Introduction
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Constraints in international operations due to limited financial, marketing and managerial resources (i.e., a weak infrastructure for conducting international operations); and,
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A predominant use of exporting (the simplest form of outward internationalization).
Literature review
Diversification versus concentration of export sales
Exporting to nearby versus distant markets and regions
Geographic diversification and export performance
Methods and measures
Data collection
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First, this was required for measuring export growth in a manner consistent with the recently adopted OECD methodology, which requires meeting a minimum threshold in the base year (OECD 2008). As an equivalent of ten employees, we used export volume (230,000 USD) from the Polish customs system to categorize the so-called microexporters.
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Second, a recent study (Cieślik et al. 2010) demonstrated the existence of a sizeable and distinct group of exporters that do not survive as exporters after initial attempts or that engage sporadically in international sales with export volumes remaining at very low levels.
Measures
Diversification measures
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The number of export markets (this standardized measure was used as reflected in the literature)
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Concentration on the home region versus the host region: To reflect the psychic, or country distance, Polish exporters are divided into two groups: those with over 50% of their exports to the “home” EU single market and those concentrating predominantly on markets outside the EU. Such categorization reflects recent findings pointing to the positive impact of home region concentration on export performance (Lee 2010). The EU market is the most important export destination for Polish firms, comprising over 80% of total exports in 2006. This market has grown since Poland’s induction into the EU in May of 2004. For Polish exporters, the country’s accession into the EU in 2004 resulted in an increasing gulf—in operations and perceptions—between the largely homogenous EU single market and the rest of the world. We do not attempt to categorize the key Polish export markets outside the EU into regions because they are widely dispersed and do not form homogeneous groups. The triad regional classification was not useful for categorizing Polish exporting SMEs due to their marginal presence in both Asian and North American regions.
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Concentration of export sales on one key market is measured by the percentage of export sales channeled to the largest host country—either within the EU or outside the EU. A smaller exporter facing financial and human resource constraints may opt for having the majority of its export sales channeled to just one market. Obviously, such a strategy is not without risks, specifically once the economic conditions in the lead market deteriorate. This measure seems suitable for capturing the impact of the "natural" lead country destinations either due to the size of their economies, longstanding relationships (such as between Canada and the USA; Francis and Collins-Dodd 2004), or historic links such as those that are tied to a colonial past (Shepherd 2010). Some authors argue that in firms that expand rapidly, the geographic scope of operations and psychic distance become less important, giving way to selecting export markets