RELATIONSHIPS BETWEEN EXPORT SUCCESS, EXPORT STRATEGIFS,

AND EXPORT PLANNING

Granger Macy

Bruce Barringer
University of Missouri

Columbia, Missouri

Max Wortman
Iowa State University

Ames, Iowa

The remarkable pace of change in world markets has caused a fundamental shift
in the number of possible avenues of growth for U.S. exporters. Eastern Bloc coun-
tries and the republics of the former Soviet Union are actively soliciting trade. Asian
economies are experiencing growth at an unprecedented rate. The approaching unifi-
cation of th~ European Community and the possibility of a ratified North American
Free Trade agreement may provide additional opportunities for well-positioned U.S.
firms.

For many U.S. companies, exports represent a small but still vital portion of their
overall sales. Exports can also decrease the trade deficit and reduce unemployment.
Depending on the source, it has been estimated that each additional billion dollars worth
of exports creates between 19,600 and 30,000 new jobs. The Commerce Department,
the Department of Labor, and the U.S. ExportJImport Bank have made estimates within
this range. A deeper understanding of how firms reach their full export potential is
important for American businesses and the nation as a whole.

Background

For many firms, target market selection and product considerations are the main
dimensions of their export programs ([3],[5]). Some U.S. firms, for example, export
regionally and may compete primarily on price. Others export across the globe and
emphasize customer satisfaction and quality products. Recent developments in the in-
ternational economy with regard to regional trade agreements such as NAFfA and
EC92, and the outcome of the GAIT negotiations, will affect all types of exporters.

One key to competing successfully may be the development of complementary
product/market strategies. The primary thrust of this paper is to examine the role of
planning in this process. Here we examine a specific type of planning we refer to as
'export planning.' It is deImed as the development of a distinct export plan and the
systematic incorporation of that plan into the firm's annual strategic plan. Firms that
practice export planning may be better equipped to develop and execute synergistic
export strategies.

Several studies have examined the simple bivariate relationship between export
planning and export success. Cooper and Kleinschmidt [5] found that the best per-



2 Journal ofBusiness Strategies Vol. 10, No.1

fonners among Canadian exporters in the electronics industry conducted the most ex-
tensive export planning. Madsen [16] found similar results with Danish manufactur-
ing finns. In addition, Walters and Samiee [26] found a positive relationship between
what they called "strategic export planning activities" and export success. To the
best of our knowledge, only Walters [25], in a study of the lumber industry, found no
relationship between export planning and the relative importance of exporting to the
firm. With regard to the success of export strategies, however, planning appears to
be a factor that is consistently important.

This study extends existing export success research by examining the importance
of export planning to specific product and market aspects of a finn's export strate-
gies. We will examine the interaction between export planning, product/market strat-
egies, and export success. Based upon the existing literature, the strategies most com-
monly associated with export success are identified and discussed. Hypotheses are then
proposed and tested in order to examine the role of export planning in creating sound
product/market strategies.

Export Strategy and Export Planning

The eventual success of any export program may depend on the synergy between
its market selection and product strategies. Carefully crafted product/market strategies
are not ad hoc events. There is significant support in the literature that conscientious
strategic and functional planning improves both the technical and the strategic elements
of export plans ([5], [12], [22]). We expect that successful, value building strategies
will be structured to best position a company within its relevant market. For export-
ers, this usually means developing product and market selection strategies that comple-
ment each other and deliver maximum value to a highly competitive global market-
place. A market selection strategy should complement a finn's strengths, be consis-
tent with its long tenn goals and objectives, and ultimately lead to exporting success.

In the following sections we will defme and discuss specific elements of export
market selection and product strategies. In support of this discussion, we also review
key aspects of the relevant literature. This literature is summarized in Table 1. We
then examine the role of export planning and present hypotheses describing its place
in achieving successful product/market strategies.

