Table Of ContentBehind the Exporters’ Success: Analysis
of Successful Hungarian Exporter Companies
From a Strategic Perspective
AnnamariaKazaiOnodi
CorvinusUniversityofBudapest,Hungary
[email protected]
KrisztinaPecze
CorvinusUniversityofBudapest,Hungary
[email protected]
Thepurposeofthestudyistoprovideanoverviewofexportsuccessfrom
astrategicmanagementperspective.Thepaperempiricallytestedtherela-
tionshipsbetweenthefirm’sexportperformance,strategicthinking,adap-
tationtothechangingenvironmentandcompanies’capabilities.There-
searchisbasedontheHungarian CompetitivenessResearchdatabaseof
2013 that consists of 300 firms. Cluster analysis differentiated successful
export-oriented and stagnant companies. Both of them had high export
intensity(higherthan75),butsignificantdifferencescouldbeobserved
in export volume and profitability. More than 90 of total export rev-
enuebelongedtothesuccessfulexport-orientedcluster.Successfulexport-
orientedcompaniesprovedtobemoreproactiveandinnovativethanstag-
nant,thustheywerecapableofadaptingtothechangingenvironmentbet-
ter.Thestudyhighlightedthatappropriatestrategicthinkingcouldplaya
significantroleinimprovingexportsuccess.Theimplicationofthestudy
isthatstagnantcompaniesneedtodeveloptheirforecastabilities,flexibil-
itytoadapttothechangingenvironmentandoperationalefficiency.Stag-
nantcompanies lagged behindsuccessful exporters concerning industry
forecast,productionlevel,numberofinnovations,competitivepricesand
employeequalifications.
KeyWords:internationalisation,export,performance,
HungarianCompetitivenessResearchSurvey,strategy
jel Classification: c38, l21, m16
Introduction
Overthepastfewdecades,exportinghasbeenoneoftheeconomictopics
tobeexplored.Itisacommonviewamongstresearchersthatexporting
firms’competitivenesshasastrongeffectonnationalexportcompetitive-
ness(Porter1990).Inaddition,thereisanincreasingattentiontoglobal
ManagingGlobalTransitions12(4):325–346
326 AnnamariaKazaiOnodiandKrisztinaPecze
competition in the foreign marketsby researchersas well as practition-
ersparticularlywithrespecttodeterminantsofexportsuccess.Exporting
canbeanenginefortheindividualfirm’sgrowthandprofitability,andfor
thegrowthofnationaleconomies(HatemiandIrandoust2001;Wolffand
Pett2000).
Theanalysisofexportperformanceisaveryimportantissueincaseof
Hungary as well. Studying the Hungarian firms’ export performance in
a small open economy better contributesto the improvement of export
competitiveness on a national level. Several researches were concluded
onamacroeconomiclevelinHungary(Munkácsi2009)intermsofhow
exportcompetitivenesscanbeimproved.Theanalysisfromamicroeco-
nomicperspectiverevealingexporterfirms’characteristicscanservesig-
nificant information to export development implications (to economic
policymakersinthegovernmentaswellasacademicresearcherstoo).In
this paper, we analyse the export success from a strategic management
pointofviewandintendtorevealfactorsbehindthesuccess.
Themainideaofthisanalysisisthatexportperformancecanbeanin-
dicatoroffirms’internationalcompetitivenessandthatexportsuccessis
boostedbythegrowthofinternationalmarketsanddiminishedbyfactors
dominatingintheyearsoftheeconomicrecession.However,competitive
and non-competitive firms are not equally influenced by the economic
situation: less competitive firms’ export activity will be much more in-
fluencedbynegativeeffects,measurableonexportvolume,exportprices
and/orprofitability.
Muchoftheresearchinexportperformanceanalysishascategorized
firms into stages of export development, distinguishing exporters from
non-exporters,analysingvariablesofhowexportersperceivevariousas-
pectsoftheirorganization,market,environment,resources,strategy,etc.
(Dean,Mengüc,andMyers2000;KorandMesko2013).Wealsousedthe
methodofdistinguishingfirmsbasedondifferentcharacteristics.Inour
study,oneofthemainquestionsiswhatthedifferencebetweensuccessful
andnon-successfulexportercompaniesis.Thisstudyfocusesonstrategic
capabilitiesofsuccessfulexportersandintendstorevealindepthwhatis
behindtheirsuccess.
