Academic journal article Management International Review

Patterns of Formal Planning and Performance in U.S. Exporting Firms

Academic journal article Management International Review

Patterns of Formal Planning and Performance in U.S. Exporting Firms

Article excerpt

* This study investigates planning activity in U.S. exporting firms.

* The findings indicate a pattern of a relatively low managerial propensity to undertake formal export planning and a hierarchical pattern of planning activity. The research results also indicate that firm size and environmental "complexity" affect planning activity.

* An association between export intensity and formal planning activity was also identified. However, the data does not indicate any consistent pattern in the relationship between export planning and financial performance.

Key Results

* The research findings suggest that a majority of U.S. exporters are not undertaking important elements of formal planning action although planning activity is most evident in regard to strategic decisions.

Introduction

Research on planning for international operations has focused on the behavior of large multinational corporations, most of which do seem to undertake significant planning activity (Steiner and Schollhammer 1975). Interest in the planning behavior of exporters has been more limited, and little empirical research has focused on this topic. However, there is evidence that many exporters have not undertaken significant formal export planning activity, and that planned export entry has not been the norm (Bilkey 1978). It should be noted, though, that a good deal of the available data is dated, and it is likely that the historical situation does not accurately reflect current practice in many exporters.

Despite evidence of disinterest in export planning, the consensus view is that planning activity is desirable and will improve export performance. A good example of the normative mainstream is provided by the U.S. Department of Commerce's advice that, "formulating an export strategy, based on good information and assessment, makes it more likely that the best among several options will be chosen, that resources will be used effectively, and that efforts will be carried through to completion" (Business America 1987, p. 3).

If many exporters do not plan, and planning is important for success in export markets, then this implies that the export performance of many firms could be improved if a planning philosophy and appropriate procedures are adopted. It is therefore important to investigate the planning behavior of exporters and, in particular, to explore the relationship between export planning activity and export performance.

In order to learn more about these issues, this research investigates patterns of formal planning activity in U.S. exporters and then explores the relationship between export planning and export performance. The specific research questions addressed are as follows: (1) Is it the case that most U.S. exporters undertake little formal planning activity? (2) With regard to the planning that does take place, what is the broad pattern of activity exhibited? (3) Is there any evidence of a relationship between formal planning activity and export performance?

Export Planning Behavior

The available empirical evidence indicates that many exporters do not undertake significant planning activity at the start of export operations. Research data regarding initial export activity indicates that random events, notably the unsolicited export order, commonly play a major role in the initiation process; that planned export entry has not been common; and that many companies drift into exporting by chance rather than as part of a conscious strategy (Simmonds and Smith 1968, Bilkey 1978, Brasch and Lee 1978).

Export "probing" may be a precursor to formal export planning activity in many firms. During this process information on overseas markets of interest is acquired and assimilated, often in a haphazard manner, during initial export operations. Firms may also enter export markets in an indirect fashion, relying on the knowledge and services of export trading companies, export merchants and export management companies. …

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