Barriers to export management: an organizational and internationalization analysis

Journal of International Management6 (2000) 121–148

1075-4253/00 $ – see front matter © 2000 Elsevier Science Inc. All rights reserved.PII: S1075-4253(00)00022-3

Barriers to export management: an organizational and internationalization analysis

Leonidas C. Leonidou*

Department of Public and Business Administration, School of Economics and Management, University of Cyprus, Kallipoleos 75, P.O. Box 20537, CY-1678 Nicosia, Cyprus

Abstract

The article focuses on barriers encountered by developing country-based manufacturing firms dur-ing ongoing export business operations. Using a sample of 100 Cyprus-based exporters, the study re-vealed that problems associated with export competitiveness had the greatest obstructing effect. Usingprincipal component analysis, export barriers were classified into six conceptually meaningful catego-ries. Overall, organizational parameters had a serious discriminating influence on the emerging barrierfactors, especially those controllable by the firm, with company size, experience and backup network-ing exerting the most impact. Internationalization variables were generally less influential, with nov-ice, intermittent, and passive exporters being more vulnerable to problems. A number of policy-mak-ing implications are derived from the study findings. © 2000 Elsevier Science Inc. All rightsreserved.

Keywords:

Exporting; Barriers; Organizational; Internationalization; Developing countries; Cyprus

1. Introduction

Exporting has traditionally been an economic activity much sought after by corporatemanagers throughout the world for a number of reasons: it utilizes idle operating capacityand improves production efficiency; it raises technological, quality, and service standards inthe organization; it strengthens the company’s arsenal of competitive weapons; it provides abetter profit base to reward shareholders and employees; it generates more funds for reinvest-ment and growth; and it diversifies business risks by operating in multiple markets (Onkvisitand Shaw, 1997; Terpstra and Sarathy, 1997; Czinkota and Ronkainen, 1998). It is not sur-prising, therefore, that an ever-increasing number of firms have opted to engage in export op-

* Corresponding author: Tel.:

1

357-2-892-262; Fax:

1

357-2-339-063.

E-mail address:

[email protected] (L.C. Leonidou).

122

L.C. Leonidou / Journal of International Management 6 (2000) 121–148

erations, particularly in recent decades, that have witnessed a growing liberalization, integra-tion, and competition in the world market (Keegan, 1998; Kotabe and Helsen, 1998;Mühlbacher et al., 1999).

Despite the many benefits deriving from exporting, the firm’s entry into and operation inoverseas markets is not easily achieved. Rather, the company is confronted by many seriousobstacles, the most common being limited organizational and managerial resources; inap-propriate foreign marketing strategy; restrictive international trade rules and regulations;unfamiliar and/or differing business practices and customer habits abroad; dissimilaritiesbetween domestic and foreign task environments; and excessive risks and costs due to largegeographic and psychological distances separating nations (Miesenböck, 1988). These ob-stacles can limit the company’s potential to exploit foreign market opportunities, weaken itsfinancial performance, delay its progression along the internationalization path, or evencause its complete withdrawal from overseas operations (Welch and Wiedersheim-Paul,1980).

While there is a substantial amount of research targeting the obstructive role of barriers onthe firm’s export behavior, a recent review found most studies marked by serious conceptual,methodological, and empirical limitations (Leonidou, 1995a).

1

Conceptually, research on thesubject was found to be at the identification stage, as demonstrated by the different ways ofdefining, operationalizing, and classifying the export barrier construct. Methodologically, re-search on export problems was relatively flawed in terms of scope of investigation, samplingdesigns, fieldwork procedures, and analytical methods. Empirically, the studies differedwidely in their assessment of the impact of obstacles on export management decisions.Clearly, the subject requires a more systematic, organized, and integrated approach, whichwas the aim of the present study.

Several research questions provide the focus and framework of this article, namely: Howand to what degree do the export barriers identified from a review of the literature impact onmanagerial decisions of developing country-based exporters? How can these export prob-lems be classified into conceptually meaningful groups? How do organization-specific pa-rameters affect export barriers? How do export barriers vary in relation to dimensions de-scribing the firm’s internationalization status? To address these questions, the article firstreviews previous empirical research on export barriers; it subsequently explains the meth-odology adopted for the present investigation; then the study findings are analyzed fromoverall, group, organizational, and internationalization perspectives. Finally, several con-clusions are derived from this study, as well as implications for both corporate and publicpolicy-makers.

1

As opposed to export barriers, importing received scant empirical attention, mainly because of the tendency ofmost nations to emphasize an export-led economic growth (Liang and Parkhe, 1997). However, conceptualizingthe factors obstructing import behavior is crucial for three major reasons: (a) the cost, quality, and timing ofimports can improve the overseas competitiveness of indigenous manufacturers; (b) exporters can design andimplement more effective and efficient strategies by better understanding impediments encountered by foreignbuyers; and (c) importers can switch to exporting after positive experience with inward international operations(Leonidou, 1997, 1999).


123

2. Empirical research on export barriers

Table 1 reviews the key characteristics of extant empirical research on export barriers,which can be summarized as follows:

2

emphasis on one-time and ethnocentric studies; focuson smaller manufacturing firms, usually belonging to a cross-section of industries; use of theexporting firm as the unit of analysis, with only a few studies dealing exclusively with non-exporters; a tendency to adopt probability sampling designs and collect data mainly using amail survey method; examination of a relatively small number of export barriers; inclinationto measure the frequency of occurrence of export barriers and to, a lesser extent, their sever-ity or importance; heavy dependence on descriptive statistics in analyzing data, with deploy-ment of more sophisticated analytical methods by more recent research attempts.

Analysis of the empirical findings of studies reveals that export barriers, with a few excep-tions, appear in different rank order in terms of frequency, severity, or importance (see lastrow of Table 1).

3

In fact, whereas some barriers were placed high in some studies, in othersthey were ranked in the middle, and still in others were given bottom positions. To some ex-tent, this variation in findings can be attributed, apart from differing research methodologies,to different timeframes, geographic settings, company-specific factors, and export profiles.For this reason, it was thought more appropriate to analyze the results of extant research fromvarious standpoints, namely, aggregate, chronological, geographical, organizational, and in-ternationalization.

Consideration of all studies in

aggregate

suggests that the most serious exporting problemis the limited information available first to locate and subsequently to analyze opportunitiesin foreign markets (Pavord and Bogart, 1975; Yaprak, 1985; Karafakioglu, 1986; Hook andCzinkota, 1988; Weaver and Pak, 1990; Tseng and Yu, 1991; Moini, 1997). Closely re-lated—and ranked—is the problem of finding suitable overseas partners to act as companyrepresentatives in these markets (Tesar and Tarleton, 1982; Cavusgil, 1984a; Kaynak et al.,1987; Cheong and Chong, 1988; Diamantopoulos et al., 1990; Moini, 1997). Lack of knowl-edge about the relevant export documentation and mechanics of export transactions also rep-resented a serious obstacle (Rabino, 1980; Tesar and Tarleton, 1982; Cheong and Chong,1988; Barker and Kaynak, 1992), as did rules and regulations imposed on trade by foreigngovernments (Groke and Kreidle, 1967; Kaynak and Kothari, 1984; Karafakioglu, 1986;Hook and Czinkota, 1988; Kaynak and Erol, 1989; Rao, 1990), with tariff and nontariff bar-riers among the most severe (Rabino, 1980; Bauerschmidt et al., 1985; Gripsrud, 1990;Barker and Kaynak, 1992). A final problem, with a generally strong inhibiting effect, was the

2

The literature on export barriers dates back to the mid-1960s, with the pioneering work of Groke and Kreidle(1967). Since then, dozens of studies have been conducted, particularly during the last decade, doubtless reflect-ing the need to accommodate the complexities resulting from the growing globalization of world economies(Leonidou, 1995a).

3

Export barriers were measured using either nominal or ordinal scales; thus, to allow comparisons among thevarious studies, it was considered more correct to rank export barriers in descending order of impact. It is under-stood, however, that by transforming percentages and mean scores into rank orders, valuable information is lost,such as ignoring the magnitude of the impact differences between barriers.