AReviewofRelevantLiteratureandHypotheses
Theexportperformanceoffirmshasbeenstudiedinawiderangeoflit-
erature. Due to this, our research focus was to identify the relationship
betweenfirms’strategyandexportperformance.Inthispaper,wepresent
theliteraturerelatedtostrategicmanagementapproach.Wepresentthree
ManagingGlobalTransitions
BehindtheExporters’Success 327
strategictheories,theindustrialorganization-basedtheory,theresource-
basedviewoffirms,especiallythedynamiccapabilities-basedtheory,and
contingencytheory.
firm’s strategy and performance
Afundamentalaxiomofstrategicmanagementandindustrialorganiza-
tionaleconomicsistherelationshipsbetweenstrategyandperformance.
Industrial organization theory views that economic competitiveness is
basedonitsenterprises.Aconsiderableamountofliteraturehasfocused
on the relationship between strategy and performance and emphasized
the importance of a distinctive strategy in determining the firm’s eco-
nomicperformance(Porter1980;1990).
Thereisnoconsensusintheliteratureontheimportanceofthemany
variables that have been identified as determinants of export success.
The literature reports on the correlations of export performance that
arebothinternalandexternaltofirms.Themostanalysedinternalfac-
torsaremanagerialexperience,marketingstrategy,organizationalstruc-
ture,productandmarketdiversificationandresources.Industrycompet-
itiveness, business environment or product characteristics are linked to
export performance as external variables (Barney 1991; Barney, Wright,
andDavid2001;Leonidou,Katsikeas,andSamiee2002).Calantoneetal.
(2006) concluded that export performance is positively linked with the
level of product adaptation strategy and organizations’ openness to in-
novation.Thismayimplythatthecoststoadaptproductsarerecouped
throughimprovedexportperformance.
Casestudymethodisalsousedasaqualitativesurveyinunderstanding
the determinants of export success. Ábel and Czakó (2013) emphasised
theimportanceofmanagement/ownerrole,organisationalresourcesand
capabilities and learning process based on analysing ten case studies of
exportercompanies.
Therelevantliteraturesuggeststhatexportdevelopmentandinterna-
tionalizationarecomplexphenomena.Insteadoffocusingonaparticu-
laraspectofexportactivity,thisresearchmeasuresseveralorganizational
dimensionsincludingfirmcharacteristics,firmcompetency,perceptions
andstrategy.Acompleteviewontherelationshipbetweenexportperfor-
manceandfirms’strategiccharacteristicsislikelytobegiven.
Themainideabehindthisanalysisisthatexportperformancecanbe
anindicatoroffirms’internationalcompetitivenessandthatexportsuc-
cess is boosted by the growth of international markets and diminished
byfactorsdominatingintheyearsoftheeconomicrecession.However,
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328 AnnamariaKazaiOnodiandKrisztinaPecze
competitiveandnon-competitivefirmsarenotequallyinfluencedbythe
inward and outward economic situation. Competitive firm operations
are characterised by strong strategic thinking that shows itself in con-
sciousgoalorientation,valuableanddynamiccapabilitiesandgood/deep
knowledgeoftheexternalenvironment.Lesscompetitivefirmsarechar-
acterisedbythelackoftheseabilitiessotheirexportactivitywillbemuch
moreinfluencedbynegativeeffects,measurableonexportvolume,export
pricesand/orprofitability.Itisthereforehypothesizedthat:
h1 Thereissignificantconnectionbetweenstrategicthinkingandexport
performance.
Basedonpreviousresearchweassumethatbehindtheexportperfor-
mancethereisamoreconsciousstrategicthinkingsuchasstrategicplan-
ningandimplementation.Inastrategicmanagementapproach,itmeans
therealisationofthelong-termobjectives,improvingthefirm’svaluethus
increasingshareholdervalue.
the firm’s strategy and its context/environment
Oneofthetheoriesusedinstrategicmanagementliteratureisthecontin-
gency-basedapproach.Itpositsthatthefirm’sexportperformanceisde-
pendentonthecontextinwhichthefirmoperates.RobertsonandChetty
(2000) adopted a conceptual model of export performance in their re-
search,basedoncontingencytheory.Theyanalysedtherelationshipbe-
tweenexportperformanceandstrategicorientationinadifferentexternal
environment.Thestudyemphasisedthatexportingisadynamicprocess
becausethecontextofafirmchangescontinuallythroughoutitsexport-
ingventures.Exportstrategyresearchusuallyplacesitsstartingpointat
the analysis of the relationships between the firm and its environment.
