Increasing the Efficiency of National Export Promotion Programs: The Case of Norwegian Exporters

Abstract

Encouraging exports is a primary concern of most governments. In the United States, the Department of Commerce has many programs devoted to the development and nurturing of beginning exporters. Substantial resources are devoted to export promotion programs designed to increase the propensity of small companies to export. This approach to the stimulation of export sales is similar in many countries. However, while useful politically throwing monetary resources at a problem can be very wasteful. In the era of government budgetary problems and fiscal frugality, program accountability is part of every politician's and administrator's agenda. In the export promotions sector, the need to spend money wisely has emerged as a key concern. Traditionally, small and medium-sized firms have played an important role in local economies. However, the role of small and medium-sized firms in international trade is changing. A report by Birch (1988) noted that U.S. firms most likely to be exporters are small, not large firms. More than half of all exporters have fewer than 100 employees. The purpose of this study is to begin developing a preliminary screening device to help government agencies effectively allocate scarce time and financial resources for support and assistance given to exporters. Previous models of export behavior and success have tested the statistical significance of key variables but do not address this task. In this article, a regression approach is used to assess the relative importance of several variables that have been shown in prior studies to be related to export success. Based on this regression analysis, a weighted checklist is developed to assess a firm's potential for export success. This screening device can help predict how successful firms are likely to be in their export efforts. We do not intend for this model to be the final or only model for screening export candidates. However, it is useful in segmenting candidates in the initial screening process. Literature Review Academic research has identified several aspects of the firm which influence export strategy. According to Bilkey (1978), Miesenbock (1988), and Aaby and Slater (1989), the majority of the research has been focused on internal and external influences on the export decision process. Internal Influences Internal influences to export strategy are characterized by variables over which the firm has control. Many studies have examined the impact of internal influences on the export behavior of firms. Examples include Bilkey (1978), Cavusgil and Nevin (1981), Cavusgil (1984), and Cavusgil and Naor (1987). The latter study examined constructs such as the organization's commitment to exporting, motivation of the firm to export, management capabilities and perceptions of exporting, firm size, and product advantages. We examine each of these constructs in turn. Commitment of. the Organization. Commitment to exporting has traditionally been of two forms - financial and personnel. To understand the commitment level of the firm, researchers have examined the firm's behavior in gathering foreign market information, hiring and training additional staff, making international visits, learning about exporting procedures and documentation, and financing sales (Cavusgil and Naor 1987). Although research has found that commitment is not always a clearly significant factor in helping to achieve export success, several studies have found that the lack of investment in an infrastructure that supports exporting is a deterrent to achieving export success (Cavusgil and Naor 1987; Cavusgil and Nevin 1981). Other researchers have looked at the firm's strategy regarding its marketing mix in an effort to determine the firm's commitment to export. Jain (1989) emphasized that it is necessary to modify a product in order to sell it successfully overseas. Cavusgil and Kaynak (1982) suggested that strategies suitable for modification included extension of credit, promotion directed at distributors or end-users, and channels of distribution. …

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