: SMEs Size (Number of employees) and age (Years) ........................... 193
Table 7.1: Multivariate Tests of Significance (OMDC and ICEIU) ....................... 201
Table 7.2: Model Fit Summary (OMDC) ............................................................... 201
Table 7.3: Multivariate Tests of Significance (OMDC and SEIU)......................... 203
Table 7.4: Regression Weights (OMDC) ................................................................ 203
Table 7.5: Multivariate Tests of Significance (PQEI and ICEIU) .......................... 205
Table 7.6: Multivariate Tests of Significance (PQEI and SEIU) ............................ 206
Table 7.7: Model Fit Summary (PQEI) ................................................................... 206
Table 7.8: Regression Weights (PQEI) ................................................................... 207
Table 7.9: Multivariate Tests of Significance (OMR and ICEIU) .......................... 208
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Table 7.10: Multivariate Tests of Significance (OMI and ICEIU) ........................... 209
Table 7.11: Multivariate Tests of Significance (OMP and ICEIU) .......................... 211
Table 7.12: Standardized Regression Weights (Owner or manager Innovation) ...... 212
Table 7.13: Model Fit Summary (Owners or managers EO) ................................. 213
Table 7.14: Multivariate Tests of Significance (ICEIU and EP) .............................. 217
Table 7.15: Multivariate Tests of Significance (SEIU and EP) ................................ 219
Table 7.16: Summary of Hypothesis Testing Results ............................................... 221
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List of Figures

Figure 1: A Resources Based Model of sustainable competitive advantage ..................... 55


Figure 2: The Upper Echelons Model ................................................................................ 72
Figure 3: The Presumed Research Domain ....................................................................... 106
Figure 4: Integrated Research model ................................................................................. 134
Figure 5: Structural Equation Model for Owners or managers Demographics .............. 200
Figure 6: Structural Equation Model for perceived quality of export Information ........... 204
Figure 7: Structural Equation Model for Owner Manager Risk Taking......................... 208
Figure 8: Structural Equation Model for Owner Manager Innovation ............................ 210
Figure 9: Structural Equation Model for Owner Manager Proactiveness ...................... 212
Figure 10: Revised Research model .................................................................................. 223
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Appendices

Appendix 1: A Questionnaire for a Survey of Exporting SMEs in Tanzania


Introduction ............................................................................................ 309
Appendix 2: Entrepreneurship Orientation Dimensions ............................................ 314
Appendix 3: Content Validity Index (CVI) Ratings on a 26-Item Scale ................... 315
Appendix 4: Hofsteedes Uncertainty Avoidance and Masculinity-femininity.......... 316
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List of Abbreviations

ACP African Caribbean and Pacific


AGFI Adjusted Goodness of Fit Index
AMOS Analysis of Moment Structures
BDS Business Development Services
BOT Bank of Tanzania
CA Competitive Advantage
CCA Canonical Correlation Analysis
CEO Chief Executive Officer
CFI Comparative Fit Index
CMIN Minimum Discrepancy
CMIN/DF Minimum Discrepancy to Degree Of Freedom
CR Critical Ratio
EAC East African Community
ECGS Export Credit Guarantee Scheme
EI Export Information
EO Entrepreneurial Orientation
EP Export Performance
EU European Union
FDI Foreign Direct Investment
GFI Goodness of Fit Index
I/O Industrial Organization
ICEIU Instrumental Conceptual Export Information Use
ICT Information and Communications Technology
IMF International Monetary Fund
IT Information Technology
LGA Local Government Authority
LISREL Linear Structural Relations
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MNC Multi-National Corporations


NPAR Number of Parameters
OECD Organization for Economic Co-operation and Development
OMDC Owners or Managers Demographic Characteristics
OMI Owners or Managers Innovation
OMP Owners or Managers Proactiveness
OMR Owners or Managers Risk Taking
OR Organizational Resources
PQEI Perceived Quality of Export Information
RBV Resource Based View
RMSEA Root Mean Square Error of Approximation
SADC Southern African Development Community
SAREC Swedish Agency for Research Cooperation with Developing
Countries
SCA Sustainable Competitive Advantage
S-C-P Structure Conduct Performance
SEIU Symbolic Export Information Use
SEM Structural Equation Modeling
SIDA Swedish International Development Agency
SIDO Small Industries Development Organization
SMEs Small and Medium Enterprises
SRW Standardized Regression Weights
SSA Sub Saharan African
SCVI Scale Content Validity Index
TMT Top Management Team
UET Upper Echelons Theory
UIM Uppsala Internationalization Model
UK United Kingdom
USA United States of America
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USBE Ume School of Business


VRIO Value, Rarity, Imitability and Organization
1

1. CHAPTER ONE

2. INTRODUCTION

It seems logical that having more information would lead to more knowledge - but as we all
know the opposite is often true. Anonymous

1.1 Background Information

The literature on acquisition and dissemination of information by Small and Medium

Enterprises (SMEs) is not new in both developing and developed economies and has

gained ample space within the field of business development. Studied and identified

strategies used by these SMEs to acquire and subsequently disseminate information are

networks (Mbura, Rutashobya, Jaensson and Nilsson, 2005; Phiri, 2003), Information

and Communication Technologies (ICT) (e.g. Mbamba, 2004) and marketing research

(Douglas and Craig, 1983). The first two strategies have, especially, been found to be

suited for SMEs. Phiri (2003) argues that SMEs information acquisition, concerning

foreign markets, is more critical because they lack the financial resources to invest in

formal market research.

There is, however, a dearth of literature on uses of export information and their effects

on export performance of enterprises in developing countries. Extant literature in Africa

has mainly focused on domestic information acquisition and foreign markets entry

barriers by the enterprises. Researchers and practitioners alike are now facing new

informational challenges as SMEs are increasingly internationalizing. The trend has

resulted in a plethora of studies in western world focusing on antecedents and


2

dimensions of export information use (Diamantopoulos and Souchon, 1999; Low and

Mohr, 2001), export knowledge and their effects on firms export performance

(Katsikeas, Leonidou , and Morgan, 2000; Toften, 2005) among other informational

aspects.

Noted limitations of these empirical studies and guiding theories have been that most are

undertaken and developed within the contexts of developed western economies. As

developed and developing economies feature different contexts, it would be difficult if

not altogether impossible to generalize the study findings and theories from one context

to the other. Allan and Rutashobya (2007), cautioned on wholesale adoption of findings

and theories from western world by arguing that their relevance and applicability in the

context of developing economies, especially in Africa, are not well established and

justified. What gives the argument more credence in relation to this study in that access

to and uses of information are all embedded in the culture and the institutional

arrangements of the host society (Erick deMan, 2003; Voerman et al., 1997).

African countries have, of recent, recognized that one of the best strategies for achieving

economic development and growth is to encourage SMEs to export. Again, the majority

of the studies dealing with exporting activities in the literature have predominately been

conducted in the Western economies. This is happening amidst the almost universal

acknowledged importance of exporting to the enterprises and the nations at large.

Studies (Leonidou, 1998; Sharpe, 1995) hold that exporting provides economies with
3

social prosperity and development, and generates foreign exchange to support other

economic activities. Besides, exporting advantages over other market entry strategies

such as joint venture, franchising, licesing and foreign direct investment are based on

reduced financial risks, lowered commitment of resources and a high degree of

flexibility (Stttinger and Schlegelmich, 1998). It is further being acclaimed that

exporting increases employment opportunities and creates forward and backward

linkages in the economy (ibid.).

At the firm level, exporting provides an opportunity for firms in developing countries

with small domestic markets to enlarge their markets (Dijk, 2002) and act as a channel

of technology transfer (Pack, 1993). There is even general agreement that exporting

enhances the performance of individual firms (Terpstra and Sarathy, 1994) and provides

them with sustainable competitive advantage. Worldwide, exporting has been climbing

exponentially. Broadman (2007) notes that world trade has dramatically expanded in the

last 15 years, but the African continents overall trade performance in the global

marketplace has been very disappointing. Enhanced attention given to African SMEs1

internationalization therefore comes in the wake of Sub-Saharan Africa (henceforth,

SSA) countries declining export share in world exports (Bakunda, 2004; Manduna,

2005).
4

While traditional and conventional assumption that in order to compete globally you

have to be big (Chandler, 1990) may hold, a significant number of researchers have

found no relationship, or a negative relationship, between size and exports (Calof,

1993). Knight and Cavusgil (1996) reveal that more and more SMEs are participating

in global business. SMEs substantially contribute to countries exports around the

world (Fletcher, 2004). Not only are small firms becoming increasingly international,

they appear to be entering the international arena at an earlier age than had been the case

in previous decades (Andersson, et al., 2004). It is invariably accepted that, despite the

financial allure for SMEs to engage in exporting, foreign markets are strewn with a lot

of uncertainties and complexities inhibiting their export performance. Moorman (1995)

has argued that information processing is particularly important in SMEs, and that

failure to achieve marketing performance objectives can be traced to lack of or

inadequate information-processing systems. Byberg (2006) claims that traditional

internationalization theories do not explicitly explain why some SMEs are more

successful in exporting than others are.

Various scholars (Aaby and Slater, 1989; Miesenbock, 1988) dealing with the

question of what factors explain the differences in SMEs export performance have

studied and identified both external and internal factors. The importance of internal

factors in explaining performance differentials seems especially true for industries

dominated by SMEs. Drawing on the Resources Based View (RBV), Barney (1991),

Wernefelt (1984), Dhanaraj and Beamish (2003) argue that its resources and capabilities
5

generate competitive advantage and performance. Leonidou (2004) classifies the

internal factors into informational, functional and marketing barriers. Equally reflecting

on the tenets of the RBV, Leonidou argues that difference in SMEs export performance

is fundamentally due to firm heterogeneity characterized by the use of export

information rather than the external environment and industry structure. Additionally,

RBV assumes that firm performance and success is not dependent upon abundant

resources, but rather, as stressed by Hamel and Prahalad (1993), scarce resources are the

driving force for a firms creativity and developing capabilities.

The external factors according to Suarez-Ortega and Alamo-Vera (2005) are those that

an individual exporter can only control to a very limited extent. According to Lawrence

and Lorschs (1967) and Mintzbergs (1979) contingency theory, export performance is

determined by the context, in which the company operates. The RBV thus complements

the more traditional Porterian approach which assumes that the industrys external

environment and the firms competitive positioning determine the firms strategy

(Augustyn, 2004) and hence its export performance.

Information use, rather than its mere possession, has been defined as taking research

findings into account (Weiss and Bucuvalas, 1977), the conversion of data into ultimate

actions (Barabba, 1983), or the extent to which interpreted data influence the user's

decision-making (Moorman et al., 1992). As noted earlier , Diamantopoulos and

Souchon (1996) found that exporters tend to use information in two (2) main ways, that
6

is instrumentally-conceptually and symbolically and this has been supported in the SME

context (Williams, 2003). According to Toften (2005), the instrumental-conceptual use

refers to the use of information for particular, general and future decision-making

purposes. Symbolic use of information, on the other hand, involves the use of partial or

distorted information for essentially political purposes, such as justifying actions

already taken based on instinct or intuition, or legitimizing views already held

(Williams, 2003). Perceived quality of information has also been suggested to be one of

the most important factors that explain the use of information, within both the general

market information use literature (Low and Mohr, 2001) and export literature (Souchon

and Diamantopolous, 1997).

Hansen and Wernerfelt (1989) claim that, whereas external market factors have the

ability to explain the variance in performance, internal factors can explain more than

twice the variance in performance. Furthermore, Rumelt (1991) showed that the unique

skills (internal factors) of a business unit could explain more than six times the variance

in performance, in contrast to the earlier findings of Schmalensee (1985). In this regard,

it is argued that compared to internal factors, the relationship between external factors

and export performance appear to be weak (Kirpalani and Macintosh, 1980; Madsen,

1989). On that note, Leitner (2001) stresses that important determinants of performance,

competitiveness and growth are based on internal firm- specific resource factors.

Export information is acquired from the external environment though its use is a

function of the internal dynamics of an organization.


7

Even when considering the internal factors alone, explaining the difference in the export

performance of SMEs can still be complicated in view of many internal factors. It is

against this backdrop that numerous studies (Bello and Williamson, 1985; Cavusgil,

1985 and Czinkota and Johnston, 1981) have attempted to focus on export information

as one of the key determinants of a firms success in international business. Information

is even more crucial in the case of firms transcending national boundaries, due to the

higher risks resulting from the great diversity of foreign business environments, the

multiplicity of the parameters involved in selling abroad, the existence of new variables

not found in the domestic market, and the high intensity of international competition

(Czinkota and Ronkainen, 2001). Jorosi (2006) argues that in a variable and volatile

environment, information is seen as a strategic weapon for use by managers to adapt to

the turbulent business environment. In using information, top managers of firms are able

to reactively and proactively adapt their organizations to environmental changes in

order to survive and prosper.

Are the studied and identified information acquisition strategies, such as the use of ICT

and networks, the key for SMEs to capture the benefits of export information? Kettinger

et al., (2002) assert that many firms managers originally thought that the solution lay in

investing heftily in the enabling technologies (computers) and networks. In most firms

that have made colossal investments in Information and Communications Technologies

(ICT), their main concern has been that investments in systems and software have been
8

wasted. Many organizations were content to simply manage their data and information

by automating their storage and retrieval through transaction- processing systems

(Drucker, 1988). The practice led to information storage becoming increasingly more

difficult to interpret, thus rendering them almost useless. Truly, researchers need to

consider the different informational needs and uses by SMEs. In SMEs, it is the owner

or manager2 who largely determines the behavioural characteristics of

internationalization decisions.

1.2 Statement of the Research Problem

Despite the acknowledged fact that export performance lies not only in the possession of

export information but in the capabilities associated with its use, no knowledge exists on

this phenomenon in developing countries. Matarazo (1994) describes information use as

one of the most neglected areas of study and literature on the use of export information

is scarce (Diamantopoulos and Souchon, 1999) much as there is heightened interest in

that subject. Mere possession of export information does not automatically ensure that

the acquired information will indeed be put to use (Larsen, 1986). Hart and

Diamantopoulos (1993) argued that what really counts is not mere information

acquisition and possession but how companies use that information. Shapira (1982)

corroborates this by saying that many firms gather information and do not use it. In

2
SMEs owners refer to the surveyed business people who have established exporting businesses and are
themselves engaged in other businesses or are employed in the public or private sector. The extent of
owners engagement in the running of a business differs from one business to the other. SMEs managers
may, on the other hand, either be owners or non-owners of the surveyed SMEs which are engaged in the
exporting business.
9

other words, the way and extent to which information is used, as opposed to the mere

acquisition (or transfer) of information, will ensure the success or failure of

organizations (Glazer, 1991). Export Information use is considered crucial in avoiding

big business blunders (Ricks, 1983) and it reduces the decision-making uncertainty

associated with doing business with foreign customers (Crick et al., 1994).

The human element is important to be considered for effective use of information

(Kettinger et al., 2002). Therefore, although the relationship between export information

use and export performance is the central research question for this thesis, this

researcher integrates managerial characteristics and their influence on the way and the

extent to which export information is used. This approach is adopted against a backdrop

of prior research on SMEs export performance that has identified managers

background as one of the main constructs on which export success depends (Leonidou

et al., 1998; Moini, 1995). The influence of either internal or environmental factors

affecting firms outcomes and export performance in particular is best understood

through the lenses of voluntaristic and deterministic perspectives respectively. The

research model guiding the development of the hypotheses of this study is rooted in the

voluntaristic perspective, specifically; the views of the UET and RBV were adopted.

The quality of information use outcomes depends on management ability and the

processing skills of information users (Barabba and Zaltman, 1991). Whilst various

attempts have been made to study the effects of firm-level factors on export
10

performance and internationalization in SSA, the role that the owners or managers play

in the internationalization of SMEs has largely been ignored. Yet, managerial variables,

particularly the knowledge and attitudes of senior managers, have been associated with

firms export marketing activities and success in exporting in less developed countries

(Das, 1994). Filatotchev et al. (2001) also echo this concern of ignoring the role of

owners or managers in exporting and export performance. Owners or managers role is

more significant for SMEs than for large firms where the personal characteristics of the

Chief Executive Officer have a lesser effect on overall operations (Olomi, 1999 as

quoted in Mcdade et al., 2005). This standpoint, however, contrasts with other studies

such as those of Aldrich (1979) who concludes that top managers are subject to

environmental constraints and that the performance of big organizations owes little to

contributions of these managers (Galbraith, 1984). Studying the uses export

information by SMEs owners or managers in a developing country such as Tanzania is

deemed important considering the countrys concerted efforts to boost and diversify its

economy.

Focusing on owners or managers characteristics, this thesis hinges upon the principal

assumptions of the UET (Hambrick and Mason, 1984), as the theory provides a

framework to explain owners or managers influence on firms outcomes. Entriago

(2002) observes that, faced with the same objective environment, different managers

will make different decisions based on their individual characteristics. The RBV

(Barney, 1991; Wernerfelt, 1984) also guided the construction of the framework for
11

assessing export information and its use by the owners or managers. The general

question is, What effects do the various uses of export information have on the export

performance of Tanzanian SMEs engaged in exporting horticultural and handicraft

products? The answer to the question is crucial since the resources associated with

information acquisition are considerable and , it is of great importance to all exporting

business stakeholders to ensure that the use of information is optimized and

efficiencies in information use are achieved (Deshpand and Zaltman, 1982). A research

model for addressing this question is developed in this study.

1.3 Main Objective

The main objective of this thesis was double pronged: To examine the effects that

different uses of export information have on the export performance of SMEs engaged

in exporting horticultural and handicrafts; and to further integrate the owners or

managers characteristics (demographic and entrepreneurial orientation) in order to

understand the relationship. To realize the objective, studying these phenomena in a

different developing country context was deemed appropriate. The main thrust of the

study is to examine the export information uses of SMEs operating and exporting from

Tanzania (a developing economy) to other export markets.

1.3.1 Specific Objectives

In order to accomplish the main objective, the study focused on realizing the following

specific objectives:
12

i. To develop a relevant model for studying the effect of export information

use on SMEs export performance.

ii. To explain the relationship between export information use and export

performance of exporting SMEs.

iii. To explain the relationship between the demographic characteristics and

entrepreneurial orientation of owners or managers of SMEs with both export

information use.

iv. To examine the relationship between the perceived quality of export

information and the use of export information.

On the premise that export information is the key to enhancing export performance of

SMEs, a better understanding of the influence that owners or managers have on the use

of export information was deemed necessary. In this study owners or managers

demographic characteristics, entrepreneurial orientation and perceived quality of export

information are used to explain export information use and performance.

1.4 Rationale for the study

This study differentiates itself from previous research efforts in that it considers an

integrated framework of the potential influence on SMEs export performance, by

incorporating export information use, perceived quality of export information, and

managers demographics and entrepreneurial orientation, while previous research has

mainly focused on either demographic characteristics or environmental factors.


13

Secondly, for quite a long time, firm performance has been an issue of continuous

concern (Maes, Sels, and Roodhooft, 2004) to researchers and practitioners alike.

Studies addressing the identification of factors leading to SMEs improved performance

are therefore of vital interest to public policy makers, business managers, marketing

researchers (Katsikeas, Leonidou and Morgan, 2000), Business Development Services

(BDS3) providers and in fact SME owners or managers. Additionally, the large number

of studies that have been undertaken over the past decades on information use in

developed countries bear testimony to its importance. This study sought to use RBV and

UET as guides to examine and explain the use made by owners or managers of export

information and SMEs export performance in Tanzania. To the best of the researchers

knowledge, this thesis is the first scholarly work that has culminated in the development

of the model to primarily test the effect of export information use on the export

performance of SMEs in Tanzania

The resulting research model on export information use and performance will prove

relevant to many SMEs owners or managers, as Samiee and Walters (1990), noted that

research on export performance is of great interest to owners or managers because it is

considered as a tool to boost growth, strengthen the competitive edge, and ensure

company survival in a highly competitive foreign marketplace.

3BDS refers to non-financial services that are designed to overcome the internal constraints that impede
the survival, growth, and competitiveness of an enterprise (Kyukyu, 2006).
14

Export information providers should benefit from knowledge on how and what export

information is used by exporting SMEs. Such tailoring is especially important in todays

international business environment that is characterized by a huge increase in the

number of information providers (Botten and McManus, 1998). This study will also

enable policymakers and BDS providers to better tailor their offerings and enhance

SMEs export performance. Most significantly the research model can be used to guide

SME owners or managers, BDS and policy makers on the best and most appropriate

ways of using export information to improve SMEs export performance.

1.5 Tanzania: Developing Sub-Saharan African Countries Context

Countries range across a broad spectrum of economic development. A commonly used

country classification is developed and developing countries. Developing countries,

range from lower middle and upper middle-income countries to very poor countries.

The nomenclature applies to most African, Latin American, Caribbean, and Asian

countries, as well as some countries in the Middle East and Eastern Europe. According

to the World Bank, country classification is generally based on countrys annual per

capita income and not the availability of skilled resources, expertise or ICT readiness.

Whereas developing countries are often presented as a homogeneous group with similar

problems and similar resources and capabilities, there are differences, including the

level of human development, ICT readiness and priority areas for government funding

(Organization of American States, 1997). The developing country referred to in this

study is Tanzania- one of the countries in SSA.


15

Thairu (1999) acknowledges that African societies have built up a wealth of indigenous

knowledge in response to the dynamic changes experienced in their environments. The

foregoing assertion therefore necessitates considering this knowledge when one is trying

to improve the way SSA enterprises are managed and structured, and how decisions are

made. Ronen and Shenkar (1985) point out that managerial attitudes, values and beliefs

are functions of national culture and are linked to different strategic choices.

Woldesenbet, Storey and Salaman (2007), for instance, likewise carried out their study

on senior managers business knowledge in Ethiopia. The researchers found that

managers knowledge of their environment and organizational aspects were different,

context specific and subject to change and re-interpretation because of shifting roles,

responsibilities and changing contexts.

Woldesenbet et al. (2007) note that research on business management in some

developing countries and post-communist Eastern European countries has identified

several factors that differentiate the environment in these nations from western

industrialized countries. These factors (which are also to be found in Tanzania) include

the absence of knowledge required to systematically monitor the environment and

collect needed data, highly unstable political and economic environments, the presence

of compelling political and ideological influence on business operations, and the

absence of the legal and social infrastructure necessary for carrying out business-

scanning activities (Fubara, 1986).


16

Over the past two decades, Tanzania has evolved from a centrally planned economy to a

market- oriented system through a wide range of economic and public policy reforms

that have included trade liberalization. The country has continued implementing

concerted measures for macroeconomic stabilization and structural reforms that have

enabled it to transform its economy into a higher degree of openness and export

orientation.

SMEs used to operate in Tanzania which had a strong socialisttype ideology before it

adopted market economy policies in the mid 1980s, and are still shrouded in socialistic

orientation. According to Temu and Jean (2000), Tanzania was a strongly centrally

planned African economy with minute involvement by the private sector. As Heilman

and Lucas (1997) put it, Tanzania became an economy whose entrepreneurial class had

been stunted by decades of anti-business policies. The scholars found that business

owners and/or entrepreneurs in Tanzania had developed the tendencies of hiding

transactions, non-compliance with government directives, evading tax, and bribing to

get licences and permits which became the prerequisite skills for doing business in the

country.

Since the mid- 1980s, there has been gradual liberalization of the economy in general

and the international trade sector in particular, through the relaxing of foreign

exchange controls, which culminated in the replacement of the Exchange Control


17

Ordinance (Cap. 294) by the Foreign Exchange Act of 1992. The requirements for

exporters to register with the Bank of Tanzania (BOT) and to obtain a licence from the

Board of External Trade were eliminated. The list of goods subject to export permits by

individual ministries was sharply cut to only those that the government wished to

control for preserving Tanzania's national heritage. Coming from such a political and

economic situation and, despite the opening up and encouragement by the government

of the private sector, SMEs will still take a while before they operate in full adherence

to the principles of a developed market economy.

For quite a long time, Tanzanian firms have had a general inward focus typified by a

psychological aversion to exporting. To the contrary, export information acquisition and

use is predicated on having an outward looking view. As recently as 2008, a German

investors delegation to Tanzania noted that although as the country had begun its

transition from a socialist economic regime less than two decades ago, the effect is still

clearly felt in both public management and the private sector. Studying the use of

export information and the characteristics of the owners or managers operating these

firms in Tanzania will help to give fresh insights into the phenomenon.

On the ICT front, the Government of Tanzania first used a computer, ICT 1500, in 1965

for basic accounting functions (Mbamba, 2004) and ICL 1900 computer in 1974.

However, Mgaya (1994) and Mbamba (2004) note that the computers and others that

were later introduced did not achieve the desired outcomes. After the failure to fully
18

computerize the government accounting system and the consequent heavy financial loss,

the government then took the drastic measure of banning the importation of computers

in 1974 through the Government Gazette, until when the ban was lifted in 1993. The

failure is attributed to, among other factors, the lack of qualified indigenous personnel,

uncoordinated planning and government intervention (Mgaya, 1994). Heeks (2002)

attributes failure and success of ICT projects in developing countries to gaps arising

when systems designers in developed countries are physically or psychologically

detached from the developing countries contexts in respect of the implementation and

use of ICT. This happens, as was the case with the Tanzania failed experiment with ICT,

due to the domain of developing countries information systems being particularly

dominated by the transfer of developed countries designs to Southern realities.

According to Heeks, if the success rate of developing countries ICT projects is to

increase, there needs to be either a change in local realities to make them closer to

information system designs or changing imported information systems designs to match

developing countries organizational realities.

The use of ICT is inevitably important in the easing of information acquisition and use.

The ban and delayed adoption of ICT in the Tanzanian business environment may have

played a role in the psychological characteristics of the SME owners or managers

pertaining to exporting, the acquisition of export information, the perceived quality of

export information, export information use and the consequences of all these for export

performance.
19

Mfaume and Wilhelm (2004) contend that the privatization of State Owned Enterprises

and the restructuring that were introduced in the country in the mid-1980s led to

retrenched workers and retirees starting businesses that were before mainly started and

managed by less educated entrepreneurs. The new crop of entrepreneurs came with less

business experience but relatively higher education, greater access to information and

better social and professional networks. This however is not necessarily representative

of the small business sector in the country as some SMEs are still owned and managed

by people who do not have adequate management skills and experience and some are

school dropouts. These business owners and managers may be encumbered in many

ways in acquiring and using export information and other technical matters relating to

operating in foreign markets. African countries critical lack of ICT infrastructure

inhibits access to and acquisition of export information. It is noted, for instance that

Africa has:

i. Some 280 million telephone subscribers, of whom some 260 million (over 85 %)

are mobile cellular subscribers, meaning that the continent has the highest ratio

of mobile to landline subscribers of any region in the world.

ii. Fourteen percent (14 %) of the world's population, but only around 7 % of all

fixed and mobile subscribers worldwide.

iii. Some 50 million Internet users, with Internet penetration of just 5 %. Europe's

Internet penetration is 8 times higher.

iv. Broadband penetration of more than 1 % in only a few countries. Broadband

penetration in OECD countries exceeds 18% (ITU, 2007).


20

Tanzania, where this study was conducted, presents a different context from the

developed world context in terms of level of ICT connectivity. The situation has a

bearing on the way and the extent to which export information is accessed and acquired

and on the use of export information and the perceived quality of export information. As

noted earlier, Tanzanias technological development indicators such as Internet access,

tele-density and number of computers in use are still among the lowest in the world

(Mutula and Ahamad, 2002). Tanzanian SMEs access to export information is

hampered by diverse barriers. First, the country is yet to fully utilize ICT services due to

poor and inadequate infrastructure, weak or lack of ICT- related policies, and limited

human resources (inadequate skilled personnel in ICT field). In addressing these

problems, the Government of Tanzania through its National ICT policy of Tanzania

(2003) has put in place institutional structures and frameworks to enhance Internet

access and use. The policy covers such aspects as deregulation of the

telecommunication sector, licensing, reduction of import duty and other tariffs on

computer software and hardware. Having these policy instruments on paper has not

guaranteed increased connectivity and improvements in ICT on all fronts. However, it is

not all gloom and doom. According to Gorp and Maitland (2007), Tanzania has recently

made great strides forward in its telecommunications and ICT deployment and over the

last few years, Tanzania has seen its tele-density grow exponentially from a meager

0.4% in 1998 to over 17% in 2006. However, an uninspiring statistic is that by 2008, the

number of Internet users in Tanzania amounted to about 400,000 (a mere 1% of the


21

population) (ITU, 2008). It is against this modest improvement in information

connectivity ushered in by the Government of Tanzania that the researcher studied the

perceived quality of export information and its uses.

1.6 Developed Countries Contexts

The preceding discussion was intended to picture the contexts of SSA countries

generally, and Tanzania in particular, to form the basis for explaining the relationship

between Tanzania and both developing and developed countries export markets.

According to Adedeji (2002), trade relations between developing SSA countries and

European countries have been described as a hub-and-spoke arrangement. It is without

doubt that the relationship is equally noted for African countries with almost all

developed countries. Discussion of the relationship is important and relevant as it

indicates aggregate trade volumes, export information flow, and the directions of which

exporting is a part.

Notwithstanding the seemingly concerted efforts, exploitative trade agreements between

developed and developing countries have not dissuaded African SMEs from

increasingly exporting to developed countries in Europe and the transitional economies

of Asia. Exporting to other developing African countries which seem to be physically

and culturally closer is equally notable. Even with the allure, the key feature of the

arrangement is that trade between the developed and the former to the detriment of the

latter (Adedeji, 2002), naturally dominates developing countries. Under the current
22

trade arrangements, Luximon (2003) notes that the countries that will benefit more are

the developed ones because of the preference they get from developing countries. This

is argued as the developing countries compete amongst themselves for a market share in

the developed world. The researcher notes that a developing country would face

discrimination in the export market if the developed country negotiates more favourable

bilateral trade terms with new developing countries. The importance, therefore, of

focusing on the developing countries SMEs exporting to developed countries is

grounded on that reasoning, as again trading partners in the developed countries have

better export markets information than developing countries.

This study focuses on SMEs exporting from Tanzania -a developing SSA country - to

developed countries in USA, Europe, the transitional economies of Asia as well as other

developing countries in the SSA. The developed and developing regions reflect quite

different economic, political and cultural scenarios. Developed countries have modern

and state- of- the- art infrastructure, largely urban populations, an educated workforce,

and frequently, competence in high technology and science. The sophisticated

technological and electronic infrastructure affords SMEs in developed countries easy

access to quality export information and other facilities. Besides, developed countries

have for a long time been manufacturers and exporters of technology based industrial

products. While there is no single definition of a developed country, the generally

accepted concept refers to countries that:


23

i. Have achieved relatively high levels of per capita GDP (between US$ 13,000

US$ 80,000).

ii. Possess advanced productive sectors (including service and high technology

industries).

iii. Enjoy high quality infrastructure and social services (the most appropriate,

effective and up-to-date).

iv. Undertake relatively high levels of research and innovation which focuses on the

quality and relevance of technological, industrial, economic, social and cultural

aspects which include quality of life and the management of living resources;

user-friendly information society; competitive and sustainable growth;

promotion of innovation and encouragement of participation; improving human

research potential and socio-economic knowledge (GOJ, 2008).

The economic, social, political, technological and cultural disparities between

developed Western countries and developing Sub-Saharan African countries reveal the

challenges that SMEs are up against. For SMEs from Africa to carry out export business

in developed countries, they are faced with tortuous challenges, which are the result of

factors in the developing countries which may prevent the acquisition of information for

sound business decision making. These factors, according to Hrnell, Vahlne,

Wiedersheim- Paul (1973), are differences between the home market and foreign

markets in terms of level of industrial development, level of education, business

language, cultural differences, and ICT among others. Developed countries have
24

adequate and quality export information for SMEs to access and deploy in their

decision- making process. However, developing countries infrastructural and

managerial constraints bar them from enjoying the richness of the information. In

addition, it is important to note that SMEs export information needs differ from one

sector to another.
25

1.7 Structure of the Thesis

This thesis includes ten chapters structured as follows:

Chapter one has hitherto focused on the informational needs of handicraft and

horticultural SMEs in Tanzania. Tanzanias export diversification strategy, the

importance of exporting to enterprises and developing economies, SMEs and

determinants of export performance, are among other issues addressed by the chapter.

The chapter has also focused on the stating the statement of the problem, research

objectives, and significance of the study and a discussion of the contexts of developed,

developing countries in general and Tanzania in particular.

Chapter two presents part one (I) of the literature review. The chapter dwells on a

presentation of both Deterministic and Voluntaristic perspectives. These two

perspectives guided the choice of the theories adopted for explaining the use of export

information and the SMEs subsequent export performance. A review of theoretical and

empirical literature on the Uppsala Internationalization Model (UIM), Resource Based

View (RBV), and the Upper Echelons Theory (UET) are also presented.

Chapter three constitutes part two (II) of the literature review covering different types of

export information uses , perceived quality of export information , owners or

managers demographics and entrepreneurial orientation characteristics which are

presented and discussed. Empirical studies are reviewed and presented, setting the

ground for further discussion in subsequent chapters.


26

Chapter four presents the research model and hypotheses formulation. Reviews and

discussion from the preceding chapters are integrated into the research model that acted

as the guide for the rest of the study. Chapter five is devoted to a presentation of the

research philosophy, research approach and justification for the research strategy and

other choices made for the thesis. The chapter details the research design, sampling

procedures and size, operationalization of the variables, data quality and analysis. It also

describes the treatment and management of missing data and outliers. The sixth chapter

starts with a discussion on data coding, cleaning and management of non-responses. The

focus of the chapter is presentation of the descriptive findings of the study.

Characteristics of both owners or managers and the SMEs surveyed are presented and

discussed.

Assumptions of multivariate analysis used in this study are presented in chapter seven.

The chapter also presents various measures of model fit and the results of hypotheses

testing using Structural Equation Modeling and Canonical Correlation Analysis.

Discussion of the findings and conclusions are presented in chapter eight. Lastly,

chapter nine provides the summary of the major theoretical contributions, implications,

limitations of the study and directions for future studies.


27

3. CHAPTER TWO

4. THEORETICAL AND EMPIRICAL LITERATURE REVIEW

Why is it that with all the information available today on how to be successful in small
business, so few people really are? Michael Gerber

2.1 Introduction

This chapter discusses the Deterministic and Voluntaristic perspectives, the Uppsala

Internationalization Model (UIM), and the two theories of Resource Based View (RBV)

and Upper Echelons Theory (UET) that have guided the study throughout. Subsequent

to the theoretical discussion is the presentation of relevant empirical studies from both

developed and developing economies.

2.2 Deterministic and Voluntaristic Perspectives

Two theoretical perspectives are used to explain the performance of firms in general and

their export performance in particular. These perspectives are Deterministic (firm-

external viewpoint) and Voluntaristic (firm internal-view point) (Astley and Van de

Ven, 1983), which are said to be diametrically opposed. Referring to the deterministic

perspective, De Wit and Meyer (1998) contend development of an industry is an

autonomous process, to which firms must adjust or risk being selected out. The

voluntaristic perspective, on the other hand, has it that the industrial context can be

moulded in an infinite variety of ways by innovative firms or entrepreneurs. These two

perspectives are discussed here and the rationale for choosing the Voluntaristic

perspective over the other for this study is provided. The discussion helps the researcher

to situate the study on firm grounds with a focused direction.


28

2.2.1 Deterministic Perspective

The deterministic approach, grounded in neoclassical economics (Eatwell, 1971), and

the Industrial Organization model focuses on the functional and structural properties of

a system, and regards managers and their actions as being completely determined or

governed by their environments (Avital, 2003). Four assumptions of this model are: (1)

the external environment is assumed to impose pressures and constraints that determine

the strategies that would result in above-average returns. (2) Most firms competing

within a particular industry or within a certain segment of it are assumed to control

similar strategically relevant resources and to pursue similar strategies in the light of

those resources. (3) Resources used to implement strategies are assumed to be highly

mobile across firms. (4) Organizational decision makers are assumed to be rational and

committed to acting in the firms best interests, as shown by their profit maximizing

behaviours.

The model suggests that above-average returns for any firm are largely determined by

characteristics outside the firm. It significantly focuses on the industry structure

attractiveness of the external environment to the industry structure rather than the firms

internal characteristics. Stern and Reve (1980) define the environment as a set of

complex economic, physical, cultural, demographic, psychological, political and

technological forces. Interestingly, Barney (1991), who is viewed as the strongest

adherent to the RBV, has also made a notable contribution to the industrial organization
29

theory of strategy. Barney (1991) identified two underlying assumptions in the

industrial organization theory. First, the scholar noted, was that firms within an industry

or a strategic group are identical in terms of the strategic resources they control (Porter,

1981). Second is that if heterogeneity of resources should develop in an industry or a

strategic group, this heterogeneity would be short-lived because the resources which

firms use are highly mobile. This assumes are that the role of internal organizational

factors is less relevant when firms make strategic choices which influence their

performance.

Neoclassical economics is predicated on the logic of economic efficiency as a selective

force that determines the long term survival of a firm (e.g. Friedman, 1953). In this

view, owners or managers of SMEs engaged in exporting are assumed to be rational,

with the overriding objective of allocating scarce resources to alternative ends in such a

way as to maximize profits. Lado, Boyd and Wright (1992) argue that, from the

perspective, managers competencies are implicitly reduced to elements of labour input,

whose value is realized only in combination with other factors of production.

Similarly, the Industrial Organizations model has typically assumed that the firm can

influence neither industry conditions nor its own performance (Lado et al., 1992). By

ascribing competitive advantage and performance to the external environmental

imperatives, the deterministic approach overlooks the idiosyncratic competencies that

potentially generate a sustainable competitive advantage for the firm (ibid.).


30

Within the Industrial Organization model, the most influential theories are: Neo

Classical Perfect Competition, Bain-type Industrial Organization, the Chicago Tradition

and the Transaction Cost Economics. Despite these many theories, the elaborate

explanation of the Porter Competitive Model (Porterian Approach) is provided below in

an attempt to highlight the features of the deterministic perspective.