Market Selection Strategy
Market selection strategy refers to the overall company program for selecting for-

eign markets. Exporters typically adopt a market selection strategy that emphasizes
either market diversification (exporting across the globe) or market concentration (ex-
porting to only a few key markets). As shown in Table 1 market diversification has
been commonly found to be positively related to export growth and export intensity.
Market concentration may be a more deliberate, risk adverse approach. Once a pres-
ence in a foreign market has been established, attention may be shifted toward expan-
sion within that market, rather than entering additional markets. Accordingly, steps



Spring 1993 Macy, et al.,: Relationships between Export Success 3

Table 1: Summary of Selected Empirical Studies on the
Determinants of Export Success

I:: '"
'" '"I:: .~ ~~ .... CJ

.f:: .~ ...I:: tl:l e~
~

...
.~

CJtl:l ClII C ~rrJ... CJ .... - 1:: .5 '"'-~ ].~.... Q,,~ c .~ e ='"':a (; E el:: "'e"CI ~ §'c Q"C '"'~ tl:lQ"... e tl:l>B tl:l 0 = ll<tl:l ~ll<
Q Ul:l. ~ CI '"' ~a: ~Q ~~fI.l l:l.

Cavusgil [3] 1984 + Degree of Internationalization

Christenson, 1987 + + + ExportingINo Longer Exp.
etal.[4] + NS + NS Export Intensity

Cooper & 1985 + NS + Export Growth
Kleinschmidt [5}

Diamanto- 1988 NS + Export Intensity
poulos [6] + ROI

Douglas & 1983 NS + Market Share
Craig [7]

Kirplani & Mac- 1980 • + Export Growth
Intosh [12] + Export Intensity

Lee & Yang [13) 1990 + Export Growth
Export Profitability

+ Export Intensity

Louter [15] 1991 + Relative Export Profitability
NS NS + + Export Sales

Madsen [16] 1989 + + + + Export Growth
NS NS + + Export Profitability

Namiki [20] 1988 + Export Intensity

Rocha, et aI. [21] 1988 + + + Aggress. v. Passive Exporters
+ Export Intensity

Samiee & 1990 + Market Diversification
Walters [22] NS Export Profits

Seifert & Ford [23] 1989 + Satisfaction with Exp. Prog

Suzman & 1984 + + Tech. Prof. & Exp. Strat. Fit
Wortzel [24]

Walters [25] 1985 NS Relative Importance of Exp.
+ + Export Intensity

Walters & 1990 + Profit
Samiee [26]
+/. direction of significant effect between factor and export success
NS no significant effect



4 Journal ofBusiness Strategies Vol. 10, No. 1

are taken to widen the local market base and enter new segments [7]. To maximize
market share, products are often designed or differentiated specifically for those mar-
kets.

Conversely, firms that follow the market diversification approach export to a higher
number of countries [13]. By taking a low market share in a large number of coun-
tries, these firms can usually avoid direct competition with the major players in each
market [21]. As a result, they can generally export a more standardized product as
long as product quality meets global standards.

Product Strategies
Product strategy involves blending different marketing mix elements in order to

develop the right product or service for the intended market [1]. Here we conceptu-
alize product strategy in four dimensions; price, quality, modification, and promotion.
Developing product and market selection strategies as a cohesive whole should pro-
duce more effective strategies. Together, these elements are used to define the basis
on which a firm chooses to compete.

Exporters typically follow one of three price strategies: price leadership, price parity
(matching local prices in the destination country), or price at the domestic price plus
a premium. Cooper and Kleinschmidt [5] found that exporters who establish a price
advantage generally fit a fairly narrow proflle. They typically export fairly generic
products to nearby or convenient markets. This is generally a low cost strategy em-
phasizing economies of scale. Although some have reported that successful exporters
tend to price competitively in their destination countries ([2], [4], [19]), Table 1 shows
that the empirical results are mixed. Alternatively, some exporters may consider their
products to be unique and choose not to price competitively. Such an approach may
yield higher margins but lower market penetration and may account for the weak find-
ings in this area.

In contrast to price, high product quality should be considered a virtual prerequi-
site for export participation and growth. Table 1 shows many positive relationships
between product quality and success across studies. In a study of manufacturing firms,
Cavusgil [2] found that exporters don't need a new product to be successful, but the
product must be of high quality. Firms that compete on quality typically emphasize
some product characteristic that exceeds the norms. This can take on several forms
including product style, service level, durability, or technological sophistication.

Product modification is another product strategy. This refers to the practice of
designing or customizing products to appeal to specific foreign markets [23]. Like
quality, this strategy can take on a number of different dimensions. Product design,
packaging, method of delivery, or a customer service developed specifically for a
particular market are examples of a product modification strategy.

Modification strategies are typically aimed at building market share within a par-
ticular foreign market. As such, product modification is generally associated with a
market concentration approach. The empirical studies shown in Table 1 have gener-
ally supported the value of product modification in a competitive export strategy.



