Impact of export promotionprograms on firm competencies,

strategies and performanceThe case of Canadian high-technology SMEs

June Francis and Colleen Collins-DoddFaculty of Business Administration, Simon Fraser University, Burnaby, Canada

Keywords Exports, Promotion, Small to medium-sized enterprises, Government

Abstract Export promotion programs are provided by governments to help firms, especially smalland medium-sized ones, overcome real or perceived obstacles to exporting. To date, there has beenlimited empirical evidence of the effectiveness of these efforts. This study clarifies the ways in whichexport promotion programs bolster the export competence and export activities of firms bydrawing on the results of a survey of small and medium-sized Canadian high-technology firms. Theresults suggest that using a greater number of government programs influences the achievementof export objectives and export expansion strategies, and enhances export marketing competencies.By segmenting firms by level of export involvement, a clearer picture of the benefits and limitationsof export promotion programs emerges. These results suggest that sporadic and active exportersgain the most from export promotion programs, while there is little impact in the short term formore experienced international firms who derive most of their incomes from exporting.

IntroductionMany companies are unable or unwilling to pursue export sales aggressively becauseof lack of experience, limited resources or other perceived or real obstacles. Exportpromotion programs are provided by governments, trade associations and otherorganizations to help firms, especially small and medium-sized ones, to overcome theselimitations (Wheeler, 1990). The goal of export promotion programs is to enhanceexport performance by improving firms’ capabilities, resources, and strategies andoverall competitiveness (Czinkota, 1996; Diamantopoulos et al., 1993; Seringhaus andRosson, 1990), which in turn, have been demonstrated to improve export performance(Aaby and Slater, 1989; Cavusgil and Zou, 1994; Zou and Stan, 1998).

However, Kotabe and Czinkota’s (1992) review of the evidence for the effectivenessof export promotion programs found that:

. . . in spite of all these reasons speaking in favor of export promotion by state government,the empirical evidence providing a substantiated rationale for and information about theeffectiveness of export promotion efforts is limited and mixed (p. 640).

In particular, a key component of program evaluation, “consequences of theprogram at the firm level” (Seringhaus, 1990), has received limited attention.

The Emerald Research Register for this journal is available at The current issue and full text archive of this journal is available at

www.emeraldinsight.com/researchregister www.emeraldinsight.com/0265-1335.htm

The authors wish to acknowledge the support of David Mulcaster of Industry Canada, thefinancial support of the Social Sciences and Humanities Research Council of Canada, as well asthe contributions of Scott Caldwell BBA (SFU) and Shawn Jackson MBA (SFU) to thedevelopment of the questionnaire and the data collection.

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Received March 2003Revised September 2003Accepted December 2003

International Marketing ReviewVol. 21 No. 4/5, 2004pp. 474-495q Emerald Group Publishing Limited0265-1335DOI 10.1108/02651330410547153

At the same time, scrutiny of these programs is increasing, given the largeinvestments governments make. For example, the United States spentapproximately $3.6 billion in 1995 on its trade promotion programs, and theyrepresent one of the lowest spenders on a per capita basis among the developedcountries (Brown, 1995).

The purpose of this study is to investigate whether export promotion programsbolster export strategies and competencies as well as the achievement of firms’ exportobjectives – factors commonly associated with export success. Specifically, this studyexamines the degree to which firms’ use of a greater number of export assistanceprograms has a measurable impact on multiple measures of export performance,achievement of export objectives, export competence and strategies.

Past research has either evaluated specific programs (e.g. how useful trade showswere) or government programs in general (e.g. how useful government programs wereas a whole) (for an example of both, see Diamantopoulos et al., 1991). In this paper, weask whether using a greater variety of export promotion programs helps firms toachieve their export objectives. The number of programs that firms use indicates theextent to which firms avail themselves of the opportunities presented by government.It is an aggregate perspective that goes beyond any one program or type of program.

Furthermore, firms are segmented according to their degree of internationalinvolvement. It is clear that firms having different degrees of international involvement(or stages of internationalization) have different needs (Czinkota, 1996;Diamantopoulos et al., 1993; Naidu and Rao, 1993; Moini, 1998) and face differentobstacles (Kotabe and Czinkota, 1992) to be addressed by export promotion programs.

Specifically, the impact of the number of export promotion programs used isassessed for small to medium sized high-technology Canadian firms. Small andmedium-sized high-technology firms represent an interesting sector in which toexamine the impact of export promotion programs. Many of the firms in this sector arevery small, very young, very fast growing and very international. Opportunities formarket expansion internationally, as well as, threats from international competitorsare unparalleled as compared to other sectors (Beard and Easingwood, 1996;Benkenstein and Bloch, 1993). Because of rapid changes in technology, firms are drivento find ways to capitalize quickly and aggressively on their technology (Benkensteinand Bloch, 1994; Roberts and Senturia, 1996).

This sector is also a priority for government export promotion support.High-technology exports (especially by small and medium-sized firms) are a majorconcern for governments as they represent important sources of export dollars, andsuccess in this area is important for future international economic competitiveness(Industry Canada, 1999). Canadian export promotion programs provide an example ofa relatively strong national export promotion program. Naidu and Rao (1993) describeCanada as being among the top export service providers. We would expect if exportpromotion programs are effective anywhere, it should be in a nation with a strongemphasis on this type of support for firms. We have chosen to limit our analysis to onecountry because incommensurability of programs across nations makes directcomparisons difficult at best (Seringhaus and Botschen, 1991).

This study extends the current research as it is one of very few published studies toexamine the impact of export promotion program usage, and it is the first to measureimpact across a broad range of outcomes and a variety of programs.

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Literature reviewExport promotionReviews of export assistance programs find a variety of types of export assistanceprovided by governments and other related organizations. One important area is theprovision of information such as export market information, market research onforeign markets, export-marketing seminars, and newsletters. Other programs enhancemotivation to export via seminars, speeches, case studies and other communicationmaterials. Operational support includes exporting logistics training, marketingassistance, trade missions, financing support, foreign buyer visits, providing contacts,and regulatory assistance (Seringhaus and Rosson, 1990; Diamantopoulos et al., 1993).

