Printer Friendly

Modeling small locally-owned firms export behaviour: the role of language.

INTRODUCTION

The literature on the international operation of the small firms is quite extensive (e.g. see Rueber & Fischer, 2002; Brouthers & Nakos, 2004; Oviatt & McDougall, 2005; Miesenbock, 1988; Leonidou & Katsikeas, 1996; Williams; 2009; Lautanen; 2000 etc). There is no doubt that the increased attention given to the international operation of these smaller firms is driven by the increasingly globalised nature of the world economy. Economic integration, the revolution in information and communication technologies, the reduction in tariff barriers, among other things have all contributed to an increased level of competition in national markets. This competition has forced more firms to start looking to the international market place for customers in order to ensure their future survival (Cavusgil, 1994). A big portion of this literature however, focuses on the factors that motivate these smaller firms to seek business opportunities abroad. The environment dictates that these smaller firms will have to change strategic direction in order to ensure their survival. However, because of their limited resource capacity, many see themselves as not having the capabilities to take on the complexities of doing international business transactions. How those who do it managed to accomplish the achievement and why they do it are questions at the heart of the research stream looking into the area of international entrepreneurship.

The plethora of empirical work that has evolved on the subject looked at a number of firm characteristics (Reid, 1981), managers' characteristics (Leonidou et al., 1998), the external environment (Zou & Stan, 1998) and recently, a number of works started looking at the role of networks (Bhagavatula et al., 2010; Oviatt & McDougall, 2005). Still, it appears that managerial characteristics have been the most studied. Managerial characteristics are an important resource that small firms possess and which is critical for them to launch an international base (Reid, 1983). An area of managerial resource that has received much attention in the literature but with mixed results is that of the language competency of the entrepreneur. Indeed, Leonidou et al., (1998) in a review of 46 studies on managerial characteristics and the firm's export performance found that over 50 percent of those studies accounted for this variable in their empirical analysis. The results however is mixed as some studies claim that it has an important impact on export decision (e.g. Lautanen, 2000) while others did not find it to be that significant (Ursic & Czinkota, 1989).

The seemingly contradictory findings however, can possibly be explained by context. We believe that since English is the internationally accepted language of international commerce, language would not be a barrier to exports for entrepreneurs who master the art of speaking the language. We believe this is true even if they are exporting to Non-English speaking markets. As such, this study aims to test the hypothesis that language as a managerial resource is not a significant factor in influencing exporting decision in firms where the principals have a mastery of the English language. The findings from this research will make a significant contribution to the literature on the international operation of small firms for the reason that it will help to clear the contradiction in the empirical findings on the role of language in export decision making process for the small firm.

The remainder of the paper is organised as follows: the next section will look at the variables used in the study. It will give an indication of the state of the literature on each variable. Subsequent to this, the paper will present the research method. It will conclude with the presentation of the results, a discussion of same and some final thoughts which will look at the implications of the findings for both research and policy.

THE RESEARCH VARIABLES

This section of the paper will present the variables that are used to model the decision of whether or not to export. The variable of interest is really the language competency of the principal in the small firm. The idea is to better understand whether or not language does have an impact on the decision to export irrespective of the context from which the firms come. Besides language however, there are other factors that impact on export decision and such have to be controlled for. These control variables will also be highlighted in this section.

The importance of language in the exporting decision

Foreign language competency as an internal resource for the firm is a source of competitive advantage in dealing with customers in international markets. Indeed, the resource-based view of venture internationalization shows that firms which possess this valuable resource will have a greater proclivity towards internationalization (Bloodgood et al., 1996). This important internal resource will also serve as the basis for the small firm to access external resources from various sources such as public institutions and formal or informal networks between firms (Birley, 1985; Bhagavatula et al., 2010).

Empirically, the language proficiency of the principal of the small firms has received a lot of attention in the extant literature. For example, Leonidou et al., (1998) in a review of 46 studies on managerial characteristics and the firm's export performance found that over 50 percent of those studies accounted for this variable in their empirical analysis. The results from this analysis however, are not always consistent. While the majority of studies conclude in firms where entrepreneurs have a mastery of a foreign language that such firms are more likely to become exporters (Lautanen, 2000; Obben & Magagula, 2003; Dichtl et al., 1990; Karafakioglu, 1986), there are still others that did not find this to be the case. Some early studies on export behaviour of the small firm did not find a relationship between the language competency of the entrepreneur and exporting (Daniels & Guyboro, 1976; Ursic & Czinkota, 1989). Similar to the findings of Daniels & Guyboro (1976), Obben & Magagula, (2003) found that when decision makers are monolingual i.e. they speak only their native language; there is often a negative relationship with export propensity.