2.2.1.1 Porterian Approach

One of the major revolutions in the history of the management disciplines was

originated by Porter (1980) in the application of traditional organization economics-

Structure- Conduct Performance( henceforth, S-C-P) to strategy. Porter (1980)

maintains that industry structure determines performance, and one could ignore conduct

and look directly at industry structure in trying to explain performance. Porter identifies

five environmental forces in ascertaining industry attractiveness. These forces are entry

barriers, suppliers bargaining power, buyers bargaining power, substitution threat and

intensity of rivalry. A firm's profit potential (and by extension export performance) are,

Porter argues, determined by the sum total of these five forces. Porter (1980) however

notes that a firm operating in an industry can flexibly choose between three generic

competitive strategies , which are differentiation, cost leadership, and focus (cost focus

or a differentiation focus) (see Table 2.1).


31

Table 4.1: Porter's Generic Strategies


Competitive Advantage
Lower Cost Differentiation
Broad Target 1. Cost Leadership 2.Differentiation
Narrow Target 3a. Cost Focus 3b.Differention Focus
Source: Porter, 1985

By creating customer loyalty and price inelasticity, the differentiation strategy erects

competitive barriers to entry, provides higher margins, and reduces the power of buyers

as they feel they cannot afford to go for substitute products (Porter, 1980). On the other

hand, a firm devoting its efforts to controlling costs so that above- average returns are

forthcoming even when prices are falling adopts cost leadership. Focus strategy caters

for a circumscribed and specialized segment of the market resting on the premise that

the firm is able to serve the niche market more effectively and efficiently than

competitors serving broad markets (Porter, 1980). A firm that did not develop one of the

three strategies was termed to be stuck in the middle, relegating itself to low

profitability (Porter, 1980). Trying to be all things to all people, firms are only setting

themselves up for mediocrity (Porter, 1985).

The deterministic approach, which the Porters model follows, has its main weakness in

that it puts most emphasis on external factors. Adopting the deterministic approach

would then mean taking factors in the business environment as units of analysis and

presuming that all firms are homogeneous. This is the point of departure for this thesis.

It is a departure from industry/business environmental factors that firms performance to


32

internal/firm factors. The Porterian approach and by extension, the deterministic

perspective has failed to address adequately two critical issues:

1. Why do firms participating in industries with the same level of attractiveness

post different levels of performance?

2. Why do firms participating in industries with different levels of attractiveness

achieve a similar level of performance? (Olavarrieta and Ellinger , 1997)

The lack of adequate answers to these questions caused researchers to continue

searching for answers. The researchers later came up with the suggestion that the

strategic and idiosyncratic resources of the firm are greater determiners of the success or

failure of the firm than industry factors. Given the greater importance of firm effects in

explaining firm performance, this researcher is adopting the Voluntaristic perspective,

under which the RBV and UET fall in explaining the effect of export information use

and owners or managers characteristics on SMEs export performance. The two

theories are integrated with the UIM to explain export information uses and their effect

on firms export performance.

2.2.2. Voluntaristic Perspective

The Voluntaristic theoretical perspective refers to the extent to which organizations

exhibit human agency the capacity of human beings to make choices, as opposed to

acting out scripts determined for them by their social, cultural and economic
33

environment (Astley and Van de Ven, 1983). This perspective focuses on the motivation

and abilities of owners or managers to create strategic pathways for their business

(Neshamba, 2002). From this perspective, export performance of a business is primarily

associated with a dominant individual the owner or manager (ibid.). The approach

illustrates, contrary to the deterministic perspective, the potential diversity of possible

explanations as to why some SMEs, operating in more or less the same environment

perform better than others do. Proponents of this perspective argue that good

performance by SMEs does not just come from a good fit with industry or

environmental factors, but may consciously and systematically be developed by the

deliberate choices and actions of the firms strategic leaders (Bourgeois, 1984; Child,

1972; Weick, 1979).

As noted earlier, the thesis views that internal factors are more predominant than

external factors in influencing export information use and determining SMEs export

performance. Within this context and in sharp contrast to the Deterministic perspective,

the Voluntaristic perspective is therefore adopted in this study in recognition of the

importance of the owner or manager and the resources at the disposal of SMEs.

Whether causality is attributed to external factors, internal factors, or both, managers

can respond by selecting strategies that redirect resources in an attempt to improve their

firms competitive position. Because of this, an understanding of the role of the owner

or manager and how export information is used will be important in enhancing the

understanding of the SMEs export performance.


34

2.3 Internationalization: Definition and Perspectives

The heightened interest in internationalization and internationalization research has

drawn panoply of scholars to define the process in many ways. These scholars have

invariably defined internationalization differently thus, and so a single, universally

accepted definition of the term remains elusive (Welch and Luostarinen, 1988).

Beamish(1998) defines internationalization as the process by which firms both increase

their awareness of the direct and indirect influence of international transactions on their

future, and establish and conduct transactions with other countries. Welch and

Luostarinen (1988) noted that the process relates to increased involvement in

international operations. Adopting a network perspective, Johanson and Mattsson (1988)

state that developing networks in business relationships with other countries through

extension, penetration, and integration is what internationalization entails.

All definitions referred to above connote the fact that internationalization is a dynamic

process, and not a static event. In the same vein, available models concerning small firm

internationalization are considered to reflect four perspectives. These are Learning and

Innovation Adoption, Networks, Eclectic /Decision Making and Resources- Based

perspectives. At the core of the learning and innovation, adoption perspective is the

UIM, which is based on the work by Johanson and Wiedersheim-Paul (1975) and

Johanson and Vahlne (1990). On the other hand, the latter perspective supports the RBV

which contends that a firm with competitive advantage in the ownership and

management of resources or skills can go international without passing through the


35

linear process described by Johanson and Wiedersheim-Paul (1975). Based on the thrust

and focus of this study, the RBV constitutes one of the theories guiding this study.

Tallman and Fladmoe-Lindquist (1994) present the RBV of internationalization in

which the process of internationalization is characterized by two factors: resource

availability and interest in capability development. Thus, for the purpose of this thesis

and with reference to the RBV, an internationalizing firm can be viewed as mobilizing

unique, interdependent resource stocks that enable and contribute to the firms

internationalization activities within its natural context (Ahokangas, 1998). Firms go

international by deploying resources in their bid to improve their performance.

However, notable is the fact that mere internationalization, or just exporting, and

resources accumulation per se are not a panacea for the export performance problems

afflicting SMEs. The choice to study SMEs internationalization is necessitated by the

increasing internationalization of their operations (Anderson, 1995). Despite the

continuing growth in the number and the magnitude of foreign direct investments

around the world, exporting continues to be an important mode of internationalization

for SMEs.

Internationalization patterns of individual firms seem to be unique and situation specific

(Reid, 1983). The internationalization literature dates back to the time when the

contribution by SMEs was insignificant. Over time, the business environment and

firms behaviour have changed, necessitating adoption of a relevant and new


36

understanding of the phenomena. Oviatt and McDougall (1997) argue that changes in

technological, economic, and social conditions have led to different research questions

and alternative explanations for how firms internationalize. Most of these theories have

therefore failed to readily explain SMEs internationalization behaviour and to

accommodate the dynamism in the business environment owing to their static

orientation.

2.4 Internationalization Theories

The internationalization of SMEs differs from that of large enterprises. Several theories

have been applied to primarily explain the internationalization of Multinational

Corporations (Axinn, 2002; Beamish and Banks, 1987; Saarenketo, Puumalainen,

Kuivalainen, and Kylheiko, 2004). Saarenketo et al., (2004) and Rutashobya et al

(2004) categorize traditional theories into (i) behavioural theories and (ii) Economic

theories. Behavioural theories are such the Transaction Cost Economics approach, the

UIM, the Innovation-Diffusion Model, the Eclectic Model, and RBV (Rutashobya et al.,

2004). Behavioural theories have their roots in business administration, and they focus

on the managerial decisions of the individual firm or the owner or manager (ibid.).

Saarenketo et al., (2004) note that economics theories, on the other hand, are the

Monopolistic Advantage Theory, Foreign Direct Investment (FDI) and

Internalization/Transaction Cost Theory.


37

Axinn (2002) argues that, one of the stages theory, the UIM, built on observations of

Nordic multinationals have been applied successfully to explain the behaviour of SMEs

in many other regions and countries as well. Besides, the theory rests on the RBV that

is rooted in the neo-classical economics theory of the firm (Penrose, 1959; Andersen,

1997) by acknowledging that increased market knowledge is an important resource that

is supposed to lead to increased market commitment and vice versa.

As more SMEs, which are considered resource-constrained, increasingly participate in

the global economy, there is a need to pose a question: What is the role of export

information and owners or managers in the internationalization process and export

performance? We address this question by reviewing UIM upon whose foundation the

two primary theories guiding this study, RBV of the firm and the UET are discussed.

2.4.1 Uppsala Internationalization Model

The UIM assumes that internationalization is a gradual process through which firms

accumulate information (knowledge) over time. It is this information then that would

subsequently influence both the direction and pace of internationalization and firms

export performance (Hsu and Pereira, 2006). The UIM focuses on studying the how

of the internationalization process (Johanson and Vahlne, 1977, 1990). According to

this model, firms prefer to initiate an internationalization process that requires low

commitment. The theory emphasizes learning by focusing on market knowledge and

commitment. To minimize risk and overcome uncertainty, it states that firms


38

internationalize using a systematic and step by-step process. Johansson and

Wiedersheim (1975) describe four different internationalization stages.

In the first stage, companies do no regular export activities. The only international

activity is in the processing of unsolicited orders. A more advanced foreign entry mode

is regular exporting via independent representatives, which, according to the authors is

the second stage. The third stage comprises establishing a foreign sales subsidiary and

foreign production and manufacturing is the last stage. Supporting stages model of

entry into foreign markets, Bilkey and Tesar (1977) stated that SMEs can export

successfully and that exporting is not limited to large firms. The model used is that the

export development process of firms tends to occur in the following stages:

Stage One: Management is not interested in exporting; would not even fill an

unsolicited export order.

Stage Two: Management would fill an unsolicited export order, but makes no

effort to explore the feasibility of exporting.

Stage Three: Management actively explores the feasibility of exporting.

Stage Four: The firm exports on an experimental basis to some psychologically

close country.

Stage Five: The firm is an experienced exporter to that country and adjusts

exports optimally to changing exchange rates, tariffs, etc.

Stage Six: Management explores the feasibility of exporting to additional

countries that, psychologically, are further away.


39

Later, despite the stages, Johanson and Wiedersheim (1990) refined their earlier

findings by bringing out exceptions, because not all firms would go through the four

sequential stages. Two exceptions were later identified. First, firms with a large amount

of resources could take larger steps. Market knowledge can be gained in ways other

than through experience, especially when market conditions are homogeneous and

stable. Second, it might be possible to generalize the experience of markets that are

similar to a specific market if the company has considerable experience of markets that

are similar to the one the company wants to penetrate.

According to Dervillee, Rieche and Zieske (2004), the main structure of the model is the

distinction between state and agent aspects of internationalization variables. The change

aspects, according to the authors, are decisions to commit resources and the

performance of current business activities. The state aspects, on the other hand, are

market commitment and knowledge about foreign markets and their operations.

2.4.2 Criticisms of the Uppsala Internationalization Model

The UIM has however been criticized on many different fronts. Reid (1983) and

Andersen (1997) have challenged the model for being too deterministic and too limited,

by focusing only on one explanatory variable of experiential knowledge while

neglecting other managerial attributes. They contend that there is an option for strategic

choice when it comes to selecting national markets and modes of entry. Yet, Axinn

(2002) asserts that, with flatter hierarchies, and business unit structures and more
40

flexible inter-firm relationships, managers play an increasingly important role in the

development of firms internationalization process. This draws us to the thesis focus on

the owner or manager through the prism of the UET. Within SMEs, the task of making

decisions on internationalization usually falls within the sphere of activity of the owner

or manager. In many cases, the decision makers dominant managerial logic is based on

his or her previous experiences and personal traits and so it is particularly important to

know about the key decision-makers who are involved in the process. Among other

factors, the amount of information and knowledge a decision maker has about

internationalization is influenced by the decision makers level of education (Simpson

and Kujawa 1974), foreign market experience, ability to speak a foreign language

(Langston and Teas, 1976), and whether he or she was born abroad or not (Simmonds

and Smith, 1968).

Furthermore, Autio et al. (2000) highlight the fact that the Uppsala Internationalization

Model (UIM) stresses the inertial and reactive character of business organizations,

neglecting the entrepreneurial strategic choice opportunities. The choice of this study to

integrate entrepreneurial orientation is geared towards, among other reasons, filling this

lacuna. Entrepreneurial orientation refers to processes, practices and decision-making

activities that lead to new entry (Lumpkin and Dess, 1996), and has three core

dimensions; Risk taking, Proactiveness and Innovativeness.


41

A third criticism of the model relates to the limited range of validity. Forsgren (1989)

argues that Uppsala Internationalization Model (UIM) is only applicable at the early

stages of the internationalisation process. Exporting is in the early stages of the

internationalization process for most firms. It is at this stage, the researcher claims,

where the lack of market knowledge and resources is still a constraining force. It is

instead argued that at later stages of internationalisation a firm can react immeadiately

to changing market conditions , thus making the concept of market knowledge not very

deterministic any more in its internationalisation behaviour (Grillet, 2003 ).

Furthermore, Forsgren (1989) states that in the later stages of the internationalization

process, the local networks of which the foreign subsidiaries are a part become the most

important sources of knowledge for the localization of foreign activities.

Fourthly, Uppsala Internationalization Model (UIM) is criticized for ignoring external

environmental factors such as market potential and competitive conditions. Pedersen

(2000) states that the internationalization process is reduced to a question of the firms'

internal resources (market knowledge and experience of foreign activities), while the

importance of external competitive conditions and business possibilities are ignored.

Despite these criticisms, Uppsala Internationalization Model (UIM) remains one of the

dominant theories guiding internationalization studies. The theory, according to Berry

and Brock (2004), is based on the assumption that firms are growth-seeking and risk-

minimizing organizations. It is suggested that a fundamental constraint in the


42

internationalization process is lack of knowledge and subsequent uncertainty about

foreign markets. This lack of knowledge and uncertainty is directly related to costly,

foreign market information (Johanson and Vahlne, 1977). Too much empirical work has

corroborated the validity of the UIM in different countries for the model to be ignored

(Cavusgil, 1980). Related to export information use, which is the focus of our thesis, it

is noted that as firms internationalize they acquire and use information for current and

potential decision-making processes. Cohen and Levinthal (1990) use the term

absorptive capacity when they refer to a firms ability to recognize the value of new,

external information, assimilate it and apply it to commercial ends. Lastly and most

appropriately, for our thesis is that the Uppsala Internationalization Model (UIM)

introduced some new, relevant aspects of the internationalization process, including

especially the importance of the firm's internal accumulation of knowledge (Pedersen,

1996).

2.4.3 Psychic Distance and Uppsala Internationalization Model

According to Andersen and Strandskov (1998), one of the key decisions in the

internationalization of a firm is the selection of export markets. The Uppsala

Internationalization Model (UIM) states that a firm begins exporting by forming a

relationship with low psychic distance countries, acquiring experiential knowledge

about that market and then committing resources in accordance with the degree of

experiential knowledge it progressively gains through the relationship (Johanson and

Vahlne, 1990).This brings us to the concept of Psychic Distance. The term first came
43

into the parlance of international research through the work of Beckerman (1956). The

researchers reference to his empirical work on intra-European trade flows, concluded

that, a special problem is posed by the existence of psychic distance. The concept was

later popularized by Vahlne and Wiedersheim Paul (1975), who defined psychic

distance as the sum of factors preventing or disturbing the flow of information between

potential and actual suppliers and customers. Examples of such factors, they noted, were

differences in language, culture, political systems, level of education, level of industrial

development, etc. Two decades or so later Nordstrom and Vahlne (1994) redefined the

psychic distance concept as constituting factors that prevent or disturb a firms learning

about and understanding a foreign environment. The redefinition, Evans, Treadgold and

Mavondo (2000) note, was justified on the basis that learning and understanding rather

than mere access to information are essential in the development of appropriate

operating strategies in foreign markets. This notion is running through the thesis as it

has invariably been noted that it is the use of the accessed export information that is

crucial in influencing SMEs export performance.

The main assumption of psychic distance according to Stottinger and Schlegelmilch

(1998) is that firms are less likely to take up or continue business relations with

countries that are perceived to be dissimilar (i.e. show a high psychic distance).

Furthermore, despite the lack of strong empirical evidence, psychic distance has been

theoretically linked to export performance. In support of this causal relationship,

internationalization literature implies that psychically close countries are more similar
44

and, because similarities are easier to manage than differences, it is expected that

businesses will achieve greater success in similar markets (Johanson and Vahlne, 1990,

1992). Evans, et al. (2000) have however noted that psychic distance alone cannot

explain the variations in the performance of international operations. In fact, OGrady

and Lane (1996) found that operating in a psychically close country does not necessarily

lead to superior performance, as the assumption of similarity prevents executives from

noticing subtle, but critical, differences in the foreign market. We will return to this

relationship in chapter five while explaining the variable of relationship in the research

model.

Conceptualizing psychic distance has for quite a long time been a challenge. Various

authors have been attracted by the perceived simplicity and theoretical appeal of the

concept to differently explain international market selection using psychic distance.

Examples of the different conceptualizations of the concept abound. Dow and

Karunaratna (2006), for instance, refer to psychic distance as differences in culture,

language, religion, education and political systems. Hassel and Cunningham (2004)

instead conceptualize it as a combination of geographical distance and cultural distance.

Another researcher, Swift (1999) refers to the concept as the combination of cultural

distance plus mistrust and social distance. Brewer (2007) notes that researchers have, on

a regular basis, and quite erroneously used cultural distance and psychic distance

interchangeably. Dow and Karunaratna, (2006) provide a strong case for not using

cultural distance in lieu of psychic distance, by stating that the most commonly used
45

surrogate of psychic distance, a composite measure of Hofstedes cultural dimensions,

accounts for less than half of the total variance explained by a comprehensive set of

indicators.

Conceptualizing psychic distance as the differences between home market and export

markets does not adequately capture the meaning that was envisaged by Vahlne and

WiedersheimPaul (1975). Surrogate factors of psychic distance as stated by the authors

were meant to explain the flow of information from the export markets to the exporting

firm. To the researchers, the flow of information could come from familiarity of the

firm with the export market and not based on the differences that exist between the

home and export markets. However, factors that were originally thought to be just

examples of factors of psychic distance have unwittingly been used as surrogates for

psychic distance.

2.4.4 Problems associated with the use of psychic distance

Researchers have noted problems associated with the use of the psychic distance

concept. Brewer (2007) has for instance stated that researchers have replaced firm

familiarity with export markets with familiarity and /or differences between countries.

Besides, the author notes that no agreement exists among researchers and scholars as to

the connection between information flow, psychic distance and international market

selection. Reid (1984) also reveals that psychic distance is much too deterministic and

that instead firms respond in their own idiosyncratic ways to the challenges of
46

internationalization. With these problems and more, there has been a call to improve

conceptualization of the concept while acknowledging that at the heart of the concept is

the essence of information flow. Brewer (2007)s psychic distance index comprises of

seven primary indicators, which are commercial, political, historic, geographic and

social ties, country information stock, and level of development stock.

There are at least three reasons why Brewers index is considered suitable. First is the

proponents acknowledgement that the index builds on the items directly responsible for

the easy flow of information between country and firm. The Second reason, also

attributed to Brewer (2007), is that measuring a cognitive phenomenon such as psychic

distance must be improved through measuring more rather than less of its elements.

Lastly, the particular perceptions of the firm managers are considered, as Petersen and

Pedersen (1996) state that it is the managers, not nations who perceive psychic distance.

2.5 The Resource Based View

Cuervo Cazurra and Ramos (2002) argue that when considered from the point of view

of the RBV, firms internationalize for reasons related to the resources set, in an attempt

to create value. Kogut and Zander (1993) argue that to realize the value creation

objective internationally, firms develop, transfer and use resources, especially

knowledge or export information, in and across countries. To develop a conceptually

rigorous framework of export information use and export performance, the researcher

drew on the RBV of the firm. Resource Based View (RBV) is an important and relevant
47

theory of firm performance which traces its intellectual root from Marshall (1890),

Coase (1937), and Penrose (1959) to Barney (1991). Resource Based View (RBV)

focuses on how Sustainable Competitive Advantage (SCA) is generated by the

unique/heterogeneous bundle of resources at the core of the firm (Conner and Prahalad,

1996). Resource asymmetries, thus, become a veritable linchpin for explaining firm

level performance differences, including in the exporting/international business context

(Barney, 1991; Dhanaraj and Beamish, 2003; Ibeh, 2005; Wernerfelt, 1984).

RBV, rather than emphasizing market structures, highlights firm heterogeneity and

proposes that the unique assets and capabilities of firms are important factors that give

rise to imperfect competition and the attainment of supernormal profits (Fahy, 2000).

Researchers and scholars advocating this view argue that, to evaluate which firms will

become successful, we need to focus on the internal factors (resources and

entrepreneurs), since they are the real sources of competitive advantage. Essential

elements of the RBV are: (1) SCA and superior performance (2) the characteristics and

types of advantages generating resources and (3) strategic choices by management

(Fahy, 2000).

There has been a sense of ambivalence with regard to the position of the Resource

Based View (RBV) in relation to its position along the DeterministicVoluntaristic

continuum. It is the contention of this study, with empirical and theoretical support from

different authors and scholars that RBV falls under the Voluntaristic perspective of
48

management. With its roots in neo-classical and Chamberlinian economics, the view

stresses the importance of the heterogeneity of firms resources, (Caroll, 1993) which is

the result of managerial action (Lockstrom, 2007). According to the Astley and Van de

Ven (1983) management theory matrix, the RBV is at the Voluntaristic micro-level

(bottom right hand) corner. The matrix outlines the classifications of the major schools

of thought of organization and management theory into four basic views: natural

selection view, system structural view, collective action view and strategic choice view

(see table 2.2).

Table 4.2: Classification of Organizational Perspectives


Deterministic Voluntaristic
Macro Level Natural Selection View Collective Action View
Micro Level System Structural View Strategic Choice View
Source: Adapted from Astley and Van de Ven, 1983

Fahy (2001) asserts that Resource Based View (RBV) emphasizes strategic choice,

charging the firms management with the important tasks of identifying, developing and

deploying key resources to maximize returns. In this study, these actions are captured

under the export information uses and help to de-emphasize a simple resources

performance link which, obviously, as Ketchen, Ghult, and Slater (2007) note, lacks

face validity. Recent studies (e.g. Edelman, Brush, and Manolova, 2005; Frynas,

Mellahi, and Pigman, 2006) that have adopted Resource Based View (RBV) as a guide

have moved away from the simplicity of the link by capturing the view by assessing the

action component of its underlying framework.


49

2.5.1 Firm Resources and Their Attributes

Wernefelt (1984) defined resources to mean anything that can be thought of as strength

or a weakness of the firm. Daft (1983) stated that firm resources include all assets,

capabilities, organizational processes, firm attributes, information, knowledge, etc that

are controlled by a firm enabling it to conceive or implement strategies that would

improve its efficiency , effectiveness and subsequent performance. Whereas the list of

resources in any given firm is likely to be long, one of the principal insights of the

Resource Based View (RBV) is that not all resources are of equal importance or that all

possess the potential to be sources of SCA (Fahy and Smithee, 1999).

For resources to have the potential to contribute to firm performance, they need to

exhibit certain attributes. Different researchers have outlined the various attributes. Fahy

and Smithee (1999) are of the opinion that for resources to be able to create competitive

advantages they need to has value, barriers to duplication and appropriability. The value

attribute is explained in the same way that Barney (1991) defined it to mean a resource

that enables a firm to conceive or implement strategies that improve its efficiency and

effectiveness. A barrier to duplication refers to a situation where the resources

relationship with advantage is poorly understood and/or they possess the characteristics

of tacitness, complexity, specificity, regulatory protection and economic deterrence

(Fahy and Smithee, 1999).


50

Lastly, the issue of appropriability (who takes the created value?) needs to be

considered when viewing the resources of the firm. Coff (1999) aptly asks the question,

What if rent from competitive advantage is appropriated so it cannot be observed in

performance measures? Companies must therefore guard against the dissipation of

value added and so appropriability is the ability to turn value into profit (Kay, 1993).

In close relation to the previous classification, Barney (1991), invariably credited to be

the father of modern RBV of the firm argues that the attributes that give a resource

value creating ability are;

(a) Valuable-Resources are valuable when they enable a firm to conceive or

implement strategies that improve its efficiency and effectiveness.

(b) Rarity- when valuable resources possessed by a large number of competing

firms they cannot be a source of either competitive advantage or SCA.

(c) Imperfectly mobile or sticky- Resources are considered sticky because of a

combination of three reasons: unique historical conditions, causal ambiguity and

social complexity. An example of unique historical conditions is the location of

the firm vis--vis the raw material suppliers (Nord, 2005). Causal ambiguity

comes from the notion that the link between the firms resources and its

advantage is poorly understood. Imitating firms do not know what actions are to

be taken to utilize the specific resources in order to build strategies creating SCA

(Nord, 2005). Lastly, social complexity as a source of imperfect imitability is

related to, for example, the long-term relationship between a firm and its

customers, or suppliers (Porter, 1980).


51

(d) Non-substitutable- A resource fulfils this condition if there are no

strategically equivalent valuable resources that are themselves either not rare or

imitable.

Priem and Butler, (2001) however contend that the above-mentioned attributes are

individually necessary, but not sufficient conditions for SCA. This poses challenges to

researchers and practitioners alike as to which resources might have the mentioned

attributes, how to acquire them and to how deploy those firms resources. The challenge

is further compounded when dealing with SMEs which are known to be resource

constrained. The different type of resources necessitates further discussion.

2.5.1 Types of Firm Resources

A resource is not one thing but is many things. Resources acquired by a firm come in

different forms, shapes and types. The great variation in the classification and

typologies of resources are placing a lot of burdens on the shoulders of SME owners or

managers and on further development of the theory. Different researchers have come up

with various classifications of firm resources. Amit and Schoemaker (1993) identify

three types of potential strategic resources as: (1) physical resources, such as geographic

locations and other fixed assets (Barney, 1991); (2) structural resources, which is the

knowledge that has been captured by the firm and embedded in the organization through

organizational routines, practices, processes, new technology, and patents/licences

(Amit and Schoemaker, 1993); and (3) human capital, which includes employee
52

knowledge and skills (Amit and Schoemaker, 1993 and Barney, 1991). Besides, Amit

and Schoemaker (1993) also noted that the all-encompassing constructs previously

called resources can be split into resources and capabilities. In this respect, new

resources refer to tradable and non-firm specific resources, while capabilities are firm-

specific resources that are used within the firm, such as the transfer knowledge within

the firm (Makadok, 2001). This classification is crucial for this studys model

construction in view of the fact that the thesis addresses both export information use and

the owners or managers characteristics that would influence the use of export

information and subsequently influence the export performance of SMEs.

Equally important classification of resources is recommended by Dhanaraj and Beamish

(2003). Following submissions by Penrose (1959), they both identify three sets of

resources that encompass the resource domain of the firm as being: (1) Managerial or

organizational resources (2) Entrepreneurial/enterprise resources and (3) Technological

resources. Penrose (1959) noted then that managerial resources refer to a measure of

managerial slack indicated by the financial and physical resources at the disposal of the

firm. Entrepreneurial resources on the other hand refer to the risk and drive of the

managers, who are primarily responsible for the growth of the firm. Lastly,

technological resources refer to the tangible and intangible technical assets of the firm.

A further review of the plethora of literature on strategic management reveals that there

is a further classification of resources. Fahy and Smithee (1999), for instance, classify
53

resources into tangible assets, intangible assets and capabilities. Table 2.3 designates

these resources and the corresponding authors.

Table 4.3: Classification of the Firms Resources Pool


Author The Firm Resources Bundle
Tangible Intangible assets Capabilities
assets
Wernefelt (1989) Fixed assets Blue prints Cultures
Hall(1992) Intangible assets Intangible
Capabilities
Hall(1993) Competencies
Prahalad and Hamel (1990) Core competencies
Itami (1987) Invisible Assets
Amit and Schoemaker (1993) Intermediate Goods
Selznick (1957); Hitt and Distinctive
Ireland (1985) Competencies
Irvin and Michaels (1989) Core skills
Source: Fahy and Smithee (1999)

Tangible assets refer to fixed and current assets which have long-term capacity

(Wernerfelt, 1989), their value is relatively easy to measure (Hall, 1989), that are

transparent (Grant, 1991) and weak in resisting duplication efforts. Examples of these

kinds of resources include plant, equipment, land, and other capital goods. Intangible

assets, according to Hall (1992) include intellectual property such as trademarks and

patents, brands, reputation, company networks and databases. These resources are

inherently resistant to imitability and substitutability at least in the short run (Fahy and

Smithee, 1999). Export information fall under the intangible assets classification. SMEs

with adequate information about foreign markets at their disposal would be expected to

set themselves apart from competition. However, it should be noted that idle export

information resources, however, rare, valuable, inimitable and non- substitutable they
54

may be, cannot ensure that a firm will be able to attain competitive advantage.

Something needs to be done to make them contribute to building competitive advantage

and improving SMEs performance. This brings us to the last type of resources under

this classification - capabilities.

Capabilities are complex bundles of individual skills, assets and accumulated

knowledge exercised through organizational processes that enable firms to co-ordinate

activities and make use of their resources (Amit and Schoemaker, 1993; Day, 1994).

Individual skills may be highly tacit and, thus, inimitable and non-substitutable and

though they can be hired or bought by competitors, they are difficult to duplicate due to

causal ambiguity (Fahy, Farrelly and Quester, 2004). Capabilities are the most likely

source of SCA compared to other resources (Collis, 1994). Capabilities differ from

other firm resources in the sense that they are enhanced by use (Nelson, 1991).

Menguc and Auh (2006) pose an important question. Why are some firms despite their

relative superior resources possession, not able to sustain their competitive advantage

over time, especially in dynamic markets? The answer, they argue, lies in their ability to

transform their resources into dynamic capabilities. According to the RBV, export

performance can be obtained if the firm effectively deploys these resources in its

product markets. Fahy (2000) notes that firms management are charged with the task of

identifying, developing and deploying key resources to maximize returns. The

capabilities resource is essential for this thesis, as the research model not only
55

incorporates export information but also the way and the extent to which export

information is used.

Resources and capabilities that meet the four criteria become the source of core

competencies. The competencies are the basis for a firms competitive advantage, value

creation and its ability to earn above-average returns. Calcagno (1996) acknowledges

that competencies result from the way the firm uses its resources to create knowledge

and skills. Export information can be acquired in the market; competencies to use the

export information can be either externally acquired through consultancies or internally

developed by the firm in its day-to-day activities. Competencies are accumulated

following firm- specific knowledge patterns and, once developed; they affect the export

information from which they have been generated. The export information resources are

then transformed into something different from what the firm originally acquired.

Figure 1: A Resources Based Model of sustainable competitive advantage

Managements Strategic Choices

Resource Identification

Resource Development/Protection

Resource Deployment

Key Resources Superior


Sustainable
Competitive Performance
Value Tangible Assets, Advantage
Barriers to Intangible Assets, Market and
Duplication Capabilities Financial
Appropriability Value to
performance
Customers

Source: Fahy and Smithee (1999)


56

Figure 2 shows the essential components of the RBV and the role that the managers

may have in identifying, developing and deploying resources to enhance the

performance of firms. According to Fahy and Smithee (1999), the model highlights the

notion that not all resources are equal in terms of achieving SCA, and successful

performance of the firm, and that management plays an important role in the process of

attainment of SCA.

2.5.2 Criticisms of the Resource Based View

Despite the RBVs great contribution to the strategy management literature, it has met

strong criticisms from various researchers and scholars. For instance, Foss and

Knudsen (2000), while acknowledging that RBV is one of the dominant contemporary

approaches to the analysis of SCA, raise strong criticisms against the view. Most potent

of the criticisms raised is that much RBV research rests on partial and/or implicit

assumptions leading to problematic conclusions. The researchers contend that

uncovering implicit assumptions is an important activity , because it promotes a better

understanding of the true reach of a theory through the identification of what

assumptions are necessary for producing certain results. Some of the identified implicit

assumptions relate to the form of competition, distribution of information and the

bargaining powers of the various stakeholders among others. To clarify this issue

further, Foss et al (2000) stated that, while RBV proponents only discuss performance

differences as caused by differences in underlying resource bundles, they also assume a

competitive business environment. This is argued because the firm performance


57

distribution in an industry is not just a function of firm -specific resources but also of

the form that competition takes in that industry. On the competition, Foss et al (2002)

conclude that by not stating these assumptions explicitly, this shows the limitations of

the theory.

The second criticism is that the view is characterized by a confusion of necessary and

additional conditions in the analysis of the SCA. Based on their analysis on the works of

Barney (1991) and Peteraf (1993), Foss and Knudsen (2000) drew attention to the

attributes of resources that are claimed to be necessary and sufficient conditions for the

existence of SCA. They argue that there is a need to separate necessary and sufficient

conditions for SCA to exist. This supports Hicks (1979) argument that conditions, in

this case attributes, that regardless of their particular expression, do not alter the

possibility of the existence of SCA cannot be candidates for necessary conditions. To

conclude, the researchers suggest that only two attributes (uncertainty and immobility)

are necessary to produce SCA and that all other attributes are additional as they are just

derivatives of the necessary attributes. Besides, the additional attributes have

intermediate positions in the causal chain that produces SCA.

Other notable criticisms of the RBV are its neglect of a firms environment in its

entirety and over- emphasis on the uniqueness of resources and strategies (Porter, 1994;

Pedersen, 1999). The resources and competencies are taken into account without

considering industrial factors which might influence a firms strategy (Calcagno, 1996)
58

and performance. Priem and Butler (2001) and Powell (2001) also raise concerns that all

RBV propositions are tautologies in that they are true by definition and therefore cannot

be empirically tested. The authors also claim that RBV neglects the demand side of

resources, failing to identify the cause mechanisms responsible for creating a SCA is

noted. Calcagno (1996) claims that the relationship between resources and

competencies on the one hand and competitive advantage and success on the other is not

explained.

Resource Based View (RBV) has again come under recent criticism as much of the

literature takes resource stocks as given and pays little or no attention to the process of

resource development. Thus, it is argued, the view is somewhat static in nature and

lacking a dynamic element (Kylaheiko, 1998). In addition, RBV is also criticized

because it does not give due importance to the influence of past decisions on the actual

behaviour of the firm. Ghemawat (1991) argued that the view has failed to adequately

account for the constraints imposed by past decisions on current ones and by current

ones on those yet to come.

Managers play an important role in the process by which resources lead to SCA (Fahy

and Smithee, 1999) as resources, in and of themselves, do not confer SCA. Teece,

Pisano and Shuen (1997) introduced the concept of dynamic capability, arguing that

simply having access to resources that fulfill the resources requirements of Value,

Rarity, Imitability and Organization (VRIO) is insufficient to base SCA on. More
59

relevant for this thesis is how SMEs use the export information resources at their

disposal to influence their export performance. A resource only becomes a source of

competitive advantage when it is applied to an industry or brought to the market (Kay,

1993) and creates value for the customer or other stakeholders. Penrose (1959),

Wernerfelt (1984), and Fahy and Smithee (1999) conclude that more important for

achieving SCA, however, is the managers capability in successfully deploying these

resources into returns for the firm. Notwithstanding the significant role played by

managers in the strategic process, this has not been sufficiently studied in the sphere of

RBV (Molina, Pino and Rodriguez, 2004). Therefore, the asymmetries of performance

between heterogeneous firms are very much driven by managers who, according to

Whittington (1994), create value and advantage by deploying competencies and

focusing on the imperfections of organizational and market processes.

Despite the criticisms raised, Resource Based View (RBV) remains an attractive theory

to researchers because of its theoretical utility in explicating the link between resources,

the capabilities required to develop and apply them, and the competitive success of

enterprises (Mata, Fuerst, and Barney, 1995). Resource Based View (RBV) gives a

powerful theoretical perspective with wide applicability to internationalization,

presenting a unifying framework from within which activities of firms may be

examined.
60

2.5.3 Empirical Studies on the Resources Based View

According to Morgan et al (2006), the Resource Based View (RBV) is an appropriate

theoretical framework for studying export venture performance. Despite the extant

literature on a RBV, few studies have empirically been conducted in the context of

export and in developing countries to verify the veracity of its assumptions. This is

demonstrated by the sampled studies which are discussed below. All of these studies

were undertaken in either developed or emerging economies.

Dhanaraj and Beamish (2003) undertook a comparative study of the export performance

of 87 US and 70 Canadian small and medium-sized exporters. The authors developed a

parsimonious model on the RBV of the firm, with three sets of resources, namely firm

size, enterprise, and technological intensity. These key resources were found to be good

predictors of the export strategy of a firm which was modeled as degree of

internationalization, and its effect on overall firm performance was studied using firm-

level performance measures. Dhanaraj and Beamish adopted LISREL a Structural

Equation Modeling technique- to test the model. The results confirmed the validity of

the model across the two data sets used.

Morgan, Vorhies and Schlegelmilch (2006), drawing on the Resource Based View

(RBV) and insights from qualitative fieldwork4 conducted, examined the resource

drivers of export venture performance in industry firms using primary data from UK

4
The fieldwork involved 17 interviews with export managers, international business development
managers, CEOs, and account development managers.
61

and German industrial goods manufacturers. A random sample of 862 firms in Germany

and 411 firms in the UK were utilized. Data analysis was performed using Structural

Equation Modeling (SEM) on each of the data sets. Neither set indicated a significant

relationship between the individual export venture resources available and export

effectiveness. The researchers concluded that the relationship between individual

resources and export venture is less important in determining export venture

performance than might have been previously believed (e.g. Aaby and Slater, 1989).