Czinkota (1996) presents a process model of how export promotion programs have animpact on firms’ export performance. According to this model, export assistanceinfluences export performance only indirectly. These programs are seen as instrumentalin augmenting organizational and managerial capabilities/competencies. Organizationalcompetencies include research capabilities, market knowledge and connections, andhuman and technical resources. Managerial competencies include education,international exposure, expertise, international orientation and commitment. Further,these characteristics influence (and perhaps are also influenced by) the degree of exportinvolvement of the firm which, in turn, influences export performance. Seringhaus andRosson (1990) propose a somewhat similar chain of events through which exportpromotion programs have indirect effects on export sales. They view export promotionas improving the export competence of firms and ultimately improving these firms’chances for success in the international market place.

When export assistance is viewed in this way, it becomes clear that firms atdifferent stages of export involvement have different competencies, resources, andstrategies and face different obstacles to achieving their export objectives. Hence, firmsdiffer greatly in their export assistance needs depending on their internationalexperience. Kotabe and Czinkota (1992), Seringhaus and Rosson (1990) and others havefound that the goals of export promotion programs are mediated by the degree ofinternationalization of the firm and firms should be segmented accordingly. The firm’slevel of internationalization has been identified as a critical factor in developingappropriate programs (Cavusgil, 1990; Diamantopoulos et al., 1993; Kotabe andCzinkota, 1992; Lesch et al., 1990).

Diamantopoulos et al. (1993) propose a response hierarchy model to explain theprocess by which firms might benefit from export promotion assistance programs atdifferent stages of involvement. In the early stages, firms can use assistance to becomeaware of exporting opportunities and benefits and hence, become motivated to export.Later, firms require information about exporting and export planning support. In thethird and final stage of the model, firms need assistance in conducting exportingactivities such as selling their products in export markets. Czinkota (1996) utilizes asimilar approach, whereby export development is viewed as an adoption process,moving from motivation and informational needs in the early stages through trainingon export mechanics, and then communications, logistics and sales support as firmstryout exporting as a route to greater profitability. Firms may discontinue exportexpansion plans after this trial phase due to the costs and risks involved. Regulatoryand financing support and ongoing market development support can help firms adoptexporting as a regular activity. Kotabe and Czinkota (1992) found that export

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procedural expertise was significantly different across their five export involvementstages, with firms having greater export involvement also having greater exportexpertise. It appears that managers were learning from their exporting experience withthe firms own operations and/or these firms were hiring managers with greaterexporting experience. Firms’ beliefs in the importance of availability of financing andmarket information and the competitive benefits and profitability of exporting werealso significantly different across the five stages.

Many different classifications have been developed to describe the exportdevelopment stages of firms (Bilkey, 1978; Cavusgil, 1980; Czinkota and Johnston,1981; Johanson and Vahlne, 1977; Kotabe and Czinkota, 1992; Moini, 1998; Samiee andWalters, 1991). Although the number of stages differs across these schemes, the basicpattern of evolution appears to be essentially the same (Kotabe and Czinkota, 1992):non-exporters, those beginning to examine exporting, firms involved sporadically withexporting without any real commitment to exporting, firms that actively export andfirms for which exporting is a fundamental part of their business.

Measuring the impact of export promotion programsWhile most researchers and providers of export promotion programs agree on the needto measure the impact of export promotion, there is no consensus on how this should bedone. Part of the difficulty with measuring the impact of export promotion programs isthat export promotion is not a business activity per se, but rather it facilitates firms’own activities in a wide variety of ways, as we have seen in the models of exportpromotion of Czinkota (1996), Seringhaus and Rosson (1991) and Diamantopoulos et al.(1993) among others. The other difficulty is that many factors, of which exportpromotion programs are only one, influence companies’ export behavior andperformance. Hence disentangling the effect of export promotion is difficult(Seringhaus and Rosson, 1990). Methodological and measurement difficulties haveled most researchers to use surrogate variables to evaluate export promotion programs(Diamantopoulos et al., 1993).

One line of research has focused on measuring the awareness and usage of exportpromotion programs as an indication of their success (Mansfield et al., 1987; Wheeler,1990; Pahud de Mortanges and Van Gent, 1991). Results of awareness and usage levelsof these programs are mixed (Kedia and Chokar, 1986; Dominguez and Sequeira, 1991;Sbrana and Tangheroni, 1991; Vanderleest, 1996). Although use and awareness may behelpful for program planning, they are not measures of impact. First, awareness doesnot necessarily lead to usage. Second, awareness evaluates the effectiveness of thecommunication of the program, not necessarily the contribution of the program itself.In fact, awareness of these programs has been shown to be a poor indicator ofperformance (Marandu, 1995). Further, usage of programs per se gives no indication asto the effectiveness of these programs in achieving their intended results. Firms’perceptions of the usefulness of programs have also been used as proxies to measurethe impact of these programs. Attitudes towards government programs, perceptions ofhelpfulness or usefulness of these programs provide valuable information, but cannotbe considered impact studies (Diamantopoulos et al., 1991; Clarke, 1991; Sbrana andTangheroni, 1991). Firms may give high ratings to programs that in fact have noinfluence on their export position and competitiveness. For example, Crick andCzinkota (1995) found there were significant differences between the programs

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requested by exporters and the types of programs that were needed to make themmorecompetitive from the point of view of their customers. Also, Marandu (1995) found norelationship or a negative relationship between satisfaction with the services andexport intensity. In addition, there is evidence to suggest that some firms may in factuse programs of questionable effectiveness because of pressure from export programproviders (Seringhaus and Rosson, 1990, p. 207). Overall, these proxy measures ofimpact can be criticized as lacking in objectivity, and in some cases relevance.

