Export Planning and Performance

The construct of planning is rooted in the normative approach to studying decision theory, which prescribes how managers should behave and make decisions (Ansoff, 1965; Hitt and Tyler, 1991). It is based on the concept of rationality and assumes that managers are able to make optimal choices (Greenley, Hooley and Saunders, 2004). Thus, planning is conceptualised as the step-by-step process of developing definite and precise objectives, collecting and analysing information and evaluating different options in order to formulate a solution to a problem or to make a decision (Bailey, Johnson and Daniels, 2000). There is a significant body of work linking formal export planning to performance. However, investigations into the nature of the relationship between export planning and export performance have returned

equivocal results.

There is a strong research tradition based on the assumption that planning enhances export performance, and this is supported by empirical findings (e.g. Cavusgil and Zou, 1994; Zou and Stan, 1998; Shoham, 2002). On the other hand, there is also inconsistency in the empirical results as some authors document a negative

relationship between planning and export performance (e.g. Katsikeas, Piercy and Ioannidis, 1996) or find no relationship at all (e.g. Chae and Hill, 2000).

There may be some explanations for this though. First, in past studies on the export planning-export performance relationship, the authors often considered export planning as the sole decision-making approach (e.g. Samiee and Walters, 1990; Shoham, 2002; Morgan et al., 2003), overlooking other potential approaches to making decisions. This presents a one-sided view of the decision-making process and potentially leads to biased or inconsistent results.

Second, those conflicting findings can also be explained by the variety of conceptual definitions of export performance itself. Despite the fact that export performance is studied widely, there is no consensus in the academic literature on its conceptual definition and operationalisation (Cavusgil and Zou, 1994; Shoham, 2002; Baldauf, Cravens and Wagner, 2000; Hult et al., 2008). Export performance was

measurements (Leonidou, Palihawadana and Theodosiou, 2011), adaptiveness, effectiveness, and efficiency dimensions (Katsikeas, Leonidou and Morgan, 2000), and export sales and profit (Cadogan et al., 2005) among others (see Chapter 2, section 2.4 for more details). It is suggested that the relationship between export planning and export performance could change in its direction (positive, negative, neutral) depending on the dimensions chosen to conceptualise export performance. The choice of the export performance dimension for the current research is

explained below.

The results of the current exploratory study (see Chapter 3) uncovered that export managers themselves evaluate export performance mostly based on financial figures (mainly sales and profit) and customer performance (customer satisfaction, customer retention, reputation among customers). Despite this, the customer dimension of export performance when compared to the financial dimension has received scarce attention in marketing.

As early as 1990, Koh mentioned that ‘the ability to identify and meet a particular customer’s needs is especially important in the sale of industrial products’ (p. 52). However, there was a lack of attention to customer performance in relation to

manufacturing firms in general. Consequently, there is a dearth of research devoted to the investigation of the relationship between planning and customer performance within the marketing field. Authors have mostly focused their attention on the

relationship between planning and financial performance. Less than 10 years ago, according to Sousa (2004), customer satisfaction measures were used in only two studies. This is in spite of Morgan, Kaleka and Katsikeas (2004) stating that

companies monitor the performance related to their export ventures ‘with respect to detailed customer attitudes and behaviours (e.g. customer satisfaction and

retention)’ (p. 99). Nevertheless, only recently have marketing scholars started to consider export customer performance as a separate construct (Katsikeas, Samiee and Theodosiou, 2006; Hultman, Robson and Katsikeas, 2009, Hultman, Katsikeas and Robson, 2011).

dimensions (e.g. Leonidou, Palihawadana and Theodosiou, 2011). Customer performance relates to the firm’s ability to satisfy and retain customers (Hultman, Katsikeas and Robson, 2011). Financial performance in the current study refers to a firm’s sales and profits indicators (e.g. Sichtmann, von Selasinsky and

Diamantopoulos, 2011). As mentioned above, the choice of these export

performance dimensions is determined by the exploratory study (see Chapter 3 for more details). Respondents referred to customer performance and financial

indicators (mainly sales and profit) as the outcomes of the decision-making process. For example, the manager from Company 2 explained that: ‘if the customers are happy with what they’ve got, that’s also a measure of success’ (customer

performance). Moreover, respondents did not make significant distinctions between sales and profit indicators (e.g. Company 3, 6, 7, 9, 11), which encouraged the author of the current work to view financial performance as sales and profit-related.