Asit issuggested by KnudsenandMadsen(2002)thetheoreticalback-
groundofexportstrategyresearcheshastobecompletedwithdynamic
capabilitiesapproach.
h2 Thereisasignificantconnectionbetweenthefirms’abilitytoadapt
tothechangingenvironmentandexportsuccess.
firm’s strategy and capabilities
The researches examining export performance from capabilities are
groundedintheresource-basedview(rbv)ofthefirm(Wernerfelt1984)
anditsextensionsasknowledge-based(Grant1996)view.The rbv em-
phasises unique resources and capabilities of a firm for sustained com-
petitiveadvantage.Wecontendthatknowledgeisakeystrategicresource
ManagingGlobalTransitions
BehindtheExporters’Success 329
andafirm’scapabilityinintegratingandexploitingknowledgeinexport-
ing is a source of competitive advantage (Dhanarajand Beamish 2003).
AconceptualmodelpresentedbyHaahtietal.(2005)proposesthatex-
portmarketknowledgeaccumulatedfromvarioussourcesconstitutesa
valuable ‘entrepreneurial resource’ and that both domestic and foreign
cooperativestrategiesdirectlyinfluenceexportperformance.Thesyner-
gistic effect of export on performance will also be multiplied when the
exportactivityiswellutilizedunderaproperselectionoforganizational
strategy in the case of firm, product, market and technology (Lee and
Habte-Giorgis2004).
According to Reid (1981) we emphasise that exporting must be con-
sidered as a dynamic process, because the context of a firm changes
continually throughout its exporting ventures. This idea is connected
tothedynamiccapabilitiesperspective(dcp).Themostimportantissue
of dcp is to explore the way the firm comes to terms with the contin-
uous emergence of novel circumstances caused by rapid technological
changes(Teece,Pisano,andShuen1997).Thus,thefirm’scentralstrate-
gicproblemistocreatenewproductiveknowledgeandtocoordinatethe
cumulativeprocessofknowledgedevelopmentandcreation.Theframe-
workdevelopedbyTeece(2014)explainshowstrategyanddynamicca-
pabilitiestogetherdeterminefirm-levelsustainedcompetitiveadvantage
in a global environment. The internalization models complemented by
exportperformanceanalysisseektounderstandwhysomefirms’export
activitiesaresuccessfulwhileothers’fail.Hence,weadvancethefollow-
inghypothesis:
h3 There is a significant connection between the firms’ resources and
capabilitiesandexportsuccess.
Numerous authors of export performance studies compare the ex-
porters’ characteristics in an attempt to reveal the factors that make a
difference between success and failure in foreign market activities. In
thispaperweintendtoidentifythedistinctivefactorsofexportsuccess
and based on these findings develop better practice-related suggestions
forfirmswithlowperformance.
MethodofResearch
The phrased three hypotheses were tested on the Hungarian Compet-
itiveness Research database of 2013. The connection between export
performanceandtheselectedinfluencingfactors(strategicthinking,re-
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330 AnnamariaKazaiOnodiandKrisztinaPecze
table1 ClusterCentrePoints
Category () ()
Exportintensity(–scale) . .
Exportvolume(–scale) . .
Changeinexportvolume(–scale) . .
Profitabilitycomparedindustryaverage(–scale)
notes ()successful(n=40),()stagnant(n=34).
sourcesandcapabilities)couldbeanalysedbyseveralstatisticalmethods.
One of the key elements of the research was measuring export success.
Since four export performance metrics were used cluster analysis was
conductedtodifferentiatesuccessfulexportersfromnon-successful.In-
dependent sample t-test was applied to compare the characteristics of
successfulandnon-successfulfirmsandthroughthismethodwetriedto
obtainadeeperinsightintotheinfluencingfactorsofexportsuccess.
database
TheresearchisbasedontheHungarianCompetitivenessResearchdataba-
seof2013,whichwaslaunchedbytheCompetitivenessResearchCentre,
Institute of Business Economics of Corvinus University of Budapest. It
containsfourquestionnaires(morethan60pagesaltogether):topman-
agement, marketing, production, finance, which enables us to make a
complexanalysisaboutcompanies’environment,strategicandfunctional
areas.Generally,thesurveytargetedincorporatedcompanieswithmore
than 50 employees to build a corporate sample, as well as keeping an
eye on representativeness (in terms of staff size, geographical location,
industry).Thefinaldatabaseconsistsof300firms.