124


Tab

le 1

Rev

iew

of

empi

rica

l stu

dies

on

expo

rt b

arri

ers

Stud

ypa

ram

eter

s

Res

earc

h st

udy

Gro

ke a

ndK

reid

le(1

967)

Ale

xand

ride

s(1

971)

Pavo

rd a

ndB

ogar

t(1

975)

Rab

ino

(198

0)

Tes

ar a

ndT

arle

ton

(198

2)A

lbau

m(1

983)

Czi

nkot

aan

d U

rsic

(198

3)K

ayna

k an

d K

otha

ri (

1984

)

Fiel

dwor

k ye

ar19

6619

7119

7419

7919

8119

8219

8119

8219

82Fo

cus

coun

try

Uni

ted

Stat

es–

Nor

ther

nIl

linoi

s

Uni

ted

Stat

es–

Geo

rgia

Uni

ted

Stat

es–

Illin

ois/

Indi

ana/

Ken

tuck

y/O

hio/

Penn

sylv

ania

Uni

ted

Stat

es–

Mas

sach

uset

tsU

nite

d St

ates

–V

irgi

nia

Uni

ted

Stat

es–

Idah

o/O

rego

n/W

ashi

ngto

n

Uni

ted

Stat

esC

anad

a–N

ova

Scot

iaU

nite

d St

ates

–T

exas

Indu

stri

al s

ecto

rN

AM

ultip

le (

9)Sc

ient

ific

indu

stri

alin

stru

men

ts

Mul

tiple

(7)

NA

Mul

tiple

Mat

eria

ls/

avio

nic/

indu

stri

al

Mul

tiple

Mul

tiple

Com

pany

siz

eSm

all

NA

Smal

l/med

ium

/la

rge

Smal

lSm

all/m

ediu

mSm

all/m

ediu

mSm

all/m

ediu

mSm

all

Smal

l

Uni

t of

anal

ysis

Exp

orte

rE

xpor

ter/

none

xpor

ter

Exp

orte

rE

xpor

ter/

none

xpor

ter

Exp

orte

r/no

nexp

orte

rE

xpor

ter/

none

xpor

ter

Exp

orte

rE

xpor

ter/

none

xpor

ter

Exp

orte

r/no

n-ex

port

erSa

mpl

ing

desi

gnN

APr

obab

ility

/ra

ndom

Prob

abili

ty/

rand

omPr

obab

ility

/ra

ndom

NA

Prob

abili

ty/

rand

omPr

obab

ility

/ra

ndom

Prob

abili

ty/

rand

omPr

obab

ility

/ra

ndom

Sam

ple

size

NA

72

1

3210

546

59

1

110

86 (

1

84)

181

104

1

7211

2

1

196

Res

pons

e ra

te (

%)

NA

3228

NA

NA

3130

37N

AD

ata

colle

ctio

nPe

rson

alin

terv

iew

sM

ail s

urve

yM

ail s

urve

yPe

rson

al/

tele

phon

ein

terv

iew

s

NA

Mai

l sur

vey

Mai

l sur

vey

Mai

l sur

vey

Mai

l sur

vey

Num

ber

of b

arri

ers

18

1

818

NA

1012

1

128

1

8

1

Mea

sure

men

tsc

ale

Dic

hoto

mou

s7-

poin

t/ite

nsity

le

vel

3-po

int/s

ever

ity

leve

lD

icho

tom

ous

Dic

hoto

mou

sD

icho

tom

ous

4-po

int/i

mpo

r-ta

nce

leve

l6-

poin

t/dif

-fi

culty

leve

l6-

poin

t/dif

fi-

culty

leve

lSt

atis

tical

ana

lysi

sPe

rcen

tage

freq

uenc

yM

ean

scor

ePe

rcen

tage

freq

uenc

yPe

rcen

tage

freq

uenc

yPe

rcen

tage

freq

uenc

yA

bsol

ute/

perc

enta

gefr

eque

ncy

Mea

n sc

ore

Perc

enta

ge

freq

uenc

y/m

ean

scor

e

Perc

enta

ge

freq

uenc

y/m

ean

scor

eM

ajor

exp

ort

barr

iers

fou

ndT

rade

rest

rict

ions

/ex

port

docu

men

tatio

n/lim

ited

info

abou

t for

eign

mar

kets

Fore

ign

com

petit

ion/

lack

of

fore

ign

mar

ket i

nfo/

expo

rt

proc

edur

es

Fore

ign

rule

s an

d re

gula

tions

/la

ck o

f fo

reig

n m

arke

t inf

o/fo

reig

n sa

les

supp

ort

Exp

ort

pape

rwor

k/se

lect

ing

relia

ble

dist

ribu

tors

/co

mpe

titiv

e di

sadv

anta

ges

Find

ing

fore

ign

oppo

rtun

ities

/ob

tain

ing

adeq

uate

re

pres

enta

tion

Exp

ort

docu

men

tatio

n/la

ck o

f cu

stom

er

lead

s/co

mpe

ting

with

for

eign

su

pplie

rs

Inad

equa

te

sale

s ef

fort

/m

arke

t inf

o ga

ther

ing/

offe

ring

te

chni

cal

assi

stan

ce

Gov

ernm

ent

barr

iers

/co

mpe

titio

n/m

arke

ting

and

dist

ribu

tion

Gov

ernm

ent

barr

iers

/m

arke

ting

and

dist

ribu

tion/

dem

and

(

cont

inue

d

)


125

Tab

le 1

Con

tinue

d

Stud

ypa

ram

eter

s

Res

earc

h st

udy

Cav

usgi

l (1

984b

)

Bar

rett

and

Wilk

inso

n (1

985)

Bau

ersc

hmid

t et

al.

(198

5)Y

apra

k(1

985)

Kar

afak

iogl

u(1

986)

Ked

ia a

nd

Chh

okar

(19

86)

Kay

nak

et a

l. (1

987)

Hoo

k an

d C

zink

ota

(198

8)

Che

ong

and

Cho

ng

(198

8)

Fiel

dwor

k ye

ar19

8119

6919

8419

8419

8519

8419

8619

8719

86Fo

cus

coun

try

Uni

ted

Stat

es–

Wis

cons

in/

Illin

ois

Aus

tral

iaU

nite

d St

ates

Uni

ted

Stat

es–

Det

roit

Tur

key

Uni

ted

Stat

es–

Lou

isia

naSw

eden

Uni

ted

Stat

es–

Haw

aii

Sing

apor

e

Indu

stri

al s

ecto

rM

ultip

leN

APa

per

Mul

tiple

(9)

Mul

tiple

Mac

hine

/foo

d pr

oces

sing

Mul

tiple

Mul

tiple

Furn

iture

/el

ectr

onic

sC

ompa

ny s

ize

Smal

l/med

ium

/la

rge

Smal

l/med

ium

/la

rge

NA

Smal

l/med

ium

Smal

l/med

ium

/la

rge

Smal

l/med

ium

Smal

l/med

ium

Smal

l/med

ium

/la

rge

Smal

l

Uni

t of

anal

ysis

Exp

orte

rE

xpor

ter/

none

xpor

ter

Exp

orte

rE

xpor

ter/

none

xpor

ter

Exp

orte

rE

xpor

ter/

none

xpor

ter

Exp

orte

rE

xpor

ter/

none

xpor

ter

Exp

orte

r/no

nexp

orte

rSa

mpl

ing

desi

gnN

APr

obab

ility

/st

ratif

ied

NA

NA

Prob

abili

ty/

rand

omN

AN

APr

obab

ility

/ra

ndom

Prob

abili

ty/

stra

tifie

dSa

mpl

e si

ze70

197

1

117

115

39

1

4010

849

1

4786

147

1

141

194

Res

pons

e ra

te (

%)

NA

NA

NA

NA

54N

A86

3732

Dat

a co

llect

ion

Pers

onal

inte

rvie

ws

Pers

onal

inte

rvie

ws

Mai

l sur

vey

Mai

l sur

vey/

tele

phon

eM

ail s

urve

yPe

rson

al in

ter-

view

sM

ail s

urve

yM

ail s

urve

yM

ail s

urve

y

Num

ber

of b

arri

ers

5

1

1917

15

1

820

59

1

15

1

Mea

sure

men

tsc

ale

Dic

hoto

mou

s5-

poin

t/im

por-

tanc

e le

vel

5-po

int/i

mpo

r-ta

nce

leve

lD

icho

tom

ous

Dic

hoto

mou

s4-

poin

t/im

port

an

d di

ffic

ulty

Dic

hoto

mou

sD

icho

tom

ous

Dic

hoto

-m

ous

Stat

istic

al a

naly

sis

Perc

enta

gefr

eque

ncy

Mea

n sc

ore

Perc

enta

ge f

re-

quen

cy/m

ean

scor

e/fa

ctor

an

alys

is

Perc

enta

gefr

eque

ncy

Perc

enta

gefr

eque

ncy

Ran

k or

der

Perc

enta

ge

freq

uenc

yPe

rcen

tage

fr

eque

ncy

Perc

enta

ge

freq

uenc

y

Maj

or e

xpor

tba

rrie

rs f

ound

Unf

avor

able

ex

chan

ge r

ates

/ob

tain

ing

fore

ign

repr

esen

tatio

n/cu

ltura

l di

ffer

ence

s

Inab

ility

to

mee

t co

mpe

titiv

e pr

ices

/fre

ight

co

sts

Hig

h va

lue

of

U.S

. dol

lar/

high

tr

ansp

ort c

osts

/em

phas

is o

n do

mes

tic

mar

ket

Red

tape

/slo

w

paym

ents

/poo

r ec

onom

ic

cond

ition

s

Stro

ng

inte

rnat

iona

l co

mpe

titio

n/la

ck o

f fo

reig

n m

arke

t inf

o

How

to m

arke

t ov

erse

as/

deal

ing

with

a

stro

ng U

.S.

dolla

r

Sele

ctin

g re

liabl

e di

stri

buto

rs/

fore

ign

cust

omer

co

mm

unic

atio

n

Loc

atin

g fo

reig

n m

arke

ts/

fina

ncin

g ex

port

s/fo

reig

n tr

ade

rest

rict

ion

Lac

k of

av

aila

ble

wor

king

ca

pita

l/co

mpe

titio

n in

for

eign

m

arke

ts/

lack

of

info

on

exp

ortin

g

(

cont

inue

d

)

