final assignment - qun tan - article

8/4/2019 Final Assignment - Qun Tan - Article

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Export market-oriented

behavior and exportperformanceThe moderating roles of competitive

intensity and technological turbulence

John W. CadoganAston Business School, Aston University, Birmingham, UK

Charles C. Cui and Erik Kwok Yeung LiManchester School of Management, UMIST, Manchester, UK

Keywords Export markets, Behaviour, Environmental regulations, Hong Kong

AbstractThis study examines the issue of how export market-oriented behaviors influence export success. Using survey data obtained from Hong Kong based manufacturing exporters, our findings suggest that export market-oriented behaviors are important predictors of severaldimensions of export performance. In particular, it appears that this behavior is most important

for exporters operating under conditions of high environmental turbulence. The exportmarket-oriented behavior export performance relationship for these firms, was generally positiveand strong. However, under conditions of low environmental turbulence, the costs of developingand implementing high levels of export market-oriented behavior may outweigh the benefitsaccrued.

IntroductionIt has been suggested that one route to superior export performance is for firmsto adopt a market orientation in their export activities (Cadogan et al., 2001).Previous studies have indicated that measures of firms market-orientedbehaviors in their export operations, export market-oriented (EMO) behaviors,are significantly correlated with various dimensions of export success(Cadogan and Diamantopoulos, 1998; Cadogan et al., 1999). However, the latterfindings were presented as part of the validation process for measures of exportmarket orientation, and the original studies did not systematically examine theexport performance related consequences of EMO behaviors. As a result, theexact nature of the relationship between firms levels of EMO behavior and

export success, is in need of clarification.The purpose of the current study is to bridge this research gap. Specifically,

we extend previous export market orientation research by investigatingwhether the degree to which EMO behavior and export success are associated,varies under differing environmental conditions. In particular, we attempt todetermine whether competitive intensity and technological turbulence in firmsexport markets are moderators of the EMO behavior export performancerelationship.

The Emerald Research Register for this journal is available at The current issue and full text archive of this journal is available at

http://www.emeraldinsight.com/researchregister http://www.emeraldinsight.com/0265-1335.htm

Exportmarket-oriented

behavior

493

International Marketing Review

Vol. 20 No. 5, 2003

pp. 493-513

q MCB UP Limited

0265-1335

DOI 10.1108/02651330310498753
http://www.emeraldinsight.com/researchregisterhttp://www.emeraldinsight.com/0265-1335.htmhttp://www.emeraldinsight.com/0265-1335.htmhttp://www.emeraldinsight.com/researchregister


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The main benefit resulting from this research is that it will provide neededempirical grounding from which to make recommendations to export managersconcerning important resource allocation decisions. Increasing marketorientation levels requires significant resource investments (Slater andNarver, 1994) and managers need to be sure that their investments will reapsuitable rewards. Yet, as things stand, recommendations to practitioners areplagued with uncertainty, simply because the performance-relatedconsequences of EMO behaviors have yet to receive rigoros empiricalattention. Specifically, there are doubts as to whether increasing levels of EMObehavior is a good thing for all exporters, all the time. Thus, marketingscholars do not know the conditions (if any) under which the benefits of EMObehavior outweigh the costs. Similarly, it is not known whether there areactually conditions under which the costs associated with increasing a firmslevel of EMO behavior, outweigh the benefits accrued. Given that it is likely

that the costs associated with behaving in a market-oriented way in a firmsexport operations may be significantly higher than those associated with beingmarket-oriented within a purely domestic setting, the generation of informationconcerning the performance consequences of EMO behavior is timely.

In what follows, we first define the key construct, EMO behavior. We thenoutline the studys theoretical background and formally state our hypotheses.The methods chosen to provide evidence on our conceptual framework aredescribed, and the key findings highlighted. We conclude with a discussion ofthe studys significance, pinpoint the research limitations and present severaldirections for future research.

What are EMO behaviors?Market orientation is usually defined as being the implementation of themarketing concept. What does this mean? Although differences abound,researchers are beginning to recognize that implementation means manythings and that market orientation is, in fact, a broad, multi-dimensionalconcept. Specifically, the domain of market orientation encapsulates deeplycultural facets, such as market-oriented values and norms (Harris, 1998), aswell as other psychologically endowed issues, such as market-orientedartifacts, stories, rituals and arrangements (Homburg and Pflesser, 2000).However, perhaps market orientations most critical manifestation is in the

form of market-oriented behaviors (Jaworski and Kohli, 1993). Indeed,Homburg and Pflesser (2000) have argued that of the all the varioussub-dimensions of market orientation, only market-oriented behaviors directlyinfluence performance: market-oriented values, norms and artifacts areconsidered to be antecedents to market-oriented behavior, and any performanceinfluence these aspects of market orientation may have is indirect and throughthe firms actual activities (for additional arguments in support of this claim,see also Jaworski and Kohli, 1996).

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Thus, the focus of this study is on the behavioral aspects of marketorientation. Fortunately, for the most part, researchers tend to agree on the corecomponents of market-oriented behavior. Specifically, market-orientedbehaviors comprise the generation of information about a firms markets, thedissemination of this information to relevant decision-makers within the firm,and development and implementation of appropriate responses to theinformation (Narver and Slater, 1990; Kohli and Jaworski, 1990).