where the most promising opportunities are identified. In particular, firms operating in the high-tech, knowledge-based industries since their inception focus on the "lead markets," the home market being just one of these. Consequently, it may occur that exports precede domestic sales during the initial stages (Bell et al. 2003; Morgan-Thomas and Jones 2009; Kudina et al. 2008). In turn, Brouthers et al. (2009) found that export sales predominantly directed towards a single market is an extreme form of concentration that leads to higher export performance.
Measuring export performance
Analysis
Initial categorization of exporters
Clustering variables
Additional cluster characteristics
Cluster key characteristics (mean values) | |||||||||||||
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EU-concentrated exporters | |||||||||||||
High-growth exporters (group A) | Slow-growing exporters (group B) | ||||||||||||
Cluster no. | A1 | A2 | A3 | A4 | A5 | Group A | B1 | B2 | B3 | B4 | B5 | Group B | |
Cluster category (concentration, balanced, spreading) | CON | BAL | BAL | SPR | SPR | CON | CON | BAL | SPR | SPR | |||
No. of exporters | 250 | 174 | 165 | 97 | 25 | 711 | 312 | 166 | 171 | 109 | 48 | 806 | |
No. of export markets in 2006a
| 2.2 | 6.8 | 9.1 | 17.2 | 31.9 | 8.0 | 1.8 | 5.2 | 6.6 | 14.5 | 25.9 | 6.7 | |
% share of key market in 2006a
| 96.4 | 67.7 | 41.1 | 33.1 | 27.0 | 65.5 | 97.9 | 77.6 | 46.6 | 42.8 | 26.9 | 71.2 | |
Export volume in 2006 (PLN mln) | 6.2 | 7.4 | 7.7 | 9.0 | 10.7 | 7.4 | 4.2 | 5.9 | 4.9 | 7.2 | 10.3 | 5.5 | |
Firm age as of 2003 | 8.8 | 9.2 | 9.4 | 8.7 | 9.3 | 9.0 | 9.4 | 9.8 | 10.4 | 10.1 | 10.5 | 9.9 | |
Time to internationalization | 2.5 | 2.7 | 2.8 | 2.3 | 1.7 | 2.6 | 2.4 | 2.4 | 2.9 | 2.5 | 2.3 | 2.5 | |
Ratio of number of export markets in 2006 to 2003 | 1.3 | 1.9 | 1.8 | 1.9 | 1.8 | 1.7 | 1.1 | 1.5 | 1.5 | 1.6 | 1.3 | 1.4 | |
Ratio of % share of key market in 2006 to 2003 | 1.1 | 1.0 | 0.8 | 0.8 | 0.8 | 0.9 | 1.1 | 1.0 | 0.8 | 0.9 | 0.9 | 1.0 | |
Germany as key market—% of cluster firms | 62.8 | 47.1 | 22.4 | 29.9 | 32.0 | 44.0 | 70.8 | 60.2 | 28.1 | 38.5 | 33.3 | 53.0 | |
Declining exporters (group E) | Groups A + B + E (EU) | ||||||||||||
Cluster no. | E1 | E2 | E3 | E4 | E5 | Group E | |||||||
Cluster category (concentration, balanced, spreading) | CON | CON | BAL | SPR | SPR | ||||||||
No. of exporters | 496 | 242 | 297 | 127 | 21 | 1,183 | 2,700 | ||||||
No. of export markets in 2006a
| 1.3 | 3.4 | 5.2 | 13.1 | 26.2 | 4.4 | 6.0 | ||||||
% share of key market in 2006a
| 99.5 | 84.4 | 53.5 | 38.3 | 31.1 | 77.1 | 72.3 | ||||||
Export volume in 2006 (PLN mln) | 2.7 | 3.6 | 3.5 | 5.2 | 9.4 | 3.5 | 5.1 | ||||||
Firm age as of 2003 | 10.0 | 11.1 | 10.4 | 10.1 | 9.8 | 10.3 | 9.9 | ||||||
Time to internationalization | 2.5 | 3.3 | 2.7 | 2.3 | 1.4 | 2.7 | 2.6 | ||||||
Ratio of number of export markets in 2006 to 2003 | 0.9 | 1.4 | 1.2 | 1.2 | 1.3 | 1.1 | 1.3 | ||||||
Ratio of % share of key market in 2006 to 2003 | 1.1 | 1.1 | 0.9 | 0.9 | 0.9 | 1.0 | 1.0 | ||||||
Germany as key market—% of cluster firms | 66.7 | 51.2 | 34.7 | 29.1 | 33.3 | 50.9 | 49.7 | ||||||
Non-EU-concentrated exporters | |||||||||||||
High-growth exporters (group C) | Slow-growing exporters (group D) | ||||||||||||
Cluster no. | C1 | C2 | C3 | Group C | D1 | D2 | D3 | Group D | |||||
Cluster category (concentrated, balanced, spreading) | CON | BAL | SPR | CON | BAL | SPR | |||||||
No. of exporters | 55 | 114 | 56 | 225 | 60 | 64 | 51 | 175 | |||||
No. of export markets in 2006a
| 2.7 | 8.3 | 22.2 | 10.4 | 3.0 | 6.8 | 21.1 | 9.7 | |||||
% share of key marketa
| 92.7 | 52.4 | 37.7 | 58.6 | 92.8 | 53.3 | 35.1 | 61.5 | |||||
