Optimal geographic diversification and firm performance:evidence from the U.K.

This paper examines the relationship between multinationality and firm performance. The analysis is based on a sample of over 400 UK multinationals, and encompasses both service sector and manufacturing sector multinationals. This paper confirms the non-linear relationship between performance and multinationality that is reported elsewhere in the literature, but offers further analysis of this relationship. Specifically, by correcting for endogeneity in the investment decision, and for shocks in productivity across countries, the paper demonstrates that the returns to multinationality are greater than those that have been reported elsewhere, and persist to higher degrees of international diversification.

The effects of foreign acquisition on domestic and export markets dynamics in China

Using recent data from the Chinese manufacturing industry and the generalised propensity score, this paper establishes economically significant causal effects of foreign acquisition on domestic and export markets dynamics.

Finance and firm export in China

Using a rich panel data set, we provide a rigorous analysis of the relationship between access to external finance, foreign direct investment and the exports of private enterprises in China. We conclude that, in order to foster the exports of indigenous enterprises, the elimination of financial discrimination against private firms is likely to be a more effective policy tool than the reliance on spillovers from multinational firms. © 2007 Blackwell Publishing Ltd.

Institutional antecedents and performance consequences of influence strategies in export channels to transitional economies

This study examines how the institutional environment of transitional economies impacts institutional arrangements in the form of influence strategies employed by Western exporters in managing relationships with local firms. Reflecting environmental components, a Western firm’s understanding of Eastern Europe’s regulatory volatility, foreignness, and partner’s control locus is posited to impact economic performance by affecting key coercive and non-coercive influence strategies. A model specifying the effects of the institutional environment on economic outcomes is developed and tested on data from US exporters to Eastern Europe. A structural equation analysis indicates institutional components have a differential impact on the influence strategies employed by these Western firms and on export performance. In particular, use of coercive legalistic pleas is increased by regulatory volatility but reduced by perceived foreignness while use of non-coercive recommendations is increased by the partner’s external locus of control but not by perceived foreignness. Importantly, the institutional environment’s impact on economic performance is shown to be direct as well as indirect through the influence strategies Western firms employ in Eastern Europe. The study concludes with a discussion of implications for managers and researchers.

Technological diversification within UK’s small serial innovators

This paper investigates the determinants of technological diversification among UK’s small serial innovators (SSIs). Using a longitudinal study of 339 UK-based small businesses accounting for almost 7000 patents between 1990 and 2006, this study constitutes the first empirical examination of technological diversification among SMEs in the literature. Results demonstrate that technological diversification is not solely a large firm activity, challenging the dominant view that innovative SMEs are extremely focused and specialised players with little technological diversification. Our findings suggest a nonlinear (i.e. inverse-U-shaped) relationship between the level of technological opportunities in the environment and the SSIs’ degree of technological diversification. This points to a trade-off between processes of exploration and exploitation across increasingly volatile technology regimes. The paper also demonstrates that small firms with impactful innovations focus their innovative activity around similar technological capabilities while firms that have introduced platform technologies in the past are more likely to engage in technological diversification.

Innovation and export performance:evidence from UK and German manufacturing plants

Using comparable plant-level surveys we demonstrate significant differences between the determinants of export performance among the UK and German manufacturing plants. Product innovation, however measured, has a strong effect on the probability and propensity to export in both countries. Being innovative is positively related to export probability in both countries. In the UK the scale of plants’ innovation activity is also related positively to export propensity. In Germany, however, where levels of innovation intensity are higher but the proportion of sales attributable to new products is lower, there is some evidence of a negative relationship between the scale of innovation activity and export performance. Significant differences are identified between innovative and non-innovative plants, especially in their absorption of spill-over effects. Innovative UK plants are more effective in their ability to exploit spill-overs from the innovation activities of companies in the same sector. In Germany, by contrast, non-innovators are more likely to absorb regional and supply-chain spill-over effects. Co-location to other innovative firms is generally found to discourage exporting.