126


Tab

le 1

Con

tinue

d

Stud

ypa

ram

eter

s

Res

earc

h st

udy

Kav

nak

and

Ero

l (19

89)

Ken

g an

d Ji

uan

(198

9)D

icht

l et a

l. (1

990)

Dia

man

topo

ulos

et a

l. (1

990)

Gri

psru

d (1

990)

Rao

(19

90)

Wea

ver

and

Pak

(199

0)

Sulli

van

and

Bau

ersc

hmid

t (1

990)

Fiel

dwor

k ye

ar19

8519

8519

8919

8819

8819

8419

8919

87Fo

cus

coun

try

Tur

key

Sing

apor

eG

erm

any

Finl

and

Nor

way

Uni

ted

Stat

esSo

uth

Kor

eaA

ustr

ia/F

in-

land

/Ger

man

y/Sw

eden

Indu

stri

al s

ecto

rM

ultip

leM

ultip

leC

hem

ical

/ele

c-tr

ical

/mac

hine

Mul

tiple

(6)

Fish

ery

prod

-uc

tsM

ultip

leO

ptic

al/te

xtile

sFo

rest

pro

d-uc

tsC

ompa

ny s

ize

Lar

geSm

all/m

ediu

mSm

all/m

ediu

mSm

all/m

ediu

mSm

all/m

ediu

m/

larg

eSm

all/m

ediu

m/

larg

eSm

all/m

ediu

mN

A

Uni

t of

anal

ysis

Exp

orte

rE

xpor

ter/

none

xpor

ter

Exp

orte

r/no

nexp

orte

rE

xpor

ter

Exp

orte

rE

xpor

ter

Exp

orte

rE

xpor

ter

Sam

plin

g de

sign

NA

Prob

abili

ty/

rand

omPr

obab

ility

/ra

ndom

Prob

abili

ty/

rand

omPr

obab

ility

/ra

ndom

Prob

abili

ty/

rand

omPr

obab

ility

/ra

ndom

Non

prob

abili

-ty

/con

veni

ence

Sam

ple

size

5010

8

1

4860

1

4433

114

185

7062

Res

pons

e ra

te (

%)

2917

NA

4130

187

15D

ata

colle

ctio

nM

ail s

urve

y/pe

rson

al

inte

rvie

ws

Mai

l sur

vey

Mai

l sur

vey

Mai

l sur

vey

Mai

l sur

vey

Mai

l sur

vey

Mai

l sur

vey

Mai

l sur

vey

Num

ber

of b

arri

ers

16

1

16

1

126

1013

1030

Mea

sure

men

tsc

ale

5-po

int/

sign

ific

ance

leve

l

Dic

hoto

mou

sIn

tens

ity le

vel

5-po

int/i

mpo

r-ta

nce

leve

l5-

poin

t/deg

ree

of a

gree

men

t5-

poin

t/inh

ibit-

ing

leve

l3-

poin

t/sig

nifi

-ca

nce

leve

l5-

poin

t/im

por-

tanc

e le

vel

Stat

istic

al a

naly

sis

Mea

n sc

ore

Perc

enta

gefr

eque

ncy

Sum

of

wei

ghte

d ra

nks

Mea

n sc

ore/

Man

n W

hitn

ey

U

test

Perc

enta

gefr

eque

ncy/

fac-

tor

anal

ysis

Mea

n sc

ore/

one-

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128


intense competition, which has grown significantly in international markets during the lastfew decades (Alexandrides, 1971; Kaynak and Kothari, 1984; Karafakioglu, 1986; Cheongand Chong, 1988; Dichtl et al., 1990; Leonidou, 1995b; Kaleka and Katsikeas, 1995).

Chronological

analysis

4

of export barriers confirmed three of the above-mentioned barri-ers, namely limited information to locate and analyze international market opportunities, dif-ficulties in obtaining adequate representation abroad, and restrictions imposed by foreignrules and regulations, as severe problems irrespective of the timeframe of the empirical in-vestigation. Two problems were found to change with time: export documentation and pro-cedural difficulties were more prevalent in early research (e.g., Groke and Kreidle, 1967;Rabino, 1980; Tesar and Tarleton, 1982; Yaprak, 1985), whereas later studies emphasizedthe obstructing role of intensified competition in the global marketplace (e.g., Cheong andChong, 1988; Dichtl et al., 1990; Leonidou, 1995b; Kaleka and Katsikeas, 1995). Severalother export impediments correlated to a lesser degree with the time dimension; for instance,whereas problems stemming from high business risks/costs (Kaynak and Kothari, 1984;Bauerschmidt et al., 1985; Karafakioglu, 1986) and unfavorable exchange rates (Cavusgil,1984b; Bauerschmidt et al., 1985; Kedia and Chhokar, 1986) were more evident in the early1980s, subsequently the firm’s inability to finance the exporting effort was stressed (Hookand Czinkota, 1988; Cheong and Chong, 1988; Rao, 1990; Weaver and Pak, 1990; Kalekaand Katsikeas, 1995), as was the difficulty in offering foreign customers satisfactory prices(Keng and Jiuan, 1989; Dichtl et al., 1990; Rao, 1990; Tseng and Yu, 1991; Leonidou,1995b).

Geographically

, approximately half of the studies examined export barriers encountered byU.S. manufacturers, while the remainder took place in other developed or newly industrializedcountries located mainly in Europe and the Pacific Rim. Notably, very limited emphasis wasplaced on the problems faced by developing country-based exporters. Although research onthe subject was initiated in the United States, this has gradually shifted to other countries.Spatial analysis points to the obstructing impact of locating and analysing overseas markets,irrespective of the exporter’s geographic base. However, certain problems tended to be coun-try-specific: U.S. exporters had more difficulties in handling export documentation and proce-dures (Groke and Kreidle, 1967; Rabino, 1980; Tesar and Tarleton, 1982; Kedia and Chhokar,1986) and coping with restrictive foreign rules and regulations (Groke and Kreidle, 1967;Kaynak and Kothari, 1984; Rao, 1990), whereas non-U.S. exporters experienced more diffi-culties with personnel issues (Dichtl et al., 1990; Tseng and Yu, 1991; Barker and Kaynak,1992; Leonidou, 1995b) and offering overseas customers competitive prices (Barrett andWilkinson, 1985; Yaprak, 1985; Keng and Jiuan, 1989; Dichtl et al., 1990).

4

The objective of this analysis was to roughly identify the effect of time-related factors on export barriers. Ofcourse, ideally, changes in the impact of export barriers would be monitored by longitudinal research on a cross-country basis, but such an approach is difficult in practice because of financial, human, and other constraints(Leonidou, 1995a).


129

Very few studies researched

organizational

influences on impediments to exporting. Somestudies examined the effect of company size—measured in terms of number of employeesand/or sales turnover—on export barriers, but found only a few significantly affected; thesewere mainly associated with resource limitations, logistical constraints, and trade restrictions(Barker and Kaynak, 1992; Katsikeas and Morgan, 1994; Leonidou, 1995b). Other research-ers attempted to link the company’s products with export barriers, but findings were conflict-ing: One study found no significant differences between producers of consumer and industrialgoods (Leonidou, 1995b), whereas another concluded that export logistics or mechanics af-fected manufacturers of industrial products more (Weekly and Bardi, 1975). Two other stud-ies showed that export barriers had variable impacts across industries in each of these twogroups of firms (e.g., Alexandrides, 1971; Kedia and Chhokar, 1986; Keng and Jiuan, 1989).Finally, a study conducted among Cypriot nonexporters concluded that business experiencehad a discriminating role in approximately one-fifth of the export barriers investigated, withinexperienced firms emphasizing problems relating to competition, distribution channels,working capital, and foreign market information (Leonidou, 1995b).

Internationalization

variables likewise have received limited research attention, althoughinvestigations drawing comparisons between nonexporters’ and exporters’ perceptions of ex-port barriers abound (e.g., Alexandrides, 1971; Tesar and Tarleton, 1982; Kedia and Chhokar,1986; Cheong and Chong, 1988; Barker and Kaynak, 1992; Ramaseshan and Soutar, 1996).One study focusing on export experience concluded that novice exporters are more concernedwith pricing issues, whereas experienced exporters feel more strongly about problems relatingto national export policy and domestic currency devaluations (Katsikeas and Morgan, 1994).Another study attempted to ascertain whether aggressive exporters perceive export barriersdifferently from passive exporters, but no significant results were achieved (Tesar and Tarle-ton, 1982). Sporadic and regular exporters were compared in one study, which reported seri-ous differences in more than one-third of the problem areas investigated (Kaleka and Katsi-keas, 1995). Export sales intensity was also examined as a potential discriminator ofimpediments to exporting, but received only partial validation (Weekly and Bardi, 1975;Katsikeas and Morgan, 1994). Finally, a landmark study by Bilkey and Tesar (1977) revealedthat the impact of certain barriers to exporting, such as understanding international businesspractices, collecting money from overseas customers, and obtaining adequate foreign repre-sentation, increases as the firm progresses along the internationalization path.