The contradiction in findings seems to be a function of the context from which the firms are derived. In a context where firms are located in English speaking markets and their principals are native English speakers or have mastered the language, language may not be a significant barrier to export since English is the accepted language of international commerce. While there are benefits to be gained from speaking a foreign language (for example, it will facilitate effective planning and control of business operations in the export market, it will assist in understanding foreign business practices; improve communication and interaction with foreign customers and help to establish social and business contacts, among other things), the fact that the English language is seen as the accepted method of communication for international commerce, means that most of the trading partners in Non-English speaking markets will be forced to speak the language and so it reduces the linguistic differences. As it relates to exporting, the principal does not have to be present in the host market for the selling of the goods or service; s/he having a mastery of the foreign language is not such an important factor when making the decision to sell abroad. This would possibly be more relevant for other entry modes such as foreign direct investment (FDI).

These contextual differences therefore, may better explain why the results from different studies do not normally coincide. For, if studies are carried out in a non-English speaking market and the principals of the firms do not have a good mastery of the English language (given that the English language is the accepted language for international commerce), then mastery of a foreign language, in this context, English, would be very important in their export decision making. On the other hand, for those studies carried out in markets that are English speaking and the principals of the firms have a mastery of the language; results from any study would more than likely suggest that it is not an important factor in making the decision to enter into exporting.

Control Variables

While language is an important factor that can impact on a small firm's decision to enter into exporting. There are other factors that may impact on the decision as well. These are what we call control variables. A number of controls that have been cited in the extant literature have been looked at in this study.

Firm size

Firm size is possibly one of the most studied variables in the literature looking at the international operation of small firms. The intrigue with size becomes relevant because it is generally argued that size reflects resource capacity and international operations require a significant amount of resources, therefore, small firms should not be able to effectively take on international operation (Bonaccorsi, 1992). Indeed, the resource-based view of the firm argues that larger firms (as measured by number of employees) will have access to more resources (e.g. more qualified managers, financial resources etc.) than smaller firms (Bloodgood et al, 1996). It is because these larger firms have more resources (e.g. financial, technology, human capital etc.) than smaller firms why they are better able to be more successful in the export market (Aaby & Slater, 1989; Katsikeas & Piercy, 1993; Philp, 1998).

Despite the claim of the need for more resources to be successful in international operation, the empirical evidence regarding firm size and successful operations in international markets remains contradictory. The broad literature on firm size and export behaviour provides little agreement regarding its impact on either export propensity or export success (Aaby & Slater, 1989). From the extensive literature, most studies found a positive relationship between size and exporting (e.g. see Miesenbock, 1988). They suggest that larger firms are the ones most likely to engage in exporting. This is in concert with the basic premise of the resource-based view of the firm. Further, some studies have even suggested a minimum size for exporting. For example, Mittelstaedt et al., (2003) recommended a minimum size of 20 employees. They argued that exporting becomes infeasible below this number. If size does reflect the productive capacity of the firm, then below a critical minimum, the firm will not have sufficient capacity to initiate exporting. This argument seems to have support from other researchers. For example, Bilkey, (1978) found that beyond a certain point, exporting is positively correlated with firm size, but, below a minimum point there is no correlation.

The relationship between firm size and export performance however is not unidirectional. Researchers have found that for example, there are firms with less than five employees that are engaged in exporting and doing it successfully (Bilkey & Tesar, 1977; Philp, 1998; Calof, 1993; Moen & Servias, 2002). Further, Hall & Tu, (2004) looked at the impact of size on both measures of export performance (propensity and intensity) and found different results. For export intensity, they found a negative relationship with size, while for export propensity there was a positive relationship. Also, Pla-Barber & Alegre, (2007) found that size was not important for export propensity for science-based firms while Czinkota & Johnson, (1983) concluded that size did not substantially differentiate between managers' attitudes and the firm's experiences in exporting.

Size however becomes an important variable for exporting when one takes into account the fixed cost related to exporting (Hall & Tu, 2004). When a company decides to become involved with exporting, there are certain sunk costs that it will have to bear. To elucidate, fixed cost associated with search for market, negotiation, certification (e.g. ISO 9000 or HACCP) can be exorbitant but must be undertaken if the decision is made to enter exporting. This is even true for certain industry sectors such as agriculture and manufacturing where certification is important for export market entry. Small firms which are resource poor might not be able to afford these costs although they may have a good quality product suitable for exporting. The exorbitant cost might therefore dissuade them from responding positively to export stimuli.

