Academic journal article Journal of Small Business Management

Small Firms' Motivations for Exporting. to Earn and Learn?

Academic journal article Journal of Small Business Management

Small Firms' Motivations for Exporting. to Earn and Learn?

Article excerpt

Exporting is an important source of revenues for many small and medium-sized U.S. companies in an emerging global economy. Although many factors are known to explain why companies begin to export, relatively little is known about why they decide to continue to export after their initial international transactions. Most small firms see exporting as a risky venture and many do not obtain immediate financial returns. This study of 138 small firms in North Carolina with exporting experience finds that although financial success is a crucial factor, financial gains alone do not fully explain the propensity of small companies to continue exporting. Firms that strongly value learning from international experience are more likely to continue exporting even when initial financial returns are disappointing.

In an era of economic globalization, the failure of U.S. firms to consider exporting their goods and services can be detrimental to their own growth and to that of the American economy (Young, Lawson, and Duncan 1986; Ogbuehi and Longfellow 1994). Exporting already plays a critical part in the U.S. economy: exports of goods and services from the United States totaled more than $956 billion in 1999 (U.S. Department of Commerce 2000); the United States accounts for about 12.6 percent of the world's exports in goods and 16 percent in services (Ludolph 1998); and exports supported more than 12 million jobs in the United States in 1997 and accounted for almost 12 percent of the gross domestic product. However, the United States has imported more than it has exported every year since the early 1970s, and its merchandise trade deficit grew to $264 billion in 1999. About 209,000 firms (a small share of the more than 6.5 million business establishments in the United States) engage in exporting. Almost 97 percent of a ll exporters are small and medium-size companies.

Thus, the trend toward economic globalization offers exporting opportunities to not only large multinational firms but also to the thousands of small companies that continue to focus primarily on the domestic market (Wright and Ricks 1994). However, many internal barriers in small firms--limited resources, difficulty in acquiring information, lack of managerial experience with exporting, and weak formal planning systems--restrict their interest in and frustrate their efforts at internationalizing (Karagozoglu and Lindell 1998; Roth 1992; Ali and Swiercz 1991; Naidu and Prasad 1994; Baird, Lyles, and Orris 1994). Moreover, small firms that lack the depth of resources and experience available to large multinational corporations see exporting as risky.

Many variables are associated with a firm's decision to start exporting and with its subsequent evaluations of success. Research on the exporting experience of small companies has explored a wide range of relevant issues: the impact of firm size (All and Swiercz 1991; Kaynak, Ghauri, and Olofsson-Bredenlow 1987; Czinkota and Johnston 1983); competitive advantages, managerial characteristics, and expectations (Moini 1995); firm characteristics (Ogbuehi and Longfellow 1994; Bilkey and Tesar 1977; Czinkota and Johnston 1983); export planning and organizational structure (Bijmolt and Zwart 1994); and firm competence and export strategy (Aaby and Slatner 1989). Factors associated with the initial decision to internationalize include the presence of strategic opportunities abroad, inquiries from foreign buyers, flat domestic sales, international moves by competitors (Karagozoglu and Lindell 1998); internal firm barriers (Campbell 1996); size (OrtizBuonafina 1990); managerial attitudes (Kedia and Chhokar 1985); and the ability to acquire information (Reid 1984).

Managerial attitudes--such as the desire to exploit technological advantage, offer unique products, maximize marketing advantages, and pursue market diversification (Welch and Wiedersheim-Paul 1980)--also influence a firm's decision to export. …

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