Factors facilitating and impeding the development of export market-oriented behavior: A study of Hong Kong manufacturing exporters

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Abstract

We test a model of the antecedents to market-oriented behavior in firms' export operations (i.e., export market-oriented [EMO] behavior). Using data from Hong Kong-based industrial manufacturing exporters, we explain 73% of the variance in EMO activity. Our findings confirm the importance of variables such as export coordination, export experience, and the export environment in determining EMO behavior levels. However, several hypotheses are refuted, contradicting previous research findings. For instance, in our sample, centralized decision-making generally is positively related to EMO activity—particularly under conditions of high environmental turbulence: this contradicts findings of studies in Western exporting businesses where centralization generally inhibits EMO behavior. Furthermore, unlike their Western counterparts, market-based reward and training systems and managers' export commitment and emphasis on market orientation do not predict EMO behavior. We suggest that these unexpected findings may be due to differences in culture between Asian and Western businesses.

Introduction

It is argued that a powerful way to enhance the export performance of manufacturing companies is for them to adopt a market orientation in their export operations (Cadogan, Diamantopoulos, & Siguaw, 2002). Specifically, for most exporting manufacturers, empirical studies indicate that higher levels of market-oriented activity in the firms' export markets (hereafter, export market-oriented [EMO] behavior) is associated with higher levels of export success (e.g., Akyol & Akehurst, 2003, Cadogan et al., 1999, Cadogan et al., 2002, Sundqvist et al., 2000). Given these encouraging findings, it is clear that managers can benefit from understanding the conditions that facilitate or impede the development of EMO behavior. However, research into these antecedent factors is scarce in an exporting context. It is more common for researchers to study antecedents to market orientation in non-export-specific settings (e.g., Avlonitis & Gounaris, 1999, Bhuian, 1998, Chelariu et al., 2002, Jaworski & Kohli, 1993, Pelham & Wilson, 1996, Pulendran et al., 2000, Ruekert, 1992, Selnes et al., 1996, Valera & del Rio, 2003, Winston & Dadzie, 2002).

This state of affairs is unfortunate because one cannot assume that findings uncovered in non-export-specific studies can be transferred to exporting firms. That is, the antecedents to market orientation may be context-specific such that “antecedents may be found which affect a firm's market-oriented behavior in its export operations but, because of their context-specific nature, do not lend themselves to being modeled as antecedents to a firm's market-oriented behavior in its domestic market” (Cadogan, Paul, Salminen, Puumalainen, & Sundqvist, 2001, p. 262). Thus, researchers interested in understanding antecedents to EMO behavior have to contend with the possibility that antecedent factors may not mirror or have the same affect as those identified in non-export-specific studies. Cadogan and colleagues' empirical findings add credence to this contention, since they discover antecedent factors to EMO behavior that are unique to the exporting context, and which have little meaning within non-export settings (see Cadogan et al., 2001, Cadogan et al., 2002).

A further problem arises from the scarcity of research into the antecedents to market-oriented behavior of exporters. Specifically, to the authors' knowledge, only two published studies attempt to identify factors facilitating or inhibiting EMO behavior: Cadogan et al.'s (2001) investigation of New Zealand and Finnish exporters, and Cadogan et al.'s (2002) study of US exporters. This paucity of empirical evidence means that export managers operating in non-Western business environments have only Western-based empirical evidence to help them develop strategies for managing EMO levels in their businesses. However, non-Western business cultures may be different from those found in Western firms, especially in terms of market-oriented activities (cf., Deshpandé & Farley, 2004), and generalizing studies of exporting behavior from Western to non-Western business contexts may be misleading (see Ling-yee, 2004). Indeed, it is noted that there is a need for more studies into the transferability of Western exporting research to the Asian business setting (Ambler, Styles, & Xiucun 1999). In this respect, Cadogan et al. (2001) argue that the antecedents to EMO behavior may be partially nation-specific, and present some empirical evidence in support of this notion.

Given this situation, the purpose of the current study is to shed new light on the antecedents to EMO behavior on two fronts. First, responding to Ambler et al.'s (1999) call, our main contribution is to test the generalizability of previous models of antecedents to EMO behavior in an Asian business setting. To this end, we utilize a sample of Hong Kong-based industrial manufacturing exporters to provide initial insights into the research question. Our second contribution is to extend the previous models of EMO behavior's antecedents by adding to the hypotheses already developed. As a result, we add richness to our current understanding of how EMO behaviors come about, and how they can be fostered and managed.

In what follows, we describe the domain of the EMO behavior construct, and then present our model of its antecedents. We then explain the methods used to test the model and describe our results. Finally, we discuss the findings of the study, highlight the managerial implications, and provide suggestions for future research.

