Moderators of the Export EOB and Export Performance Linkage

In addition to attempts to demonstrate the direct effect of EOB (and its

components) on business performance, and export success in particular, many scholars have also examined whether these direct linkages are universal across different organisational conditions and environmental contexts. As a result, in the broader marketing and entrepreneurship literatures a number of moderator variables have been modelled on the relationship between EOB and

performance in both domestic-focused and export level EO studies.

With respect to firm-wide EO studies, researchers have examined the

moderating role of firms‟ task environment such as market turbulence (e.g. Hult, Hurley, and Knight 2004), hostility (e.g., Lumpkin and Dess 2001; Naman and Slevin 1993; Miller 1983; Miller and Friesen 1982; Miller 1987; Zahra 1996; Zahra and Covin 1995; Dess Lumpkin and Covin 1997; Becherer-Maurer 1997) and dynamism (Wiklund and Shepherd 2005; Lumpkin and Dess 2001). Others have tested such moderators as organisational structure (e.g. Miller 1987; Miller and Friesen 1982), organisational decision-making style (e.g. Covin, Slevin and Green 2006), financial resources (e.g., Wiklund and Shepherd 2005), and marketing mix factors (e.g. Barret, Balloun and Weinstein 2000). Some

qualitative studies have proposed the likely moderating effect of structure and learning orientation on the relationship between EOB and performance (Kocak and Abimbola 2009; Miles and Arnold 1991; Morris and Paul 1987). A number of seminal works have also suggested the potential moderating effect of market orientation on the link between EO and firm performance (e.g. Miles and Covin 1999; Schindehutte, Morris and Kuratko 2000; Morris, Schindehutte, and LaForge 2002).

These earlier firm-wide EO studies have drawn largely on contingency theory to model the moderator relationships. For instance, Lumpkin and Dess (1996, p.151) argue that “in order to effectively model the EO – performance

relationship, the role of contingent variables will be considered”. Contingency theory suggests that fit between a firm‟s strategic orientation and other key variables, such as environment, structure, and strategy, are important for

79

obtaining optimal performance. In drawing on the contingency perspective, Covin and Slevin (1991) contend that EO‟s relationship with performance may depend on managerial style, firm structure and the nature of the external environment.

Lumpkin and Dess (1996, p. 152) suggest that “environmental factors, such as dynamism and munificence, or structural factors, such as the decentralization of decision making, may influence the performance of firms with an

entrepreneurial orientation”. Covin and Slevin (1991) are more specific about the moderating roles of environment factors. These authors argue that in “highly competitive, unforgiving, "hostile" environments, for example, entrepreneurial postures appear to promote high levels of firm performance […] On the other hand, the relationship between entrepreneurial posture and performance may be much less positive or even negative in nonhostile or "benign" environments” (Covin and Slevin 1991, p. 12). Miller and Friesen (1982, p. 6) further echo the moderating role of the environment when they argue that “Entrepreneurial firms are often found in dynamic and hostile environments because their

venturesome managers prefer rapidly growing and opportuneful settings; settings which may have high risks as well as high rewards. Such firms may even be partly responsible for making the environment dynamic by contributing challenging product innovations [...] because innovation prompts imitation, the more innovative the firms, the more dynamic and competitive (hostile) their environments can become”.

Among the organisational variables, scholars suggest that market orientation might be a moderator in the associating between EO and performance (Schindehutte, Morris and Kuratko 2000; Morris, Schindehutte, and LaForge 2002). For example, Schindehutte, Morris and Kuratko (2000) suggest that firms with strong entrepreneurial posture need market information activities to be successful in their chosen markets. Maidique and Zirger (1984) find that product innovations, for instance, are more likely to be successful if the developing organisation excels in its marketing mix activities and is willing to commit a significant amount of its resources to marketing-related activities associated with the new product. Moreover, Bhuian, Menguc and Bell (2005, p.11) argue that “entrepreneurship provides a filter through which organisations view and

80

direct market intelligence processes. That is, entrepreneurship will influence the way in which what are essentially quantitative market orientation processes are performed”.

Although the literature seems to suggest a potential interactive effect of market orientation and external environment on the association between EO and firm performance, empirical study of these moderating effects is lacking. Indeed, in export level EO studies, researchers have rarely tested moderator moderating effects on the relationship between EOB and export performance. In fact, information on potential moderators of the relationship between EOBs

component elements and export performance is missing from the literature. In other words, most export level EO studies have focused on studying only the main effect of aggregate EO on export performance. An exception is the work of Jantunen et al. (2008). In a study of the strategic orientations of born-global firms, Jantunen et al (2008) focus on moderating the link between EO and international performance with international growth strategy. They find that EO does matter to born-global businesses as it is related positively to performance. However, EO is more beneficial for non-born global firms when those firms choose to internationalise gradually. It is, therefore, unfortunate that export research have not considered moderators of the EO – export performance relationship given the assertion that the export environment is more complex, dynamic and uncertain compare to domestic markets. As an antecedent to performance, it can be argued that the environment may moderate the link between EO and export performance.