Spring 1993 Macy, et al.,: Relationships between Export Success 5

However, not all experts agree. Levitt [14] argued against product modification. He
stated that simplicity and economies of scale are the key factors, and that globalization
of markets should imply standardization of products worldwide. This brings costs down
which can potentially expand world markets. Nevertheless, many exporters encourage
product modification. A popularaxiom among exporters combines the two approaches,
"Standardize what is possible, differentiate where necessary" [15]. Such conflicting
viewpoints have yet to be adequately resolved.

The final dimension of export product strategy considered here is promotion. This
area is not well researched but tends to be positively related to export success. It is
generally believed that most firms invest much less in promotion for export markets
than for domestic markets. Exporters may rely on their importers to promote their
products once ownership has changed hands. Seifert and Ford [23] asked 65 U.S.
exporters from diverse industries about their export promotion budgets. Only 4.5% of
the companies spend proportionally more on exports than domestic products. Firms
that did promote their exports typically fell within the market concentration category.
Such firms are more able to focus their promotional efforts by concentrating on fewer
markets. Promoting products across multiple markets could spread resources too thin
and be ineffective within individual markets.

Selection of Product/Market Strategy
Although we believe that there is no one best export strategy, the empirical lit-

erature does suggest that certain combinations of product and market selection strate-
gies are conceptually more reasonable. Competitive pricing is typically associated with
the market concentration approach. These firms typically sell a standardized, high
volume product to a limited number of markets [18]. A much different but also po-
tentially effective market concentration approach emphasizes product modification. This
is a differentiation strategy that is aimed at building market share in selected markets.
Product promotion is also associated with building market share in a limited number
of markets.

In contrast, the optimal approach for market diversification may be high quality.
As discussed previously, there are several paths available to achieve high quality. The
importance of quality may be due to the wide market demand for intrinsically appeal-
ing products.

Export Planning

Planning is proposed to be a key antecedent to export success. In this study, export
planning is conceptualized as the extent of effort on the part of an exporter to sys-
tematically incorporate exporting into the firm's strategic plans. It is analogous to a
firm carefully integrating a business strategy into its broader corporate strategies and
narrower functional strategies. Such planning helps assure that a firm's export pro-
gram is consistent with its overall goals, objectives, and internal capabilities.

As mentioned earlier and summarized in Table 1, a relationship between export
planning and export success has been supported by previous empirical research.



6 Journal ofBusiness Strategies Vol. 10, No.1

Howard and Herremans [9] conducted a subjective study of 273 winners of the De-
partment of Commerce "E" award for excellence in exporting. Each of the firms were
asked to evaluate 23 different activities in terms of overall importance to export op-
erations. Planning activities received the highest rankings.

Our purpose was to investigate a more complex relationship that considers export
planning, product/market strategies, and export success. Different strategies may re-
quire different degrees of rigor in export planning. The next section posits potential
relationships between specific product/market strategies, export planning, and export
success.

Hypotheses
Taken together these hypotheses posit that export success may be achieved through

one of several complementary product/market strategies. It is not our intention to find
some 'ideal' combination of export strategies and planning intensity. Export planning
is examined as a potential catalyst in the development of sound export strategies, and
specified as a moderating variable in the following hypotheses.

H1a: Competitive pricing will be related to increased export success under
conditions of market concentration regardless of the level of export
planning.

Hlb: Competitive pricing will be related to increased export success under
conditions of market diversification and high levels of export planning.

Firms that price their exports competitively typically sell standardized, high vol-
ume products designed for manufacturing efficiency. The focus on planning is at home,
rather than abroad, so as to support the complexities required to maintain high vol-
ume production facilities. Frequently, the same product can be sold domestically and
abroad. In this approach, profitability results from the effectiveness of the manufac-
turing process rather than premium pricing.

The level of export planning should not be critical for firms that match competi-
tive pricing with the market concentration approach. Markets can be selected for sta-
bility and minimal risk. Distribution channels can be established and exporting can
be managed on a rather routine basis. Conversely, export planning is more critical
for fums that match competitive pricing with the market diversification approach. As
market diversification increases, the need for market scanning and thus export plan-
ning increases. In this situation, competitive pricing is more likely to be successful
where higher planning intensity is present to adequately assess market pricing.

