Internal and external determinants of export performance: Insights from Algeria

• Published date: 01 January 2019
• Date: 01 January 2019
• Author: Robert Newbery,Mohamed Yacine Haddoud,Paul Jones,Witold Nowinski
• DOI: http://doi.org/10.1002/tie.21972

THE INTERNATIONALIZATION OF AFRICAN FIRMS

Internal and external determinants of export performance:

Insights from Algeria

Mohamed Yacine Haddoud

1

| Witold Nowinski

2

| Paul Jones

3

| Robert Newbery

4

1

Plymouth Business School, Plymouth, United

Kingdom

2

Poznan School of Banking, Poznan, Poland

3

International Centre for Transformational

Entrepreneurship, Coventry University,

Coventry, United Kingdom

4

Newcastle University, Newcastle upon Tyne,

United Kingdom

Correspondence

Mohamed Yacine Haddoud, Plymouth

Business School, Mast House, Plymouth, PL4

8AA.

Email: mohamed.haddoud@plymouth.ac.uk

The internationalization of small and medium-sized enterprises (SMEs) has been the focus of

numerous studies. However, while the attention has thus far been on SMEs operating in devel-

oped countries, firms evolving in a developing context, including Africa, have been largely

neglected. To address this, and drawing on a dual resources-based and network-based view,

this study simultaneously investigates the importance of internal and external resources for

firms’export performance and regularity in the context of North African SMEs. Using a sample

of Algerian exporters, the study reveals the superiority of discrete resources for boosting

export performance and export regularity. These findings provide directions to Algerian SME

managers and policymakers as to important factors driving the internationalization process in

the developing Algerian context.

KEYWORDS

Algeria, export performance, export regularity, resources and capabilities

1|INTRODUCTION

Notwithstanding the widely acknowledged benefits of exporting for

both firms’and nations’growth (Pattnayak & Thangavelu, 2014;

J. Wagner, 2013), African small and medium-sized enterprises (SMEs)

are still reluctant to enter international markets, and when they do,

they often struggle to achieve and maintain satisfactory performance.

In fact, exporting remains a challenging activity hampered by inhibi-

tors typically caused by SMEs’limited resources (Brouthers, Nakos, &

Dimitratos, 2015; Villar, Alegre, & Pla-Barber, 2014).

To improve understanding of this problem, several studies investi-

gated the resource factors improving SMEs’export performance

(Belesca-Spasova, Glaister, & Stride, 2012; Brush, Edelman, & Mano-

lova, 2002; Denicolai, Zucchella, & Strange, 2014;Dhanaraj & Beamish,

2003; Díez-Vial & Fernández-Olmos, 2013; Pickernell, Jones, Thomp-

son, & Packham, 2016). The majority of these empirical studies have

been conductedin developed countries, and as a result, resources driv-

ing SMEs’international competiveness in a developing setting remain

unclear (Matanda, Ndubisi, & Jie, 2016). This is particularly true when

it comes to African SMEs, for which a lack of empirical research is

often underlined (Ibeh, Wilson, & Chizema, 2012). Consequently, to

inform policy, the existing exportliterature tends to generalize findings

obtained from developed contexts. However, the relevance of

such findingsfor firms operating in African nations could be questioned

(Boso, Cadogan, & Story, 2012). In particular, African firms’

internationalization is prone to beinfluenced by a set of unique factors,

which is due to significant institutional and environmental differences

across the two contexts (Robson & Freel, 2008). Such differences are

likely to affectthe resource needs for international expansion.

To address this issue, this study adopts a comprehensive

approach identifying key resource drivers boosting international per-

formance, using evidence from Algeria, a widely neglected North Afri-

can country. Drawing on a sound theoretical underpinning combining

the resource-based view (RBV) and the network approach, the study

develops and tests an integrated model in which the influences of

both internal and external resources on export performance and reg-

ularity are simultaneously examined. By empirically testing this model

using data from Algerian SME exporters, the study aims to contribute

to this special issue by fulfilling several gaps in the extant literature.

First, the empirical literature examining the influence of firms’

resources on export performance has thus far been fragmented and

inconsistent (Sousa, Martínez-López, & Coelho, 2008; Zou & Stan,

1998). With few exceptions (e.g., Beleska-Spasova et al., 2012; Dha-

naraj & Beamish, 2003), most prior studies focus on a single resource

or a group of particular resources (such as technology, innovation,

marketing resources, etc.). Consequently, the majority of the

studied resource factors emerged as equally important for export per-

formance, and thus no superiority was distinguished or prioritization

suggested (Beleska-Spasova et al., 2012). In a context of resource-

constrained SMEs, operating in an unfavorable developing setting,

DOI: 10.1002/tie.21972

Thunderbird International Business Review. 2019;61:43–60. wileyonlinelibrary.com/journal/tie © 2018 Wiley Periodicals, Inc. 43

the identification of key resources to prioritize and focus on is crucial

to increase SMEs’and public assistance efficiencies. Thus, developing

and testing a comprehensive model evaluating several types of

resources simultaneously provides a valid contribution.