Section snippets

Background and conceptual model

In line with opinions in the broader literature (e.g., Kohli & Jaworski, 1990), researchers have defined EMO behavior as comprising three key activities, namely export market intelligence generation, dissemination and responsiveness. What differentiates EMO behavior from broader market-oriented activities is that “EMO behavior is [focused] towards export customers' current and future needs, competition within the firm's export markets, and other exogenous factors… influencing the firm's export

A model of the antecedents to EMO behavior

Cadogan and colleagues' (Cadogan et al., 2001, Cadogan et al., 2002) empirical studies identify antecedents to EMO behavior in samples of exporters in New Zealand, Finland and the USA. This work draws heavily on variables and ideas arising in the contingency theory of the firm (see Donaldson, 2001). In this respect, four key sets of antecedent variables can be identified: export structures, export systems, export development indicators, and export environment factors (see Fig. 1). We expand on

Sampling issues

To test our hypothesis in an Asian context, we collected data from Hong Kong manufacturing exporters. This represents something of a unique test of the theory of antecedents to market orientation. On the one hand, Hong Kong's colonial history enables Hong Kong companies to appreciate certain Western concepts (Deshpandé & Farley, 2004). On the other hand, Hong Kong businesses are imbued with traditional Chinese values, which means that Hong Kong firms are separated from their more Western

Analysis

Model testing was undertaken using LISREL 8.50 and the maximum likelihood (ML) estimation procedure. We also followed Ping's (1995) guidelines for the evaluation of structural models with interaction terms (as an anonymous reviewer noted, this is akin to a path analysis with product interaction terms). In preparation for the analysis, a five-step procedure was undertaken.

Results

Table 3 provides the path estimates and t-values for the unrestricted model. The percentage of variance explained for EMO behavior is 73%, a figure that compares well with other studies of antecedents to EMO behavior (see Table 4).

Hypothesis 1 is supported since, although formalization does not return a significant main effect (γ =  .05, not significant [ns]), the ‘formalization–environment’ interaction term is negative and significant at the 10% level (γ =  .21, p < .10). This finding shows that

Discussion and research implications

Research into antecedents to EMO behavior uses samples of US, European and New Zealand exporters. Generalizing from these studies to export marketing contexts in other countries can be misleading (Katsikeas, Peircy, & Ioannidis, 1996), especially when considering export behaviors in non-Western business environments (Ling-yee, 2004) and industrial manufacturer samples in particular. For this reason, the purpose of this study is to investigate the factors facilitating and inhibiting EMO activity

Limitations and future research

Typical of research into market orientation, our study is cross-sectional, and causal inferences must be drawn with caution. Future researchers may wish to consider ways of overcoming this weakness in method through the use of longitudinal designs (e.g., see Dawes, 2000). On a similar front, our research focuses on identifying antecedents to EMO behavior under the assumption that EMO activity is beneficial for business success in most situations: future researchers may also wish to investigate

John W. Cadogan, PhD, is Professor of Marketing at the Business School, Loughborough University, UK. His primary areas of research interest are international marketing, marketing strategy, and sales management. He has published on these issues in the Journal of the Academy of Marketing Science, Journal of International Business Studies, the International Journal of Research in Marketing, the Journal of Business Research, Industrial Marketing Management, the European Journal of Marketing, the

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    John W. Cadogan, PhD, is Professor of Marketing at the Business School, Loughborough University, UK. His primary areas of research interest are international marketing, marketing strategy, and sales management. He has published on these issues in the Journal of the Academy of Marketing Science, Journal of International Business Studies, the International Journal of Research in Marketing, the Journal of Business Research, Industrial Marketing Management, the European Journal of Marketing, the International Marketing Review, the Journal of Marketing Management, the Journal of Strategic Marketing, and other academic journals. He received his degree from the University of Wales (UK).

    Charles C. Cui, PhD, is a Senior Lecturer in International Management and Marketing in Manchester Business School at the University of Manchester, UK. Previously, he pursued a career in the manufacturing sector, international trade and with a Sino–British joint venture in China. He received his PhD from De Montfort University (UK) and embarked on an academic career since then. His primary areas of research interest are international marketing and cross-cultural management. A special interest is in the comparative study of consumer and management behaviours across the West and Asia Pacific regions. His work has been published in academic journals such as International Journal of Bank Marketing, International Marketing Review, Journal of Asia Pacific Marketing, Journal of Business and Society, Journal of Customer Behaviour, and R & D Management.

    Robert E. Morgan, PhD, holds the Sir Julian Hodge Chair and is Professor of Marketing and Strategy at Cardiff Business School, Cardiff University, UK. His main research interests include market-based organizational learning, strategic alliance management, and international entrepreneurship. He has published widely on these and other topics in marketing and his academic publications number over 90. He is the recipient of many research distinctions for his management writing and teaching excellence awards with the most recent being the William Darden Award for the Best Research Methodology Article at the Academy of Marketing Science annual meeting. He has been engaged as a Special UK Government Advisor for export trade promotion and he has worked with, among others: the Department of Trade and Industry; Foreign and Commonwealth Office; HM Treasury; British Trade International; Welsh Development Agency; The Environment Agency; BBC; PwC Management Consultants; Coca-Cola (Asia Pacific); BT; and, Siemens.

    Vicky M. Story, PhD, is a Lecturer in Marketing in the Centre for Automotive Management, at the Business School, Loughborough University, UK. Her research interests include marketing strategy, selling and sales management, automotive retail and selling environments and new product development. She has published on these issues in the Journal of Personal Selling and Sales Management, the International Journal of Retail and Distribution Management, the International Journal of Innovation Management, and other academic journals.

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