Research Proposal

RESEARCH PROPOSAL DOCUMENT Student Name:

Tuan LE HOANG

Student Number:

TIBD2013H019

Course:

MIB Program

Subject:

Research Methods

Submitted To: Date:

December 26, 2013

Title: “Export Barriers: The impacts of export barriers to enterprises”

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Research Proposal Table of Contents

1.

Authenticity Declaration Page .............................................................................. Page 3

2.

Research Rationale................................................................................................ Page 4

2.1. Purpose of Study ................................................................................................... Page 4 2.2. Personal Rational .................................................................................................. Page 4 2.3. Justification of the Study ...................................................................................... Page 4 3.

Literature Review.................................................................................................. Page 5

3.1. Introduction ........................................................................................................... Page 5 3.2. Definition of Export Barriers ................................................................................ Page 7 3.3. Literature Review Conclusion ............................................................................ Page 12 3.4. Literature Map of key Finding ............................................................................ Page 12 4.

Research Problem Leading to Research Objectives ........................................... Page 14

5.

Proposed Research Methods ............................................................................... Page 15

6.

References ........................................................................................................... Page 16

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Research Proposal 1. Authenticity Declaration

I… certify that all material contained in this report was generated by me as part of my independent assignment. I certify that the material, other than where it has been referenced directly, is my own work entirely and has not been copied from electronic or physical or any other means from any other authors work.

Signed:

Date: December 26, 2013

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Research Proposal

2.

Research Rationale

2.1. Purpose of Study The purpose of this study is to understand and also provide useful knowledge about the export barriers and the impact of it’s to enterprises. Although it’s a big problem to any enterprises but the process and the ways they can get through are the studies for new ones. For this reasons, many authors have researched and provide a huge knowledge for export barriers and the ways to get through it. 2.2. Personal Rational The personal purpose for choosing this topic is related to many international enterprises all over the world try to expand into many countries. It also helps me to earn more knowledge to this topic that will help me doing business for the future. The study will help me to understand how the exportation still grows-up very fast and less and fewer barriers are disbanded by trading international. 2.3. Justification of the Study International trade is the exchange of goods and services across national boundaries. It is the most traditional form of international business activity and has played a major role in shaping world history. It is also the first type of foreign business operation undertaken by most companies because importing or exporting requires the least commitment of, and risk to, the company’s resources. For example, a company could produce for export by using its excess production capacity. This is an inexpensive way of testing a product’s acceptance in the market before investing in local production facilities. A company could also use intermediaries, who will take on import-export functions for a fee, thus eliminating the need to commit additional resources to hire personnel or maintain a department to carry out foreign sales or purchases (Daniels and Radebaugh, 2004). It shows the important of the export barriers activities will decrease the benefits of international trade and exportation all over the world. The international trade are successful will be affected by the export barriers so that why it’s necessary to research about this situation of exportation.

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Research Proposal 3.

Literature Review

3.1. Introduction Export and import are important to every country in the world until now. The world developed and grow-up fast like today is the successful of trading. Before, the governments of many countries realize that export increase the benefits for their country and also make a good relationship to other countries nearby. The exportation happened from the past through the East-West and North-South of the world. It makes people know more about the other place far away from their countries. The exportation still grows-up day by day and help all over the world come closer. The benefits of exportation are very large but it is also having lot of bad goods go through that make social evil. That why nowadays, more and more countries try to prevent this bad things by putting some barriers and it makes lots of companies consider how to get through the market they want to join in. The export barriers of Asia countries and African countries are complicated than European countries and American countries because they develop slower than the others. But when WTO (World Trade Organization) organized, it helps lots of companies easier to run the business in these markets and also push the development of trading better and better. Exporting has been one of the fastest growing economic activities in emerging markets, consistently exceeding the rate of growth in world economic output over the past two decades (IMF, 1995). A common objective of most countries is to find ways to increase exports. Reid (1981) defined export intention as the motivation, attitude, beliefs, and expectancy about export contribution to the firm’s growth. According to Sharkey, Lim and Kim (1989) non exporters are those who have never exported. Non-exporters have very little knowledge about the process of exporting and have no experience with obstacles to exporting. Occasional exporters refer to those who are exploring exporting and may have filled some unsolicited orders. Occasional exporters have learned the basics of the export process, but their low level of commitment may also be coupled with frustration that lead to the perception of more export barriers. Regular exporters have mastered the technicalities of exporting and have learned that exporting is an important mechanism for achieving organizational goals. Regular exporters have learned to cope with perceived export barriers (Sharkey, Lim and Kim, 1989).

