Export Barriers During the Periods of Growth and Recession : the Major Factors and Propositions
The majority of academics and practitioners agree that the international activities of companies are very important for the companies themselves as well as for their countries. However, only a rather small part of Lithuanian companies sell their products abroad. Export is influenced by a number of factors, all of which can be grouped into three categories: external factors, company-related factors and manager-related factors. These groups of factors were researched by the survey of Lithuanian companies that were engaged in export in 2006. The questionnaire included 70 questions that dealt with possible barriers for development of export activity. The survey identified the most important groups of factors as well as individual factors that limit the willingness of companies to be engaged in export activities. According to the survey, shortage of qualified workers appears to be the most important individual factor. Other important factors included a shortage of qualified employees with specific skills – qualified export managers and sales agents, as well as a lack of qualified managers. The following two important factors were low awareness of the company’s brands in foreign markets and limited financial resources for advertising its products. The management of the companies admitted that “insufficient support from Lithuanian government” and “ineffective program for export support” were also two significant factors which did not help companies to cope with the aforementioned problems. In addition, lack of relevant information was indicated as a serious problem for export development. The survey was performed during a period of stable economic development and growth. However, currently the situation is the opposite – the country is in a recession or even in a crisis. Companies lack working capital; they are under the necessity to reduce a number of employees. Wakasugi Ryuhei from the Institute of Economic Research, Kyoto University noticed that the financial crisis has widened from monetary and financial issues to problems in the real economy – notably reduced consumer spending and private investment outlays. All this is spilling over into the labour market. A weak employment market tends to induce protectionist actions as government seeks to shield the domestic market from foreign competition. C. Fred Bergsten, director of the Peterson Institute for International Economics, predicted a risk that the world trade would fall sharply and produce a downward spiral of global growth. That could create all types of trade distortions: increased import barriers, higher export subsidies, domestic subsidies that discriminate against foreigners, structures on international lending. According to Dr. Vo Dai Luoc, the former Head of the Economics and Politics Research Institute, in a crisis exporters compete with each other mostly in terms of prices, while brand name, quality, design, and distribution networks become less important at this moment. Therefore, one of the big barriers might be the foreign exchange rate. It is obvious that Lithuanian companies will face all or some of the problems in their attempts to export their products during the nearest period. Though extensive research data from the current time period is not yet available, the findings from the previous research can be put against theoretical and practical evidence of recession, which makes it possible to develop some scientific propositions.(original abstract)
- Andersen, O., Coughlan, A., International Market Entry and Expansion Via Independent or Integrated Channels of Distribution, “Journal of Marketing”, Vol. 51. No. 1, pp. 71-82, 1986.
- Ang, S. H., Crisis marketing: a comparison across economic scenarios, “International Business Review”, Vol. 10, pp. 263-84, 2001.
- Barriers to Export: An Analysis of the Needs of Thai SMEs and Government Support Programs, Thai Government’s Department of Export Promotion, pp. 1-11.
- Bauerschmidt, A., Sullivan, D., Gillespie, K., Common factors underlying barriers to export: studies in the U.S. paper industry, “Journal of International Business Studies”, Fall, pp. 111-123, 1985.
- Bernard, A. B., Wagner, J., Export Entry and Exit by German Firms, NBER Working Papers, No. 6538, 1998.
- Bernard, A. B., Jonathan E., Bradford J. J., Kortum S., Plants and Productivity in International Trade, “American Economic Review”, No. 93, pp. 1268-90, 2003.
- Bernard, A. B., Jensen, J. B., Redding, S. J., Schott, P. K., Firms in international trade, “Journal of Economic Perspectives”, Vol. 21 (3), pp. 105-130, 2007.
- Bergsten, F., Needed: A Global Response to the Global Economic and Financial Crisis, March 12, 2009, http://www.iie.com/publications/papers/bergsten0309.pdf.
- Brooks, M. R., Rosson, P. J., A Study of Export Behavior of Small and Medium-Sized Manufacturing Firms in Three Canadian Provinces (in) Czinkota, M. R., Tesar, G., (eds.) Export Management: An International Context. Praeger, New York, 1982.
- Calof, J. L., Beamish, P. W., Adapting to Foreign Markets: Explaining Internationalization, “International Business Review”, Vol. 4, (2), pp. 115-131, 1995.