The results instead support the Resource Based View (RBV) predictions concerning

resource inimitability and non-substitutability in explaining the differences in market

performance in export ventures. Morgan and others argue that the insignificant

relationships found could be attributed to not considering inimitability and non-

substitutability characteristics of the industrial export ventures available mix of

resources. Notwithstanding their unique characteristics, we argue that in addition to the

reasoning of Morgan et al, the lack of relationship could be attributed to the lack of or

improper use of the available resources. The Morgan et al (2006) study is limited in two

important ways. First, the study is cross-sectional, thus making it hard to empirically

impute causality in the relationships. Secondly, the researchers noted logistical

problems when collecting primary data, making it difficult to control for differences

between export ventures in terms of other firm-specific phenomena such as the specific

capabilities used to select and deploy export venture resources(c.f. Teece et al ., 1997).
62

Ussahawanitchakit (2007) studied the influence of management capability on export

performance of 165 leather businesses in Thailand. The study was an attempt to

comprehend how different components of management capability such as teamwork,

organizational learning, and entrepreneurial orientation are linked to export

performance. In the existing literature, management capability has been found to be a

key determinant of export performance. The researcher adopted the ordinary least

squares regression analysis to test and examine the hypothesized relationships and

estimate factors affecting a firm's export performance.

The results show that teamwork, organizational learning, and entrepreneurial orientation

have significant positive effects on export performance. Three conclusions can thus be

drawn pertaining to the results of the study. Firstly, according to the research findings,

firms with greater teamwork are likely to have stronger competitive advantage and to

effectively have superior performance and success in competitive international markets.

Secondly, firms with higher organizational learning tend to perform very well in

competitive markets. Thirdly, firms that effectively implement entrepreneurial

orientation tend to efficiently improve competitive advantage, effectively achieve

performance and success, and are strongly viable. While the researcher did not mention

nor did he acknowledge that he was using the RBV, the study typically adopted the

view.
63

Likewise, Graves and Thomas (2003) drawing on the tenets and the spirit of RBV,

compared the managerial capabilities of family and non-family businesses according to

their degree of internationalization. Graves and Thomas noted that mere possession of

firm specific VRIO resources does not guarantee competitive advantage. The

researchers surveyed 891 firms in Australia, using non-parametric statistical techniques,

as they are distribution free and robust when using non-normal data (Hair, Anderson,

Tatham, and Black (1998). Using the most recently available longitudinal database of

Australian SMEs, the results of this study indicated that the managerial capabilities of

family firms lag behind those of their non-family counterparts as they expand

internationally, particularly at high levels of internationalization.

Two notable limitations of the study, however, were that, first of all, it ignored other

variables that have been used in previous studies to identify the scope and complexity of

firm internationalization. The study instead just used export intensity as the only

measure of firm internationalization. Export intensity represents the share of exports in

the total sales of a particular firm. Notwithstanding the limitation, export intensity is by

far the most widely used indicator in empirical international business research.

Majocchi et al (2005) contend that export intensity is an objective measurement that

does not suffer from the problem of manager resistance concerning confidentiality.

Secondly, the broad definition of family business includes varying levels of family

influence. To this end, the effects of family influence on managerial capabilities were or

could not be ascertained.


64

Batjargal (2000) carried out a study on entrepreneurial versatility, resources and

performance of firms in Russia drawing on both the Upper Echelons Theory (UET) and

Resource Based View (RBV) of the firm. The study comprising face- to -face

interviews with 75 entrepreneurs in 1995 and 56 entrepreneurs in 1999 found out that

entrepreneurial versatility has a stronger positive impact on firm performance.

Entrepreneurial versatility was found to be more strongly related than other general

humanbased resources, such as social capital and human capital. Supporting the

relevance and the importance of managers and human resources, Venter, Eeden, and

King (2004) investigated the competencies required by managers for small business

success. The objective of this study was to identify the management competencies

possessed by small business owners or managers. This quantitative research, based on

the positivistic paradigm involving a sample of 242 small businesses, found that

managers competencies that are evident in successful small businesses are planning

and administration, strategic action and self-management.

Ngowi, Lwisi and Mushi (2002), using ten construction firms in Botswana which have

been in operation for a period of over ten years, carried out a pilot study on competitive

strategy in the context of limited financial resources. The study examined the types of

resources acquired by these firms and whether there were any firm-specific capabilities

used to deploy them. The researchers found that in the context of limited financial

resources in construction, firms can still build and sustain competitive advantage by

creating firm-specific capabilities rather than imitating the strategies of large


65

construction firms. Two of the ten construction firms studied had built core firm

specific capabilities by having a team of dedicated supervisors and building a reputation

for quality workmanship respectively. The authors thence recommend that instead of

building and then defending competitive advantage, firms should create temporary

(dynamic) competitive advantage, which they should upgrade frequently to avoid the

necessity of defending it and thus keep competitors off balance by forcing them to

respond.

A notable weakness of this pilot study is that it was limited to only ten citizen-owned

construction firms in Botswana. Further work involving a representative sample from all

construction firms operating in Botswana, regardless of their ownership, could enhance

representation. Its strength in relation to the current study is that it was conducted in a

developing country context that has some of the characteristics typical of such

countries.

Carmeli and Cohen (2001) studied the role of reputation in 263 Local Governments

Authorities in Israel, these being 62 municipalities, 148 local councils (with two

industrial local councils excluded as their function is very different), and 53 regional

councils. The authors identified organizational reputation as a source of SCA and

abovenormal performance. The researchers proposed a mediation model that argued

for a relationship between OR (i.e. organizational resources) and financial performance,

mediated by OR-value, OR-rareness and OR-inimitability. The model was tested by


66

LISREL VIII and found to be robust. The effects of demographic and environmental

variables on financial performance were also examined. Strong support was found for

the RBV, maintaining that to achieve superior performance, organizations need to

acquire SCA, which is dependent upon the core resources they possess.

The researchers acknowledge several limitations of this research. First, as this study

ventured into somewhat new ground, the data must be interpreted cautiously. Second,

the empirical model proposed here is a preliminary one and it should be further tested.

Third, the financial performance measure must also be further tested to determine its

criterion validity. Finally, as the model was employed for the public sector and local

authorities, future research should be conducted in order to extend its base to other

research populations, from both business and public sectors. An important contribution

of this study however is the call for identification of core resources, such as

organizational resources, which follow the SCA tests, and the need to test their

predictive power of variance in performance. This study examined some of the basic

theoretical insights of the RBV in relation to local authorities, and extended the theory

to areas of organizational research that had not previously been addressed. This is

strength of the study in the sense that it gives RBV greater empirical and theoretical

validity.

Molina, Pino, and Rodriguez (2004) conducted a study on industry, management

capabilities and firms competitiveness, aimed at contributing to the knowledge of


67

strategic factors that explain the competitive position reached by firms in the service

sector. A survey carried out on 173 executives identified the factors that distinguish the

performance of competitive vis--vis non-competitive firms. Molina et al. (2004) also

focused on the capabilities of managers due to the significant role played by them in the

strategic decision- making process. McGee, Love and Rubach (1999) conducted an

exploratory study on 270 small businesses on the source of competitive advantage for

small independent retailers operating in increased environmental turbulence. Factor

analysis, cluster analysis and analysis of variance (ANOVA) were then used to develop

the typology and assess the differences performance among identified retailing types.

The results of the study suggested that it is quite possible to develop and maintain

distinctive competencies. However at odds with other prior research was that

developing only one or just a few distinctive competencies is not significantly better

than a total lack of competencies.

Valuable or value- creating resources are important for creating competitive advantage

for a firm. A resource needs, therefore, to permit the firm to conceive strategies that

improve its efficiency and effectiveness by meeting the needs of customers (Barney,

1991). This implies that, though the resources may meet other conditions, they become

a potential source of advantage only if they enable the firm to create value. In an

information economy, information is the critical resource and basis for competition in

all sectors of the economy (Wolf, 2001).


68

From the above discussion, it is evident that internal resources and managers

competencies have an impact on SMEs SCA and performance. Limitations and

shortcomings of the studies should however be noted. Some of the studies (e.g.

Batjargal 2000, Ngowi et al., 2002) reviewed comprised small samples or focused on a

single sector thus limiting generalization. Whereas firm performance may be measured

in various ways (March and Sutton, 1997, Meyer 1994), in some studies (Batjargal

2000) performance was measured using average revenue growth only. Above all this,

Carmeli and Cohen (2001) aptly noted limitations of their study in that it focused on the

public sector and local authorities. The researchers are calling for the modeling of the

RBV in the private sector.

In the context of SMEs, owner managers are regarded as the resource carriers (Bamford,

Dean and McDogall, 2000, Mosakowski, 1998). This view is supported by Daily et al.,

(2002) who assert that an owner or manager tends to occupy a position of unique

influence, serving as the locus of control and decision-making (pp.391). The focus for

this thesis is therefore on the SME owner or manager, whose personal resources and

characteristics are hypothesized to influence the use of export information and SMEs

export performance. Resources of the owner or manager exist as an idiosyncratic and

personalized collection of assets (Batjargal, 2000). This brings us to the next

presentation of the UET whose proponents acknowledged as early as 1938 the role of

top managers as central determiners of the direction of their organizations.


69

2.6 Conceptualizing the Upper Echelon Theory

The theoretical background of the linkage between managerial characteristics and

export performance is based on UET as proposed by Hambrick and Mason (1984). The

UET sheds light on the strategic management literature as follows: first, the theory puts

more focus on the behaviour of Top Management Teams rather than on a single

decision maker such as the CEO. Second, the cognitive ability of the Top Management

Teams is related to strategic choices, and is the predictor for the strategic choice. With

respect to SMEs, one of the main factors is the decision -making abilities of the key

personnel involved in the firm (Fillis, 2001). Das (1994), for instance, contends that the

export success of a firm may be related to the quality, attitudes and characteristics of its

managers. The relative importance of managers and the environment for the success

and failure of organizations has been a source of considerable debate in the strategic

management and organization theory literature (Daily, 1994). Advocates of the strategic

choice paradigm (Child, 1972) suggest that managers are the main arbiters of

organizational direction and performance.

Proponents of the Upper Echelons Theory (UET) are Hambrick and Mason (1984), who

claimed that complex decisions are largely the result of behavioural factors of the

managers rather than their rational and economic optimization. Organizational

outcomes, the scholars argue, are expected to reflect the characteristics of these leaders.

Outcomes that have been studied in relation to the demographic attributes include

innovation, strategy, strategic change, executive turnover and organizational


70

performance (Smith et al., 1994). According to Maes et al., (2004) the theory links

observable characteristics such as the age of the owner or manager , functional track

and other career experiences, formal education, socio-economic background, financial

position and management team heterogeneity, to organizational outcomes and

performance. The essence of the suggestion, according to Markoczy (1997), is that,

since individual cognition is shaped by individual experiences and since these in turn

are reflected in these external a demographic characteristics, those characteristics can

then be used as proxy measures for individual cognition.

The relationship between top managers and organizational performance has been a

contentious one for a long time. In their ground -breaking study, Lieberson and

OConnor (1972) studied how much variance in organizational performance can be

attributed to year (interest rates and inflation), industry (technology, competition),

company (size, location, facilities and reputation) and persons in top management roles.

The researchers found that, by means of a sequential decomposition of variance,

managerial differences had little or no impact on organizational performance. These

findings were as well supported by Pfeffer and Salancik (1978) who commented that

studies estimating the effect of administrators have found them to account for a mere ten

percent of the variance in organizational performance.

These findings by Pfeffer and Salancik (1978) and Lieberson and OConnor (1972),

though seemingly based on sound statistical analysis, drew a lot of attention and
71

criticism. Aldrich (1979) noted that generalizing from Lieberson and OConnor (1972)

findings is risky. This, he noted, was because of definitional dependence on their three

performance variables (profit, sales and profit margins) and the lack of organizational

control variables. Aldrich noted that it is inconceivable and implausible that leaders

who have failed to have an impact on sales or net earnings could nevertheless have an

impact on profits.

Hambrick and Mason (1984) , in building the case for the theory, claimed that the

Lieberson and OConnor (1972) study was flawed as it employed a combination of

dependent variables and statistical analysis that made it impossible for the leadership

variable to take a major role, rendering the results almost tautological. It is also noted

that the percentages of performance variance accounted for by the independent variables

are highly sensitive to the order in which they are treated. Thomas (1988) noted that the

impact of leadership appears either to be substantial or negligible, purely because of it

being assessed first or last.

Thomas (1988) urges researchers to ask themselves two distinct questions: (i) what is

the extent to which leader differences account for performance variations within each

firm over time? (ii) what is the extent to which leader differences account for the total

variation displayed by the whole set of organizations , which includes both within and

between firm variance , in comparison with that accounted for by the contextual

variables?
72

In summarizing the UET, Carpenter et al., (2004) and Pansiri (2005) argue that the

theory is based on three central tenets:

1. The strategic choices made in firms are a reflection of the values and

cognitive bases of powerful actors (Wiersema and Bantel, 1992; Carpenter et

al., 2004);

2. The values and cognitive bases of such actors are a function of their

observable characteristics such as education, experience and background

(Carpenter et al., 2004); and

3. Significant organizational outcomes are associated with the observable

characteristics of the upper echelons actors (Carpenter et al., 2004).

2.6.1 Upper Echelons Model

Central to Upper Echelons Model is the explicit proposition that psychological

characteristics, as operationalised by observable demographic characteristics, will

influence strategic choices and in turn organizational performance. Thus, in line with

the orientation of the strategy, firm performance is the primary dependent variable

(Meyer, 1991).

Figure 2: The Upper Echelons Model

Upper Echelons Characteristics Strategic Choices Performance


The objective Psychological Obervable Product innovation Profitability
situation: Cognitive base Age Unrelated diversification Variations in
(External and Values Functional tracks Related diversification profitability
internal) Other career Acquisition Growth
experiences Capital intensity Survival
Education Plant and equipment
Socioeconomic newness
roots Backward integration
Financial Forward integration
position Financial leverage
Administrative
Group complexity
characteristic Response time
73

Source: Hambrick and Masons (1984)

The connection between managers choices and outcomes was made in the early 70s,

when strategic choice theorists (e.g. Child, 1972) developed and successfully tested the

idea that company performance is not completely externally determined by market

influences. The predictive power of this theory is expected to be substantial in the

context of small businesses, due to the assumption that small businesses are built around

the entrepreneur or owner or manager (Maes, et al., 2004).

Researchers that examined the relationship between top managers characteristics,

strategic choices and outcomes have followed two main streams. The less popular

approach is that of assessing managers mindsets and links their psychological profiles

to subjects of interests (Miller and Toulouse, 1986). The other stream that has borrowed

a lot from Child (1974) and Hambrick and Mason (1984) assesses the relationship
74

between managers demographic characteristics and organizational outcomes. The

latter researchers claim that at the core of the UET are the managers cognitions, values

and perceptions and their influence on the process of strategic choice and resultant

performance outcomes. Smith et al have articulated two reasons for not researching on

the top managers cognitive styles, values and dispositions have been articulated. One is

the problem of access to private information and the other is that it is often considered

superfluous to investigate underlying psychological concepts. Michel and Hambrick,

(1992) corroborate the reasons by arguing that managers cognitions are unobservable

and impractical to measure directly. Besides, demographic characteristics are available

in archives and guarantee to a large-extent rigorous, large scale and longitudinal studies

(Markoczy, 2001).

2.6.2 Criticisms of Upper Echelons Theory

Although research on managerial demography has yielded valuable insights into top

managers, it has not escaped criticism and skepticism. Several researchers and scholars

have argued that relying solely on the demographic characteristics of top managers

without directly studying the unobserved psychological processes may lead to spurious

results (Lawrence, 1997). Others have pointed out that most upper echelon researches

have been static, failing to consider the stability of the hypothesized associations

between managerial demography and various outcomes over time (Finkelstein and

Hambrick, 1996).
75

Markoczy (1997), himself an early ardent follower of the UET, noted that, without

looking at the intervening attitudes or cognitions, researchers cannot tell if these

experiential or demographic variables really affect beliefs and therefore organizational

actions. He contends that the claimed relationship between managers cognitive bases

and characteristics is equivocal at best. Markoczy (1997) uses the words of Hambrick

and Mason rough surrogates to explain the implausibility of demographical

characteristics in understanding managers cognitions. Other researchers have raised

concerns, asserting that demographics-based research (1) can be conducted without

direct contact with top managers (Pettigrew, 1992); (2) produces research without

emotion, drama or action (Reger, 1997: 804); (3) assumes that the demographic

predictors are correlated with presumed intervening processes which remain in a black

box (Lawrence, 1997); and (4) uses proxies that may be related to organizational

outcomes primarily through other variables (Smith et al., 1994).

Michel and Hambrick (1992) advocated the advantages of using managers

demographic characteristics as being objective, parsimonious and possible replication.

Indeed, Pfeffer (1983) has argued that measurement accuracy is a major benefit of

demographic studies. It is possible for demographics to do a better job of explaining

variance in the dependent variables than measures of the presumed intervening

constructs, for the reason that many of the intervening constructs are mental processes

that are more difficult to access and reliably measure. In sum, the demographics

performance literature has contributed a great deal in redirecting research attention


76

toward top managers and in showing that top managers are important to firm

performance.

To date, research that has examined the relationship between top management team

characteristics and organizational outcomes has followed two main directions. One is to

examine top management team demographics such as age, education, work experience,

and tenure. Another, direction has been to assess the mindsets of the team and link their

psychological profiles to subjects of interest (Miller and Toulouse, 1986b). Significant

results have resulted from both kinds of studies, though the extent demographic and

psychological attributes do not generate common effects. Kitchell (1997) argued that

either approach in isolation will give rise to only partial results. The study by Kitchell

(1997) integrates these two approaches and examines both the demographic and the

psychological attributes of CEOs that have an impact on corporate innovativeness

In recognition of the noted weaknesses, this study takes into account other

entrepreneurial orientation characteristics to supplement the demographic

characteristics. These characteristics are proactiveness, risk taking and innovation. The

choice of these three dimensions is demonstrated by a number of researchers (Miller,

1993, Covin and Slevin, 1986, Miles, Arnold and Thompson, 1993) who have adopted

them in their studies. Although not as convenient as the demographic characteristics in

terms of measurability, they can be measured directly using already developed tools,
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and they help to closely capture what has been missed by the demographic

characteristics.

2.6.3 Empirical Studies on the Upper Echelons Theory

Most studies on the UET have been conducted in the developed world. Presentation

and discussion of the empirical findings of the studies follow.

Halikias and Panayotopoulou (2003) studied the influence of CEO personality on the

export behaviour and performance of 81 manufacturing firms in the small European

country of Greece. Regression analysis was applied in order to determine which of the

personality characteristics studied could explain the export performance of the firms.

The results showed that there are several personality traits of the decision maker that

can be related to export involvement, supporting the UET that contends that firm

performance is a reflection of its top managers. Moreover, the effect of the CEOs

personality on export performance was found to be much stronger in small enterprises

than in larger ones. Limitations noted from this study are as noted elsewhere in similar

studies. One pertains to the cross -sectional and exploratory nature of the study that

involved a small sample size thus constraining the researcher from making

generalizations. Therefore, its findings should be restricted to relationships of

association instead of imputing causality.


78

Lohrke, Franklin, McClure, Vinay and Austin (1999) undertook to study the

relationship between International Orientation and Small Business Exporting

Performance adopting the UET. The researchers noted that recent advances in

technology and transportation have allowed even the SMEs to globalize. Although these

SMEs have limited resources, many have been able to successfully increase sales

overseas through exporting. This trend has prompted increased interest in the key

success factors influencing small business export performance.

Data for this study were collected employing a mail questionnaire sent to 1000

randomly selected firms from a Dun and Bradstreet database of US small business

exporters. From the initial sample, 156 questionnaires were returned and deemed usable,

yielding an actual response rate of 17 %. Regression analysis was conducted to test the

three study hypotheses to establish the causal effect relationship between the

dependent and independent variables.

The results generally supported the hypothesis that market and industry factors

moderate the relationship between top management international orientation and small

business exporting performance. The specific key findings of the study were that: (1)

Managements international orientation will be more positively associated with the

export performance of firms exporting to culturally distant countries than those

exporting to culturally similar countries. (2) Management's international orientation

will be more positively associated with export performance for firms exporting to
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economically different countries than those exporting to economically similar countries.

(3) Management's international orientation will be more positively associated with the

export performance of firms competing in multi-domestic industries than those

competing in global industries. Though the authors did not bring out the psychic

distance concept in their research, they were in fact making strong comments on it. This

negative relationship between psychic distance and organizational performance is

attributed to the fact that psychically close countries are easier to learn about and

understand (Nordstrom and Vale, 1994). General acceptance, notwithstanding,

empirical findings on the negative relationship between psychic distance and

performance, are rather inconclusive (Ali, 1995; O'Grady and Lane, 1996). In fact,

Evans (2001) established a positive relationship between psychic distance and

organizational performance and argued that in fact foreign markets that are perceived to

be different from domestic market need not be avoided.

Similarly, even without acknowledging the theory guiding the study, Axinn (1988) finds

in her 1984 study that export performance is more highly correlated with international

experience and the perceptions of exporting possessed by managers than it is with the

firms' size, technology, or goals. This conclusion and argument are in favour of the

assumptions of the UET and Voluntaristic perspective. The researcher collected data

through mail questionnaires form Chief Executive Officers of 78 machine tool firms in

Ontario and 305 for Michigan with a response rate of 31 and 26.5 per cents,

respectively. The data collected were regressed to ascertain the relationship between the
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firm-related adopter characteristics factors and the manager related adopter

characteristics and the firms export performance.

The findings of Axinns study are also corroborated by other researchers (e.g. Kirpalani

and MacIntosh 1980; Schlegelmich and Ross, 1987; Kirpalani and Robinson, 1989; and

Becker and Lenberg, 1990), who invariably noted that the better export performing

firms are managed by internationally oriented managers.

It has been observed that, if companies are to survive in the global environment,

continuous innovation is imperative. Kitchell (1997) conducted a study on CEO

characteristics and technological innovativeness in Canada using a sample of 110

companies in the machinery and metalworking industry in Ontario. Data were collected

using two sets of questionnaires designed to capture CEO demography and

psychological profile respectively. Demographic variables captured for this study are

CEO age, education background, immigrant status, international work experience and

tenure. Psychological variables measured on a seven -point Likert Scale are flexibility,

perseverance and risk taking.

The data were analyzed in two stages using linear regression. The results suggested that

the model was statistically highly significant and explained a substantial amount of

variance. The results confirmed that CEO characteristics have a significant impact on

corporate innovativeness, giving support to the UET.


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This study is relevant in our study in two ways. First in this thesis we have taken

managers demographic characteristics and innovativeness among other variables as

independent variables. To the contrary though, the study by Kitchell (1997) took

innovativeness as a dependent variable being affected by the CEO demographic

characteristics. The importance of this contradiction will help in building the research

model by realizing the aspect of Multicollinearity, which means that three or more

variables are correlated. However, Multicollinearity does not impact the reliability of

the forecast, but rather impacts the interpretation of the explanatory variables.

Secondly, the study was conducted in a developed country, Canada, about technological

innovativeness in the context of computerized manufacturing technology adoption.

Developing countries such as Tanzania have very limited and constricted computerized

manufacturing technology. The thesis framework is predicated on a different set of

firms operating in a developing country.

Entrialgo et al (2000) studied how psychological characteristics and the strategic

process affect organizational success. Researchers used data collected from a sample of

233 companies, whose size ranged between five and 500 employees operating in a

Spanish territory. The questionnaire for the study was divided into three blocks. The

first two blocks covered the way in which managers make decisions, and managers

psychological profile. The final block drew together questions concerning the success of
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the company. The managers psychological profile consisted of need for achievement,

internal locus of control and tolerance of ambiguity. Students t- test and variance

analysis were used to analyze the data. This study concluded that the managers traits

indirectly affect success through process and that this process has a direct influence on

success. However, the managers demographic characteristics were also observed to

have a direct influence on company success.

Although the results from the study did not give conclusive findings on the direct

influence of managers on performance, they need to be taken cautiously. There are at

least three reasons for taking this stance. First is that the study took a very

heterogeneous group of industries. With some having five employees only and others

having a maximum of 500 employees, the influence of firm size should have been taken

into account when explaining the significance of the variance. That was not the case.

The influence of the manager in such a diverse selection of companies is equally diverse

with managers having a bigger influence in small companies than is the case in big

companies. The second reason as, we have argued early, is the issue that the study was

conducted in a developed country with its peculiar and unique characteristics. Lastly,

the psychological constructs used for the study (locus of control, need for achievement

and tolerance of ambiguity) are not necessarily the only variables that can be used to

depict psychological factors.


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Herrmann and Datta (2005) drawing on the executive demography and the upper-

echelons perspectives, examines the relationships between the characteristics of Top

Management Team (educational level, tenure, age, international experience and

functional background) and firms international diversification. The study is based on a

sample of 112 relatively large and internationally diversified US-based firms in the

manufacturing sector. The researchers used descriptive statistics, zeroorder

correlations and regressions to underscore respondents profiles, underlying correlations

and causal effect relationships.

The findings indicate that firms with higher levels of international diversification are

likely to have a top management teams characterized by a higher educational level,

shorter organizational tenures, younger executives and greater international experience.

In addition, the findings indicate that relationships between team characteristics and

international diversification are more dominant in better performing than in lower-

performing firms.

This study is relevant to our thesis in the sense that the findings are predicated on the

executives characteristics and international strategy. Ten years ago Lohrke and Bruton

(1997), noted that studies on the relationships between the characteristics of top

management teams and firm internationalization have been notably absent in

international management literature. It is worth noting that the relevance of this

empirical study is that, characterized by higher levels of uncertainty and ambiguity,


84

international business favours top management teams who are flexible, open to change,

exhibit greater tolerance for ambiguity and who possess superior information-

processing abilities. According to Lohrke and Bruton (1997) then, these tend to be firms

whose managers are younger, have shorter organizational tenures and possess higher

levels of education and international experience.

Karake (1995) conducted a study on information technology performance by using both

agency and upper echelons theory. Data was collected through a mail questionnaire

from a sample of 305 top IT executives. Only 57 questionnaires (representing 21 %)

were deemed fit for analysis. Logistical regression (logit) model was selected and used

because the dependent variable is discrete (binomial) and logit analysis avoids some of

the strong assumptions of other multivariate analysis techniques like discriminant

analysis. The findings of the study revealed that management ownership structure, board

composition and the age of the CEO affected the performance of information

technology. Relatively young CEOs were found to invest more in information

technology than their older counterparts. Older managers are expected to be more risk

averse than young CEOs.

Empirical studies reveal some issues that need to be addressed when one is using the

theory in the developing country context. Issues like firm size and developed versus

developing context differences have already been discussed. A Google search on studies

using the UET in SSA countries revealed no hits on the theory. Even Glunk et al (2001)
85

note that research on UET is predominantly US- based and that little is known about the

way top management is structured and how it functions in other countries. This was

asserted over five years ago, but to date other researchers has been conducted in other

developed western countries. This bears testimony to the scanty attention given to

studies of this nature in the developing SSA countries. Other issues relate to the

technological sophistication of the studied firms when contrasted with those targeted for

the subsequent study following this research model. Likewise, a plethora of methods of

analysis such as correlation, regression, logit and structural equation modeling call for

more study to be able to generalize the findings.

The assumptions of the UET, according to Batjargal (2000), are relevant to the context

of new entrepreneurial ventures because founding entrepreneurs are often the firm`,

especially at the early stages of venture formation. This augurs well for exporting SMEs

in Tanzania which were mostly started in the early 1990s following the governments

adoption of free market economy policies. Even at the growth stage, firms have birth

marks of the characteristics of the owners or managers because of the path dependence

(Batjargal, 2000) .The decisions as to whether or not SMEs will use, ignore or misuse

the collected export information and the emphasis put on its acquisition will ultimately

rest on the owner or manager. It is in this light that we consider that the RBV and UET

are significant for this study. The two theories are however built upon the foundations

of the Uppsala Internationalization Model (UIM). The studys emphasis is on export

information, its perceived quality and use, owners or managers characteristics as


86

resources or factors of production that are just like the traditional ones such as land,

labour, capital and entrepreneurship.

2.7 Conclusion

The preceding discussion of the internationalization, the deterministic and voluntaristic

perspectives, Uppsala Internationalization Model (UIM), the Resources Based View

(RBV) and Upper Echelons Theory (UET) has now set the platform for a detailed and

specific discussion and presentation of their specific variables. The relationships of the

variables, with their connections to the appropriate theories (see table 3.1) are thereafter

tied together in the generated research model (see Chapter 4).

To explain the value of owners or managers in relation to the use of export information

in the decision-making process and SMEs export performance, this researcher drew on

Upper Echelons Theory (UET), Resources Based View (RBV) and Uppsala

Internationalization Model (UIM). The researcher is of the view that the theories are

important for explaining how export informational resources are used by exporting

SMEs. From the Resources Based View (RBV), SME owners or managers are

considered entrepreneurial resources in their own right, which affect firm performance

(Penrose, 1959). The Resources Based View (RBV) of the firm focuses on the idea of

costly-to-copy attributes of the firm as a source of business returns and the means to

achieve superior performance and competitive advantage (Barney, 1991; Rumelt, 1987;

Conner, 1991; Prahalad and Hamel, 1990). This complements the Upper Echelons
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Theory (UET) (Hambrick and Mason, 1984), which states that owners or managers (a

reflection of the firms they own or manage) are crucial for identifying, developing,

deploying, and preserving resources (export information), and thus creating SCA and

subsequently affecting firm performance. In this regard, Hambrick and Mason argued

that, SME owners or managers demographic characteristics help to explain their

influence on the decisions and actions that they make and take. The owners or

managers export decision- making is facilitated by the use of export information that a

firm acquires from various sources. Additionally, this researcher argues for the

importance that perceived quality of export information plays in determining the use of

export information.

In the light of the VRIO attributes of strategic resources as stated under the Resources

Based View (RBV), the SME owner is a valuable resource when he/she is able to

analyze the opportunities to be exploited and the threats to be neutralized (Mahoney,

1995). If firms resources (Barney, 1996) are to generate competitive advantage, the

manager likewise will have to build and use them effectively (Castanias and Helfat,

1991). In this study, the rarity and non-substitutability of the owner or manager is

relevant as managers will, in most cases, have firm -specific knowledge at the individual

level (Carmeli and Tishler, 2006). The owner or manager is equally imperfectly imitable

(inimitable) due to unique historical conditions, causal ambiguity, and social complexity

as argued for earlier (ibid.).


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As many young and small private SMEs need to address liabilities relating to

newness, smallness and inexperience (Westhead, 2008), SMEs exporting

handicrafts and horticultural products adopt exporting entry modes that constitute less

resource commitment and risk involvement. Exporting is the most used

internationalization mode for SMEs because of the lack of resources (Dalli, 1995) and

limited market knowledge and inexperience (Root, 1994). In support of the RBV,

Leonidou (1995) states that resource endowment and other factors can pull or push

SMEs into exporting their products.

This augurs well for the Uppsala Internationalization Model (UIM) (Johanson and

Widersheim-Paul, 1975) that a firm internationalizes by moving sequentially through

discrete stages. Accordingly, Vasilescu, Goagara, and Girboveanu, (2008) note that each

of these stages denotes an increase in firms commitment of their resources to overseas

markets. As firms move through these sequential stages the knowledge and information

base expands and the "psychic distance" between themselves and the overseas markets

involved contracts making progression to the next stage that much easier (Vasilescu, et

al., 2008).

In the case of SMEs, the researcher makes the case for further consideration of the

individual decision-maker. Owners or managers with their demographics, which are

good proxies for underlying traits and cognitive processes (Hambrick and Mason, 1984),

are considered the most important resource that help owners or managers to acquire ,
89

combine and deploy the resources necessary (RBV) for the realization of the SMEs

exporting objectives (UIM).


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5. CHAPTER THREE

6. EXPORT INFORMATION AND OWNERS OR MANAGERS

CHARACTERISTICS

``Good management consists in showing average people how to do the work of superior people
`` John D. Rockefeller

3.1 Introduction

This chapter is divided into two main parts. The first part dwells on information

generally and export information in particular as important and strategic resources that

can be deployed and used aptly to improve the export performance of a firm. Reflecting

upon the Upper Echelons Theory (UET), the second part of the presentation covers

SMEs owners or managers characteristics such as language proficiency, education

level, age, gender, international experience, and export experience. Important to note

when focusing on the owner or manager demographics, is the acknowledgement that

according to the Upper Echelons Theory (UET), the demographics are used just as

rough proxies for managers cognitive base. It is in this vein that the researcher thought

to consolidate the managers demographic characteristics by also delving into the

entrepreneurial orientation (whose dimensions are risk-taking, innovativeness and

proactiveness) of the small and medium enterprise (SMEs) owners or managers.

Whereas it has been discussed elsewhere in this thesis, it is important to restate here that

in studying exporting firms and their export information use, it is necessary to

understand the business owners or managers since they represent the main influence on

the behaviour of the business (Leonidou et al., 1998).


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Table 6.1: Theories and corresponding variables


Sn Theory Variables
1 Resource Based View (RBV) Export Information, Export Information
Use
2 Upper Echelons Theory (UET) Demographic Characteristics: (Age,
Gender, Education, Export Experience,
International Experience, Language Proficiency)
Entrepreneurial Orientation: (Risk Taking,
Innovation and Proactiveness)

3.2 Understanding Information Use

Information has always been considered a critical component in making effective and

efficient marketing decisions (Leonidou and Theodosiou, 2004). This is because

information can be used to ( a) understand better the major actors in the marketplace

where the firm intends to operate (b) monitor changes in a business environment

characterized by rapidly changing market conditions , intensifying competition , and

increasing globalization (c) design reliable marketing plans and strategies by shedding

light on the desirability of the various marketing alternatives (d) offer sound solutions

to specific marketing problems , such as launching new products , changing prices ,

setting up distribution channels and choosing promotional methods and (e) improve

marketing control through better monitoring of marketing strategy implementation and

more accurate assessment of company performance (Churchill , 2001, Tull and Hawkins

, 1993 ; Zikmund, 2000).

Resource-based theorists argue that firms enable themselves to improve their efficiency

and effectiveness by using their resources (Peteraf, 1993; Barney, 1991). Kotler (2003)

contended that in order for firms to be able to plan effectively, they should dedicate
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resources to the collection and use of information to reduce uncertainty and to

understand market needs. Foreign operations are different from domestic ones, and the

difference is very much related to the problem of knowledge and the cost of information

(Carlson, 1975).

Various researchers have come up with diverging and sometimes overlapping views

with regard to what the use of information really entails. Jais (2007) studied the

influence of national culture on the relationship between managerial use of information

and managerial performance. The researcher noted difficulty in understanding the term

use of information and recommended, quite aptly, that operationalization of information

use is better for understanding the content of the construct. Over a half a century ago

Simon et al., (1954) identified three different forms in which information can be used.

These are score carding, which refers to performance evaluation; attention directing

which is the use of information in which managers focus attention on critical business

issues of their organization; problem solving that connotes the use of information in

assessing various courses of action that an organization ought to take in pursuance of its

objectives.

Pelz (1978) brought to the fore the various forms of information use which stand out as

being those that have been the popularly adopted classifications in contemporary

marketing, exporting and management studies. According to Pelz, whose research focus

was on public policy, the various forms of information use are instrumental, conceptual
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and symbolic. Pelz (1978) however, pointed out that the demarcation between these

forms of information use is not always sharp. Beyer (1997) explains that instrumental

use involves applying research results in specific, direct ways. Conceptual use involves

using research results for general enlightenment. Symbolic use involves using research

results to legitimate and sustain predetermined positions. Symbolic use may involve

using research information to rationalize past actions or to build a consensus about

future decisions or actions (Pelz, 1978).

Burchell et al (1980) conducted a case study and operationalized the use of information

in four distinct forms. According to the researchers, information can be used as an

answer machine (formulae to solve problems), ammunition machine (influence others),

learning machine (gain knowledge), or rationalization machine (legitimate decisions).

The form of information use depends on the degrees of certainty of objectives and

cause- effect. The last two forms are inimical to conceptual and symbolic use of

information respectively.

One of the most elaborate studies on the use of accounting information was conducted

by Ansari and Euske (1987). The researchers took 22 years to longitudinally study the

use of accounting information in a military organization in US. Ansari and Euske

distinguished three reasons as to why organizations use accounting data: for

enhancement of efficiency (technical-rational), for pursuing power and influence (socio-

political) and for setting up a facade of rationality towards stakeholders (institutional).


94

Analyzing the longitudinal data guided by the institutional theory, the researchers noted

that there is strong evidence of socio-political and institutional pressures shaping the use

of information in the organizations studied. Rational technical use of information,

which is driven by efficiency considerations, is rarely used, the researchers noted.

In their study, Menon and Varadarajan (1992) found that market research findings are

used in action-oriented (change of behaviour), knowledge enhancing (changes in

understanding) and affective (good feeling) modes. Drawing on the previous forms of

uses of information, the researchers established that action oriented use of information

can be broken down into instrumental and symbolic uses, and knowledge enhancing can

also be broken down into product- based and process-based knowledge enhancement

use. Likewise, two subtypes of the affective use are product and process based affective

use of information.

The research question posed in this study will be examined using the improved version

of Pelzs (1978) information use classification. Diamantopoulos and Souchon (1999)

concluded that instrumental and conceptual information uses were two facets of the

same dimension of a construct. Supporting this merging of the two dimensions of

information use, Dunn (1980) also concluded that the two dimensions cannot be

dissociated from each other. The taxonomy of information use is adopted owing to its

frequent conceptualization in both domestic and international business studies.

Additionally, the taxonomy is adopted while the researcher is cognizant of the cultural
95

differences between developing and developed countries that may have a moderating

effect on the use of information.