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Research Proposal It is really important to helps companies to understand the ways and get enough knowledge about the market they want to run their business. That lead some companies spend a huge amount of budget to research their target market such as: export barriers, forbidden products, people, education, etc. These reasons lead me to do research about the export barriers and the impact of it’s to companies. According to Czinkota, Rivoli and Ronkainen (1992) export development is highly regarded by both public and corporate policy-makers, due mainly to the substantial macroeconomic and microeconomic benefits derived from external trade. From a macroeconomic perspective, exporting can enable national economies to enrich their foreign exchange reserves, provide employment, create backward and forward linkages, and ultimately, lead to a higher standard of living. Terpstra and Sarathy (1994) clarified the benefit of exporting to an economy in terms of its microeconomic gains. Exporting can give individual firms a competitive advantage, improve their financial position, increase capacity utilisation, and raise technological standards (Terpstra and Sarathy, 1994). In general the expansion of a nation’s exports has positive effects on the growth of the economy as a whole as well as on individual firms (Julian and O’Cass, 2004).

Exporting is of vital economic importance to trading nations and their firms. Exports boost profitability, improve capacity utilization, provide employment, and improve trade balances (Barker and Kaynak, 1992). According to Gripsrud (1990) the increasing globalisation of the world economy and the widespread opinion that increased exports benefit society has stimulated research in this area. In the U.S., the growing trade deficit is the most immediate factor behind the interest in this topic. A common objective in most countries today is to find ways to increase exports. This can be achieved either by encouraging exporting firms to export more or by inducing non-exporters to begin exporting. In 1998, the exports-GNP ratio for Malaysia was 84.3 percent indicating how much the Malaysian economy relied on its exports (Central Bank of Malaysia, 1999). “In this globalized world, industries do not survive if they are not export oriented” (Tenbelian, 2003: 23).

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Research Proposal 3.2. Definition of Export Barriers Export barriers can be defined as the attitudinal, structural, operational and other constraints that hinder an enterprise’s ability to initiate, develop or sustain international operations (Koksal and Kettaneh, 2011). It is important to get a good knowledge and a better understanding of export barriers, since these barriers waste the resource of enterprises and threaten the efficiency and effectiveness of an enterprise’s operations. The negative impact that export barriers can have on all kind of enterprises’ internationalization behaviors and activities has attracted the attention of many researchers in international business (Ortega, 2003; Da Silva and Da Rocha, 2001). The research has employed different perspectives to establish a set of notable barriers, especially with regard to the specific industry or geographical area. Leonidou’s work (2000) is one of the most cited papers that develop a conceptual framework to explain and classify export barriers.

There is 20 barriers in the field of exporting proposed by him; the keen competition abroad, unable to offer satisfactory prices, deteriorating of economic conditions abroad, the government assistance are not developed, limited information to locate and analyze foreign markets, high political risk or instability abroad, the awareness of high business risks and costs abroad, shortage of working capital, high tariff and non-tariff barriers, inadequate transportation and infrastructural facilities, restrictions imposed by rules and regulations, different customer habits and attitudes, difficulty in locating and obtaining representation, unfavorable foreign exchange rates, different product standards and specifications, inadequate and untrained staff, unfamiliarity of foreign business practice, different cultural traits and language abroad, difficulty in using documentation and procedures and unable to offer technical after sales service.