To overcome the onerous barrier of cost, small firms seem to be taking advantage of their business and social networks in order to climb over the cost barriers (Johanson & Vahlne, 2003). Small firms are working with each other to overcome the fixed cost barrier. They are sharing production networks and distribution channels, and in some cases getting support for market entry from government agencies (Williams, 2009). Some small firms may also network with larger firms which are resource rich and have already borne the fixed cost involved in exporting (Coviello & McAulley, 1999; Lipparini & Lorenzo, 1999). Networking will also help small firms to achieve the economies of scale that are important for reducing their fixed costs. Economy of scale is a function of the firm's resources. Achieving scale will lead to a reduction in the unit cost of output, therefore, allowing firms to sell products at a more competitive price. Small firms, due to their limited resource stock will not be able to gain the same level as larger firms. Networking however can help them over the barriers to scale.

Technology

The firm's technological capability (as is generally captured by the level of investment in Research & Development {R&D}) is considered one of the most important physical resources which can influence a firm's decision to enter export markets (Cavusgil & Nevin, 1981; Tybjee, 1994; Tseng et al., 2004; Rodriguez & Rodriguez, 2005). Small firms by the nature of their sizes are much more flexible and can respond to changing demands much quicker than larger more bureaucratic firms, as such, it can have a greater competitive advantage in the international marketplace through its innovation (Simpson & Kujawa, 1974). Indeed, investment in R&D reflects this commitment to innovation. With increased research and development, the firm will be able to provide more unique products to offer thus increasing its competitive advantage and its chance of survival in the export market (Rodriguez & Rodriguez, 2005; Pla-Baber & Alegre, 2007).

Having a unique product gives a firm a more positive outlook towards international businesses since there is the perception that this uniqueness will give it a greater competitive advantage in the export market (Moen, 1999; Cavusgil & Nevin, 1981; Burton & Schlegelmilch, 1987; Rodriguez & Rodriguez, 2005). Unique product offering therefore is an opportunity for small firms to develop a niche market, which can give them a competitive edge in the international marketplace since they will not necessarily require scale to compete (Rialp et al., 2005; Dimitratos & Liokas, 2004).

The empirical work regarding the relationship between technology and export propensity does not provide a clear answer as would have been expected based on the theoretical reasoning from the innovation school. As it relates to the decision of whether or not the firm exports (export propensity) based on its level of technological investments, some researchers find a positive relationship (e.g. Tseng et al., 2004; Andersson et al., 2004 et), while others find no statistically significant relationship (e.g. Tybjee, 1994; Rodriguez & Rodriguez, 2005). While investment in R&D is important, it appears that it alone will not automatically translate into increased capacity to help firms gain access to foreign markets. The investment may not result in product or process innovations that can give the firm a competitive advantage. The competitive advantage from this investment will be derived from what is achieved (e.g. reduction in production costs) from using the technology. The mere investment will not provide technological economies of scale which is what firms need to put them in a better position to be able to access foreign markets.

Further, disagreement on the role of technology as it relates to its importance to the level of sales the firm receives in the export market is investigated. For example, Reid (1986) found that technology will encourage the firm into early exporting but in terms of its impact on future success (e.g. increased export revenue) there was no strong relationship. On the other hand, it is argued that firms in industries with high R&D spending reported a higher proportion of their sales from international markets. In other words, there is a positive relationship between technology and export intensity (Tybjee, 1994). Also, Rodriguez & Rodriguez, (2005) found R&D spending to be significant with regard to export intensity. This again was based on firms from highly technologically oriented industries.

The literature appears to suggest therefore that industry characteristics do have an impact on the role of R&D in the export performance of the firm. The nature of an industry will impact on the strategies and performance of any firm (Barney, 1991; Rodriguez & Rodriguez, 2005). Firms in industries that are technology driven are more likely to innovate and thus export (Tybjee, 1994). This stems from the belief that there is a competitive advantage to be gained from developing unique and customized products with the new technology. This may explain why a large number of firms in high technology industry are more likely to be exporters (Bell et al., 2004; Jones & Crick, 2004; Tybjee, 1994).

Industry sector

The debate on the importance of the role of technology shows that industry sector is also important for driving export performance. Indeed, analysts have shown that the nature of an industry will impact on the strategies and performance of any firm (Barney, 1991; Rodriguez & Rodriguez, 2005; Porter, 1990). If the industry sector is a natural export sector, then the firms that are located in that sector will have no choice but to export. This may be due to the size of the market or the nature of the product that is produced. For example, the natural resources industry in most developing countries is generally export oriented so firms that operate in these industries are all exporters. In this regard, the characteristics of the industry sector are what determine the relationship with export performance of firms.