Importantly, researchers are now beginning to recognize that it is possiblefor firms to have different levels of market orientation across their differentbusiness operations (Cadogan et al., 2001; Rose and Shoham, 2002; Uncles,2000). Consequently, if a firm has a strong market orientation in its domesticmarkets, this will not automatically be transferred into a high degree of marketorientation in its export operations (Hooley and Newcomb, 1983; Cadogan et al.,2001). Thus, care must be taken when describing the level at which market

orientation is being conceptualized. For instance, Rose and Shoham (2002) haveconceptualized market orientation at the organizational level, while recognizingthat market orientation may differ across the firms domestic and exportactivities. Cadogan et al. (1999), on the other hand, explicitly focused onanalyzing firms market-oriented behaviors in their export operations, not theirbehaviors in their domestic markets.

Therefore, given the current study objectives, and drawing on Cadoganet al.s (1999) definition, EMO behavior can be formally defined as consisting ofexport market intelligence generation, dissemination and responsive activities.The focus of a firms EMO behavior is towards the firms export markets, notits domestic markets. Indeed, it is likely that in many firms, the degree to which

activities are market-oriented in the domestic and export settings will differ(Cadogan et al., 2001). The different components of EMO behavior areinter-related, but are qualitatively distinct. Export intelligence generationconcerns the activities associated with generating information about the firmsexport customers current and future needs and wants, competition in the firmsexport markets, and other exogenous factors (such as technological andregulatory developments); export intelligence dissemination concerns theformal and informal information exchanges which allow the informationgenerated to reach appropriate export decision-makers; and export marketresponsiveness is the design and implementation of strategies and tactics inresponse to changes occurring in the firms export markets.

The export performance consequences of EMO behaviorsIn this study, we define a firms export performance as its degree of economicachievement in its export markets. Do firms with higher levels of EMObehavior outperform their less export market-oriented counterparts? There aretwo perspectives on this question.


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On the one hand, the marketing concept suggests that firms should focus onthe generation of information about their export customers needs and wants,and the provision of solutions to these in the form of goods and services. Thebetter the firm is at identifying export customers real needs and wants, andfollowing this up with matching solutions, the more successful the firms exportoperations should be. As Dickinson et al. (1986, p. 18) have noted, if buyers arerational, it follows, seemingly as a truism, that [they] will choose and come toprefer those firms whose market offerings best meets wants. Consequently, itcan be argued that higher levels of EMO behavior should result in superiorexport performance, and that firms may need to expend greater effort to developtheir EMO behaviors in order to remain competitive (Kwon and Hu, 2000).Consequently, we propose to test the following hypothesis:

H1. There is a positive relationship between exporters degree ofmarket-oriented behavior in their export operations and their exportsuccess.

On the other hand, there are also arguments to suggest that behaving in amarket-oriented way in a firms foreign markets may not be beneficial for allexporters. Specifically, scholars have argued that aspects of the environmentmay moderate the market orientation performance relationship. We focus ontwo such potential environmental moderators; competitive intensity andtechnological turbulence.

Looking at competition in firms exporting operations, although theirresearch was not specific to firms EMO activities, Jaworski and Kohli (1993,p. 57) argued that a market orientation may be less important under conditions

of low competitive intensity: in the absence of competition, an organizationmay perform well, even if it is not very market-oriented, because customers arestuck with the organizations products and services. Under morecompetitive conditions, however, less-market-oriented firms are likely to seetheir performance impaired as customers switch to more market-orientedcompetitors. Thus, it is possible that a market orientation is not alwaysdesirable, given that its development and maintenance is highly resourceintensive (Slater and Narver, 1994), and that the rewards from beingmarket-oriented may not always accrue (Jaworski and Kohli, 1993).

The logic of Jaworski and Kohlis (1993) argument can also be applied to the

exporting context. Indeed, in firms exporting operations, market orientationsimportance may be even more severely limited. Specifically, it has been arguedthat, relative to firms domestic operations, behaving in a market-orientedfashion in export markets is more difficult and, as a result, the resources requiredin the development and maintenance of EMO activities are significantly higher(e.g. Cadogan and Diamantopoulos, 1995; Kwon and Hu, 2000). Consequently, itseems likely that EMO behaviors will be most important under conditions ofhigh competitive intensity in firms export markets. Here, firms that do not

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may be counterproductive, since these resource could be better invested inR&D or improving operations and production efficiency. Indeed, as Jaworskiet al. (2000) have noted, the success of firms operating in technologicallyturbulent markets often hinges on these firms ability to better deliver value tocustomers through more effective supply-side operations and costmanagement. The point that Kohli and Jaworski (1990) were making was notthat market orientation is not a good thing for firms operating intechnologically turbulent markets. Rather, they were saying thatmarket-oriented behavior may not be as important as it is for firmsoperating in markets which are technologically stable. In the latter case, thereare relatively few opportunities for changing the market structure ormanipulating market behavior (Jaworski et al., 2000), and consequently, thecompetitive battleground often focuses on changing customers perceptions ofthe focal firms offerings versus the competitors offerings on attributes known

to be considered important by customers (Jaworski et al., 2000, p. 47). Thus, wealso argue the following hypothesis:

H3. The relationship between exporters levels of market-oriented behaviorin their exporting activities and their export performance is moderatedby the technological turbulence in the firms exporting environments:specifically, under conditions of low technological turbulence, therelationship is strong and positive; as technological turbulence becomesgreater, the positive relationship becomes progressively weaker.