Several conclusions can be drawn from the above review of the literature on barriers to ex-port management: First, the most serious impediments overall were those associated with theforeign environment within which the firm operates or is planning to operate, such as locat-ing opportunities, obtaining adequate representation, and facing competition; second, someof the most severe problems maintained their impact irrespective of time, whereas thestrength of others altered in different timeframes, probably because of changing exogenousforces; third, the geographic context of the study seems to affect certain export barriers, espe-cially those connected with domestic industrial development and foreign trade policies;fourth, the role of organizational parameters on export barriers is underresearched, and in thelimited number of cases examined, results were weak and often conflicting; and finally, re-search on the link between various aspects of the firm’s internationalization status with ex-port barriers is limited, often characterized by inconsistent findings.

130


3. Research methodology

Export barriers are defined in this study as all those attitudinal, structural, operational, andother constraints that hinder the firm’s ability to export (Leonidou, 1995a). This article fo-cuses on ongoing export barriers—obstacles that become operative after the firm begins toexport—encountered by manufacturers in developing countries. Cyprus provided the basisfor this type of research since, apart from being the home country of the principal investiga-tor, it shares similar characteristics with many other small developing nations, such as: rela-tively infant manufacturing sector; inadequate infrastructural and trade facilities; weak gov-ernment export promotion programs; high vulnerability to external politico-economic forces;and chronic balance of trade deficits (The World Bank, 1998). There are also some specificreasons for selecting Cyprus for this investigation, namely: its strategic geographic locationwhich connects three continents; its high economic dependence on external trade; and itsproblematic export performance (The World Bank, 1988).

5

For a firm to participate in the study, three basic criteria had to be met: to belong to themanufacturing sector of the economy; to be of an indigenous nature, rather than a subsidiaryof a multinational corporation; and to currently sell part or all of its goods to at least oneoverseas market. Target organizations were identified from a recent directory including allfirms in the island classified by type of activity (Cyprus Chamber of Commerce and Indus-try, 1994). From a total of 1,286 firms registered, 765 met the above criteria. These firmswere contacted by telephone to explore the possibility of fixing an appointment with themanager directly responsible for making export-related decisions. Only 138 firms respondedpositively, some of the nonrespondents had closed down, others had moved, whereas stillothers claimed reasons such as lack of available time, absence of the responsible manager,and a company policy prohibiting the disclosure of information. No statistically significantdifferences in profiles were observed between responding and nonresponding firms.

6

Because of the very centralized management system of indigenous firms in Cyprus, infor-mation from participants in the study was obtained by means of personal interviews with sin-gle key informants in the organization, usually the general manager, marketing director, orexport officer. The research instrument was a questionnaire containing a precoded list of 20export barriers derived from a review of the pertinent literature.

7

Each barrier was measuredfor its obstructing impact on ongoing export operations on a five-point scale, ranging fromstrongly disagree (1) to strongly agree (5). The questionnaire contained 16 additional ques-

5

Three major factors contribute to the declining performance of Cypriot exporters: (a) lack of competitivenessof domestically-produced goods; (b) deteriorating economic conditions in principal export destinations; and (c)unfavorable foreign exchange rates (Cyprus Ministry of Commerce, Industry and Tourism, 1995).

6

Comparison between respondents and nonrespondents was based on three demographic variables for whichinformation was available from secondary sources, namely, company size, industry type, and geographic location.This comparison was drawn using the Wilkoxon test for two independent samples, revealing no statistically sig-nificant differences between the two groups in all three parameters examined (

a5

.05).

7

Using managers as a starting point to develop new insights (especially through focus-group discussions or in-depth interviews) when designing the questionnaire, although very important in the case of researching an area forthe first time, was not considered necessary for this type of research, since the field has been investigated veryextensively in the past.


131

tions related to the firm’s organizational and internationalization characteristics. Prior to thefull-scale study, the questionnaire was tested with nine export managers to verify its work-ability in terms of structure, comprehensiveness, and timing, with no serious problems indi-cated.

8

With the completion of the full-scale study, all questionnaires were subsequently ed-ited for completeness, consistency, and legibility, resulting in 100 usable cases for furtherstatistical analysis.

4. Research findings

Analysis of the study findings is organized as follows: First, the overall impact of exportbarriers on management decisions is examined; second, export problems are classified intoconceptually meaningful groups using principal component analysis; third, the discriminat-ing role of organizational parameters on the extracted export barrier factors is explored; andfinally, export barriers are seen within the context of internationalization influences.

4.1. Overall analysis of export barriers

Fig. 1 shows the results of the obstructing effect of each of the 20 barriers on export man-agement examined. Keen competition in overseas markets was the most influential problemencountered by participant exporters, supporting the postulation that accelerating marketglobalization has intensified competition on an international scale (Douglas and Craig,1995). This finding confirms earlier research (e.g., Alexandrides, 1971; Karafakioglu, 1986;Cheong and Chong, 1988), and reaffirms results of two studies conducted within the samegeographic area among nonexporters (Leonidou, 1995b) and exporters (Kaleka and Katsik-eas, 1995). The firm’s inability to offer satisfactory prices to overseas customers was also aserious obstacle, this being consistent with other investigations (Barrett and Wilkinson,1985; Keng and Jiuan, 1989; Dichtl et al., 1990; Rao, 1990). Both deteriorating economicconditions in principal export market destinations and lack of assistance and incentives bythe home government exhibited a somewhat lesser impact compared to the above barriers.

Limited information with which to analyze overseas markets, although a crucial problem inother studies (e.g., Pavord and Bogart, 1975; Tesar and Tarleton, 1982; Kaynak and Kothari,1984; Yaprak, 1985; Karafakioglu, 1986; Hook and Czinkota, 1988; Weaver and Pak, 1990;Tseng and Yu, 1991), was ranked fifth, together with the existence of high political risk/insta-bility abroad. Slightly less inhibiting were two other barriers, namely, high business risks/costs and shortage of working capital. Showing a moderate impact were four other barriers:high tariff/non-tariff barriers, inadequate transportation/infrastructural facilities, different cus-tomer habits/attitudes, and trade restrictions placed on exporting firms by foreign govern-

8

Apart from precoded questions, the pilot questionnaire contained a number of open-ended questions aiming togain more qualitative information about export barriers. However, these open-ended questions were omitted fromthe final questionnaire because the information collected repeated most of the material mentioned in the precodedquestions, thus making the questionnaire too repetitive, tedious, and lengthy.

132



133

ments. Notably, in previous research this last barrier was found to impose a serious obstruc-tion to export development (e.g., Groke and Kreidle, 1967; Kaynak and Kothari, 1984;Kaynak and Erol, 1989; Rao, 1990). Obtaining adequate representation in overseas markets,although found crucial in other studies (e.g., Tesar and Tarleton, 1982; Cavusgil, 1984b;Yaprak, 1985; Kaynak et al., 1987; Cheong and Chong, 1988; Diamantopoulos et al., 1990),was ranked next, together with problems caused by unfavorable foreign exchange rates.

The least inhibiting barriers were, in descending order, different product standards/specifi-cations, existence of inadequate and untrained export staff, unfamiliarity with foreign busi-ness practices, cultural and language diversity, difficulties in handling export documentation/procedures, and inability to offer technical/after-sales service to overseas customers. Threeof these barriers require further analysis: exporting staff constraints, which in a similar studyconducted among nonexporting firms within the same country was also found to be a weakrestrictive factor for export initiation (Leonidou, 1995b); handling documentation/proce-dures, which many other studies ranked as highly influential (e.g., Groke and Kreidle, 1967;Rabino, 1980; Yaprak, 1985; Cheong and Chong, 1988; Barker and Kaynak, 1992); and af-ter-sales service, whose insignificant effect can be attributed to developing country-based ex-porters being rarely responsible for marketing their goods abroad, a task usually undertakenby their business partners in overseas markets (Wortzel and Wortzel, 1981).

4.2. Conceptual classification of export barriers

Principal component analysis with varimax orthogonal rotation was employed to analyzethe interrelationships among the 20 export barriers. These were combined into six scales,

9

each containing the average of the items loading at .59 or above

10

and explaining 67.30% ofthe variance (see Table 2). Three barriers, namely, bad/deteriorating economic conditions,high political risk/instability, and high tariff/non-tariff barriers, had to be dropped from theanalysis because of low individual loadings. The Cronbach alpha coefficient was estimatedto assess reliability of the formative scales, this being the mean score calculated on the set ofbarriers comprising each extracted factor. Resulting alpha values ranged from

a 5

.67 to

a

5

.75, which are satisfactory according to Nunally and Bernstein’s (1994) guidelines forexploratory research. To test for construct validity, an interscale correlation was performed,

9

In determining the number of factors, both the latent root criterion and the scree test were employed. Thelatent root criterion, with a cutoff value of 1.0 for the eigenvalue, indicated that five factors would be retained,while the scree test pointed to six factors. In combining these two criteria, and taking into account the fact that theeigenvalue of the sixth factor was .92 (i.e., very close to 1.0), it was decided to retain six factors for further analy-sis (Hair et al., 1995).

