ARTICLE NO 2

Presented to
Mr. Aamir Abaas

A Causal Study Of Relationships Between Firm

Characteristics, International Marketing
Strategies And Export Performance
Author: B. Peter Hoang
Source: Management International Review, Vol. 38, Challenges and Solutions for International
Marketing Management (1998), pp.73-93
Published by: Springer
URL: http://www.jstor.org/stable/40228474

Presenters
Hamayun Hassan
Fahad Ahmad Khakwani
Faiq Hassan
Salman Nazir
Farhan Butt

Abstract

This Study Examines the causal relationship between firm

characteristics, international marketing strategies and export
performance.
Different statistical tools
355 Manufacturing Export Firms of New Zealand.
Result of this study suggest that export performance is significantly
influenced by the choice of international marketing strategies which
are determined by a firms characteristics.

Introduction

This study was written after the change in New Zealands export
environment.
In the past, Government of New Zealand imposed the stiff regulation
which effect the New Zealands export and restrict it on fewer products
and markets.
Their standard of living declined from top levels to 23 rd level which was
caused by Governments restriction.
After this situation, Government and private sector redesign the policy
of trade and implement Open Economic Policy.

Cont..
This theory adopted, and market and product diversification become a
major objective of New Zealands international trade policy.
This policy create the problems for firms because they have not
enough experience to trade internationally.
B. Peter Hoang identified this Situational Gap and written this study
which postulates that export performance is affected by the
international marketing strategies which are determined by firms
characteristics.

International Marketing Strategy

There are to many theories on international marketing strategy but are
all conflicting with each other.
This theory eliminate this conflicting factor by Full Structural
Analysis to examine the causal relationship of between international
marketing strategies and export performance.
International Expansion
International expansion is a critical process in todays business
operations. Especially for New Zealand firms because they have small
home market size.
They have to export sales for growth and survival.

 Some marketing strategies were discussed including Market

Selection, Market Segmentation and Rate of entry.
Product Line Strategy
It has been suggested that if firm have broad product line then it will be
perform better in trade rather than others.
Export Promotion
It is suggested that a positive relationship between export performance
and the level of promotion activities give success to firm in trade.

Research Questions

Q1: Identification of factors for enhancement of export performance of

any firm?
Q2: The impact of promotional strategy of export performance of a firm?
Q3: The role of market strategy, product strategy and promotion strategy
in the favor of export performance?

Determination Of International Marketing

Strategies And Export Performances

The relationship between firm characteristics and export operations has

been studied extensively in past. But..
Two school of thoughts.
The reason behind divergent result in research finding in past.
Delineated firm characteristics is current study.
The size of firm
The level of business experience
The intensity of international involvement

Firm Size
Three school of thoughts (1964-1989)

Positive correlation between firm size, international marketing strategies and

export performance.
Little no relationship between firm size, international marketing strategies and
export performance.
Inverse relationship between firm size, international marketing strategies and
export performance.

Reasons of discrepancy

Conceptual / methodological problems.

Only direct relationship was studies.
Variations in firm size operationally defined.

High Cost, High Risk and High Profit

International Experience
A firm acquires more international experiences level to become more
Physically distant measures because that the number of years in which
a firm engage business operations inevitably has some bearing on its
strategies and market performance.
Intensity of international involvement
A firm which actually peruse international operations tend to attain
better export performance.

Two Dimensions of Activeness

1- Marketing Research
Lacking knowledge of overseas markets is often a major obstacle in the development of
international operations by concluding market research, a rational market strategy can
be implemented and directs to export success.

2- Marketing Planning Activities

Several studies developed the importance of planning activities . Market Planning is an
incremental process. There is a positive connection between market planning and export
performance.

Measure Of Export Performance

The frequent use of export performance indicators include

Export
Export
Export
Export

Intensity
Growth
vs Non Export
Profitability

It was generally agreed that multiple indications should be used

because they tend to offer a more complete picture of a firms
performance in export performance.
And to show basic performance of any firm with respect to export.
Usually used to measure export performance
1. Export Intensity
2. Export Growth

Overall Research Design

Research Design
Multistage research design
Multistage research design has been employed in the present study to emphasically
substantive the causal relationship between firm characteristics, international marketing
strategy and export performance
Firstly, Collect relevant secondary data on different variables.
Secondly, Correlation analysis employed to determine which selected variables are likely
to be good predictors and good for further data analysis.
Thirdly, Factor analysis and variable rotation applied to evaluate the measurement model.
Finally, Maximum Like hood (ML) is adopted to test hypothesis.