MethodologySampling issuesWe used a mail survey to generate data in order to test the hypotheses. Arandom sample of 800 manufacturing firms with 50 or more employees wasselected from the Hong Kong Trade and Development Council internetdatabase system. The sample included businesses from a wide range ofindustrial sectors, including textiles and clothing, machinery, electronics,pharmaceuticals, toys and games, watches and clocks, and jewelry. In order toobtain the responses, we first contacted all the firms in the sample by telephonein order to determine eligibility and then elicit cooperation in the study. Theexport manager in those firms agreeing to participate was mailed a

questionnaire, together with a cover letter and pre-paid reply envelope. Aweek after the initial posting, follow-up telephone calls were undertaken toincrease the response rate. Two weeks after this, a follow-up telephone call wasmade to elicit reasons for non-response. In total, 213 firms were deemedineligible (e.g. the firm had never exported, the firm had stopped exporting, thefirm was listed more than once), and a further 278 declined to participate. Of the309 questionnaires mailed out, a total of 137 completed questionnaires werereturned, corresponding to a response rate of 23 percent (i.e. 137/587). Our

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telephone analysis indicated that the two main reasons for non-participationand non-response were:

(1) company policies restricting the giving of information to external

parties; and(2) time constraints.

MeasurementWe used Cadogan et al.s (2001) shortened version of the Cadogan et al. (1999)measures of EMO activities to capture the degree to which each firm behaves ina market-oriented way in its export operations.[1] Incorporated in theinstrument are items capturing firms levels of export market intelligencegeneration, export market intelligence dissemination and export marketresponsiveness. An additional item from Cadogan et al.s (1999) original scalewas included in the responsiveness measure.

Two dimensions of environmental turbulence were also included in thestudy. Specifically, we used Cadogan et al.s (2001) adaptations of Jaworski andKohlis (1993) measures of competitive intensity and technological turbulence.Cadogan et al. (2001) modified the original instruments so they reflect changestaking place in firms export markets, not changes taking place in firmsdomestic markets. Consequently, the measures of export environmentalturbulence capture aspects of change and unpredictability in competitiveactivities and competitive intensity, and opportunities and threats arising fromchanges in the firms technological environment.

Finally, following the recommendations of Cavusgil and Zou (1994) andMatthyssens and Pauwels (1996), among others, we measured three aspects offirms economic achievement in their export markets: export sales efficiency,export sales growth and export profits. Our export sales efficiencyperformance measure contained two items:

(1) the absolute average export sales turnover per company employee; and

(2) the absolute average export sales turnover per export destinationcountry.

Our export growth performance measure contained two items:

(1) the absolute annual percentage growth in export sales over the previousthree years; and

(2) the firms average annual export sales growth compared to the industryaverage, measured on a ten-point scale , from 1 poor to10 outstanding.

Finally, a single item was used to capture export profit performance.Specifically, respondents were asked to indicate how profitable their exportoperations had been over the last financial year on a ten-point scale, from1 very unprofitable to 10 very profitable.


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Measurement assessment and constructionIn order to comment on the validity and reliability of the measures used, allscales were examined with confirmatory factor analysis (CFA) using LISREL8.30 (Joreskog and Sorbom, 1996). In order to avoid violating minimum samplesize to parameter ratios, the scales were analyzed in sets. The first set containedthe three EMO behavior scales and three items were eliminated to ensureadequate model fit.[2] The second set contained the two export environmentalturbulence scales. The third set contained the export performance measures.Since the export profit performance latent variable contained a single itemonly, the latters error variance was set at [(1 - a) s2], where a scalereliability (and was assumed to be 0.90), and s item standard deviation.Table I provides the measurement model fit indexes for each of the three CFAanalyses. As can be seen, the fit indexes obtained for the measurement modelswere good. The Appendix provides a complete listing of all items used for

model testing.The final measurement results for the scales together with a correlationmatrix are shown in Table II. Overall, the results indicate that the scalesperform well. Specifically, the CFA fit indexes returned indicate that thespecified measurement structures fit the data acceptably and that the scales areunidimensional. Furthermore, the composite reliabilities are all above therecommended threshold of 0.60 and the average variance extracted (AVE)scores are all above the recommended threshold of 0.50, except for thecompetitive intensity measure, which returned an AVE of 0.44 (Bagozzi and Yi,1988).

AnalysisModel testing was undertaking using LISREL 8.30. In preparation for theanalysis, three procedures were undertaken.