Firms in the sample operated in different industries, except the fi-
nancial sector. Processing industry dominated (45), following it, the
proportionofservicesectorwas34.7,constructionindustrywas7.7,
agriculture was 8. 72.7 of the firms was medium-sized, the propor-
tion of large firms was 16.7. In terms of ownership structure, the do-
mestic owned companies dominated (71.3), the proportion of foreign
companies was 23 and the rate of state owned was 5.7. The major-
ity (53) of firms had export activities, and this rate characterised the
small and medium sizes companies, which is significantly higher than
the average rate in Hungary (22.5 according to Szerb-Márkus, 2008).
Averyhighexportconcentrationcanbeobservedinthesample,which
ManagingGlobalTransitions
BehindtheExporters’Success 331
table2 TheCompositionofSuccessfulExport-OrientedandStagnantCompanies
byExportRevenuein2013
Category () ()
Undermiohuf . .
–miohuf . .
–miohuf . .
–miohuf . .
–miohuf . .
Overmiohuf . .
Total
notes ()successful(n=40),()stagnant(n=34).Inpercent.
reflectedthe high Hungarian export concentration (Kállay and Lengyel
2008;Munkácsi2009).Inthesamples,theshareoflargeforeignowned
companiesfromtotalexportrevenuewas79.38,foreignownedcompa-
nies’90,domesticcompanies’10.(Forthedescriptionsofthesamples
ofthequestionnairesurveyof2013,seeMatyusz2014.)
cluster analysis – identifying successful
and stagnant export-oriented companies
In our previous researches, we used cluster analysis to study firms’ ex-
port performance, since we preferred using more than two export per-
formancemetricsandmoreobjectivegrouping.Forclusteranalysis,we
used financial data as well as managerial self-evaluation. The generally
usedmetricswereappliedformeasuringexportperformance(Leonidou,
Katsikeas,andSamiee2002),theseareexportintensity,exportrevenue,
exportsalesgrowth.Thefourthfactorinclusteranalysiswasprofitability,
we used managerial self-evaluation of companies’ return of investment
comparedto industry average. The applied k-meanscluster analysis re-
sulted in four clusters: successful export-oriented companies, stagnant
companies,leadingminorexportersandexporters.Theexportintensity
ofleadingminorsandminorswasunder20sointhisresearchweonly
concentratedoncomparingsuccessfulandstagnantcompanies(table1)
Sinceourhypothesis,testingwasbasedoncomparingsuccessfuland
stagnant companies it is crucial to describe the main features of the
two clusters. The successful export-oriented companies could be char-
acterised by high export revenue, high export intensity and high prof-
itability.Allofthemhavemorethanonebillion huf exportrevenueper
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332 AnnamariaKazaiOnodiandKrisztinaPecze
table3 TheCompositionofSuccessfulExport-OrientedandStagnantCompanies
byExportIntensityin2013
Category () ()
Under . .
– . .
Over . .
Total
notes ()successful(n=40),()stagnant(n=34).Inpercent.
table4 TheCompositionofSuccessfulExport-OrientedandStagnantCompanies
bySizein2013
Category () ()
Small . .
Medium . .
Large . .
Total . .
notes ()successful(n=40),()stagnant(n=34).Inpercent.
table5 TheCompositionofSuccessfulExport-OrientedandStagnantCompanies
byOwnerStructurein2013
Category () ()
State . .
Domestic . .
Foreign . .
Total .
notes ()successful(n=40),()stagnant(n=34).Inpercent.
year. 75 of them had more than 75 export intensity (tables 2 and 3).
Thesuccessfulexport-orientedfirmsrepresentedaboutthequarterofex-
portersinthesample,buttheireconomicpowerwassignificantlyhigher,
morethan90oftotalexportrevenuebelongedtothisgroup(table6).
Theirprofitabilitywasoverindustryaverageaccordingtoself-evaluations
(table7).
Morethanhalfofthem(52.5)belongedtomedium-sizedcompanies,
theproportionoflargecompanieswaslower(45),butcomparedtothe
averagerate(16.7)inthesample,itcouldbeseenthatthelargecompa-
niesarestilloverrepresentedinthiscluster(table4).