Competitive pricing appears most useful for standardized products without any
clearly defined product advantage. Noncompetitive pricing is expected to be appro-
priate where product uniqueness generates the demand. Noncompetitive pricing may
require extensive market scanning and careful market selection. Such an approach may
create high profitability; but the selectivity of the approach may not necessarily yield
high sales levels or a large export market in terms of the number of countries. Since
the measures of success in this study do not focus on profitability, a noncompetitive
pricing strategy is not likely to be related to the measures of success used in this study.



Spring 1993 Mary, et al.,: Relationships between Export Success 7

H2: High product quality will be related to increased export success under
conditions of market diversification regardless of the level of export
planning. High product quality has consistently been linked with
export success ([15], [16], [17]).

A quality strategy focuses on product strength and technology rather than on low
price. A market diversification approach is indicated in that high quality products can
penetrate even particularly demanding markets. In addition, Madsen [16] found that
exporters of high quality products are more successful in attracting successful agents
and distributors. These intermediaries may facilitate reaching additional markets. This
may also allow firms to leave their export planning to the intermediaries and con-
centrate on other product issues. In this case, high product quality may actually be
associated with relatively low levels of export planning.

On the other hand, products need to be differentiated to be successful using a
quality approach. A company may thus need to keep abreast of consumer preferences
and plan to adapt to changing preferences. Thus a quality approach may be success-
ful under either low or high levels of export planning.

H3: Product modification will be related to increased ~xport success under
conditions of market concentration and high levels of export planning.

Firms that practice product modification typically select one or more attributes that
many buyers in a particular foreign market perceive as important, and position their
products to meet those needs. This is typically done in an effort to capture a specific
market. Rather than export a general product, the product is modified to accommo-
date local needs.

As a competitive strategy, product modification may be more effective for firms
pursuing a market concentration approach. Logistical problems can exist under a prod-
uct modification policy due to the need to maintain different versions of the product
and to set up multiple, shorter production runs. An effective modification strategy will
become increasingly complex as a firm diversifies into a greater number of markets.
Thus it may be in the firm's best interest to concentrate on achieving penetration in
fewer markets.

Product modification also represents a more deliberate, methodological approach
than price leadership or quality differentiation. Export planning is expected to be higher
so that firms can monitor local preferences and continue to modify their products
accordingly.

H4: Product promotion will be related to increased export success under
conditions of market concentration and high levels of export planning.

It was mentioned previously that export product promotion is not well researched.
It is expected that traditional promotional strategies such as advertising and point of
sale marketing can be used more effectively by firms pursuing a market concentration
approach. Promotion across a large number of markets may be impractical. Planning
intensity for promotion is expected to be high. Effort, managerial input, and intense
monitoring of effectiveness are required to maintain promotional programs.



8 J oumal ofBusiness Strategies

Methodology

Vol. 10, No.1

Sample
The data for this study were collected from a survey of Midwest agricultural ex-

porters. The companies were identified by using state export directories. An initial
mailing was sent to 281 firms. A total of 151 firms provided usable surveys result-
ing in a response rate of 54%.

A wide variety of firms were represented in the survey includingoquipment manufac-
turers and chemical producers. Agricultural firms were chosen because they are heavily
involved in exporting and they include a broad cross section of firms that use various
product/market strategies. The typical survey respondent had 10 to 20 years of export
experience, employed 50 to 100 people, and exported to 3 continents and 8 different
countries. The firms also varied in terms of how much they exported; 41 % export up
to 6% of sales, 34% export 6-15% of sales, and 25% export more than 15% of sales.

Variables
The study employed three sets of variables including product strategy, export plan-

ning, and export success.
1. Product strategy measures included the four product strategy variables of price,

quality, modification, and promotion. These were the anticipated predictors of export
success.

The price variable asked respondents to indicate the category that best described
how they priced their products for export. This measured whether competitive pric-
ing was used in the destination country. Codes ranged from 0 to 2 with higher num-
bers representing more competitive pricing.

The modification variable measured the extent to which the firm relied on modi-
fying its products to suit the taste of its foreign markets. This was coded: 0 - no
modifications; 1 - minor modifications; 2 - major modifications.

The quality measure asked respondents about the relative quality level of the firm's
products as compared to competitors in destination countries. It was coded: 0 - be-
low average; 1 - average; 2 - above average; 3 - quality leader.