Model x2 (d.f.) RMSEA GFI NNFI CFI

Measurement (set 1) 53.97 (51) 0.024 0.916 0.979 0.984Measurement (set 2) 13.89 (8)a 0.087 0.955 0.936 0.966Measurement (set 3) 3.98 (5) 0.000 0.984 1.026 1.000Main effects 3.03 (3) 0.010 0.990 0.990 0.998

Initial interaction-effects 3.90 (3) 0.055 0.990 0.896 0.989Final interaction-effects 0.03 (2) 0.000 1.000 1.317 1.000

Notes: Measurement (set 1): export market intelligence generation, dissemination andresponsiveness; Measurement (set 2): export market competitive intensity, and export markettechnological turbulence; Measurement (set 3): export sales efficiency performance, exportgrowth performance, export profit performance. RMSEARoot mean square error ofapproximation; GFI Goodness of fit index; NNFI N onnorm ed fit index;CFI Comparative fit index; a: significant at p , 0.10

Table I.Fit measuresfor the models

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Constructs

Mean

Standard

deviation

Composite

reliability

Averagevariance

extracted

1

2

3

4

5

6

7

8

1.Exportmarketintelligence

generation

4.63a

0.94

0.75

0.50

1.00

2.Exportmarketintelligence

dissemination

5.02a

0.88

0.83

0.50

0.191.00

3.Exportmarketresponsiveness

5.34a

0.89

0.83

0.55

0.280.12

1.00

4.Exportmarketcompetitive

intensity

14.7

8b

2.70

0.70

0.44

0.270.13

0.341.00

5.Exportmarkettechnological

turbulence

14.7

7b

2.99

0.84

0.65

0.120.30

0.120.291.00

6.Exportsalesefficienc

y

performance

0.03c

1.77

0.73

0.59

0.130.12-0.2

10.120.031.00

7.Exportgrowthperfor

mance

0.09c

1.72

0.77

0.64

0.140.22

0.270.220.220.051.00

8.Exportprofitperform

ance

0.06c

1.14

na

na

-0.0

20.09

0.110.130.140.020.221.00

Notes:a

averagescore

acrosstheitems(onaseven-points

cale);b

sumofitemscores(onasev

en-pointscale);cscaleitemsweres

tandardized

priortoanalysisandscaleconstruction;na:compositereliabilityandaveragevarianceextractedarenotapplicableforthesingleitemmeasure

Table II.Measurement

information andcorrelation matrix


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First, single scores were created for each of the latent variables of interest. Theuse of single indicants within interaction-based structural models to reducemodel complexity has been recommended in the literature (e.g. Jaccard andWan, 1996). Thus, a single score was obtained for EMO behavior by summingacross the export market intelligence generation, dissemination andresponsiveness scales (Cadogan et al., 1999, 2001). A similar process wasundertaken for export environmental turbulence, whereby single scores werecreated for the competitor and technological environments respectively, and forexport performance, whereby single scores for export sales efficiencyperformance and export growth performance were computed. The exportprofit performance measure was already measured using a single item.

Second, to reduce possible problems associated with multi-collinearityarising from the introduction of interaction terms in the structural model, thesingle indicants for the EMO behavior scale, export market competitive

intensity scale, and the export market technological turbulence scale, were allmean-centered (Ping, 1994).

Third, interaction terms were created. Specifically, the observedmean-centered EMO behavior score was multiplied by the mean-centeredcompetitive intensity score. The resulting interaction term is simply referred toas the competition interaction term. Similarly, using the mean-centered EMObehavior and the technological turbulence scores, a technology interactionterm was created.

Hypothesis testing procedures then followed Pings (1995) guidelines for theevaluation of structural models with interaction terms. Thus, a main effectsonly structural model was estimated first, with the error variance of each latent

variables indicator set at [(1 - a) s2]. Here, the EMO behavior and the twoenvironmental latent variables were modeled as direct antecedents to all threeexport performance measures (the interaction terms were excluded from thismain effects model). Looking at Table I, it can be seen that the model fit thedata well. Using the error variance and factor loading estimates obtained in themain effects model, together with Pings (1995) equations, the loadings anderror variances of the interaction terms were calculated.

An initial interaction-effects model was then estimated, in which theinteraction terms were included. Here, the latters estimated loadings and errorvariances were specified as constants in the model, and the interaction latent

variables were modeled as antecedents to the three performance latentvariables. The fit for the initial interaction-effects model was acceptable, as canbe seen in Table I. However, the NNFI was below the recommended thresholdvalue of 0.90. In order to improve the model fit, an examination of themodification indexes was undertaken. As a result, it could be seen that theexclusion of a significant path from export growth performance to exportprofit performance explained the relatively low fit index. Given that theinclusion of this path in the model makes good sense from a theoretical

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perspective, the modified model was re-specified accordingly (NB: the inclusionof this path did not substantively alter the other path estimates). As can be seenin Table I, the final interaction-effects model returned excellent model fit, withall fit indexes showing substantial improvement, and the NNFI returning avalue well in excess of the recommended threshold of 0.90. Furthermore, thedecrease in Chi-Square on moving from the initial interaction effects model tothe final interaction effects model was significant at p 0.05. A diagramaticrepresentation of the final interaction-effects model is shown in Figure 1, andTable III provides the standardized and unstandardized parameter estimatesfor the this model.

ResultsH1. Positive relationship between EMO behavior and export success

Looking at Table III, it can be seen that H1 receives only partial support.Specifically, only one of the three main effects from EMO behavior to the exportperformance measures was significant: EMO behavior was a significantpredictor of export growth performance (g = 0.31, p, 0.01), but did not predictexport sales efficiency performance or export profit performance. However, itcan also be seen that there is an indirect linkage between EMO behavior andexport profit performance, since the path from growth to profits was alsosignificant (b 0.25, p , 0.05). As a result of the above, the findings provideclear support for the notion that EMO behavior is an important determinant ofexport success in terms of growth and profits.