Another stream of research measures the obstacles exporters face in order toidentify potential needs to be fulfilled (Brooks and Frances, 1991; Cooper and Nyborg,1998; Dominguez and Sequeira, 1991; Ramaswami and Yang, 1990). In some cases,obstacles are explicitly matched to current program offering and judgments are madeas to the degree to which exporter needs are being met (Kotabe and Czinkota, 1992;Crick and Czinkota, 1995). This approach is based on research that indicates thatperceived barriers to exporting affect the behaviour of small and medium-sizedexporters (Bauerschmidt et al., 1985; Bilkey and Tesar, 1977; Lee and Brasch, 1978).While this research plays an important part in designing export promotion programs,it fails to provide evidence on the impact of these programs on firms’ capabilities andresources.

Another approach, proposed by Gray (1997), changes the focus from the firm to themanager as the relevant target for some export promotion efforts. By targetingmanagers with common international attitudes, skills and knowledge, governmentexport promotion programs can assist firms at all stages of internationalization byproviding the knowledge that their individual managers require. As Katsikeas et al.(2000) and Diamantopoulos et al. (1993) point out, the unit of analysis is a criticalelement in the scope of export performance research.

At the other extreme in terms of unit of analysis, macro-economic approachesattempt to estimate statistically the relationship between aggregate export promotionspending and aggregate export performance at the national or state level (Armah andEpperson, 1997; Camino, 1991; Richards et al., 1997). The shortcoming of this approachis that so many factors affect export sales that it is difficult, if not impossible, todisentangle the effect of export promotion on export sales at such an aggregate level(Seringhaus and Rosson, 1990).

A few studies have attempted to evaluate the effect of export promotion programson export sales performance directly. Seringhaus (quoted in Seringhaus, 1986) found norelationship between the use of one type of export assistance (i.e. trade missions) andtwo performance measures (i.e. export intensity and receipt of customer orders).However, use of trade missions was found to lead to quicker establishment of foreigncontacts and better organization of firms’ market entry approaches. Reid (1984) wasable to establish the effectiveness of export promotion program use on stimulatingforeign market expansion. Marandu (1995) found that program use was associatedwith export performance at an individual program level, but was not able to find such arelationship at an aggregate level. Seringhaus’s (1986) review of attempts to measurethe impact of export promotions programs on outcome measures concluded that“impact or effectiveness should not and perhaps cannot, be exclusively measured inexport sales volume, export ratio or order receipt”.

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Export performance measurementA variety of outcome measures have been proposed and evaluated in the exportperformance literature. The one common finding in more recent research is thatmultiple measures are necessary to capture unique and valuable facets of performance(Diamantopoulos, 1999; Katsikeas et al., 2000; Shoham, 1998; Styles, 1998; Zou et al.,1998). Katsikeas et al.’s (2000) review of the export performance measurement literatureidentified some categories of performance outcomes:

. economic measures based on sales, profits and market share;

. non-economic measures related to export markets (such as number of countriesexported to), products and miscellaneous items (including projection of exportinvolvement); and

. generic subjective measures (including perceived export success, achievement ofexport objectives, satisfaction with specific export performance indicators and ingeneral).

Both objective financial measures (albeit self-reported in most cases) and subjectivemeasures have been used in the literature. Opening the door to subjective measuresenables a much wider range of outcomes to be addressed. Some researchers haveargued for the inclusion of managers’ perceptions of the extent to which they haveachieved their objectives as a bona fide measure of performance, because they are theonly ones who know their export goals (Seifert and Ford, 1989; White et al., 1998).Further, Shoham (1998) found that objective measures of sales, profits and growthwere strongly correlated with subjective measures of satisfaction with theseoutcomes.

Measures of impact need to be derived to capture the wide range of export relatedactions which precede actual sales (Diamantopoulos et al., 1993; Seringhaus, 1986).Ideally, these outcome measures should also closely reflect the scope of exportpromotion activities (Seringhaus, 1990; Seringhaus and Rosson, 1990). Therefore, wehave chosen to use traditional performance outcome measures such as economicperformance (export sales in dollars, export intensity, growth in export sales), exportdiversification (number of countries exported to, percentage of exports to nearestneighbour, i.e. USA), as well as achievement of export objectives, export competenciesand export expansion strategies.

Achievement of specific export objectives (classified as “generic measures” byKatsikeas et al., 2000), such as those identified by Cavusgil and Zou (1994) most closelyresembles the kinds of outcomes export promotion programs support. These objectivesinclude:

. knowledge of export practices;

. knowledge of export opportunities;

. increased awareness of our products in specific export markets;

. gaining a market foothold;

. increased market share in export markets;

. pre-empt competition in export markets; and

. increase profitability of the company with exports (Cavusgil and Zou, 1994).

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These objectives are ultimately related to achieving export sales performance and maybe a more appropriate measure of performance than export sales performance(Cavusgil and Zou, 1994; Seringhaus, 1986; Styles, 1998). Export objectives cover avariety of export goals, appropriate for exporters at all levels of involvement and atvarious points in the export development process (Cavusgil and Zou, 1994;Diamantopoulos et al., 1993; Styles, 1998). Even though firms may not yet bereaping financial returns on their export efforts, they may consider themselvessuccessful in putting the appropriate building blocks in place, thereby investing infuture financial returns.

Export promotion programs may also have an impact on the antecedents ofperformance. Aaby and Slater (1989), and Cavusgil and Zou (1994), among others,identify firm competencies as firm level characteristics that contribute to exportperformance. Export promotion programs that provide information training andguidance about exporting should enhance specific export or marketing competenciesthat are relevant to firms’ level of export involvement.

Export promotion programs may also act to stimulate export expansion and guidefirms to choose appropriate strategies and develop and implement export plans (Reid,1984). In addition, the specific market expansion stimulated should be suited toparticular levels of involvement. Firms at earlier levels of export involvement may bestimulated to enter the most lucrative market or do better in markets they are alreadyin (market penetration), while firms that are more involved in export marketing may bestimulated to expand into new markets (market diversification).

HypothesesWe expect that use of a greater variety of export promotion programs contributes toexport performance and the achievement of strategic export objectives, improvesfirms’ export competence and affects the strategies employed. However, we furtherexpect that the relationship will be moderated by level of export involvement.

