Academic journal article Academy of Marketing Studies Journal

Barriers to Export for Non-Exporting Firms in Developing Countries

Academic journal article Academy of Marketing Studies Journal

Barriers to Export for Non-Exporting Firms in Developing Countries

Article excerpt

INTRODUCTION

Although all businesses both from developed and developing countries face some sort of barriers to entry in global markets, companies in developing countries have additional barriers that they must overcome. Firms from developing countries are especially affected by global competition and protective measures such as, tariffs, quota, monetary barriers, and non-tariff barriers imposed by the governments of the countries in which they wish to market their products. Presence of barriers to export usually makes the domestic market more attractive and influences companies to lose interest in entering international markets.

Barriers to export for manufacturing firms have been the focus of a wide range of research interest since the 1980s. A handful of empirical studies have been conducted concerning the perception of barrier to export by non-exporting firms and how these barriers relate to one another. However, similar attempts to study barriers to export remain much more limited in developing nations. Based on the literature review conducted, previous research examining barriers to export for developing country firms, have not considered the relationship between external and internal barriers to export. In developing nations, understanding barriers to export and the relationships among them is particularly important and may provide valuable information for public and private sector bodies seeking to promote exports.

LITERATURE REVIEW

Shepherd (1979) defines barriers to entry in any market as anything that decreases the likelihood, scope, or speed of the potential competitors' entering into the market. Porter (1980) proposed six major sources of barriers to market entry. These barriers were; 1) cost advantages incumbents; 2) product differentiation of incumbents; 3) capital requirements; 4) customer switching costs; 5) access to distribution channels and 6) government policy. Karakaya and Stahl (1989) tested the relative importance of these barriers in domestic markets. Cavusgil and Naor (1987) indicate that financial and personnel resources are crucial factors in overcoming barriers to entry in international markets. Similarly, Many types of resources are consumed by foreign involvement, and inadequate resources, financial and non-financial, decrease a firm's activities in international markets (Cavusgil & Zou, 1994).

Although most of the barriers discussed for domestic market entry are similar in international markets, some barriers are different mostly due to international marketing environments. Kotler (1986) states that barriers in international markets may include discriminatory legal requirements, political favoritism, cartel agreements, social and cultural biases, unfriendly distribution channels and refusal to cooperate by both business executives and foreign governments.

Yang, Leona and Alden (1992) group export barriers into three categories: 1) external barriers, 2) operational barriers, and 3) internal barriers. For numerous firms, the most important external factors that cause barriers to entry into international markets consist of tariff and non tariff barriers, foreign exchange rate, fluctuations, competition in foreign markets, government policy, foreign business practice, and different product and consumer standards in foreign markets (Barker & Kaynak, 1992; Bauerschmidt at. al., 1985; Leonidou, 1995; Czinkota & Ursic, 1983; Ditchtl, Koglmary & Muller, 1986; Kaynak & Kothari, 1983; Kedia & Chokar, 1986; Robino, 1980; Tseng & Yu, 1992; Yang et al., 1992). Similarly operational barriers consist of receiving payments from foreign buyers, making arrangements for transportation and shipments, clearing customs, getting representation in international markets (Kedia & Chokar, 1986; Yaprak, 1985), and managing international channels of distribution (Gilliland & Bello, 1997). Internal barriers include past experience in foreign markets, lack of managerial commitment, and lack of human and capital resources (Barker & Kaynak, 1992; Bauerschmidt, Sullivan & Gillespie, 1985; Cavusgil & Nevin, 1981; Yaprak, 1985). …

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