It is critical to point out that the sectors studied in this research are not natural exporting sectors although they account for a large amount of exports from the Jamaican economy. These sectors are manufacturing and agriculture. The average export ratio (i.e. export revenue as a portion of total revenue) for industries in Jamaica is 53.64 cents out of the dollar earned. Manufacturing had an export ratio of 40.06 cents to every dollar of revenue earned in 2000. This is 33 percent below the industry average. Further, agriculture, although having an export ratio of 64.06 cents to the dollar, over 70 percent of this was driven by export in agricultural services. The services sector on the other hand, had a ratio of 70.48 percent compared to the average of 53.6 percent from all sectors. That is, for every J$1 earned in revenue in the services sector, 70.48 cents came from exports. It is therefore expected that firms in the services sector in Jamaica would be more inclined to export than those from sectors such as manufacturing and agriculture.

Beside the natural resources sector, an important sector that is emerging as an export sector is the technology sector. Most researchers argue that firms from the high technology sector are natural exporters given the nature of the product they produce (Rodriguez & Rodriguez, 2005; Bell et al., 2004; Jones & Crick, 2004; Tybjee, 1994). The nature of the technology sector allows firms to be international from inception (born globals) given the fact that they can sell their services by sitting at their computer and distribute it across the worldwide web without much hassle. Given this new method of reaching consumers in foreign market, researchers on the international operations of small firm have to now reconceptualize how they think about exporting. The case of the technology sector is a clear message on how industry sector has shaped the export behaviour of firm.

THE RESEARCH METHOD

This research drew heavily on a survey of exporters and non-exporters in the agricultural and manufacturing sectors in the Jamaican economy. These are two sectors that have seen tremendous competition from foreign competitors since the rapid liberalization of the Jamaican economy in the 1990s and the decline of a large number of firms as well. Surprisingly, given the small size of the Jamaican market and the high level of competition in the sector, there remain a large number of firms from both sectors that are still not exporting. The export ratios of 40.06 and 64.06 for manufacturing and agriculture (with 70% of agricultural export revenues coming from agricultural services) reflect the poor export performance of the firms in these sectors. Understanding the factors that motivate positive export behaviour will better aid in the development of policies to motivate more small firms to export.

To motivate this study, data were collected from both exporters and non-exporters in the sectors of interest in the economy. An instrument developed from previous literature along with feedback from a pilot survey was used to collect data from the principal owner (the key informant) in each firm. Since the unit of analysis was the firm, it was deemed necessary to have the principal owner as the key informant because the literature suggests the entrepreneur/owner is the most important decision maker in the small firm. Interviews with the principals of each firm lasted for about 60 minutes. The questionnaire was interviewer administered which helped to increase the time for the interviews. In some cases, the interviewer also prodded for further clarification on specific issues that the key informant may raise while responding to the structured question. This as well increased the time for the interviews.

The sample frame for the project came from the export directory of the Jamaica Promotions Limited (JAMPRO), the main national body that is responsible for exporting in the Jamaican economy. All firms that are involved in exporting must register with this agency. They also had a list of non-exporters who have export potential but were not exporting. These two lists provided the sample frame for the project. Given the small number of firms in the frame, it was deemed necessary to call all the firms on the list for the interviews. This method resulted in a 33 percent response rate with 44 exporters being interviewed and 48 non-exporters giving a total of 92 interviews. The data gathered from the interviews were analysed using the logistic regression model.

THE ANALYSIS TECHNIQUE

To motivate the study, some analytical framework had to be found to capture accurately the data that were gathered from the interviews. Given that the dependent variable (export performance of the firm) is dichotomous in nature a suitable model had to be found for analysing the data. The genre of qualitative choice models revealed that the logit model would yield very good results when used to analyse the research problem. As such the model used took the form of:

ln([P.sub.i]/1-[P.sub.i])= [[beta].sub.0] + [[beta].sub.1][efl.sub.i] + [[beta].sub.2][cps1.sub.i] + [[beta].sub.3][ts.sub.i] + [[beta].sub.4][ind.sub.i] + [[epsilon].sub.i]

Where:

EFL = the entrepreneur's foreign language proficiency

CPS1 = firm size

TS = the level of investment in R&D as a measure of innovation

IND = the industry sub-sector

[[epsilon].sub.i] = the error term normally distributed with mean 0 and variance 1/ [NP.sub.i] (1-[P.sub.i]) i.e. [[epsilon].sub.i] [approximately equal to]] N{0, 1/[NP.sub.i](1-[P.sub.i])}

This model is used to provide the highest predictive accuracy of a given set of predictors (Hair et al., 1998). The paper is interested in predicting the impact on language on the decision to export or not. The model therefore, is a good application to answer such question. Because the chance of the firm becoming an exporter lies in a narrow range of 0-1, that is, its takes a probability distribution, as such, values outside of this range are not meaningful and therefore, will not give an accurate prediction of the firm becoming an exporter. Based on this restriction, regression models such as ordinary least squares (OLS) or linear probability models become meaningless for carrying out this analysis (Pindyck & Rubinfeld, 1998). The error term in these models, although normally distributed, does not have equal variance which will lead to the problem of heteroscedasticity (Gujarati, 2003). With heteroscedasticity, parameter estimates will become unstable and thus prevents generalization of the model beyond its sample data. Further, OLS will produce probabilities that are greater than one (1) which would not be relevant in this case. These decisions have led to the use of the logit model as the tool for analysing the data from the study. This analysis has produced some interesting results.