He using samples of 100 Cyprus-based exporters and separated these barriers in six groups: corporate resource constraints, environmental differences, export bureaucracy and legislation, government apathy, foreign market entry and operating difficulties and competitive pressures. Then the conclusion show that problems link with export competitiveness, including the keen competition abroad and unable to offer satisfactory prices, had the greatest obstructing effect (Leonidou, 2000). Other research has done before

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Research Proposal such as the work of Da Silva and Da Rocha that was published in 2001. They researched 69 exporters from Brazil and showed that inappropriate incentives, strong international competition and exchange rate policies are the most influential obstacles to export activities (Da Silva and Da Rocha, 2001). Ortega’s work (2003) on Spanish exporters and non-exporters, involving many kinds of enterprises, is the other research that introduced the lack of resources, strong foreign competition and the lack of export knowledge as export barriers (Ortega, 2003). On the other hand, it shows that export procedures can be a main reason for the initiation of an export activity (Altintas, Tokol, and Harcar, 2007). The research that was done in Lebanon by Ahmed, Craig, Baalbaki, and Hadadian, is the other researchs that investigated the problems and barriers of exporting. These researchers interviewed 61 exporters and non-exporters to identify export barriers. Five factors are showed in their research’s conclusion were the lack of government providing, the high competition from enterprises in overseas markets, the effects of pricing and promotion policies, high foreign tariffs and lack of financial capital (Ahmed et al., 2004). Craig and Ahmed focused the research on export barriers in Australia with the same problems.

They used the interview method as well as their previous research, but only with exporters. This research resulted in two critical factors; export venture management characteristics and adapting to foreign market needs (Craig and Ahmed, 2005). The differences in these two researches are related to the economic condition of the two countries; it is important to note that specific environmental factors such as political and economic conditions can facilitate or prevent the exporting. So, testing concepts in different economic, political, cultural, and institutional settings creates the contextual meanings to evaluate the robustness of prevailing theories (Koksal and Kettaneh, 2011).

Altinas, Tokol and Harcar research the export barriers in Turkish enterprises. They found 20 factors and divided them in 5 groups: diversity barriers, procedural barriers, internal inefficiency barriers, competition barriers and government barriers. The results of their research show that the procedural barriers factor has the most impact on export performance,

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Research Proposal followed by the competition in foreign market factor. Bureaucracy requirements and competition in overseas markets are the most active factors in export barriers. Competition can be examined in the context of hostile environment perceptions of domestic firms to gain competitive advantage (Altinas et al., 2007).

Other research also show that exporters care a lot about high banking charges, low capacity usage, and poor technology as the major problems that affect their business operations (Owusu-Frimpong and Mmieh, 2007). It also shows that exporters’ sensitivity to barriers in the foreign market is determined by managerial perceptions which are in turn influenced by contextual factors associated with firm size, resources and capability, export involvement and international experience (Ortega, 2003; Ojala, 2007: Karelakis, Mattas, and Chryssochoidis, 2008). Mavrogiannis, Bourlakis, Dowson and Ness assessed the export performance of Greek food and beverage exporters though their research. It involved a variety of variables and also included trade barriers and also concluded that trade barriers have a negative effect on export performance and Greek exporters should be proactive and innovative to overcome export problems and trade barriers.

On the other hand, the role of the government affects critically in facilitating export performance. Government policies can assist exporters to overcome trade barriers by providing information about overseas markets and host country partners, and by educating managers to design and implement proper export marketing strategies (Mavrogiannis et al., 2008). The research of Koksal and Kettaneh – a comparative study of two developing countries, Turkey and Lebanon - employed variables as export barriers into two groups; internal barriers and external barriers. Their study established that the imposition of tariff/non-tariff barriers by host countries negatively affects the performance of firms in both samples, based on export volume and market share. They realized that a strong brand image in international markets offers opportunities for capitalizing on economies of scale, developing global markets and helping to establish a firm’s visibility and position in the minds of international consumers (Koksal and Kettaneh, 2011). One of the surprising results of this study related to international competition in the target markets, strong international competition positively influencing the performance of Turkish and Lebanese export firms in

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Research Proposal terms of profitability, since the target market of Turkish and Lebanese firms are geographically and culturally closed. Kneller and Pisu referred to changes in consumers’ preferences, the presence of middlemen and agent representatives, import tariffs, problems finding a trustworthy distributor in the target country, exchange rate fluctuations, risk of losing money in the foreign market, and quality and safety standards as potential export barriers to firms (Kneller and Pisu, 2011).