3.3 Export performance and Competitive Advantage

Research on the firm's export performance can be traced back to the early 1960s when

Tookey (1964) made an early attempt at identifying factors associated with export

performance, while two decades later, Porter (1985) propounded and popularized the

competitive advantage (CA) theory. In defining CA and export performance, it is

important to follow the footsteps of strategy researchers and scholars cited earlier by

asking the question, Why do some SMEs succeed while others fail and what determines

export performance differentials? Export performance and CA are discussed and

presented together as they are often used interchangeably. It was Porter (1985, xv) who

argued that Competitive advantage is at the heart of a firms performance in

competitive markets. And this can as well be stated for SMEs operating in international

markets where competition is ubiquitous. Competitive advantage, according to Porter

(1985), is normally defined as the ability to earn returns on investment consistently

above average for the industry. The most explicit attempt to define CA has come from

Barney (1991). He states, "a firm is said to have a competitive advantage when it is

implementing a value-creating strategy not simultaneously being implemented by any

current or potential competitors.


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Flint (1999) noted that the term competitive advantage might possibly win the prize for

the most overworked and least understood catch- phrase of the field. Not surprisingly,

Katsikeas et al., (2000) assert that export performance is equally one of the most

widely researched but least understood and most contentious areas of international

marketing. Prior to 1985, Penrose (1959) had referred to CA while Ansoff (1965) also

used the term in such a way as to describe what a firm needed to compete effectively.

Two researchers (Spence, 1984; Caves, 1984) had also scantly discussed CA without

defining it. Like Porter, both Spence and Caves held the view that an industry's structure

is the determinant of firms performance within the industry, with the former focusing

on the use of subsidies and government restrictions to give domestic firms protection

from foreign competitors, while Caves focuses on the commitment of resources to

establish entry barriers that would enhance the performance of a firm.

Does competitive advantage in international business equal export performance? This is

a question that has eluded scholars, policy makers and practitioners alike. Simply put,

CA is related to export performance in the sense that it constitutes the ability gained

through attributes and resources to perform at a higher level than others in the same

industry or market (Christensen and Fahey 1984; Porter, 1980). Successfully

implemented strategies lift firms to superior performance by facilitating a firm with CA

to outperform current or potential players (Passemard and Calantone, 2000). The above

discussion signifies that competitive advantage in both domestic and international


97

markets ensures that market leadership and right business strategies have a profound

effect on export performance.

Barneys (1999) definition does not link competitive advantange (CA) to the

performance of a firm. Barneys missing link between CA and performance implicitly

corroborates Coyne's (1986) assertion that competitive advantage may actually reduce

shareholder wealth and hence firm performance. This study takes the position of such

authors as Reed and DeFillippi (1990) or Porter (1985), who argue that superior or

above-average performance is synonymous with competitive advantage.

3.4 Export Information Use and performance

Export information plays a crucial role in expanding activities beyond the domestic

market (Katsikeas, 1994; Leonidou, 1995). Information, ties with information sources

and competences are strategic resources giving competitive advantage (CA) to a firm

(Barney and Zajac, 1994; Porter and Millar, 1991). According to Porter (1980), the

basis of above average performance within an industry is CA.

Organizations are increasingly aware of the potential of information in providing CA

and sustaining their success (Porter, 1985). Despite all this, there is a growing consensus

in the export market literature that underlying the decision to acquire export information

is a process that gives expression to the relative value of the information and its costs

(Douglas and Craig, 2001; Brownlie, 1991). There are three ways which are generally
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used to acquire export information. These are export-marketing research, export

assistance, and export market intelligence. According to Souchon and Diamantopoulos

(1999), export-marketing research is a formalized, systematic, and objective mode of

collecting market information. Seringhaus (1986) defined export assistance as the

information acquisition mode in which governmental bodies and banks are involved.

Export market intelligence is an informal and on-going information acquisition mode

that includes approaching potential customers, distributors, and/or competitors

(Souchon and Diamantopoulos, 1999). It reflects a set of procedures used by managers

to obtain their everyday information about pertinent developments in the marketing

environment (Kotler, 1991).

It is the thesis of this study that export information can only be a source of compettitive

advantage (CA) when a firm is organized to exploit its potential. Effective use of

information is essential in gaining SCA as then the firm can better understand its foreign

markets and in this way create heightened customer value (Diamantopoulos and

Souchon, 1999). It is further argued that while ignorance is a severe threat to successful

exporting activities, the mere acquisition of information does not guarantee high export

performance (Zaltman and Moorman, 1988).

SCA is thus to be found increasingly not on the possession of information but in what is

done with the information (Zaltman and Moorman, 1988). For example, entering a

foreign market without prior knowledge about the unfamiliar environment can often
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cause business blunders, with the ultimate result of sales and/or profit losses (Ricks,

1983). Besides, information use helps reduce the uncertainty surrounding the business

environment (Lee et al., 1987). In the light of the unfamiliarity of the foreign

environments which exporting firms face (McAuley, 1993), the use of different forms of

information can be seen as a critical in determining export performance (Souchon and

Diamantopoulos, 1997).

3.5 Forms of export information use

As noted earlier, Diamantopoulos and Souchon (1996) revealed that exporters tend to

use information in two main ways that is instrumentally-conceptually and symbolically.

Separately, instrumental use is knowledge for purposeful action (Rich as cited in Pelz,

1978) and deals with specific decisions or actions that can be clearly designated. With

this type of use, Weiss (1979) argued that a decision drives the application of

information. Instrumental use is predicated on the actual existence of a rational

decision-making process (Albaek, 1995). This conception of information use has also

been called the problem-solving model (Weiss, 1979). Conceptual use on the other

hand, refers to thinking about an issue without putting information to any specific,

documentable use (Rich as cited in Pelz, 1978). For emphasis, it refers to the indirect

application of information, in the sense that information is used to broaden the

managers knowledge base without serving any one specific decision or action

(Moorman, 1995). Diamantopoulos and Souchon (2000) defined the instrumental


100

conceptual use of export information as the rational application of information for the

overall purpose of enhancing decision-making.

Symbolic use of information occurs when information is used to justify a decision

already made (Feldman and March, 1981), to keep information providers happy (Menon

and Varadarajan, 1992), or is distorted beyond the correct intent in order to support the

decision-makers opinion (Goodman, 1993). Symbolic use is used more for political

reasons than for direct application to any decision-making activity. For example, export

information can be used to justify a decision made previously based on, for example,

instinct or intuition (Hart et al., 1994). Symbolic use of research is linked to the

bargaining-conflict model of decision making theory (Albaek, 1995).

Knorr (1977) identified three manifestations of symbolic information use. The first

occurs when information is distorted in order to support the decision-makers opinion in

the eyes of his/her subordinates, colleagues and superiors (e.g. Goodman, 1993). This

distortion is defined as the incorrect reproduction of objectively correct information and

can result from either conscious or deliberate alteration or unconscious manipulation

(OReilly, 1978). The second manifestation of symbolic use is when information is used

to justify a previously made decision (e.g. Feldman and March, 1981); this can occur

because people have a tendency to retain information selectively in accord with their

prejudices, and to reject possible disconfirming evidence (Hogarth and Makridakis,

1987). The third manifestation of symbolic use occurs when information is applied
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merely to preserve good relationships with information providers (Menon and

Varadarajan, 1992). The three manifestations of symbolic use of information do not

always have equal or the same effects on the quality decision making and hence are not

always beneficial for export performance.

3.6 Quality and Perceived Quality of Export Information

Literature is replete with various definitions and attributes of information quality.

Quality, a commonly used concept in business, involves meeting or exceeding customer

expectations of the goods or services offered by a firm (Heizer and Render, 1999).

Kotler et al., (1999), likewise, have defined quality as being the totality of features and

characteristics of a product or service that have the ability to satisfy stated or implied

customer needs. More specifically, Kahn, Strong and Wang (2002) define quality of

information in terms of fitness for use or the extent to which information successfully

serves the purpose of users. Information is thus regarded as of acceptable quality if it is

fit for use for its intended purpose.

Although until today no standard definition of information quality exists, defining

information quality from the users perspective seems to be an appropriate approach.

However, any appropriate discussion on the quality of information should start with a

clear understanding of whether information should be treated as goods or services.

Generally, information has intrigued many scholars and researchers alike on whether it

is to be regarded as a physical good or a service. Detailed and in-depth insights into the
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problem caused Toften and Rustad (2004) to conclude that export information is both a

good and a service.

In an attempt to define and measure the quality of services, Parasuraman et al., (1988)

developed a service quality instrument (SERVQUAL) that consists of 22 items

(questions) intended to measure five dimensions of quality. The dimensions are

tangibles, reliability, responsiveness, assurance and empathy. Important criticisms of the

SERVQUAL have been that (a) the five dimensions the SERVQUAL measures are not

universal and may thus vary from one product to another (Stevens et al., 1995).

Supporting the argument, Lapierre et al., (1999) note that perception of quality is

industry and context-specific. (b) The SERVQUAL instrument focuses only on the

process attributes of quality (Richard and Allaway, 1982), whilst quality evaluation

could include outcome attributes (Gronroos, 1982).

Toften and Rustad (2004) developed, through an exploratory study, a model that

encompasses both process and outcome attributes. The model is referred to as the

MARKINFQUAL. The researchers conducted in-depth personal interviews with export

managers. Export managers of twelve Norwegian SMEs with strong export dependency

engaged in exporting seafood were the target interviewees. According to the model, the

process attributes include reliability (delivery within agreed deadline), responsiveness

(rapid feedback and good communication flow), assurance (credibility and honesty) and

empathy (able and willing to serve individual needs). Six outcome attributes are: form
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and comparability (concrete, specific, precise, comparable and up-to-date),

infrastructure (distribution, logistics and storage), general marketing (economics, trends

and culture), specific marketing (detailed information) production/supply (volumes,

quotas and availability) and regulatory framework (customs, market access and

regulations). Only four process attributes of quality were found to be relevant. The

exclusion of tangibles from the model was explained by the researchers that it was not

considered important by the informants because most of them received the information

without having to physically appear at the production facilities of the information

providers.

Bovee, Srivastava and Mak (2003) proposed that quality is comprised of integrity,

accessibility, interpretability and relevance. Bailey and Person (1983) identify nine more

attributes of information quality which are accuracy, precision, currency, output

timeliness, reliability, completeness, conciseness, format and relevance. According to

Jeong and Lambert (2001), through a review of studies specifically focusing on

information quality, there are four attributes (or dimensions) of information quality,

which are: (a) perceived usefulness (b) perceived ease of use (c) perceived accessibility

and (d) attitude of the information users. Fox, Levitin and Redman (1994) note the

attributes of information quality as accuracy, currency, completeness and consistency.

With this litany of attributes of information quality, there is no agreement on what

constitutes not only information quality attributes but also the meaning of the concept

itself. Researchers have not found information quality attributes which are essentially
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mutually exclusive and collectively exhaustive. Wang, Storey and Firth (1995) have

evaluated the research literature on data/information quality attributes and have

concluded that there is no consensus on what constitutes information quality

dimensions.

Adding complexity to the debate on the quality of export information is the fact that

quality can be construed as actual or perceived. Perceived quality, the dimension that

guides this study, is according to Aaker (1991), the customers perception of the overall

quality or superiority of the product or service (export information in this case) with

respect to its intended purpose, relative to alternatives. Corroboratively, Zeithaml (1988)

states that perceived quality refer to the judgment of a consumer about a products

overall excellence or superiority. The author emphasized that perceived quality is (i)

different from objective or actual quality, (ii) a higher level abstraction rather that a

specific attribute of a product, (iii) a global assessment that in some cases resembles

attitude,(iv) a judgment usually made within a consumers evoked set. With that in mind

perceived quality cannot be determined objectively because it is subjective and is based

on individuals whose judgments, personalities, needs and preferences are remarkably

different.

3.7 Empirical Findings on Export Information and its Quality

A survey of high performing companies in the UK found almost universal acceptance of

the view that information is a valuable asset (Owens et al., 1997). The gathering,
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processing, and implementation of market information enable companies to deal with

the threats and opportunities in export markets, thus enhancing the firms

competitiveness (Douglas and Craig, 1983). Assessing the influence of firm

characteristics on export market information behaviour, Voerman et al. (1998) also

found that country-of-origin, sector and size influence both the number of information

sources consulted, and the type of information providers consulted. Voerman and others

found that the relationship between the amount of export market information and export

performance is not straightforward, but needs to be corrected for these three firm

characteristics.

Lybaert (1998) conducted a study on what were the main elements of influence of

information use by SMEs that influences performance by surveying 208 SMEs owners

or managers. The main objective of the study was to gain some insights into the

importance of information use for the success of SMEs. Lybaert (1998) examined some

characteristics of the owner or manager and the firm, which determine the extent of

information use. A model was developed and tested using SEM. Her findings suggest

that there is a positive relationship between the extent of information use and SMEs

performance. The researcher further found that SME owners or managers with (i)

greater strategic awareness, (ii) less eperience in the firm prior to the present position

and (iii) greater desire for growth, use more information. The model used by Lybaert

(1998) is presented in figure 3.


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Figure 3: The Presumed Research Domain

Personal specific characteristics with respect to:


Personality
Education
Economic history
Desire for growth
Familiarity with administration

Information Use Success

Firm-specific characteristics with respect to:


Maturity and size
Intervention of family
Involvement of co-workers
Availability of information systems
Financial conditions

Source: Lybaert (1998)

While Lybaerts (1998) study is commended for its contribution to the study of

information, it is noted for two weaknesses. The study operationalized information use

as a single construct, whereas it is widely acknowledged that information use is a

multidimensional construct. The second limitation of the study, related to the first, is

that the performance of the SMEs was based on objective measures. Objective

performance measures, much as they are potentially good at estimating performance,

have inherent weaknesses. An aspect that has drawn a lot of interest in the studies of

export information and information in general is the question of networks.


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Riddle and Gillespie (2003) examined how the owner-operators of new ventures in the

Turkish clothing export industry utilize their informal and formal social networks to

acquire the information they need to export successfully. A survey of 250 Turkish

clothing firm owners was conducted to explore the networks phenomenon. The findings

indicated that informal social ties are key sources of information for new venture firm

owners in the industry.

Williams (2003) used exploratory and mail surveys to study export information use in

small and medium-sized industrial companies. The exploratory research consisted of 24

in-depth interviews and the information obtained was used to develop a survey in which

376 managers were studied. The study provided great insights into the measurement and

application of the export information use scales, more specifically in the context of

SMEs exporters. Williams (2003) appropriately recommends that future research could

usefully investigate the relationship between such export information use and SMEs

performance. This study adopts the suggestion and in addition investigates the

antecedent factors to export information use.

Souchon et al., (1999) found that information utilization is crucial for effective export

decision-making and ultimately for export performance. However, little empirical

evidence exists on the topic of export information use as most of the literature focuses

on information acquisition. Souchon et al (1999) developed a set of hypotheses

concerning the effect of culture on different types of export information use, based on
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Hofstedes (1980) cultural dimensions. The results indicate that the effects of cultural

dimensions on export information use differ, depending on both the type of information

use considered and the mode of information acquisition.

Nguyen, Barrett and Fletcher (2006) carried out a study targeting 144 Vietnamese

enterprises. In this study, the researchers examined the role of information

internalization in international business. A theoretical model incorporating key

antecedents and outcomes of information internalization was developed. The

antecedents were market orientation and learning orientation, and the outcomes were

international orientation and foreign sales intensity. A survey was conducted to test the

model in conjunction with its two competing models by means of a two-step approach

to SEM. The study found that information internalization had both direct and indirect

effects on foreign sales intensity. Further, it was found that market orientation and

learning orientation underlie information internalization.

Conclusively, studies on export information acquisition, and more importantly its use,

have received heightened attention in the recent past in the developed world. As noted

elsewhere in this thesis, studies on the use of export information in the context of

developing countries are still wanting. This brings about the importance studying the

export information behaviour of SMEs in Tanzania, a country with different social,

cultural and economic environments. Besides, most of the studies cited here used
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different ways in the operationalization of constructs, with some constituting few

construct indicators, making the results hardly generalizable.

3.8 Business Information Empirical Studies in the Context of Developing

Countries

There is a dearth of studies on the use of and access to information in developing

countries generally and in exporting business contexts in particular. This situation

necessitated and compelled this researcher to review empirical studies on business

information that have been conducted in the context of developing countries. SMEs

engaged in domestic or international business are operating in different contexts much

as their contextual similarities rest on the fact that they are all operating in developing

countries. The exception is the study by Viviers and Calof (2002) reviewed below.

Viviers and Calof carried out a study whose primary objective was to establish how

small and medium-sized South African firms gather exporting information. The Pretoria

Metropolitan Council (South Africa) sent a survey to their members in 1999 asking

questions relating to the types of information they required, present sources of

information, difficulties accessing and using information, and preferred ways of

receiving information. The study respondents indicated that the information relating to

potential buyers was regarded as the most important followed by price quotations and

trends. The dominant source of information was publications, followed by partners,


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customers and suppliers. Another finding was that acquiring information was difficult as

there were problems of interpretations and in finding English language material.

Jorosi (2006) studied the information needs and information seeking behaviours of 217

SMEs managers in Botswanas manufacturing industry, using a self-administered

questionnaire. After analyzing the data using descriptive statistics (percentages,

frequencies, mean and standard deviation) Jorosi found, among other findings, that

SMEs managers devote a significant amount of time to active information-seeking and

that they spend time seeking customer and competition information. In terms of sources

of information, the researcher noted that SMEs managers use both personal (e.g.

customers, business associates) and impersonal sources (newspapers, broadcast media

and government publications). SMEs managers were also found to be selecting sources

of information based on accessibility and ease of use. The information was being used

for making important decisions and performing other routine activities. The author

purposely excluded exporting SMEs on the ground that they may introduce bias to the

sample.

In a methodologically similar way, Okello-Obura (2007) studied the information needs

and behaviour of SMEs operating in the northern Uganda. The researcher used simple

statistics (frequencies and percentages) to survey 219 SMEs owner-managers. The study

findings were that SMEs owner-managers are lagging behind in using ICTs due to: (1)

Lack of familiarity with changing technologies such as the Internet. (2) Lack of trained
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information professionals (3) inadequate electricity (4) insecurity. (5) Lack of

government devotion to proving relevant information to the business community and (6)

Language barrier. Generally, the author contends that there is no meaningful

information system in place to facilitate efficient and effective access to business

information by business enterprises. Despite the barriers, SMEs managers rely on the

radio (82.7%), personal contacts (72.2%), and newspapers (62%) as their important

sources of the business information they need. Interestingly, the study findings indicated

that SMEs do not consider printed sources, private sector consultants, government

departments, TV stations, banks and other financial institutions, Internet sources and

libraries as important sources of business information.

Ikoja-Odongo and Ochola (2004) conducted a study on the information-seeking

behaviour of the informal sector entrepreneurs in the same country, using qualitative

research methodologies (critical incidence techniques and unobtrusive observations).

The study covered 602 entrepreneurs, 23 organization representatives and 35 informants

in the informal sector. The researchers found that modern and exotic models of

information transfer, based on the media and ICT have less impact on the

entrepreneurs information needs and use because of poverty, illiteracy and poor

communication infrastructure. Appropriately, the study ends with three important

recommendations to enhance information access and use: (1) Models for information

behaviour need to be grounded on oral traditions and indigenous knowledge. (2) The

models need to be sensitive to the entrepreneurs poverty, infrastructure and illiteracy.


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(3) There is a need for information repackaging and (4) the use of appropriate media for

information provision.

Chiware and Dick (2008) studied the business information needs of 308 Small, Micro

and Medium Enterprises (SMMEs) in Namibia. They also studied 60 business service

providers which were established to provide business information and other support

services to the SMMEs sector. Quantitative and qualitative techniques were used in

collecting and analyzing the data. The study revealed three important findings relevant

to this study. (1)Information- seeking patterns of enterprises surveyed were found to be

largely informal with limited use of formal business information services. (2) Utilization

of ICTs, by the SMMEs was equally found to be limited to word processing, book-

keeping packages and spreadsheets. (3) There was limited use of the Internet, as a

source of business information among the SMMEs. In summary, the researcher noted

that, while information is an important resource, the demand by SMMEs for information

services alone is not enough unless it is accompanied by awareness creation, direct

contacts with BDS providers and proper packaging of the information.

A few conclusions can be drawn regarding information- seeking behaviours and sources

in the developing countries of SSA. From the reviewed studies, the inadequacy of

information infrastructure, the lower demand for information due to illiteracy and

poverty and unfamiliarity with various sources of information seem to be the factors

hampering access and use. The other conclusion which is universal (not context
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specific) is that formal sources of information such as electronic information sources

(Internet, electronic databases, computer networks, Radio, TV) and printed sources are

less popular and are considered less important by entrepreneurs in both developing and

developed countries than the informal sources of information such as personal contacts

and networks . Vaughans (1998) study on business information use in Canada and the

study by Kinnell, Feather and Matthews (1994) on Chinese and British managers

information needs and their satisfaction arrived at the same conclusion.

3.9 Owners or Managers Factors in Export Information Use and Performance

Conventionally, the UET focuses on Top Management Team traits and their

heterogeneity rather than the top managers demographics in understanding the teams

influence on organizational outcomes. Numerous subsequent studies (e.g. Smith and

White, 1987; Guthrie and Datta, 1998; Finkelstein and Hambrick, 1996) have however

demonstrated the justification for studying the CEOs influence on firm strategies and

performance. This, researchers argue, is because CEOs in organizations symbolically

represent their organizations, and substantively formulate and implement strategies

(Fama and Jensen, 1983; Pfeffer, 1981; Herrmann and Datta, 2002, 2005). Focus on the

top manager/CEO is further accentuated in the SMEs where owners or managers are

determiners of the destiny of their firms. It is against this background that the

demographics and entrepreneurial orientation dimensions of the SMEs owners or

managers were operationalized to examine their influence on export information use. A


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detailed description of the characteristics of SMEs owners or managers is provided in

the context of Tanzania.

There is a great chasm separating visionary business strategies and the reality of SMEs

performance that can be associated with strong managers. Owners or managers are

critical because they link day-to-day activities to exporting SMEs goals, provide

context, focus priorities, ensure quality, encourage accountability and inspire results.

Entrialgo (2002) argues that, when faced with the same objective environment, different

managers will make different decisions based on their individual characteristics.

Voerman (2003) likewise attests to the special place of owners or managers in SMEs

and their influence on export performance. It is accepted that the SME owner or

manager plays an essential role as the searcher and user of export information. Rothwell

and Zegveld (1982) contend that key decisions in smaller, international companies often

tend to be concentrated in one person, frequently the owner or manager. This could be

reasoned since the owner or manager does not always have subordinates at her/his

disposal to acquire and process information.

In SMEs, as earlier noted, the role of the owner or manager is often decisive, because

decision-making is centralized (Carson et al., 1995, Marchesnay and Julien, 1990,

Miesenbck, 1988). Johannisson (1988) even argues that a SME is considered an

extension of the personality of the manager or entrepreneur. Based on anecdotal

evidence Bilkey, (1978) strongly noted that the quality of management probably is the
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greatest single determinant of a firms export success. Lang, Calantone and

Gudmundson (1997) conclude that the managers perception of the environment

influence a firms information-seeking behaviour.

3.10 Description of the Owners or Managers Characteristics

One classification typology used by Leonidou et al (1998) to classify managers

characteristics follows the objective - subjective dichotomy. Objective characteristics

under the former typology include language proficiency, age, gender, educational level,

export and international experience. These constitute some of the demographic

characteristics of owners or managers surveyed in this study. The subjective

characteristics are risk aversion, change aversion, personal ambition, innovation,

dynamism and flexibility. As noted earlier, this thesis has limited itself to three (3)

entrepreneurial orientation constructs: risk- taking, innovativeness, and proactiveness.

According to Covin and Slevin (1989) and Miller (1983), entrepreneurial orientation

(EO) indicates the willingness of firms to display proactive and innovative firm

behaviours and to take calculated risks in an effort to create and exploit environmental

opportunities. The choice of the three EO dimensions is based on their wide application

in a number of studies (e.g. Miller, 1983; Covin and Slevin, 1989; and Wiklund, 1999).

Besides, EO is considered multidimensional (Lumpkin and Dess, 1996) and the three

EO sub-dimensions have a different impact on key outcome variables as they vary

independently (Kreiser, Marino, and Weaver, 2002). The next section provides a
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breakdown of the characteristics of owners or managers. A more detailed description of

the EO is provided subsequently.

3.10.1 Owner or Manager Language Proficiency

Swift (1991) has argued that decision-makers international and linguistic experience is

likely to facilitate speedier access to, and a deeper understanding of, information on

overseas markets. Various research findings (e.g. Cunningham and Spigel, 1971,

Turnbull and Welham, 1985) have also explored the linkage between linguistic ability

and export performance with mixed results. It is argued that linguistic ability enables

verbal and written communication, facilitates more cultural sensitivity and contributes

to the managers perception of psychological distance (Davis, 1995; Swift, 1991;

Turnbull and Welham, 1985).

Wiedersheim-Paul et al (1978) further noted that language familiarity is particularly

important for smaller companies in the early stages of internationalization, including the

stage preceding the first foreign sale, wherein the background, including language, of

key decision-makers, is critical. According to Leonidou et al (1998), language

proficiency is important in that it helps to establish social and business contacts abroad,

it assists in understanding foreign business practices and facilitates planning and control

in overseas markets. Personal unfamiliarity with foreign languages constrains a person's

ability and preparedness to initiate exchanges with those in a foreign market using their
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language, in contrast to the relative ease of going into a foreign market where a familiar

language, own or acquired, is used (Carlson, 1975).

While each ethnic group in Tanzania speaks its own local language, almost all

Tanzanians are also fluent in the national language, Swahili, a coastal Bantu language

strongly influenced by Arabic. Soon after Tanzania independence in 1961, English was

seen as a colonial language, whose importance should be reduced, while the status of

Kiswahili was raised as a national as well as the official language in the country.

Because of that, almost all Tanzanians speak Kiswahili proficiently and are unified by

it. Making Kiswahili the national language of Tanzania deepened a sense of Tanzania's

national consciousness and cultural pride (Mazrui, 1999), facilitated cross ethnic

communication in a distinctly African context and lessened dependence on the colonial

language of English (Khalid5, 1977). However, Tanzanians fluency and affinity with

Kiswahili has meant that most of them, especially businesspeople, fail to integrate in

global markets easily citing foreign language inhibitions. The situation is corroborated

by Kadeghe (2003), who argues that the support for the proposal to use Kiswahili in

secondary and high learning institutions is an attempt by academics and policy-makers

in Tanzania to marginalize the majority from global socio-economic upward mobility.

5
Khalid comment was made with reference to Kenya.
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3.10.2 Education Level

Business owners or managers education level may be an important factor in export

marketing, as it serves as an indicator of a person's knowledge and skill base (Hambrick

and Mason 1984). Bettman and Park (1980) however suggested that highly

knowledgeable people might have less need to search for more information. This may

contradict what has been proposed by McInnis and Jawornski (1991) that the more

knowledgeable the individual, the easier they would find it to encode information.

A knowledgeable SME owner or manager, it is argued, is expected to be more open-

minded and have an international outlook with an interest in international affairs and is

able to objectively analyze the benefits and disadvantages of exporting (Garnier, 1982).

Managers with higher levels of education may also be more exhaustive in their

information- searching activities, yielding richer information set for formulating

strategic decisions (Hambrick and Mason, 1984; Entrialgo, 2002; Dollinger, 1985).

Both claim that the highest levels of formal education are associated with greater ability

to process information and tolerate ambiguity, respectively. It is thus asserted that the

more educated the manager is, the more the managers skills and ability to use

information to improve export performance.

Traditionally, education in developing countries and more specifically in SSA began as

a tool to prepare its young to take their administrative place in African society. The

African education experience was strictly set up to prepare the young for society in the
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African community and not necessarily for life outside of Africa. Even with the advent

of colonialism in the African continent, schooling meant receiving an education that

would allow Africans to work as civil servants in administration and clerical work. Only

the lucky few were able to be educated in the western world and would compete with

the best in their field. It is against this background that it is contended that education in

Africa is still less developed than in other parts of the world, and many African

countries have high illiteracy levels. Often times, schools lack many basic teaching and

learning facilities. African universities suffer from overcrowding and staff being lured

away to Western countries in search of greener pastures. This has made a very low base

of educated entrepreneurs, with the majority of Tanzanian businesspeople having only

basic education and trying to cope with the challenges of export business the hard way.

3.10.3 Age

Old age of the top decision-maker in an organization is negatively related to risk- taking

(Wroom and Pahl, 1971). Younger executives, Carlsson and Karlsson (1970) argue,

have consistently been found to be associated with innovativeness and risk taking. Also

Child (1972) found that youthfulness is related to risk propensity. It can be assumed

that younger people tend to be more willing to take risks than older ones, possibly

because older individuals may have diminished physical and mental abilities (Child,

1972) or, as Entrialgo (2002) states, may be less able to generate new ideas and learn

new behaviours.
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Taylor, (1975) likewise concludes that ones ability to possess and process information

is related to age. Other researchers have asserted that age has different effects at

different stages of internationalization, in that younger managers are more likely to

influence export activity during the initial stages, rather than advanced stages of

internationalization, where elders experience and patience can be called into play. So

it has been stated that age is a predictor of export behaviour on the assumption that

younger managers tend to be more internationally minded and cosmopolitan than older

ones (Moon and Lee, 1990; Jaffe, Nebenzahl and Pasternak, 1988). Older executives,

on the other hand, tend to be more conservative and less likely to initiate strategic

change (Stevens, Beyer and Trice, 1978; Wiersema and Bantel, 1992). If youth is

positively associated with an owners or managers propensity to initiate change and

foster firm performance and growth, we might expect younger managers to seek,

acquire and use more export market information than their older counterparts.

It is worth noting that the concept of age is perceived differently in different countries.

According to Hofstede (1996) most SSA societies exhibit high power distance or

respect for power (Kiggundu, 1988). Concuring, Grzeda and Assogbavi (1999) argue

that African cultures are most accurately described as high power distance, with

authority being assigned on the basis of age and experience. In these societies, children,

even adult children, are expected to obey their parents and respect elders

unquestionably. This is in contrast to the situation in most developed countries where

children are encouraged to become independent and status is independent of age but is
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related to competence (Marquardt and Kearsley, 1999). This contrasting meaning

attached to age may have a bearing on how owners or managers from developing

countries search for and use export information from sources within and outside the

country.

3.10.4 International Experience

Time spent in foreign countries by an owner or manager is considered important in

influencing export information use and export performance. A number of studies (e.g.

Leonidou et al., 1998; Brooks and Rosson, 1982; Oviatt and McDougall, 1994; Reuber

and Fischer, 1997) have found that international experience involves managers

exposure to foreign cultures, which allows the accumulation of greater experiential

knowledge about international markets. According to Johanson and WidersheimPaul

(1975) as quoted in Muranda (1999), export marketing theory postulates that living

and/or working in a foreign country improves international orientation and reduces

psychic distance.

There are two noted reasons as to the way international experience may have a

significant bearing on how managers undertake the internationalization process. The

first reason is related to what could generally be referred to as uncertainty reducing

experiential learning. As noted earlier in UIM - a behavioural model- knowledge and

learning have a profound impact on how the firm is seen to approach foreign markets.

According to Fischer and Reuber (2001), more experienced owners or managers direct
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the international activities of their firms in a more proactive and strategic manner than

would owners or managers with limited experience. Two years prior to their above-

cited study , both researchers noted that internationally experienced owners or managers

scan more proactively for the information required to export effectively and are more

likely to know what they do not know (Reuber and Fischer, 1999).

The second reason for the influence of international experience on the

internationalization process is the formation of what Bettis and Prahalad (1986) termed

the firms dominant logic- an information funnel through which managers attention

is filtered. According to Bettis and Prahalad, the dominant logic, is the way in

which managers conceptualize the business and make critical resources allocation

decisions. Different authors and researchers have over the years given different names

to the concept. These are Frame of Reference (March and Simon, 1958), Mindsets

(Kedia and Mukherji, 1999), States of Mind (Perlmutter, 1969); and Cognitive Maps

(Axelrod, 1976). It has been acknowledged that these dominant logics of managers are

important determinants in interpreting the internal and external environments and

selecting strategies that will in turn affect the performance of an organization (Hambrick

and Mason, 1984). Lampel and Shamsie, (2000) argue that the dominant logic impacts

the processes by which managers attend to and process information.

How does one develop a dominant logic? Although the need of dominant logic is

recognized by researchers (e.g. Kedia and Mukherji, 1999), the process by which top
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managers evolve it is not clear. However, Kedia and Mukherji came up with a number

of ways that managers may adopt in building up dominant logic(s). The four (4)

suggested ways are foreign travel, establishing teams with diverse backgrounds and

perspectives, purposeful training and transfers to foreign locations.

3.10.5 Export experience

Related to international experience is the managers export experience. These two

phrases are at times used interchangeably. It has been suggested that information may

be difficult and expensive to obtain in the international context (Walters, 1983).

However, Cadogan and Paul (1999) state that as export experience increases so will the

firms familiarity with available sources of export information and its knowledge.

Furthermore, since more experienced companies have better knowledge of their foreign

markets (Johanson and Vahlne, 1977) and are better equipped to identify accurate and

relevant information, they are also able to prevent information overload by purifying,

summarizing and filtering the information disseminated (Diamantopoulos and Cadogan,

1996).

Export experience may also have an impact on an exporter's intelligence dissemination

activities (Cadogan, Diamantopoulos and Siguaw, 1999). Thus, in order to respond

efficiently to the market environment, market-oriented exporters must effectively

acquire, disseminate and then, through a transformation process, give meaning to the

information (Rich, 1991; Souchon and Diamantopoulos, 1996).


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3.10.6 Gender

Over a decade ago Rutashobya (1998), noted the paucity of studies focusing on

entrepreneurship in African business. The researcher noted that the studies are few and

far between and have taken gender differences in entrepreneurship for granted. The

situation has since then taken a new direction with many studies being conducted

addressing the once ignored area. Likewise, considering gender in the

internationalization of SMEs seem appropriate, as Orser, Spence, Riding and Carrington

(2007) note that among export-oriented SMEs an increasing number are women owned.

To achieve a better understanding of export information use and export performance the

role of gender needs to be considered. Broadly, there are two different views regarding

feminism. One of the views, liberal feminism, contends that the disparity in

achievements between the genders is attributed to the differences in social opportunities

presented to men versus women (Johnsen and McMahon, 2005). The disparity is

therefore not the result of gender differences per se. Liberal feminism assumes that

women and men will be equal if they are given identical opportunities (Lowe and

Bentson, 1984). The other view, social feminism, posits that men and women are

subject to different socialization processes relating to their sex, and that this will

condition them to differ in many characteristics, including motivation, that is generally

considered relevant to entrepreneurship (Lowe and Bentson, 1984). Studies on social

feminism mainly examine gender differences in psychological traits, such as


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compassion, self-actualization, self-confidence and risk-taking propensity (Fischer et

al., 1993).

Gender- based studies conducted in developed and developing economies have come

up with conflicting results regarding the role of gender in business. For instance, among

the sample of seven women exporters in the developed world, none reported that being

a woman created additional challenges for them, either in international trade or in

maintaining work/life balance (Reavley, Lituchy and McClelland, 2005). Orser et al.

(2004) also noted that twenty four (24) percent of women exporters and export planners

cited no gender challenges. Likewise, Keyser, de Kruif and Frese (2000) found no

significant differences in success due to age or gender among Zambian small business

owners. To the contrary, Henning and Jardin (1977) found differences between women

and men, stating that women view risk as negative. According to the researchers,

women and men also differ in their perspectives on the consequences of risk taking.

Equally Orser et als (2007) findings lend support to social feminist arguments that the

experiences of men and women exporters differ. Gender entrepreneurship studies in

developing countries and Tanzania in particular, have also revealed the constraining

factors inhibiting womens participation and excellence in business. According to El

Namaki (1990) and Rutashobya (1998), women's early socialization has significantly

affected their level of self-confidence, achievement, motivation and even their ability to

take risks. The research model relates gender to entrepreneurial orientation, export
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information use. Whereas most of the studies have followed the environmental

approach (Rutashobya, 1998), this thesis has taken the voluntaristic perspective.

3.11 Entrepreneurial Orientation (EO)

In addition to the owners or managers demographics, this thesis integrated EO.

Hambrick and Mason (1984) acknowledge that studying only observable demographics

might not be enough. Priem et al (1999) collaborate this by stating that, in addition to

demographics, psychological aspects must also be studied. It is widely argued that EO

may be a key to enhancing performance (Brown, 1996; Covin and Slevin, 1991).

Although the empirical evidence that EO affects performance is limited, some

conceptual arguments are in favour of such a relationship (Zahra and Covin, 1995).

Furthermore, there is reason to believe that the relationship between EO and

performance may also be particularly strong among SMEs, and which may have an

influence on the way and the extent to which owners or managers use export

information.

EO mainly represents the response of firms to future or potential market needs and has

many definitions from diverse perspectives. Table 3.2 provides some of the commonly

used definitions of the concept and perspectives and their corresponding authors.
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Table 6.2: Definitions of Entrepreneurial Orientation


Author Perspective Definition
Morris and Marketing The propensity of a company's top management to
Paul (1987) take calculated risks, to be innovative, and to
demonstrate proactiveness.
Lumpkin and Management The propensity to act autonomously and a tendency to
Dess (1996) be aggressive toward competitors.

Miller (1983) Entrepreneurship Engaging in product marketing innovation,


undertakes somewhat risky ventures, and is first to
come up with proactive innovations.

A common thread running through all the definitions is the inclusion of risk, innovation

and-or proactiveness. It is not surprising then that numerous researchers (e.g., Covin and

Slevin, 1989; Morris and Paul, 1987; and Naman and Slevin, 1993) have used these

variables in their works.

Various other scholars and researchers have conceptualized EO with more variables.

Lumpkin and Dess (1996) conceptualized EO to consist of five (5) dimensions:

innovation, proactiveness, risk-taking, autonomy and competitive aggressiveness.

Venkatraman (1989) identified six (6) dimensions of EO as aggressiveness, analysis,

defensiveness, futurity, proactiveness, and riskiness.