RESULTS

This section of the paper will report on the result obtained from the analytical model. It will merely describe the results; the latter section will provide a mode detailed discussion on these results. The table below shows the findings from the model that looked at the factors that can predict whether or not a firm can become an exporter.

The result from the model reveals that the foreign language competency of the principal owner of the firm is not the most significant factor that will determine whether or not the firm enters into exporting. Indeed, this is in contrast to what other analysts have found on the subject. For example, Latuanen, (2000) in his study of Finnish firms, found that language competency of the principal owner was an important factor that could determine export entry. This study found otherwise. The most important variables that seem to explain export entry are; firm size and industry sector. As firms grow larger, they are more likely to become exporters according to the results from this analysis. Also, as firms move from agriculture to manufacturing, they seem more likely to become exporters according to the results from this model.

These results seem to be robust as the diagnostic statistics from the model reveal a good fit for the model. The Hosmer & Lemeshow test which looks at the difference between the predictive and the actual model was not significant, which shows that the models are not very different. Also the model has a high predictive accuracy of over 60 percent as revealed in the table below.

The results from this study do not always match with the theoretical expectations from the literature. This is not an aberration but could be explained by strong theoretical reasoning on the role of language in the context of export behaviour of firms. The next section will try to shed more light on the results obtained here.

DISCUSSION

The results from the study suggest that firm size and industry sector, and not the language competence of the entrepreneur are the most powerful factors that lead firms to adopt exporting. These results however are not universal as other studies have found that language skills of the entrepreneur is the most critical factor that determines which small firm develop their exporting rapidly. Indeed, Lautanen (2000) after investigating the export behaviour of Finnish firms from the manufacturing sector, concluded that it was not financial risk related to exporting; lack of experience related to exporting nor the education level of the white collar workers that would determine which small firm develop their exporting rapidly but it was the language skills of the entrepreneur that mattered most. This finding as we have noted earlier, is not surprising in the context of the discussion presented earlier on the role of language in international business.

Language does matter for export development, especially in the context of the small firm where the role of the owner in the decision making process is most crucial. Since English is the accepted language of international commerce, if the owner of the small firm does not feel confident in mastering the language, it possesses doubts in his/her mind about doing well in foreign markets. Naturally, increased competence in foreign language will provide the owner with a greater orientation to international marketing as s/he will be able to communicate better with suppliers and customers. This therefore, reduces the psychic distance in the minds of the entrepreneur between the home and export market. If we follow this logic therefore, it is clear why owners who are natural English speakers would not pay much attention to language when they are trying to develop their export business. For owners that are non-English speakers however, learning a foreign language especially English will have a significant impact on their confidence to develop export business. So, from this result, it appears that language skill impact on export development in the small firm is context specific.

What however does not seem to be context specific is the positive impact of firm size on exporting. The literature is replete with empirical work looking at the relationship between firm size and export behaviour (e.g. see Miesenbock, 1988; Leonidou & Katsiekas, 1996 for reviews of the extensive literature). While the results are mixed, what is certain is that large size helps firms to overcome the barriers associated with the fixed cost of exporting and as such, better position the firm to compete successfully in the export market (Hall & Tu, 2004). Exporting requires economies of scale to compete effectively. Scale is indeed a function of size so the larger the firm gets the greater the chance of generating economies of scale in production. Because there is a sunk cost element to the export development process, with increased scale, the firm can better manage its exposure to this sunk cost. However, what needs to be clear is that, the results are not saying only large firm can export successfully. The empirical evidence shows that small firms are indeed successful at exporting a well. However, size does enhance the chance of survival and further success.

