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Aaby1989Managerial Influences

Aaby1989Managerial Influences
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  African Journal of Business Management Vol. 6(15), pp. 5150-5158, 18 April, 2012Available online at 10.5897/AJBM11.1408ISSN 1993-8233 ©2012 Academic Journals Review    Management influence on the export performance offirms: A review of the empirical literature 1989 – 2009 Farshid movaghar moghaddam 1 *, Abu Bakar Bin Abdul Hamid 2   and Elham Aliakbar 3   1 Department of Management, Abade branch, Islamic Azad University, Abade, Iran. 2 Department of Human Resource and Development, Faculty of Human resource and Development, UniversityTechnology Malaysia, Malaysia. 3 Faculty of Human resource and Development, University Technology Malaysia, Malaysia.   Accepted 11 January, 2012 Growing of international trade and sales activity in the global market has caused increasing attention tothe determinants of the export performance of firms. However, despite numerous published works ondeterminants of a firm’s export performance, the literatures are characterized by the lack of consensusamong researchers as to what constitutes managerial factors. As a result, the reviews of articlespublished between 1989 and 2009 attempted to assess the management determinants of exportperformance. Based upon comprehensive and systematic literature study, a synthesized model appliedfor understanding management influence on export to enhance the firm export performance will beeventually designed. In this study, the managerial determinants are classified into skill-based andattitudinal characteristics. Later, the results of previous studies about the relationships betweeninternal determinants and firm export performance are mentioned, and a proposed conceptualframework is developed for the researchers who are interested in investigating about this issue further.Key   words: Firm export performance, management characteristics, attitudinal characteristics, skill basedcharacteristics.  INTRODUCTION Growing of international trade and sales activity in theworld has increasingly accentuated the importance ofexporting for firms and countries. Globalization process,global market competition and the subsequentperformance difficulties encouraged by exporters causedthe increasing interest in this subject (Sousa et al., 2008).Exporting plays a vital role in the world and has countlessbenefits for firms and countries. Exporting is afundamental strategy in ensuring a firm’s survival orgrowth, and firms may achieve the competitive advantagein international markets with a positive influence oncurrent and future export performance (Navarro et al.,2009). Many companies have recently allocated moreattention and resources in order to export their productsto foreign markets (Julian and O’Cass, 2002a, 2003; *Corresponding author. E-mail: Lages, 2003; Navarro et al.,   2009). In addition,contributing to nation’s economy prosperity is one of theimportant roles of exporting (Koksal, 2008;Shamsuddoha, 2004; Ahmed et al., 2004; Langes andMontgomery, 2005). Export has great effects ontocountries in terms of items such as: enhancing economicgrowth and activity, increasing the internal production,reducing the unemployment rate, supplying foreigncurrencies for import, becoming growth accelerator,making favorable balance of trade, accumulating theforeign exchange reserves, increasing profitability andsocietal success, enhancing trade balances and industrialdevelopment, improving capacity utilization andproductivity, providing employment and creating new jobopportunities. Thus, the ulterior goal in most firms andnational governments is expanding the exports.Understanding the determinants of export performancein today’s business environments has been emphasizedby understanding the factors like: the impact of export   success and performance on the firms’ survival andexpansion, the achievement of having competitiveadvantage in international markets and the developmentof economy as well as the development andimplementation of public policy. Hence, over the past 30years, a large substantial number of studies have beendone to identify the key variables that affect the exportperformance of firms (Zou and Stan, 1998; Baldauf et al.,2000; Lages, 2003; Ahmed et al., 2004; Haahi et al.,2005; Sousa et al., 2008). Identifying the variables whichaffect the export performance is a strategic movementand has triggered vital interest for export managers,public policy makers and researchers to study them(Sousa et al., 2008; Lages, 2003; Haahi et al., 2005;Mohamad et al., 2009).Since Bilkey’s (1978) work, that was the first study onsuccessful export practice, many previous literatureshave identified numerous variables as determinants ofexport performance. Later, researchers such as Aabyand Slater (1988), Zou and Stan (1998) and Sousa et al.