Figure 1.Final interaction-effects

model


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Dependentvariables

R2

Independ

entvariables

Unstandard

izedparameter

estimates

Standardized

parameter

estimates

t-values

Exportsalesefficiency

performance

0.10

EMObeh

avior

20.02

2

0.02

2

0.19

Competitiveenvironment

0.11

0.18

1.52*

Technolo

gicalenvironment

20.01

2

0.02

2

0.13

Competitioninteractionterm

0.11

0.36

2.78***

Technolo

gyinteractionterm

20.06

2

0.25

2

1.89**

Exportgrowthperform

ance

0.24

EMObeh

avior

0.30

0.31

2.90***


0.06

0.10

0.89

Technolo

gicalenvironment

0.08

0.14

1.41*


0.03

0.11

0.92

Technolo

gyinteractionterm

0.06

0.25

2.08**

Exportprofitperforma

nce

0.08

EMObeh

avior

20.03

2

0.06

2

0.45


0.03

0.08

0.64

Technolo

gicalenvironment

0.03

0.07

0.64


2

0.01

2

0.05

2

0.41

Technolo

gyinteractionterm

2

0.01

2

0.06

2

0.47

Exportgrowthperformance

0.15

0.25

2.01**

Notes:a

Unstandardiz

edpathestimatesareusedforinterpretingtheresultsofstructuralmodelswithinteractionterms(Jaccar

dandWan,

1996);*:significantatp,

0.10(one-tailed);**:significant

atp,

0.05(one-tailed);***:signific

antatp,

0.01(one-tailed).

Table III.Unstandardizeda andstandardized pathestimates for the finalstructural model

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H2. Competitive intensity as moderatorSome support was also provided in terms of H2. Specifically, for export salesefficiency performance, the competition interaction term returned a significantpath coefficient (g 0.36, p , 0.01). Using the partial derivatives approach(Greenley, 1995), and knowing that the competitive intensity scale could varybetween 3 (very stable) and 21 (extremely turbulent), the competitive exportenvironments influence on the relationship between EMO behavior and exportsales efficiency performance could be assessed. As a result, the value of thecompetitive intensity measure at which EMO behavior is estimated to have norelationship with export sales efficiency (i.e. the inflexion point for thecompetition interaction term) is 14.78. The result supports the notion that, forfirms operating in environments where their competitive intensity score is lessthan the inflexion point, the relationship between EMO behavior and exportsales efficiency is negative. Only as competitive intensity increases above a

value of 14.78 does the relationship between EMO behavior and export salesefficiency become positive. This finding provides some support for the notionthat EMO behavior is most important under turbulent competitive conditionsin firms export operations. However, this finding was not repeated for eitherexport growth performance or export profit performance, since the competitioninteraction terms were non-significant.

H3. Technological intensity as moderatorWith export sales efficiency performance as dependent variable, the technologyinteraction term also returned a significant co-efficient (g -0.25, p , 0.05).This time, an inflexion point value of 14.77 was returned, on a scale varyingfrom 3 (very stable to) to 21 (extremely turbulent). Here, for firms operating intechnological environments that score less than the inflexion value, therelationship between EMO behavior and export sales efficiency performancewas positive. However, as technological environmental turbulence increasedabove the inflexion value, the relationship between EMO behavior and exportsales efficiency performance was negative. Consequently, this finding providessupport for H3.

Regarding export growth performance, H3 was refuted since the technologyinteraction term returned a significant path coefficient (g 0.25, p , 0.05).This time, the inflexion point occurred at a value of 13.57, and the parameter

estimate indicates that for firms operating in technological environments lessturbulent than the inflexion value, the relationship between EMO behavior andexport growth performance was negative. Only those firms operating in exportmarkets which are more turbulent than the inflexion point returned a positiverelationship between EMO behavior and export growth performance.

Finally, no support was found for H3 when looking at the export profitperformance measure, since the technology interaction term returned anon-significant path coefficient.


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DiscussionThe findings from this study are interesting from a number of perspectives.Looking at the main effects only, EMO behavior was not associated with exportsales efficiency performance. Given that the sales efficiency measure was basedon efficiency ratios (i.e. export sales per employee; export sales per countryexported to), it can be concluded that EMO activity does not decrease theamount of effort required to bring about sales in export markets. EMOactivities require considerable resource inputs themselves. However, EMObehaviors were strong predictors of export sales growth. Thus, while behavingin an export market-oriented fashion in firms export operations might not leadto increases in the efficiency with which sales are made (i.e. increases inresource inputs are required to achieve and maintain high levels of EMObehavior), it does appear to lead to increased sales per se. Furthermore, EMObehaviors also have an indirect influence on export profit performance via

export sales growth.Regarding the moderating effect of competitive intensity, a single effect wasfound in support of H2. Thus, under conditions of low competitive intensity,EMO behavior was negatively related to export sales efficiency performance,but positively associated with export sales efficiency performance underconditions of high competitive intensity. Figure 2 demonstrates this finding.Thus, under conditions of high competitive rivalry in export markets, salesefficiency decreases as EMO behavior levels decrease, indicating that EMObehaviors are a necessity under highly competitive conditions. However, whencompetitive conditions are less hostile, and competition is weak, exporters canperhaps get away with low levels of EMO behavior in order to sell their

products. Indeed, since customers have little choice under these conditions,higher levels of EMO behavior may actually represent an unnecessary drain onresources which reduces the efficiency with which sales are achieved.

