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Title: Export performance satisfaction of Flemish creative SMEs: an investigation from a resource based view
Authors: Nauwelaerts, Ysabel
Vijfeyken, Elena #
Issue Date: 2010
Publisher: JAI Press
Host Document: The Journal of Entrepreneurial and Small Business Finance
Conference: Rent Conference - Research in Entrepreneurship and Small Business edition:24 location:Maastricht University, The Netherlands date:17-19 November 2010
Abstract: In this paper we investigate the export performance satisfaction of Flemish creative SMEs from a resource based view. We will focus on the effects of support actions by a governmental organization, taking into account the effects of internal firm resources. The creative industry represents a growing industry in Flanders: the growth rate of employment and added value is double as compared to the total industry. Today’s consumers are looking for diversification and new impulses which are often provided by the creative industries (Maenhout, 2006). On average 10% of the total consumption in 2007 in Flanders originates from products and services like books, music, design, fashion, museums, radio and television. The total household expenditures for food & beverages exceed the expenditures for the creative industry only by about 5% (Statbel, 2009). In addition, creative firms in Flanders are highly oriented to niche products, which are in high demand on international markets. The unique Flemish character of these creative SMEs offers them a strong position on foreign markets. Flemish exports accounted for 201 billion euro in 2008, representing 80% of total Belgian exports (Flanders Investment & Trade, 2009). While the creative sector represents only a small part in these total exports, it has an important growth potential (Maenhout e.a., 2006; Rutten e.a., 2004). However, since most of the creative firms are micro or small firms, they often need to rely on public or private support in their internationalization process. Research into small firms’ exporting has been mainly descriptive, lacking the necessary theoretical underpinnings that could contribute to the substantial export strategy literature (Gemunden, 1991). In addition, it is only in recent years that the empirical data sets have become larger and the methods used have become more sophisticated. Dhanaraj & Beamish (2003), for example, examined 157 firms using structural equation modeling. While previous work on export promotion has implicitly addressed many issues related to firm resources, Dhanaraj & Beamish (2003) argue that the resource-based view can provide a suitable theoretical framework for internationalization models. The ability of smaller firms to become successful international competitors depends upon the resources they posses to invest in potential export opportunities (Anderson & Kheam, 1998; Crick & Batstone, 2001). SMEs frequently lack necessary internal resources, know-how and information about foreign markets (Alvarez, 2004; Ramaswami & Yang, 1990, Wolff & Pett, 2000). Smaller firms can overcome the limitations of inadequate information about foreign markets by choosing partners who posses this knowledge, such as distributors, international trade associations and other types of export intermediaries as well as government services. The resource based model used for our study mainly follows Wilkinson & Brouthers (2006), who examined the effectiveness of a set of export promotion services in 105 American SMEs. They demonstrate the linkage between the difficulties experienced by smaller firms on international markets and their ability to overcome these difficulties through the development of internal and external resources. We use the framework of Wilkions & Brouthers (2006) in the growing creative industry by studying the effects of export promotion programs (EPPs) in Flanders. We investigate the actions supported by the governmental organization ‘Flanders Investment and Trade’ (FIT) to help and stimulate export activities by Flemish creative SMEs. More precisely, we test the effects of FIT’s export stimulating programs organized in the home and in the host country on the export satisfaction of Flemish creative SMEs. We thereby also take into account the effects of internal firm resources on their export performance satisfaction. Recent studies found a direct relationship between firm resources and export performance (Bloodgood et al., 1996; Wilkinson & Brouthers, 2006). Inspired by this literature, we consider the following internal resources in our study: reserves in marketing resources, reserves in management and reserves in production capacity. We assume that the level of these internal firm resources is positively associated with firm satisfaction with export performance. The growth of international sales and export intensity are used as control variables. On the side of the external resources, earlier studies on EPPs provided mixed results on the effectiveness of these services: they reported positive effects of EPPs like trade shows on firm performance but also found that the effectiveness of some EPPs like trade missions vary, depending on the internal and external conditions (Cavusgil & Jacobs, 1987; Wilkinson & Brouthers 2000 and 2006). In our study, we take into account EPPs supported by the Flemish governmental organization FIT. We distinguish between on the one hand export stimulating instruments in the export countries such as meeting days organized in the export country or the presence on international fairs with individual Product Sample Booths, Group Booths or Catalogue Booths and on the other hand export stimulating instruments organized in the home country such as the invitation of foreign buyers or the organization of ‘exportdays’ focusing on specific sectors or export regions. The dependent variable ‘export performance satisfaction’ was measured by the perception of the manager on his export performance. We developed a survey based on an extensive literature review and with the help of FIT. The survey included questions on the internal resources (the firms’ reserves of marketing, of management and of production capacity) and also on external resources (i.e. the various EPPs in the home and host countries). FIT provided us with the email addresses of 1597 creative SMEs. Most of these firms are micro and small firms, active in the furniture and related creative activities in Flanders. Eighty responses were returned, of which only sixty eight were complete and suitable for the tests. The analysis of our findings leads to the following conclusions. First of all, we find that export intensity shows a very significant, positive relation with export performance satisfaction. This result is perfectly in line with our expectations. On the side of the internal resources, we see different results when we distinguish between the ‘purely creative firms’, having their own designer or design department and those who do not. For the purely creative firms, marketing reserves seem to be positively related to export performance satisfaction while for the other group, it is the extra production capacity which is positively related to export performance satisfaction. These results suggest that extra marketing efforts are particularly effective to promote and stimulate exports in the creative firms and the design sectors. On the side of the external resources, we find that among the EPPs organized in the international export market only the individual Product Sample Booths on international fairs seem to have a significant positive effect on export performance satisfaction. Other EPPs like catalogue booths or trade missions and export days did not show significant effects on export performance satisfaction. For the EPPs organized in the home country, only the sector-oriented invitations of foreign potential clients focusing on a specific sector seem to have a small positive, significant effect on export performance satisfaction. All other EPPs organized in cooperation with FIT show no significant effects. These results are in line with those of Wilkinson & Brouthers (2006) who found that, even after controlling for internal firm resources, the use of trade shows and programs identifying agents and distributors contribute positively to SME satisfaction with export performance. In their study of 2000, they also found that international trade missions and objective market information programs are negatively associated with direct exports. For the creative sector, we can conclude that for EPPs organized in the home as well as in the host countries, only those activities that are oriented towards a particular industry or sector seem to be effective. This observation is of high importance for practice, since it indicates that it is important for governmental organizations to focus on sector or industry specific actions and instruments. EPPs oriented towards larger markets, covering various industries, seem to lose a large part of their effects.
ISSN: 1099-2219
Publication status: published
KU Leuven publication type: IC
Appears in Collections:Department of Managerial Economics, Strategy and Innovation (MSI), Leuven
Department of International Business, Strategy and Economics (IBSE), Campus Carolus Antwerp
Faculty of Economics and Business (FEB) - miscellaneous
# (joint) last author

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