| Chapter 2: | Theoretical Background |
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Exporting is an attractive choice if firms want to expand their business overseas because it is a relatively easy mode of foreign market entry compared with other types of entry such as joint ventures or wholly owned subsidiary. Exporting also requires a lower level of commitment of the firm’s resources and less risk (Katsikeas 1994). However, there is wide recognition that success in the domestic market does not guarantee success in foreign markets and that a unique strategy is needed to succeed in export markets (Zou et al. 1998).
2.3.1 Determinants of export performance
A substantial number of empirical export performance studies have been conducted. The outcomes from these studies suggest that environmental determinants of export performance can be broadly classified into two areas: (1) internal environmental factors (controllable) and (2) external environmental factors (uncontrollable) (Zou and Stan 1998).
2.3.1.1 Internal environmental determinants
The majority of studies have focused research attention on the internal determinants at the firm level. Most of them are classified into three broad groups: strategic, organisational and management factors.
2.3.1.1.1 Strategic factors
A considerable number of studies attributed export performance to a firm’s strategy. The main focus of these studies has been on product, promotion, distribution, and pricing strategy.
Product Numerous research studies provide valuable insights into the link between product characteristics and marketing strategy by highlighting the differences between goods and services (Shostack 1977), tangible and intangible product attributes (Levitt 1981), and search versus experience attributes of products (Nelson 1970; Darby and Karni 1973). Product characteristics are noted to influence export marketing strategy as well by positively differentiating the exported brand and influencing customer attitudes (McGuinness and Little 1981; Cooper and Kleinschmidt 1985; Cavusgil et al. 1993; Cavusgil and Zou 1994).