The notion of using a greater variety of programs is based on the exportperformance literature, which finds many factors contributing to export success:information, knowledge, financing, business contacts, strategies, attitudes, strategicorientations, etc. No single program supports all of these contributors to exportperformance, and therefore a greater variety of programs can provide support for agreater variety of factors underlying the achievement of export performance. Inaddition, our focus on aggregate export promotion program usage avoids the problemof how to weight programs to account for different types of programs (e.g. those thatare used frequently or only required once) or different quality of programs. In a sense,if most firms at a given level of involvement use a program, we are assuming that theybelieved it to be suitable at the time they decided to use it, whether or not they found ituseful after the fact. The other issue has to do with the sheer number of programsoffered. Examining each of the 21 programs across four levels of involvement and 13impact measures is well beyond the scope of a single paper.

Diamantopoulos et al.’s (1993) response hierarchy approach and Kotabe andCzinkota’s (1992) export problems analysis suggests that pre-exporters lack motivationand export competence and knowledge with respect to both markets and exportpractice. They require programs that help to motivate exporting, provide informationabout exporting practice and export opportunities. Because of their very focused needs

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to enhance their knowledge and competence as exporters, using a greater variety ofprograms will only benefit them for short-term outcomes.

H1. For pre-exporters, number of export promotion programs used is positivelyassociated with achievement of export market knowledge objectives, productmarketing objectives, marketing and export marketing competence andexport planning.

Sporadic exporters, having had some limited experience with exports, still lack theability to proactively seek out and follow up new export opportunities, and also maystill lack a commitment to exporting. Sporadic exporters require support to motivateexporting as a regular activity, training and information to develop exportingcompetence, and assistance in identifying opportunities and contacts. Their greaterinvolvement with exporting than the pre-exporters produces the need for a greatervariety of support programs, in keeping with their higher level of activity. They haveenough export involvement to warrant program assistance, and limited enoughexperience to still obtain benefit from it. Therefore, for sporadic exporters, using abroader variety of programs will have a positive impact on the greatest range ofoutcomes of interest than is the case for any other level of export involvement.

H2. For sporadic exporters, number of export promotion programs used ispositively associated with achievement of export market knowledgeobjectives, product objectives, product marketing objectives, marketing andexport marketing competence, export planning as well as longer term andimmediate export strategies.

Active exporters are moving beyond the sporadic exporting stage: they know how toexport and plan an orderly international expansion, but are seeking information,contacts and support to expand into new export markets. They require assistance inidentifying and understanding new markets. Therefore, program use should have apositive impact in those specific areas. Program use should also begin to have animpact on economic performance and market diversification.

H3. For active exporters, number of export promotion programs used is positivelyassociated with achievement of export product objectives, short- andlong-term market expansion strategies, export marketing competence andeconomic performance, and market diversification performance.

Majority exporters have well established export commitment and competence. Theyknow how to find and evaluate new geographic markets and mainly requireinformation about specific geographic markets. Given their experience, these outcomesfor this group are not likely to be determined by use of a greater variety of exportpromotion programs. They may, however, benefit in terms of economic performanceand market diversification performance.

H4. For majority exporters, achievement of objectives, strategies andcompetencies is independent of number of export programs used andpositively related to economic and market diversification performance.

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MethodSampleA national database of 3,500 small and medium-sized high-technology firms ininformation technology (computer hardware, microelectronics, geomatics and softwareand computer services) and telecommunications (equipment and services) was createdfor this study based on Canadian government trade databases. Firms were stratified bysub-sector and geographic region, and a sample of 500 firms was drawn. The seniorexport manager for each firm was personally contacted by a representative of IndustryCanada[1] to solicit their participation in the survey. A self-administered surveyquestionnaire, accompanied by a letter from the head of the National Sector Team forIndustry Canada encouraging firms to participate in the survey, was sent by mail to allthose who agreed. Follow-up telephone calls were conducted as required.

InstrumentThe survey questionnaire was developed after a review of the export performanceliterature, in-depth interviews and pre-testing with 25 senior executives in informationtechnology and telecommunication firms in these sectors, and consultation withIndustry Canada and other trade organizations and industry associations’representatives. In addition, a French version was created for Quebec firms[2]. The22-page questionnaire took approximately one hour to complete. It covered a widerange of issues relating to firm performance, characteristics, strategy and use ofCanadian international business development programs.

Export performance outcomes: economic, export objectives, competencies and strategymeasures. Themost commonly used economic export performancemeasures in the literatureinclude export intensity (export sales/total sales), export sales growth and export salesvolume (Katsikeas et al., 2000). Respondents were asked to provide export sales and annualsales data using actual values for the current year and five previous years. Export intensitywas calculated from the export and annual sales information. Export growth over theprevious year was calculated as the difference between the two (only the previous year wasused because so many of these firms were relatively new). We note that export intensity andexport sales are confounded with the degree of export involvement categorization; however,there is diversity within each level that may be related to program use.

Market-related measures were also identified by Katsikeas et al. (2000). We askedfirms the number of countries they currently exported to and what percentage of theirexports were sent to these countries. Number of countries exporting to and percentageof exports to Canada’s nearest neighbour, the United States, provide measures ofexport market diversity.

Firms were asked to rate their perceived achievement of seven export objectives.Cavusgil and Zou’s (1994) export objectives were measured on nine-point scalesanchored by “missed objective” and “surpassed objective”.

Firm competencies in marketing, and export marketing specifically, were measuredby the following items:

. overall marketing competence;

. competence with distribution;

. developing contacts in export markets; and

. information acquisition in foreign markets.

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Respondents were asked to compare their competencies relative to competitors onnine-point scales anchored by “well below average” and “well above average”. Thesedescriptions of competencies were adapted from Czinkota (1996). As discussed earlier,they represent the kinds of competencies that export promotion programs are aimed atenhancing (e.g. Diamantopoulos et al., 1993). In addition, firms were asked the degree towhich they undertook formal export planning, measured on a nine-point scale where1 ¼ not at all and 9 ¼ very much.

