International Journal of Research in Management, Science & Technology (E-ISSN: 2321-3264)

Vol. 3, No. 4, December 2015

Available at www.ijrmst.org

Export Promotion Programs and Exporters

Performance, Strategies and Competencies: A
Review
Gitanjali Jindal#1, Prof. Kamlesh Gakhar*2
#
Research Scholar, IMSAR, M.D. University, Rohtak (Haryana)
*Professor, IMSAR, M.D. University, Rohtak (Haryana)

gitu_jindal11@rediffmail.com

Abstract— Export promotion schemes are very beneficial

to the exporters. These programs help the exporters in
different stages of exporting. These programs enhance the
performance of the exporters in international market.
Previous researches show mixed view on it. It has been
observed that export promotion programs affect the firm’s
performance, competencies and strategies, directly and
indirectly. The earlier studies indicate that there is need of
awareness of export promotion programs.
Keyword— Economic Development, Economic Growth,
Export promotion schemes
I. INTRODUCTION
To increase the exports growth, government offer
number of incentives to firms through a wide range of
export promotion programs (Cavusgil and Yeoh, 1994;
Jaramillo, 1992). Promoting national exports is,
therefore, a top priority of many public policy makers,
mainly because national exports provide the means to
increase employment opportunities for local people,
generate foreign exchange to finance imports, increase
public funds with additional tax revenues, create
backward and forward linkages in the economy, and
achieve higher economic growth and living standards
(Archer and Maser, 1989). Export activities are known
to be important for the economic well-being of a nation.
II. OBJECTIVE
Objective of this article is to present a review of
literature on relationship between export promotion
programs and firm’s performance. To carry out this
study we have considered on six factors i.e. Export
Growth, Export performance, Export strategy, Export
competencies, need for export promotion programes and
awareness of Export Promotion Programs.
III. EXPORT GROWTH
Growth of exports is very important from a nation’s
point of view. If exports show a rising trend and this
results in the increased GDP due to the making of
multiplier. For this government introduce various
schemes from time to time to encourage the exporters.
Mishra (2011) found significant relationship between
export promotion schemes and export growth in India
during the period from 1970 to 2009. Yannopoulos
(2010) examined the usefulness of the export assistance
programs available to Canadian exporting firms. This
study analyzed that the importance and usefulness of
export promotion programs are different according to
level of stages in export activities. This study reveals
that all support services are not equally important or
useful and used to the same degree by Canadian
exporters. It concluded that importance must be given to
most useful programs as to maximize the effectiveness
of these export support efforts. He examined the
performance of Indian textile and clothing industry in
United States market. This study revealed that India had
not maintained its position in textile sector in US market
in comparison to China. It also concluded that the
Indian exports of textiles and clothing are highly
correlated with global trade pattern in contrast to China
and Bangladesh etc. Domician (2009) also observed that
export promotion programs are relevant for the country
as well as for the global development orientations. But
for some instance the programs remain inefficient due to
the prevailing risk in the market. Figure 1 showed
conceptual model given by Jalali (2012). He found that
export promotion programs affect the export knowledge
and commitment of the firm. So the firm makes
strategies to compete in the international market and
firm export performance enhances. Export promotion

