The effect of firm characteristics and the propensity to export decision in food industry

Article history: Received December 2, 2013 Accepted 8 May 2014 Available online May 11 2014 This paper presents an empirical investigation to study the effects of firm and management team’s characteristics to develop food industry. The proposed study considers four factors associated with firms and 9 factors, which are related to management team’s characteristics. There were 50 firms in food industry in province of Tehran, Iran and the study has been accomplished among all 50 existing firms. For each firm, between 2-3 questionnaires were distributed among experts in each firm. Cronbach alpha has been calculated as 0.879, which is well above the minimum acceptable level. The results indicate that management knowledge about export market was number one important factor followed by the level of technology used, competitive advantage, believe in being profitable. © 2014 Growing Science Ltd. All rights reserved.


Introduction
Expert has been considered as the axis of economic development especially for development countries (Aaby & Slater, 1989).Suárez-Ortega and Alamo-Vera (2005) investigated the specific organizational and managerial determinants of the various characteristics of a firm's export development process including intention, propensity, and intensity.Their results confirmed that factors impacting export involvement were not the same along the process of export development.Atuahene-Gima (1995) investigated the role of new product factors in the firm's propensity to export and its performance in exporting new products based on a sample of Australian firms.They reported that product advantage, proficiency of predevelopment activities, and international orientation of the development process had substantial positive impact on the firm's propensity to export new products.In addition, the new product's domestic market performance and its effect on the sales and profitability of other products of the firm were substantially associated with its export performance.Finally, they reported that firm factors overwhelm new product factors in explaining export performance of new products.Export marketing has covered a number of theoretical and practical issues such as standardization and customization, export development processes, obstacles to exporting, export performance, etc. (Kaynak & Erol, 1989;Javalgi et al., 2000;Balabanis et al., 2005).Cadogan et al. (2001) developed a model of the key determinants of firms' market-oriented activities in their export operations on survey data from New Zealand and Finland.They reported that various factors, which were unique to firms' export operations, could play an essential role in impacting the firms' export market-oriented behavior.The findings also confirmed various variables, which have non-linear relationships with firms' market-oriented behavior in their export markets.Cavusgil and Zou (1994) studied the marketing strategy-performance relationship in the context of export ventures.The study was different from past export marketing investigation since they considered a comprehensive set of potential determinants of export market performance.They proposed a conceptual framework of export marketing strategy and performance and examined using path analysis.They provided some supports on the contention that export marketing strategy, firm's international competence, and managerial commitment were the key components of export performance.In their study, export marketing strategy was affected by internal as well as external factors.Chi and Sun (2013) in an empirical investigation reported various key antecedents such as export reward and training systems, top management support, and export dependence, which could facilitate the development of firm's export market oriented (EMO) behavior while determining the specific moderating influences of environment and experience, and therein described a large percentage of variance in EMO behavior.Estrin et al. (2008) extended the theory of the multinational enterprise and the institutional perspective of strategy by investigating subsidiary-specific advantages as a driver of subsidiary exports.They also made a distinction between the factors affecting whether or not subsidiaries were exporting and those determining the share of sales, which were exported.In addition, they presented some support for these arguments based on a Heckman two-stage selection model estimation in Hungary, Poland, India and South Africa, Egypt and Vietnam.In their survey, the quality of the host institutional environment did not influence on export propensity, which depends entirely on subsidiary-specific advantages in terms of geographic location, acquired resources and small scale of the parent MNE.Filatotchev et al. (2009) investigated factors influencing the export orientation and export performance of high-technology small and medium enterprises (Hamilton & Dana, 2003) in an emerging economy Combining international business research with the knowledge-based view.They argued that export orientation and performance depend not only on the development of capabilities through research and development as well as technology transfer, but also on entrepreneurial characteristics, such as the founder's international background and global networks.Fillis (2007) made an assessment on an alternative methodological method to investigate international entrepreneurship, which mirrors the creativity of successful entrepreneurial organizations.Gumede and Rasmussen (2002) reported that business linkages such as networks, joint ventures and subsidiaries play essential role in increasing the probability to export of small enterprises.Besides, access to information, access to capital and the level of education may also increase the probability of a small enterprise to be an exporter.Therefore, they recommended that a national small business strategy could incorporate an element of networking amongst small enterprises and that small enterprise programs need to encourage intermediaries to help not only with networks but also with international market intelligence.Hutchinson et al. (2009) studied the initial obstacles to internationalization experienced and perceived by small retailers based in the UK and the effect of government support in addressing such barriers.They reported that lack of vision, fear of losing control, lack of knowledge; the company: transfer of retail concept overseas, lack of resources, lack of consolidation in domestic market are the most important issues influencing the success of firms.Jones (2001) provided some empirical evidence consisting of quantitative data on their first steps in internationalization and reported that, as expected from previous empirical evidence, trade-related activities, i.e., importing and exporting, were the modes of activity most frequently reported.Katsikeas et al. (2000) evaluated more than 100 papers of pertinent empirical investigation to evaluated and to critique export performance measurements and provided some insights.Shaw and Darroch (2004) presented the findings of a comprehensive investigation on the perceptions of the barriers to internationalization by 561 New Zealand Entrepreneurial New Ventures (ENVs).They identified substantial differences in the perception of the barriers based on the level of international activity of New Zealand ENVs.In their survey, exporters and likely exporters considered the main obstacles to internationalization to be finance and cost-associated factors.Insufficient New Zealand government incentives were also observed to be a major barrier for the lack of international experience to be a hindrance.