Export volume in 2006 (PLN mln) | 6.2 | 6.8 | 10.0 | 7.4 | 3.5 | 4.5 | 7.6 | 5.1 | |||||
Firm age as of 2003 | 9.3 | 9.2 | 10.1 | 9.4 | 9.0 | 10.2 | 12.1 | 10.4 | |||||
Time to internationalization | 3.4 | 2.7 | 2.9 | 2.9 | 2.8 | 2.8 | 3.7 | 3.1 | |||||
Ratio of number of export markets in 2006 to 2003 | 0.9 | 1.5 | 2.1 | 1.5 | 0.6 | 1.2 | 1.6 | 1.1 | |||||
Ratio of % share of key market in 2006 to 2003 | 1.3 | 1.1 | 0.9 | 1.1 | 1.3 | 1.1 | 1.0 | 1.1 | |||||
Declining exporters (group F) | Groups C + D + F (N-EU) | Total | |||||||||||
Cluster no. | F1 | F2 | F3 | Group F | |||||||||
Cluster category (concentrated, balanced, spreading) | CON | BAL | SPR | ||||||||||
No. of exporters | 274 | 182 | 53 | 509 | 909 | 3,609 | |||||||
No. of export markets in 2006a
| 1.5 | 4.4 | 17.3 | 4.2 | 6.8 | 6.3 | |||||||
% share of key marketa
| 97.3 | 59.4 | 40.9 | 77.9 | 70.0 | 71.7 | |||||||
Export volume in 2006 (PLN mln) | 0.9 | 1.5 | 5.7 | 1.6 | 3.7 | 4.8 | |||||||
Firm age as of 2003 | 9.9 | 11.3 | 10.4 | 10.5 | 10.2 | 9.9 | |||||||
Time to internationalization | 3.0 | 3.6 | 1.8 | 3.1 | 3.0 | 2.7 | |||||||
Ratio of number of export markets in 2006 to 2003 | 0.5 | 0.8 | 1.2 | 0.7 | 1.0 | 1.2 | |||||||
Ratio of % share of key market in 2006 to 2003 | 1.6 | 1.2 | 1.0 | 1.4 | 1.3 | 1.1 |
Propositions
Diversification strategy | Concentration | Balanced | Spreading | Total | ||||||
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Export orientation | EU | Non-EU | Total | EU | Non-EU | Total | EU | Non-EU | Total | |
No. of exporters | 1 466 | 389 | 1 855 | 807 | 360 | 1 167 | 427 | 160 | 587 | 3 609 |
% of the total number of exporters | 40.6 | 10.8 | 51.4 | 22.4 | 10.0 | 32.3 | 11.8 | 4.4 | 16.3 | 100.0 |
% of the total number of exporters within EU | 54.3 | 29.9 | 15.8 | 100.0 | ||||||
% of the total number of exporters within non-EU | 42.8 | 39.6 | 17.6 | 100.0 | ||||||
No. of export markets 2006a
| 2.4 | 1.9 | 2.3 | 6.6 | 6.1 | 6.5 | 17.6 | 20.2 | 18.3 | 6.3 |
% share of key market 2006a
| 93.7 | 96.0 | 94.1 | 52.6 | 56.1 | 53.7 | 36.0 | 37.9 | 36.5 | 71.7 |
Export volume in 2006 (PLN mln) | 4.1 | 2.1 | 3.7 | 5.5 | 3.7 | 4.9 | 7.7 | 7.8 | 7.7 | 4.8 |
Firm age as of 2003 | 9.8 | 9.7 | 9.8 | 9.9 | 10.4 | 10.1 | 9.8 | 10.8 | 10.1 | 9.9 |
Time to internationalization | 2.6 | 3.1 | 2.7 | 2.8 | 3.2 | 2.9 | 2.3 | 2.8 | 2.4 | 2.7 |
Ratio of number of export markets in 2006 to 2003 | 1.2 | 0.6 | 1.0 | 1.5 | 1.1 | 1.4 | 1.5 | 1.6 | 1.5 | 1.2 |
Ratio of % share of key market in 2006 to 2003 | 1.1 | 1.5 | 1.2 | 0.9 | 1.2 | 1.0 | 0.9 | 1.0 | 0.9 | 1.1 |
Germany as key market—% of cluster firms (EU only) | 63.6 | 33.5 | 32.5 | 49.7 |
Number of exporters | Total | % of the total | Total | |||
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EU | Non-EU | EU | Non-EU | |||
High growing (HG) | ||||||
Total | 711 | 225 | 936 | 100.0 | 100.0 | 100.0 |
Of which key market >50% | 339 | 116 | 455 | 47.7 | 51.6 | 48.6 |
Of which key market = 100% | 108 | 16 | 124 | 15.2 | 7.1 | 13.2 |
Slow growing (SG) | ||||||
Total | 806 | 175 | 981 | 100.0 | 100.0 | 100.0 |
Of which key market >50% | 419 | 83 | 502 | 52.0 | 47.4 | 51.2 |
Of which key market = 100% | 167 | 21 | 188 | 20.7 | 12.0 | 19.2 |
Declining (DECL) | ||||||
Total | 1,183 | 509 | 1,692 | 100.0 | 100.0 | 100.0 |
Of which key market >50% | 559 | 240 | 799 | 47.3 | 47.2 | 47.2 |
Of which key market = 100% | 385 | 183 | 568 | 32.5 | 36.0 | 33.6 |
HG + SG + DECL | ||||||
Total | 2,700 | 909 | 3,609 | 100.0 | 100.0 | 100.0 |
Of which key market >50% | 1,317 | 439 | 1,756 | 48.8 | 48.3 | 48.7 |
Of which key market = 100% | 660 | 220 | 880 | 24.4 | 24.2 | 24.4 |