(2008) summarized and reviewed the export performanceliterature. These literatures classified the determinants ofexport performance. Cooper (1985), Baldauf et al. (2000),Cicic et al. (2002) and Leonidou   et al. (2002) assumedthat export performance depends on the firms’ structureor internal factors, international environment or externalfactors and marketing strategy. Zou and Stan (1998) intheir empirical literature have classified determinants intointernal (controllable) and external (uncontrollable) andrecently, Sousa et al. (2008) classified the determinantsof export performance to internal and external factors.However, in spite of prior efforts to recognize the effectof determinants on export performance, there is a stillgap in fragmented literature with no comprehensivereviews and the findings are considered as “confusing”(Aaby and Slater, 1988; Zou and Stan, 1998; Sousa etal., 2008). Due to the increasingly significant role ofmanagement in the development of companies’internationalization strategies (Suarez-Ortega et al.,2005), this study focuses on the managerial determinantsclassified as internal factors. The attitudes, perceptionsand characteristics of managers play significant roles inexport success of the firms (Maurel, 2009).On another hand, although many studies evaluated theelements of management characteristics (Zou and Stan,1998; Suarez-Ortega et al., 2005; Sousa et al., 2008), theprevious studies or reviews did not mention all theelements of management characteristics. There was alsothe lack of consensus among them on factors thatconstitute a managerial factor in determining exporting,which previously highlighted by Leonidou et al. (1998)and recently by Suarez-Ortega and Alamo-Vera (2005).Although at present, there is necessary amount ofliterature on this issue; however, a systematic synthesison the existing studies and frameworks is needed tounderstand the management determinants of exportperformance better.moghaddam et al. 5151 LITERATURE REVIEWManagerial characteristic Management is the major force behind the beginning ofdevelopment, sustenance and prosperity in exporting.The focuses of many empirical researchers are therelationships between export performance andmanagerial characteristics (Sousa et al., 2008). Previousliterature reviews placed management characteristics asdeterminants of export performance and most of thescholars proved that this determinant was an importantfactor in export performance that may influence theexport success significantly. Katsikea and Skarmeas(2003) noted that ''management characteristics play asignificant role in influencing export sales uniteffectiveness''. Export performance is usually controlledby organization and management, so it is responsible forpoor or excellent performance of the firm’s exporting(Nazar and Saleem, 2009; Zou and Stan, 1998).Referring to previous studies, managerial characteristicsin this study are divided into attitudinal and skill-based. Attitudinal characteristics (Orientation andperception) Export commitment and support    These are the most common determinants amongmanagement characteristics in the previous studies thatare critical factors to successful export performance inthe foreign market (Sousa et al., 2008). They appear incompetitive environment as well as managementcommitment and support in exporting process, which isnecessary for export success (Sousa et al., 2008). Theyconstitute the key determinant (Nazar and Saleem, 2009;Cavusgil and Zou, 1994) that helps to increase exportperformance (Nazar and Saleem, 2009; Julian and Nhat,2007; Julian, 2003) and propensity to enter theinternational markets and sales positively (Cicic et al.,2002). Management commitment is very important forexport success because when the manager hascommitments to export, they will plan carefully programsto enter the export markets and allocate financial andmanagerial resources sufficiently (Sousa et al., 2008;O’Cass and Julian, 2003). This allows a company toacquire opportunities in foreign markets and pursue theefficient export marketing strategy to improveperformance of firm’s exporting (Zou and Stan, 1998;Cavusgil and Zou, 1994). Management support has adirect impact on export performance and positivemanagerial attitudes and the level of managementsupport have stronger positive impact while, the negativeattitudes had negative influence on export performance(Cicic et al., 2002). Many scholars have proven thatmanagement commitment and support helps the export  5152 Afr. J. Bus. Manage.success to have a positive impact on export performance.Julian and Nhat (2007) in their survey mentioned thatmanagement commitments positively contribute to exportmarketing performance. Therefore, companies havemuch to gain if they hire or train qualified personnel.These outcomes are consistent with the studies done byStottinger and Holzmullerm (2001), Cicic et al. (2002),O’Cass and Julian (2003), Alvarez (2004), Castaldi et al.