Export market location decision and performance: The role of external networks and absorptive capacity
Abstract
Purpose
Drawing on the resource-based view and network theory, the purpose of this paper is to investigate the role of external networks (ENs) and absorptive capacity (AC) in export market location decision of emerging economy firms (EEFs) and the performance implication of this decision.
Design/methodology/approach
This study employs structural equation modeling to test three hypotheses: first, ENs influence an EEF manager's propensity to enter culturally/psychically distant markets for exports. Distant markets are more likely to be chosen by managers of firms with abundant ENs. Second, AC moderates this network-market location relationship. Third, superior performance results from the fit between managers’ propensity to enter a market and firms’ levels of ENs and AC.
Findings
An analysis of 196 Chinese exporting firms supports the hypotheses.
Research limitations/implications
Though the theoretical discussion is general, the empirical context is specific to Chinese export manufacturers. Replicating the study is necessary in different contexts.
Practical implications
The study identifies to managers the importance of external (i.e. ENs) and internal resources and capabilities (i.e. AC) and linkages between resources and capabilities, strategy and performance.
Originality/value
The study is novel in conceptually addressing the role of ENs and AC in firms’ decision making and performance and in testing hypotheses with robust methodology and data.
Keywords
Acknowledgements
The authors wish to thank Professor John Cadogan for the valuable suggestions and three anonymous reviewers for their insightful comments on previous version of the manuscript. The paper also benefits from helpful comments and suggestions by Frank McDonald and Chengang Wang at University of Bradford, Xiaohui Liu at Loughborough University, Hongwei He at University of Warwick and participants at Academy of International Business UK & Ireland Chapter 2011 Conference and Academy of Marketing 2011 Conference, where it was awarded the Best Paper in International Market Track. The authors alone are responsible for all limitations and errors that may relate to the study and the paper.
Citation
He, X. and Wei, Y. (2013), "Export market location decision and performance: The role of external networks and absorptive capacity", International Marketing Review, Vol. 30 No. 6, pp. 559-590. https://doi.org/10.1108/IMR-09-2011-0232
Publisher
:Emerald Group Publishing Limited
Copyright © 2013, Emerald Group Publishing Limited