Export Strategy for Small Business

Article excerpt

EXPORT STRATEGY FOR SMALL BUSINESS

Exporting is increasingly seen as an opportunity for corporate growth and increased profitability among small-to medium-sized firms in many industries. Many U.S. markets have become or are becoming international, mainly because of reduced market differences among such major trade powers as the United States, Japan, and the European countries. Many companies also look to foreign markets because of intensified competition at home, maturing domestic markets, or limited domestic market opportunities. Exporting as a means to corporate growth is particularly appropriate for manufacturers of industrial goods or products with innovative advantages, and for smaller firms without the financial and managerial resources necessary for more extensive international operations such as joint ventures and foreign direct investment.(1) (1)Robert G. Cooper and Elko J. Kleinschmidt, "The Impact of Export Strategy on Export Sales Performance," The Journal of International Business Studies (Spring 1985), pp. 37-55. Dr. Namiki is an associate professor of management at California State University in Sacramento. He is co-author of The False Promise of the Japanese Miracle (Pitman Publishers) and a number of articles on business strategy.

Although competition in export markets has become important for many small firms in the United States, studies have rarely been conducted of competitive strategy in export markets.(2) Many studies of competitive strategy employed by firms in the U.S. market have found that firms competing in the same industry or similar environments tend to use more than one type of strategy, and certain types of strategy lead to better corporate performance than others.(3) In other words, the current trend in strategic management research is to classify firms by strategy type or group, and then to identify successful strategy types within a given industry or set of circumstances. This type of research is called "strategic group analysis."

Few studies, however, have examined export strategy types and their effect (2) For an example, see Kendall Roth and Patricia P. McDougall, "An Empirical Comparison of Domestic and International Strategic Behavior," paper presented at the 46th Annual Academy of Management Meeting, August 1986, Chicago. (3) See, for example, Gregory G. Dess and Peter S. Davis, "Porter's (1980) Generic Strategies as Determinants of Strategic Group Membership and Organizational Performance," Academy of Management Journal (September 1984), pp. 467-488. on performance, especially for small business exporters. Most studies of exporters have investigated the relationship between firm or market characteristics (e.g., commitment to export, size of foreign markets and size of firm) and export performance.(4) Other studies have examined the relationship between a firm's export marketing activities (e.g., product adaptation and market segmentation) and export performance.(5)

This article presents the results of a strategic group analysis of small firms competing in export markets. The following questions are addressed: . What types of strategy are followed by small firms in export markets? . What types of strategy are instrumental in providing small firms with competitive advantages in export markets, thereby leading to export success?

COMPETITIVE STRATEGY

Many studies have reported that several different types of strategy are pursued by firms within an industry, and certain types of strategy tend to outperform others. Examples of strategy types are Porter's generic strategies (differentiation, low cost leadership, and focus) and Miles and Snow's typologies (defenders, prospectors, analyzers, and reactors).(6) The present study (4)For example, Salih T. Cavusgil, "Organizational Determinants of Firms' Export Behavior: An Empirical Analysis," unpublished doctoral dissertation, University of Wisconsin-Madison, 1976; Seev Hirsh, "Technological Factors in the Composition and Direction of Israel's Industrial Exports," The Technology Factor in International Trade, ed. …

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