The proposed study
This paper presents an empirical investigation to study the effects of firm as well as management team's characteristics to develop food industry (Morgan, 1997;Morgan et al., 2004;Obben & Magagula, 2003;Stoian et al., 2011).The proposed study considers four factors associated with firms and 9 factors, which are related to management team's characteristics.There were 50 firms in food industry in province of Tehran, Iran and the study has been accomplished among all 50 existing firms.For each firm, between 2-3 questionnaires were distributed among experts in each firm.Cronbach alpha has been calculated as 0.879, which is well above the minimum acceptable level.In our survey, 64.5% of the participants were less than 35 years old and in terms of educational background, 41.9% of them hold Bachelor of Science and 39.1% of them had master's degrees.Finally, in our survey, most participants had at least 6 years of job experiences.

Firm related hypotheses
The first four hypotheses of the survey are associated with firms' characteristics as follows, 1. Firm size influences on the propensity to export decision in food industry (Verwaal & Donkers, 2002;Vermeulen, 2004;Serra et al., 2012).
2. Competitive advantage influences on the propensity to export decision in food industry (Lages & Lages, 2004).
3. The level of technology oriented influences on the propensity to export decision in food industry (Sentürk & Erdem, 2008).
4. Firm age influences on the propensity to export decision in food industry.
Table 1 demonstrates the results of testing the first four hypotheses associated with firm's characteristics.34, 4.26, 4.23 and 3.49, which are all above the average and we can confirm the effects of four factors on the propensity to export decision in food industry.

The effects of management characteristics
The second part of the survey is associated with the effects of management characteristics.As stated earlier, there are nine hypotheses associated with our survey as follows, 4. Young management teams in food industry are more interested in export.
5. Highly educated management teams in food industry are more interested in export.
6. Management teams with full knowledge on other international languages in food industry are more successful in export.
7. Managers who take more risks in food industry are more interested in export.
8. Managers who believe export cost more than domestic sales in food industry are less interested in export (Solberg, & Nes, 2002).9. Managers who believe in export's advantage are more interested in export.
10.More commitment managers in food industry are more interested in export.
11. Managers of old firms in food industry are more interested in export.
12. Managers with high level of international rules and regulations (Cateora & Hess, 1975) are more interested in export.
13. Managers with knowledge with rules and regulations of the target market in food industry are more interested in export.
Table 2 presents the results of testing the next nine hypotheses associated with management characteristics.Similar to what we have found in the previous section, all mean values are well above the average level and we can confirm that all management characteristics influence on development of export, significantly.

Freedman test
One of the primary concerns on testing various hypotheses of the survey is to learn more about the effects of various factors on export development, which has been accomplished by using Freedman test summarized in Table 3 as follows, The results indicate that management knowledge about export market is number one important factor followed by the level of technology used, competitive advantage, believe in being profitable.

Conclusion
In this paper, we have presented an empirical investigation on the effects of two group factors on export development.The first group of factors has been associated with four factors including firm size, competitive advantage, technology and firm age.The study has confirmed that large and older firms have had better potentials for export development.In addition, firms with better competitive advantage as well as advanced technology are more likely to succeed in export development.The second group of factors was related to managers' personal characteristics such as age, educational background, language capabilities, etc.The study confirmed the effects of all these factors on export development.Finally, the implementation of freedman test has concluded that management knowledge about export market was number one important factor.In addition, the level of technology used, competitive advantage, believe in being profitable were other important factors influencing export development.Finally, in our survey, firm's age and management are the least important factors.

Table 1
The summary of some basic statistics and testing firm's characteristics According to the results of Table1, the mean of four hypotheses are 3.

Table 3
The summary of freedman test