The results also identified the importance for industry sector in determining export initiation. This again can be quite context specific similar to the issue of language skills. For industry sectors that are small due to the small size of the economies in which they are located, exporting for firms become a natural strategy for survival and growth. In the case of this study, Jamaica is indeed a small economy by any measure (GDP is about US$12bill, land mass is about 11,000 square kilo, population is about 2.8mill people) so industry sectors are generally small. It is no surprise therefore that small firms in this economy identified the industry as having an impact on their decision to develop their export business. What is surprising however; is that, there is still a large number of firms that are not exporting. Williams (2009) shed some light on this. Having developed a stimuli organism response model to explain the export behaviour of firms in the Jamaican economy, he noted that mindset of the entrepreneurs/owners and the availability of a standardized product are critical drivers for export development. Owners who had a global mindset viewed exporting more positively than those without. Also, once firms had a product that could be easily modified for export, they were willing to get involved in the export business. Support in building these critical areas are needed in order to expand exporting from the industrial sectors in Jamaica.

IMPLICATIONS OF THE FINDINGS

The results presented in this paper have implications for export policymakers at the national level, managers and owners of small firm and, researchers that are interested in the international operations of small firms. Export policy makers have to put strategies in place that can encourage firms to grow if they are to increase the level of exports from their economies. While not only large firms are involved in the export business, the evidence suggests that the larger the firm becomes, the greater is the likelihood of them getting involved in the export trade. Access to finance for the purchase of equipment necessary to improve productivity in these firms is an important stimulus for growth. Export policymakers should design special programmes that can provide easy access to export financing for small firms. Besides access, the cost of financing is also important. Policymakers have to make the business environment conducive so that the cost of capital can be low and affordable for small firms. Without the affordable capital, these firms will be able to acquire the necessary equipment to expand their plants. The role of the export policymakers is to ensure that the business environment is hospitable for the firms to pursue the right growth strategies.

Owners and managers in small firms will recognise that while language skills are not the most important driver of export development; this is not a general rule. The context in which the firm operates will determine the level of importance language will play in the decision to enter exporting. For managers that are not native English speakers and who do not have a mastery of the language, they need to improve their language skills in order to increase their chance of engagement in the exporting business. Owners should also be cognisant of the fact that the growth of the firm enhances its ability to engage in exporting. Therefore, they will have to invest in strategies that will deliver growth not just protecting market share or containing costs. Again, growth strategies will be a function of the context within which the firm operates. Each owner will have to do a scan of their firm and the industry sector before designing a new strategy.

The empirical evidence presented in this paper will no doubt add to the body of work on the international operations of small firm and more specifically the role of language in that process. This evidence coming from a context that has received very little attention in the international literature can greatly advance the efforts of scholars who are interested in building a general theory on the subject. The specific role of context in explaining the impact of language was also not explicitly explained in previous works. This research had made that added contribution to the debate. Future research can extend this research into other context to determine whether or not the findings do hold across multiple contexts. This would be a huge boost to theory development in the field. Also, researchers need to investigate what specific role language plays in the export process. Most research merely identify that it is an important variable but why it is important is not fully explored. Taking a qualitative exploration to this phenomenon could help in answering the question.

CONCLUDING REMARKS

Industry sector, firm size and not the language skills of the owner/entrepreneur seem to be the most critical factors that drive the development of export business in the firms sampled in this study. The results in some cases support the findings from previous literature but also disprove others as well. This was not surprising as context seems to play a role in terms of explain the export behaviour of firms. For example, small market size makes exporting a natural strategy for firms. Also, where owner/entrepreneurs are native English speakers, language is not the most important factor to determine export behaviour. These findings have made an added contribution to the literature on the international operations of the small firm and especially as it relates to the role of language in the export development process. The findings highlight that context is what determines whether or not language matters in a firm's export behaviour. This is indeed an important addition to the extant literature.

REFERENCES

Aaby, N.E. & S.F. Slater (1989). Management influences on export performance: a review of the empirical literature 1978-88. International Marketing Review, 6 (4), 7-26.

Andersson, S., J. Gabrielsson & I. Wictorl (2004). International activities in small firms: Examining factors influencing the internationalization and export growth of small firms. Canadian Journal of Administrative Sciences, 21, 1, pp 22- 31.

Barney, J.B. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17, 99-120.

Bell, J., D. Crick & S. Young (2004). Small firm internationalization and business strategy. International Small Business Journal, 22, 1, pp 23-56.

Bhagavatula, S., T. Elfring, A. Tilburn & van de Bunt, G (2010). How social and human capital influence opportunity recognition and resource mobilization in India's handloom industry. Journal of Business Venturing. 25, pp 245- 260.

Bilkey, W.J. (1978). An attempted integration of the literature on the export behaviour of firms. Journal of International Business Studies, (Spring/ Summer), 33-46.

Bilkey, W.J., & G. Tesar (1977). The export behaviour of smaller-sized Wisconsin manufacturing firms. Journal of International Business Studies, Spring/Summer, 93-98.

Birley, S. (1985). The role of networks in the entrepreneurial process. Journal of Business Venturing, 1 (1), 107-117.

