The effect of matching on perceived export barriers and performance in an era of globalization discontents: Empirical evidence from UK SMEs
Introduction
Faced with compound uncertainties in an era of rising nationalistic and protectionist policies and backlashes against globalization (e.g. Brexit in the UK and Trump’s ‘America first’ approach to governance in the US), firms, particularly in their cross-border operations, are prompted to learn about and develop managerial strategies of navigating economic nationalism. Exporting firms have long enjoyed the incentives of the globalization era, accompanied by trade deals, international organizations, economic integration, and close relationships between countries, all of which have significantly facilitated the flow of goods, services, and capital across borders. The vibrant export activities across countries have significantly fostered welfare creation, socio-economic development, and job creation. However, the recent protectionist sentiments, encapsulated in ‘anti-globalism4’ or ‘globalization discontents’ (Stiglitz, 2018), point at structural changes, and uncertainties in the international political-economic environment, that are likely to have serious effects on personal and organizational connectivity with partners (Cano-Kollmann, Hannigan, & Mudambi, 2017). Institutional change, which was once a driver of globalization in the shape of pro-market reforms, has reversed, with governments imposing protectionist measures and weakening institutions such as the World Trade Organization (Cuervo-Cazurrra, Mudambi, & Pedersen, 2017; Kobrin, 2017). Barrier-free relationships between countries and societies are likely to diminish (Helleiner & Pickel, 2005) and in order to offset these, firms will have to move towards the development of relationships at multiple levels with different actors.
Network-based relationships are considered to be an effective way of navigating through uncertainties inherent in international operations, particularly during institutional transition periods (Meyer, 2001; Peng & Zhou, 2005; Zhou, Wei-ping, & Xueming, 2007). Hence, we examine the matching concept, introduced by Ghauri and Holstius (1996) to refer to a multitude of networking activities that firms conduct in order to interact with different actors at various levels, including customers, suppliers, local government, and trade unions, in developing cross-border relationships (Elg, 2008; Elg, Ghauri, & Tarnovskaya, 2008; Ghauri & Holstius, 1996). Compared with traditional networking relationships, which mainly focus on micro business relationships or on just one level of network relationships, matching extends to networks at the micro and macro levels. Our argument is that the simultaneous management of multiple levels of network relationships will support contemporary firms in overcoming internationalization barriers and foster export performance, specifically for small and medium-sized enterprises (SMEs) in an era of globalization discontents.
This paper develops a conceptual model in which matching is hypothesized as a moderating variable, i.e. shapes the relationship between perceived internal and external export barriers and export performance. Exporting experience, export commitment, and perceived export barriers are introduced as independent variables and export performance as the dependent. While there is a plethora of prior work that examines direct impacts on export performance, the role of moderators is regarded to be underrepresented (Rose & Shoham, 2002; Sousa, Martínez-López, & Coelho, 2008). A study by Sousa et al. (2008, p. 366), providing a comprehensive review of the export performance literature, also suggests that “future studies should focus not solely on the main effects of independent variables on export performance, but also on whether the relationship between the independent and dependent variable varies as a function of the value of a third variable” and deliberately focus on moderating effects.
This paper contributes to the literature as follows. Firstly, it examines the moderating effect of matching on the relationships between perceived export barriers and export performance. Whereas most of the previous work is limited to micro-level business networks and their direct impact on firms’ exporting behaviors, we introduce matching to delineate to what extent the moderating impact of networking activities at micro and macro levels can alleviate perceived export barriers and thus foster export performance. Secondly, this paper systematically integrates perceived internal and external export barriers and investigates their impact on export performance, whereas previous empirical evidence on that integration has been limited. This provides a more nuanced understanding of the nature and type of barriers that SMEs encounter.
Section snippets
Exporting and network-based SME internationalization
Exporting is seen as a baseline cross-border activity, particularly useful for SMEs, as their organizational structure, size and management system puts pressure on their ability to devote resources towards internationalization and connecting with international markets (Chetty & Blankenburg Holm, 2000; Navarro, Acedo, Robson, Ruzo, & Losada, 2010a; Uner, Kocak, Cavusgil, & Cavusgil, 2013). It offers a fast, cost-effective, and risk-reducing approach to internationalization, combined with high
Sample
A list of firms was generated from the population of firms covered in the Department of Trade and Industry (DTI) UK database. Firms included in the list had to meet the two criteria of being SMEs, according to the EU definition based on firm size (fewer than 250 employees), and of being based in the North West of England. Some specific government initiatives had been taken by the North West Development Agency (NWDA) in this specific area, and we aimed to explore the managerial relevance and
Descriptive statistics
The descriptive statistics of the sample firms are presented in Table A2. The engineering sector was most widely represented in the sample, with 31.10%, followed by firms in the textile (10.40%), chemicals (4.70%), automotive (3.80%), and furnishing (2.80%) industries. Despite a strong bias towards the engineering sector, the generalizability of the sample to the population of firms in the North West region of England is not considered a problem. However, the data will most probably lack
Discussion
Globalization has been driving the IB research field over the past three decades (Meyer, 2017). As highlighted by Buckley (2002), it has been one of the three key research areas successfully tackled in the IB field. Furthermore, Buckley and Ghauri (2004) highlighted globalization as one of the next big questions of IB research. However, in the aftermath of the recent global recession in 2008, globalization is shifting into a different phase, characterized by popular globalization discontents (
Conclusion, limitations, and future research
Previous studies have pointed at the role of networks in enabling firms to overcome exporting and internationalization barriers (Chetty & Blankenburg Holm, 2000; Coviello, 2006; Shoham & Albaum, 1995; Zhou et al., 2007). However, previous research has mostly studied micro- or macro-level networking activities separately. This study offers an in-depth understanding of the role of networking activities, by incorporating the matching concept, which deals with micro- and macro-level networks, into
Acknowledgements
We gratefully acknowledge insightful comments received from Mo Yamin, S. Tamer Cavusgil and Ram Mudambi during seminars at The University of Manchester, Alliance Manchester Business School, UK and Fox School of Business, Temple University, Philadelphia, USA.
Rudolf R. Sinkovics (PhD, WU Vienna), is Professor of International Business at The University of Manchester, UK, Visiting Professor at Lappeenranta University of Technology, Finland and Visiting Scholar at Fox School of Business, Temple University. He has published on inter-organizational governance, the role of ICT in firm internationalization, and currently works on rising powers, and responsible business.
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Rudolf R. Sinkovics (PhD, WU Vienna), is Professor of International Business at The University of Manchester, UK, Visiting Professor at Lappeenranta University of Technology, Finland and Visiting Scholar at Fox School of Business, Temple University. He has published on inter-organizational governance, the role of ICT in firm internationalization, and currently works on rising powers, and responsible business.
Yusuf Kurt (PhD, The University of Manchester) is Lecturer (Assistant Professor) in International Business and Management at Alliance Manchester Business School, The University of Manchester. His current research interests include spirituality, social network analysis, internationalization, and emerging markets. His work has been published in International Marketing Review, European Management Journal and as chapter contributions.
Noemi Sinkovics (PhD, University of Manchester) is Lecturer (Assistant Professor) in International Business and Management at Alliance Manchester Business School, U.K and Visiting Scholar at Fox School of Business, Temple University. Her research focuses on International Entrepreneurship, ICT, and Economic Development issues. She has published in journals such as International Business Review, International Marketing Review, Journal of Business Research, Critical Perspectives on International Business, and European Journal of International Management.