10

According to Hair et al. (1995), item loadings of .50 or greater are considered practically significant andacceptable for describing a specific factor, loadings of .40 are considered important, and factor loadings greaterthan .30 are considered to meet the minimal level.

Fig. 1. Relative impact of barriers on export behavior. Mean scores (and standard deviations) based on afive point

Likert

–type scale ranging from 1 (strongly disagree) to 5 (strongly agree) that the specific bar-rier had a serious obstructing impact on ongoing export behavior.

134


Tab

le 2

Var

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ort

hogo

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rot

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pri

ncip

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ompo

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s an

alys

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f ex

port

bar

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s

Exp

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arri

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ems*

Ext

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acto

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pora

tere

sour

ceco

nstr

aint

sE

nvir

onm

enta

ldi

ffer

ence

s

Exp

ort

bure

aucr

acy/

legi

slat

ion

Gov

ernm

ent

apat

hy

Fore

ign

mar

ket

entr

y/op

erat

ing

diff

icul

ties

Com

petit

ive

pres

sure

sC

omm

unal

ities

Unf

amili

arity

with

for

eign

bus

ines

s pr

actic

es

.61

.01

.34

.15

2

.05

2

.07

.69

Inad

equa

te/u

ntra

ined

sta

ff

.76

.08

.17

.07

.09

2

.14

.65

Perc

eptio

n of

hig

h bu

sine

ss r

isks

/cos

ts a

broa

d

.76

2

.01

2

.10

.09

.24

.20

.70

Shor

tage

of

wor

king

cap

ital

.61

.07

.27

.12

.30

.26

.61

Dif

fere

nt c

usto

mer

hab

its/a

ttitu

des

.01

.79

.03

.18

2

.06

.09

.68

Dif

fere

nt c

ultu

ral t

raits

/lang

uage

abr

oad

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.23

2

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2

.05

.13

.77

Dif

fere

nt p

rodu

ct s

tand

ards

/spe

cifi

catio

ns

2

.08

.78

.08

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2

.09

.69

Dif

ficu

lty in

han

dlin

g do

cum

enta

tion/

proc

edur

es.2

5.1

8

.70

.20

.12

2

.03

.64

Res

tric

tions

impo

sed

by r

ules

/reg

ulat

ions

.02

.09

.80

.05

.14

2.0

5.6

7L

ack

of g

over

nmen

t ass

ista

nce/

ince

ntiv

es.0

62

.14

.18

.74

.20

.19

.68

Inad

equa

te tr

ansp

orta

tion/

infr

astr

uctu

ral f

acili

ties

.26

.25

.08

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.01

2.0

5.0

1L

imite

d in

form

atio

n to

loca

te/a

naly

ze m

arke

ts2

.02

.23

.36

.37

.59

.11

.57

Dif

ficu

lty in

loca

ting/

obta

inin

g re

pres

enta

tion

.18

.06

.39

2.0

7.6

6.3

1.7

3In

abili

ty to

off

er te

chni

cal/a

fter

-sal

es s

ervi

ce.3

9.3

22

.03

.29

.70

2.3

6.7

3U

nfav

orab

le f

orei

gn e

xcha

nge

rate

s.3

02

.06

.03

.15

.63

2.1

4.5

4E

xist

ence

of

keen

com

petit

ion

abro

ad.0

4.1

82

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L.C. Leonidou / Journal of International Management 6 (2000) 121–148 135

with all correlation coefficients appearing in the expected direction and being statisticallysignificant at a 5.05.

The first of the six factors conceptually connects four barriers to exporting: unfamiliarity withconducting foreign business, inadequate/untrained export personnel, prohibitive business risks/costs abroad, and shortage of working capital to finance overseas operations. Because these de-note handicaps in managerial, human, and financial resources that obstruct the firm from initiat-ing and subsequently expanding export business, this factor is titled corporate resource con-straints.11 The inhibiting role of insufficient corporate resources has been repeatedly emphasizedin the exporting literature, and, in fact, sometimes this has constituted a serious export impedi-ment (Cheong and Chong, 1988; Hook and Czinkota, 1988; Dichtl et al., 1990; Tseng and Yu,1991). However, in this study, some resources, such as those referring to personnel, were insig-nificant barriers, thus resulting in this factor receiving a moderate compound mean score.

The second factor was heavily loaded with three variables exemplifying differences be-tween the home and foreign markets on customer habits and attitudes, cultural traits and lan-guages, and product standards/specifications. These are basically problems associated withthe environment (both micro and macro) within which organizations operate, which was re-peatedly emphasized as being more diverse, complex, and dynamic in overseas than in domes-tic markets (Terpstra and Sarathy, 1997; Czinkota and Ronkainen, 1998). Environmental dif-ferences provide an appropriate label to capture the underlying dimension of these variables.This factor exhibited a low obstructing effect, as all constituent variables received low ranks.

The third factor pairs two highly related export obstacles—difficulties in handling exportdocumentation/procedures and restrictive foreign rules and regulations. The former showsproblems in understanding and efficiently using the export requirements of government min-istries, chambers of commerce, and financial institutions (Albaum et al., 1998). The latter re-fers to another export-specific problem, that of conforming to the numerous trade restrictionsimposed by foreign governments, such as license requirements, qualitative controls, and ex-tra taxes (Terpstra and Sarathy, 1997). This factor is termed export bureaucracy/legislation,its composite mean score being the lowest of the six-dimension solution.

The fourth factor links two export barriers that are straightforward in their conceptual in-terpretation: lack of government assistance/incentives offered to both current and would-beexporters and inadequate transportation/infrastractural facilities. Both parameters reflectgovernment unwillingness or indifference with regard to assisting indigenous exporters; yetgovernments can play a crucial role in assisting companies to identify foreign market oppor-tunities, understand export mechanics, and make prices more competitive (Howard and Her-remans, 1988; Kaynak and Erol, 1989). This factor could, therefore, best be described asgovernment apathy. Its mean score exemplifies a moderate effort of the government agenciesto assist indigenous exporters.

The fifth factor incorporates four export obstacles: limited available information on over-seas markets, difficulties in obtaining adequate foreign representation, inability to offer after-sales service, and unfavorable foreign exchange rates. These refer to problems associated

11Unfamiliarity with conducting foreign business, although seemingly an exogenous barrier, could also beregarded as a company resource constraint, in the sense that managers do not possess the skills or knowledge ofhow to do business abroad, which in turn hinders their company’s efficient export development.

136 L.C. Leonidou / Journal of International Management 6 (2000) 121–148

with preparing, establishing and operating business activities in international markets, whichhave been widely stressed by other exporting researchers in the past (Tesar and Tarleton,1982; Yaprak, 1985; Kaynak et al., 1987; Hook and Czinkota, 1988; Weaver and Pak, 1990;Moini, 1997). Taking this into account, the label foreign market entry/operating difficultieswas assigned to this factor, whose composite hindering effect was moderate.

The sixth factor, competitive pressures, comprises the remaining two export barriers,namely, the existence of keen competition abroad and the inability to offer satisfactory pricesto overseas customers. Both variables are conceptually very highly interrelated: whereas theformer stresses growing international competition, the latter focuses on a specific dimensionof it, specifically, that of offering attractive export prices. Substantial research in the field un-derscored the severity of competition as a problem encountered by exporters (e.g., Alexan-drides, 1971; Karafakioglu, 1986; Cheong and Chong, 1988). As mentioned earlier, both bar-riers were highly ranked in this study, giving the emerging factor the strongest obstructingimpact among all dimensions.

4.3. Organizational effects on export barriers

Based on the six factors extracted from the principal component analysis, the effect of anumber of organizational dimensions was next examined. These were identified from the ex-porting literature and referred to industry type, number of employees, sales turnover, busi-ness profitability, corporate assets, organizational age, background affiliations, and domesticmarket share (Leonidou, 1998). To facilitate the analysis, each of these variables was dichot-omized, with cutoff points closely linked to the median and/or mean. To identify differencesbetween the resulting groups in relation to the impact of export barrier factors, the Studentt-test for two independent samples was employed (see Table 3).

Among the identified organizational parameters investigated, length of the firm’s experiencein business exhibited the greatest effect overall, significantly affecting four out of the total sixexport barrier factors. Analytically, organizational age had a serious discriminating impact re-garding corporate resource constraints (t52.41, p50.02), environmental differences (t51.74,p50.09), export bureaucracy/legislation (t52.22, p50.03), and foreign market entry/operatingdifficulties (t53.52, p50.00). In all cases, the inhibiting effect of these factors was greateramong newly established than older firms, probably because of limited organizational re-sources, managerial expertise, and business knowledge (Welch and Wiedersheim-Paul, 1980).

The company’s home market share was also revealed as a serious organizational variableaffecting export barriers. Like business experience, domestic market share played a signifi-cant segregating role on corporate resource constraints (t53.00, p50.00), environmental dif-ferences (t52.50, p50.01), and foreign-market entry/operating difficulties (t53.20, p50.00).In fact, firms with a limited home market share emphasized these export problem areas morethan firms with a leading market position. This was equally true for competitive pressures,which was also strongly influenced by this organizational parameter (t51.84, p50.07). Thisfinding can be explained insofar as keen competition usually results in shrinking marketshares, thus oversensitizing low-market share firms to competitive pressures.

