Small Firms Exporting: How Effective Are Government Export Assistance Programs?

By Moini, A. H. | Journal of Small Business Management, January 1998 | Go to article overview

Small Firms Exporting: How Effective Are Government Export Assistance Programs?


Moini, A. H., Journal of Small Business Management


Increasing trade deficits and other economic problems have forced many countries, as well as regions and states, to develop policies and strategies to encourage non-exporting firms to enter the export field. For example, the state of Wisconsin is considering a variety of export stimuli to help infrequent exporters increase the number and value of their shipments (Wisconsin Export Strategy Commission 1995). Several studies have been conducted on the many aspects of export stimulation programs. They have shown that smaller-sized firms in particular could benefit from export assistance programs (Olson 1975; Pointon 1978; Czinkota 1982; Cavusgil 1983; Gronhaug and Lorentzen 1983; Reid 1984; Denis and Depelteau 1985; Seringhaus 1984, 1987; Cavusgil and Naor 1987).

However, this conclusion assumes that policy-makers have a complete knowledge of the determinants and inhibitors of export entry and a clear understanding of the export decision-making process. Unfortunately, small and medium-sized manufacturing firms do not constitute a single homogeneous group (Tesar 1976). Therefore, it is essential that policy-makers fully understand the kinds of differences that occur among them if they are to provide programs that effectively move these firms into successful exporting.

One important way in which firms differ is where on the "internationalization process" continuum they fit. It is proposed here that firms in one stage of this development process may have different needs and interests to be met by government assistance programs than firms in another stage. The study specifically examines government assistance programs designed to stimulate exporting activity among small and medium-sized manufacturing firms and addresses some recurring questions about the impact of these programs on the export activity of firms and their performance: What is awareness of these programs among small and medium-sized firms? Which programs are most effective? What factors influence the effectiveness of government export assistance programs? In what ways does a firm's level of exporting activity impact the effectiveness of these programs?

Review of The Literature

Substantial research has attempted to identify and explain exporting decisions of businesses. Growing evidence suggests that firms pass through several stages on the way to becoming actively involved in export activity. Therefore, export assistance programs should vary in nature to provide the type of assistance best suited for a particular group of firms.

The first major study dealing with the stages of export development among manufacturing firms was conducted by Bilkey and Tesar (1977). They believe that firms gradually move through six levels of commitment to exporting, ranging from complete unwillingness to export to a full, large-scale commitment. Czinkota and Johnston (1981) also identified a six-stage model of the export development process, ranging from unwilling firms to larger experienced exporters. Bilkey (1978) has suggested that for maximum success export stimulation programs should be tailored to the export development position of the firms to be stimulated. He argues that if export assistance programs are formulated in terms of the export internationalization process, then: (1) experienced exporters would be stimulated to increase exports by devaluating the currency and by removing perceived obstacles to exporting; (2) non-exporters would be stimulated to begin exporting by being provided with export orders (perhaps by developing Japanese-type trading companies) and with managerial assistance (such as export extension programs and export consulting services); (3) firms that have not attempted to export would be stimulated to explore the feasibility of exporting by programs promoting the attractiveness of exporting (trade association meetings, advertising, public meetings) and through international education within schools (such as foreign language training, student exchange abroad, international business education, and so on). …

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