The promotion variable measured the extent to which the firm relied on promo-
tion to compete in foreign markets. Promotion was operationalized by asking firms
whether their promotional spending for exports was lower; the same as; or higher than
their promotional spending for domestic markets. These choices were coded 0 through
2 respectively.

2. Export planning was used as a moderator variable. Each hypothesis was tested
under conditions of "low planning" and "high planning." The export planning vari-
able asked respondents to evaluate to what extent the export plan was incorporated
into their annual strategic and operating plans. Firms in the "low planning" category
reported that there was either no export plan or that their export plan was not incor-
porated into their annual strategic and operating plans.

3. Export success included two dependent variables; export intensity (total export
sales divided by total firm sales) and the number of countries to which products are



Spring 1993 Macy, et al.,: Relationships between Export Success 9

exported. The export intensity variable (EI) measured overall export success. This
data was collected in categories with 5% increments. Thus a code of 1 equates to an
export intensity up to 5%; a 2 equates to export intensity up to 10%, and so on. The
variable for number of countries (NUCfY) indicated the geographic scope of a firm's
export operations and in combination with EI represents a proxy for market selection
strategy. It was coded as 1 - up to 5 countries; 2 - 6 to 10 countries; 3 - 11 to 20
countries; 4 - more than 20 countries.

Analysis
The means and response counts for each variable are presented in Table 2. Note

that these data are categorical.

Table 2: Variable Means and Distributions

Mean 0 1 2 3 4 5 6 7 8 9

Price 1.18 30 55 56
Modification .83 44 84 19
Quality 2.21 1 23 66 57
Promotion .51 87 50 13
Export Planning .77 34 117
Export Intensity 2.46 61 41 11 17 12 2 2 3 2
Number Countries 1.83 82 28 22 17

The distributions of export intensity and NUCfY, the dependent variables, are not
normally distributed. This is consistent with other export success studies [1]. Nor-
mally, many of the commonly applied linear tests are robust to non-normal dependent
variables. However, in this case, there is a very high level of non-normality. As a
result, the study employed techniques designed to offset this difficulty.

First, a Spearman rank order correlation matrix was used. This is appropriate for
ordered categorical data. These correlations are used to show population wide asso-
ciations. Second, logit analysis, a multivariate test, was used to analyze the hypoth-
eses. This form of regression is appropriate for categorical data and is used exten-
sively in evaluating dichotomous dependent variables. To utilize this approach, the
dependent variables were reduced to dichotomous categories. All export intensities (EI)
above the lowest response were combined into one category. The same was done for
number of countries (NUCfY). This reduced each of the dependent variables into
two categories of relatively balanced size representing a low and high level for each
variable. The moderator variable, export planning (EP), was then used to partition
the data into firms representing "low" and "high" levels of export planning. Logistic
regression was then applied to each dependent variable twice, once for each level of
EP.



10 Journal ofBusiness Strategies Vol. 10, No.1

Following this, matching models were computed using ordinary least squares re-
gression. These tests were conducted for comparison to the logit analysis. In this
case, the original data was used for the dependent variables; i.e., no dichotomous cat-
egorization. If these results were found to be reasonably consistent, then it could be
concluded that little information was lost by combining the dependent variables into
categories for hypothesis testing.

Results
The Spearman rank order correlations are shown in Table 3. Consistent with

previous studies, export planning (EP) was found to have a· high positive correlation
with both dependent variables, export intensity (EI) and number of countries (NUCfY).

Table 3: Spearman Rank Order Correlations

1 2 3 4 5 6

Price
Modification .181*
Quality .108 .147
Promotion -.107 .066 .109
Export Planning .132 .273** .119 .206*
Export Intensity .090 .263** .215 .393** .239**
Number Countries .196* .156* .378** -.041** .303** .306**
*p = <.05
**p = <.01

The results of the logit analysis are shown in Table 4. The logistic regression
coefficients are difficult to interpret due to logarithmic transformations, and thus the
raw coefficients are not reported.

Table 4: Logistic Regression Chi-Square Test of Significance

Strategy

Total Model
Price
Modification
Quality
Promotion

EI NUCIY
EP=O EP=1 EP=O EP=1

ns *** ** ***
ns *** *
** ns ns
ns ** ***

*** *** ns
*p = <.10
** P = <.05
***p = <.01



Spring 1993 Macy, et al.,: Relationships between Export Success 11

This table presents the differences between low levels and high levels of plan-
ning on each of the four product variables. This is shown for each dependent vari-
able; export intensity (EI) which is the measure of overall export success and the
number of countries (NUCfY) which is a measure of the achievement of market di-
versification. The results shown in this table largely support the central premise of
this study; i.e., export planning differentially affects the success of product/market strat-
egies.