Sales turnover—often an indicator of company size—significantly affected half of the ex-port barrier factors. Specifically, firms with relatively low total revenues were shown to: (a)


Table 3Organizational effects on export barriers

Organizational parameters

Export barrier factors*

Corporateresourceconstraints

Environmentaldifferences

Exportbureaucracy/legislation

Governmentapathy

Foreign market entry/operatingdifficulties

Competitivepressures

Industry typeConsumer (n 5 77) 2.91 (.90) 2.72 (.96) 2.73 (1.01) 3.29 (1.02) 2.98 (.82) 4.17 (.79)Industrial (n 5 23) 2.52 (.92) 2.73 (.85) 2.55 (1.13) 3.00 (1.04) 2.71 (.86) 3.72 (.80)t-value 1.76 20.01 0.73 1.15 1.34 2.31p-value 0.08 0.99 0.47 0.25 0.18 0.02

Number of employeesBelow 50 persons (n 5 49) 2.96 (.89) 2.83 (.97) 2.55 (1.08) 3.27 (1.03) 3.07 (.83) 4.07 (.75)50 plus persons (n 5 51) 2.67 (.92) 2.66 (.89) 2.83 (.99) 3.18 (1.03) 2.78 (.80) 4.07 (.88)t-value 1.52 1.10 21.32 0.42 1.73 0.00p-value 0.13 0.28 0.19 0.68 0.09 1.00

Sales turnoverBelow $2.5 million (n 5 41) 3.08 (.88) 2.91 (1.00) 2.62 (1.10) 3.39 (1.02) 3.31 (.81) 4.20 (.71)$2.5 million or above (n 5 59) 2.63 (.90) 2.60 (.87) 2.74 (.99) 3.11 (1.03) 2.64 (.72) 3.97 (.87)t-value 2.40 1.68 20.54 1.30 4.28 1.41p-value 0.02 0.09 0.59 0.20 0.00 0.16

Business profitabilityNonprofitable (n 5 47) 2.98 (.86) 2.93 (.99) 2.54 (1.07) 3.33 (1.05) 3.16 (.85) 4.19 (.73)Profitable (n 5 53) 2.66 (.94) 2.54 (.84) 2.82 (1.01) 3.14 (1.00) 2.70 (.74) 3.96 (.88)t-value 1.73 2.11 21.34 0.90 2.88 1.41p-value 0.09 0.04 0.18 0.37 0.01 0.16

Corporate assetsBelow $2.5 million (n 5 40) 2.87 (.86) 2.97 (.98) 2.56 (1.06) 3.19 (1.07) 3.19 (.82) 4.19 (.75)$2.5 million or above (n 5 60) 2.77 (.95) 2.56 (.87) 2.76 (1.02) 3.25 (1.01) 2.74 (.78) 3.99 (.85)t-value 0.53 2.17 21.00 20.27 2.71 1.18p-value 0.59 0.03 0.32 0.79 0.01 0.24

Organizational ageBelow 20 years (n 5 42) 3.07 (.96) 2.92 (.95) 2.95 (1.11) 3.34 (1.10) 3.24 (.97) 4.03 (.82)20 years or more (n 5 58) 2.62 (.83) 2.59 (.91) 2.49 (.94) 3.14 (.97) 2.68 (.60) 4.10 (.81)t-value 2.41 1.74 2.22 0.94 3.52 20.38p-value 0.02 0.09 0.03 0.35 0.00 0.71

Background organizationNonexistent (n 5 74) 2.91 (.89) 2.74 (.93) 2.62 (1.05) 3.21 (1.02) 3.03 (.82) 4.09 (.83)Existent (n 5 26) 2.49 (.93) 2.69 (.96) 2.89 (1.00) 3.27 (1.06) 2.58 (.75) 4.00 (.78)t-value 1.97 0.21 21.12 20.24 2.38 0.49p-value 0.05 0.84 0.26 0.81 0.02 0.62

Domestic market shareBelow 20% (n 5 52) 3.07 (.87) 2.95 (1.04) 2.63 (1.08) 3.27 (.98) 3.16 (.83) 4.21 (.67)20% or more (n 5 47) 2.53 (.87) 2.49 (.74) 2.76 (.99) 3.17 (1.08) 2.65 (.74) 3.91 (.93)t-value 3.00 2.50 20.64 0.48 3.20 1.84p-value 0.00 0.01 0.52 0.63 0.00 0.07

*Mean scores (and standard deviations) for the subsamples of each organizational parameter was based on afive-point Likert-type scale ranging from 1 (strongly disagree) to 5 (strongly agree).


experience such problems as inadequate export staff, shortage of working capital, and pro-hibitive foreign business risks, probably because of limited corporate resources (t52.40,p50.02); (b) perceive more cultural, customer, and product differences in the foreign busi-ness environment (t51.68, p50.09); and (c) encounter more difficulties in the internationalmarketplace, such as analysing business opportunities, obtaining adequate representation,and providing after-sales service (t54.28, p50.00). These findings, particularly those refer-ring to resource limitations, are consistent with earlier research (e.g., Barker and Kaynak,1992; Katsikeas and Morgan, 1994).

Similar results apply to the effect of business profitability on factors obstructing exportbehavior.12 This organizational parameter significantly affected the following export barrierfactors: corporate resource constraints (t51.73, p50.09), environmental differences (t52.11,P5.04), and foreign market entry/operating difficulties (t52.88, p50.01). Notably, all thesefactors had a stronger impact among nonprofitable, as opposed to profitable, firms. Two pos-sible explanations with a different causal direction can be given for these results: one refersto the weakness characterizing nonprofitable firms in raising funds necessary for research-ing, entering, and sustaining overseas markets; the other explanation is associated with thefact that the severity of export problems can result in a company having a poor business per-formance overall.

The differentiating role of company assets13 related to only two factors obstructing exportbusiness: (a) problems associated with environmental differences, such as habits and atti-tudes, cultural characteristics, and product standards, which exhibited a greater impact onfirms with limited assets (t52.17, p50.03); and (b) difficulties in entering and subsequentlyoperating in foreign markets, which were stressed more by firms with low assets (t52.71,p50.01). Surprisingly, this study failed to establish a link between assets—an indication ofthe amount of a company’s resources—and various resource-sensitive barriers, such as cor-porate resource constraints.

Analysis of industry type, distinguishing between consumer and industrial goods, revealeda limited impact on export barriers. In fact, significant differences were observed for two ex-port barrier factors only: corporate resource constraints (t51.76, p50.08) and competitivepressures (t52.31, p50.02). For these two barriers, as well for all remaining barriers, the com-pound mean score was higher among manufacturers of consumer than industrial products, con-firming the thesis that consumer goods face more difficulties and problems in the interna-tional marketplace because of greater cultural sensitivity (Czinkota and Ronkainen, 1998).

Firm affiliation with a background organization also exhibited a serious discriminatingrole on two impediments to exporting. Specifically, companies lacking backup support were

12To distinguish participant firms in terms of business profitability, these were asked to report the total amountof their last year’s profits achieved in both domestic and foreign markets; based on this information, they weresubsequently classified into profitable (making profits) and nonprofitable (making losses or breaking even). Thefact that approximately half of the sample firms fell under the nonprofitable category can be partly attributed tocorporate constraints, market inefficiencies, and the intense competition characterizing developing countries(Kinsey, 1988).

13An attempt to examine the effect of return on assets (ROA) on export barriers was abandoned, since some ofthe respondents provided information about their profits and/or assets using interval rather than ratio scales.


revealed as more vulnerable to corporate resource constraints (t51.97, p50.05) and foreignmarket entry/operating difficulties (t52.31, p50.02). These results have an obvious interpre-tation: in the first case, the financial, human, marketing, and other support that a backgroundorganization can provide help to alleviate problems in resource limitations when penetratingoverseas markets (Dominguez and Sequeira, 1993); in the second case, the company canmore easily cope with problems of entering and subsequently operating in foreign marketsvia transference of resources, expertise, and management from its affiliated business units(McConnel, 1979).

Firm size, measured as number of employees, had the least effect on export barriers, asdemonstrated by the fact that it was influential only in relation to one barrier, foreign marketentry and operation (t51.73, p50.09). Indeed, the study has shown that firms employing asmall number of persons are more susceptible to such difficulties, as compared to those hav-ing a greater number of employees. This can be partly attributed to the fact that personnellimitations in small firms make the task of identifying and operating in foreign markets prob-lematic (Gomez-Mejia, 1988). Notably, although the number of employees was expected tohave a serious impact on corporate resource constraints, this was not validated by the study.

The above analysis clearly shows that only certain types of barriers are influenced by or-ganizational parameters. Specifically, organizational effects were more evident in the case offoreign market entry/operating difficulties, corporate resource constraints, and environmen-tal differences, which are, essentially, barriers that can be controlled and handled by the ex-porting firm. For instance, acquiring information about foreign markets, finding workingcapital to finance exports, and offering products according to the standards/specifications re-quired by foreign customers constitute problems that can be resolved internally by the ex-porting organization. On the contrary, the results indicate that organization-specific charac-teristics play a limited role in the case of exogenous barriers that are beyond the control ofthe exporter, such as competitive pressures, export bureaucracy/legislation, and governmentapathy.

