Export readiness index : construction and analysis

The internationalisation process of firms has attracted much research interest since the 1970s. It is noted, however, that a significant research gap exists in studies with a primary focus on the pre-internationalisation behaviour of firms. This paper proposes the incorporation of a pre-internationalisation phase into the traditional Uppsala model of firm internationalisation to address the issue of export readiness. Through extensive literature review, the concepts fundamental to the ability of an Uppsala type firm to begin internationalisation through an export entry mode are identified: exposure to stimuli factors, attitudinal commitment of decision makers towards exporting, the firm’s resource capabilities, as well as the moderating effect of lateral rigidity. The concept of export readiness is operationalised in this study through the construction of an export readiness index (ERI) using exploratory and confirmatory factor analysis. The index is then applied to some representative cases and tested using logistic regression to establish its validity as a diagnostic tool. The proposed ERI presents not only a more practical approach towards analysing firms’ export readiness but has also major public policy implications as a possible tool for government export promotion agencies.

Causes of rigidity in SMEs' export commencement decision

Today, small-medium sized enterprises (SMEs) collectively contribute to the largest percentage of job creation in OECD countries. SMEs have become increasingly international since the turn of the century despite being smaller in size in comparison to large multinational firms, and notably, exporting is the most favoured mode of international market entry utilised by SMEs in their internationalisation strategy. Governments around the world have acknowledged the importance of export promotion and have employed policies that are targeted at increasing the export activity of SMEs. However, in many countries, the involvement of SMEs in export operations remains rather low. Within Australia, for example, only about one-third of local SMEs are exporting and this raises an important question as to why there is such a huge percentage of non-exporters. Much scholarly research that focuses on this problem has concentrated on the broad concept of 'export barriers' that act as obstacles to a firm's export development. This paper takes a different approach to previous studies and proposes that a firm's resistance to commence exporting can be better understood through an analysis of the behavioural decision process during its pre-export state. Using a sample of Australian SMEs, the factors that are important in preventing a firm’s initial export commencement decision are categorised and discussed through the use of factor analysis.