- Cavusgil, S. T., Organizational Characteristics Associated with Export Activity, “Journal of Management Studies”, Vol. 21, pp. 3-22, 1984.
- Cavusgil, S. T., Kirpalani, V. H., Introducing Products into Export Markets: Success Factors, “Journal of Business Research”, Vol. 27, pp. 1-15, 1993.
- Cavusgil, S. T., Zou, S., Marketing Strategy-Performance Relationship: An Investigation of the Empirical Link in Export Market Ventures, “Journal of Marketing”, Vol. 58, January, pp. 1-21, 1994.
- Chang, S. J., Internationalization expansion strategy of Japanese firms: capability building through sequential entry, “Academy of Management Journal”, No. 2, pp. 383-407, 1995.
- Czinkota, M. R., Rokainen, I. A., (eds.), International Marketing, The Dryden Press, Forth Worth, 1995.
- Diamantopoulos, A., Bodo, B., Schlegelmilch, Export Marketing Research in Practice: A Comparison of Users and Non-Users, “Journal of Marketing Management”, Vol. 6(3), pp. 257-273, 1990.
- Dichtl, E., Koglmayer, H. G., Muller, S., International Orientation as a Precondition for Export success, “Journal of International Business”, Vol. 21, pp. 23-40, 1990.
- Douglas, S. P., Craig, S. C., Advances in International Marketing, International Journal of Research in Marketing, Vol. 9, pp. 291-318, 1992.
- Eaton, J., Samual, K., Technology, Geography and Trade, “Econometrica”, Vol. 70(5), pp. 1741-1779, 2002.
- Ebling, G., Janz, N., Export and Innovation Activities in the German Service Sector Empirical Evidence at the Firm Level, Centre for European Economic Research, pp. 1-25, 1999.
- Exporters survey, EESTI Expordiagentuur, pp. 1-22, 2001.
- External Trade by Enterprise Characteristics, Luxembourg: Office for Official Publications of the European Communities, 2007.
- Foreign Trade, Statistikos departamentas prie LRV. Vilnius, 2002, 2003.
- Hedlung, G., Are Strategies for Foreign Market Entry Changing? The Case of Swedish Investment in Japan, International Studies of Management and Organization, Vol. 15, pp. 41-59, 1985.
- Helleiner, G. K. (ed.), Manufacturing for Exports in the Developing World: Problems and Possibilities. Routledge, New York, 1995.
- Johanson, J., Vahlne, J., The Mechanism of Internationalization, “International Management Review”, Vol. 7, No. 4, pp. 11-24, 1990.
- Knight, G. A., Cavusgil, S. T.,. The Born Global Firm: A Challenge to the Traditional Internationalization Theory, “Advances in International Marketing”, Vol. 8, pp. 11-26, 1996.
- Koksal, M. H., Ozgul, E., The relationship between marketing strategies and performance in an economic crisis, “Marketing Intelligence & Planning”, Vol. 25, No. 4, pp. 326-342, 2007.
- Krugman, P. R., Scale Economies, Product Differentiation, and the Pattern of Trade, “American Economic Review”, Vol. 70, pp. 950-959, 1980.
- Lal K., E-business and Export Behaviour Evidence from Indian Firms, UNU/WIDER Conference on the New Economy in Development, 10-11 May Helsinki, pp. 1-22, 2002.
- Leonidou, L. C., Empirical Research on Export Barriers: Review, Assessment and Synthesis, “Journal of International Marketing”, Vol. 3, No. 1, pp. 29-43, 1995 a.
- Leonidou, L. C., Export barriers: non-exporters’ perceptions, “International Marketing Review”, Vol. 12 (1), pp. 4-25, 1995 b.
- Leonidou, L. C., Katsikeas, C., The Export Development Process: An Integrative Review of Empirical Models, “Journal of International Business Studies”, Vol. 27, No.3, pp. 517-551, 1996.
- Lindqvist, M., Infant Multinationals: The Internationalization of Young Technology-based Swedish Firms, IIB, Stockholm School of Economics, Stockholm, 1991.
- Madsen, T. K., Successful Export Management: Some Empirical Evidence, “International Marketing Review”, Vol. 6, No. 4, pp. 41-57, 1989.