4.4. Internationalization effects on export barriers

Export barrier factors were also considered in relation to various aspects of the firm’s in-ternationalization status identified from a thorough review of the pertinent literature, namely,export experience, export regularity, export aggressiveness, foreign entry mode, psychic dis-tance, expansion strategy, export sales intensity, and export profit contribution (Leonidouand Katsikeas, 1996). As for organizational aspects, each internationalization parameter wassplit into subgroups based on the median and/or mean, and differences in their mean scoreswere checked using the Student t-test for two independent samples (see Table 4).

Of the internationalization parameters investigated, export experience had the strongestsegregating effect, since it significantly affected five out of the total six export barrier fac-tors. These refer to corporate resource constraints (t52.33, p50.02), environmental differ-ences (t51.69, p50.09), export bureaucracy/legislation (t51.78, p50.08), government apathy(t51.67, p50.09), and foreign market entry/operating difficulties (t52.38, p50.03). Thesebarriers were rated more highly by novice than by experienced exporters, confirming earlierpostulations that the export initiation is the most critical because at this stage many serious


Table 4Internationalization effects on export barriers

Export barrier factors*

Internationalizationparameters

Corporateresourceconstraints

Environmentaldifferences

Exportbureaucracy/legislation

Governmentapathy

Foreignmarket entry/operatingdifficulties

Competitivepressures

Export experienceBelow 10 years (n 538) 3.09 (.93) 2.93 (.93) 2.92 (1.11) 3.45 (.90) 3.16 (.91) 4.16 (.67)10 years or more (n 5 62) 2.65 (.87) 2.61 (.92) 2.54 (.97) 3.09 (1.08) 2.78 (.74) 4.02 (.89)t-value 2.33 1.69 1.78 1.67 2.28 0.86p-value 0.02 0.09 0.08 0.09 0.03 0.39

Export regularityIntermittent (n 5 31) 3.10 (.87) 2.89 (.97) 2.77 (1.10) 3.68 (.77) 3.32 (.85) 4.11 (.68)Continuous (n 5 69) 2.69 (.91) 2.66 (.91) 2.65 (1.01) 3.02 (1.06) 2.74 (.75) 4.05 (.87)t-value 2.08 1.14 0.55 3.06 3.43 0.34p-value 0.04 0.26 0.58 0.00 0.00 0.73

Export aggressivenessPassive (n 5 20) 3.40 (.87) 3.18 (.87) 3.00 (1.14) 3.55 (.80) 3.29 (.78) 4.24 (.54)Active (n 5 80) 2.68 (.87) 2.62 (.92) 2.61 (1.01) 3.15 (1.06) 2.83 (.81) 4.03 (.86)t-value 3.17 2.39 1.46 1.56 2.44 0.99p-value 0.00 0.02 0.15 0.12 0.02 0.33

Foreign-entry modeIndirect (n 5 10) 3.25 (.80) 3.22 (1.14) 2.78 (.83) 3.39 (.78) 3.25 (.57) 4.16 (.56)Direct (n 5 90) 2.78 (.91) 2.68 (.90) 2.68 (1.06) 3.21 (1.05) 2.89 (.84) 4.06 (.84)t-value 1.41 1.68 0.27 0.50 1.25 0.37p-value 0.16 0.09 0.79 0.62 0.21 0.71

Psychic distanceLow (n 5 56) 3.00 (.85) 2.68 (.95) 2.66 (1.01) 3.32 (.92) 3.02 (.80) 4.05 (.80)High (n 5 44) 2.57 (.94) 2.79 (.92) 2.73 (1.09) 3.10 (1.15) 2.80 (.85) 4.09 (.83)t-value 2.34 20.60 20.31 1.00 1.31 20.23p-value 0.02 0.55 0.76 0.32 0.19 0.82

Expansion strategyBelow 5 markets (n 5 44) 3.06 (.82) 2.64 (1.03) 2.61 (1.00) 3.35 (.90) 2.98 (.74) 4.10 (.69)5 markets or more

(n 5 56) 2.62 (.94) 2.80 (.86) 2.75 (1.08) 3.13 (1.11) 2.88 (.90) 4.04 (.90)t-value 2.41 20.80 20.64 1.05 0.64 0.36p-value 0.02 0.43 0.52 0.30 0.52 0.72

Export sales intensityBelow 50% (n 5 62) 2.76 (.82) 2.74 (.96) 2.67 (1.01) 3.34 (.95) 2.97 (.81) 4.02 (.84)50% or more (n 5 38) 2.92 (1.05) 2.71 (.91) 2.71 (1.10) 3.03 (1.13) 2.85 (.86) 4.16 (.76)t-value 20.82 0.14 20.14 1.48 0.69 20.86p-value 0.41 0.89 0.89 0.14 0.49 0.39

Export profit contributionBelow 50% (n 5 72) 2.81 (.92) 2.67 (.96) 2.68 (1.03) 3.30 (1.01) 2.91 (.82) 4.05 (.83)50% or more (n 5 28) 2.84 (.91) 2.88 (.85) 2.71 (1.09) 3.02 (1.07) 2.95 (.87) 4.12 (.78)t-value 20.12 20.97 20.13 1.21 20.20 20.44p-value 0.91 0.33 0.90 0.23 0.84 0.66

*Mean scores (and standard deviations) for the subsamples of each internationalization parameter were basedon a five-point Likert-type scale ranging from 1 (strongly disagree) to 5 (strongly agree).


problems may occur. In fact, any failure at this point might negatively affect the firm’s futureadvance along the internationalization path, or even cause its complete withdrawal (Welchand Wiedersheim-Paul, 1980).

Export aggressiveness, defined as the degree to which the firm had actively or passivelysought its first export order, was ranked second in terms of discriminating impact. This pa-rameter was influential on half of the export barrier factors, namely corporate resource con-straints (t53.17, p50.00), environmental differences (t52.39, p50.02), and foreign marketentry/operating difficulties (t52.44, p50.02), with passive (as opposed to active) exportersmore sensitive to all these factors. This implies that firms adopting an ill-prepared and half-hearted approach toward overseas operations are more likely to be exposed to problems, suchas shortage of working capital, difficulties in understanding foreign customers, and inade-quate representation in overseas markets. It also emphasizes the crucial role of planning andorganizing in successful export operations (Cooper and Kleinschmidt, 1985; Evangelista,1994).

Export regularity, that is, the degree to which the product is exported on an intermittent orsystematic basis, played a serious differentiating role in three obstructing factors. The firstrelates to corporate resource constraints, as in the case of shortages in human, financial, andother resources (t52.08, p50.04). The second is government apathy, exemplifying inade-quate monetary, informational, and other support on the part of governmental agencies toboth current and potential exporters (t53.06, p50.00). The third concerns difficulties associ-ated with the identification, representation, and servicing of foreign markets (t53.43,p50.00). Notably, all three barriers were stressed more by manufacturers adopting an inter-mittent, rather than systematic, approach to exporting.

Foreign entry mode, indirect or direct, influenced only one export barrier: environmentaldifferences (t51.68, p50.09). Specifically, firms selling via indirect methods, such as residentbuyer, piggyback, or export trading company, are more severely obstructed by environmen-tal differences, as opposed to those who use direct distribution. This finding is easily inter-preted: The less control the company has over its foreign market distribution, the more unfa-miliar it will be with the sociocultural, political-legal, economic, and other characteristicsshaping the international business environment, and vice versa (Terpstra and Sarathy, 1997;Czinkota and Ronkainen, 1998).

Psychic distance, defined as the sum of forces preventing or disturbing the flow of infor-mation between the firm and its overseas markets (Johanson and Wiedersheim-Paul, 1975;Johanson and Vahlne, 1978, 1990),14 was an effective discriminant parameter on corporateresource constraints alone (t52.34, p50.02). This was rated more highly by companies sell-ing their goods to countries that are psychologically close to them, as opposed to those ex-porting to distant markets. To some extent, this finding is reasonable, since this factor incor-porates two important dimensions conducive to greater distance: unfamiliarity with foreignbusiness practices, and perception of higher risks and costs abroad. Apart from this, one

14Psychic distance was measured based on Dichtl et al.’s (1983) methodology, whereby each exporter placesthe countries to which the company’s products are sold on 10 concentric circles, ranging from 1 (smallest circle)to 10 (largest circle), with his/her country at the center.


would also expect significant results with respect to a number of other barriers—especiallyenvironmental differences—although this was not confirmed by the study findings.

Corporate resource constraints was also the only export barrier influenced by the firm’sexpansion strategy in overseas markets, defined as the number of countries where the firmsells its goods, with market concentrators selling to four countries or less, and market spread-ers exporting to a greater number of countries. Firms adopting a market concentration strat-egy are more vulnerable to problems such as inadequate export staff, cash-flow difficulties,and lack of internationally minded managers, which limit their foreign market expansion po-tential (t52.41, p50.02). This finding contradicts a recent study that concluded that marketconcentrators experience more problems regarding the product adaptation needs of the cus-tomers abroad (Katsikeas and Leonidou, 1996).