(2003) and Faver-Bonte and Giannelloni (2007). Theyconcluded that management commitments and supporthad positive correlation with export performance. Inaddition, Sousa et al. (2008) explained that all studiesreviewed by them, had similar findings. Management international orientation    This is the antecedent of export operation in firms.Managers should have international orientation to besuccessful in managing an export. Internationalcompanies can better obtain opportunities and preventthreats in export markets (Nazar and Saleem, 2009; Zouand Stan, 1998). The forecasters of export performanceare regarded as the international vision (Nazar andSaleem, 2009; Aby and Slater, 1989) and theinternational orientation (Nazar and Saleem, 2009; Zouand Stan, 1998). Totally, the effective entrepreneurialorientation is one of the determinants of exportperformance that influences export performancepositively while, the poor management causes weakperformance (Mavrogiannis et al., 2008). Increasingprobability of exporting is related to positive managementattitudes toward the issue of export in internationalmarket (Das, 1994). Customer orientation (CO)  Is the determinant that few researchers have examined inrecognizing its relationship with export performance.However, according to the study by Nazar and Saleem(2009) customer orientation is considered as one of theattitudinal management characteristics. Nwankwo (1995)emphasized that the customer orientation has beendefined in a different way in previous literature. Manyacademics have suggested that customer orientation isone of the behavioral components of market orientationand there is no clear destination between them. It is onepart of market orientation definition that consisted ascustomer orientation, competitor orientation, and intersfunctional coordination. On the other hand, customerorientation has been identified by Brown et al. (2002), as“predisposition to meet customer needs in an on-the-jobcontext." In addition, Drucker (2007) has definedcustomer orientation as "the set of beliefs in sales thatstates that customer’s needs and satisfaction are thepriorities of an organization. It focuses on dynamicinteractions between the organization and customers. It isthe business seen from the point of view of its final result;that is, from the customer’s point of view". The adaptationof customer’s needs guarantees the success in customerorientation. Therefore, managers in highly effectiveexport sales organization need to more focus onconsumers (Katsikea and Skarmeas, 2003). A study byLeonidou et al. (1998) about identifying managerialinfluences on exporting concluded that overseascustomer orientation is one of the export sales managerelements to enhance exporting. In addition, Katsikea andSkarmeas (2003) in their research categorized exportersinto high and low effectiveness export units. Theyconcluded that customer orientation component was oneof the significant factors between high and loweffectiveness export and mentioned that customerorientation influence export performance positively.Customer orientation is one of the important managerialcharacteristics that provide the buyers’ needs, so firmsthat want effective organization are advised to evaluatethis attitude of their managers. Perception toward competitiveness    This is another determinant of export performance that isless examined in previous studies. Perception ofmanagers on competitiveness of export merchandise hasa correlation with outcome of firm’s exporting (Nazar andSaleem, 2009). In addition, a number of researchersexplained that capability of managers to perceive andinterpret signals from the market and to determinewhether competitive environment has a key role indeciding on firms to export (Nassimbeni, 2001).Furthermore, Eusebio et al. (2007) explained that indeterminants of operating, the competitive capacities ofthe firms in global markets are attitudes of the directorand confidence of a manager about export productscompetitiveness that enhance the intensity of exporting.Managers need to be confident in dealing with thecompetitors of their product in order to compete in exportmarket and increase performance of export. Perceptions about export advantages and barriers    Perceptions about export advantages and barriers arethe important forecasters of export performance (Nazarand Saleem, 2009; Zou and Stan, 1998). Perceptionabout export advantage is such as perceived importanceor profit percentage of export outcomes for a companybut on the other hand, perception about an export barrieris like expected risk, cost involved, or complexities ofexporting. The excellent export sales, profits, and highgrowth establish management’s perceived exportadvantage while, low export sales, slow export growth,and low perceived export success, or failing to be   significant predictors of export performance, makemanagers perceive export barriers. A study done byOgunmokun and Ng (2004) mentioned that the issue ofmanagers’ attitudes toward exporting is one criterion fordiscriminating between organization with a high levelexport performance and organization with a low-levelperformance of export. They also emphasized in theirstudy that managers of firms with high exportperformance have more positive perceptions andattitudes toward export operation compared to low exportperformance companies. In the same vein, Ogunmokunand Ng (2004), Suarez-Ortega and Alamo-Vera (2005),Wilkinson and Brouthers, (2006), and Castaldi et al.