Second, the literature review has reflected the superiority in

number of studies conducted in developed countries in comparison

to those undertaken in developing (and emerging) economies (Boso

et al., 2012; Matanda et al., 2016). Therefore, by focusing on a North

African nation, this study enriches our understanding of export per-

formance in the context of African economies. Algeria constitutes

part of the Maghreb area and is located in a strategic geographic

position bridging Africa, Europe, and the Middle East. The export

potential of the SMEs located in this area is significant and the conse-

quence for the development of these nations considerable. Yet the

drivers of export performance in those countries remain largely mis-

understood and unclear compared to other countries, not only West-

ern developed economies but also other African countries.

Third, the empirical export literature also appears to have over-

looked the antecedents of firms’export survival and regularity

(Cadot, Fernandes, Gourdon, Mattoo, & De Melo, 2014; Deng, Guo,

Zhang, & Wang, 2014; Fu & Wu, 2014). Such a dimension is particu-

larly relevant for developing and African countries. Clear evidence

has demonstrated that regular exporters play a greater role in

increasing economic development than sporadic ones (Alvarez, 2007;

Cadot, Iacovone, Pierola, & Rauch, 2013). Sporadic exports do not

meet the governments’target to boost export growth. Therefore, the

present study included the regularity dimension as an additional

internationalization outcome.

This article is structured as follows. The next section presents

the North African context of the study, followed by an overview of

the conceptual framework, the research model, and hypotheses. The

article proceeds with an outline of the research methods and data

collection. Finally, the results, discussion, conclusion, and implications

for both practice and theory are drawn.

2|THE RESEARCH CONTEXT: ALGERIA

The Algerian context was deemed suitable, as there is an urgent need

for practical assistance to boost SMEs’international activities and

diversify the country’s exports. Algeria is considered as the third most

important economy in the Middle Eastern and North African (MENA)

area (World Bank, 2017). However, Algeria is also facing great chal-

lenges in terms of economic diversification. Being a typical oil-rich

country, oil and gas revenues constitute the mainstream of its

incomes (Global Insight, 2014). Algeria’s exports remain among the

least diversified in the MENA region. The oil and gas exports repre-

sents over 93% of the total export, with a mere 6.16% dedicated to

nonoil exports (from both SMEs and large firms). Table 1 identifies

the breakdown of these figures and the main export regions for Alge-

rian firms. In terms of growth, the country’s nonoil exports declined

by 9.55% compared to 2015, while in 2015, a decline by 20.1% from

2014 was recorded (Algerian Customs, 2017).

Against thisbackdrop, and as a response to calls by the WorldBank

(2017) to boost nonoil exports, the Algerian government had been

investing in export promotion programs to encourage SMEs to enter

and be competitive in export markets (Algerie Press Service, 2016). In

particular, an export development scheme including the establishment

of several organizations in charge of assisting Algerian SMEs in their

internationalization (CACI website)was implemented. This focusedpre-

dominantly on SMEsas they constitute over 94% of the total firm pop-

ulation and typically require external assistance. The organizations

involved in the scheme comprised bodies such as the Algerian Agency

for the Promotion of Foreign Trade (ALGEX),the Algerian Company of

Export Guarantees (CAGEX), the Office of Promotion of Foreign Trade

(PROMEX), and the Algerian Chamber of Commerce and Industry

(CACI) (Organization for Economic Cooperation and Development

[OECD]/European Commission/European Training Foundation [ETF],

2014). The aims of the export development scheme were to provide

resource-constrained firms with (a) foreign market intelligence,

(b) specialized trainings in exporting, (c) assistance with foreignpromo-

tion campaigns, (d) export consultancy, (e) sponsored trade missions,

and (f ) export financing (Algerie Conseil Export, 2016).

However, despite those efforts, export assistance remains ineffi-

cient and ineffective in boosting exporters. Recent estimations record

a number not exceeding 520 exporters (Algerian Chamber of Com-

merce, 2016). In this respect, an EU report highlighted that institu-

tional support available for Algerian SMEs fails to match firms’needs

(Nancy, Kreitem, & Picot, 2009). Moreover, the International Mone-

tary Fund (IMF) advised the government to adopt a more customized

export promotion strategy in order to meet those needs. The IMF

called for more targeted and adjustable export support policies to

develop the export sector (IMF, 2011). Similarly, an OECD/European

Commission/EFT (2014) report highlighted the inadequate business

support services available and urged providers to offer personalized

and tailored services.

Following these suggestions, one could argue that to enable cus-

tomized and effective assistance,export promotion organizations need

to be aware of the main factors driving export performance. Since

export promotion programs are perceived as a resource supplement

(Leonidou, Palihawadana, & Theodosiou, 2011),it could be argued that

empirical studies investigating the key resources to firms’export per-

formance and regularity are highly relevant. However, according to

Ibeh et al.’(2012) recent review on African internationalization litera-

ture, only two studies looking at North African firms were published

between 1995 and 2011 (Khemakham, 2010, for Tunisia, and

TABLE 1 Overview of Algerian exports

Algerian exports % Regions %

Oil and gas 93.84 EU (Italy, Spain,

and France)

57.95

Semi-manufactured

products

4.5 Non-EU OECD

countries

21.64

Food-related products 1.13 Asia 8.07

Raw products 0.29 South America 5.81

Industrial equipment 0.18 Maghreb 4.74

Other products 0.06 Middle East

(Arab countries)

1.33

Africa 0.18

Source: Algerian Customs (2017).

44 HADDOUD ET AL.