Morethan75offirmswereactiveintheprocessingindustrydueto
ManagingGlobalTransitions
BehindtheExporters’Success 333
table6 ShareofClusters
Cluster () ()
Shareofclusterfromtotalexportrevenues . .
Shareofclusterfromtotalexporters . .
Shareofclusterfromtotalnumberofcompanies . .
Shareofclusterfromtotalemployees . .
notes ()successful(n=40),()stagnant(n=34).Inpercent.
table7 ProfitabilityRelativetoIndustryAverageAccordingtoManagerial
Self-Evaluation
Category () ()
Returnonsales . .
Returnsoninvestment . .
notes ()successful(n=40),()stagnant(n=34).-pointLikertscale,–best,–
underaverage.
the characteristics of the samples, but there were some representatives
offoodindustryandservicestoo.Foreignownedcompaniesdominated
(72.5)(table5).Eachofthemhaddominantowners,66.7ofthemhad
owners with 75 share or more. The proportion of subsidiaries is 65.
Strong owner control could be observed in about 10 of firms. 15 of
themhadownerswithmorethan70sharefromrevenue.
Companiesbelongingtothestagnantclusterslaggedbehindsuccess-
fulexport-orientedcompaniesinregardofexportperformanceandcom-
panyprofitability.Althoughtheyhadhighexportintensity(76),itwas
significantly lower than the average rate of successful export-oriented
firms(84).60ofthemhadmorethan75exportintensity(table3).
Their export revenue was significantly lower than the revenue of suc-
cessfulcompanies.Therewerenocompanieswithover5billion huf ex-
portrevenue(table2).Although22ofexportersbelongedtothisclus-
ter, their share from total export revenue was under 5 and their share
fromtotalemployeeswas8.5incontrastwiththefactthatsuccessfulex-
porters’sharewas34.4(table6).Theirprofitabilitywasunderindustry
averageaccordingtoself-evaluations(table7).
77ofthefirmswasactiveintheprocessingindustryduetothechar-
acteristics of the samples, followed by it the rate of service companies
(22.9). The majority of them was medium-sized (80) and domestic
owned (74.3).The proportion of large companieswas only 11.4. The
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334 AnnamariaKazaiOnodiandKrisztinaPecze
table8 FundamentalPurpose
Fundamentalpurpose () ()
Satisfyingcustomerneedsasmuchaspossible . .
Gainingmoreprofit . .
Increasingshareholdervalue . .
Survivingcrisesandpreservingtheabilityoffuturedevelopment . .
notes ()successful(n=40),()stagnant(n=34).-pointLikertscale,–nottrue
atall,–perfectlytrue.
table9 FinancialGoals
Financialgoals () ()
Liquiditypreservation,improvement . .
Compliancewithpaymentcommitments,deadlines . .
Salesrevenueincrease . .
Costreduction . .
Increaseinreturnonsales(profitability) . .
Increaseinreturnonassets(profitability) . .
Increaseinreturnoninvestment(profitability) . .
Highowner(shareholder)return . .
Paymentofhighrewards . .
Paymentofhighdividends . .
Regulardividendpayments . .
notes ()successful(n=40),()stagnant(n=34).-pointLikertscale,–nottrue
atall,–perfectlytrue.
table10 SalesOpportunitiesin2013Relativeto2009
Salesopportunities () ()
Indomesticmarket . .
Inexportmarket . .
notes ()successful(n=40),()stagnant(n=34).-pointLikertscale,–become
unfavourableinlargeextent,–becamefavourableinlargeextent.
proportionofforeignownedcompanieswasmuchlower(25.7)inthis
clusterthaninthecaseofsuccessfulexport-orientedcompanies(72.5)
(tables4and5).Theownershipconcentrationishigh(only5.7ofthem
hadnodominantowner)butlowerthansuccessfulexport-orientedcom-
panies’.31ofthemaresubsidiaries.Theroleofownersascustomersis
ManagingGlobalTransitions
Description:nant companies lagged behind successful exporters concerning industry forecast analysis from a microeco- nomic perspective revealing exporter firms' characteristics can serve sig- Dean, D. L., B. Mengüc, and C. P. Myers. 2000. 'Revising Leonidou, C. L., C. S. Katsikeas, and S. Samiee. 2002.
