The Internet and export marketing from a Middle Eastern perspective.

• Author: Ahmed, Zafar U.

ABSTRACT

This study explores the role of the Internet in export marketing. The data was gathered based on a survey of 61 Lebanese manufacturing firms engaged in exporting. The findings indicate a positive relationship between Website ownership, average annual sales volume and export. The findings further indicate that the main reason for owning a corporate Website was to attract clients outside of Lebanon. The second and third top reasons for owning a corporate Website turned out to be improving the company's image and advertising, respectively. Finally, the findings indicate a positive relationship between Website ownership and engaging in export, share of exports over total sales and the number of countries to which the firm exports.

Key Words: Internet, Export Marketing, Lebanon

INTRODUCTION

Gibb (1990) claimed that in areas where there are already a significant number of small and medium-sized businesses, the predisposition to start a business will be higher. This can be proved by statistics that show higher rates of start-ups in areas that already have a high proportion of small and medium-sized businesses. Where no situation in support of the development of enterprise culture exists, those situations can be socially produced through training, education, promotion and reward systems intended to influence the ambitions and capabilities of the younger population during their formative years (Gibb 1990).

Ramsay et al (2003) suggested that small and medium sized firms are the major providers of technological innovation and entrepreneurship enabling them to effectively compete with their larger rivals on similar grounds. They use technology to invent new ways of conducting business, redefining the bases for competition in an industry (Schlegelmilch and Sinkovics 1998). According to Schlegelmilch and Sinkovics (1998) small enterprises adapt to environmental changes much quicker and more flexibly than do larger firms enabling them to respond to market forces quicker than their larger counterparts (Schlegelmilch and Sinkovics 1998).

The appearance and development of strong small and medium-sized enterprises (SMEs) is vital to Lebanon's economic recovery and sustainable growth. A sound SME development strategy is needed to implement policies efficiently and to promote cooperation among the different institutions responsible for the delivery of services. So far both the public sector and professional organizations have failed to provide sustained support for small business development (UNDP 2002).

In general the expansion of a nation's exports has positive effects on the growth of the economy as a whole as well as on individual firms (Julian and O'Cass 2004). Exporting is of vital economic importance to trading nations and their firms. Exports boost profitability, improve capacity utilization, provide employment, and improve trade balances (Barker and Kaynak 1992). According to Gripsrud (1990) the growing internationalisation of the world economy and the widespread opinion that increased exports benefit society has stimulated research in this area. In the U.S., the growing trade deficit is the most immediate factor behind the interest in this topic. A common objective in most countries today is to find ways to increase exports. This can be achieved either by encouraging exporting firms to export more or by inducing non-exporters to begin exporting. In 2000, Lebanese exports represented about five percent of GDP, which is considered a very low level (UNDP 2002). According to Fadi Abboud, President of the Association of Lebanese Industrialists "In this globalized world, industries do not survive if they are not export oriented" (Tenbelian 2003: 23).

Given the substantial attention paid to the Internet in the business media and the widely held view that the Internet represents a substantive opportunity for both domestic and international marketing, it is rather astonishing that only limited scholarly research has been devoted to understanding the role of the Internet in the context of some of the major streams of research in marketing and international marketing (Hoffman and Novak 1996). As such, conceptual and empirical evidence regarding the role and the impact of the Internet in business and exporting is quite scarce. The relative absence of a theoretical framework has led to significant confusion regarding the subject matter (Samiee 1998). Dou, Nielsen and Tan (2002) suggest "The diffusion of global e-commerce has spurred the growth of exports through the Internet". According to a recent report (Gould 1997), global online exports will surge to $1.4 trillion by the end of 2004. Accordingly, the Internet may be an effective marketing tool for exporters in a number of ways.

Hamill (1997) argued that the effective use of the Internet could provide a low-cost "gateway" to the global market for companies intending to or engaging in exporting, especially for small-to-medium sized enterprises located in peripheral economies and those operating in global niche markets. The Internet has the potential of resolving some long-standing problems associated with exporting (Samiee 1998). However, "the appropriateness of the Internet for an exporter should be viewed in light of its direct and indirect costs and benefits and expressed in terms of incremental revenue attributable to the use of the Internet in exporting" (Samiee 1998: 414). As such, this study examines the role of the Internet in export marketing for small to medium sized enterprises in Lebanon, a struggling Middle Eastern economy with respect to its current Balance of Payments.

LITERATURE REVIEW

Evidently, as an increasing number of exporters develop Web sites, absence from the Internet can create a competitive disadvantage. However, non-exporting firms cannot look forward to becoming exporters overnight by virtue of developing and maintaining a Web site (Samiee 1998). The costs related to designing and maintaining a Web site, for instance, can be larger than the capital of smaller firms (Gould 1997). Developing an export-specific infrastructure within the firm is fairly involved and expensive. Moreover, export marketing involves many macro and micro planning and management considerations including meeting local product standards, target market pricing and competitive factors, export currency and payment issues, customer support and service requirements, legal and regulatory considerations, etc. None of these issues will be addressed simply by being present on the Internet (Samiee 1998).

"The proposition that firms typically adapt to international marketing via an evolutionary series of sequential stages has a long and distinguished intellectual history" (Bennett 1997: 327). It can be argued that the use of the Internet for global marketing allows firms to "leapfrog" the conventional stages of internationalisation, as it removes all geographical limitations, permits the instant establishment of virtual branches all around the world, and allows direct...