Impact of firm-level characteristics and international marketing strategies on export performance of SMES in South Africa
Date
2021
Authors
Siddiqui, Ammar
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Abstract
Internationalization has caused numerous businesses across the world to extend their
operations to foreign countries. Amongst the various forms of internationalization, such as
direct investment, franchising and joint ventures, the primary and most common mode used
by Small and Medium Enterprises (SMEs) is exporting. Exporting allows businesses to
function in their home country and serve customers in other countries. Exporting relieves
businesses from domestic competition, increases production, from which economies of scale,
competitive prices and competitive advantages are gained. Despite these advantages, there
are reports that limited SMEs in emerging economies like South Africa that are facing
increasing competition from international forms entering their markets are exporting. Such
reports raise questions as to the factor that becomes barriers for SMEs in South Africa to
export. Previous studies have produced mixed findings, with some suggesting that exporting
determinants are SMEs characteristics in terms of size and age, others suggesting managerial
capabilities and characteristics and some contending that it is environmental factors and
competence in dealing with expert market conditions and requirements.
Considering the mixed findings from literature, there was a need for a consolidated study to
identify country-specific factors that will propel SMEs in South Africa to not only export to
perform optimally and superiorly. Even though the resource-based view (RBV) and dynamic
capabilities view (DCV) theorists posit that firm performance is guaranteed when firms
possess resources (tangible and intangible) and dynamic capabilities to adapt marketing
strategies to changing market conditions, researchers have ignored the mediating role of the
resultant marketing strategies in the relationships between performance drivers and export
performance. Thus, this research had two main objectives: 1) examine the extent to which
firm characteristics (firm size, age of the firm and employee education), managerial
characteristics (international experience, education level, foreign language knowledge, risk taking ability, rigidness, proactive approach), environmental characteristics (psychic
distance, cultural specificity), export market competencies (commitment, international
expertise, market knowledge, innovation) impact both optimal and superior export
performances); 2) test the mediating role of international marketing strategies in the
relationships between the sets of drivers and export performance (subjectively) of South
African SMEs. An integrated conceptual framework was developed delineating these
relationships.
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To empirically test the conceptual framework, data was collected from 350 respondents of
SMEs involved in export activities, located in the Gauteng and Western Cape of South Africa.
Convenience sampling method was used in the research. The findings indicate that optimal
export performance was significantly driven by an organization’s characteristics (i.e., size
and education of employees), environmental characteristics of the firm (only psychic
distance) and export market competence (internal market knowledge and experience,
innovation and commitment. Superior export performance was significantly impacted by
managerial characteristics (i.e., Foreign Language Expertise, International Experience, and
Education level), Personality Factors (i.e., Risk Taking Ability, Rigidness, and Proactive
Approach). The international marketing strategies and managerial characteristics had the
greatest influence on the optimal export performance of the organisation, while the market
competencies made the greatest impact on optimal export performance.
The developed integrated model explained 87.6% of superior export performance, 78.5% of
optimal export performance and 79.2% of international marketing strategy. With this high
explanatory powers, this research theoretical contributes in the field of international
marketing and strategic management by providing a holistic model with which to identify
various factors and their facets helping and hindering SMEs to perform superiorly and
optimally in not only an emerging market context but also in an African context. This study
also theoretically contributes by confirming the RBV and DCV theories in an African market
context. Practically, and for the SMEs that perform well, they can use insights from this study
to identify what they are doing rightly. For the SMEs that perform poorly or are planning to
export, this comprehensive findings will be a rich guide into internal factors (managerial and
firm characteristics and export market competence) and environmental factors to focus on for
effective strategy implementation and resultant superior and optimal export performances.
Future research should test this model with a larger sample size and in other emerging and
developing countries
Description
A thesis submitted to the in fulfilment of the requirements for the degree of Doctor of Philosophy to the Faculty of Commerce, Law and Management, School of Business Science, University of the Witwatersrand, Johannesburg, 2021