Geographic export diversification: Determinants and their link with export performance

• Author: Angels Cabasés,Antonio Colom,Pilar Cos
• Date: 01 March 2019
• DOI: http://doi.org/10.1002/tie.21991
• Published date: 01 March 2019

INTERNATIONAL BUSINESS THEORY AND APPLICATION

Geographic export diversification: Determinants and their link

with export performance

Pilar Cos

1

| Antonio Colom

2

| Angels Cabasés

3

1

International Business and Marketing

Research, Department of Business

Administration, Faculty of Law and Economics,

University of Lleida (UdL), Lleida, Spain

2

Agricultural Marketing, Department of

Business Administration, School of Agronomy

and Agricultural Science, University of Lleida

(UdL), Lleida, Spain

3

Econometrics, Department of Applied

Economics, Faculty of Law and Economics,

University of Lleida (UdL), Lleida, Spain

Correspondence

Pilar Cos, Lecturer, PhD, International Business

and Marketing Research, Department of

Business Administration, Faculty of Law and

Economics, University of Lleida (UdL),

C/Jaume II, n73, 25001 Lleida, Spain.

Email: cspilar@aegern.udl.es

This study examines company-specific factors that may help explain the choice of an export-

market strategy and explores how the selected export strategy contributes to explaining com-

pany's export performance (XP). Concentrating on a specific area within a broad spectrum of

export behavior analysis has enabled us to examine these factors in greater depth. The results

of our research, which was carried out using a sample comprising Spanish exporting companies,

show a firm's size, a firm's age, and a firm's greater foreign ownership in its share capital are all

determining factors for adopting a strategy geared to export-market diversification. A greater

level of investment in R&D and greater international commitment are also important in this

regard. We suggest reinforcing these two factors because there is evidence of a better XP

among firms that have a wider range of foreign markets.

KEYWORDS

export intensity, export-market expansion strategies, export performance, geographic export

diversification, international marketing, Spanish exporters

1|INTRODUCTION

Export behavior has traditionally been analyzed using variables that

explain the decision to export, including, notably, export intensity,

internationalization process stages, and market entry modes.

However, research that also covers other general aspects, such as

those related to export-market expansion, is less common, despite the

growing interest in the determining factors of firms' export behavior,

as the ample (though heterogeneous and fragmented) literature

thereon demonstrates.

After the decision to actually undertake export activities, choos-

ing a foreign-market expansion strategy is one of the key decisions

that a firm must make during its internationalization process

(Cavusgil & Zou, 1994). From the perspective of international market-

ing, such a decision, when made on a long-term basis, requires a firm

to (a) define the characteristics sought in the markets in question

(Albaum, Strandskov, & Duerr, 2002); (b) identify potential markets

beforehand, analyze them, and establish the order in which it will

enter them (Ayal & Zif, 1979); (c) determine the number of foreign

markets in which it will compete or operate (Albaum et al., 2002),

bearing in mind the restriction of a fixed marketing budget that must

be shared among the different markets chosen (Ayal & Zif, 1979); and

(d) determine the pace of its international expansion (Ayal &

Zif, 1979).

Another topic that has generated considerable interest among

researchers is the study of the factors that influence a firm's export

performance (XP). In that respect, some works conclude a firm's suc-

cess in foreign markets is conditioned by various aspects, including

export-activity planning and organization, the firm's export commit-

ment, managerial capabilities, the extent of the firm's international ori-

entation, the adaptation of marketing, and good relations with foreign

distributors and middlemen (Navarro, 2002). Other studies deem

foreign-expansion strategies to be determining factors in XP but also

confirm their status as such is debatable.

In that context, some research affirms that an export-market con-

centration strategy produces a better XP (e.g., Beamish, Craig, &

Mclellan, 1993; Bodur, 1994; Madsen, 1989), though a larger number

of studies show there is a positive association between such a perfor-

mance and the geographic diversification strategy (e.g., Aulakh,

Kotabe, & Teegen, 2000; Lee & Yang, 1990; Naidu & Prasad, 1994).

Meanwhile, the third group of authors believe there is no significant

relationship between the variables (e.g., Katsikeas, Piercy, & Ioannidis,

DOI: 10.1002/tie.21991

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