(2003) emphasized that there is a negative link betweenperceived export barrier and export performance. Theoutcome of literature reviews showed that it is essentialfor managers to concentrate on the advantages insteadof barriers in exporting and keep the positive attitudetoward the prospect of exporting (Zou and Stan, 1998). Skill-based characteristics Export experience  Is one of the determinants that have been mentionedmore in pervious published works. Export experience is acritical factor in competing in foreign markets(Shamsuddoha, 2004). Management internationalexperience refers to the degree to which the company’smanagement has abroad experience, having lived orworked overseas, as well as the skills, abilities andinformation that provide firm’s goals (Nazar and Saleem,2009; Langes and Montgomery, 2005). Managers’experiences affect the ability to perceive risks or threatsand opportunities in international markets and to come upwith effective solutions in the export market (Nassimbeni,2001; Moini, 1992; Abay and Slater, 1989). Most previousstudies revealed that managers with more extensiveprofessional experience may bring in more success inexporting, though some of the scholars do not supportthis issue. The evaluating of key strategy topics isnormally seen to be complex by managers with lessexperience while managers with greater experience inthe international markets have better comprehension onthe effective factors in export markets and, therefore,they apply appropriate marketing strategy to avoid threatsand seize opportunities (Langes and Montgomery, 2005).Zou and Stan (1998) in their literature review mentionedthat export performance of companies totally benefit frommanagers with international experience competence. Inaddition, the review by Souse (2008) showed thatmanagers with international experience are moresuccessful in exporting. These outcomes were confirmedby Julian and Nhat (2007) in their survey. Theyconcluded that a significant factor in discriminatingbetween high and low export marketing performance ismoghaddam et al. 5153the international experience of the export venture’smanagement, and management’s internationalexperience contributes to positive export performance. Inthe similar vein, Ibeh (2003), Julien and Ramangalary(2003), Brodrechtova (2008), and Faver-Bonte andGiannelloni (2007) noted that export experience of amanager had positive effects onto his/her exportperformance. In contrast, Brouther and Nakos (2005)described that the relationship between mangers’experience and export performance could be bothpositive and negative. Managers with greater experiencebuild a network around themselves, so it is easier forthem to handle obstacles faced in the internationalmarkets. Experienced managers are less opened tointernational development and business practicecompared with younger managers who are dynamic andpractice new approach in managing. Mavrogiannis et al.(2008) in their research concluded that export experiencedoes not have significant effect on export performance. Inaddition, they mentioned that some researchers find nopositive or negative association between exportexperience and performance.This result is similar to Contractor et al.’s (2005) studywhich explains about export performance of internationalnew ventures between Indian and Taiwanese softwareindustry. It was found that due to little experience,managers use internet and formal or informal networks toreach out to foreign customers. By doing this, they havebetter export performance compared with experiencedmanagers who ignored it. So, they could associate thenegative effect between export performance andexperience. Previously, in a study done by Das (1994)mentioned that managers’ experience have less impact insuccessful exporting firms. One of the important aspectsin terms of managers’ experience that needs theresearcher attention was the different marketspecifications that may affect the managers’ targetmarket experience on the overall market experience. Foreign language proficiency    This is another factor that many researchers previouslyexamined. Reviews on the past researches by Sousa(2008) showed that recent studies have not evaluatedthese variables because business in the foreign market isbased on foreign language proficiency, and without thisproficiency trade becomes very hard. Although, thisvariable has been mentioned in a study by Zarin andVazife (2009), there is still a need to examine it amongIranian exporters. They noted that most of the exportmanagers could not speak English or speak fluently, andthis problem caused misunderstandings on bothnegotiators in business meetings. Thus, it is worthrecognizing the relationship between foreign languageproficiency and export performance. Katsikea andSkarmeas (2003) in their research categorized   professional    5154 Afr. J. Bus. Manage.components as the significant factors between high andlow export effectiveness. Furthermore, previous studiesrevealed that managers with foreign language proficiencyare able to cause better success in exports (Sousa et al.,2008). Most of the researchers found positive correlationbetween foreign language proficiency and exportperformance. The study by Suarez-Ortega and Alamo-Vera (2005) about firms and managerial factors ofinternational SMEs revealed the positive relationshipbetween foreign language proficiency of managers andperformance of export. In addition, Das (1994) foundforeign languages to be related to exporting involvementand success in performance of export. In the past, thisoutcome was proven by Moini (1995), Das (1994) andEvangelista, (1994) who