Export expansion strategies via new markets and/or new products were capturedwith four items that measured the degree to which new geographic or new productmarkets would be a priority for firms in the next year, and the next three years wereincluded to capture export expansion strategies. An additional item assessed firms’plans to increase export intensity “next year” and “next three years”. All of these itemswere measured on nine-point scales where 1 ¼ not at all and 9 ¼ very much.

Government export assistance programs used. Industry Canada and the Departmentof Foreign Affairs and Trade (DFAIT) identified the International BusinessDevelopment (IBD) programs that were available to high-technology firms who werecurrently exporting or planning to export in the future. The list of 21 programsincluded, for example, local and foreign trade officers; export training, export marketseminars, market studies, newsletters, online information, trade shows and missions,market access and trade barrier information and negotiations as well as exportfinancing (see Table I for a list of programs).

Respondents reported whether or not they had used the program in the previousyear. A new variable, i.e. number of programs used, was calculated for each firm. If afirm had used a program at least once it was added to the total. Because opportunitiesfor repeated usage were not commensurate across programs or firms of different levelsof export involvement, frequency of use was not an appropriate measure forcross-program analysis. For example, firms might go online for export information ona daily basis, but would participate in a foreign trade mission once. Therefore, numberof programs used represents a measure of the variety of programs used and as suchrepresents a degree of involvement with export promotion programs overall.

Other measures of program usage have been employed in previous research.Seringhaus and Botschen (1991) created an index of program usage based on athree-point perceptual scale across a variety of programs. Moini (1998) reported bothawareness and usage of individual programs, but did not aggregate usage acrossprograms. We used an aggregate measure in order to get an overall usage figure acrossdifferent programs.

Level of export involvement. Firms were segmented by level of internationalinvolvement, in keeping with the recommendations of previous research(Diamantopoulos et al., 1993; Kotabe and Czinkota, 1992; Moini, 1998). For thisresearch we adapted Moini’s (1998) stages of export involvement to accommodate themuch greater export involvement of high-tech firms. For traditional manufacturingexporters, 5-10 percent exports as a percentage of sales is considered to represent ahigh degree of export involvement. In high-tech markets, firms are involved withexporting to a much greater degree (Jones, 1999). Four categories were used to reflectfirms’ self-reported level of activity in export markets, similar to the approach ofSamiee and Walters (1991), without explicitly setting numerical targets for exportintensity (e.g. Moini, 1998).

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Program Pre-exporters

Sporadic

exporters

Active

exporters

Majority

exporters Total

Local trade officers 69.6 67.5 84.6 75.4 74.9

4.06 4.30 5.45 4.59 4.69

Overseas trade officers 65.2 70.7 82.1 84.6 78.0

3.53 4.90 5.41 4.71 4.79*

Market studies 22.7 42.1 71.4 41.3 45.6***

4.55 4.02 4.66 3.91 4.19

Incoming trade missions 48.0 43.9 71.8 51.6 53.8*

Foreign trade shows 66.7 50.0 74.4 71.4 66.3*

5.00 4.50 4.47 4.43 4.53

Export training initiatives 39.1 48.8 59.5 51.6 50.9

5.00 3.30 4.45 3.78 3.98

Case studies 30.4 20.5 32.3 23.3 25.5

4.32 3.76 4.68 4.32 4.34

Online services 100 100 100 100 100

6.00 4.91 5.70 5.02 5.30*

Newsletters 69.6 72.5 89.7 82.8 80.1

4.69 3.79 4.26 3.70 3.98

“How-to” 56.5 65.9 66.7 69.8 66.3

4.45 4.37 3.96 3.86 4.13

Market opportunity seminars 65.2 47.5 59.5 50.0 53.7

4.43 3.68 4.03 3.61 3.84

Contacts/leads 78.3 63.4 69.2 63.9 67.1

4.39 3.42 4.70 3.64 3.97*

Science and technology

agreements 0 0 19.4 9.8 7.8***

Government to government 33.3 36.0 57.9 43.5 43.8

4.00 3.93 4.27 3.22 3.77

Export development

corporation 25.0 29.3 30.6 41.3 33.5

3.00 3.25 3.19 2.95 3.07

IFI information 20.8 25.6 27.8 23.0 24.4

4.2 2.40 3.20 3.64 3.28

Canadian International

Development Agency 17.4 17.5 34.3 13.1 19.5*

5.25 5.78 4.33 4.54 4.86

TEMIC visits 4.5 7.3 9.1 8.1 7.6

TEMIC experts 4.5 12.2 12.1 3.3 7.6

Market barrier information 47.8 51.3 63.2 65.6 59.0

6.27 4.00 4.79 4.65 4.78*

Trade missions 28.0 20.0 52.8 44.6 38.0***

Mean number of programs used 7.5 7.9 10.18 8.32 8.52**

Notes:aUsefulness as perceived by those firms using the program (1 ¼ not useful, 9 ¼ very useful);chi square tests/ANOVAs of significant differences between groups of firms: *indicates significantdifferences between groups, p , 0:10; **indicates significant differences between groups, p , 0:05;***indicates significant differences between groups, p , 0:01

Table I.Percentage of firms usingexport promotionprograms and perceivedprogram usefulnessa bydegree of exportinvolvement

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Firms were asked to indicate which of the following best described their firm:. pre-exporters –may not export at all but are getting ready to export and may

export to a limited degree;. sporadic exporters – sporadically involved in export markets;. active exporters – actively involved in exporting; or. majority exporters – derive a majority of their sales from exports.

ResultsA total of 183 responses to the survey were received (37 percent response rate), and 175were retained for the analysis[3]. This sample size is consistent with sample sizes andresponse rates reported by other researchers in this area (e.g. Samiee and Walters,1991; Shoham, 1998)[4]. Survey respondents were typically presidents, CEOs orvice-presidents (80 percent of respondents) or the senior marketing person responsiblefor sales and/or exports. Industry sectors represented included telecommunications(20.9 percent), computer hardware and microelectronics (24.3 percent), software andservices (41.8 percent) and other information technology firms (13.0 percent). Thesample included firms from all regions of Canada. The responding firms’characteristics closely matched the sector and region proportions in the population.