Their studies confirm that enterprises face export barriers in the form of imperfect distribution of information between buyers and sellers, which translates into additional costs to obtain basic information about export markets, identifying the first contact point, as well as divergences in culture as key factors acting as export impediments in international trade (Kneller, Pisu and Yu, 2008). Mpinganjira’s study in Malawi resulted in classifying 17 export barriers in six main groups. This research referred to the importance of human-related factors as personnel barriers, including insufficient knowledge about export opportunities and lack of personnel knowledgeable in exporting (Mpinganjira, 2011). After analyzing current literature, the considered variables were exposed to experts and finally 18 factors which had high repeatability and frequency in various studies, were identified as the main export barriers. Table 1 indicates these factors along with their contributors.

3.2.1. Situation Theory of Export Barriers Exports create high-wage employment. In a study of recent wage statistics, the U.S. Trade Representative’s Office found that U.S. workers employed in export-related jobs earn 17 percent more than the average worker in the United States. Export-related wages are higher for manufacturing and service sector jobs. While service-related jobs generally pay less than manufacturing jobs, service jobs in the export sector were found to pay more on average than manufacturing jobs in the overall economy (U.S. Department of Commerce, 1994). A recent study on wages and trade finds a strong positive correlation between export intensity and wages. This could be partly explained by the fact that export intensive sectors tend to show higher levels of productivity than other firms. It is also consistent with economic theory, as industries in which a nation enjoys comparative advantage are likely to be those in which workers are more productive and therefore receive higher wages. It also shows that greater

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Research Proposal import penetration is associated with greater demand elasticity, which reduces workers ‘bargaining power (Harless, 2006).

3.3. Literature Review Conclusion

With the expansion of globalization and economic integration among countries, exporting has become an important internationalization strategy for companies and national economies, especially for developing countries. These researches can be connected to the literature of trade costs reviewed recently by Anderson and Wincoop (2004). In this literature has shown that trade costs are large and associated with barriers such as language differences, imperfect information, institutional quality and so on. The results show that among many enterprises and industry-level variables only export experience appear to be significantly related, in a negative way, to trade costs generated by specific barriers.

These formal econometric results suggest the existence of a process of learning to export, whereby enterprises are able to learn from their past experience how to overcome new export barriers and therefore to incur in lower trade costs. Further progress in this field of enquiry would benefit from additional research on how specific export impediments change as the firm adds new export destinations or exports new products. However, this is likely to require further surveys collecting precise information about the foreign markets firms serve and the products they export in addition to the types of export barriers they face.

3.4. Literature Key Map of Study

Table 1: Barriers

Contributors

Strong International Competition

Leonidou (2000); Da Silva et al. (2001); Ortega (2003); Ahmed et al (2004); Altintas et al. (2007); Koksal et al. (2011); Mpinganjira (2011)

High Business Risk

Leonidou (2000); Kneller et al. (2011)

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Research Proposal Different Customer Culture

Leonidou (2000); Altintas et al. (2007)

Required Quality Standards

Leonidou (2000); Altintas et al. (2007); Mpinganjira (2011); Koksal et al. (2011)

Non Competitive Prices

Leonidou (2000); Ahmed et al (2004); Altintas et al. (2007); Mpinganjira (2011); Koksal et al. (2011);

Limited Information about Foreign Markets

Leonidou (2000); Mpinganjira (2011); Koksal et al. (2011);

Unfamiliar Foreign business Practice

Leonidou (2000); Altintas et al. (2007)

Technical & After Sales Service

Leonidou (2000); Altintas et al. (2007)