Despite the silence in testing moderators of the relationship between EOB and export performance, however, in view of the importance of the organisational characteristics and the external environment factors in driving performance in export markets, some export researchers (e.g. Yeoh and Jeong 1995, p. 102) argue that “the positive or negative influence of an [EO] on export performance may be greater for organisations that are characterised by certain internal and external characteristics”. As such, the field would be well served if key

organisational and environmental moderators are included in any test of the association between export EOB (and its component elements) and export performance.

81

An important benefit to be derived from moderator models is that they can help both researchers and export managers to determine situations where export EOB is most beneficial, and situations where export EOB may be harmful for export success. In addition, Lumpkin and Dess (1996) suggest that future researchers should also identify moderators of the individual EO dimensions. Although researchers have not yet captured this in their modelling of export EOB – export performance relationship, It is possible that the direction and the strength of the effects of the individual export EOBs on export performance might change upon the introduction of moderator variables. Hence, it can be argued that recommendations to managers can become more fine-grained and specific as a result of examining relevant moderators. Rather than simply saying that more or less EO is needed when markets are more or less dynamic, for instance, recommendations can be made at the individual EO dimension levels, as well. Consider the export product innovativeness – export performance relationship, for example, Samiee, Walter and Dubois (1993) note that the export performance impact of product innovation may depend, to a large extent, on the nature of the export environment. Furthermore, it can be said that the extent to which product innovation influences performance may be contingent on the willingness of customers to accept the new product. Thus, identifying and exploring moderators of the export EOBs – performance relationship would help improve our understanding of the export EO phenomenon.

In summary, the existing literature on export EO – export performance

relationship reveals evidence of incomplete and inconsistent empirical results regarding the moderating effects of different organisational and environment factors. As shown in table 2.4, out of the 14 selected studies listed only four have bothered to test for any moderator influences on the relationship between EO and performance. Interestingly, no study has attempted to moderate the link between the specific EOBs and export performance. Thus, it appears that more research attention is warranted to probe more comprehensively into the benefits of adopting EOB (and its components) in export operations. One way of doing this is to theorise and test the association of EOB (and its components) with export performance in different organisational and environmental contexts.

82

Table 2.4: Empirical Link of Entrepreneurial Orientation (EO) and Firm Performance in EO Studies with Consideration of Moderators

Author (s)

Export Contexts? (Yes or NO)

EO – Performance Link (Main Effects)

Moderators Studied

Moderator

Effects Key Findings Zahra and

Garvis 2000

Yes IEO → IP HOS +

+

There is a weak direct association between IEO and performance. However, when hostility is high, IEO greatly enhances company performance Robertson and Chetty 2000 Yes Firm-wide EO → EP STR HOS + The firm-wide EO → EP becomes stronger and more positive when moderated by organic STR and environment hostility.

Jantunen et al. 2008

Yes Firm-wide EO → IP IGS + The firm-wide EO → EP becomes stronger and more positive when firms adopt IGS.

Covin et al. 2006

No Firm-wide EO → FP Autocratic + The firm-wide EO → FP is stronger and more positive when autocratic decision- making style is employed.

Wiklund and Shepherd 2005 No Firm-wide EO → FP DYN RES + + Firm-wide EO → FP becomes stronger and more positive when moderated by RES and DYN. Naman and Slevin 1993 No Firm-wide EO → FP DYN TUR + +

Firm satisfaction with

performance becomes stronger and more positive when fit is created between EO, DYN and TUR environments.

Miller 1987 No Firm-wide EO → FP STR + Firm profitability becomes stronger when entrepreneurial style is practiced within organic STR. Miller and Friesen 1983 No Firm-wide EO → FP HOS DYN HET - + + EO negatively influences performance in hostile environment but positively related to performance in dynamic and heterogeneous market environments. Hult et al.

2004

No Innovativeness → FP

TUR + The positive effect of

organisational innovativeness on firm performance becomes stronger and more positive when the environment highly turbulent.

83

Table 2.4: Empirical Link of Entrepreneurial Orientation (EO) and Firm Performance in Selected EO Studies with Consideration of Moderators (Continued)

Keys:

INN = Innovativeness RSK = Risk-taking PRO = Proactiveness

AGG = Competitive Aggressiveness AUT = Autonomy

DYN = Market Dynamism

IEO = International Entrepreneurial Orientation HOS = Market Hostility

TUR = Market Turbulence HET = Market Heterogeneity COM = Competitive Intensity RES = Financial Resources EP = Export Performance IP = International Performance STR = Organisational Structure CUL = Culture

IGS = International Growth Strategy MIX = Marketing Mix

FP = Firm Performance Author (s) Export Contexts? (Yes or NO) EO – Performance Link (Main Effects)

Moderators Studied

Moderator

Effects Key Findings

Lumpkin and Dess 2001 No Competitive aggressiveness → FP Proactiveness → FP HOS DYN + +

Competitive aggressive style is more appropriate in hostile environment while

proactiveness is an

appropriate mode for firms in dynamic environments.

Zahra and Covin 1995

No Firm-wide EO → FP HOS + Firm effectiveness is stronger and more positive when entrepreneurial firms operate in hostile market environments. Barret et al.

2000

No Firm-wide EO →FP MIX + The individual marketing mix factors positively moderate the link between EO and business performance

84