Instruments & Samples

Data Type
Primary & Secondary

Data Collection Instrument

Questioner / Mail Surry

Testing
Academic stage
Industry stage

Sample Size
755

Response rate
51%

Statistical Tool Apply

Normal Probability / Variance croon Bach alpha etc.

Operational Model & Research

Hypothesis
To determine the like hood of good export performance predictor the
correlation were applied.
Group variables
International Marketing Strategy
Firm Characteristics
Export Performance

Cronbachs Alphas of Measurement Instruments

Factors

Coefficient alphas

Market Expansion Strategy

0.8462

Product Breadth Strategy

0.8934

Promotion Strategy

0.8384

Firm Size

0.9462

International Experience

0.8875

Intensity of Involvement

0.8982

Export Performance

0.8533

An Operational Model of Firm Characteristics, International Marketing Strategies

and Export Performance

Firm Size

Market
Expansion
Strategy

Intensity of
Involvement

Product
Breadth
Strategy

International
Business
Experience

Promotion
Strategy

Export
Performance

Hypothesis
H1: Export Performance is likely to be positively related to a firms:
a)
b)
c)
d)
e)
f)

Market expansion strategy:

Product breadth strategy:
Promotion strategy:
Size:
Intensity of international involvement:
Level of international business experience:

Ho: Export Performance is likely to be inversely/negatively related to a firms:

a)
b)
c)
d)
e)
f)

Market expansion strategy:

Product breadth strategy:
Promotion strategy:
Size:
Intensity of international involvement:
Level of international business experience:

H2: Market expansion strategy is likely to be positively related to:

a) The size of a firm:
b) The intensity of international involvement:
c) The level of international business experience

H0: Market expansion strategy is likely to be inversely/negatively related

to:
d) The size of a firm:
e) The intensity of international involvement:
f) The level of international business experience

H3: Product breadth strategy is likely to be positively related to:

g) The size of a firm:
h) The intensity of international involvement:
i) The level of international business experience

Ho: Product breadth strategy is likely to be inversely/negatively related to:

j) The size of a firm:
k) The intensity of international involvement:
l) The level of international business experience

H4: Export promotion strategy is likely to be positively related to:

a) The size of a firm:
b) The intensity of international involvement:
c) The level of international business experience

Ho: Export promotion strategy is likely to be inversely/negatively related

to:
d) The size of a firm:
e) The intensity of international involvement:
f) The level of international business experience

Discussion
The theoretical study verified that export performance can be theoretically
linked to international marketing strategies & firm characteristics.
1. Firstly, Export sales and growth can be enhanced by adopting an aggressive market
expansion strategy. This includes carefully selecting foreign markets, not only similar
markets but physically distant ones too and targeting as many markets as possible.
By doing so, firms not only can diversify or reduce risk and stabilize revenue but also
increase export sales and growth. In this respect, theories a plenty of room for New
Zealand manufacturing firms to improve this export performance.
2. Secondly, the product breadth strategy which is measured by the number of product
lines, product width and new product development can also be used to improve
export performance. The research result suggests that export sales and growth can
be expanded by regularly introducing new product into potential markets and
increasing the number of products served in the major markets.

The theoretical study verified that export

performance can be theoretically linked to
international marketing strategies & firm
characteristics.
1. Firstly, Export sales and growth can be
enhanced by adopting an aggressive market
expansion strategy. This includes carefully
selecting foreign markets, not only similar
markets but physically distant ones too and
targeting as many markets as possible. By
doing so, firms not only can diversify or reduce
risk and stabilize revenue but also increase
export sales and growth. In this respect,
theories a plenty of room for New Zealand
manufacturing firms to improve this export
performance.
2. Secondly, the product breadth strategy which
is measured by the number of product lines,
product width and new product development
can also be used to improve export
performance. The research result suggests that
export sales and growth can be expanded by