Ready to export? The role of export readiness for superior export performance of small and medium‐sized enterprises

• Published date: 01 May 2020
• Author: Elizabeth L. Rose,Joanna Scott‐Kennel,Stephan Gerschewski
• Date: 01 May 2020
• DOI: http://doi.org/10.1111/twec.12928

World Econ. 2020;43:1253–1276. wileyonlinelibrary.com/journal/twec

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1253

© 2020 John Wiley & Sons Ltd

Received: 20 December 2019

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Accepted: 2 January 2020

DOI: 10.1111/twec.12928

SPECIAL ISSUE ARTICLE

Ready to export? The role of export readiness for

superior export performance of small and medium-

sized enterprises

StephanGerschewski1

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JoannaScott-Kennel2

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Elizabeth L.Rose3

1Kent Business School, University of Kent, Canterbury, UK

2School of Management & Marketing, University of Waikato, Hamilton, New Zealand

3Leeds University Business School, University of Leeds, Leeds, UK

KEYWORDS

export performance, export planning, export readiness, inward internationalisation, pre-export behaviour, small and medium-

sized enterprise

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INTRODUCTION

Small and medium-sized enterprises (SMEs) are becoming increasingly important players in inter-

national trade, currently accounting for 25%–35% of world merchandise exports (Francioni, Pagano,

& Castellani, 2016; OECD, 2005; World Trade Organization, 2018). Exporting is the most common

foreign market entry mode employed by SMEs, due to its being relatively low risk, with a high de-

gree of flexibility and low commitment of resources (Leonidou & Katsikeas, 1996). For SMEs from

small and open economies, international activities often represent the only path for substantial growth

(Nummela, 2011); as Dana, Etemad, and Wright (2004, p. 19) argue, “understanding internationalisa-

tion is no longer an option for business success, [but] it is a prerequisite.”

Yet, growth in global competition and political turbulence in offshore markets present considerable

challenges to small exporters. Economic disintegration (e.g. Brexit in the UK), growing protectionism

(e.g. recent policies of the United States) and the rise of emerging market multinationals (e.g. firms

from China and India) mean that small—and especially young—firms face exposure to the complex-

ities and costs associated with international trade. Developing an understanding of whether a firm is

ready to export can, thus, be critical to its long-term success. How do such firms know when they

are ready to export? What determines their export readiness? Is being export-ready linked to stronger

export performance?

To date, the literature has offered relatively few answers to these questions. Considerably more

research attention has been focused on the choice of exporting and other forms of internationali-

sation (often for large firms from large economies), as opposed to the pre-exporting phase and the

antecedents of export readiness (see e.g. Beleska-Spasova, Glaister, & Stride, 2012; Leonidou, 2004;

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GERSCHEWSKI Et al.

Leonidou, Katsikeas, Palihawadana, & Spyropoulou, 2007). Notable exceptions include the works of

Cavusgil and Nason (1990), Liesch and Knight (1999), Tan, Brewer, and Liesch (2007, 2018), and

David and Cariou (2014), which have led to discussion in this area and provide a theoretical founda-

tion for this study. Still, the conceptualisation of export readiness remains relatively under-researched,

and challenges remain with respect to operationalising such a construct.

The focus of this study was on firms from an advanced, small and open economy (SMOPEC),

such a home context that to magnify barriers to exporting, particularly for SMEs (van den Bulcke &

Verbeke, 2001). SMOPECs generally display international connectivity that reflects their openness to,

and engagement in, international trade and investment. These characteristics tend to present particular

challenges to exporting SMEs—who are often young and lack international experience—as they seek

access to larger markets while facing full exposure to international competition at home and away

(Michailova & Ott, 2019). The need for international engagement to escape the confines of limited

home markets and competition from imports provides a theoretically interesting context for the study

of export readiness. However, the extant literature provides relatively few answers with regard to the

importance of export readiness for such firms' exporting exploits or export performance.

The purpose of this paper was to operationalise the export readiness construct, and empirically

investigate both its antecedents and its relationship with export performance. The first contribution

of the paper is an operationalisation of the export readiness construct, focusing on three key aspects:

finance, trade and exchange, and marketing. In this way, we encompass key exporting capabilities and

resources, including the availability of financial resources, minimisation of foreign currency exchange

risk and the ability to adapt to customer preferences overseas, building on previous work in this area

(Tan et al., 2007, 2018; Tan, Brewer, & Liesch,2010). From a theoretical perspective, distinguishing

among different aspects of export readiness offers a more fine-grained analysis that is based on the

entrepreneurship perspective (e.g. Shane & Venkataraman, 2000) and the network-based view on

internationalisation (e.g. Johanson & Mattson, 1988). Further, our study incorporates export stimuli,

information and export planning, and importing prior to exporting as antecedents of export readiness.

Our empirical examination, based on questionnaire data from 96 SMEs based in New Zealand, finds

internal export stimuli to be particularly important, along with positive relationships between each of

the three types of export readiness and export performance. These results suggest that, although not all

antecedents of export readiness are equally important to SMOPEC-based SMEs, export readiness is

strongly linked to export success. Thus, while addressing calls for more research within specific inter-

national business contexts, the paper contributes to our understanding of export readiness, providing

strong evidence of a link between readiness and performance for SMEs exporting from an advanced

and open economy in a rather peripheral location.

The paper is structured as follows. The next section presents the theoretical background to export-

ing and develops the study's hypotheses. The research methodology is then presented, followed by

the results. Finally, the study's findings, including relevance to the SMOPEC context, are discussed.

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THEORETICAL BACKGROUND AND

HYPOTHESIS DEVELOPMENT

This study is embedded in two key theoretical perspectives pertaining to exporting and internation-

alisation: the entrepreneurial perspective (e.g. Andersson, 2000) and the network-based view on in-

ternationalisation (e.g. Axelsson & Easton, 1992; Johanson & Mattson, 1988). The entrepreneurial

perspective places a strong focus on the entrepreneur as the individual driving the firm's interna-

tionalisation (e.g. Shane & Venkataraman, 2000). This view is based largely on the Schumpeterian