Covin and Slevin (1989) adopt a three-dimension conceptualization of entrepreneurial

orientation. They theorize that the three dimensions of EO-innovation, proactiveness,

and risk taking-acted together to comprise a basic, unidimensional strategic orientation

and should be aggregated together when conducting research in the field of

entrepreneurship. The motivation for selecting the Covin et al., (1989)


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operationalization for the construction of the research model is informed by the fact

that the three constructs have shown high levels of reliability and validity in a panoply

of studies (e.g., Barringer and Bluedorn, 1999; Becherer and Maurer, 1997; Naman and

Slevin, 1993). Another reason for its selection was that the dimension was used by

Covin et al (1989) to study small manufacturing firms. This research model is also

focused on SMEs albeit in a different context.

3.11.1 Risk Behaviour


Firms perceive export obstacles differently depending on export destinations and the

risk behaviour of the owner or manager. Firms whose decision-makers are risk-averse

and inward looking are very likely to perceive export obstacles in a more intense and

severe manner than firms with risk-taking, and foreign-oriented managers (Dichtl,

Kglmayr, and Mller, 1990; Bilkey and Tesar, 1977).

3.11.2 Proactiveness
Prior studies report that the motivation to export measured by proactiveness versus

reactiveness is a consistent predictor of good export performance (Dean et al., 2000).

Exporting researchers have analyzed the level to which firms take initiative and actively

solicit sales as an indicator of proactiveness (June and Collins-Dodd, 2000). The most

successful firms are those that adopt a more proactive approach in terms of firms sales-

seeking activities and degree of information- seeking activities (ibid.). According to

Johnston and Czinkota (1982), proactive exporters perform better than reactive firms.
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3.11.3 Innovation

Empirical studies support the existence of the relationship between the innovative

behaviour of SMEs and their performance (Gunasekaran, Forker and Kobu, 2000).

According to Mahemba and Bruijn (2003), innovation practices of SMEs are defined as

the activities that SMEs undertake in order to provide new solutions for their products,

production, marketing and administration to cope with the dynamics of the markets.

Well-established innovative practices constitute the intangible assets of a firm as they

have been established through trial and error.

As exporting is invariably considered an innovative activity (Axinn, 1988), the

importance of export information becomes more obvious. As Julien (1998) states,

innovation means listening to the environment that requires implicit or fairly well

organized technological, competitive and commercial scanning. As noted above, the

resources of SMEs are embedded in the owner or manager, and then the innovative

attributes of the SMEs in this context will definitely be identified by focusing on the

SMEs owner or manager.


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7. CHAPTER FOUR

8. RESEARCH MODEL AND HYPOTHESES FORMULATION

Satisfaction does not come with achievement, but with effort. Full effort is full victory
Mahatma Gandhi

4.1 Introduction

Drawing from empirical and theoretical literature, this chapter is aimed at constructing a

research model that would guide the study. The model is primarily constructed to

explain relationships between uses of export information and export performance. It

also illustrates the antecedents of export information uses being: first, the perceived

quality of export information and second, the owners or managers demographic

characteristics and their Entrepreneurial Orientation (EO). Chapter 3 of this thesis laid

foundation for the conceptual and empirical relationships between variables. What are

presented here are but a deeper and specific elucidation of the relationship of variables.

Subsequent to the presentation of the research model is the formulation of hypotheses

that are tested on Chapter 7.

4.2 Presentation and Description of the Research Model

A research model is described as a set of ideas and principles taken from relevant fields

of inquiry and used to structure subsequent studies (Reichel and Ramey, 1987).

Models illustrate relationships of the variables to be tested and to ascertain magnitude of

relationships of variables and direction of causality. It is envisaged that the developed


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model for this study help explain owners or managers uses of export information and

subsequent effects on SMEs export performance. Furthermore, it proposes the

antecedents of uses of export information to be, perceived quality of the information,

owners and managers demographic characteristics, export and international

experiences, entrepreneurial orientation (EO). The focus on the owners or managers of

SMEs engaged in exporting handicrafts and horticultural products is essentially

because, among other reasons, information processing is fundamentally people

processes (Moorman, 1995).

Conceptually, this research is based on a line of thought underlying uses of export

information that is considered critical in explaining differences in SMEs export

performances. The model is also constructed in recognition of the findings that, todate,

the key motivation in uses of information in the marketing field have not changed as

companies are still bedeviled by the tendency to fail to utilize information that they have

already acquired (Maltz and Kohli, 1996). The model embraces two central theories of

(1) Resource Based View (RBV), which holds that a pool of firm resources that satisfy

Value, Rarity, Imitability and Organization (VRIO) criteria determines firm

performance, and (2) the Upper Echelons Theory (UET) that holds that organizational

outcomes, such as strategies and performance, are expected to reflect the characteristics

of their managers.
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The Resource Based View (RBV) has been reviewed to identify resources that when put

to good use can ultimately lead to improved export performance of the exporting SMEs.

Three categories of resources are identified and examined and used in formulation of

hypotheses for this study. These resources are: (i) Export information (ii) owners or

managers entrepreneurial orientations-or simply EO resources, and (iii) owners or

managers demographic characteristics and experiences-sometimes simply referred to as

entrepreneur resources. Resources, scholars have argued, can only be a source of

competitive advantage and hence subsequent enterprise performance if they are used to

do something (Ray, Barney, Muhanna, 2004) as Porter (1991) has equally noted that

resources are not valuable in and of themselves, but they are valuable because they

allow enterprises to perform activities.

Owners or managers demographic characteristics, experiences and entrepreneurial

orientations (EO) typify intangible resources that are socially complex and embedded in

human capital. It is along these lines that the Upper Echelons Theory (UET) was also

adopted to guide this formulation of the research model, hypotheses and the study in

general. Later sections draws on various literature suggesting that owners or managers

characterized by foreign language proficiency, gender, age, export and international

experience, and education which are likely to be valuable, rare and inimitable resources.

Miesenbock (1988) and Crick and Chaundry (1997) have argued that any analysis of

export oriented decision making processes is focused on the individual decision maker

who is often the owner-manager.


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While various scholars (e.g. Diamantoplous and Souchon, 1996) have identified export

information uses as being instrumental, conceptual and symbolic, an extensive empirical

study by Diamantoplous and Souchon (1996), have concluded that the first two uses are

actually aspects of a single dimension. A two dimensional approach of information

consisting of instrumental-conceptual and symbolic uses is adopted to guide this study.

The focus is on both the extent to which owners or managers uses the acquired export

information to make and implement decisions as they pursue foreign markets business

opportunities. This conceptualization is mainly based on almost unanimous findings

from several studies in developed countries that information that is perceived to be of

good quality is used properly and otherwise it is not used at all or used symbolically

(Weiss and Bucuvalas, 1980). In a nutshell, the causal research model on the use of

quality-related export information is thus summarized: Export information uses are

determined by the level of perceived quality of the export information as well as the

level of owners or managers demographic characteristics, experiences in foreign

markets and entrepreneurial orientations. Furthermore, export performance is

influenced by either instrumental-conceptual or symbolic uses. Empirical and

theoretical literature review resulted into the research model which is visually presented

in Figure 4.

4.3 Description of the Research Model

All variables that inform the constructions of research model are as presented and

operationalized on section 4.13. Operationalization of variables refers to the detailed


134

process or operations required to establish empirically the existence of what is described

by a concept or construct (Neuman, 2000; Sekaran, 1992). The operationalization

started with the dependent variable (export performance) and subsequently followed by

export information uses, demographic characteristics, and entrepreneurial

characteristics.

Figure 4: Integrated Research model

Export Information
Perceived Quality of Export
Use
Markets
Export

Information
(Reliability, Responsiveness, Empathy,
Assurance)

Symbolic Use of
Export Information
Export
Performance

Managerial Demographic
Characteristics
(Age, Gender, Education, Export
Domestic Market

Experience, International Experience, Instrumental-


Language Proficiency)
Conceptual Use of
(Tanzania)

Export Information

Owner or manager
Entrepreneurial Orientation
(Risk taking, Innovativeness,
Proactivesness)

Key: Exports flow from developing country to export markets.

Information flow from export markets to Tanzania.


135

4.4 Research Hypotheses Developed from Literature Review and Research

Model

Relationships of variables are built on the premise that the exporting SMEs are from a

developing country exemplified by Tanzania to other countries in Asia, America,

Europe, and the rest of Africa. The dotted line with an arrow pointing upward represents

the flow of handicrafts and horticultural product exports, while the other dotted line

with an arrow pointing downward represents the flow of export information (See Figure

4). Export information from the export markets does not necessarily flow directly to

SMEs, but rather to other relevant organizations and government organs charged with

supporting the growth and development of SMEs in the country. The essence of

distinguishing Tanzania from its export markets is grounded on the premise that the

operating business environment in Tanzania is contextually different. Besides, the

theories that guided this study were mostly developed in western countries.

Given the promising foundations of the early studies discussed in the foregoing

literature review, the section below outlines the relationships of various variables and

hypotheses. The presentation is divided into four (4) main sections. The first section

addresses the relationship between owners or managers characteristics (OMDC) and

export information use (eiu). The second section relates to the perceived quality of

export information (PQEI) with the use of export information. The third section

addresses the relationship between owners or managers EO (omeo), uses of export

information (eiu) and export performance (ep). The fourth section that bears the weight
136

of the study presents the relationship between both uses of export information (i.e.

instrumental-conceptual and symbolic) and SMEs export performance.

4.4.1 Owner or Manager Demographic Characteristics and Export Information

Use

Individuals differ in their information processing capabilities and their motivation to

seek out a particular amount of environmental complexity. According to McGaffey and

Christy (1975), for owner- manager who operates as the key management decision

maker, the complexity of a business is positively related to his integrative complexity

level. Both researchers contend that capabilities of an owner or a manager to deal

successfully with burgeoning information are dependent upon his/her ability to utilize

information with a view to optimization of his business. Building upon the Upper

Echelons Theory (UET), it is the thesis of this study that SMEs owners or managers

demographics, export and international experiences and their entrepreneurial

orientations (EO) are proposed to be related to different uses of export information. The

Upper Echelons Theory (UET) suggests that organizational outcomes and strategic

choices can be predicted from managers demographics, background and experiences. In

further elaboration of the importance of the managers, Miles and Snow (1978) contend

that a strategy to be successful should fit with the psychological characteristics and

constraints of the managers responsible for its formulation and implementation. As

argued earlier, various demographic characteristics and experiences of the owners and

managers that are proposed to have a bearing on the extent and type of uses of export
137

information are foreign language proficiency, gender, age, export and international

experience, and education are described below.

Foreign Language Proficiency: Foreign language proficiency is anomalous among the

characteristics of decision makers that are studied in relation to SMEs operating in

international markets (Knowles and Mughan and Lloyd-Reason, 2006). Language

proficiency is considered not only as the tool for communication but more importantly is

considered as a bridge to culture (Morgan, 1997), and for reduction of psychic

distance (Williams and Chaston, 2004). Despite the importance of language proficiency

by owners or managers whose business transcends national borders, a study by Knowles

(2006) on the UK SMEs, found little direct relationship between the possession and use

of specific language skills and better decision making or firms performance.

Nonetheless, as this study is conducted in a different environment, it is hereby argued

that Tanzania owners or managers limited understanding of foreign business partners

lingua franca can inhibit their export information acquisition and processing, and

subsequently lead to information overload and use export information acquired in a

manner not directly linked to the problem at hand. The relationship between

information overload and linguistic ability has been found to exist in situations where

information in a non-dominant language acts as a stressor thus affecting decision

making. Dolinsky and Feinberg (1986) found that second language processing leads to

information overload and sub-optimal decisions more easily than first language

processing.
138

Gender: Kempf, Laczniak and Smith (2006) states that there is ample evidence

suggesting gender differences in information processing. The oft-quoted theory to

demonstrate these gender differences is the Selectivity Model by Meyers-Levy

(1989). The theory states that females tend to engage in detailed, elaborative, and

comprehensive processing of information while males rely on a single cue or inference

that is readily available. It thus follows from the above that, males are classified as

heuristic processors and females are portrayed as comprehensive processors (Meyers-

Levy, 1989). Complementing the Selectivity Model while also acknowledging gender

differences in information processing strategies is Putrevu (2001) who argues that

females are relationship-oriented, communal and are more likely to consider all aspects

of the information they receive. Males, it is further argued, are more likely to engage in

item-specific information processing (Einstein and Hunt, 1980), paying attention to

those key attributes that have the greatest personal impact while women are interested in

the global impact of information processing. It is the contention of this thesis that item-

specific processing, which is ascribed to males is instrumental conceptual whilst the

relational-information processing which is ascribed to females, does, on the other hand

connote symbolic use of export information. The Meyers-Levys Selectivity Model

does not however predict gender superiority over one another in terms of information

processing but it suggests only that males and females use different information

processing strategies. An important feature of the model is its acknowledgement that


139

gender processing differences disappears when particular contexts motivate males to

also engage in comprehensive information processing (Smith, 1995).

Age: Managers age has been found to be instrumental in determining information

processing ability in that it contributes to both the manner in which decisions are

reached (Kirchner, 1958) and to the quality of decisions (Weir, 1964; Birren, 1964). Age

differences in processing information are attributed to social, psychological and physical

changes that accompany aging (Phillips and Sternthal, 1977) and not necessarily to the

chronological aging. According to Birren (1974), aging is accompanied by a reduction

in information processing speed, and this according to Rabbitt (1965) is attributed to

older adults relative inability to ignore irrelevant information and not necessarily on

their inability to process pertinent information. Birren (1974) further interprets the

information processing deficit of the older individual under conditions of rapid stimulus

pacing as evidence for an age-related decline in the speed with which the central

nervous system processes information. Much as studies on age of the entrepreneur and

their exporting behaviour have provided contradictory information, it is proposed in this

study that older owners managers will be associated more with instrumental-

conceptual use of export information. .

Export and International Experience: Do increased international and export experiences

lead owners or managers to processing information efficiently? No cast-iron response

can be gained to this pertinent question. While age may be indicative of owners or
140

managers international or export experiences, it is not necessarily the case as one may

start exporting at an advanced age. However, it is invariably noted that the experience

gained in international markets through either visits, studies in foreign countries or

actual exporting can compensate for elderly individuals diminished speed in processing

information. Phillips and Sternthal (1977) noted that experience is used as a basis for

abstracting the stimulus input (read export information). It is thus assumed that

considerable experience accumulated enhances older individual information processing

efficiency thus compensating for slowness of information processing (Phillips and

Sternthal, 1977). Some researchers have thus found that experience acquired with age

enables older individuals to process information with increased efficiency (Birren, 1969;

Welford, 1965). Birren (1970, pp 133) aptly confirm this by arguing:

Grouping past experiences under new abstractions , ones previous

bits can become chunks , if you like so that while one grows

older , one may process fewer units of information per unit of time , but

the chunks become larger , and thereby effectiveness may stay the

same if not improve

The preceding elaboration leads us to conclude that, younger individuals are more likely

to process export information more efficiently than older individuals in situations where

both the elderly and the younger ones do not have prior export or international

experience. It should however be noted that higher business experience increases


141

individuals expertise in the complexity of decision-making and perceptual acuity

(Yeoh, 2003). Owners or managers international and export experience is related to

instrumental conceptual uses of export information, ceteris paribus. The inexperienced

owners or managers would, on the other hand, be inclined to using export information

more symbolically.

Education: Known mitigating factors in how information is used in decision-making

relate not only to the expertise and experience of the decision-maker but also to his/her

educational level (Bruggen, Smidts and Wierenga, 2001). Educated managers are more

inclined to have better managerial knowledge and capabilities and perceive exporting to

be less risky (Moini, 1995). Cooper et al (1995) note that higher levels of education

orient managers to be more aware of information needs and to be more cognizant of the

wide array of information for exploiting international opportunities in a timely manner.

Garnier (1982) had also argued that better educated decision makers are more open

minded and interested in foreign affairs and inclined to evaluate the benefits and

demerits of exporting from an objective point of view. The foregoing discussion affords

us the opportunity to conclude that high education level is positively associated with

instrumental-conceptual uses of export information.

Given the promising foundations of the preceding discussions, the section below

outlines the research hypotheses about the association of owners or managers


142

demographics and both international and export experiences with both instrumental--

conceptual and symbolic uses of export information.

H1: Owner or manager characteristics (foreign language proficiency,

international experience, export experience, education, gender and age) are

positively related to the instrumental-conceptual use of export information.

H2: Owner or manager characteristics (foreign language proficiency,

international experience, export experience, education, gender and age) are

negatively related to the symbolic use of export information.

4.4.2 Perceived Quality and Use of Export Information

Quality of information is expected to correlate highly with information use (Yeoh,

2005). It is however not the absolute quality of export information that guides decision

makers owners or managers as they normally tend to rely on their own accumulated

experiences and personal sources that are rich, informal and accessible instead of formal

sources such as academic journals, industry and government reports (DeMartin and

Whitbeck, 1987). While the latter can relatively be considered to be of higher quality,

looked through the owners or managers perception, the former sources provides more

quality and influences. It is argued in this study that owners or managers positive

perception of the quality of export information informs the way and the extent to which

acquired export information is used. It is on this basis that it is argued that the perceived

quality of information is often posited as an important determinant for information use

(Deshpande and Zaltman, 1982; Low and Mohr, 2000)


143

As early noted in the preceding discussion, uses of information can be either

instrumental-conceptual or symbolic. Likewise, the correlation of perceived quality of

export information will vary across the two- uses dimension. Maltz, Souder and Kumar

(2001) state that information that is perceived to be of high quality will be used in a

more in instrumental conceptual manner than symbolic. Due to the foregoing

conceptually and empirically demonstrated findings, it is considered appropriate to

hypothesize thus:

H3: Perceived quality of export information is positively related to the instrumental-

conceptual export information use.

H4: Perceived quality of export information is negatively related to the

symbolic export information use.

4.4.3 Entrepreneurial Orientation, Export Information Use and Export

Performance

Owners or managers Entrepreneurial Orientation (EO) is an important contributor to

various positive organizational decisions and outcomes. Although researchers have

examined various dimensions of entrepreneurial orientation, this study is the first to

examine the influence of owners or managers EO on the use of export information, by

drawing upon Hambrick and Masons (1984) UET. This study examines owners or

managers demographics, international and export experiences and the three EO

dimensions of risk taking, innovation and proactiveness.


144

Keh, Nguyen and Ng (2006) have noted that firms with high levels of EO tend to

constantly scan and monitor their operating environment and thus EO could be a

predictor of the acquisition and utilization of information.

Proactiveness is referred to as the personal initiative and persistent orientation that

attempts to shape environmental conditions (Frese, Kring, Soose and Zempel, 1996).

Proactiveness is one of the well-established dimensions of the standard firm-level EO

measures (Covin and Slevin, 1989). Personal initiative in particular has been shown to

be related to success in both developed countries and a developing country such as

Uganda (Koop et al., 2000). A proactive firm seizes new opportunities through (a)

scanning the environment to seek opportunities (Venkatraman, 1989) and (b) taking

preemptive action in response to the perceived opportunity (Lumpkin and Dess, 1996).

According to Miller and Friesen, (1983) proactive firms do not react to the environment

but rather introduce new products, technologies, administrative techniques to shape their

environment.

An innovation orientation implies that one has a positive mindset towards new ideas

with regard to products, services, administration or technological processes (Krauss,

Frese, Friedrich and Unger, 2005). New ideas are not necessarily absolute novelties, but

could be new to the relevant group, market, or environment (West and Farr, 1990). The

entrepreneurship literature agrees that a competitive and aggressive orientation is one of


145

the basic characteristics of successful entrepreneurial firm activity (Covin and Slevin,

1991). Hurley and Hult (1998) define innovativeness as the notion of openness to new

ideas as an aspect of a firm's culture. In SMEs, innovativeness implies a willingness of

the owner or manager to learn about and adopt innovations. Therefore, the managers

innovativeness is expected to increase his/her perceived ability to seize opportunities

and to avoid threats, consequently increasing his performance expectations. Zaltman

(1986) concludes that if a firm has pro-innovation bias, information is more likely to be

shared and used.

Engaging in exporting involves venturing into new areas with a lot of uncertainties and

risks. Schumpeter (1934) noted that venturing into new fields involves errors and a

certain degree of risk. Besides, risk taking is assumed to be related to success (Lumpkin

and Dess, 1996). While taking calculated risks reduces the probability of failure, a

generally positive stance towards risk taking is mandatory in an environment where

risks are inevitable. Frese (2000), in a carefully designed series of studies of five

African countries (Tanzania, Uganda, Zambia, Zimbabwe and (the Republic of South

Africa), found that EO among other factors, differentiates successful from less

successful enterprises- and it is the thesis of this study that success is predetermined by

the appropriate use of export information. On this note, the framework links the three

dimensions EO with the use of export information. It is therefore hypothesized that:


146

H5: SMEs owners or managers entrepreneurial orientation (innovation,

proactiveness and risk taking) is positively related to the instrumental -

conceptual use of export information.

H6: SMEs owners or managers entrepreneurial orientation (innovation,

proactiveness and risk taking) is negatively related to the symbolic use of

export information.

4.4.4 Export Information Uses and Export Performance.

Higher levels of information utilization are expected to lead to improved export

performance as firms learn to effectively manage competition, identify prospective

markets, and satisfy customer needs (Hart and Tzokas, 1999). The epicenter of the study

focused on the way and extent to which SMEs owners or managers in Tanzania use

export information in enhancing export performance. It is invariably accepted that

information acquisition is obviously important. However, as it has been noted earlier,

acquired export information, whatever its level of quality, has little effect on export

performance unless it is put to good use in decision-making processes. Hart and Tzokas

(1999) report a significant relationship between the use of information and export

performance for SMEs, where the information usage patterns were shown to be strongly

related to higher export profits. The two dimensional view of export information uses

adopted for this study consist of instrumental conceptual and symbolic uses.
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Instrumental conceptual use of export information: This form of use, according to

Toften (2005), refers to use of export information for a particular, general or future

decision making purposes. Various studies (e.g. Hart and Tzokas, 1999), have shown

significant relationships between export market information use and SMEs export

performance. Such findings are not isolated and in many ways provide exporters with

great impetus to not only search and assimilate export information but also to

unequivocally use them for the prosperity of their enterprises. Early information use

studies conceptualized use in instrumental information usage only (Deshpande and

Zaltman, 1982; 1987), which refers to using acquired information to problem at hand

directly. Today it is acknowledged that there are many ways and forms of information

uses. Not all uses of information are good and have the same relationship with

enterprise export performance. It is on the basis of that that we corroborate Toften

(2005) findings that the strong relationship between uses of export information and

export performance is based on the instrumental-conceptual use. It is hypothesized thus:

H7: There is a positive relationship between the instrumental -conceptual use of

export information and export performance.

Symbolic use of export information: The symbolic use of export information is

associated with ignoring it, distorting research findings, oversimplifying and in general

using information in ways inconsistent with its intended purpose (Menon and

Varadarajan, 1992). Menon and Varadarajan note that symbolic use of information is
148

intended to make decision makers feel good about the decision already made and thus

essentially affirming them whereas Souchon et al (2004) argue that the use entails the

more political ways in which information can be applied. Distorted information is such

manners can have negative consequences on decision-making (Feldman and March,

1981) and it is therefore reasonable to believe that such use of information will have

negative effect on firm performance (Souchon and Diamantoplous, 1996). The symbolic

use of export information is therefore presented to be negatively related to export

performance. Due to the foregoing conceptually and empirically demonstrated findings,

it is considered appropriate to hypothesize thus:

H8: There is a negative relationship between symbolic use of export

information and export performance.

4.5 Observations on the Proposed Research Model

Two major problems potentially limit the potency of the research model. First is the fact

that from its inception, the thesis focused on the internal factors as the major

antecedents of SMEs export performance. By focusing on the internal factors, the

researcher does not, by any stretch of the imagination, pretend to undermine the

influence of the external business environment on export performance, especially in the

unstable SSA business environment. Researchers using the research model may deem it

appropriate to integrate external factors and other internal factors in holistically

capturing the influence. Olomi (2001) justifies the focus on the internal factors based on
149

thoroughness, reason and the acknowledgement of the complexity and multiplicity of

external environmental factors. Likewise, Charles (2009) acknowledges that while

inclusion of many variables in building research models seems to be beneficial and

enriching, it may cause a lot of ambiguities in a focused study. It is against this

background that this study considered only those variables with strong theoretical and

empirical justification.

The second shortcoming relates to the different contexts of developed and developing

countries such as Tanzania. All the theories used in the construction of the model, as has

been noted elsewhere, were derived from studies conducted in developed or transitional

economies. In any case, while this researcher argues that there are differences between

developed and developing countries, he does not ever claim that all developing

countries share absolutely the same characteristics.

Despite the shortcomings, the research model, other than scaffolding subsequent

research, helped in keeping the research on track by providing clear links from the

literature to the research goals and questions and informing the research design. The

research model also provided reference points for discussion of the literature,

methodology and analysis of data and thus contributing to the trustfulness of the study

(Goetz and LeCompte, 1984). Given the shortcomings, it is considered important that

research models are used cautiously.


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9. CHAPTER FIVE

10. RESEARCH METHODOLOGY

Philosophy is a battle against the bewitchment of our intelligence by means of language.


Ludwig Wittgenstein (1889 - 1951)

5.1 Introduction

The purpose of this chapter is to present the positivistic research philosophy, deductive

research approach and the survey research strategy used in this study. Motivation for

choices and their justifications are made to reflect and address adequately the research

problem and objectives stated on the first chapter.

5.2 Research Philosophy, Strategy and Approach

Developments in the strategic management field have over time shifted the emphasis

from qualitative and inductive research to positivistic and deductive research thus

elevating the discipline to more rigorous scientific analysis (Hoskisson et al., 1999). It

is on that basis that this researcher used positivism which, according to Saunders et al

(2003), adopts the philosophical stance where a highly structured methodology is

followed to facilitate replication and quantification of variables. The philosophy was

used by combining deductive logic with precise empirical observations of individual

behaviour in order to discover and confirm a set of probabilistic causal laws that could

then be used to predict general patterns of human activity (Neumann, 2000). In

conducting this study, the researcher sought to quantitatively capture and measure
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export information use, the quality of export information, export performance and the

managers characteristics.

According to Henwood and Pidgeon (1993), the deductive approach logically follows

from positivistic philosophy and emphasizes universal laws of cause and effect on an

explanatory framework. The deductive approach adopted commences with an

established theory and seeks to confirm whether the theory applies to specific instances

(Hyde, 2000). General conclusions are presented based on the corroboration or

falsification of the hypothesis through empirical tests (Kirkeby, 1990). It is against this

background that the researcher proposes a number of causal relationships in the building

of the research model.

A cross- sectional study, where a statistically significant sample of a population is used,

was used to estimate the relationship between an outcome of interest and population

variables as they exist at one particular time. Mbura (2004) asserts that the cross -

sectional approach is suited for deductive studies as it allow greater flexibility in terms

of money and time, as well as avoiding the hardships of hunting for respondents more

than once to produce a high reponse rate as opposed to the longitudinal approach.

Choice of a research strategy is determined by, among other things, the type of research

questions, the required degree of control over behavioural events and whether focus is

on contemporary as opposed to historical events and time horizons (Mbura, 2007).


152

Survey research was thus chosen to guide this study, as it provides a systematic and

structured method for acquiring information on the same topic from a large group of

people in a relatively short amount of time (Gerhardt, 2004). Survey research is one of

the commonest research strategies used in business studies and it offers the researcher

an opportunity to collect large quantities of data or evidence (Saunders et al., 2003).

5.3 Research Design

The overall approach to the research process, from the theoretical underpinnings to the

collection and analysis of the data is presented here. Research design was used to

structure the research and to show how all of the major parts of the research project

work together to address the central research objectives and questions. This section thus

addresses such issues as study areas, sampling plan, sampling procedures, sample size,

data collection methods and instruments, sources of data, validity and reliability and

data analysis.

5.3.1 Areas of the Study

This study focused on owners or managers of SMEs engaged in exporting horticultural

and handicraft products from three regions in Tanzania mainland and one from

Tanzania Island (Zanzibar). The regions identified for the study were Zanzibar, Dar-es-

Salaam, Arusha, and Kilimanjaro. Zanzibar comprises the islands of Unguja and Pemba

off the east coast of Tanzania mainland. Zanzibars economy is based primarily on the

production of cloves, the principal foreign exchange earner. Kilimanjaro region located
153

on the north of the country is endowed with natural beauty and has a temperate climate,

which is perfect for floriculture and horticultural activities.

Arusha is a region located in the north of Tanzania and has Kilimanjaro International

Airport that provides easy access to the region from abroad, as several international

airlines operate there and have regular flights to the airport. There are 29 airstrips across

the region providing easy and convenient access to remote areas.

Formerly referred to as Mzizima, Dar-es-Salaam is the largest city in the country and

the economic centre and former capital of Tanzania. Like Arusha, the region also has an

international airport, the Mwalimu Julius Nyerere International Airport. The four

regions are selected based on their having active and vibrant commercial horticultural

and handicraft activities in the country.

5.3.2 Sample and Sampling Frame

A sample was used in undertaking this study. By using a sample, it was expected that

the study would be less costly and more manageable. Other key reasons for being

concerned with sampling are that of validity- the extent to which the interpretation of

the results of the study follows from the study itself and the extent to which the results

may be generalized to other situations with other people (Shavelson, 1988). Considering

the complexity and difficulty in establishing the true population of the SMEs engaged in

exporting in Tanzania, one needed to determine the extent of sample representativeness


154

so valid generalizations could be made about the population. As Malhotra (1996) states,

the basic principle of sampling is that, by selecting some of the elements of the

population, a researcher may draw conclusions about the entire population.

A comprehensive sampling frame was generated by combining data from the Tanzania

Chamber of Commerce, Industry and Agriculture (TCCIA), the Tanzania Revenue

Authority (TRA), the Tanzania Horticultural Association (TAHA), the Ministry of

Industry and Trade and Marketing (MITM) and National Bureau of Statistics Tanzania

(NBS). These databases provided information regarding firms and the contact details of

owners or managers/entrepreneurs. The databases also contained details of the types of

business the SMEs exporters were engaged in. The study focused on the SMEs that

have been exporting horticultural products and handicrafts for at least one year.

A sampling frame consisting of 1323 SMEs engaged in exporting of either handicraft or

horticultural products was initially established from the various mentioned sources.

Upon screening by deleting those which failed to meet the established criteria, 890

SMEs were identified, thus forming the final more refined sampling frame. The choice

criteria were regularity of export, a more than one year exporting experience and having

less or equal to 100 employees. SMEs meeting the criteria for each region were as

indicated in brackets: Dar-es-Salaam (486), Kilimanjaro (192), Arusha (130) and

Zanzibar (81). Proportionate sampling and then simple random sampling within each of

the four regions were conducted. As the target population was not large, a simple
155

random sampling was considered appropriate (Hair, et al., 2003). The number of owners

or managers that were recruited from each region was approximately equal to their

proportion in the population.

5.3.3 Sample Size

The issue of sample size in research has for quite a long time caused a lot of debate and

has thus remained contentious. Hussey and Hussey (1997), for instance, contend that

there is no ideal or prescribed sample size as it all depends on the discipline, the level of

confidence expected in the answers and the anticipated response rate. However, Lewis

(2000) contends that an adequate sample size helps ensure that the study yields reliable

information.

One rule -of- thumb found in the multiple regression analysis literature is that sample

size for a study should be at least 50, and more than 8 times the number of variables in

the model (i.e. N 50+8M), where N= sample size, M= number of

predictors/independent variables. This study had twelve independent variables (M=12),

thus the minimum sample size would be (N) greater or equal to 50+8(12) = 146.

Schumaker and Lomax (2004) state that reasonable sample size for SEM is at least 100

cases. While no consensus has been reached on the appropriate sample size, Ding et al

(1995) also specify 100 to 150 cases as adequate. It is worth noting the various

researchers who have adopted SEM as their data analysis technique and have used
156

varying sizes of samples ranging from 99 responses upwards. For example, Mavondo

and Farrell (2003) used a sample size of 176 in a study conducted in Zimbabwe on

cultural orientation. Pesamaa, Hair and Haahti (2008) used 99 SMEs to study inter-

organizational commitments in tourism networks in the US using SEM. Louter,

Ouwerkerk and Bakker (1991) studied 163 firms in Netherlands and using LISREL and

found that export success did not vary with the size of the company but with the type of

industry.

Allowing for non-response and errors in responses, 300 questionnaires were prepared

for owners or managers of SMEs exporting either handicrafts or horticultural products

from the four regions of Tanzania. One hundred and eighty (180) questionnaires were

collected from the field. One hundred and fifty eight (158) of the 180 questionnaires

collected were found to be substantially complete and usable. The twenty two (22)

questionnaires discarded were from firms which are either not exporting, have over a

hundred employees or had many incomplete responses. These resulted in an effective

response rate of 45.1%. The total sample size of 158 exceeded the required 100-150

sample size (Hair et al., 1998). Moreover, Aina (2002) notes that if the population is less

than 1000, then a 30 percent sampling ratio will be adequate. The return rate of rate of

45.1% for this study can thus be considered an adequate representation of the population

of handicraft and horticultural exporting SMEs in the four surveyed regions.


157

5.3.4 Unit of Analysis

For the purpose of this study, owners or managers of SMEs exporting handcrafts and

horticultural products were the units of analysis. SMEs engaged in exporting

handicrafts are inherently export-oriented (Rutashobya et al., 2004). In addition, most of

the handicraft firms, besides their export orientation, fall within the category of SMEs

being appropriate for this study target.

5.4 Sources of Data

For the purpose of this study, primary data were collected through survey questionnaires

administered to the owners or managers of the sampled SMEs. Various documents from

government departments, university libraries, public and private institutions, and the

sampled SMEs were used as sources of secondary data to substantiate and enrich the

discussion of the findings.

5.5 Data Collection Methods

For this study, considering the various validations of the measurements used, budgetary

and time constraints, a personally-administered survey questionnaire was used. The

questionnaire, first written in English was translated into Kiswahili6 and subsequently

the Kiswahili version was translated back to English using a different translator to

ensure validity of the instrument. Furthermore, the questionnaire in Kiswahili was

6
Kiswahili is a Tanzania national language spoken by the majority of the population.
158

subject to validation using Scale- Content Validity Index (S- CVI)7. Back translation is

also advocated to avoid ending up with a pseudoetic questionnaire that occurs when

translators are not aware of idiomatic expressions and colloquialisms in one of the

languages. The two versions of the English questionnaire were compared. A few

semantic differences were noted and rectified. The refined questionnaire that was

deemed to be the proper and correct translation of the Swahili version was the one

ultimately used in the data collection exercise.

Questionnaires were administered personally to all owners or managers of the 300

respondents. The questionnaire captured informational elements such as:

Sources of information used by SMEs owners concerning international

markets, competition and consumer dynamics.

Firm owners or managers awareness of associations that provide

information and assistance to exporting SMEs.

Owners or managers subjective and objective characteristics as per the

generated research model.

Four research assistants who are business graduates of the then Faculty of Commerce

and Management (University of Dar-Es-Salaam Business School) were involved in data

collection. The research assistants had a two -day briefing on the study, research ethical

considerations and the management of the whole process of data collection. Before

7
Computation of Content Validity Index (CVI) is discussed under section 5.14
159

launching the main data collection exercise, the research assistants were involved in

pre-testing the questionnaire, involving rehearsal and pilot testing.

5.6 Rehearsal and Pilot Testing

Two research assistants were selected for the rehearsal in which one acted as an

interviewer, and the other played the role of a respondent. During the exercise wording

problems, ambiguity and unclear questions were noted and corrected. This rehearsal

was expected to bring up areas for improvements that could be made to the

questionnaire before the pilot study. When these improvements had been made after the

rehearsal, the next stage was to carry out a pilot test in Dar-es-Salaam using real

respondents. The research assistants were assigned to carry out two interviews for a

day. Thereafter, the researcher took a week to carry out questionnaire corrections and

proof reading. The research assistants were then respectively assigned for the main

fieldwork in the four regions.

5.7 Operationalization of Variables

Ways that the various study variables were operationalized in this study are described in

the sections below.


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5.7.1 Measurement of Dependent Variable: Export Performance

Export performance of the surveyed SMEs constituted the dependent variable for the

study. There is no agreement on how to measure export performance (Cavusgil and

Zou, 1994). Performance has been conceptualized as a complex multi-dimensional

phenomenon (Venkatraman, 1986) and by extension export performance is one of the

most resistant variables to conceptualize, define and apply (Bonoma and Clark, 1988).

The lack of agreement on export performance measurement makes it difficult for

researchers to compare and contrast research findings from different settings. Attempts

to measure export performance have led to researchers coming up with many subjective

and objective measures of the construct. Zou and Stan (1998) support that another

problem of export performance measurement is that many studies are focused on a

narrow view of export performance, such as export sales, while others have used non-

financial measures, thus hampering theory development in this area. It is widely

suggested that there is a need for the development of a cross-culturally consistent

conceptualization and measurement of export performance.

Haber and Reichel (2005) state two broad approaches to measuring performance. One

is the goal approach and the other is the systems resource approach. The goal approach,

which is adopted in this study, measures the extent to which organizational goals have

been attained, and reflects the point of view of the owner or manager (Pfeffer and

Salancik, 1978). Haber and Reichel (2005) argue that the approach is most relevant to

SMEs because of the dominance of the owners or managers in determining business


161

performance. The goal approach to firm performance reveals two dimensions of

measuring performance: (a) Objective- financial vs. Subjective non-financial measures

(b) Short vs. Long-term performance measures. Objective measures include sales,

earnings and net worth, whilst subjective measures include perceived growth in market

share, perceived change in cash flow and growth in sales (Chandler and Hanks, 1993).

On the other hand, the systems resource approach assesses the ability of the

organization to obtain resources to maintain the organizational system (Yuchtman and

Seashore, 1967).