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 International Journal of Research in Management, Science & Technology (E-ISSN: 2321-3264)
programs have a significant impact on firm’s export
growth and these programs provided proper guidance to
the firms for availing the opportunities in the foreign
market Reid (1984).
Figure 1 Conceptual model of the study
Source: Seyed Hossein Jalali
IV. EXPORT PERFORMANCE
Export promotion programs are government
measures that help the exporting firms to improve the
performance of export market. The main motive behind
these programs is to overcome various problems related
to export, Seringhhaus (1986) and Seringhaus and
Rosson (1990). Performance of the firms means firm
ability to satisfy and develop the customer’s base in
foreign market by satisfying the needs of the customer
by offering good product and services, Moorman and
Rust (1999). However, by developing the customer
base, the firm will have to penetrate the market and
improve the turnover and market share, Grozdanovec
and klarmann (2007). Mainly the export performance
means activities of the firm in international market,
Cavusgil & Zou (1994). Shoham (1998) stated that a
firm’s export performance included growth as well as
export profitability. A better understanding of the
activity of export is most important for a firm for
improving financial position and utilization of
production capacity etc, Lu &Beamish, (2001).
Leonidou et. al. (2011) examined the significant
relationship between export promotion program and
firm export performance. They stated that by adoption
of various export promotion programs, firms increase
their export based capabilities by developing the export
marketing strategy. Export assistance programs enhance
the internationalization of SMEs directly and indirectly
Shamsuddoha et al (2009). Further Francis and Colleen
(2004) analyzed that there is significant relationship
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between a firm’s export performance and export
promotion programs. They concluded that the export
promotion programs provided by the government help
SMEs to overcome barriers to exporting. This study
examined that export promotion programs affect the
firm’s performance, strategies and competencies in
Canadian economy. They added that if the government
provides more and more programs to boost the export, it
will influence the achievement of export objectives and
export promotion strategies as well as increase the
export competiveness. Export promotion programs are
an important source of enhancing the knowledge and
expertise necessary for international market
involvement and the use of these programs could
influence export performance of the firm directly and
indirectly. So the export promotion programs affect the
export performance of the firms either directly or
indirectly (Gillespie and Riddle 2004; lages and
Monotogomery 2005; Shamsuddoha 2006). Jalali
(2012) examined the significant relationship between
export promotion programs and export performance in
Iranian food manufacturers. He revealed the positive
effects of export promotion programs on export
performance directly and indirectly. He further stated
that export strategy played a key role in relationship
between export promotion programs and export
performance so that firm also achieves competitive
advantages in global world.
V. EXPORT STRATEGY
Export promotion programs have significant impact
on export strategy of the firms. Export strategy means
firms use internal and external forces to meet the
objective. It includes all aspects of marketing plan that
involves four p’s of marketing (Cavusgil and Zou,
(1994). Export strategy means policies made by the
firms to achieve the firm’s objective (Orville and
Walker 2008). Maghaddam (2011) examined the effect
of export marketing strategy on firm’s export
performance. He added that various strategies adopted
by the firms, like product marketing strategy, price
marketing strategy, place marketing strategy, and
promotion marketing strategy are on the basis of export
promotion programs. Lederman and Olarreaga (2006)
analyzed the impact of existing Export Promotion
Assistance and firm export strategies, based on a data
set covering 104 developing and developed countries.
They stated that there is positive relationship between
Export Promotion Assistance on export growth. Similar
results were shown by Francis and Colleen (2004). They
examined the relationship between export promotion
programs and export strategy of the firms. They focused
on the impact of export promotion programs on SMEs
competencies, strategies and performance in Canadian
economy. They found that export promotion programs
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 International Journal of Research in Management, Science & Technology (E-ISSN: 2321-3264)
increased the export activities of firms. They revealed
that the export promotion programs influence the export
expansion strategies. Export marketing strategy, firm's
international competence, and managerial commitment
are the key determinants of export performance
Cavusgil and Zou (1994)). Lee and Yang (1990)
examined the relationship between the export market
strategy and the performance of exporting firms. They
showed that firms follow different export market
expansion strategies: export market concentration etc.
Kleinschmidt and Cooper (1985) pointed out that there
is positive relationship between export intensity and
domestic market potential and domestic market growth.
They stated that much speculation has, of course,
already surrounded the causes of the varying
performance of the industry with the general consensus
focusing on the vital role of FDI and the growth of
externally-owned, high-tech sector. In brief, although a
few studies mention that there is not any relationship,
most of researchers concluded that marketing strategy is
affected by export promotion programmes.
VI. EXPORT COMPETENCIES
Competencies mean using the organizational
resources to benefit the export market of the firm. La et.
al. (2005) examined that the competencies affect the
firm’s performance in international market. Morgan and
Keleka (2004) showed that various competencies related
to sales, information and production increased the firm’s
export capabilities. Ritter (2006) added that various
competencies played a different role that is measured by
the customer value delivering process of manufacturing
goods for exporting. Francis and Colleen (2004)
examined the impact of export promotion programs on
firm competencies in export market. They discounted
that there is positive correlation between export
promotion programs and export competencies. These
programs boost the firm’s export competencies. They
found that these programs influence the accomplishment
of objectives of firms as well as expand the export
strategies of the firms. Export marketing competencies
have got enhanced because of these programs. He
explained that the active exporters gain more from
export promotion programs in comparison to other
exporters. SMEs have limited capacity to gain
information of international market. So, that limited
involvement was possible in the export market. Reid
(1984) found that if firm’s market competencies