Insufficient Production Capacity

Altintas et al. (2007); Koksal et al. (2011); Mpinganjira (2011); Owusu-Frimpong et al. (2007)

High Tariff and non-tariff Barriers

Leonidou (2000); Ahmed et al (2004); Altintas et al. (2007); Koksal et al. (2011);

Unfavourable Foreign Exchange Rate

Leonidou (2000); Da Silva et al. (2001); Kneller et al. (2011)

Difficult collection of payments

Altintas et al. (2007); Mpinganjira (2011)

Lack of Government Assistance

Leonidou (2000); Ahmed et al (2004); Altintas et al. (2007);

Restrictive Rules and Regulation

Mpinganjira (2011); Leonidou (2000)

Bureaucratic Requirements

Leonidou (2000); Altintas et al. (2007); Mpinganjira (2011)

Transportation Difficulties

Leonidou (2000); Koksal et al. (2011); Mpinganjira (2011); Kneller et al. (2011)

Shortage of working Capital

Leonidou (2000); Ahmed et al (2004); Mpinganjira (2011);

Untrained Staffs for Exporting

Leonidou (2000); Ortega (2003); Altintas et al. (2007); Mpinganjira (2011)

Source: OMB survey.

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Research Proposal

Table 2: Barriers to Exporting Barrier

% Enterprises Identifying this as a Barrier

Group 1 – Networks and Marketing Obtaining basic information about an export market

29.8

Identifying who to make contact with in the first

53.7

instance

Building relationships with key influencers or decision-

43.5

makers Establishing an initial dialogue with prospective

42.8

customers or business partners The marketing costs associated with doing business in

51.3

an overseas market Group 2 – Procedural and Exchange Rates Exchange rates and foreign currency

41.7

Dealing with legal, financial and tax regulations and

42.2

standards overseas Logistical problems

35.0 Group 3 - Cultural

Language barriers

36.5

Cultural differences (not language)

32.4

Not having an office or site in an export market

37.2

A bias or preference on the part of overseas customers

45.2

for doing business with enterprises established in their own country

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Research Proposal 4.

Research Problem Leading to Research Objectives

4.1. The impact of export barriers based on some problems that showed in literature review. These main impacts of export barriers divided into two reasons: Lack of Knowledge in enterprises about the exporting procedures and Lack of Know-How and Practices in Enterprises

4.2. Lack of Knowledge in Enterprises about The Exporting Procedures Alexandrides (1971) was one of the first to investigate the barriers to export a lack of knowledge about exporting procedures. His research concluded that the major problems preventing enterprises from initiating exporting was a lack of knowledge of exporting, inadequate understanding of export payment procedures and difficulties in locating foreign markets. In this research show some reasons and that the based for me to study and research more about the impacts of this reason to enterprises. The research will target on several different exports barrier perceptions between non-exporters and regular exporters as to the important barriers to export because it’s the main problem for these gaps about export barriers. This will fill the gaps of the previous research and will be useful foe enterprise to avoid of the impact of export barriers. These important things in the research of the literature review show the work of author about small and medium size companies and how it affect to the them. It’s still having a gap in general enterprises such as international enterprises or multinational enterprises. This research will focus on these kinds of enterprises to fill in the previous research.

4.3. Lack of Know-How and Practices in Enterprises

Bilkey and Tesar (1977) researched the lack of international business know-how and practices as a barrier to export and significance of this barrier to export. They focused on variations in barrier perceptions by export stage. Their research concluded that the more advanced the export stage, the greater the proportion of enterprises that perceived difficulties in understanding foreign business practices and conforming to foreign product standards. Another research of Bilkey (1978) further focused on the importance of a lack of international business know-how and practices as a particularly important barrier to export

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Research Proposal for both non-exporters and regular exporters. Even though, their research still not show enough evidences that many invisible export barriers affect enterprises in many ways. The impacts of export barriers are large and some can lead enterprise to be extinction. That led me to make a research to discover the lack of worldwide business know-how and to prevent it for enterprises.

5.