Objective financial measures for SMEs may seem to be the simplest way to assess

performance, but these data are often confidential and difficult to obtain (Sapienza and

Grimm, 1997). It is widely acknowledged that small firms are known for their inability

and unwillingness to provide the desired financial information (Haber and Reichel,

2005). Besides, assessing performance solely based on financial measures neglects other

relevant performance dimensions of small ventures that relate to managerial aspects,

such as market share and number of employees (Bouchikhi, 1993). Covin and Slevin

(1989), for instance, argue that subjective and non- financial measures are more flexible

and useful measures than objectivefinancial measures. Although the precision of these

subjective-non- financial measures is compromised, the measures, it has been claimed,

have both content - validity and reliability (Chandler and Hanks, 1993).
162

On performance timeliness, both short-term and long-term performance measures have

been well thought out in various studies. Barney (1997), for example, noted that

financial measures reflect the business situation in the short- term though they can serve

to accumulate resources for future use and subsequent growth in market share. Based on

this background, it is argued that financial measures need to be considered in

conjunction with other non-financial measures that indicate both performance in the

short run and the ability of the business to thrive in the long- run (Haber and Reichel,

2005).

Notwithstanding the arguments for and against the use of objective or subjective

performance measures, this study adopted subjective measures. The reasons for this are

that, in developing countries, SMEs owners or managers are not willing to disclose

financial measures because of the perceived unfair follow up by both central and local

government taxation8 bodies. Most importantly, as noted by Nchimbi (2003), SMEs do

not usually keep proper records that would allow performance evaluation using

objective measures. Besides, several studies (e.g. Venkatraman and Ramanujam, 1987;

Dawes, 1999) that have adopted both types of measures have reported a strong

association between subjective and objective measures of performance (Pont and Shaw,

2003). Dawes (1999) further argues that subjective measures are even more appropriate

than objective measures for comparing performance in cross- industry studies, as

managers can take the relative performance of other industries into account when

8In 2001, Tanzania had a taxation system that was said to be complex, unpredictable and unfair (Olomi,
2001).
163

providing responses. Table 5.1 illustrates the strength of association between subjective

and objective measures of performance. All five of these studies found significant

associations between objective and subjective measures of performance. Additionally

for the Hart and Banbury (1994) study, the strength of associations rose to r=0.99 when

only examining firms within a specific industry (Dawes, 1999).

Table 10.1: Strength of Association between Subjective and Objective Measures of


Performance.

Studies Strength of association(r) between


subjective and objective measures of
performance
Dess and Robinson (1984) Between r=0.48 to r=0.61
Pearce , Robbins and Robinson (1987) Between r=0.74 to r=0.77
Covin , Slevin and Schultz (1994) Between r=0.44
Hart and Banbury (1994) Between r=0.44 to r=0.55
Dawes (1999) Between r=0.51
Source: Dawes (1999)

Subjective export performance measures for this current study included satisfaction

with export performance, export performance relative to competitors and overall

measure of export performance. Satisfaction with the achievement of export

performance objectives was measured on a 5-point Likert scale (Cavusgil and Zou,

1994; Evangelista 1994). Likewise, a 5-point scale was used to capture export

performance in relation to major competitors (Jaworski and Kohli, 1993). An overall

assessment of export success was measured by asking respondents to rate their firms

overall export performance on a 5-point scale (Evangelista, 1994; Jaworski and Kohli,

1993).
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5.7.2 Measurement of Independent Variables

Export information use is the main independent variable. As explained earlier, two types

of export information use used have been in the construction and validation of the

research model. These categories are the instrumental-conceptual and symbolic use of

export information. Besides, the type and extent of export information use is

hypothesized to be determined by the quality of export information and the role of

SMEs owners or managers.

The owners or managers characteristics are also organized into two categories. The

first category consists of demographic characteristics. Mead and Liedholm (1998) note

that various personal demographic variables appear to differentiate successful from less

successful entrepreneurs in Africa as much as they do elsewhere. The authors however

offer a caveat: The predictive validity of demographic variables tends to be unstable

over time, especially when studied in isolation. It is against this backdrop that this

study adopts the second category of managers psychological characteristics that relate

to how owners or managers make decisions. More specifically, the items under this

category are captured using the EO characteristics innovation, risk taking and

proactiveness.

5.7.2.1 Export Information Use

Export information use was measured using a modified Diamantopoulos and Souchon

(1999) scale that captures the Instrumental-conceptual and symbolic use of export
165

information on a five-point Likert scale. The uses were measured using a five point

Likert scale ranging from 5= Strongly Agree to 1= Strongly Disagree.

5.7.2.2 Quality of Export Information

The quality of export information was measured using items adopted and modified from

the SERVQUAL scale consisting of four dimensions instead of five. The dimensions

are reliability, responsiveness, assurance and empathy. The SERVQUAL scale was

adopted to assess the quality of export information on three grounds: (1) the scale has

been adopted widely in measuring the quality of information systems pioneered by

Kettinger and Lee (1994). (2) Jiang, Klein and Crampton (2000) and Kettinger and Lee

(1997) noted that the revised SERVQUAL, after deleting the tangibles dimension, has a

high level of reliability and validity. The dimensions were measured using a 4- item

five- point Likert scale (5= Strongly Agree to 1= Strongly Disagree). The respondents

were asked to express their perceptions with regard to the quality of export information

they acquire and use in the decision making process. It has been noted by ONeill et al.,

(2003) that the perceptions only measure of quality has marginally higher validity than

the perceptions expectations scores.

5.7.2.3 Owners or Managers Demographic Characteristics

The following characteristics were measured; education, age, gender, foreign language

proficiency, international experience, and export experience. With regard to

international experience, respondents were asked whether they have ever lived or
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studied abroad for a period of at least six months. In addition, they were asked about the

frequency of their foreign travels during the period of three years prior to the time of the

survey. With regard to foreign language skills, respondents were asked to state whether

they can communicate in any foreign language. Besides, they were also asked to

mention the languages in which they could communicate fairly and fluently. Export

experience of the respondents was captured by asking them the length of time that they

have been involved in export activities. Youthfulness and gender were measured by

asking respondents directly. Age was captured in a range of years from 20-29, 30-39,

40-49, 50-59, and 60 plus years while gender was captured with a dichotomy of

responses i.e. either male or female.

5.7.2.4 Owners or Managers Entrepreneurial Orientation

The instrument used to measure EO was a modified version of the one used by Covin

and Slevin (1989). Three dimensions of EO (Innovativeness, Proactiveness and Risk-

taking) were measured using a 4-item five- point Likert scale (innovativeness), 5- item

five- point Likert scale (risk taking) and 2- item five- point Likert scale (proactiveness).

Covin and Slevin (1989) adopted and suggested considering EO as a one-dimensional

construct. However, other researchers (e.g. Lumpkin and Dess, 1996; Kreiser et al.,

2002) claimed that the dimensions of EO can vary independently of each other. Further,

Zahra and Neubaum (1998) suggest that the sub-dimensions of EO would interact

independently with environmental variables such as environmental hostility. This study


167

adopted the latter view of acknowledging the independent contributions of these sub-

dimensions of EO to SMEs export information use.

5.8 Validity and Reliability

Warwick and Linninger (1975) mention two basic goals of questionnaire design as

being to obtain information relevant to the purpose of the study and to collect

information with maximal validity. Scales validity for these studies was assessed using

Scale- Content Validity Index (S-CVI). The Index was used to assess the relevancy of

the questions used to measure the study variables of EO, instrumental conceptual use

of export information, symbolic use of export information, perceived quality of export

information and export performance. Polit, Beck and Owen (2007) note that S-CVI is

preferred to other indices, owing to it being easy to compute and understand,

relevant, and providing both item and scale information.

Whereas the literature on scale validation is diverse with respect to the number of

experts needed for validation, this researcher used four experts. Lynn (1986)

recommended a minimum of three. The researcher used the four point scale of relevant,

quite relevant, somewhat relevant and not relevant and collected responses from four

experts (See appendix 3). A proportion of relevant and quite relevant was computed to

get the S-CVIs from the four experts which were computed as 0.84, 0.92, 1.00 and

0.92. Averaging the 26 items on the various export variables used in the study yielded a
168

value of 0.92, thus meeting a minimum benchmark of 0.80 recommended by Davis

(1999).

To test the reliability of the measurement scales and scale items, the researcher

undertook the following procedures (1) the questionnaire was subjected to a pretest by

administering it to five SMEs engaged in handicrafts exports. (2) Feedback received

from the pretesting exercise was used in adjusting the questionnaire. The final refined

and modified questionnaire was then developed for fully- fledged data collection. (3)

The reliability of the composite variables was then tested with the aid of the Cronbach

alpha which measured the internal consistency of the items. Cronbach alpha coefficients

vary from 0 to 1.0 with an alpha coefficient of 0.7 or above being judged reliable

(Nunnaly, 1978). Hair et al (1998) note that the Cronbach alpha remains one of the

most commonly used measures of internal consistency. The questionnaire included

items which were primarily drawn from the literature. All the variables were measured

using multiple items and respondents were asked to indicate responses on a 5- point

Likert type scale that ranged from 1-Strongly Disagree 2- Disagree 3-Undecided

4 Agree to 5-Strongly agree. The measures have reported high reliability with

Cronbach alpha ranging between 0.67 and 0.8 inclusive, indicating high internal

consistency and reliability (see table 5.2). The only exception was export performance

with a reliability =0.67, which is marginal.

Table 10.2: Reliability of Exogenous and Endogenous Variables


169

Measures Number of Reliability


cases (Cronbach
Alpha-)
Export performance 158 0.67
Instrumental-conceptual use of export information 158 0.74
Perceived quality of export information 158 0.76
Proactiveness 158 0.70
Risk taking 158 0.78
Innovation 158 0.77
Symbolic use of export information 158 0.80

5.9 Data Analysis

Data collected through the survey questionnaire were edited, coded and entered into the

SPSS computer program for data analysis. Initial descriptive statistical analysis was

carried out to obtain frequencies, means, and percentages. The second level of analysis

was a SEM that tested export performance in relation to export information uses,

managers demographic characteristics and EO. SEM is a powerful technique that

combines the measurement model (confirmatory factor analysis) and the structural

model (path analysis) (Garver and Mentzer, 1999). The researcher decided to use SEM

in this study for a number of reasons as stipulated by Soonhong and Mentzer (2004): (1)

SEM is useful when one dependent variable becomes an independent variable in

subsequent dependence relationships; (2) SEM provides a straightforward method of

dealing with multiple relationships simultaneously while providing statistical efficiency;

and (3) SEM is able to assess the relationships comprehensively and provides a

transition from exploratory to confirmatory analysis (Hair et al., 1998).


170

Conclusively, discussion of the research philosophy, approach, strategy, data collection

methods and the nature of the thesis problem all afford the researcher an opportunity to

opt for the choices made as shown in table 5.3. The choices are also informed by the

tradition in the export marketing research. Grounded on this tradition it is then argued

that, unless a suitable case can be made for a new methodological approach, then the

approach must be accepted (Remenyi, et al., 1998). The preceding discussion on

peeling the onion layers draws us to the summary of the choices made. The presence

of established theories on export information use, albeit in different social, economic

and cultural contexts, necessitates the adoption of these stances.

Table 10.3: Research Philosophy, Approach and Strategy

Research Process Choices Made


Research Philosophy Positivistic
Research Approach Deductive approach
Research strategy Survey
Time horizons Cross -sectional
Data collection methods Questionnaires
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11. CHAPTER SIX

12. DESCRIPTIVE ANALYSIS OF THE SAMPLED SMES

A statistical analysis, properly conducted, is a delicate dissection of uncertainties, a surgery of


suppositions. M.J. Moroney

6.1 Introduction

To best compute descriptive statistics and perform multivariate analysis it was

considered important to prepare the data collected from the field. The main objective of

this section is to therefore provide a brief account of how data collected from the field

were coded, entered, and cleaned. The chapter also addresses the issue of the way

missing data and outliers were treated. The data preparation process is so important that

Hair, Anderson, Tatham and Black (1998) refer to the time and energy spent on data

preparation as an investment in multivariate insurance.

6.2 Data Coding, Cleaning and Non-response Analysis

After collecting data from the field, all items in the questionnaire were coded to

facilitate entry into SPSS. Data were then cleaned for entry errors and the removal of

invalid responses. Non-response analysis was also carried out and it was found to be

5%, thus falling within the acceptable range of 3% to 8% as suggested and

recommended by Craig and McCann (1978).

6.3 Management of Missing Data

Researchers are almost always faced with the problem of missing data. Before testing

study models and checking for model fit, the researcher checked for missing data in the
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dataset using the SPSS statistical data analysis package. Following suggestions by Hair

et al (1998), the researcher sought to answer the following questions with regard to

missing data. (1) Are the missing data scattered randomly throughout the observations

or are distinct patterns identifiable? (2) How prevalent are the missing data? Important

to note is that not dealing with missing data may have a great and detrimental impact on

the analysis through both hidden bias and sample size (Hair et al., 1998). There are

many techniques for remedying missing data abnormalities. Popular among them are

listwise deletion, pairwise deletion and Mean Substitution.

Considering the limited sample size of 158, Listwise Deletion was at first considered

but a decision was made not to use it as it led to further sample reduction to an

inadequate sample size of 80 usable questionnaires. Likewise, Pairwise Deletion is

generally considered inappropriate for SEM (Byrne, 2001).

In this study the researcher instead used Series Mean Substitution, which, according to

Afifi and Elashoff (1966) is a technique in which Variable Means are used to replace

missing values. Series Mean Substitution is a popular method of managing missing

values in SEM and it is a conservative technique in that it makes the data less reactive.

6.4 Management of Outliers

Outliers are observations with a unique combination of characteristics identifiable as

distinctly different from the other observations (Hair et al., 1998). The presence of
173

outliers is considered an abnormal situation and it is left to the researcher to decide what

will be considered abnormal. According to Voerman (2003) and Hair et al (1998),

outliers are based on any one of the following conditions: (a) errors in data entry and

coding. (b) Valid but exceptional observation that is explainable by an extraordinary

situation. (c) An exceptional observation with no likely explanation. (d) An ordinary

observation in its individual characteristics but exceptional in its combination of

characteristics.

For the purpose of managing the outliers, the researcher adopted a strategy of replacing

outliers with either a MIN or a MAX. In adopting this strategy, any outlier less than the

minimum value (i.e. 1, though none was found in this study) was replaced with the

minimum value and any outlier greater than the maximum value (i.e. 5) was replaced

with the maximum value. In other cases where a double equal integer was identified

(e.g. 22, 33, 44, 55), the researcher logically replaced the values with the corresponding

2, 3, 4 or 5. Other researchers, considering the nature of the study and the research

instrument used, have tended to treat outliers as missing values. Attempts were made to

manage outliers, cognizant of the assertion that there is still no standard strategy for

locating, and more importantly for dealing with outliers (Hayduk, 1996).

6.5 Descriptive Statistics of SMEs Owners or Managers

This section presents a profile, characteristics and brief description of the owners or

managers and a sample of the surveyed horticultural and handicrafts SMEs in Tanzania.

The importance of the presentation lies in the fact that these characteristics will also
174

have a bearing on the subsequent multivariate data analysis. The characteristics

presented are owners or managers age, gender, level of education, international

experience, export experience and foreign language fluency. Other characteristics

pertaining to SMEs are their size, age, and regional distribution and export markets.

Frequencies and valid percentages are used in reporting and providing descriptive

statistics for the owners or managers and SMEs characteristics. The first part of the

subsequent discussion is based on information summarized on table 6.1.

6.5.1 Age

The descriptive analysis findings show that the majority (44.7%) of owners or managers

surveyed are aged between 30 and 39. In fact, in integrating two age groups (30-39 and

40-49), respondents aged between 30 and 49 constitute nearly 80% of all those

surveyed. This combined age group constitutes the main productive and reproductive

age group of the population. Likewise, the results reveal delayed entry into exporting,

with just 8.6% of all owners or managers aged between 20 and 29. Respondents aged

over 50 years constituted 11.2 % of the surveyed owners or managers.

6.5.2 Gender

Male-owned enterprises make up a great proportion of private businesses in most

countries (Brooksbank, 2000). Consistent with this, the study results show that 62.4% of

the surveyed owners or managers were males and only 37.6% were females. This is not

surprising given that the dominance of male entrepreneurs in business and other spheres

of human economic life are reported by other studies in Tanzania. Rustashobya (2000),
175

Olomi (2001), Nchimbi (2003) and Mbura (2007) carried out studies in Tanzania and all

of their findings reflected similar gender imbalance distribution. It is widely

acknowledged that Tanzanian women's entry into business is constrained by, among

other factors, lack of access to capital, especially institutional capital, raw materials

problems, lack of skills and appropriate technology, lack of markets and low

profitability (Malambugi, 1991; Mbise, 1992; Mbughuni, 1994). The findings also

reveal that womens entry barriers are even higher when it comes to exporting, as

women are known to be hampered by their dual roles of reproduction and production.

The cultural environment of Tanzania makes it even more difficult for women to start

and run enterprises due to the expectations and demands of their traditional reproductive

roles (UDEC, 2002). A policy message that is relevant in the situation is to continue to

pay greater attention to and address traditional and cultural practices that discriminate

against women by denying them schooling and business opportunities. The scenario

changes when it comes to most developed economies. The other reason that would

explain overrepresentation of male owners could be attributed to differences in

business opportunities between male and females.

6.5.3 Level of Education

The majority (86.1%) of the surveyed SMEs owners or managers have either primary or

secondary education only. About 10.6% of the owners or managers have obtained either

ordinary or advanced diplomas. This reveals that business, including exporting business,
176

is mostly conducted by people who have no post- secondary education. However, it is

important also to note that 13.9% had post secondary education. This percentage is

relatively large compared with Nchimbis (2003) study which revealed that those with

post- secondary education were below 5%. This goes to show that the exporting

business has a relatively higher education entry bar. An interesting finding in respect of

education was that none of the surveyed owners or managers had acquired a Masters

degree and only one had a doctorate.

6.5.4 International Experience

International experience was captured in this study by asking respondents about the

frequency of their international travels over the last one year. Of the 158 respondents

who responded to the question, 23.4% noted that they have no such international

experience while 59.5% indicated that they have travelled abroad frequently. Owners or

managers who claimed to have travelled abroad between once and five times a year

were 17.0%. Those with less or no international travel argued that they use indirect

exporting mode for moving their products to foreign markets.

6.5.5 Exporting Experience

Of the 141 owners or managers who responded to the question regarding exporting

experience, the majority (47.5%) revealed that they have had experience of between 3

and 5 years. Over 17.7 % had exporting experience of between 6 and 8 years, 9.2% had

exporting experience of between 9 and 11 years, while only 8.5 % indicated exporting
177

experience of over twelve years. The results suggest that 91.5% of the owners or

managers started exporting in the last 11 or so years. This goes to explain that it is only

recently that exporting has been given the position it deserves in the countrys

development agenda.

6.5.6 Foreign Language

One hundred and fifty eight (158) owners or managers responded to the question

regarding the number of foreign languages (other than Kiswahili and/or their vernacular

languages) they have a fair fluency communicating in. Owners or managers who

expressed that they can communicate in more than just Kiswahili and their local

languages were 96.2 %. The commonly spoken foreign language was English with 84.8

% claiming the ability to speak the language. Around 3.8% acknowledged that they can

only communicate in Kiswahili and their native languages. Other than English, the other

languages that were mentioned were Spanish, German, Italian, Russian, French, Arabic

and Chinese. Consistent with findings in the developed world, it is argued in this study

that fluency and a good command of foreign languages improves export performance

directly and indirectly by increasing the firms competitive position, foreign orientation

and the psychic stress tolerance (Kaynak and Kuan 1993; Holzmller and Stttinger,

1996).
178

Table 12.1: Profile of the Surveyed SMES Owners or Managers


Demographics Categories Number (N) Valid percentage (%)
Age (Years) 20-29 13 8.6
30-39 68 44.7
40-49 53 34.9
50-59 17 11.2
60+ 1 0.7
Missing values 6 100.0
Total 158
Gender Male 98 62.4
Female 59 37.6
Missing values 1
Total 158 100.0
Education No formal 1 0.7
Primary 24 15.9
O-Level 78 51.7
A-Level 27 17.9
Diploma 14 9.3
Advanced
2 1.3
Diploma
Bachelor 4 2.6
Masters 0.0 0.0
PhD 1 0.7
Missing values 7
Total 158 100.0
International Experience Never 37 23.4
(Number of Once 10 6.3
international travels) Twice 7 4.4
Thrice 7 4.4
4 Times 1 0.6
5 Times 2 1.3
5 Times Plus 94 59.5
Total 158 100
Export Experience 0-2 24 17.0
(Years) 3-5 67 47.5
6-8 25 17.7
9-11 13 9.2
12+ 12 8.5
Missing value 17
Total 158 100.0
Foreign Language One language 6 3.8
Proficiency Two languages 134 84.8
Three languages 14 8.9
Four languages 4 2.5
Total 158 100.0
179

6.5.7 Highest Educational Level and Gender of the Owner or Manager

As noted above, there were more male owners or managers than female ones and male

dominance is quite consistent with other research findings. Owners or managers with

primary education were evenly divided between male and female owners or managers at

8%. Thereafter, the dominance of males at all levels of education is reported. While

males who had ordinary level secondary education were 34%, slightly over half of these

(17.3% only) were females. Ten percent (10%) of male owners or managers and 8% of

female owners or managers had advanced level of secondary education. Ordinary

diplomas were held by 6.7% and 2.7 % male owners or managers and female owners or

managers respectively. No female owner or manager holding an advanced diploma,

undergraduate degree, masters or PhD was engaged in the business. These findings can

be said to explain womens reluctance to engage in business upon acquiring

professional qualification. These findings are also consistent with findings by Mpango

and Mushi (2000) and Rutashobya (1995), who found that the number of women in

Tanzania engaged in further and higher education is low. These findings also go to

show that upon attaining higher education qualifications few women opt to engage in

businesses which are generally considered more risky than employment in the public or

private sectors.
180

Table 12.2: Highest Educational Level and Gender of the Owner or Manager
Gender of the owner or manager
Highest educational level Male Female Total
No formal education N 1 0 1
% 0.7 0.0 0.7
Primary N 12 12 24
% 8.0 8.0 16.0
Ordinary level secondary N 51 26 77
% 34.0 17.3 51.3
Advance level secondary N 15 12 27
% 10.0 8.0 18.0
Diploma N 10 4 14
% 6.7 2.7 9.3
Advanced diploma N 2 0 2
% 1.3 0.0 1.3
Undergraduate N 4 0 4
% 2.7 0.0 2.7
Masters N 0 0 0
% 0.0 0.0 0.0
PhD N 1 0 1
% 0.7 0.0 0.7
Total N 96 54 150
% 64.0 36.0 100.0

6.5.8 Education and age of the SMEs Owners or Managers

The majority (30.8%) of the surveyed owners or managers, aged between 30 and 39,

have either ordinary or advanced level of secondary education. The only male owner or

manager with a PhD was aged between 50 and 59, while those with undergraduate

degrees were aged between 20 and 39. Whereas this may be consistent with national

education averages, it portends poorly for the performance of exporting enterprises that

could be attributed to education. The results are revealing a trend where the lower the

level of education the more the spread of owners or managers across the whole age

spectrum, except for the 60+ age group.


181

Table 12.3: Highest Educational Level and Age of the SMEs Owner or Manager
Owners or managers age (Years)
Highest formal educational level 20-29 30-39 40-49 50-59 60+ Total
No formal Education N 0 0 0 1 0 1
% 0.0 0.0 0.0 0.7 0.0 0.7
Primary N 1 7 10 5 0 23
% 0.7 4.8 6.8 3.4 .0 15.8
Ordinary level secondary N 5 38 26 7 0 76
% 3.4 26.0 17.8 4.8 .0 52.1
Advanced level secondary N 4 16 5 1 1 27
% 2.7 11.0 3.4 0.7 0.7 18.5
Diploma education N 1 5 6 1 0 13
% 0.7 3.4 4.1 0.7 0.0 8.9
Advanced diploma N 0 0 2 0 0 2
% 0.0 0.0 1.4 0.0 0.0 1.4
Undergraduate N 2 1 0 0 0 3
% 1.4 0.7 0.0 0.0 0.0 2.1
PhD N 0 0 0 1 0 1
% 0.0 0.0 0.0 0.7 0.0 0.7
Total N 13 67 49 16 1 146
% 8.9 45.9 33.6 11.0 0.7 100

6.5.9 Highest Education Level and Primary Export Market

SMEs are generally exporting their handicrafts and horticultural products to more than

one export market. However, the owners or managers were asked to indicate what they

consider to be their primary export market which constitutes more than 50% of each

enterprises annual export value. SMEs exporting to the East African countries of

Burundi, Kenya, Rwanda and Uganda (in alphabetical order) take the lions share (50.0

%) of the handicrafts and horticultural exports. Table 6.4 reveals the relationship

between education level of the owners or managers and their choice of export markets.

Exporters to Europe and America are relatively and generally more educated that those

exporting to either Africa or Asia, whose maximum level of education is just ordinary

level of secondary education. As fluency in a foreign language, especially English


182

improves with ones level of education; it is not therefore surprising that the trend is

such that the owners or managers choice of distant export markets increases with his

or her level of education.

Table 12.4: Highest Education Level and Primary Export Market


Primary export markets

America
Europe
Rest of
Africa

Africa

Total
Asia
Highest educational level East
No formal Education N 0 0 0 1 0 1
% 0.0 0.0 0.0 0.7 0.0 0.7
Primary N 11 3 4 2 3 23
% 7.9 2.1 2.9 1.4 2.1 16.4
Ordinary level secondary N 40 8 8 7 7 70
% 28.6 5.7 5.7 5.0 5.0 50.0
Advanced Level Secondary N 11 5 4 5 1 26
% 7.9 3.6 2.9 3.6 .7 18.6
Diploma N 8 1 0 3 2 14
% 5.7 0.7 0.0 2.1 1.4 10.0
Advanced Diploma N 0 0 0 1 0 1
% 0.0 0.0 0.0 0.7 0.0 0.7
Undergraduate N 0 0 1 3 0 4
% 0.0 0.0 0.7 2.1 0.0 2.9
PhD N 0 0 0 1 0 1
% 0.0 0.0 0.0 0.7 0.0 0.7
Total N 70 17 17 23 13 140
% 100.
50.0 12.1 12.1 16.4 9.3
0

6.5.10 Export Markets and Gender Distribution

Out of 90 male SMEs owners or managers who responded to the question on export

markets, 25.5% indicated that they export to East Africa, 9.7 % export to Europe, 12.4

% export to America, 7.6 % export to Asia and 6.9 % export to the Rest of Africa

(Table 6.5). On the other hand, of the 55 female owners or managers who responded to
183

the question on export markets, 26.2% indicated that they export to East Africa, 2.1 %

export to Europe, 4.1 % export to America, 0.7 % export to Asia and 4.8 % export to the

Rest of Africa.

A gender comparison reveals a trend where the percentage of males and females

exporting to East Africa are almost even at 25.5 % and 26.2 respectively. In all other

distant export markets such as Europe, Asia, America and the Rest of Africa, the

proportion of females is lower and male owners or managers is more dominant.

Explanations for this could be the long held arguments of women having dual

reproductive and productive roles, low levels of education and hence lack of foreign

language fluency, and female general risk averseness. For instance, Watson (2002)

argues that females, on average, will devote fewer resources to their business ventures,

thereby reducing their exposure (risk) should things go wrong. Direct exporting to

distant markets entails more risks, and longer stays away from home. These gender

differences are further corroborated by Orser, Spence and Riding (2008), who argue that

there are gendered differences in business and that the noted gender differences can also

be used to explain female participation in the exporting intensity of an enterprise.

Besides, research results support the social feminist theory that male and female

exporters are different, thus providing evidence that supports anecdotal findings about

gender-related barriers to exporting (Riddle, 2000).


184

Table 12.5: Export Markets and Gender Distribution


Gender of the Owner or Manager
Main Export Market Male Female Total
East Africa N 37 38 75
% 25.5 26.2 51.7
Rest of Africa N 10 7 17
% 6.9 4.8 11.7
Europe N 14 3 17
% 9.7 2.1 11.7
America N 18 6 24
% 12.4 4.1 16.6
Asia N 11 1 12
% 7.6 .7 8.3
Total N 90 55 145
% 62.1 37.9 100.0

6.6 Profiles of the Surveyed SMEs

Subsequent to the profile of the SMEs owners or managers surveyed a general account

of the profile of the SMEs that were surveyed is provided. Factors used in

characterizing the SMEs are sector type, enterprise size measured in terms of number of

employees; age of the SMEs measured in years, geographical dispersion and their

primary export markets. An analysis of various cross-tabulations is used to describe the

distribution of the two variables simultaneously. The use of cross-tabulation is

recommended and adopted as it provides an extra wealth of information about the

relationship between the variables that would be left uncovered in one-dimensional

tables.
185

6.6.1 Sectoral Distribution

Out of 300 questionnaires distributed to owners or managers, 180 were duly filled out

and returned. However, 22 horticultural enterprises based in Arusha and one based in

Kilimanjaro were omitted from the study, during the data screening process, as they did

not meet the SMEs definitional criteria by having more than 100 employees. Their

omission eventually and significantly skewed the sample towards handicrafts

enterprises. Handicraft enterprises, which were mainly dealing in exporting leather bags

and belts, batik, baskets, beads, hardwood carvings, Zanzibar doors and chairs, and

tingatinga pictures, comprised 94.9 % of all the enterprises while horticulture

enterprises a mere 5.1%. Horticultural enterprises were mainly exporting flowers, herbs

and seaweed. The dominance of handicrafts SMEs in the sample signifies that caution

needs to be exercised when interpreting the results of this study. However, it is worth

noting that the main focus of this study was not so much on the studied sector

differences but rather on the owners or managers of the enterprises engaged in exporting

either handicrafts or horticultural products.

6.6.2 Size (Number of Employees)

Of the 155 owners or managers who responded to the question regarding number of

employees, 65.8% were managing micro enterprises with the number of employees

ranging from 1 to 4. Those managing small enterprises (5-49 employees) were 32.3%

and medium enterprises (50-99 employees) were 1.9%. These results are consistent with

those of Spring and McDade (1998) who, ten years ago, found that only 2% of all
186

African businesses have 10 or more employees, with the majority being micro and

small-scale enterprises that consist of one to three employees (Daniels et al., 1995). The

dominance of micro-enterprises in the study may also be a reflection of what Olomi

(2001) characterizes as owners or managers economic necessity with very modest

growth aspirations. It is widely noted that a small, large-scale sector and a large, small-

scale sector characterize most African economies (Spring and McDade, 1998) and in

fact most other developed countries. For instance , according to the Observatory of

European SMEs (2003), out of 19.3 million enterprises in the European Economic Area

and Switzerland, 92% of these enterprises were micro (0-9 employees), 7 % were small

(10-49), and less than 1 % were medium-sized enterprises (50-249).

6.6.3 SMEs Regional Distribution

This survey of 158 SMEs was conducted in four regions of Tanzania. The percentages

of SMEs surveyed in each region are Dar-es-Salaam (54%), Kilimanjaro (22%), Arusha

(15%) and Zanzibar (9%). (See table 6.6). The regional distribution was considered

adequate, as Mbura (2007) notes that, when the primary objective of the research is not

to compare between cities, proportionality is not necessary. The lack of a

comprehensive sampling frame limits the proportionate selection of SMEs per region.

However, owing to its vibrant commercial activities, Dar-es-Salaam comprised the

biggest number of surveyed SMEs, followed by Kilimanjaro, Arusha, and lastly

Zanzibar.
187

6.6.4 Choice of Primary Export Markets and Psychic Distance

Disaggregated frequencies with respect to export markets are shown and discussed with

reference to table 6.6. It is notable that 51.4% of the owners or managers exported their

products to the East African Community (EAC) countries .The fact that the majority are

exporting to the EAC that constitutes Burundi, Kenya, Rwanda, and Uganda (in

alphabetical order) correlates to the traditional and narrow definition of the stage theory.

Geographic distances have long been thought to have a favourable effect on commercial

exchanges between countries (Beckerman, 1956). This is so argued in the sense that it is

expected that the transfer and flow of information is expected to be enhanced with

closer geographical proximity (Ghemawat, 2001), revolution in ICT notwithstanding.

The percentage of exporters to the Rest of Africa and Europe is even at 10.8% of all the

surveyed SMEs, while America comes second after East Africa with 15.2 % of SMEs

exporting their handicrafts and horticultural products to the continent. America in this

study was taken to constitute both US and Canada. In spite of the long geographical

distance between Tanzania and the European continent compared with the distance

between Tanzania and the Rest of Africa, four reasons could be given to explain the

propensity of SMEs to export to Europe. One reason is that Tanzania had colonial ties,

first with Germany (1885-1918) and later with Britain (1919-1961), which explains the

longstanding trading relationship with these colonial masters. Second, since

independence Tanzania has been one of the biggest recipients of aid and grants from

Europe with Scandinavian countries topping the list of donors. The third is the
188

agreement between African, Carribean and Pacific countries (ACP) and the EU with its

new guidelines for inter-regional trade between them. The EU offers duty free access to

ACP countries for products including flowers and vegetables. The fourth and last

explanation relates to the impoverished transport and communication infrastructure

linking Tanzania and the Rest of Africa. It is incredible that one would take a shorter

time flying from Tanzania to say German, the United Kingdom or France than to a

neighbouring African country such as Mozambique, owing to the lack of direct flights

between the two developing countries.

The fact that America comes second after the EAC countries as the preferred destination

for SMEs handicrafts and horticultural products could also be because: First, the basis

of the conducive environment that the governments of both Canada and US have

established. The conditions have motivated Tanzanian SMEs to exploit the

opportunities. In 2000, US, for instance, passed the African Growth and Opportunity

Act (AGOA) intended to enhance 39 SSA countries access to the US market. The act

that was originally meant to end in 2008 has been extended to 2015. Secondly,

increased Foreign Direct Investments (FDI) to Tanzania from the US, Canada, and the

Republic of South Africa (following the end of apartheid in 1994) has retrospectively

increased the interest of Tanzanian firms in exporting to those countries. Thirdly,

dependency on oil imports from Arabic countries and the growing interest of the

Peoples Republic of China in Africa as an area of significant economic and strategic


189

significance has opened up business opportunities for the handicrafts business among

other businesses in Asia in general and Peoples Republic of China in particular.

Table 12.6: Profiles of the Surveyed SMEs


SMEs Characteristics Categories Number (N) Percentage (%)
Sector Type Handicraft 150 94.9
Horticultural 8 5.1
Total 158 100
Enterprise Size(Number of 1-4 102 64.6
Employees) 5-49 50 31.6
50-99 3 1.9
Missing value 3 1.9
Total 158 100
Age of the SMEs (Years) 1-3 13 8.2
4-6 47 29.7
7-9 42 26.6
10+ 53 33.5
Missing value 3 1.9
Total 158 100.0
SMEs Regional Distribution Dar-es-Salaam 85 54.0
Zanzibar 14 9.0
Arusha 24 15.0
Kilimanjaro 35 22.0
Total 158 100.0
Primary Export Markets East Africa 75 47.5
Rest of Africa 17 10.8
Europe 17 10.8
America 24 15.2
Asia 13 8.2
Missing value 12 7.6
Total 158 100.0

6.6.5 SMEs Age and Gender of the Owner or Manager

One hundred and fifty four (154) respondents responded to the question regarding the

age of the enterprise and gender of the owner or manager. The findings indicate that

just 5.2% of the male -owned enterprises and 3.2% of the female-owned enterprises

were 1-3 years old. Thereafter both male and female owned enterprises reveals an
190

interesting trend. The male-owned enterprisesthat have been running for 4-6 years

(14.3%), for 7-9 years (17.5%) and for 10+ years (26.0%). Contrast this with the age

of female owned enterprises, from 4-6 years (16.2%), from 7-9 years (9.7%) and from

10+ years (7.8%). The results show that up until recently female owners or managers

participation in exporting handicrafts and horticultural products has been increasing

while male owners or managers participation had been decreasing. Maintaining the

momentum and increasing awareness of the great business opportunities in horticulture

and most especially in handicrafts will go a long way to addressing the male-female

imbalance.

Table 12.7: SMEs Age and Gender of the Owner or Manager


Gender of the owner or manager
SMEs Age (Years) Male Female Total
1-3 N 8 5 13
% 5.2 3.2 8.4
4-6 N 22 25 47
% 14.3 16.2 30.5
7-9 N 27 15 42
% 17.5 9.7 27.3
10+ N 40 12 52
% 26.0 7.8 33.8
Total N 97 57 154
% 63.0 37.0 100.0

6.6.5 Size (Total Number of Employees) and Gender of the owner or manager

The percentage of male owned micro-enterprises was 39.0% while 27.3% were owned

by females (see table 6.8). Small enterprises were owned by 22.1 % and 9.7% of the

surveyed males and females respectively. None of the surveyed females owned medium
191

enterprises. Males who owned medium enterprises comprised 1.9% of the respondents.

These findings are consistent with those of Olomi (2001), who found that as the size of

the enterprise increases, the proportion of female owned enterprises decreases faster

than those owned by males. This trend is universal in character and is not confined to

developing countries only. Carter and Shaw (2006, pp. 73), in full acknowledgement of

male dominance in business ownership (especially growing enterprises) noted the

following;

It is also clear that womens experiences of business ownership are

remarkably similar, irrespective of the international context. Womens

businesses appear to take longer at the gestation stage; tend to be

started by individuals rather than teams; remain smaller; do not

demonstrate the same performance levels of businesses owned by men

or co-owned by men and women; and probably exit at a faster rate

Different countries are putting in place appropriate macro-economic conditions and

policy frameworks that provide support and encouragement, while minimizing external

constraints to womens entry into both domestic and international business. While the

measures are bearing fruit, it will take a while before gains and objectives are realized.
192

Table 12.8: SMEs size and Gender of the Owner or Manager


Gender of the owner or manager
SMEs size (Number of Employees) Male Female Total
Micro Enterprises (1-4) N 60 42 102
% 39.0 27.3 66.2
Small Enterprises (5-49) N 34 15 49
% 22.1 9.7 31.8
Medium Enterprises (50-99) N 3 0 3
% 1.9 0.0 1.9
Total N 97 57 154
% 63.0 37.0 100.0

6.6.6 Size (Total Number of Employees) and Age (Years)

The majority of the enterprises in all the age groups except the 10+ age group are micro

in size. (See table 6.8). The only exception is where 18.3% of the surveyed SMEs are

aged more than ten years, which is greater than 14.4% of the microenterprises within

the same age group. The results underline take-off inertia in terms of upward mobility

from micro, small to medium enterprises. These results are however not typical of only

Tanzania or developing countries. The pattern of enterprise size distribution is the same.