improve in foreign market then market diversification is
possible because of export promotion programs.
VII. NEED FOR EXPORT PROMOTION PROGRAM
There are a number of factors which affect the
exports of a country. Political risk is an important
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obstacle in international trade. Moser et. al. (2006)
pointed out that a firm’s export activity is very much
affected by the political risk in the importing countries.
They further added that export credit agencies are
unable to provide proper insurance for all types of risk
associated with exports. Tesfom and Lutz (2006)
observed that industrial factors and other external
factors influence the export performance of the firm.
They classified the export problems of small and
medium sized firms in developing countries. They
revealed that both developing and developed countries
faced similar export problems. Rose (2005) observed
that communication cost and other cost also affect the
export promotion of the countries. Giovannucci (2004)
observed that for development trade export promotion
programs are an effective tool. He revealed that trade
promotion organizations have clear roles and functions.
Chiung (2003) examined the various external factors
including exchange rate fluctuation, foreign income,
price index between countries and cost of importing, are
the main factors that affect the export growth of the
countries. Silverman et. al. (2002) explained the export
promotion needs of the SMEs in Californian
environmental technology. The exporters into three
stages that is heavy, moderate and marginal. Singer and
Czinkota (1994) examined the factors affecting the use
of export promotion programs. They revealed the four
factors: export stage, firm size, management
commitment and type of services used. They stated that
export promotion programs help the exporting company
to reduce the barriers of export. With the help of these
programs export managers received more information,
experience and resources to enhance the export market.
According to this study export stage, firm size and
management commitment are independent variables and
export performance is a dependent variable. They found
that less experienced firms use more export promotion
schemes for development in comparison to more
experienced firms. Weaver et. al. (1998) Naidu and Rao
(1993) pointed out the need of Export Promotion
Programs at different stages of the internationalization
process. They found that Export Promotion Programs
are introduced by the government according to the
needs of the exporters, as well as proper measurement
use by the government to monitor the performance of
Export Promotion Programs. Kotabe and Czinkota
(1992) studied that the difference between the need of
export assistance required by an export firms and Export
Promotion Programs provided by the government. They
suggested that government make the Export Promotion
Programs according to the needs of the exporters. There
were two types of export activities: export source
programs and market development programs.
Involvements of exporters are different according to
different stages in export market. They discussed the
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following firm’s categories: partial exporting, exploring,
experimental limited experience and experienced
exporters. Vozikis and Miscon (1985) concluded that
Export Promotion Programs provided by the
government should fulfill the wishes of the exporters.
VIII. AWARENESS OF EXPORT PROMOTION PROGRAM
Exporters must be aware of different export
promotion programs introduced by the government.
Moini (1998) examined the impact of Export Promotion
Programs on the export activities in US State of
Wisconsin. He divided firms into four categories: non
exporters, regular exporters, growing exporters and
partially invested exporters. He found that lack of
export awareness about Export Promotion Programs
was more in non exporters and partially interested
exporters. Lack of awareness of Export Promotion
Programs affects the export development of a particular
country. Effectiveness of Export Promotion Programs
varies with firm export involvement. More export
enhancement strategies should be developed and the
exporter firms should be informed about the procedure
of export operations. As a result export profit will
increase. Diamantopoulos et. al. (1993) explained the
awareness of exporters regarding Export Promotion
Programs introduced by a country. According to the
study awareness of Export Promotion Programs depends
upon the stage of involvement of the exporters. They
added that in the initial stage firms can use more Export
Promotion Programs if they are aware of about the
export opportunities and motivated to export but in
other stages firms require more informational supports
regarding export and in the last stage firm requires
Export Promotion Programs for the selling of their
products in export market. Government can promote the
awareness of the programs to the exporters, that more
export growth is possible. Czinkota and Ricks (1981)
Exporters should be aware of the Export Promotion
Programs provided by the government.
III. CONCLUSION
On the basis of earlier studies six major conclusions
emerge:
1. There is direct relationship between export
promotion programs and export growth of the
country. However the importance and usefulness
of these programs are different according to level
of stages in export activities.
2. Export promotion programs could influence
export performance of the firm directly and
indirectly. However there is significant
relationship between export promotion programs
and export performance of the firms.
3. Export strategy of the firm and export promotion
programs are directly related to each other. On
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the basis of export promotion programs various
strategies are adopted by the firms like product,
place, promotion and price marketing strategy.
4. There is positive correlation between export
promotion programs and firms export
competencies. Thus we can conclude that there is
significant relationship between export
promotion programs and export competencies of
the firms. Export promotion programs enhance
the various competencies like marketing, sales,
production as well as informational
competencies.
5. Government introduces the export promotion
programs according to the need of the exporters.
With the help of these programs export managers
receive more information, experience and
resources to enhance the export market.
6. According to earlier studies awareness of the
export promotion programs depend upon the
stages of involvement of the exporters. Firms can
use export promotion programs in each and
every stage of exports.
Export promotion programs improve the firm
performance, competencies and strategies Czinkota
(1996), Francis and Collins (2004). Many factors affect
the export promotion programs of the export market
Seringhaus and Rosson (1996). More awareness of
export promotion programs affects the success in export
market to the exporters. We can conclude that more and
more export initiative should be provided to the
exporters so that more export growth is possible.
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