The determinants of export performance:evidence for manufacturing plants in Ireland and Northern Ireland

The dramatic GDP and export growth of Ireland over the last decade forms a marked contrast with that of its nearest neighbour Northern Ireland. In Ireland, export volume growth averaged 15.5% p.a. from 1991 to 1999 compared with 6.3% from Northern Ireland. Using data on individual manufacturing plants this paper considers the determinants of export performance in the two areas. Larger, externally owned plants with higher skill levels are found to have the highest export propensities in both areas. Other influences (plant age, R&D, etc.) prove more strongly conditional on location, plant size, and ownership. Structural factors (e.g. ownership, industry) explain almost all of the difference in export propensity between larger plants in Northern Ireland and Ireland but only around one-third of that between smaller plants. Significant differences are also evident between plants in terms of their sources of new technology. For indigenously owned plants, inhouse R&D is important. For externally owned plants, R&D conducted elsewhere in the group - typically outside Ireland and Northern Ireland - proves more significant. This external dependency and lower than expected export propensity on the part of small plants in Northern Ireland represent significant policy challenges for the future.© 2006 Scottish Economic Society. Published by Blackwell Publishing Ltd.

Attainment of competitive advantage by the exporter-importer dyad:the role of export offering and import objectives

Although experience shows that the exporter and importer jointly contribute towards the attainment of competitive advantage, past studies have separately examined export-related characteristics or import barriers. This article identifies a subset of critical factors that illustrate how the exporter–importer (E-I) dyad creates and maintains competitive advantage. Based on a sample of Greek importers, a path analytic model was developed that empirically demonstrates that product technology sophistication (PTS), product and service quality and importer strategic objectives are important for the attainment of competitive advantage while price competitiveness and trust upon the exporter are not.

Portfolio diversification and filter rule profits

Previously, it has been shown that the profits from a simple market timing trading rule applied to a portfolio of shares can be affected by the inter-relationships between the returns of the component securities. In this short letter, the results from applying a more sophisticated 'filter' rule to the same data are reported. Unlike the simple trading rule, the filter rule does produce some evidence of economic profits.

The impact of portfolio diversification on trading rule profits:some evidence for UK share portfolios

This paper demonstrates how the autocorrelation structure of UK portfolio returns is linked to dynamic interrelationships among the component securities of that portfolio. Moreover, portfolio return autocorrelation is shown to be an increasing function of the number of securities in the portfolio. Since the security interrelationships seemed to be more a product of their history of non-synchronous trading than of systematic industry-related phenomena, it should not be possible to exploit the high levels of return persistence using trading rules. We show that rules designed to exploit this portfolio autocorrelation structure do not produce economic profits.

Differences in market-oriented behaviour levels across firms' domestic and export marketing operations:a study of antecedents and consequences

Researchers are beginning to recognise that organisations often have different levels of market orientation across different aspects of their operations. Focusing on firms involved in export marketing, this study examines how market-oriented behaviour differs across firms' domestic and export marketing operations. In this respect, the study is the first of its kind since it investigates three main issues: (1) to what extent do differences exist in firms' levels of market-oriented behaviour in their domestic markets (i.e., their domestic market-oriented behaviour) and in their export markets (i.e., their export market-oriented behaviour), (2) what are the key drivers of such differences, and (3) what are the performance implications for firms of having different levels of domestic and export market-oriented behaviour. To shed light on these research questions, data were collected from 225 British exporting firms using a mail questionnaire. Structural equation modelling techniques were used to develop and purify measures of all construct of interest, and to test the theoretical models developed. The results indicate that many of businesses sampled have very different levels of market orientation in their domestic and exporting operations: typically, firms tend to be more market-oriented in their domestic markets relative to their export markets. Several key factors were identified as drivers of differences in market orientation levels across firms' domestic and export markets. In particular, it was found that differences were more pronounced when: (i) interfunctional interactions between domestic marketing and export marketing are rare, (ii) when domestic and export marketing follow asymmetric business strategies, (iii) when mutual dependence between the functions is low, (iv) when one or other of the functions dominates the firm's sales, and (v) when there are pronounced differences in the degree to which the domestic and the export markets are experiencing environmental turbulence. The consequences of differences in market-oriented behaviour across firms' domestic and export markets were also studied. The results indicate that overall sales performance of firms (as determined by the composite of firms' domestic sales and export sales performance) is positively related to levels of domestic market-oriented behaviour under high levels of environmental turbulence in firms' domestic markets. However, as domestic market turbulence decreases, so to does the strength of this positive relationship. On the other hand, export market-oriented behaviour provides a positive contribution to firms' overall sales success under conditions of relatively low export market turbulence. As the turbulence in export markets increases, this positive relationship becomes weaker. These findings indicate that there are numerous situations in which it is sub-optimal for firms to have identical levels of market-oriented behaviour in their domestic and exporting operations. The theoretical and practical implications of these findings are discussed.