Proposed Research Methods

This part will base on the strategic method which would follow up the questions and the gaps of the research of the authors. The plans of this research will follow author plans which is still have problem and use data collection method to prove the evidences of the research. The research will use both of the primary and secondary data. -

Primary Data:

In many research were collective in this research shows that most of the research using quantitative and qualitative methods. This research is not exception so I think the quantitative and qualitative methods would be the best relevant methods to support this research to reach its target. -

Quantitative and Qualitative Methods:

Quantitative data is the methods to get the data though doing survey to research target and qualitative data is the methods to get data though interview some main targets that strongly prove for the research. For quantitative methods, the software SPSS will be used to create questionnaire and also analysis the data after collected. For qualitative methods, group interview and individual interview will be useful to get good information for the research. Both of the methods will collect sources of data to build the completely evidences for the research. -

Secondary Data:

Secondary data are also important because the previous research will support to the present research and the existing data from previous research really valuable for this research. It is useful for this research because all the data from previous research has been published into

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Research Proposal report, newspapers and can base on them to find the gaps. The sources of secondary data all are collected from FBS library resources and also through many other resources. -

Case Study:

Case study in intensive analysis of an organization, enterprise or group will support a huge information and knowledge about the aim of this research. It’s also a part of the combination of quantitative and qualitative methods. A case study about an international enterprise may prove the gaps of the previous research and show evidence about the effects of export barriers. The case study will focus on international France Company that will make a chance to interview and also do questionnaire on target questions for the research. It will be variable analysis for this proposal. 6.

References

Ahmed, Z.U., Julian, C.C., Baalbaki, I and Hadidian, T.V. (2004), “Export barriers and firm internationalisation: A study of Lebanese entrepreneurs”, The Journal of Management and World Business Research, vol. 1 no. 1, pp. 11-22., accessed via www.academyofworldbusiness.com/jomawbr Albaum, G. and Tse, D. (2001), “Adaptation of international marketing components, competitive advantage, and firm performance: A study of Hong Kong exporters”, Journal of International Marketing, vol. 9 no. 4, pp. 59-81. Alexandrides, C.G. (1971), “How the major obstacles to expansion can be overcome”? Atlanta Economic Review, May, pp. 12-15. Armstrong, J.S. and Overton, T.S. (1977), “Estimating non-response bias in mail surveys”, Journal of Marketing Research, vol. 14, pp. 396-402. Da Silva, P. and Da Rocha, A. (2000), “Perception of export barriers to Mercosur by Brazilian firms”, International Marketing Review, vol. 18 no. 6, pp. 589-610.

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Research Proposal Hooley, G., Greenley, G., Fahy, J., and Cadogan, J., 2001, “Market-focused resources, competitive positioning and firm performance”, Journal of Marketing Management, 17, 5/6, 503-520. Karelakis, C., Mattas, K., and Chryssochoidis, G., 2008, “Export problems perceptions and clustering of Greek wine firms”, Euromed Journal of Business, 3, 1, 6-22. Kneller, R., and Pisu, M., 2011, “Barriers to exporting: What are they and who do they matter?” The World Economy, 34, 6, 893-930. Koksal, M.H., and Kettaneh, T., 2011, “Export problems experienced by high- and lowperforming manufacturing companies: A comparative study”, Asia Pacific Journal of Marketing and Logistics, 23, 1, 108-126. Lee, J., and Habte-Giorgis, B., 2004, “Empirical approach to the sequential relationships between firm strategy, export activity, and performance in U.S. manufacturing firms”, International Business Review, 13, 101-129. Leonidou, L.C., 2000, “Barriers to export management: An organizational and internationalization analysis”, Journal of International Management, 6, 2, 121-148. Li, L., and Ogunmokun, G.O., 2001, “Effect of export financing resources and supply chain skills on export competitive advantages: Implications for superior export performance”, Journal of World Business, 36, 3, 260-279. Liargovas, P.G., and Skandalis, K.S., 2008, “Motives and marketing strategies of Greek companies exporting to south-east European markets”, South-Eastern Europe Journal of Economics, 6, 2, 227-244.

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