Academic journal article Management International Review

The Relationship between Organizational Structure and Export Performance

Academic journal article Management International Review

The Relationship between Organizational Structure and Export Performance

Article excerpt

Introduction

Although academic research into the field of exporting has grown in proportion to the importance of exporting policy, most researchers have studied the phenomenon by focusing on the link between strategy and performance (Cavusgil/Zou 1994). While many scholars have included various organizational variables in their analysis of export performance, few empirical studies have looked explicitly at the relationship between organizational structure and performance. Of notable exception is Reid's (1987) study of strategy, structure, and performance in Italian manufacturing firms. In his research, evidence was found supporting the relationship between firms' organizational choices to conduct exports and their export performance; these choices were deemed to be selective and firm specific. The generalizability, however, of Reid's (1987) findings may be limited since his sample was small manufacturing firms which had no overseas facilities.

This study was conceived, therefore, to address this gap in our understanding of export marketing by testing the proposition that a firm's organizational choices will have a significant impact on their export performance. Our intent was to discover if any clear findings could be established regarding the relationship between structure and performance that would be of value to managers, to government policy makers interested in promoting exports, and to researchers interested in studying the prerequisites for success in the international marketplace.

Theoretical Underpinnings

The growth in a firm's exports is often conceptualized as a progressive commitment along an organizational continuum ultimately leading to an investment in foreign-based production (Bilkey/Tesar 1977, Johanson/Vahlne 1977, Johanson/Wiedersheim-Paul 1975). Johanson and Vahlne (1977), for example, considered the internationalization of firms to be an increasing dedication of resources designed to give firms more control over the channels through which they receive and transmit information. Their research tended to focus on the stimuli which induce firms to progress to a more advanced stage of internationalization which then, in turn, alters firms' perceptions, experiences, expectations, as well as managerial capability and competence; new stimuli then induce the firm to move to the next stage (Cunningham/Homse (1982) taken from Turnbull (1987)). In general, this approach is one in which firms are seen to be passing through a series of sequential and evolutionary stages of increasing dependence on international markets.

Empirical studies which have looked at the international development as a series of small, cumulative steps have, however, revealed some inconsistency (Buckley 1982, Turnbull/Valla 1986). Their research has shown that firms do not necessarily follow a consistent organizational approach as they enter foreign markets or expand exports. The irregular paths taken by firms in their organizational development can often remain on plateaus which serve as the basis for the consolidation of previous moves (Macharzina/Englehard 1991).

Although the internationalization stages model is useful to characterize firm development, its emphasis on the impact of a firm's sales dependency as the primary determinant of structural change does not take into account the important issues of industry characteristics, firm resources, and market opportunities (Reid 1983). Industry characteristics and market opportunities are relevant since these determine the climate in which international marketing decisions are made. Further, firm resources are important since they set potential limits on organizational choice. In other words, a more accurate model of firm performance would also include the concept of overall organizational "fit" between the industry in which the firm competes, the resources available to the firm, as well as its existing and perceived market opportunities. …

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