According to Lukacs (2005) , out of 19.3 million enterprises in the European Economic

Area and Switzerland, 92 % are micro(1-9 employees), 7 % are small (10-49), less than

1 % are medium-sized (50-249), with only 0.2 % being large enterprises (250+).

Furthermore, in Latin America, the vast majority (approximately 80-90%) of companies

are micro enterprises and the governments have vastly reduced red tape to ensure

SMEs needs are attended to swiftly (ibid.).


193

Table 12.9: SMEs Size (Number of employees) and age (Years)


SMEs age
SMEs size 1-3 4-6 7-9 10+ Total
Micro Enterprises (1-4) N 11 36 32 22 101
% 7.2 23.5 20.9 14.4 66.0
Small Enterprises(5-49) N 2 9 10 28 49
% 1.3 5.9 6.5 18.3 32.0
Medium Enterprises(50-99) N 0 2 0 1 3
% 0.0 1.3 0.0 0.7 2.0
Total N 13 47 42 51 153
% 8.5 30.7 27.5 33.3 100.0

6.7 Conclusions on the Descriptive Statistics

Barring minor exceptions, the descriptive statistics of the enterprises surveyed reflect

previously recorded research findings. The dominance of male-owned and managed

businesses and the over-representation of Dar-es-Salaam in terms of number of

enterprises surveyed are not out of the ordinary. Equally expected results were the over-

representation of micro enterprises with less than five employees. The findings embody

many factors , such as the differences in malefemale socialization in the country that

exacerbate male domination and impinge on the rights of women, the governments

shift from the Ujamaa (African Socialism ) path to a free market economy and the new

world economic order, to mention a few. As noted earlier, in part, the findings in this

section form the basis, for the subsequent multivariate analysis in the next chapter.
194

13. CHAPTER SEVEN

14. RESEARCH FINDINGS (MULTIVARIATE)

The study of many subjects brings enlightenment but statistics brings significance. Confucius
(551 BC to 479 BC)

7.1 Introduction

Based on the foundation developed in the preceding chapters, the first section of the

chapter discusses the assumptions of multivariate analysis. In the second section,

hypotheses tests are conducted using both Canonical Correlation Analysis (CCA) and

SEM. The last section of the chapter covers conclusions to the study and hypotheses

testing.

7.2 Assumptions of Multivariate Analysis

This section presents the assumptions of multivariate analysis. Testing the assumptions

of multivariate analysis is necessary for two main reasons. First, violations of

assumptions may produce significant distortions and biases in the research findings.

Secondly, Hair et al., contend that complexity of the multivariate analyses and of the

results may mask the signs of assumption violations apparent in the simpler univariate

analysis.

Many CCA and SEM estimation procedures assume multivariate normal distributions.

One of the characteristics is that a normal distribution has (Pearson's) skewness and

Normality testing is a commonly needed procedure, because multivariate statistical


195

procedures apply to normally distributed data. There are generally two types of tests for

normality: Graphical analysis and statistical tests. In this study, normality was tested by

indices of skewness and kurtosis. Observed variables were examined and verified using

graphical and statistical methods and were found to be normally distributed. The

skewness and kurtosis statistics for variables were less than 1.0, indicating that the

distribution does not differ significantly from a normal distribution (Miles and Shelvin,

2003).

Homoscedasticity, which refers to the assumption that dependent variable(s) exhibit

equal levels of variance across the range of independent variable(s) (Hair et al., 1998),

was checked. Variables that were found to be heterodaestic were transformed to meet

this assumption of homoscedasticity. Linearity assumptions were assessed using scatter

plots (with an overlaid trendline) to identify non-linear patterns in the data. Identified

non-linearity was corrected by transforming data logarithmically on dependent and

independent variables.

7.3 Presentation of the Model Fit Measures

The output from the computer program AMOS 4 gives various statistics to determine

the overall fit of the proposed models with the field data. Various fit indices were used

to test the data fit of the hypothesized models. Fit refers to the ability of a model to

reproduce the data or, as Byrne (1994) notes it measures how the model adequately

replicates observed patterns between variables. Chi-square /degree of freedom ratio


196

(CMIN/df), Goodness of Fit Index (GFI), Adjusted Goodness of Fit Index (AGFI),

Comparative Fit Index (CFI), and Root Mean Square Error of Approximation (RMSEA)

were used in this study to test the goodness of fit of the models as they are the

commonly used indices in these types of studies. Structural equation models were at

times modified in order to improve the fit, thereby estimating the most likely

relationships between variables without undermining the theoretical relevancy. A brief

discussion of these indices is given.

Chi-square is the most common fit test. The test examines whether an unconstrained

model fits the covariance as well as the given model. Williams (2003) notes that most

model fit indices are influenced by sample size. In particular Hair et al. (1998) note that

for a larger sample (n 400) the measure is almost always statistically significant and

may result in a satisfactory model appearing as a poor fit on the basis of trivial

discrepancies. According to Kenny (2008), for models with about n = 75 to 200 cases,

chi-square is a reasonable measure of fit. Chi-square for this studys models was

relatively small and within acceptable ranges, as large values of the measure would

indicate a poor fit of the model with the data. According to Ame (2005), a non-

significant chi- square (smaller value of chi-square) is desired, as the goal of SEM is to

develop a model that fits the data. Despite the fact that our model is made up of 158

cases (an acceptable size for SEM), and appreciating the measure sensitivity to sample

size, the researcher used alternative ways to test the model fit.
197

Chi- Square to df (2/df) ratio has no consistent standards for what is considered an

acceptable model. However, Carmines and McIver, (1981) note that a fitted model is

often acceptable when the ratio of chi-square to degree of freedom (CMIN/df) is less

than 3. It is widely argued by various authors that models that do not achieve less value

are regarded as mis-specified (Byrne, 1984).

The GFI varies from 0 to 1, though it can yield meaningless negative values.

Conventionally a GFI equal or greater than 0.90 indicates a good fit of a model. The

AGFI is a variant of GFI, which uses mean squares instead of total sums of squares in

the numerator and denominator of 1-GFI. Bollen (1990) notes that the index tends to

underestimate model fit for sample size. AGFI varies between 0 and 1.0, with values

greater than 0.90 indicating an acceptable goodness of fit.

The CFI which compares a hypothesized model with the independent model takes into

account the sample size and is noted for not being influenced by the non-normality

distribution (Reisinger and Mavondo, 2001). The CFI values range from 0 to 1. A

revised cutoff of 0.95 has recently been advised for CFI. However, Hu and Bentler

(1999) note that CFI values greater than 0.90 still indicate a reasonably good fit of the

model.

The RMSEA is a measure of the population discrepancy that is adjusted for the DF for

model testing (McKone, Schroeder and Cua, 2001). According to Chen et al., (2008),
198

RMSEA ranges from zero to positive infinity, with a value of zero indicating exact

model fit, and larger values reflecting poorer model fit. Values of less than 0.05 for the

RMSEA are considered evidence of a good fit; values between 0.05 and 0.08 indicate a

fair fit, and values greater than 0.10 represent a poor fit (Browne and Cudeck, 1993;

Schermelleh-Engel and Moosbrugger, 2003). Our hypothesized path models showed

good fit with the data with the RMSEA less than the recommended maximum of 0.08

(Newcomb, 1994; Marsh and Hau, 1996). Widaman and Thompson, (2003) state that

RMSEA should be chosen because it is a reliable measure of model fit as it is

independent of sample size. A combination of indices provided a more reliable

conclusion on the model fit.

7.4 Hypotheses Testing

Eight hypotheses developed for this study were tested using CCA and SEM. The CCA

was conducted in order to evaluate the multivariate shared relationship between

independent and dependent variables. CCA is capable of establishing relationships

between sets of multiple dependent and independent variables (Hair, Anderson, Tatham,

and Black, 1998). This study used multiple dependent and independent variables, thus

necessitating adoption of the CCA. Hair et al (1998) note that in situations where

multiple dependent and independent variables are used, CCA is the most appropriate

and powerful multivariate technique.


199

SEM was subsequently conducted upon establishment of relationship between variables.

A range of plausible alternative models was developed and tested using the computer

statistical package Amos 4. The threshold value at p =0.05 of the Critical Ratio (CR) is

1.96, with values higher than 1.96 or values lower than -1.96 corresponding to

increased degrees of significance.

The results of hypotheses testing are categorized into five parts. The first part addresses

the two hypotheses (H1 and H2) that relate owners or managers demographic

characteristics to both instrumental-conceptual and symbolic uses of export information.

The second part constitutes two hypotheses testing results (H3 and H4) relating

perceived quality of export information to use of export information. The third part

relates the three dimensions of EO to both uses of export information (H5 and H6).

Fourthly, the relationship of the uses of export information with export performance is

again elaborately described using earlier models and analyses (H7 and H8).The fifth part

presents a textual and tabular conclusion to the hypotheses testing results.

7.4.1 Owners or Managers Demographics and Uses of Export Information

Drawing from UET, the researcher set out to assess the relationship and structurally test

the effect of owners or managers demographics on the use of export information. The

demographic characteristics tested were owners or managers education, gender, age,

language, international and export experience. The Structural Equation Model (see
200

figure 5) is presented to illustrate the relationship between demographics and uses of

export information.

Figure 5: Structural Equation Model for Owners or Managers Demographics


e23 e24 e26 e13

qs15_1 qs16_1 qs17_1


qs14_1
-,34 ,90
,56 ,43

res3

iceiu
res1 qs25_1 e18
,36 ,67
e7 qs31_1
,56 e17
qs26_1
e6 qs32_1 ,72

-,61
-,13
ep ,65

qs28_1 e14
e1 qs33_1
,37 -,27

res2
e3
-,32
qs34_1
omd
-,26
-,13

e2 qs35_1
seiu
,40 ,59 ,99

qs18_1 qs19_1 qs20_1

e12 e10 e11

Note: (1) Small circles with e-values -stands for associated errors with measured
variables (2) Rectangles represent measured, observed variables (3)Oval shapes
represents latent , unmeasured variables.

H1 Owners or managers demographics are positively related to the Instrumental-

conceptual use of export information.

CCA was conducted using owners or managers demographics (OMDC) as predictors

of ICEIU variables to evaluate the shared relationship between the two variable sets.

The full model across all functions was not statistically significant using Wilks =.82 F

(20, 495) =1.53., p > 0.05(See table 7.1). Because Wilks represents the variance

unexplained by the model, 1- yields the full model effect size in an r2 metric. Thus for

the set of canonical functions, the r2 type effect size was 0.18, which indicates that the
201

full model explained about 18% of the variance shared between the demographic

variables and ICEIU. The relationship between owners or managers education, gender,

age, language, international and export experience and ICEIU is thus found to be

insignificant.

Table 14.1: Multivariate Tests of Significance (OMDC and ICEIU)


Test Name Value Approx. F Hypoth. DF Error DF Sig. of F
Pillais .19116 1.52577 20.00 608.00 .066
Hotellings .20854 1.53799 20.00 590.00 .063
Wilks .81909 1.53527 20.00 495.13 .065
Roys .11010

The same hypothesis one (H1) was tested using SEM. The testing was preceded by an

assessment of the overall model fit indices which indicated that all minimum or

maximum thresholds had either been met or exceeded with 2 = 67.7, CMIN/df=1.612,

GFI=0.93, AGFI=0.90. CFI=0.88 and RMSEA=0.06 (Recall that while RMSEA values

less than or equal to 0.05 are considered indicators of a close fit, values between 0.05

and 0.08 are indicators of acceptable fit.) .The model fit indices summary and cut- off

points are shown in table 7.2. Given that all fit indices were inside conventional cut-off

values, the model was deemed acceptable.

Table 14.2: Model Fit Summary (OMDC)


NPAR GFI AGFI CFI RMSEA
Models 9 CMIN df p cmin/df
Good fit 0.9 0.9 0.9 0.05
3
guidelines
24 67.7 42 0.007 1.612 0.93 0.90 0.88 0.06

9
NPAR is the number of parameters being estimated in the model and is not a measure of model fit.
202

Contrary to expectations, the results of hypotheses testing revealed that there is no

relationship between OMDC and ICEIU. The CR was -0.090 and p 0.05.

Standardized regression weight between the two variables was -0.011, signifying that

the demographics have no explanatory power over ICEIU. These SEM tests support and

give credence to the earlier results. It can thus be stated conclusively that Hypothesis 1

is not supported and that the demographics of the owners or managers have neither a

relationship nor an effect on the instrumental conceptual use of export information.

H2, Owner or manager demographic characteristics are negatively related to the

symbolic use of export information.

CCA was conducted using OMDC as predictors of symbolic export information use

(SEIU) variables to evaluate the shared relationship between the two variable sets. The

full model across all functions was not statistically significant using Wilks = .87 F

(15, 414) =1.41, p > 0.05. (See table 7.3). Because Wilks represents the variance

unexplained by the model, 1- yields the full model effect size in an r2 metric. Thus for

the set of canonical functions, the r2 type effect size was 0.13, which indicates that the

full model explained about 13% of the variance shared between the demographic

variables and SEIU. Likewise, the analysis shows that there is no relationship between

OMDC (education, gender, age, language, international and export experience) and

SEIU.
203

Table 14.3: Multivariate Tests of Significance (OMDC and SEIU)


Test Name Value Approx. F Hypoth. DF Error DF Sig. of F
Pillais .13150 1.39364 15.00 456.00 .146
Hotellings .14457 1.43283 15.00 446.00 .128
Wilks .87128 1.41428 15.00 414.49 .136
Roys .10671

The same hypothesis 2 (H2) was tested using SEM. The hypothesis results indicated

that the relationship between OMDC and SEIU is insignificant with CR = 1.669,

Standardized Regression Weight =0.255 at p 0.05. These results signify further that

the OMDC have no relationship with SEIU. With these results, it is thus concluded that

Hypotheses 2 (H2) is not supported, that is demographics of the owners or managers

have neither a relationship nor an effect on the symbolic use of export information.

Table 14.4: Regression Weights (OMDC)


Structural path Estimate S.E. SRW C.R. P Remarks
seiu <--- omdc -0.066 0.725 -0.011 -0.090 0.928 Not supported
iceiu <--- omdc 0.928 0.556 0.255 1.669 0.095 Not supported

7.4.2 Perceived quality of Export Information and Use of Export Information

In testing Hypothesis 3 (H3) and Hypothesis 4 (H4), the perceived quality of export

information (PQEI) was first tested using CCA and later structurally tested with both

instrumental-conceptual and symbolic uses of export information. The Structural

Equation Model (see figure 6.) is presented to illustrate the relationship between

perceived quality and uses of export information.


204

Figure 6: Structural Equation Model for perceived quality of export


Information
e23 e24 e26 e13

qs14_1 qs15_1 qs16_1 qs17_1


-,36 ,84
,59 ,45

res3

iceiu res1 qs25_1 e18


,67
,12
,59 e17
qs26_1
e5 qs21_1 ,47 ep ,64
,71
qs28_1 e14
-,07

,90 res2
e4 qs23_1 pqei
-,40
,51
seiu
e3 qs24_1
,45 ,68 ,85

qs18_1 qs19_1 qs20_1

e12 e10 e11

H3 Perceived quality of export information is positively related to the instrumental-

conceptual use of export information.

CCA was conducted using PQEI variables as predictors of ICEIU variables to evaluate

the shared relationship between the two variable sets. The full model across all functions

was statistically significant using Wilks = 0.78 F (12, 399.80) =3.21, P<.001(see table

7.3). Because Wilks represents the variance unexplained by the model, 1- yields

the full model effect size in an r2 metric. Thus for the set of canonical functions, the r2

type effect size was 0.22, which indicates that the full model explained about 22%, of

the variance shared between PQEI and ICEIU. Hypothesis 3 (H3) is thus supported.
205

Table 14.5: Multivariate Tests of Significance (PQEI and ICEIU)


Test Name Value Approx. F Hypoth. DF Error DF Sig. of F
Pillais .23108 3.19216 12.00 459.00 .000
Hotellings .25724 3.20841 12.00 449.00 .000
Wilks .78379 3.21343 12.00 399.80 .000
Roys .13312

The hypothesis 3 (H3) was again tested using SEM and as expected, the relationship

between PQEI and ICEIU was found to be significant and positive (CR=3.799, p0.01).

Standardized regression weight between the two variables was 0.47, signifying the

strong explanatory power of PQEI on ICEIU (See table 7.8, and figure 6). With these

results it is thus concluded that Hypotheses 3 (H3) is supported, implying owners or

managers positive perception of quality of export information is positively related to

the instrumental-conceptual use of export information.

H4 Perceived quality of export information is negatively related to the symbolic use

of export information.

CCA was conducted using PQEI variables as predictors of SEIU variables to evaluate

the shared relationship between the two variable sets. The full model across all functions

was statistically significant using the Wilks = 0.85 F (9, 370.08) =2.82, p< 005 (see

table 7.4). Because Wilks represents the variance unexplained by the model, 1-

yields the full model effect size in an r2 metric. Thus for the set of canonical functions,

the r2 type effect size was 0.15, which indicates that the full model explained about

15%, of the variance shared between PQEI and SEIU. Hypothesis 4 (H4) is supported.
206

Table 14.6: Multivariate Tests of Significance (PQEI and SEIU)


Test Name Value Approx. F Hypoth. DF Error DF Sig. of F
Pillais .15069 2.71478 9.00 462.00 .004
Hotellings .17385 2.91040 9.00 452.00 .002
Wilks .85071 2.82460 9.00 370.08 .003
Roys .14078

Likewise, analysis using SEM found the overall model fit indices meeting or exceeding

all minimum or maximum thresholds. Chi- square (2) =73, CMIN/df=1.22, GFI= 0.93,

AGFI=0.89, CFI= 0.97 and RMSEA=0.04. The model fit indices summary is shown in

table 7.5. Given that all the fit indices were inside the conventional cut-off values, the

model was deemed acceptable.

Table 14.7: Model Fit Summary (PQEI)


NPA GFI AGFI CFI RMSEA
Models CMIN df p CMIN/df
R
Goodfit 0.9 0.9 0.9 0.05
3
guidelines
31 73.00 60 0.12 1.22 0.93 0.89 0.97 0.04

Analysis using SEM found that the hypothesized relationship between PQEI and SEIU

was significant and negative (CR= -3.95, p 0.01). Just like it was with H3, here the

Standardized regression weight =-0.40, signifying the negative but strong explanatory

power of PQEI on SEIU (See table 7.8, and figure 6). These results suggest that

Hypotheses 4 (H4) is supported, i.e. owners or managers perception of quality of

export information is significant and negatively related to symbolic use of export

information.
207

Table 14.8: Regression Weights (PQEI)


Structural path Estimate S.E. C.R P Remarks
iceiu <--- pqei 0.40 0.11 3.80 *** Supported
seiu <--- pqei -0.47 0.13 -3.95 *** Supported

7.4.3 Owners or Managers Entrepreneurial Orientation, Use of Export

Information

Another set of hypotheses relating owners or managers EO (OMEO), and export

information uses were tested. In testing hypotheses 6, 7 and 8 (H6, H7and H8), EO was

unpacked into its three dimensions (risk taking, innovation and proactiveness) and

tested with of the two types of export information uses (instrumental-conceptual and

symbolic).

H5 Owners or managers entrepreneurial orientation is positively related to the

instrumental- conceptual use of export information.

7.4.3.1 Owner-Managers Risk Taking and ICEIU

Conducting CCA, using owners or managers risk taking (OMR) variables as predictors

of ICEIU variables to evaluate the shared relationship between the two variable sets,

revealed that the full model across all functions was not statistically significant. Wilks

= 0.85 F (20, 495.13) =1.18, p=.269 and as Wilks represents the variance

unexplained by the model, 1- yields the full model effect size in an r2 metric. Thus for

the set of canonical functions , the r2 type effect size was 0.15 , which indicates that the
208

full model explained about 15%, of the variance shared between owners or managers

risk taking and ICEIU.

Table 14.9: Multivariate Tests of Significance (OMR and ICEIU)


Test Name Value Approx. F Hypoth. DF Error DF Sig. of F
Pillais .14784 1.16674 20.00 608.00 .277
Hotellings .16069 1.18508 20.00 590.00 .261
Wilks .85723 1.17695 20.00 495.13 .269
Roys .10387

Analysis using SEM found that the overall risk-taking model fit indices indicated that

all minimum thresholds had been met or exceeded with 2 =98.2, CMIN/df=1.364,

GFI= 0.918, AGFI=0.880, CFI= 0.952 and RMSEA=0.049. The model fit indices

summary is shown in Table 7.11. Given that all the fit indices were inside conventional

cut-off values, the model was thus deemed acceptable. The Structural Equation Model

(see figure 7) is presented to illustrate the relationship between risk -taking and uses of

export information.

Figure 7: Structural Equation Model for Owner Manager Risk Taking


e23 e24 e26 e13

Qs14_1 Qs15_1 Qs16_1 Qs17_1


-,34 ,88
,56 ,43

res3

iceiu
res1 qs25_1 e18
,35 ,67
e7 qs40_1
,56 e17
qs26_1
, 11
e6 qs41_1
,26

-,16
ep ,65

qs28_1 e14
qs42_1 ,38
e5 -,27

res2
e4
,81

qs43_1
omr
-,13
,73

e3 qs44_1
seiu
,43 ,63 ,91

qs18_1 qs19_1 qs20_1

e12 e10 e11


209

Contrary to the hypothesized relationship between risk taking and ICEIU, the CR= -

3.95, at p > 0.05 indicates that there is no relationship between the variable sets. The

path from OMR to ICEIU is not statistically significant though positive with the

standardized regression weight = 0.107. These results suggest that perception of risk of

the owners or managers of SMEs has, as hypothesized, a positive but insignificant

relationship with the instrumental - conceptual use of export information.

7.4.3.2 Owner-Managers Innovation and ICEIU

CCA was conducted using owner-managers innovation (OMI) variables as predictors of

ICEIU variables to evaluate the shared relationship between the two variable sets. The

full model across all functions was not statistically significant using Wilks = 0.90 F

(16, 458.90) =.93, p=.532. Because Wilks represents the variance unexplained by the

model, 1- yields the full model effect size in an r2 metric. Thus for the set of canonical

functions, the r2 type effect size was 0.10, which indicates that the full model explained

about 10% of the variance shared between OMI and ICEIU.

Table 14.10: Multivariate Tests of Significance (OMI and ICEIU)


Test Name Value Approx. F Hypoth. DF Error DF Sig. of F
Pillais .09535 .93405 16.00 612.00 .530
Hotellings .10019 .92985 16.00 594.00 .534
Wilks .90690 .93226 16.00 458.90 .532
Roys .05995

The overall innovation -model fit indices indicated that all minimum model fits

thresholds were met or exceeded with 2 =97.2, CMIN/df=1.15, GFI= 0.93,


210

AGFI=0.90, CFI= 0.96 and RMSEA=0.03. The model fit indices summary is shown in

Table 7.11. The model was thus deemed acceptable provided that all fit indices were

inside conventional cut-off values. The Structural Equation Model (see figure 8) is

presented to illustrate the relationship between innovation and uses of export

information.

Figure 8: Structural Equation Model for Owner Manager Innovation


e23 e24 e26 e13

qs14_1 qs15_1 qs16_1 qs17_1


-,36 ,58,85 ,44

res3

iceiu
res1 qs25_1 e18
,32 ,68

,56 e17
e7 qs36_1 ,11
qs26_1

,75
ep ,65
e6 qs37_1 qs28_1 e14
,83
-,10

,85 res2
e5 qs38_1 omi -,45
,59

e4 qs39_1 seiu
,46 ,65 ,87

qs18_1 qs19_1 qs20_1

e12 e10 e11

Using SEM revealed that, contrary to the the hypothesized relationship between

innovation and ICEIU, there is no relationship between the variable sets with CR= -

1.113, at p > 0.05. The Standardized regression weight =0.109. The results cause the

researcher to conclude that innovation has, as hypothesized, a positive but insignificant

relationship with the instrumental - conceptual use of export information.


211

7.4.3.3 Owner-Managers Proactiveness and ICEIU

CCA was conducted using owner-managers proactiveness (OMP) variables as predictors

of ICEIU variables to evaluate the shared relationship between the two variable sets.

The full model across all functions was not statistically significant using Wilks = 0.96

F (8, 304.00) =.67, p=712. Because Wilks represents the variance unexplained by the

model, 1- yields the full model effect size in an r2 metric. Thus for the set of canonical

functions , the r2 type effect size was 0.04 , which indicates that the full model explained

about 4%, of the variance shared between owner-managers proactiveness and ICEIU.

Table 14.11: Multivariate Tests of Significance (OMP and ICEIU)


Test Name Value Approx. F Hypoth. DF Error DF Sig. of F
Pillais .03477 .67683 8.00 306.00 .712
Hotellings .03585 .67663 8.00 302.00 .712
Wilks .96531 .67676 8.00 304.00 .712
Roys .03213

Using SEM it was found that the overall (proactiveness, uses of export information)

model fit indices indicated that all minimum thresholds had been met or exceeded with

2 =65.5, CMIN/df=1.34, GFI= 0.94, AGFI=0.89, CFI= 0.95 and RMSEA=0.05. The

model fit indices summary is shown in Table 7.11. Given that all fit indices were inside

conventional cut-off values, the model was thus deemed acceptable. The Structural

Equation Model (see figure 9) is presented to illustrate the relationship between risk -

taking and uses of export information.


212

Figure 9: Structural Equation Model for Owner Manager Proactiveness


e23 e24 e26 e13

qs14_1 qs15_1 qs16_1 qs17_1


-,35 ,86
,58 ,43

res3

iceiu res1 qs25_1 e18


,67
,27
,56 e17
qs26_1
,19
ep ,65

e7 qs45_1 qs28_1 e14


,67 -,26

res2
,71 omp
-,07
e6 qs46_1
seiu
,44 ,65 ,89

qs18_1 qs19_1 qs20_1

e12 e10 e11

Contrary to the hypothesized relationship between proactiveness and ICEIU, the CR=

1.613, at p>0.05 indicates that there is no relationship between the variable sets. The

Standardized regression weight =0.196. These results suggest that proactiveness of the

owners or managers of SMEs has, as hypothesized, a positive but insignificant

relationship with the instrumental - conceptual use of export information.

Table 14.12: Standardized Regression Weights (Owner or manager Innovation)


Structural path Estimate SRW S.E. C.R. P Remarks
seiu <--- omi -0.539 -0.445 0.117 -4.607 *** Supported
iceiu <--- omi 0.083 0.109 0.074 1.113 0.266 Not supported
ep <--- iceiu 0.441 0.320 0.150 2.939 0.003 Supported
ep <--- seiu -0.085 -0.099 0.097 -0.873 0.382 Not supported
213

Table 14.13: Model Fit Summary (Owners or managers EO)


NPA GFI AGFI CFI RMSEA
Models 2 df p 2/df
R
Goodfit 0.9 0.9 0.9 0.05
3
guidelines
Innovation 33 98.20 72 0.022 .364 0.918 0.880 0.952 0.049
Risk taking 35 97.59 85 0.17 .15 0.93 0.90 0.96 0.03
Proactiveness 29 65.52 49 0.06 1.34 0.94 0.89 0.95 0.05

Supported by both CCA and SEM, and contrary to the hypothesis, the relationships

between owner or manager EO dimensions (innovation, risk-taking and proactiveness)

and (ICEIU) was found to be positive but statistically insignificant thus partially

supporting hypothesis 5 (H5).

H6 SMEs owners or managers entrepreneurial orientation is negatively related to

the symbolic use of export information

7.4.3.4 Owner- Managers Risk Taking and SEIU

CCA was conducted using OMR variables as predictors of SEIU variables to evaluate

the shared relationship between the two variable sets. The full model across all functions

was not statistically significant using Wilks = 0.95 F (15, 414.49) =.49, P=.945.

Because Wilks represents the variance unexplained by the model, 1- yields the full

model effect size in an r2 metric. Thus for the set of canonical functions , the r2 type

effect size was 0.05 , which indicates that the full model explained about 5%, of the

variance shared between Owner or Managers Risk Taking and SEIU.


214

Table 7.14: Multivariate Tests of Significance (OMR and SEIU)


Test Name Value Approx. F Hypoth. DF Error DF Sig. of F
Pillais .04803 .49461 15.00 456.00 .943
Hotellings .04913 .48690 15.00 446.00 .947
Wilks .95259 .49051 15.00 414.49 .945
Roys .02856

SEM showed that minimum or maximum thresholds for model fit indices had either

been met or exceeded (see table 7.11).The path between symbolic use of export

information and risk-taking have CR= -1.146 at p 0.05. The standardized regression

weight between risk-taking and SEIU is -0.126, signifying insignificant (weak), albeit

negative explanatory power of the dimension on SEIU (See table 7.17).

7.4.3.5 Owner-Managers Innovation and SEIU

CCA was conducted using OMI variables as predictors of SEIU variables to evaluate the

shared relationship between the two variable sets. The full model across all functions

was statistically significant using Wilks = 0.79 F (12, 399.80) =.3.02, p<.001. Because

Wilks represents the variance unexplained by the model, 1- yields the full model

effect size in an r2 metric. Thus for the set of canonical functions, the r2 type effect size

was 0.21, which indicates that the full model explained about 21%, of the variance

shared between OMI and SEIU.

Table 7.15: Multivariate Tests of Significance (OMI and SEIU)


Test Name Value Approx. F Hypoth. DF Error DF Sig. of F
Pillais .21062 2.88817 12.00 459.00 .001
Hotellings .25140 3.13552 12.00 449.00 .000
Wilks .79479 3.02146 12.00 399.80 .000
Roys .18098
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SEM of the innovation Model indicated that all minimum or maximum thresholds had

either been met or exceeded (see table 7.11). The path between symbolic use of export

information and innovation have CR= -4.607 at p 0.01. The standardized regression

weight between innovation and SEIU is -0.445, signifying the strong explanatory power

of the innovation of owners or managers on SEIU (see table7.12).

7.4.3.6 Owner-Managers Proactiveness and SEIU

CCA was conducted using owner-managers proactiveness (OMP) variables as

predictors of SEIU variables to evaluate the shared relationship between the two

variable sets. The full model across all functions was not statistically significant using

Wilks = 0.93 F (6, 306.00) =.1.79, p=.10. Because Wilks represents the variance

unexplained by the model, 1- yields the full model effect size in an r2 metric. Thus for

the set of canonical functions, the r2 type effect size was 0.7 , which indicates that the

full model explained about 7%, of the variance shared between Owner-managers

proactiveness and SEIU.

Table 7.16: Multivariate Tests of Significance (OMP and SEIU)


Test Name Value Approx. F Hypoth. DF Error DF Sig. of F
Pillais .06717 1.78401 6.00 308.00 .102
Hotellings .07108 1.80062 6.00 304.00 .099
Wilks .93325 1.79244 6.00 306.00 .100
Roys .06019

The proativeness model was analyzed using SEM and its model fit indices indicated that

all minimum or maximum thresholds had either been met or exceeded (see table 7.11).
216

The path between symbolic use of export information and proactiveness have CR= -

0.676 at p 0.05. The standardized regression weight between proactiveness and SEIU

is -0.069. This result shows that while the relationship is negative as hypothesized it

signifies the weak explanatory power of the proactiveness on SEIU (see table 7.20).

Table 7.17: Regression Weights-(Owners Managers Risk Taking)


Structural path Estimate SRW S.E. C.R. P Remarks
seiu <--- omrisk -0.598 -0.126 0.522 -1,146 0.252 Not supported
iceiu <--- omrisk 0.308 0.107 0.320 0.963 0.336 Not supported
ep <--- iceiu 0.433 0.350 0.148 2.924 0.003 Supported
ep <--- seiu -0.200 -0.268 0.086 -2.326 0.020 Supported

Supported by both CCA and SEM, and contrary to hypothesis, the relationship between

owners or managers two EO dimensions (risk-taking and proactiveness) and symbolic

export information use (SEIU) were found to be insignificant. The only exception was

the relationship between innovation and SEIU-which was found to be negative and

significant as hypothesized. The results allow the researcher to thus conclude that

hypothesis 6 (H6) is partially supported- that is, the more innovative that owners or

managers become, the less they will use the export information symbolically, while

the other EO dimensions show no significant relationship whatsoever.

Table 7.21: Regression Weights (Owners or Managers Proactiveness)


Structural path Estimate SRW S.E. C.R. P Remarks
seiu <--- ompro -0.149 -0.069 0.220 -0.676 0.499 Not supported
iceiu <--- ompro 0.258 0.196 0.160 1.613 0.107 Not supported
ep <--- iceiu 0.344 0.273 0.142 2.418 0.016 Supported
ep <--- seiu -0.204 -0.265 0.085 -2.401 0.016 Supported
217

7.4.4 Uses of export Information and Export performance

H7 There is a positive relationship between the instrumental-conceptual use of

export information and export performance.

This is one of the two hypotheses which constitute the central thrust of the study-

measuring export information uses and their influence on export performance. CCA

was conducted by first using ICEIU variables as predictors of export performance to

evaluate the shared relationship between the two variable sets. The full model across all

functions was found to be statistically significant using Wilks = 0.82 F (12, 399.80)

=2.46, P<.001(See table 7.20). Because Wilks represents the variance unexplained by

the model, 1- yields the full model effect size in an r2 metric. Thus for the set of

canonical functions , the r2 type effect size was 0.18 , which indicates that the full model

explained about 18%, of the variance shared between ICEIU and export Performance.

Table 14.14: Multivariate Tests of Significance (ICEIU and EP)


Test Name Value Approx. F Hypoth. DF Error DF Sig. of F
Pillais .17816 2.41499 12.00 459.00 .005
Hotellings .19980 2.49195 12.00 449.00 .004
Wilks .82819 2.46049 12.00 399.80 .004
Roys .12983

No new Structural Equation Model was constructed for testing hypothesis 7 because

when testing hypotheses 5, 6 and (H5, H6), the relationship between the instrumental-

conceptual use of export information and export performance was equally tested. The
218

findings from the previous models (model-innovation, model-risk taking and model-

proactiveness) are used to describe the results for hypothesis H8.

In the first model (model-innovation), standardized regression weight between ICEIU

and export performance is +0.32 with critical ratio (CR) of +2.939 at p 0.05. In the

second model (model-risk taking), the standardized regression weight between the two

variables is +0.35 and the CR=+2.924 at p 0.05. In the third model (model-

proactiveness), the standardized regression weight between the two variables is +0.27

and the critical ratio CR=+2.418 at p 0.05. These results demonstrate strong support

for the hypothesis that ICEIU has a significant and positive association with export

performance.

H8 There is a negative relationship between the symbolic use of export information

and export performance.

This is the second hypothesis which constitutes the thrust of the study. CCA was

conducted using SEIU variables as predictors of export performance variables to

evaluate the shared relationship between the two variable sets. The full model across all

functions was statistically significant using Wilks = 0.89 F (9, 370.08) =1.86, P=.05.

Because Wilks represents the variance unexplained by the model, 1- yields the full

model effect size in an r2 metric. Thus for the set of canonical functions , the r2 type
219

effect size was 0.11, which indicates that the full model explained about 11%, of the

variance shared between SEIU and export Performance.

Table 14.15: Multivariate Tests of Significance (SEIU and EP)


Test Name Value Approx. F Hypoth. DF Error DF Sig. of F
Pillais .10355 1.83524 9.00 462.00 .060
Hotellings .11316 1.89443 9.00 452.00 .051
Wilks .89745 1.86941 9.00 370.08 .054
Roys .09302

As it was argued in testing hypothesis 7, models that were developed for testing

hypotheses 5, 6 were also used for testing hypothesis 8. In the first model (model-

innovation), the standardized regression weight between SEIU and export performance

variables was -0.10 with CR = -0.873 at p 0.05. Contrary to expectation, this model

demonstrates weak, albeit negative association between SEIU and export performance.

In the second model (model-risk taking), A standardized regression weight between the

variables is -0.27. The hypothesis is further supported with CR= -2.326 at p 0.05. In

the third model (model-proactiveness), the standardized regression weight between the

variables is -0.26. The hypothesis is further supported with CR= -2.401 at p 0.05. The

model demonstrates that SEIU is negatively associated with export performance, thus

supporting hypothesis 8 (H8).

Conclusively, in all the three models, paths from instrumental-conceptual export

information use (ICEIU) to export performance (EP) indicated a positive and significant

relationship. Direct paths from owners or managers EO (omeo) dimensions and export

performance (EP) reveal differing relationships. To test this mediating role and effect,
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the researcher re-specified the models. In all three models, the direct path from each of

the three dimensions of EO to export performance was removed. Chi-square value for

the model-innovation without the direct path is 2=98.204, while the one with the direct

path is 2=109.315. For model-risk taking, the chi-square value increased from 2=97.6

to 2=98.3. Lastly, the model-proactiveness increased from 2=65.52 to 2=76.08. The

results show that there are lower values of Chi-Square for the models with the direct

path, indicating that innovation and proactiveness influence export performance directly

and indirectly through the instrumental-conceptual use of export information. Risk

taking was however found to have an insignificant, though positive, relationship with

export performance.

Out of all eight (8) hypotheses, four (4) hypotheses were supported fully, two (2)

hypotheses were partially supported and two (2) others were not supported at all.

Hypotheses that were not supported were those that linked owners or managers

demographics with either uses of export information. Hypotheses that examined the

relationship between EO and export information uses were partially supported. All

hypotheses linking perceived quality of export information and uses of export

information were supported.