Bloodgood, J. M., H.J. Sapienza & G.J.Almeida (1996). The internationalization of new high-potential U.S. ventures: Antecedents and outcomes. Entrepreneurship: Theory and Practice, 20 (4), 61-76.

Bonaccorsi, A. (1992). On the relationship between firm size and export intensity. Journal of International Business Studies, 23, 605-635.

Brouthers, K., & G. Nakos (2004). SME entry mode choice and performance: A transaction cost perspective. Entrepreneurship: Theory and Practice, 28(3), 229.

Burton, F.N. & B.B. Schlegelmilch (1987). Profile analysis of non-exporters versus exporters grouped by export involvement. Management International Review, 27 (1), 38-49.

Calof, J.L. (1993). The impact of size on internationalization. Journal of Small Business Management 31 (4), 60-69.

Cavusgil, S. T. (1994). From the Editor in Chief, Journal of International Marketing, 2 (3), 4-6.

Cavusgil, S.T. & J.R. Nevin (1981). Internal determinants of export marketing behavior: An empirical investigation. Journal of Marketing Research, 18, 114-119.

Coviello, N. E. & A. McAuley (1999). Internationalization and the small firm: A review of contemporary empirical research. Management International Review, 39, 3, 223-237.

Czinkota, M. R. & W. Johnson (1983). Exporting: Does sales volume make a difference? Journal of International Business Studies (Spring/Summer), 147-153.

Daniels, J. D & J. Goyburo (1976). The exporter-non-exporter interface: A search for variables. Foreign Trade Review, 3, pp 258-282.

Dichtl, E., H-G. Koeglmayr & S. Mueller (1990). International orientation as a precondition for export success. Journal of International Business Studies, 20 (l), 23-40

Dimitratos, P & S. Lioukas (2004). Greek perspectives of international entrepreneurship. In Leo - Paul Dana (Ed.), Handbook of Research on International Entrepreneurship (pp 455-480). Edward Elgar: Cheltenham U.K.

Gujarati, D.N. (2003). Basic econometrics. (4th Edition). New York: McGraw Hill.

Hair, J.F., W.C. Black, B.J. Babin, R.E. Anderson & R.L. Tatham (2006). Multivariate data analysis (6th Edition). New York: Prentice Hall.

Hall, G. & C. Tu (2004). Internationalization and size, age and profitability in the United Kingdom. In Leo-Paul Dana (Ed), Handbook of Research on International Entrepreneurship,(pp 596 -613). Edward Elgar: Cheltenham U.K.

Johanson, J. & J-E. Vahlne (2003). Business relationship commitment and learning in the internationalization process. Journal of International Entrepreneurship, 1, 83-101.

Jones. M.V. & D. Crick (2004). Internationalising high-technology based U.K. firms' information gathering activities. Journal of Small Business and Enterprise Development, 11(1), 84-94.

Karafakioglu, M. (1986). Export activities of Turkish manufacturers. International Marketing Review, Winter, 3443.

Katsikeas, C. S. & N.F. Piercy (1993). Long-term export stimuli and firm characteristics in European LDC. Journal of International Marketing, 1(3), 23-47.

Lautanen, L. (2000). Modelling small firm's decision to export - evidence from manufacturing firms in Finland, Small Business Economics, 14, 107-124.

Leonidou, L. C. & A. Kaleka (1998). Behavioral aspects of international buyer-sellerrelationships: Their association with export involvement. International Marketing Review, 15 (5), 373-397.

Leonidou, L.C. & C.S. Katsikeas (1996). The export development process: an integrative review of empirical models. Journal of International Business Studies, 27 (3), 517-51.

Lipparini, A. & G. Lorenzo (1999). The leveraging of interfere relationships as a distinctive organisational capability: A longitudinal study. Strategic Management Journal, 20, 317-338.

Miesenbock, K.J. (1988). Small business and exporting: A literature review. International Small Business Journal, 6 (2), 42-61.

Mittelstaedt, J. D., G. N. Harben & W. A. Ward (2003). How small is too small? Firm size as a barrier to exporting from the United States. Journal of Small Business Management, 41(1), 68-84.

Moen, O. (1999). The relationship between firm size, competitive advantages export performance revisited. International Small Business Journal 18 (1), 53-72.

Moen, O. & P. Servais (2002). Born global or gradual global? Examining the behavior of small and medium-sized enterprises. Journal of International Marketing, 10 (3), 49-72.

Obben, J. & P. Magagula (2003). Firm and managerial determinants of the export propensity of small and medium-sized enterprises in Swaziland. International Small Business Journal, 21(1), 73-91.