This latter finding appears to indicate that, from an efficiency-basedperspective, and in line with Jaworski and Kohlis (1993) reasoning, the returnsaccruing from having high levels of EMO behavior under low levels ofcompetition are not as great as the returns accruing from having high levels ofEMO behavior under high levels of competition. However, the findings do notcompletely support H2, since the competition interaction term did not return asignificant coefficient for either export growth or export profits. EMO

Figure 2.Findings for H2.Competitive intensity

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behaviors, therefore, while apparently reducing sales efficiency underconditions of low competitive intensity, do not appear to reduce actual salesgrowth, or the total profits accruing from export sales. This finding also makessense since, by performing EMO behaviors, firms are better positioned to:

. respond to changing customer needs and wants;

. develop competitive strategies;

. identify new market opportunities; and

. be able to match the firms marketing capabilities with the conditionsfacing the firm.

This logic holds regardless of whether competition is weak or intense.The findings for the moderating effect of technological turbulence in firms

export markets (H3 ) were a little more controversial. First, the findings withexport sales efficiency performance appear to provide some support for H3, in

that EMO behaviors were positively related to export sales efficiencyperformance under conditions of low technological turbulence. Unexpectedly,under conditions of high technological turbulence, rather than having a weakpositive relationship, EMO behavior was negatively related to sales efficiencyperformance (see Figure 3). At first glance, this appears to reinforce Jaworskiand Kohlis (1993) contention that under conditions of high technologicalturbulence, firms may find that market orientation becomes less beneficial.However, this result only pertains to the efficiency-based measures of exportperformance not the sales growth measure. Here, refuting H3, sales growth isnegatively related to EMO behavior under conditions of low technologicalturbulence and positively related to EMO behavior under conditions of hightechnological turbulence (Figure 3).

It can be argued that these findings are a function of the fact that EMObehaviors add a variable cost to the firms activities (e.g. developing andimplementing new technologies, new product development, etc.), and that this

Figure 3.Findings for H3.

Technological intensity


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variable cost increases as a function of increased levels of technologicalturbulence. Consequently, increased technological turbulence decreases theefficiency with which sales are achieved by market-oriented firms. However, itis necessary for firms to accept these reduced efficiencies since, under highlevels of technological turbulence, EMO behavior appears to be able tostimulate customer demand, and is thus an important direct driver of salesgrowth. In turn, since export growth is an antecedent to export profits, thosefirms wishing to improve their profits via increased export sales will need toensure that their levels of EMO behaviors are sufficiently high.

However, under conditions of technological stability, EMO behavior ispositively related to sales efficiency and negatively related to sales growth.Possibly, technological stability in the environment may actually reduce thevariables costs associated with behaving in a market-oriented way in firmsexport markets. Specifically, in a fairly predictable technological environment,

the types of market-oriented activities required of firms also become fairlypredictable and formalized and this, in turn, is likely to increase the efficiencyof those activities (Ruekert et al., 1985). Hence, sales efficiency increases underconditions of low technological turbulence.

By the same logic, as the technological environment becomes more stableand less prone to change, the need to generate, disseminate and respond toinformation about the technological environment, decreases. Consequently,some of those resources that help maintain EMO behavior levels could perhapsbe better spent by investing in market driving activities, such as research intoreducing production costs, more efficient distribution systems, productinnovations, new product designs, identifying radically new technologies, and

the like (Jaworski et al., 2000). For example, by investing in more efficientdistribution systems, or by undertaking operation and production research,production, operations and distribution costs can be lowered. These lower costscan be used to spur sales growth through reduced prices or by increasing valuein other ways. In short, under high levels of technological stability, high levelsof EMO behavior appear to introduce an opportunity cost such that salesgrowth and profits are compromised.

Overall, then, the findings of this study provide strong support for theimportance of EMO behaviors to export performance. Some direct effects fromEMO behavior were observed, as well as several non-linear effects. What canbe concluded is that the findings indicate that EMO behaviors are perhaps

most important under conditions of high environmental turbulence, andbecome less important when changes occurring in the environment are limited.

Conclusions and future researchThis study asked two key questions:

(1) Does EMO behavior have a direct influence on export success?

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(2) Does the export environment moderate in some way the EMO behavior export performance relationship?

Our results have provided support for our hypotheses; a direct affect from

EMO behavior to export sales growth was observed, and moderator effectswere also returned for both competitive intensity and technological turbulence.In general, the findings indicate that export sales growth and (indirectly) exportprofits, are facilitated by exporters levels of EMO behavior. These effectsvaried depending on the degree of turbulence in the technological environment.EMO behavior may have a positive influence on export growth and sales underconditions of high technological turbulence, but the costs of EMO behaviormay outweigh the benefits accrued when technological change is rare.

The findings also seem to demonstrate that an efficiency based measure ofexport sales efficiency performance was not directly influenced by EMObehavior. Instead, it appears that firms with high levels of EMO behaviors have

higher levels of export sales per employee and export sales per exportdestination country under conditions of high competitive intensity. Thus, thepayback from increasing levels of market orientation becomes greater when thecompetitive environment is more intense.

