What drives regional export performance?: Comparing the relative significance of market determined and internal resource factors
Previous analysis of networking activities among SME exporters in regional NSW, Australia indicates that they tended to be isolated entrepreneurs, who relied primarily on their internal innovation and marketing capacities rather than on local networks and clusters as suggested by regional development theory (Vaessen and Keeble, 1995). Many of these firms were small, new ‘born global’ firms that had entered world markets with an innovative niche product and helped by the very low Australian exchange rates prevailing at that time. To be a successful exporter, the small firm must acquire sufficient resources to cover the higher risks of operating in international markets, as well as adopt strategies that are consistent with prevailing market conditions. In this study, SME exporters are divided into four categories based on their growth performance between 1996/97 and 2000/01: negative, modest, good and fast. Each group is analysed to determine the relationship between their export growth performance and a series of market orientated and internal resource variables. This analysis is performed using logistical equation models, controlling for a number of structural variables. Key findings were that export growth increased in line with export intensity. Fast and good export growth was associated with the use of partnerships and collaborations and foreign direct investment, while these factors were either insignificant or negative for the other firms. Most of the fast growth firms were new exporters or ‘born global’ and tended to use early stage export strategies, while for the larger good and modest growth firms, introducing equity was positively associated with export growth. Most types of R&D were positively associated with good export growth. Adapting products from the market and developing technology in partnerships were also associated with export growth. Good export growth performance was associated with strategies focusing on client service, flexible production, technical innovation and product quality. Their marketing strategies were based on innovation but also recognised the importance of price (low exchange rates) and product quality in achieving export sales.