Oviatt, B. M. & P. P. McDougall (2005). Defining international entrepreneurship and modeling the speed of internationalization. Entrepreneurship Theory & Practice, 29, 537-553.

Philp, N. E. (1998). The export propensity of the very small enterprise (VSE). International Small Business Journal, 16, 79-93.

Pindyck, R.S. & D.L. Rubinfeld (1998). Econometric models and economic forecasts (5th Edition). New York: McGraw Hill.

Pla-Barber, J. P. & J. Alegre (2007). Analysing the link between export intensity, innovation and firm size in a science-based industry. International Business Review, forthcoming.

Porter, M.E. (1990). The competitive advantage of nations. New York: The Free Press.

Reid, R.S. (1981). The decision-maker and export entry and expansion. Journal of International Business Studies, 12(2), 101-112.

Reid, S. D. (1983). Firm internationalization, transaction costs and strategic choice .International Marketing Review 1(2), 45-55.

Rialp, A., J. Rialp & G.A. Knight (2005). The phenomenon of early internationalizing g firms: what do we know after a decade (1993-2003) of scientific inquiry? International Business Review, 14(2), 147-166.

Rueber, A. R. & E. Fischer (2002). Foreign sales and small firm growth: The moderating role of the management team. Entrepreneurship Theory and Practice, 27(1), 29-45.

Rodriguez, J.L. &R.M.G Rodriguez (2005). Technology and export behaviour: A resource-based view approach. International Business Review, 14, 5, pp 539-557

Simpson, C. & D. Kujawa (1974). The export decision process: An empirical inquiry. Journal of International Business Studies, 5 (1), 107-117.

Ursic, M. L. & M. R. Czinkota. (1989). The relationship between managerial characteristics and exporting behaviour. Developments in Marketing Science, 12, pp 208-210.

Tseng, C-H., P.S. Tansuhaj & J. Rose (2004). Are strategic assets contributions or constraints for SMEs to go international? An empirical study of the US manufacturing sector. Journal of American Academy of Business, 5, 1-2, pp 246-254.

Tybjee, T.T. (1994). Internationalization of high tech firms: Initial vs. extended involvement. Journal of Global Marketing, 7, 4, pp 59- 78.

Williams, D.A. (2009). Understanding exporting in the small and micro enterprise (pp 1-188). New York: Nova Science Publishers.

Zou, S. & S. Stan (1998). The determinants of export performance: a review of the empirical literature between 1987 and 1997. International Marketing Review, 15(5), 333-356.

Densil A. Williams, University of the West Indies
Table 1: Logistic Regression- unrestricted model (N=92)

Independent variables                         [beta]         Wald

Constant                                       -1.45         2.90
EFL                                             -.57          .29
CPS1                                            1.16         5.14
TS                                             17             .10
IND                                             -.15         2.30
-2LL(Initial Model)                           127.37
-2LL(Final Model)                             115.88
[chi square] (df) (Final Model)                11.58 **
[chi square] (df) Hosmer & Lemeshow test      410 ***
Nagelkerke [R.sup.2]                             .16
[R.sup.2.sub.L]                                  .09
% Correct Prediction                           62

Independent variables                          Sig.       Exp([beta])

Constant                                        .09 *         .30
EFL                                             .59           .57
CPS1                                            .02 *        3.18
TS                                              .75          1.18
IND                                             .13 *         .86
-2LL(Initial Model)
-2LL(Final Model)
[chi square] (df) (Final Model)
[chi square] (df) Hosmer & Lemeshow test
Nagelkerke [R.sup.2]
[R.sup.2.sub.L]
% Correct Prediction

* Variables are significant at the 0.05 level of significance

** Statistic is significant at the 0.05 level of significance
(p=0.04)

*** Test is non-significant at the 0.05 level of significance (p=.85)

[R.sup.2.sub.L] = 1- (Final model -2LL/ Initial model -2LL)

Table 2.: Predictive accuracy of the model

                          Export Performance          Percent Correct

                          Exporter   Non-Exporter
Exporter                     27           17             61.4
Non-exporter                 18           30             62.5
Overall percent correct                                  62.0
COPYRIGHT 2011 The DreamCatchers Group, LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2011 Gale, Cengage Learning. All rights reserved.

 Reader Opinion

Title:

Comment:



 

Article Details
Printer friendly Cite/link Email Feedback
Author:Williams, Densil A.
Publication:Academy of Entrepreneurship Journal
Date:Jul 1, 2011
Words:7277
Previous Article:Emergence of entrepreneurial retail forms.
Next Article:Opportunity recognition for novice entrepreneurs: the benefits of learning with a mentor.
Topics:

Terms of use | Copyright © 2014 Farlex, Inc. | Feedback | For webmasters