The SMEs in the sample tended to be quite small. Forty-two percent of firms had tenor fewer employees, and the average firm size was 30.9 employees. Annual sales, whichwere highly correlated with number of employees (r ¼ 0:84, p , 0:00), also reflectedthe preponderance of very small firms in this industry – 48.9 percent had sales of onemillion dollars or less, with overall average sales of $3.21 million. These firms alsotended to be quite young. Just over 20 percent had been in operation only five years orless, and only 20 percent had been in business longer than 20 years.

Further, as demonstrated in Table II, there are significant differences in the exportintensity (percentage of sales from exports) across the export involvement groups,which validates the firms’ self-categorization. Pre-exporters have an average of lessthan 10 percent of sales from exports. Export intensity progressively increases to anaverage of 80 percent for majority exporters. It is interesting to note that these levels ofexport intensity are much higher than normally reported in studies of manufacturers ingeneral (e.g. Kotabe and Czinkota, 1992; Moini, 1998), again confirming the uniquenature of these high-tech SMEs.

The export objectives and competency items were factor analyzed in order tounderstand the dimensionality of the constructs. Principal components analysis of theseven export objectives items produced two factors with eigenvalues greater than one,and extracted 76 percent of the total variance with acceptable communalities and afairly clean structure (Table III). The first factor represents product market objectivessuch as increasing market share, pre-empting competition, profitability, and gaining afoothold in the market. Its reliability as measured by Cronbach’s alpha was very goodat 0.89. The other factor represents market knowledge objectives, including knowledgeof market opportunities, knowledge of export practices and increased awareness of thefirm’s products by export markets. These three items exhibited a reliability of 0.81.Relevant items were averaged to produce summated scales.

Factor analysis of the firm’s competence items produced two distinct factors thatexplained 86 percent of the total variance: general marketing competence (overall

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Pre-exporterSporadicexporter

Activeexporter

Majorityexporter

Totalsample

Annual sales ($m) 1.22 2.39 4.59 3.71 3.21**Years in operation 9.4 13.48 14.23 14.31 13.39Years exporting 4.45 5.80 7.80 9.16 7.66*Number of employees 13.28 20.34 41.90 37.65 30.93***Percentage of marketing budget forexports 10.00 29.74 57.00 80.75 57.50***

Export performanceExport sales ($m) 0.04 0.57 1.22 2.30 1.31***Export intensity (percentageexports/total sales) 7 25 42 80 48***Export growth ($m, previous year) 20.57 0.99 2.91 2.12 1.62Number countries exporting to 2.33 5.31 5.65 17.80 9.82Percentage of exports to USA 38.75 56.25 48.94 62.46 56.17Sample sizea 25 41 39 68 173

Notes: aSample size varies by variables due to missing data; ANOVA tests of significant differencesbetween groups of firms: *indicates significant differences between groups, p , 0:10; **indicatessignificant differences between groups, p , 0:05; ***indicates significant differences between groups,p , 0:01

Table II.Sample description bylevel of exportinvolvement

Product marketingobjective factor

Market knowledgeobjective factor

Performance objective achievementIncrease market share 0.86Pre-empt competition 0.83Profitability 0.81Gain foothold in new market 0.70Know export opportunities 0.90Know export practices 0.85Increased awareness of products in export markets 0.72Eigenvalue 4.16 1.16Cronbach’s alpha (reliability) 0.89 0.81

Marketingcompetence

Export marketingcompetence

CompetenciesOverall marketing 0.89Distribution 0.78Export market information 0.91Export contacts 0.88Eigenvalue 1.61 1.82Cronbach’s alpha (reliability) 0.90 0.86

Note: Principal components analysis performed by Varimax rotationTable III.Rotated factor loadings

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marketing competence and distribution competence), and export marketingcompetence (firms’ competence in developing contacts in export markets,competence in information acquisition on foreign markets). Reliability, as measuredby Cronbach’s alpha, for these two factors was 0.86 and 0.90, respectively. Again,ratings for each of the two factors were averaged to produce a summated scale.

Use of government export assistance programsActive exporters use the greatest numbers of export assistance programs on average,with pre-exporters using the least. Majority exporters use slightly more programs thansporadic exporters. Table IV provides detailed usage information for each program bylevel of export involvement.

Impact of number of programs used on economic performance, export objectives,exporting diversification, competencies and strategiesBivariate correlations were employed to examine the relationships between number ofprograms used and each of the objectives, competence and strategy variables for eachcategorical level of export involvement. When the effect of program use on theachievement of export objectives is segmented by level of internationalization of theexporter, we see significant effects in each of our measurement dimensions, excepteconomic measures of performance. Generally, program use is positively andsignificantly associated with the achievement of export objectives. However, thepattern varies by types of exporters (Table V). A detailed analysis by type of exporterfollows.

Pre-exporters. Greater use of export promotion programs by pre-exporters hadpositive effects on knowledge objectives as well as on export product marketing,although the latter was not statistically significant due to a relatively small sample sizeof pre-exporters.

Use of export assistance programs is positively related to pre-exporters’ competencein two areas. Specifically, there are significant correlations between use of exportassistance programs and firms’ general marketing competence and export marketingcompetence.

The results also indicate that for the pre-exporters, use of export assistanceprograms is positively related (although not statistically significant) with the firm’simmediate market expansion priorities.