The ordinary least squares (OLS) results are presented in Table 5. These results
attest to the robustness of the OLS procedure. All tests of significance between the
logit analysis and OLS agreed except for pricing and number of countries under the
low planning condition. Furthermore, only one coefficient, indicated in Table 5, did
not agree as to the direction of the effect; and this coefficient was not significant in
either analysis.

Table 5: Ordinary Least Squares Regression Coefficients

Strategy EI
EP=O EP=1

NUCfY
EP=O EP=1

Price -.01 .05
Modification .04.53*
Quality .31 .12
Promotion .23c .68*
·indicates significance in both logit and OIS techniques
c indicates sign change between logit and OLS techniques

-.14 .16*
.11 .03
.19* .20·

-.24* -.07

Evaluation of Hypotheses
All hypotheses were evaluated with respect to the logit results shown in Table 4.

The effect of pricing strategy as proposed in Hypothesis la was not supported. Pric-
ing had no significant effect on export intensity. However, Hypothesis Ib was sup-
ported in that competitive pricing exhibited a positive effect on number of countries
(NUCfY) under high planning. In Table 5 note the difference in the effect of com-
petitive pricing between levels of planning for NUCfY. This is a clear indication of
the effectiveness of planning in a market diversification strategy. Under high plan-
ning there was a positive relationship significant in both the OIS and logistic regres-
sions. Under low planning, there was an inverse relationship that was significant in
the logistic regression.

Hypothesis 2 was accepted. Quality had a significant positive relationship only
with NUCIY and this occurred regardless of the level of planning. These results were
uniformly significant across both regressions in Tables 4 and 5. This supports the
importance of quality to a market diversification strategy.

Hypothesis 3 was also supported. Modification was significant for export inten-
sity (EI) under high export planning but was not significant for number of countries.
Again, this result was consistent in both regression procedures.



12 Journal ofBusiness Strategies Vol. 10, No.1

Hypothesis 4 was accepted. Product promotion was significantly and positively
related to EI under high planning but inversely related to NUCfY with similar results
found in both the OLS and logistic regression. This strongly indicates the importance
of market concentration to the success of promotional activities.

Discussion

The findings of this study demonstrate that the effectiveness of certain export
product/market strategies are strongly related to the firm's l~vel of export planning.
Recall that export planning is a specific type of planning. It was defmed as the de-
velopment of a distinct export plan and the systematic incorporation of that plan into
the firm's annual strategic plan. Previous studies had established a simple bivariate
relationship between export planning and. export success. This study has demonstrated
one important reason why export planning contributes to export success. Apparently,
firms that practice export planning are able to develop more complementary product/
market strategies. For example, export intensity (EI) was influenced by product modi-
fication and promotion, but only when accompanied by high levels of export planning.
Low planners were not able to execute these strategies with as much success.

Different patterns emerged for the dependent variable, number of countries
(NUCfY). To the best of our knowledge, this has only been utilized once as a de-
pendent variable in previous export success studies. NUCfY actually has a dual
impact, both as a dependent and an independent factor. 111 one sense, it represents
a firm's deliberate selection of countries; yet, the firm must also be successful in
those markets to remain in them. The results of this may be especially useful as
exporters contemplate entering new markets. NUCfY was related to competitive
pricing, promotion, and product quality. The finding of the effectiveness of com-
petitive pricing under conditions of high planning was not unexpected. Although this
hasn't been examined previously, it is contrary to suggestions in much of the ex-
port success literature. The relationship between' NUCfY and quality replicates pre-
vious studies. Apparently high product quality is associated with export success in
this context regardless of the level of planning. The inverse relationship between
NUCfY and product promotion under low export planning is also noteworthy. Pro-
motional spending appears to have limited usefulness in penetrating a large number
of markets.