Furthermore, under conditions of low technological turbulence, EMObehavior was also positively related to the efficiency with which sales aremade. However, increased efficiency appears to come at a price, since salesgrowth and profits appeared to be negatively affected by higher investments inEMO activities in technologically turbulence markets: perhaps investments inother activities would be more beneficial for growth and profits.

An important implication of this study for academics and export managersis that there are likely to be many export business contexts in which high levelsof EMO behavior are critical. However, our findings also suggest thatacademics should be aware that it is possible that higher levels of EMObehavior are not always necessary. Indeed, approximately half of the currentsample operated in technological and competitive business contexts where itseems that the costs of developing and maintaining EMO behavior may exceedthe associated benefits (the term costs is a broad concept, and includesfinancial expenditures and resource investments, as well as opportunity costs).While this conclusion may seem somewhat controversial, it is a logicaldevelopment from the empirical findings reported here, and finds support in a

growing body of market orientation research undertaken within the nonexporting literature (e.g. Greenley, 1995; Kumar et al., 1998; Appiah-Adu, 1998;Gray et al., 1999).

Of course, the findings reported here must be interpreted in the light ofthe studys limitations. First, given the cross-sectional nature of theresearch, we cannot draw firm conclusions regarding causal linkagesbetween variables. We can only compare the logic of the theoreticalarguments with the patterns of association between variables. A


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longitudinal study to explore the issues raised in this paper would providemore conclusive evidence in this respect. The study also used a sample ofexporting companies based in Hong Kong. In order to explore whethercountry of origin effects play a role in determining the effects observed inthis study, multi-country studies are also warranted.

There are also several directions for future research which may provefruitful. For example, future researchers may find it productive to investigatewhether there are other important moderators of the EMO behavior exportperformance relationship. Examples could include factors external to the firm(such as changing socioeconomic factors within export destination countries orthe latters degree of political instability), as well as factors internal to the firm(such as co-ordination capabilities, political acceptance of exporting, exportdependence or organizational structure issues).

It is also the case that EMO behaviors may influence non-economic as well

as economic performance. One avenue of research to pursue in this context is todetermine whether EMO behaviors influence the success of the firms chosenstrategies in their export markets. For instance, do EMO behaviors influencethe success of firms adaptation or standardization strategies[3]?

There is also a need to understand how firms market orientation behaviorsin both their export markets and domestic markets, interact. Why do somefirms fail to carry the market orientation they have develop in the domesticcontext into their exporting operations? Are these firms behaving in a rationalway, or should they be attempting to have consistent levels of market-orientedbehavior in all their activities? Clearly, answers to issues such as these mayhave important resource allocation implications.

Finally, investigators could examine market orientation in a morefine-grained way. For example, should market orientation be viewed as a setof activities that can and do vary market-by-market (Uncles, 2000)? Ifmarket-oriented behavior does vary on a market-by-market basis, how cansuch differences be explained, particularly in light of the recently advocatedmarket-oriented culture perspective of the firm (Harris, 1998; Homburg andPflesser, 2000)? Perhaps, most importantly, what are the performanceimplications for firms with different profiles of market orientation acrosstheir business portfolios, and are there any heuristics which can be identified tohelp businesses organize their market-oriented behaviors in the mostappropriate way?

Notes

1. In response to a reviewers question, we used Cadogan et al.s (2001) measure because thereare currently no valid alternative measures available of firms market-oriented behaviors intheir export operations.

2. Two items were eliminated from the generation scale, leaving a three-item measure, and oneitem was eliminated from the responsiveness scale, leaving a four-item measure.

3. We thank an anonymous reviewer for suggesting this line of research.

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References

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Cadogan, J.W. and Diamantopoulos, A. (1995), Narver and Slater, Kohli and Jaworski and themarket orientation construct: integration and internationalization, Journal of Strategic

Marketing, Vol. 3 No. 1, pp. 41-60.

Cadogan, J.W. and Diamantopoulos, A. (1998), Measuring market orientation in an exportcontext: some preliminary evidence, in Buckley, P.J., Burton, F. and Mirza, H. (Eds), TheStrategy and Organization of International Business, Macmillan, London, pp. 75-88.

Cadogan, J.W., Diamantopoulos, A. and de Mortanges, C.P. (1999), Developing a measure ofexport market orientation: scale construction and cross-cultural validation, Journal of

International Business Studies, Vol. 30 No. 4, pp. 689-707.

Cadogan, J.W., Paul, N., Salminen, R.T., Puumalainen, K. and Sundqvist, S. (2001), Key

antecedents to export market-oriented behaviors: a cross-national empiricalexamination, International Journal of Research in Marketing, Vol. 18 No. 3, pp. 261-82.

Cavusgil, S.T. and Zou, S. (1994), Marketing strategy-performance relationship: an investigationof the empirical link in export market ventures, Journal of Marketing, Vol. 56, January,pp. 1-21.

Dickinson, R., Herbst, A. and OShaughnessy, J. (1986), Marketing concept and customerorientation, European Journal of Marketing, Vol. 20 No. 10, pp. 18-23.

Gray, B.J., Greenley, G.E., Matear, S.M. and Matheson, P.K. (1999), Thriving on turbulence, Journal of Market Focused Management, Vol. 4 No. 3, pp. 231-57.

Greenley, G.E. (1995), Market orientation and company performance: empirical evidence fromUK companies, British Journal of Management, Vol. 6, pp. 1-13.