4.3.1 Planning-Customer Performance Relationship

To the author’s best knowledge, there is no study examining the relationship

between export planning and export customer performance. The limited research in the management and marketing literature proposes a positive relationship between planning and customer performance (e.g. Narayanan, Balasubramanian and

Swaminathan, 2011). Authors explain that collection of the information about customers could help to address their needs in the future and achieve long-term benefits for the firm while focusing on customer-satisfaction (c.f. Appiah-Adu and Singh 1998). Homburg, Droll and Totzen (2008) proposed the positive moderating relationship of planning on prioritisation strategy-customer prioritisation (special treatment of customers according to their importance). Planning, being associated with a high degree of commitment to a specific course of action (Pulendran, Speed and Widing, 2003), will help to set clear priorities among customers and effectively allocate resources to these priorities (Zeithaml, Rust and Lemon 2001). However, the direct effect of planning on customer performance is underexplored in the marketing field (especially in export marketing).

The results of the exploratory study (see Chapter 3) show that the respondents often viewed the relationship between export planning and export customer performance

as more negative. Managers claimed that planning slows down the decision-making process (e.g. Company 4, Company 5), as obtaining detailed information is time- consuming (Fredrickson, 1984; Atuahene-Gima and Murray 2004). The delay in decision-making regarding a customer’s request may result in decreased customer satisfaction (c.f. Jayachandran, Hewett and Kaufman, 2004). In day to day business operations, customers sometimes expect quick solutions to their problems

(Company 9), and identifying them often requires an ‘outside the box’ approach rather than sequentially following established procedures. Similarly, not being able to react rapidly enough could discourage customers from working with the exporter in the future (Company 4), which affects customer retention. Moreover, dissatisfied customers could spread negativity by word of mouth, which could have an adverse effect on the company’s reputation (Company 9).

Thus, the following can be surmised:

H1: Export planning is negatively related to export customer performance.

4.3.2 Planning-Financial Performance Relationship

The influence of export planning on export financial performance is more promising. In previous studies, export planning was found to be a predictor of financial export performance, including export sales and export profit measures (Zou and Stan, 1998; Wiltbank et al., 2006). Adoption of a marketing planning approach makes decision-making more comprehensive, rational and objective (Pulendran, Speed and Widing, 2003). Planning helps to communicate the firm’s initial intentions to its

employees and unites them in pursuing the same financial goals (Company 6). The formality of the planning process encourages setting clear objectives and defining positions of responsibility. This helps to make the goal achievement process more transparent and focused (Shoham, 2002). According to the exploratory study (see Chapter 3), planning allows different members of the team (or managers and the CEO) to reach consensus. The manager from Company 5 stated: ‘I think you need a plan because you need to get a consensus in the company’ and the manager of Company 10 said: ‘It [planning] helps you to set clear priorities on what you want people to be engaged in’. As the decisions go through different steps, various people

compromise if they disagree with each other. At the same time, consensus between managers tends to improve financial performance (Blythe and Zimmerman, 2004). Thus, export planning emphasises the firm’s commitment to a certain decision or a course of action, which in turn also includes allocation of appropriate resources (Shoham, 1999; Pulendran, Speed and Widing, 2003; Slotegraaf and Dickson, 2004). The nature of the planning process ensures that resources will be used as effectively as possible because the best of several options was chosen

(Walters, 1993), which leads to increased financial reward (Timmor and Zif, 2005). Based on the above, it is proposed that:

H2: Export planning is positively related to export financial performance.