Pre-exportersSporadicexporters

Activeexporters

Majorityexporters Total

Product objectives 2.91 3.79 5.83 5.45 5.01***Knowledge objectives 4.79 4.81 5.58 5.49 5.31**Marketing competency 3.88 3.96 5.15 5.11 4.67***Export marketing competency 3.88 4.39 5.80 5.55 5.08***New geographic markets 5.83 5.63 6.22 7.17 6.45***New geographic markets – three years 7.33 7.21 7.13 7.98 7.53New product markets 5.00 6.00 7.20 7.25 6.77***New product markets – three years 6.66 7.03 7.54 8.05 7.57**

Notes: Scale: 1 ¼ least positive, 9 ¼ most positive; *indicates significant correlation, p , 0:10;**indicates significant correlation, p , 0:05; ***indicates significant correlation, p , 0:01

Table IV.Mean outcomes

(objectives, competenciesand strategies) by degree

of export involvement

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Sporadic exporters. Number of programs used is significantly and positively correlatedwith sporadic exporters’ objectives related to establishing their products in newmarkets and developing export knowledge.

In the matter of competencies, the pattern of findings is quite similar to that ofpre-exporters. Use of export assistance programs is significantly correlated with bothmeasures of firm marketing competence as well as with their use of formal exportplanning. These results suggest that the use of government programs appears tosignificantly improve the competence of this group of exporters. This is expected,given that these exporters have little experience in the exporting process but stand tobenefit considerably because they are able to capitalize on the assistance received, inkeeping with the objectives of an exporter building export experience.

Sporadic exporters’ use of export assistance programs is significantly correlatedwith their market diversification strategies in both the short and long terms, as well aswith export intensity strategies in both the short and long terms. Sporadic exportersare not geographically diversified or well established in their current export markets,and hence great market potential still exists. Export assistance programs seem to beboosting firms’ ability (via their competencies) and resolve to pursue both types ofmarket expansion strategies.

Active exporters. Interestingly, number of programs used contributed to activeexporters’ knowledge objectives, which are relatively early objectives in the successchain. These exporters are in the process of expanding into new markets. Therefore,

Pre-exporterSporadicexporter

Activeexporter

Majorityexporter

Economic performanceExport intensity 0.02 0.14 20.04 0.05Export sales 0.02 0.16 20.21 20.08Growth in export sales (previous year) 0.07 20.09 0.05 20.09

Export diversificationNumber of countries 0.32 0.14 0.16 0.16Percentage of exports to USA 20.17 0.01 20.39** 20.23*

Export objectivesMarket knowledge objectives 0.63* 0.33** 0.32** 20.09Product marketing objectives 0.58 0.37* 0.06 20.04

Firm strategiesPriority: new geographic market next year 0.29 0.29* 0.59** 0.15Priority: new geographic market next three years 20.05 0.46** 0.48** 0.15Priority: increase export intensity – next year 0.23 0.28* 0.22 0.18Priority: increase export intensity – next three years 0.11 0.41** 0.11 0.10

Firm competenciesMarketing competency 0.33* 0.60*** 0.44*** 0.11Export marketing competency 0.57*** 0.51*** 0.41*** 0.16

Notes: *Indicates significant correlation, p , 0:10; **indicates significant correlation, p , 0:05;***indicates significant correlation, p , 0:01

Table V.Correlations betweennumber of programs usedand export performance,objectives, firmexpansion strategies andcompetencies

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programs that contribute to knowledge objectives may still be very beneficial as theycontinue to have to learn new export market practices. They appear to no longerbenefit from greater program use in their product marketing objectives. If theirproducts are well established in some markets, they should have the experience andexpertise necessary to establish plans and strategies to achieve their productobjectives, such as market share and profitability.

The impact of program use on competencies for the active exporter group aresimilar to that for the sporadic exporters group, however the results on formalmarketing planning provide an interesting insight. That is, the use of a greater numberof export assistance programs is significantly related to the overall marketing andexport marketing competence measures, but not for formal export planning. Thisgroup’s rapid increase in exporting activities renders them prime candidates forbenefiting from these assistance programs, perhaps because they already haveplanning mechanisms in place.

Not surprisingly, use of export assistance programs is also significantly correlatedwith market diversification priorities for active exporters. Specifically, the resultsindicate that firms that use more export assistance programs are also more likely toplace a high priority on market diversification both in the short and long term. Firmsusing a greater number of programs also demonstrate greater current geographicdiversification of their exports, with a smaller proportion of exports to the US. Theseare firms whose products have demonstrated export potential, and their bestopportunity is to leverage that success into new geographic markets.

Majority exporters. Greater use of government programs contributed nothing tomajority exporters’ achievement of objectives. Not surprisingly, of all the exportercategories, competencies of majority exporters are the least affected by the use ofexport assistance programs. This group’s experience in exporting provides its owncompetence even without the help of export assistance programs. It is possible that useof export assistance is substituted for their in-house capabilities and did not addincrementally to their competencies. Alternatively, as suggested by Gray (1997),individual employees who lack experience may seek the benefits provided by theseprograms, even though the firms themselves are experienced. Firms who experiencegreater turnover of experienced employees may have serious need of these programs.

Use of export assistance programs is not significantly correlated with majorityexporters’ expansion strategies. Given their high export intensity, these firms placeequal priority on market expansion and penetration strategies and their use ofprograms did not affect this priority. However, majority exporters who were moregeographically diversified beyond the US used significantly more programs.

DiscussionThe objective of this study was to evaluate the impact of export promotion programson export objectives, competencies and strategies. Drawing on previous research in theexport promotion literature as well as research on exporting in general, specificmeasures were developed to evaluate the impact of these programs. The results of thisstudy provide evidence of and clarify the nature of the impact of these exportassistance programs. A key contribution of this study is in demonstrating the impactof export promotion programs that had heretofore been argued but not demonstratedempirically in the literature (Czinkota, 1996; Diamantopoulos et al., 1993; Seringhaus

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and Rosson, 1990). Samiee and Walters (1991), Kotabe and Czinkota (1992) and Moini(1998) found significant differences in the awareness, usefulness and desirability ofgovernment export assistance programs across types of exporters. Our results areconsistent with these differences across types of exporters in these earlier studies, andin addition, support is found for the effectiveness of export assistance programs inimproving the competence of firms, helping them to achieve their export objectives andthe degree to which they employ various export expansion strategies.