found the positive relationshipbetween the factors. Education level  Education level of a manager is a determinant that anumber of previous and recent researchers examined intheir studies. The awareness on international issues andthe reality of business life is obtained through theeducation level of managers. A review by Souse (2008)showed that better educated managers are moresuccessful in exporting and have better exportperformance. Export success in foreign markets is linkedto education of managers (Mavrogiannis et al., 2008).The possible effect posed by education was due tomanagers’ knowledge that can help companies to utilizeand leverage on the international opportunities andpreventing international threats (Zou and Stan, 1998;Julien and Ramangalary, 2003; Brodrechtova, 2008).In fact, educated managers will become moreexperienced and thus, are able to apply their knowledgebetter in deciding and planning the export market. Hence,this will increase the performance of exporting. In manyinstances, it is most proved that educated managers aremore successful in export markets. Zou and Stan (1998)in their literature review mentioned that totally exportperformance of company's benefits from educatedmanagers. In addition, Sousa et al. (2008) concluded thatbased on previous studies better-educated managerswas able to have better success in exporting. In the samemanner, Julien and Ramangalary (2003), andBrodrechtova (2008) emphasized that education ofmanagers had positive effect on total export sales,growth, profits and compound evaluation of exportperformance. In their research, they understood that mostof the top managers and commercial managers of Iranianfirms did not have high education or their education wasnot related to marketing or commercial areas. It isadvocated that for better export performance, high leveleducation would be useful and essential. Therefore, highlevel education is essential factors in export markets thatcould influence export performance.All   management   characteristicsthat have been mentioned in earlier studies are summarized in Table 1. Readersmay have better understanding on the influence of thesedeterminants and it facilitates the design of the proposedconceptual framework. RESEARCH FRAMEWORK AND METHODOLOGY The aim of this study is to synthesize the available studies onmanagement influences on export performance. An assessment ofthe export performance measure and characteristics of previousstudies have not been included as Sousa (2004), Zou and Stan(1998) and Sousa et al. (2008) have offered valuable and adequatereviews of the previously published. Indeed, the current studiesreport different and often contradictory results on determinants offirm export performance. Thus, these issues clarify that there is aneed to analyse the variables that influence export performance.Consequently, the aim of this study is to facilitate the conceptualframework for determinants of export performance and to clarify thevariables that influence export performance. The focus of thisreview paper is on empirical works that have been publishedbetween 1989 and 2008. In addition, as in other review papers,case studies and non English studies are not evaluated in thisresearch. The analytical method of this research is a vote-countingtechnique that Zou and Stan (1998) and Sosa et al. (2005) hadrecommended in their review papers. This technique allows thisstudy to report the significant negative effect, the significant positiveeffect and non-significant effect on export performance.The broad literature about management characteristics hasprovided the base for classifying the management determinants ofexport performance into attitudinal characteristics, and skill basedcharacteristics. According to the findings taken from thecomprehensive review of existing references on exportperformance, a conceptual model has been designed to represent amodel about the relationship between management characteristicsand export performance as depicted in Figure 1.   Conclusion Many studies have been conducted to identify theinfluence of manager characteristics on exporting.However, little and most likely no previous studies havetried to mention all important elements of managementcharacteristics. Thus, based on the systematic literaturereviews, it is possible to design managementdeterminants of the export performance model which mayhelp firms to focus on manager characteristics as theimportant elements to enhance export performance ininternational markets. This conceptual synthesis model isbased on management determinants of exportperformance that have been previously recorded byresearchers in various publications in order to develop aclassification that may supply a comprehensive base forcomprehension management determinants of firm exportperformance. Management determinants subjectively canbe categorized into two main categories: attitudinal andskill based characteristics. Attitudinal characteristics arefurther classified into management internationalorientation, export commitment and support, customerorientation, perception toward competitiveness,perceptions about export advantage and export barrier.
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