The last two internationalization parameters, export sales intensity (the proportion of ex-port sales to total corporate sales) and export profit contribution (total corporate profits fromexport operations), had no significant effect whatsoever on export barrier factors. In fact,apart from government apathy, which was stressed more by firms whose sales and profits de-rived mainly from domestic business, differences between subcategories of the two parame-ters were marginal. This finding is to some extent antithetical to past research, which indi-cated that at least some export problems vary in accordance with export sales intensity orexport profit contribution (Weekly and Bardi, 1975; Katsikeas and Morgan, 1994).

Interestingly, internationalization parameters exhibited a greater discriminating effect onthose export barrier factors that were also affected by organizational characteristics,namely, foreign market entry/operating difficulties, corporate resource constraints, and en-vironmental differences. This implies that experienced, regular, and aggressive exportersare in a better position to handle problems that are within their sphere of control. For in-stance, firms that are in more advanced stages of the export development process are morelikely to become familiar with foreign business practices, understand foreign cultures andcustomers, and obtain satisfactory representation abroad. As in the case of organizationalfactors, the firm’s internationalization status had no serious segregating effect on such un-controllable and external barriers as government apathy, export bureaucracy/legislation, andcompetitive pressures.

5. Concluding remarks

The aim of this article was to contribute to the exporting literature by offering a systematic,organized, and integrated analysis of export barriers, an issue of growing concern for the inter-national manager. In this respect, the article (a) provided a critical review of the extant empir-ical research on the subject from which a comprehensive list of export barriers was identified;(b) carried out a sound methodology for researching barriers to exporting from a developingcountry context; (c) assessed the obstructing impact of export barriers, drawing at the sametime comparisons with earlier research; (d) offered a meaningful conceptual categorization ofexport barriers, useful for further analytical purposes; (e) revealed the hitherto neglected roleof key organizational parameters on export barriers; and (f) shed light on the relatively unex-plored link between company internationalization dimensions and export barriers.


The value of the present study should, of course, be seen within the context of a number oflimitations. First, due to time and cost constraints, the study was confined to a single develop-ing country setting and provided only a snapshot of the problems experienced by indigenousfirms in export markets. Second, although the initial intention was to investigate barriers inrelation to different export destinations, this proved difficult in practice because some firmssold their goods to many countries. Third, the findings would be more illuminating if the fre-quency, importance, intensity, and other dimensions of export barriers had been simulta-neously examined, as opposed to only measuring their obstructing impact. Fourth, because ofthe exploratory nature of the study, only implicit inferences were made as to the direction ofcausality between organizational/internationalization parameters and export barriers.

Notwithstanding these limitations, a number of conclusions can be drawn. First, the studystresses the serious obstructing effect that global competition exerts overall on export man-agement decisions; this, coupled with deteriorating economic conditions in major export des-tinations and the inability to offer satisfactory prices to overseas customers, constitutes se-vere problems for exporters, affecting not only their financial performance, but even theirvery survival in the international marketplace. Moreover, the fact that many barriers associ-ated with operating difficulties in foreign markets were not rated highly by participant firms,in contrast to exporters in other countries, must be further considered within the context ofcountry-specific factors. For instance, customer habits/attitudes, product standards/specifica-tions, technical/after-sales service, as well as other export operational problems, did not rep-resent severe obstacles for Cypriot exporters, who merely sell production capacity, leavingmost marketing tasks abroad to their foreign trading partners (Leonidou, 1989).

The fact that the emerging six-dimensional structure from the principal component analy-sis revealed adequate variance explanation, highly reliable scales, and satisfactory constructvalidity, indicates that the emerging classification of export barriers could be a useful analyt-ical tool. Notably, this classification shares many similarities with other attempts to categorizebarriers to exporting (Bauerschmidt et al., 1985; Sharkey et al. 1989; Katsikeas and Morgan,1994; Morgan and Katsikeas, 1997). This, in turn, could prove beneficial for policy-makingpurposes, in that it can both pinpoint the most significant problem areas for exporting firmsand suggest corrective actions. For example, the high impact recorded by the competitivepressures factor could lead toward more accurate, focused, and coordinated efforts by bothcorporate and government officials to alleviate this situation.

The study demonstrates that the general discriminating effect of organizational character-istics on export barriers is substantial, particularly as regards those barriers that managementhas the possibility to control. In this connection, several conclusions can be drawn. First,manufacturers with only a few years in business are more vulnerable to export barriers thanexperienced firms, the exception being problems relating to government apathy and compet-itive pressures, which are common to both groups of firms. Second, small and less profitablebusiness units also show greater vulnerability to export problems, particularly those associ-ated with resource constraints, environmental differences, and operating difficulties in for-eign markets. Third, producers of consumer goods are more frequently exposed to corporateresource constraints and competitive pressures compared to their counterparts selling indus-trial products. Finally, firms lacking background organizational support experience greaterexport problems relating to resource limitations and foreign-market entry barriers.


Internationalization parameters affected the same export barriers as organizational vari-ables but demonstrated a lesser discriminating effect. Yet some interesting observations canbe made on the basis of this analysis. First, the firm’s export experience was found to be in-versely related to export barriers; that is, the less time the firm has been engaged in overseasoperations, the more acutely are export-related problems perceived. Similar observations ap-ply to export regularity and aggressiveness: intermittent and passive exporters are morelikely to overstress export barriers, especially those referring to corporate resource con-straints and foreign-market entry/operating difficulties. The number of overseas markets towhich the firm sells its goods, as well as the perceived psychological distance from them,seem to have no effect on export barriers apart from corporate resource constraints. Surpris-ingly, this study found that neither export sales intensity nor export profit contribution hadany link at all with barriers to exporting.

6. Policy-making implications

Several implications for both corporate and public policy-makers, especially from smalldeveloping countries like Cyprus, can be derived from the above conclusions. First, there is apressing need to improve the competitiveness of indigenous exporters, especially in view ofthe fact that competition in global markets is ever increasing. One way to achieve this is bygradually building up a competitive edge on skills, capabilities, and resources on which theexporter’s country can draw. Moreover, there is a need to reduce costs, and to this end it issuggested that existing out-of-date production and operation methods be replaced by moremodern techniques. Furthermore, because developing country-based exporters are small byinternational standards, they should specialize in serving specific niches in foreign marketsthat are not under the immediate threat of large competitors from developed countries; smartniching, although offering low shares in the total market, can prove very profitable for thesefirms.

To guarantee long-term viability and success in the global marketplace, developing coun-try-based exporters should begin to take more initiatives when selling their goods abroad andinternalize all export marketing tasks currently performed by their import customers. Thiswould gradually reduce both the nature and intensity of export problems and allow indige-nous firms to improve their marketing, financial, and other business capabilities. This couldbe achieved, for example, through closer collaboration with overseas customers, formingjoint ventures with foreign manufacturers, and even creating strategic alliances with otherexporters. In addition, more frequent visits abroad would give exporters valuable hands-onexperience in international markets and more confidence for independent action.

Better targeting of foreign markets could resolve or reduce problems with deterioratingeconomic conditions, high political instability, and other environmental adversities abroad.Development of an international management information system to gather, analyze, andevaluate timely and accurate data on global market opportunities should be a high priority.Indeed, most exporters participating in this study complained that the information currentlyavailable is too limited for effectively locating, analyzing, and handling business opportuni-ties. Most important, there is a need to employ appropriate forecasting techniques to identify


changes in the global marketplace so that precautionary/corrective measures can be takenwell before difficulties arise.

The study reveals that manufacturers feel they are on their own when involved in exporting,obtaining only imperceptible support from government and other parastatal organizations. It isimperative, therefore, to provide such external support—especially in light of the serious exportbarriers encountered—preferably in the form of financial, educational, and marketing aid. Fi-nancial incentives might include low-interest loans, transport subsidies, and tax relief. Educa-tional assistance could come from the organization of export-specific seminars and confer-ences, the provision of counseling on export business procedures, as well as the running ofworkshops aiming to highlight the practical aspects of exporting. Marketing support could takethe form of advice on how to select foreign representatives, how to adapt the company’s prod-ucts to overseas customer requirements, and how to offer attractive export prices.

Finally, because certain barriers to exporting tend to vary in accordance with organiza-tional and internationalization parameters, any export promotion programs must be carefullytailored to the specific needs of exporters. Organizationally, the export promotion effortshould primarily target small, inexperienced manufacturing firms that lack networking withother companies. From the internationalization standpoint, the emphasis should be on nov-ice, sporadic, and passive exporters. In both cases, export promoters should pay particular at-tention to problems with corporate resource constraints, differences between home and hostenvironments, and difficulties in operating in foreign markets. However, this is not to sug-gest that the remaining exporting population be left outside the range of these programs;rather, any assistance provided to them should be of a more generic nature.

Acknowledgments

The author would like to thank the editors and the anonymous reviewers of the Journal ofInternational Management for their valuable insights and constructive comments on previ-ous versions of the article.

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Barriers to export management: an organizational and internationalization analysis