As was expected, greater use of export assistance programs contributed to theachievement of export knowledge and product market objectives. Further, use ofprograms had a different impact for firms with different levels of export involvement.Export assistance programs appear to have their greatest impact for firms at thebeginning and developing stages of their export activity, and made more limitedcontributions to firms that were either essentially non-exporters or experiencedexporters. However, we should note that due to the cross-sectional nature of our study,there is a possibility that there may be long-term effects of programs that we have notaddressed.

The achievement of export objectives is more directly linked to export promotionprograms than are economic measures, and so it may be easier to isolate therelationship with these variables compared to measures such as export sales orintensity. We tested and found no significant relationships between financialperformance measures and number of programs used. Because export sales areinfluenced by a considerable number of factors other than program use and basic firmcharacteristics, it is difficult to disentangle the effects of using government programson the bottom line. However, it is interesting to note that both export objectives factorswere significantly correlated with export sales, intensity and expected growth inexports, which supports the validity of these variables as relevant measures ofprogram impact (see Table VI).

Pre-exporters, because of their limited involvement in exports clearly are not at thestage to show market-related benefits from use of export assistance programs.However, export assistance is associated with increased competence in the areas wherepre-exporters need them most, i.e. gaining export knowledge.

Export assistance appears to have its most wide-ranging impact on sporadic andactive exporters. Use of export assistance is associated with greater export competence,in a variety of areas, for both of these groups of exporters. These exporters are rapidlyexpanding their businesses but have not yet acquired all the competencies andresources required on their own. As such, the incremental assistance gained from theseprograms can make a difference in firms’ competence and market expansion strategiesby serving the needs of firms who are planning for exporting.

Export objectives achievementPercentage of

exportsExport sales

(1996)Export sales growth

(1996-1997)

Market knowledge objectives 0.24*** 0.24*** 0.25**Product marketing objectives 0.47*** 0.36*** 0.22**

Notes: **Indicates significant correlation, p , 0:05; ***indicates significant correlation, p , 0:01

Table VI.Correlation among exportperformance measures

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Majority exporters, on the other hand, may be free-riding on some export assistanceprograms. Firms that used more programs did not differ from firms that were notusing these programs with respect to firm competence or market expansion strategies.The only contribution of using a greater number of programs for majority exporters isto diversify export sales beyond the US. These results suggest that firms at this stageare able to provide the resources and knowhow necessary in most areas, exceptperhaps for country-specific information used to expand into new markets in the past.The program usefulness information in Table I shows that generally programs werefound to be less useful for majority exporters compared to active exporters. If majorityexporters are using programs to train less experienced managers for the future, thenthose benefits would not be apparent in short-term outcomes. A programmatic analysismay find that some organizational learning needs are shared by the firm itself andexport promotion programs once firms have achieved this degree of exportinvolvement.

An important contribution of this study is the identification of impact measures thatare more closely associated with the kind of outcomes that should be expected fromexport assistance. Researchers had criticized economic measures such as export salesand export growth as being unlikely to demonstrate the impact of export promotion(e.g. Diamantopoulos et al., 1993). The criticisms were based on the contention that avariety of factors other than export promotion assistance contribute to export sales. Itwas suggested that measures that more closely reflected the activities that derive fromexport assistance were warranted.

This study also contributes to the growing literature on high-technology firms.High-technology firms look to exports to achieve the rapid growth required to shortenthe pay-back time for product research, and to establish themselves in as manymarkets as possible before competitive pressures extinguish opportunities (Robertsand Senturia, 1996). This study demonstrates the contribution of export promotionprograms to export success for these firms, and importantly was particularly useful forthose firms that are not yet established in export markets.

Limitations and directions for future researchThis study was conducted on one industry segment using one country’s exportpromotion programs. Therefore, it is impossible to be sure that these findings can begeneralized to different industries and to the export promotion activities of othercountries. Clearly, tradeoffs must be made in any research between generalizabilityand greater power achieved by reducing the noise created by industry effects ordifferences in programs across countries. However, the approach used and themotivation that comes from demonstrating the effectiveness in one country and for oneindustry sector should encourage new research in this area.

In addition, the unit of analysis at the firm rather than the project or employee levellimits our ability to understand who in the firm is accessing these programs, and forwhat purpose. Founders who are experienced with international business or thosefirms who are able to hire experienced managers seek different benefits to those withmanagers with less experience. It is managers who attend seminars and tradeshows,and therefore learning must happen at their level before it can be incorporated to thefirm itself [5].

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An additional limitation is due to the aggregate nature of our key measure ofnumber of programs used. Future research will look at the usefulness and impact ofvarious individual programs.

The use of cross-sectional analysis to measure the relationship between exportassistance and various impact measures leaves the question of causal direction indoubt. The results, when compared to previous research and to the literature in thearea, point to the greater use of export promotion programs as the cause of improvedoutcomes and competence. However, it is also a distinct possibility that firms who arealready successful in a variety of areas also recognize the value of export promotionprograms, and so use more of them. Longitudinal analysis that tries to replicate theseresults would provide stronger evidence regarding the causal direction of exportassistance.

In addition, correlational analysis does not rule out possible type I error, where theimpact may be falsely attributed to the program use (Seringhaus, 1990). We have foundassociations that appear to be statistically relevant, but the nature of the data rules outan experimental or quasi-experimental design that could prove a causal relationship.

Notes

1. Industry Canada is the department of the Government of Canada responsible for trade, tradepolicy and investments as well as leading the “National Sector Teams” – a joint effort byfirms, industry associations, and governmental international trade programs.

2. Firms not responding to a given question are considered missing, and are not included in theanalysis reported for that question, and therefore sample size varies by question. Fivesurveys were dropped from the analysis because they either failed to meet the SME criteriaor they provided very limited responses.

3. Samiee and Walters (1991) report that Miesenbock’s literature review found that 67 percentof studies to that time had used samples of less than 200 respondents.

4. Canada has two official languages, i.e. French and English. The dominant official languagein the province of Quebec is French.

5. The results do not change when we control for firm size, age and sector.

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