Pricing-to-market for UK export sector

This thesis investigates the pricing-to-market (PTM) behaviour of the UK export sector. Unlike previous studies, this study econometrically tests for seasonal unit roots in the export prices prior to estimating PTM behaviour. Prior studies have seasonally adjusted the data automatically. This study’s results show that monthly export prices contain very little seasonal unit roots implying that there is a loss of information in the data generating process of the series when estimating PTM using seasonally-adjusted data. Prior studies have also ignored the econometric properties of the data despite the existence of ARCH effects in such data. The standard approach has been to estimate PTM models using Ordinary Least Square (OLS). For this reason, both EGARCH and GJR-EGARCH (hereafter GJR) estimation methods are used to estimate both a standard and an Error Correction model (ECM) of PTM. The results indicate that PTM behaviour varies across UK sectors. The variables used in the PTM models are co-integrated and an ECM is a valid representation of pricing behaviour. The study also finds that the price adjustment is slower when the analysis is performed on real prices, i.e., data that are adjusted for inflation. There is strong evidence of auto-regressive condition heteroscedasticity (ARCH) effects – meaning that the PTM parameter estimates of prior studies have been ineffectively estimated. Surprisingly, there is very little evidence of asymmetry. This suggests that exporters appear to PTM at a relatively constant rate. This finding might also explain the failure of prior studies to find evidence of asymmetric exposure in foreign exchange (FX) rates. This study also provides a cross sectional analysis to explain the implications of the observed PTM of producers’ marginal cost, market share and product differentiation. The cross-sectional regressions are estimated using OLS, Generalised Method of Moment (GMM) and Logit estimations. Overall, the results suggest that market share affects PTM positively.Exporters with smaller market share are more likely to operate PTM. Alternatively, product differentiation is negatively associated with PTM. So industries with highly differentiated products are less likely to adjust their prices. However, marginal costs seem not to be significantly associated with PTM. Exporters perform PTM to limit the FX rate effect pass-through to their foreign customers, but they also avoided exploiting PTM to the full, since to do so can substantially reduce their profits.

Export memory: a preliminary investigation of its quality, its use, and its link to export performance

Exporting is one of the main ways in which organizations internationalize. With the more turbulent, heterogeneous, sophisticated and less familiar export environment, the organizational learning ability of the exporting organization may become its only source of sustainable competitive advantage. However, achieving a competitive level of learning is not easy. Companies must be able to find ways to improve their learning capability by enhancing the different aspects of the learning process. One of these is export memory. Building from an export information processing framework this research work particularly focuses on the quality of export memory, its determinants, its subsequent use in decision-making, and its ultimate relationship with export performance. Within export memory use, four export memory use dimensions have been discovered: instrumental, conceptual, legitimizing and manipulating. Results from the qualitative study based on the data from a mail survey with 354 responses reveal that the development of export memory quality is positively related with quality of export information acquisition, the quality of export information interpretation, export coordination, and integration of the information into the organizational system. Several company and environmental factors have also been examined in terms of their relationship with export memory use. The two factors found to be significantly related to the extent of export memory use are acquisition of export information quality and export memory quality. The results reveal that export memory quality is positively related to the extent of export memory use which in turn was found to be positively related to export performance. Furthermore, results of the study show that there is only one aspect of export memory use that significantly affects export performance – the extent of export memory use. This finding could mean that there is no particular type of export memory use favored since the choice of the type of use is situation specific. Additional results reveal that environmental turbulence and export memory overload have moderating effects on the relationship between export memory use and export performance.