The empirical study of the model of exporter's resource-based determinants of performance

Abstract

The purposes of this research are to propose and test the parsimonious model of the impacts of intangible and nontradable firm-specific resources on various aspects of export performance and to examine whether the assumption of resource heterogeneity holds between firms with different performance level. In this research, the focus is on firm's strategy implementation ability, purchasing capability, and export market orientation. This set of variables, allowing firms to have competitive advantage, is hypothesized to be positively related to firm export performance. The sample data was derived from questionnaires answered by 281 exporters in food processing industry. Resource-based theory serves as the theoretical foundation of this research. It suggests that superior firm performance can be explained by possession and utilization of superior firms resources. To test the hypothesis, structural equation modeling technique was employed. In general, the findings, congruent with the theoretical notion, showed that level of strategy implementation ability, and purchasing capability were significantly and positively related to all aspects of export performance measures including export sales growth, export profitability, and export customer retention. Export market orientation was found to be significantly and positively related the two export performance measures of export sales growth, and export customer retention. The significant and positive relationship between export market orientation and export profitability was, however, not found. Possibly, this could be due to the firms' priority in meeting the goals of export sales growth and retaining customers rather than trying to achieve high profitability level at the expense of the former two goals. In addition, customers may be price sensitive to the differences in price among manufacturers, making charging higher price difficult. This research also performed subgroup analysis to statistically compare level of firm resources between firms in high performance group and those in low performance group. Empirical findings revealed that firms in high performance group possessed significantly higher level of firm resources than the firms in the other group. Based on the findings, it was found that companies who treasured the importance of developing their strategy implementation ability, purchasing capability, and export market orientation would have competitive advantage and enjoy superior performance over their rivals. In addition, this research also made a comparison of performance between groups. The two grouping variables are number of export years (high vs. low experience) and number of employees (large vs. small firm). The results revealed no significant difference of performance between groups. The findings thus confirm previous conclusion that it is the difference in firm resources, rather than in experience of firm size, that explains performance differences among firms.