- Madsen, T. K., Servais, P., The Internationalization of Born Globals: An Evolutionary Process? “International Business Review”, Vol. 6, No. 6, pp. 561-583, 1997.
- Mavrogiannis, M., Bourlakis, M. A., Dawson, J., Ness, M. R., Assessing export performance in the Greek food and beverage industry, “British Food Journal”, Vol. 110, No. 7, pp. 638-654, 2008.
- Melitz, M. J., The Impact of Trade on Intra-industry Reallocations and Aggregate Industry Productivity, “Econometrica”, Vol. 71(6), pp. 1695-1725, 2003.
- Michiel Van Dijk, The Determinants of Export Performance in Developing Countries: The Case of Indonesian Manufacturing, Eindhoven Centre for Innovation Studies, 2001.
- Morbey, G. K., Dugal, S., Corporate R&D spending during recession, Research Technology Management, Vol. 35, No. 4, pp. 42-5, 1992.
- Morgan, R. E., Katsikeas, C. S., Export Stimuli: Export Intention Compared with Export Activity, “International Business Review”, Vol. 6, No. 5, pp. 477-499, 1997.
- Morgan, R.E., Export Stimuli and Export Barriers: Evidence from Empirical Research Studies, “European Business Review”, (2), pp. 68-79, 1997.
- Nordstrom, K. A., Vahlne, J. E., Impact of Global Competition on the Process of Internationalization, Annual Meeting of Strategic Management Society, Barcelona. Research report, Institute of International Business, 1985.
- Norman, Ph., Wickramasekera, R., The Propensity to Export Among Food Processing Firms in Southern New South Wales and North Eastern Victoria, “Australian Agribusiness Review”, Vol. 3, No. 2, 1995.
- O’Grady, S., Lane, H., The Psychic Distance Paradox, “Journal of International Business Studies”, Vol. 27, pp. 309-334, 1996.
- Ohmae, K., The Borderless World: Power and strategy in Interlinked Economy. Harper Business, New York, 1990.
- Pedersen, B., Petersen, T., Twenty Years After - Support and Critics of the Uppsala Internationalization Model, in: Bjorkman, I., Forgsen, M. (eds.), The Nature of the Internationalization of the Firm, “Copenhagen Business School Press”, pp. 124-134, Copenhagen, 1998.
- Ryuhei, W., 2009, The Crisis is an Opportunity to Push Multilateral Trade Liberalisation, http://www.rieti.go.jp/en/papers/contribution/wakasugi/01.html.
- Shama, A., Management and consumers in an era of stagflation, “Journal of Marketing”, July, pp. 43-52, 1978.
- Simpson, C. L., Kujawa, D., The Export Decision Process: An Empirical Inquiry, “Journal of International Business Studies”, Vol. 5 (1), pp. 107-117, 1974.
- Smith, D., Gregoire P., Lu M., 2006. Managers’ Perceptions of Export Barriers: A CrossCultural Perspective of Service Firms, “Journal of Transnational Management”, Vol. 12(1), pp. 51-68.
- Tesfom, G., Lutz, C., A classification of export marketing problems of small and medium sized manufacturing firms in developing countries, “International Journal of Emerging Markets”, Vol. 1, No. 3, pp. 262-281, 2006.
- The British Chamber of Commerce, BCC Language Survey: The Impact of Foreign Languages on British Business, pp. 1-32, May 2004.
- Trimeche, M., Kondo, F., Wakabayashi, Y., Trimeche, O., An Inquiry into the Factors Impeding Foreign Firms’ Exports in the Context of Developing Economies, pp. 1-11, 2002.
- Viviers, W., Soontiens, S., South African SMEs: obstacles to export to the southern African development, 43rd ICSB World conference, Singapore, 1998.
- Vo Dai Luoc, 2009, Exchange rate now serving as the barrier for export, http://english.vietnamnet.vn/interviews/2009/02/828144/.
- Welch, L. S., Luostarinen, R., Internationalization: Evolution of a concept, “Journal of General Management”, Vol. 14, No. 2, pp. 34-55, 1998.
- Zurawicki, L., Braidot, N., Consumer during crisis: responses from the middle class in Argentina, “Journal of Business Research”, Vol. 58, pp. 1100-9, 2005.