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Table 14.16: Summary of Hypothesis Testing Results


No. Hypothesis Remarks
H1 Owners or managers demographics are positively related to the Not supported
Instrumental-conceptual use of export information.
H2 Owners or managers demographics are negatively related to the Not supported
symbolic use of export information.
H3 Perceived Quality of export information is positively related to the Supported
Instrumental-conceptual use of export information.
H4 Perceived Quality of export information is negatively related to the Supported
symbolic use of export information.
H5 SMEs owners or managers entrepreneurial orientation is positively Partially Supported
related to the instrumental- conceptual use of export information.
H6 SMEs owners or managers entrepreneurial orientation is negatively Partially Supported
related to the symbolic use of export information.
H7 There is a positive relationship between the instrumental-conceptual use Supported
of export information and export performance.
H8 There is a negative relationship between the symbolic use of export Supported
information and export performance.
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15. CHAPTER EIGHT

16. DISCUSSION OF FINDINGS AND CONCLUSIONS

Where is the knowledge that is lost in information? Where is the wisdom that is lost in
knowledge? - T.S.Eliot

8.1 Introduction

The study objectives as set out in the first chapter were:

(i). To develop a relevant research model for studying the effect of export

information uses on SMEs export performance in a developing country

(Tanzania) context.

(ii) To explain the relationship between export information use and export

performance among exporting SMEs.

(iii). To explain the relationship between the demographic and entrepreneurial

characteristics of owners or managers of SMEs and both export information use

and export performance.

(iv). To explain the relationship between perceived quality of export information and

both export information use and export performance.

To achieve these objectives, eight (8) hypotheses were tested. Some results of

hypotheses testing were consistent with the guiding theories while some were

inconsistent and therefore not supported. The results made it possible for the researcher

to reconfigure the earlier research model into a revised research model with empirical

support.
223

8.2 The revised Research model

Developing a research model that would be relevant to studying the effect of export

information use on SMEs export performance was one of the objectives that the

researcher set out to attain. A theoretical and empirical literature review guided the

researcher into coming up with the earlier constructed integrated research model

(Figure 5). Upon data analysis and interpretations of the study findings the researcher

presents an empirically based and revised research model (figure 10).

Figure 10: Revised Research model

Perceived Quality of
Export Markets

Export Information
1. Reliability
2. Responsiveness Export
3. Assurance Information
Use

Symbolic Use
of Export
Information
Export
Domestic Market (Tanzania)

Performance
Instrumental-
Conceptual Use
Owner - Manager of Export
Entrepreneurial Information
Orientation
1. Risk Taking
2. Innovativeness
3. Proactivesnes
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8.3 Export Information Use and Export Performance among Exporting SMEs.

The hypothesis linking the instrumental-conceptual use of export information and

export performance was strongly supported. There was significant support in all three

structural models where the relationships were tested. The results thus underscored the

relevancy and appropriateness of using export information in a manner that has a strong

and positive effect on SMEs export performance. In addition, the results indicate that

managers need to eschew using export information in ways that are inconsequential

(symbolic). These results are similar to the findings of Lybaert, (1998); Hart and

Tzokas (1999); and Toften (2005) among others, whose studies were conducted in

developed countries. This study finding in a developing country helps to confirm the

universality of the positive relationship of the instrumental conceptual use of export

information and export performance.

8.4 Perceived Quality of Export Information and Export Information Use

All hypotheses relating perceived quality of export information to both uses of export

information were strongly supported. The importance of quality in determining uses of

information have been stressed previously by, among other researchers, Menon and

Varadarajan, (1992), Low and Mohr (2001) and Toften (2005). In this study perceived

quality of export information was measured using assurance, reliability and

responsiveness of the information providers. These are three of the five dimensions of

SERVQUAL. The removal of the empathy path from the model is attributed to the
225

failure of the proposed model to fit the data. So it was decided to remove the empathy

path to achieve a better fit, as recommended by, among other, scholars, Anderson and

Gerbing (1988).

It can be concluded that SMEs owners or managers first need providers of export

information who fulfil the following three quality criteria. The first of these quality

dimensions is assurance, which refers to credible and honest export information

providers with adequate skills to provide the information as needed. The second is

responsiveness - quick feedback from export information providers when owners-

managers make inquiries concerning various aspects of their exporting activities. The

last one is reliability, referring to delivery of export information within agreed deadlines

and in the form and format as per the expectations of the exporter. A snail paced and

slow bureaucracy, especially in most Tanzanian government decision- making organs

charged with the role of supporting exporting enterprises, frustrates the owners or

managers efforts to acquire and use export information.

Likewise, the perception that export information is of low quality was statistically found

to lead to SMEs owners or managers using the information symbolically (intuitionally)

more and more. This type of export information use means that managers distort the

acquired information to suit their own pre-conceived ideas, or pretend to use the

information just to satisfy the information providers. The providers of export

information are government agencies such as SIDO, Ministries, as well as international


226

or local non-governmental organizations and trade associations such as Tanzania

Horticultural Association.

Theoretically it is argued that owners or managers who have a positive perception of

quality will use the information instrumentally- conceptually that will eventually,

significantly and positively influence SMEs export performance. According to the

thesis of this study, it is difficult to impute a direct cause-effect relationship between

perceived quality of export information and export performance. This is so argued as,

from the beginning, the reasoning has been that export information, of good or poor

quality left unused or abused will not translate into improved SME export performance.

In that case, SMEs with quality export information and a moderate entrepreneur who

uses the acquired export information instrumentally conceptually will record

improved export performance.

8.5 EO of Owners or managers of SMEs to both Export Information Uses

The EO dimensions of risk taking, innovation and proactiveness were all tested

structurally and separately with uses of export information. Each dimension indicated

different results thus, revealing that, whereas these dimensions are poised to be

measuring one construct- entrepreneurial orientation, they had different effects on the

uses of export information. The subsequent discussion presents conclusions for each of

the three EO dimensions, starting with innovation followed by risk taking and

proactiveness.
227

8.5.1 Owners or Managers Innovation

Owners or managers innovation hypothesized to have a negative relationship with the

symbolic use of export information was supported. The relationship was found to be

significant and negative. This implies that highly innovative managers neither distort the

acquired export information nor do they use export information politically to suit the

interests of the providers of export information. However, the hypothesized relationship

between innovation and the instrumental-conceptual use of export information was not

supported, as it was found to be insignificant though positive. This result directs the

researcher to some aspects of entrepreneurship that were not the focus of this study.

These pertain to two contradictory conclusions regarding the optimal level of

entrepreneurship required and necessary for a firm to succeed.

According to Atuahene Gima and Ko (2001), high market orientation and high

entrepreneurship orientation is optimal, whereas Bhuian, Menguc, and Bell (2003) note

that optimal positioning is attained when a firm adopts high market and moderate

entrepreneurship orientations. This, Bhuian and others argue, is because: For highly

entrepreneurial firms, the process of gathering and disseminating market intelligence

may be done out of obligation or habit rather than as a prudent and meaningful business

practice. It can thus be argued that as entrepreneurship is multi-faceted, owners or

managers high on the innovation dimension of entrepreneurship tend to be less

instrumental-conceptual in their use of information.


228

From the preceding discussion, it then follows that innovative SMEs that are exporting

handicrafts and horticultural products may not necessarily be using the acquired export

information in an instrumental-conceptual manner as was found in this study.

8.5.2 Owners or Managers Risk Taking

Owners or managers risk taking behaviour that was hypothesized to have a negative

relationship with symbolic use of export information was not supported. The

relationship was however negative though insignificant. This implied that risk -taking

SMEs owners or managers exporting handicrafts and horticultural products do not

necessarily use information in a distortive manner; nor do they use information

politically to suit the interests of the information providers. Not supported also was the

hypothesized positive relationship between risk taking and the instrumental-conceptual

use of export information. Equally, the relationship was positive but insignificant thus

being partially supported. This implies that owners or managers who are risk takers do

not use export information properly (instrumental-conceptually) , thus failing to realize

expected export performance. These contradicting results on risk- taking can be

explained on the basis of Hoftedes cultural dimensions as they relate to risk taking

behaviour. According to Hofstedes cultural dimensions (See Appendix A4), individuals

(or our case SMEs owners or managers) from cultures with low uncertainty avoidance,

such as Tanzania, show more willingness to take risks and are open to ambiguity.
229

SMEs owners or managers in Tanzania who are engaged in exporting are said to be

great risk takers as they operate in a country with an unstable economic environment.

The owners or managers could be seeking a more stable business environment

elsewhere. SMEs need to exercise extra caution in order to successfully engage in

exporting. However, to realize export performance objectives, SMEs owners or

managers risk taking behaviour needs to be tamed with the instrumental-conceptual use

of export information. The availability and perceived quality of export information has

been noted to be one of the challenges facing Tanzanian exporting SMEs. Equally

challenging has been the aforementioned lack of capacity to use information in a manner

that produces results.

8.5.3 Owners or Managers Proactiveness

Owners or managers proactiveness that was hypothesized to have a negative

relationship with the symbolic use of export information was not supported fully. The

relationship was however found to be negative though insignificant. There was equally

no support for the hypothesized relationship between owners or managers

proactiveness and the instrumental conceptual use of export information. The

relationship, much as it was not supported fully, was positive but insignificant. Given

the turbulence and uncertainty in the export markets, proactive owners or managers

enhance their response speed, identify appropriate strategies and reap the advantage of

being the first movers. The results intimate that the surveyed SMEs owners or managers

that are venturing into new markets are grasping new market opportunities and are
230

destined to have more success in their exporting venture than those who are

conservative in their exporting approach.

The fact that owners or managers proactiveness had an insignificant relationship with

both types of export information uses was surprising. Francis and Collins-Dodd (2000)

note that owners or managers proactiveness helps firms proactively seek information

and other resources. Corroborating the information -seeking behaviour of proactive

firms, Czinkota and Johnston (1981) state that proactive firms perform more sales-

seeking and information-seeking activities than non-proactive firms. Does the mere

seeking of information translate into success in exporting? Certainly it does not. Huber

(1991) and Sinkula et al (1997) assert that proactiveness enhances the learning

capability to acquire, disseminate, unlearn and integrate market information. Recall that

the thesis of this study is that the ultimate value of export information rests on its proper

use and not on mere informationseeking activities. These results, shows that

proactiveness is not being tamed by the use of information but it is the dissemination,

learning and unlearning, and integration of export information that leads to improved

export performance.

8.6 Effects of Demographic Characteristics of SMEs Owners or Managers on

uses of Export Information

Adoption of the UET in this study was based on the theoretical base that owners or

managers are determiners of firm outcomes and that their characteristics have a bearing
231

on the decision making process (read export information use). The results of the

hypothesis testing the relationship between the demographics of SMEs owners or

managers and the use of export information showed that they were not supported. This

is reflected in hypotheses H1 and H2. Despite the increasing number of studies that

have examined the relationship between managers demographic characteristics and

various firm outcomes, there has been little consistency and no consensus among the

findings of these studies (Shrader and Siegel, 2007). For instance, the findings have led

some researchers to argue for the insignificance of the characteristics in explaining

performance to the extent that Gartner (1988) advocated abandoning of this line of

inquiry. Other researchers such as Boal and Hooijberg (2001), Markczy (1997) and

Priem et al., (1999) have also argued for a moratorium on the use of demographic

variables as proxies for psychological constructs.

8.7 Concluding Remarks

In summary, this study has provided a refined research model of export information use

and performance. The framework has revealed relationships between owners or

managers' entrepreneurial orientation, perceived quality of export information, different

uses of export information and export performance. As this study has underlined the

paucity of studies on export information use in the context of developing countries, it

has helped to highlight the importance that the perceived quality of export information

and its proper use, and owners or managers EO have on export performance.
232

CHAPTER NINE

CONTRIBUTIONS, IMPLICATIONS AND STUDY LIMITATIONS

If your contribution has been vital there will always be somebody to pick up where you left off,
and that will be your claim to immortality. Walter Gropius (1883-1969)

9.1 Introduction

This chapter presents the studys contributions, implications and limitations. As is

customary, plethora of studies are conducted with researchers being cognizant of the

fact that study limitations are inevitable. The second section, thus presents three main

limitations regarding the cross- sectional nature of the study, the problem of Common

Method Variance (CMV), and the sectoral scope. Some of these limitations should be

taken to be appropriate avenues for carrying out future research under the same theme in

the context of developing countries. On that note, the third section of the chapter thus

provides recommendation for future research directions.

9.2 Theoretical Contributions of the Study

The theoretical contributions focus on intergration of the RBV and UET into a model

the role owners-managers demographic characteristics, perceived quality of export

information and the pioneering role of the study.

9.2.1 Intergration of the RBV and UET into a Model

One of the important theoretical contributions of this study is that it culminated in a

revised research model. This model identifies perceived quality of export information

and entrepreneurial orientation (EO) as causes of the uses of export information in the
233

Tanzanian context. The model thus diverges from normative models which fail to take

into account the different contexts in which export information is used. The

contingency model, such as the one developed, recognizes that there are situation-

specific factors for each information system that will determine success or failure, and

hence strategies for success (Heeks, 2002).

This hybrid research model integrates RBV and UET in explaining export information

use and export performance with specific relevance to Tanzanias Small and Medium

Enterprises (SMEs) engaged in exporting horticultural and handicraft products. Despite

the enormous distinct influences of the RBV and UET, neither on its own provides an

adequate account of export information use. The RBV is necessary and helpful but

delivers limited value without a coherent framework. Integrating the two perspectives

within a model tends to be far more powerful and realistic. Situated in the international

entrepreneurship realm, integration of UET in this study has thus some theoretical merit

as it helps explain how SMEs owners or managers can exploit opportunities in foreign

markets. Researchers decision to include EO dimensions (risk taking, proactiveness

and innovation) as noted earlier was however meant to manage the shortcomings of the

demographics as prescribed by the UET.

The RBV suggests that firms can create a CA through the development and intelligent

application of core resources and capabilities (Wernerfelt, 1984; Hamel and Prahalad,

1990; Barney, 1991; Peteraf, 1993). It was stated earlier, that it is not the mere
234

possession of resources that will ensure that an enterprise is successful in the exporting

business, but rather the instrumental conceptual use of export information was found to

have a strong and positive link with export performance. The conclusion support

established theories and corroborates Penrose (1959) and Chandler (1977) , who state

that neither the existence of resources nor their random use is enough, since only by

applying resources strategically can economic rents be created and extracted.

Furthermore, Ibeh and Wheeler (2005) also assert that in order to utilise export market

research properly, it often means greater internalization of information on target export

markets, which tends to equip firms with the knowledge and insight to develop and offer

suitable products and services, with significant competitive benefits. While the RBV

distinguishes between resources and capabilities as resource flows (Dierickx et al.,

1989), the latter encapsulated that management resource is of particular importance, but

is an often-overlooked catalyst (Aaker, 1989). The oversight is surprising as the

managers are most often in charge of combining and recombining firms resources

(Penrose, 1959; Aaker, 1989).

The research model may serve as a road map for owners or managers to examine and

analyze a variety of uses of export information. For researchers, the model may be

useful for generating new ideas or uncovering relevant research issues relating to

increasingly internationalizing SMEs and how they use export information. The revised

model has been and can be used to examine (1) The relationship between export

information uses and export performance. (2) The relationship between EO and export
235

information use. (3) The relationship between perceived quality of export information

and both export information uses. All these relationships were assessed in the Tanzania

context.

9.2.2 Role of Owners or Managers Demographic Characteristics

The new revised model completely excludes the owners-managers demographics

whose relationships with both uses of export information were found insignificant. This

study did not set out to seek the validity of demographics in explaining uses of export

information. Instead it sought to establish the relationship, if any, between the

demographics of owners-managers of SMEs engaged in exporting handicrafts or

horticultural products and their use of export information. An explanation for the

exclusion and for the insignificant relationship is provided in the next section, and

recommendations for subsequent studies adopting the demographics of owners or

managers are provided in the succeeding sections.

Regarding managers age, Hambrick and Mason (1984) argue that advanced age could

be detrimental to enterprises outcomes, as older managers may be less effective in

grasping new ideas and behaviours. The second reason is that, as the environment is

changing, managers tend to rely more on past experience and the information they have

acquired over time and thus potentially working to the organizations detriment (Katz,

1982). This is so because older managers are at a point in their lives when they are

unwilling to take risks. That age was found to be unrelated to the use of export
236

information in Tanzania could be explained by the differences in contexts between

developed and developing countries. As noted early, the concept of age is perceived

differently in different countries. According to Hofstede (1996), most SSA countries

(including Tanzania) exhibit high power distance or power respect (Kiggundu, 1988)

and authority is assigned based on age. Young managers may thus find it more difficult

to access and use export information instrumentally and conceptually and thus instead

resort to the symbolic use of information intended to politically appease the information

providers, who, if they are older and the status attached to their age are held in high

esteem and accorded great respect.

Gender, a cultural and social construction of a personality which is manifested in the

qualities and behaviour of men and women, was considered in the testing of the

relationship between the owners or managers characteristics and uses of export

information. The UET does not specifically address gender issues with possible

influences or implications for organizational outcomes. Bringing gender analysis into

this study is because a deeper understanding of women's way of knowing has great

potential for information behaviour research and 'highlights the value of gender as a

potentially significant variable (Julien, 2005, pp 390). Slightly less than two- thirds

(62.4%) of the surveyed respondents were male. The insignificant relationship of the

owner or managers gender and use of export information also warrants a brief

explanation and argumentation. It was the contention of the study that women and men

approach decision making (read use of export information) differently. Lizrraga,


237

Baquedano and Cardelle-Elawar, 2007, pp 387) capture these gendered differences in

information behaviour by arguing:

Thus, women are more concerned with uncertainty, doubts, and

the dynamism that are involved in the decision. They place more

value on time and money; they are more concerned about the

consequences that may derive from the decision, no matter

whether these affect them or other people. Women are more aware

of the constraints that the setting and close persons put on them,

and their emotions are more important to them in the decision

process. Conversely, men assign more importance to the analysis

of the information required to carry out the decision and to the

definition of the goals or purposes of the decision. They are more

motivated during the process and also feel more intensely the

pressure from all the work-related aspects

Women, it was contended, are inclined to using information more symbolically than

males, who are more inclined to use information in an instrumental- conceptual way.

This insignificant relationship led the researcher to conclude that in the handicraft and

horticultural export business, males and females use export information in the same way

without perceptible differences. This conclusion is supported by Taggart and Valenzi

(1990), who also found no gendered differences regarding rational and intuitive styles.
238

While it seemed obvious that owners or managers education is positively associated

with the instrumental-conceptual use of export information and negatively related to the

symbolic use of export information, the insignificant relationships found were both

baffling and unexpected. Higher educational levels have been linked to greater use of

formal planning, more complex coordinating devices, and enhanced information

processing capacity (Hambrick and Mason, 1984). One would have thought that the

exporting business that is shrouded in great uncertainties would call for more

instrumental-conceptual use of export information, thus requiring relatively highly

educated businesspeople. This, as was found, was not the case, as the majority (86.1%)

of the surveyed owners or managers has either primary or secondary education only.

Their responses regarding uses of export information could therefore have influenced

the findings with bias against education being an important factor.

Slightly over 91% of the owners or managers stated that they started exporting in the

last 11 years with 23.4% noting that they have had no international experience. The

hypothesis was that owners managers who are internationally and export experienced

would use export information in an instrumental conceptual manner. However, the

relationship strength was found to be insignificant. The newness of the Tanzanian

owners or managers in the international markets could help to explain the insignificant

relationships.
239

Foreign language proficiency reflects managers greater psychological proximity to

certain foreign countries and may thus be positively linked to the instrumental

conceptual use of export information. According to Leonidou et al. (1998), foreign

language proficiency has been positively associated with export development since this

skill may help to establish social and business contacts abroad, improve communication

and interaction with foreign customers, assist in understanding foreign business

practices, and facilitate effective planning and control in overseas markets. The failure

of these last three demographic variables, foreign language proficiency and export and

international experience to explain the uses of export information could be attributed to

what Hambrick and Mason (1984) noted that, despite the greatest a priori interest they

do not have close psychological analogues.

These findings have helped to explain that exporting SMEs owners or managers are not

enslaved in the demographics. Empirically, this study therefore contends that

demographics have no explanatory power over the extent to which and the way

managers use the acquired export information. Despite these results, the researcher is

cautious not to call for the cessation of pursuing this line inquiry on the use of owners

or managers demographics as proxies for complex psychological profiles. This is

argued because a stand -alone, comprehensive and qualitative study may reveal different

results and help to bring to the fore some of the theoretical and methodological aspects

that were not covered by this study.


240

9.2.3 The Role of Perceived Quality of Export Information

This study contributed to the body of knowledge that has empirically shown the role

that the perception of the quality of export information plays in positively influencing

the uses of export information. The importance of the quality of export information as a

determinant of its proper use is corroborated by Wang and Olsen, (2002) and Doole,

Grimes and Demack (2006) who assert that the collection of high quality, timely, and

relevant information, its dissemination in the organization and its proper use contribute

to the success of exporting companies in the long-term. In fact, Jais (2007) contends that

the relationship between information use and performance is negative for information of

poor quality. In most previous studies what was considered was the mere acquisition

and subsequent use of information; whereas this study has demonstrated that the

perceived quality of export information is of paramount importance.

9.2.4 Pioneering Role of the Study

This study is, to the researchers understanding and knowledge, one of the very few

empirical studies, if not the first on the use of export information in Africa generally and

Tanzania in particular. Since the cross-cultural use of constructs has sometimes led to

controversial findings, this contribution should be appreciated. Although the association

between export information use and performance had already been empirically studied

in the developed world or postulated by anecdotal evidence, this study has brought to

the fore confirmation and disconfirmation of the earlier findings.


241

9.3 Implications of the Findings

9.3.1 Managerial Implications

The results of this study provide some implications for SMEs owners or managers.

Their perception of the quality of export information and their EO are important in

explaining the uses of export information. SMEs owners or managers need to always

seek to acquire and use the information that they truly believe is of the prerequisite

quality. It is uneconomical and in fact should not be encouraged for SMEs owners or

managers to spend a lot of their scarce resources on collecting data that go unused or are

used improperly.

The study findings are also consistent with the extant literature that argues that EO can

be a resource-consuming strategic orientation (Covin and Slevin, 1991). Owners or

managers need, therefore, to appreciate the empirical- based evidence that investing in

EO needs to be developed and preserved as a strategic resource that when aptly

developed leads to success.

9.3.2 Policy Implications

One of the major challenges facing the Government of Tanzania in the recent past has

been to actively seek to promote the enhanced participation of SMEs in international

activities and operations in order to increase their long-term competitiveness. While the

drive is made against the inadequacy of export information, finance and other structural

constraints hindering international market operations, SMEs in the country also lack the
242

capabilities and capacities to appropriately utilize the export informational resources at

their disposal. So while a lot of efforts have been geared towards affording SMEs

engaged in international markets ease access to export information and finances, there is

a need to supplement the efforts by:

a) Addressing the development of enterprises capacities and capabilities to

appropriately utilize the export information acquired. Drawing upon the RBV of

the firm (Barney, 1991) and UET (Hambrick and Mason, 1984), the researcher

confidently states that it is of great importance for SMEs not only to acquire

information but also to put it to proper use so that they can contribute more

substantially to national economic growth and development.

b) Improving the quality of export information in ways that may enhance its use

and hence helping the enterprises to realize their bottom-line. The research

findings and extant literature support the strong and positive association between

perceived quality of export information and proper use. BDS providers and

government authorities charged with the role of disseminating export

information to SMEs need to acknowledge the fact that they need to be aware of

the preferred attributes of export information quality.

c) Though no support was found between owners or managers demographic

characteristics and the use of export information, it is imperative for the


243

government to consider placing resources into supporting SMEs participation in

international trade fairs and trade missions as this will improve their acquisition

of export information that may be put to proper use. Equally important is for the

government and other stakeholders to continue emphasizing education that will

equally help improve entrepreneurs foreign language proficiency. Other

demographics such as age and gender that were found to have insignificant

linkage with the various uses of export information are beyond government

control.

d) The study findings have demonstrated albeit partially, that EO is a valuable

resource for exporting SMEs and thus the government needs to focus on (i)

supporting and developing enterprises which exhibit low levels of EO for

support. (ii) Selecting criteria for supporting exporting SMEs with EO. This

would help the government to minimize exporting SMEs development costs

while realizing its objectives. Similarly, to remedy the failure rate of most SMEs

which is invariably documented, the government needs to organize various

innovation-related support mechanisms to increase the export performance of

the exporting SMEs. This may include the formulation of an innovation policy

that will guide and protect innovative ideas, services, goods and technologies.

e) Lastly, the developed and tested research model can be used as a tool by relevant

government institutions and organs in crafting their SMEs international policies


244

and secondly use it as a basis for formulating SMEs intervention policies and

programmes for SMEs.

To be able to realize all these, the government, BDS organizations and other

development partners need to primarily translate the findings of this study and

others of this kind into intervention policies and practical intervention programmes

aimed at SMEs.

9.4 Limitations and Suggestions for Future Research

This study, like many of its kind, has limitations that need to be taken into account when

interpreting its findings and subsequent conclusions. First, according to many

researchers (Cichy, Cha, Kim, 2008; Bozionelos, 2003), a cross-section survey such as

this precludes inference of cause-effect relations between independent and dependent

variables. However, this study is still considered important in providing a foundation

for future studies, which can provide a more rigorous scientific basis for effective

predictive relations. Supported and most especially not-supported hypotheses seem to

trigger further research in order to unravel deep meanings, understanding and

interpretations.

Related to the first limitation is the second potential problem of Common Method

Variance, sometimes referred to as a monomethod bias. Spector, (2006) claims that it is

widely accepted that correlations between variables measured using the same method,
245

usually self-report surveys, are inflated due to common method variance. In this study,

such variance might arise since all the information about SEIU, ICEIU and PQEI,

OMEO and EP were obtained from owners or managers self report surveys (Cichy,

Cha, Kim, 2008; Spector, 2006). Various sources of bias due to common method

variance have been noted and the three major ones are social desirability, negative

affectivity and acquiescence-the tendency to agree with items independent of content

(ibid.). Future research could benefit by adopting, whenever possible, enterprise and

individual measures evaluated by enterprise employees instead of owners or managers.

Besides, Nchimbi (2003) also notes that data obtained in a survey directly from owners

or managers may be subject to occasional inaccuracies in reporting due to a lapse in

respondents memories. The oft-mentioned poor record keeping by SMEs owners or

managers further exacerbates the problem.

Thirdly, the respondents of the study are mainly from the handicraft sector and a few

from the horticultural sector, both of which are however inherently inclined towards

exporting. It is thus being suggested that caution needs to be exercised when attempts

are made to generalize the findings to the Tanzanian context. Future studies on the area

may be expanded to include enterprises serving the domestic market and may benefit if

the research covered more sectors of the economy.


246

Despite the noted limitations, it is envisaged that subsequent researchers will hopefully

use the study findings to delve further to gain a deeper understanding of the studied

phenomenon-use of export information among SMEs owners or managers.

9.4.1 Direction and Suggestions for Future Research

There are issues in this study that need further research. These issues include diversity

of the symbolic use of export information and performance measures, longitudinal study

instead of a cross-sectional survey and coverage. These are issues which could not be

covered for the described reasons. A brief account of these issues is given.

9.4.1.1 Diversity of Uses of Export Information

Given the multidimensional nature of the constructs used in building the research model,

it is conceivable that a rich set of relationships, rather that an omnibus relationship,

exists between export information uses, owners or managers characteristics and export

performance. It is against that background then that the research model constructed will

afford researchers on SMEs internationalization in developing countries several

research directions. One of the pertinent research issues that need further delving into is

the acknowledgment of the diversity of uses of information in general and export

information in particular. Whereas this study, for instance, treated the symbolic use of

information as a one- dimensional construct, literature reveals many uses of the

symbolic uses of information which might have different effects on export performance.

According Vyas and Souchon (2003) to symbolic use of information may take any of
247

the following forms: social, power seeking, non-use, affective, and legitimizing. Others

are self-promoting, haphazard and distortion of information.

9.4.1.2 Diversity of Export Performance Measures

Export performance is another area that has been problematic to study. This study had

earlier sought to use both objective and subjective performance measures, however due

to the reasons noted; the researcher resorted to using subjective measures. The

researcher noted and argued for the importance of objective financial measures and calls

for researchers to build trust and create good rapport with SMEs owners or managers

over time. This will help the SMEs owners to willingly disclose quantitative and

financial information about their businesses.

9.4.1.3 Longitudinal Study

To be able to carry out a similar study in future, researchers could adopt the longitudinal

approach. The longitudinal approach would also help in addressing the shortcomings of

cross -sectional studies such as this. Through repeated observations of the owners or

managers use of information and development of their entrepreneurship orientation,

which is typical of longitudinal studies, it will be possible to exclude time-invariant

unobserved individual differences.


248

9.4.1.4 Sectors and Geographical Coverage

As this study confined itself to two sectors of the economy (horticultural and

handicrafts) and in four regions of Dar-es-Salaam, Arusha , Kilimanjaro and Zanzibar ,

further studies that covers more sectors and a wider geographical areas would be

recommended to afford generalizations beyond the two sectors studied. The role and

importance of information in decision-making is so great that it cannot be left to a few

sectors. It is argued that information is power but the potency of information resides in

its use and not in its mere acquisition and possession.

9.4.1.5 Comparative Studies

Lastly, future researchers may look into the possibility of carrying out comparative

studies on the use of export information between (a) SMEs from a developing country

exporting to another developing country and (b) SMEs from a developing country

exporting to developed countries. This is important for more a systematic, fruitful

development of export marketing theory and validation purposes of the research model.

It has sometimes been stated, sometimes wrongly, that all developing countries are

similar in context. Whereas there are quite a number of similarities, these similarities

belie other contextual differences. The same can be said that the amplified differences

between developed and developing countries may sometimes belie certain similarities

that SMEs may encounter when engaging in global markets.


249

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Appendix 1: A Questionnaire for a Survey of Exporting SMEs in Tanzania


Introduction
Dear owner-manager, I would like to kindly request you to participate in this PhD research.
The main purpose of the study is to examine owners or managers entrepreneurial orientation
and uses of export information among exporting SMEs. Information collected will be
treated confidentially and will solely be used for academic purposes. The success of this
study greatly depends on your participation. Names of individual respondents and
enterprises will not be included in the final report. Should you be interested on the findings,
the final report may be availed to you on request. I thank you in advance for accepting to
participate.

Section A: General Company Information


Please answer all questions in this section. If you are not sure, answer to the best of your
knowledge.
1. In what industry is your company/ business?
A: Handicrafts ( ) B: Horticultural ( ) C: Others (Mention)

2. What is your primary export product?.

3. Which country is your primary export market?...

4. What is the total number of employees in your company?


a. MaleFemaleTotal

b. Permanent EmployeesCasual employees ...

5. When was your company founded?.

6. How many years was your company in operation at the time of your first export
sale?.........................................................................................................................

7. Which was your first export market?...

8. Which were your next three countries you exported to?


i.
ii.
iii.

9. Do you have an export department /division?


A: Yes ( ) B: No ( )

10. Do you have an export manager/director dealing with export activities?


310

A: Yes ( ) B: No ( )
11. Who is in charge of export activities in your company?
(Position)

12. How do you acquire export information you need fro business decision making?
.....
.................................................................................................................................
.....................................................................................................................

13. Who are the providers of export information you need for business decision
making?
.................................................................................................................................
.................................................................................................................................
.................................................................................................................................

Section B: Export Information Use


Key: 1-Strongly Disagree 2- Disagree 3-Undecided 4 -Agree 5. Strongly Agree

SN Statements
14 No export decision would be made without information 1 2 3 4 5
collected.
15 Information collected is translated into significant 1 2 3 4 5
practical action.
16 Information collected is often used to keep the company 1 2 3 4 5
knowledge base updated.
17 Information gathered is often not considered in the making 1 2 3 4 5
of decisions for which it was initially requested.
18 Information is often collected to justify a decision already 1 2 3 4 5
made.
19 Information gathered and used to justify an export 1 2 3 4 5
decisions is often collected/interpreted after the decision
has been made.
20 Information acquired is sometimes manipulated in order to 1 2 3 4 5
justify decisions really made based on instinct.

Section C: Quality of Export Information


Please put a circle around a number that reflect your perception about the statements
below.
Key: 1-Strongly Disagree 2- Disagree 3-Indifference 4 Agree 5 Strongly Agree
311

21 Export information we use in making decisions is delivered 1 2 3 4 5


within agreed deadline (Reliability).
22 Providers of the export information are credible, honest with 1 2 3 4 5
adequate skills (Assurance).
23 Providers of export information have the will and resources 1 2 3 4 5
to be available to serve our informational needs (Empathy).
24 Providers of export information provide quick feedback 1 2 3 4 5
without reminders (Responsiveness).

Section D: Export Performance: Please put a tick () on the appropriate box.


Key: 1-Strongly Disagree 2- Disagree 3-undecided 4 -Agree 5. Strongly Agree

How would you rate the firms financial performance in as far as the following
statements are concerned?
25 Our export business has been very profitable 1 2 3 4 5
26 Our export business has generated a high volume of sales 1 2 3 4 5
How would you rate the level of satisfaction with your export business in as far as the
following statements are concerned?
27 Our export business has fully met our expectations. 1 2 3 4 5
28 Our export business performance has been very satisfactory. 1 2 3 4 5

29. What has been your approximate export sales growth over the past three years?
Negative 0-10% 11-20% 21-30% 31-40% 40+ %

Section E: Managers Demographic Characteristics and Experiences


Please put a tick () on an appropriate box.

30. Highest formal educational level achieved by the owner manager/managing


director.
Masters degree
formal

Ordinary level

Advanced level
secondary school

Undergraduate

PhD education
Postgraduate
secondary

Advanced
education

education

education

education

education

education

education

education

education
Diploma

diploma

diploma
Primary
No
312

31. Have the owner-manager lived abroad for at least six months? A: Yes( ) B:No( )

32. How many languages can the owner manager communicate fluently?.........................

33. For how long has the owner manager been involved in export activities?....................

34. What is your age range?


A: 20-29 (.) B: 30-39 (.) C: 40-49() D: 50-59(.) E: 60+ Years (.)

35. Gender of the owner manager? A: Male (.) B: Female (.)

Section F: Manager Proactiveness, Risk Taking and Innovation


Please put a circle around a number that reflects your perception about the statements
below.
Key: 1-Strongly Disagree 2- Disagree 3-Undecided 4 -Agree 5-Strongly agree
S/N Innovation Dimension
36 Variety and change are not considered important 1 2 3 4 5
37 The same methods have been used for quite a long time 1 2 3 4 5
38 New approaches to things are rarely tried 1 2 3 4 5
39 Things tend to stay about the same 1 2 3 4 5
Riskness Dimension
40 My new projects are approved on a stage-by-stage 1 2 3 4 5
basis, rather than with blanket approval (reversed scale)
41 I adopt a rather conservative view when making major 1 2 3 4 5
decisions (reversed scale)
42 In this firm, I tend to make decisions that challenge the 1 2 3 4 5
status quo
43 I am open to risk and does not perceive new methods, 1 2 3 4 5
procedures and information as threatening
44 I am not afraid to risk some failures in order to try new 1 2 3 4 5
things or look for new solutions to problems
Proactiveness Dimension
45 I am constantly seeking new opportunities related to 1 2 3 4 5
present operations
46 I am constantly on the lookout for business that can be 1 2 3 4 5
acquired
313

Respondent contacts (Optional)


Name: ......
Position
Company
Name:...................
Address:...
Telephone No...
MobileTelephone:

Email:Website: ....

Lead Researcher Contacts


Please contact the lead researcher for any question or comments regarding this study:
John R.M. Philemon
University of Dar-es-Salaam
Telephone: +255-754-384453 or email: jonric@fcm.udsm.ac.tz

To be Filled by Research Assistant

Name:.Signature:.Date:.

Thank You for Your Precious Time and Cooperation


314

Appendix 2: Entrepreneurship Orientation Dimensions


Study Construct Label Type of Manifest Scale
Construct Variables
Miller Entrepreneurship A firms actions Proactiveness, Items from scales
(1983) innovation, risk- used by Miller and
taking Khandwalla in the
-70s. Presented in
Miller and Friesen
(1982)
Covin and Entrepreneurial Firm behaviour Proactiveness, Modification of
Slevin behaviour innovation, risk- Miller (1983) 5
(1986) taking items original
Covin and Entrepreneurial Firm behaviour Proactiveness, Covin and Slevin
Slevin posture innovation, risk- (1989)
(1990) taking modification of
Miller (1983)
Covin and Entrepreneurial Firm behaviour Proactiveness, Covin and Slevin
Slevin posture innovation, risk- (1989)
(1991) taking modification of
Miller (1983)
Miles, Entrepreneurial Underlying Proactiveness, Covin and Slevin
Arnold and orientation philosophy innovation, risk- (1989)
Thompson determining the taking modification of
(1993) nature and scope Miller (1983)
of activities and
plans
Merz et al. Strategic Philosophy of Proactiveness, Miller (1983)
(1994) orientation business innovation, risk-
behaviour taking
Brown Entrepreneurial Willingness to Proactiveness, Covin and Slevin
(1996) orientation engage in innovation, risk- (1989)
behaviour taking modification of
Miller (1983)
Lumpkin Entrepreneurial Processes, Innovation, risk- Covin and Slevin
and Dess orientation practices and taking, (1989)
(1997) decision making proactiveness, modification of
activities leading competitive Miller (1983), two
to new entry aggressiveness original items
315

Appendix 3: Content Validity Index (CVI) Ratings on a 26-Item Scale


Items Expert 1 Expert 2 Expert 3 Expert 4 Experts in I-CVI
Agreement
1 4 1
2 4 1
3 4 1
4 4 1
5 0 3 0.75
6 4 1
7 4 1
8 4 1
9 4 1
10 4 1
11 4 1
12 4 1
13 4 1
14 4 1
15 4 1
16 4 1
17 4 1
18 4 1
19 4 1
20 4 1
21 0 0 2 0.5
22 0 3 0.75
23 0 3 0.75
24 0 3 0.75
25 0 3 0.75
26 0 3 0.75
22 24 26 24 24
84.6% 92.3% 100.0% 92.3% Average I-CVI 92.3%
316

Appendix 4: Hofsteedes Uncertainty Avoidance and Masculinity-femininity

Key: EAF: East Africa (On the top right quadrant)