Harris, L.C. (1998), Cultural domination: the key to market-oriented culture?, European Journalof Marketing, Vol. 32 No. 3/4, pp. 354-73.

Homburg, C. and Pflesser, C. (2000), A multiple-layer model of market-oriented organizationalculture: measurement issues and performance outcomes, Journal of Marketing Research,Vol. 37 November, pp. 449-62.

Hooley, G.J. and Newcomb, J.R. (1983), Ailing British exports: symptoms, causes and cures, TheQuarterly Review of Marketing, Vol. 8 No. 4, pp. 15-22.

Jaccard, J. and Wan, C.K. (1996), LISREL Approaches to Interaction Effects in MultipleRegression, Sage, Thousand Oaks, CA.

Jaworski, B.J. and Kohli, A.K. (1993), Market orientation: antecedents and consequences,

Journal of Marketing, Vol. 57, July, pp. 53-70.

Jaworski, B.J. and Kohli, A.K. (1996), Market orientation: review, refinement, roadmap, Journalof Market Focused Management, Vol. 1 No. 2, pp. 119-35.

Jaworski, B.J., Kohli, A.K. and Sahay, A. (2000), Market-driven versus driving markets, Journalof the Academy of Marketing Science, Vol. 28, Winter, pp. 45-54.

Joreskog, K. and Sorbom, D. (1996), LISREL 8: Users Reference Guide, Scientific SoftwareInternational, Chicago, IL.

Kohli, A.K. and Jaworski, B.J. (1990), Market orientation: the construct, research propositions,and managerial implications, Journal of Marketing, Vol. 54, April, pp. 1-18.


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Kumar, K., Subramanian, R. and Yauger, C. (1998), Examining the market-orientationperformance relationship: a context specific study, Journal of Management, Vol. 24 No. 2,pp. 201-33.

Kwon, Y.C. and Hu, M.Y. (2000), Market orientation among small Korean exporters,

International Business Review, Vol. 9, pp. 61-75.Matthyssens, P. and Pauwels, P. (1996), Assessing export performance measurement,

Advances in International Marketing, Vol. 8, pp. 85-114.

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Ping, R.A. Jr. (1994), Does satisfaction moderate the association between alternativeattractiveness and exit intention in a marketing channel, Journal of the Academy of

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Rose, G.M. and Shoham, A. (2002), Export performance and market orientation: establishing anempirical link, Journal of Business Research, Vol. 55 No. 3, pp. 217-25.

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Further reading

Thirkell, P.C. and Dau, R. (1998), Export performance: success determinants for New Zealandmanufacturing exporters, European Journal of Marketing, Vol. 32 No. 9/10, pp. 813-29.

Appendix. Scale itemsExport market intelligence generation (seven-point scale with very strongly disagree/very stronglyagree anchors).

(1) In this company, we generate a lot of information concerning trends (e.g. regulations,technological developments, political, economic) in our export markets.

(2) We periodically review the likely effect of changes in our export environment (e.g.regulation, technology).

(3) We generate a lot of information in order to understand the forces which influence our

overseas customers needs and preferences.Export market intelligence dissemination (seven-point scale with very strongly disagree/very

strongly agree anchors).

(1) Too much information concerning our export competitors is discarded before it reachesdecision makersR.

(2) Information which can influence the way we serve our export customers takes forever toreach export personnelR.

(3) Important information about our export customers is often lost in the systemR.

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(4) Information about our export competitors activities often reaches relevant personnel toolate to be of any useR.

(5) Important information concerning export market trends (regulation, technology) is oftendiscarded as it makes its way along the communication chainR.

Export market responsiveness (seven-point scale with very strongly disagree/very strongly agreeanchors).

(1) If a major competitor were to launch an intensive campaign targeted at our foreigncustomers, we would implement a response immediately.

(2) We are quick to respond to significant changes in our competitors price structures inforeign markets.

(3) We are quick to respond to important changes in our export business environment (e.g.regulation, technology, economy).

(4) We rapidly respond to competitive actions that threaten us in our export markets.

Competitive turbulence in the firms export markets (seven-point scale with not at all/to anextreme extent anchors).

(1) In our export markets, there are many promotion wars.

(2) One hears of a new competitive move in our export markets almost every day.

(3) In our foreign markets, aggressive selling is the norm.

Technological turbulence in firms export markets (seven-point scale with not at all/to an extremeextentanchors). Regarding the impact of technology in your export business . . .

(1) The technology in our industry is changing rapidly.

(2) Technological changes provide big opportunities in our industry.

(3) A large number of new product ideas have been made possible through technologicalbreakthroughs in our industry.

Export sales efficiency performance.

(1) Export sales per company employee (the ratio of the firms total annual export sales tothe total number of company employees).

(2) Export sales per country exported to (the ratio of the firms total annual export sales tothe total number of countries the firm exports to).

Export sales growth performance.

(1) Over the last three years, average annual percentage growth/decline in export sales(a percentage score).

(2) How does your average annual export sales growth/decline compare to the industryaverage? (10-point scale with poor/outstandinganchors).

Export profit performance.

(1) Overall, how profitable has exporting been over the last financial year? (10-point scalewith very unprofitable/very profitable anchors).

Note: R reverse coded.


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