The results for quality require additional comment. Only one :firm reported its
quality as zero, or "below average." There are different ways to explain this. First,
these companies are all exporters. Exporters may be expected to represent a biased
frame of above average producers. Second, the respondents may have been reluctant
to assess their products as low quality. This would reflect an inherent limitation of
self-assessed measures. The first problem would result in a 'restriction of range' while
the second could be considered 'noise' in the data. Such problems limit the ability
of statistical tests to detect a significant effect. Nevertheless, there were still clear
relative rankings among the firms and the statistical tests for quality were significant.



Spring 1993 Macy, et al.,: Relationships between Export Success 13

It would thus appear that the effect of quality is quite strong; enough to be detected
regardless of the source of the skewed response.

Although there was a significant relationship between quality and number of coun-
tries, the relationship between quality and export intensity was not significant. This
finding is counter to previous studies which have generally found a positive relation-
ship between quality and measures of export success. However, caution should be
exercised in interpreting this result. This result may be an artifact of the methodological
issues just discussed rather than the actual contribution of product quality. On the
other hand, the correlations reported in Table 2 between quality and export intensity
were significant and consistent with previous studies. It thus seems more likely that
this data is actually similar to other studies. Perhaps the data in other studies were
also skewed but were simply not examined for this problem. Perhaps a more impor-
tant reason for this lack of significance is that the control for other dimensions of
product strategy provides a more accurate representation of the true relationship.
Further research is needed to resolve this dilemma.

One suggestion for dealing with the limitation of the quality variable in future
research would be to use multiple item scales to assess product quality. Garvin [8],
for example, proposed that product quality can be captured in eight dimensions.
Another suggestion is to use at least a seven point scale. Operationalizing quality
consistent with these suggestions may help to reduce respondent resistance and broaden
the range of responses.

The analyses also revealed some important patterns regarding export planning and
the product variables. Planning was important to product modification and promotion
strategies as expected. Earlier it was argued that these product strategies require high
levels of planning because of the managerial input and process complexities involved.
With or without planning it is also clear that quality is the primary means for achiev-
ing success in a market diversification strategy.

On the other hand, promotion appears to be a relevant strategy for market pen-
etration but not market diversification. This can be seen in its differing effects of
promotion on export intensity and number of countries. Under low levels of plan-
ning, there was a significant negative relationship between product promotion and the
number of countries exported to. This is an important result. As proposed in hy-
pothesis 4, it suggests that firms pursuing geographic dispersion in their export pro-
grams are actually hindered by channeling resources into product promotion. Alter-
nately, promotion contributed to export intensity under high planning; a seemingly
contrary finding. This suggests that promotion can be effective as long the market
breadth is not large. Thus the success of a promotional strategy appears to be highly
dependent on the overall fit of the strategy.

Conclusions

This study has examined complex relationships between three crucial export vari-
ables; market selection strategy, product strategy, and export planning. It has supported



14 Journal ofBusiness Strategies Vol. 10, No.1

the premise that export planning plays an important role in the development of comple-
mentary product/market strategies. Product/market strategies that are not complemen-
tary may not be viable in an increasingly competitive global marketplace. While past
research has convincingly supported the relationship between export planning and ex-
port success, the specific contribution of export planning bad received minimal atten-
tion. We have offered an critical first step in a promising line of inquiry.

Unlike many previous studies investigating bivariate relationships replicated in other
export studies, our study has revealed the importance of planning to the effectiveness
of many strategies, most notably pricing and quality. Results of this study help to
increase our understanding of the complexity in crafting a successful export strategy
and give more detailed guidance to managers attempting to determine the steps neces-
sary to increase their export performance.

Several specific guidelines emerge that may be of particular interest to active and
would-be exporters. First, product quality and competitive pricing are important for
achieving market diversification. Market diversification is a relatively aggressive strat-
egy that must be complemented by a favorable product and price to facilitate contin-
ued entry into new markets. Second, product modification and promotion are impor-
tant for increasing exports overall. These strategies may particularly appeal to firms
trying to build market share in selected markets. Finally, export planning is an im-
portant component to export success. Defined here as the systematic incorporation of
exporting into a firm's strategic plans, export planning apparently helps to equip man-
agers to formulate effective export strategies.

This study has also shown that successful export strategies are situationally deter-
mined by many factors. Research should continue to explore the relationships of other
factors which may impact on export success. Other factors are likely to influence the
optimal strategy for companies to pursue. Such elements as firm size and specific
elements of non price competition, if researched, could help to understand other situ-
ational factors likely to effect export success.

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	Relationships Between Export Success, Export Strategies, and Export Planning