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THE DETERMINANTS OF FIRM EXPORT PERFORMANCE IN EXPORTING TO EMERGING MARKET:

THE DETERMINANTS OF FIRM EXPORT PERFORMANCE IN EXPORTING TO EMERGING MARKET: EVIDENCE FROM PETROCHEMICAL INDUSTRY . Academic Supervisor: Prof. Dr. Abu Bakar Bin Abdul Hamid Dr. Melati Binti Ahmad Anuar. PhD Student: Frashid Movaghar Moghaddam. 19. 1.2012. RESEARCH ROADMAP.

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THE DETERMINANTS OF FIRM EXPORT PERFORMANCE IN EXPORTING TO EMERGING MARKET:

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  1. THE DETERMINANTS OF FIRM EXPORT PERFORMANCE IN EXPORTING TO EMERGING MARKET: • EVIDENCE FROM PETROCHEMICAL INDUSTRY Academic Supervisor: Prof. Dr. Abu Bakar Bin Abdul HamidDr. MelatiBinti Ahmad Anuar • PhD Student: FrashidMovagharMoghaddam • 19. 1.2012

  2. RESEARCH ROADMAP PERESENTATION OUTLINE Research Roadmap Introduction Review of Literatures Research Methodology Findings (Objectives) Contribution and Managerial Implication INSPIRING CREATIVE AND INNOVATIVE MINDS

  3. RESEARCH ROADMAP RESEARCH ROAD MAP CONTRIBUTIONS Conceptual Framework Determinants of Export Performance Background Sub elements of Internal and External variables Area of Concern Process of evaluating determinate of export performance FINDINGS PhD Research Firms from developing country in Asia Methodology Quantitative Review of Literature Petrochemical company in Iran Information about emerging market INSPIRING CREATIVE AND INNOVATIVE MINDS

  4. INTRODUCTION Vital role of exporting in the world and countless benefits of export for firms and countries cause the increasing attention to the determinants of export performance. Petrochemical industry is the main non-oil export product with 38.6% of all non-oil exporting. Exports of petrochemical products value, selling worth value and added value showed 30%, 28% and 40% of growth in (2005 – 2009)

  5. INTRODUCTION INSPIRING CREATIVE AND INNOVATIVE MINDS

  6. INTRODUCTION INSPIRING CREATIVE AND INNOVATIVE MINDS

  7. INTRODUCTION The percentage of petrochemical products export to China increases every year. INSPIRING CREATIVE AND INNOVATIVE MINDS

  8. PROBLEM STATEMENT The main problems of the this study is the recognition of effective determinants of export performance, fragmentary or conflicting knowledge about determinants of export performance, and creation of comprehensive integrated model, (Nazar and Saleem, 2009; Gertneret al., 2006; Ogunmokun and Ng, 2004; Ahmed et al., 2004; Julian and O’Cass, 2003; Julian and O’Cass, 2002a; Baldaufet al., 2000; Thirkell and Dau, 1998; Diamantopolous, 1999; Zou and Stan, 1998). Researchers give less attention to external factors. The existing literatures are insufficient insights for recognizing external determinates (Zou and Stan, 1998; Baldaufet al., 2000 Sousa et al., 2008). Although, domestic market characteristics is neglect in the previous studies (Sousa et al., 2008; Zou and Stan, 1998). INSPIRING CREATIVE AND INNOVATIVE MINDS

  9. PROBLEM STATEMENT • There is a conflicting knowledge about Internal Factors. • Scholars have different opinion about the positive or negative effects of firm characteristics . • The is not agreement among researchers aboutwhat constitutes a managerial factor (Brodrechtova, 2008; Salavou and Halikias , 2008; Lee and Griffith, 2004; ; Thirkell and Dau, 1998; Cavusgil and Zou, 1994; Rocha and Christensen, 1994). • Although, many researcher considered marketing strategyis one of major elements of export performance(Tooksoon and Mohamad, 2008)the variety of performance measurement led to the opposing findings about export marketing strategy, (Aaby and Slater, 1989; Baldaufet al., 2000; Leonidouet al., 2002; Lee and Griffith, 2004). In addition, the lack of detailed analysis on dimensions of export marketing strategy is a popular problem inherent in the previous studies (Leonidou, et al., 2002). INSPIRING CREATIVE AND INNOVATIVE MINDS

  10. PROBLEM STATEMENT • The differences among developed and developing economies and unique conditions in developing countries led to the previous researches are not appropriate for firms in developing country (Mohamad, 2009; Calantoneet al., 2006; Souse et al, 2008; Souse 2004; Lee and Griffith 2004; Theodosiou and Leonnidou, 2003; Julian and O’Cass, 2002a; Baldaufet.al, 2000; Aulakhet al., 2000; Aulakhet al., 2000; Katsikeas, 1996; Dominguez and Brenes, 1997). • Previous researchers had some problem in their methods. • First, previous researchers used a firm (total product to total export market) or export venture (one product or a product line to a specific market) that have posed some problems, but recent researchers should analyzed the firm’s main export venture (MEV) (Sousa al, 2008; Mavrogiannis et al., 2008 ; lages and Montgomery, 2004; lages and lages, 2004; Sousa, 2004; Morgan et al., 2004 ; Morgan, 2000Cavusgil and Zou, 1994; Zou and Stan, 1998) INSPIRING CREATIVE AND INNOVATIVE MINDS

  11. PROBLEM STATEMENT Second, there are a limited number of studies that uses single and related-industry that led to better understanding on the relationship of export marketing strategy and export performance(Abdul Adis and Md. Sidin, 2010; Sousa et al., 2008; Meyer, et al. 2009; Wu, and Pangarkar, 2006; Wong, 2007;Contractor et al., 2005; Sosa 2004; Zou and Stan 1998) Third, previous researchers used limited informants or respondents. However, multiple informants will improve assessment of export performance (Sousa et al., 2008; Sousa, 2004). INSPIRING CREATIVE AND INNOVATIVE MINDS

  12. PROBLEM STATEMENT • China as emerging market being one of the important target markets for Iranian petrochemical firms but, they do not have sufficient information about determinants of export performance in China market (Enderwick, 2009; Navarro et al., 2009; Koksal, 2008; Vakhshri, 2006; London and Hart, 2004; Lages, 2003; Julian and O’Cass, 2003; Julian and O’Cass, 2002a) Although, Iranian petrochemical companies have a lot of competitive advantages in the China market, and China needs more petrochemical products, export performance of Iranian petrochemical companies is not satisfactory. (Iran oil ministry, 2009; Central Bank of Iran, 2009; Fizebakhsh, 2002; Vakhshri, 2006) INSPIRING CREATIVE AND INNOVATIVE MINDS

  13. RESEARCH OBJECTIVES OBJECTIVE, HYPOTESIS, QUESTIONS RESEARCH HYPOTESIS & QUESTIONS RESEARCH OBJECTIVE Ha, Ha1, Ha2,Ha3, Ha4 • To determine the influence of exportmarketing strategy elements on export performance of Iranian petrochemical firms in China market 1 Qb, Qb1, Qb2,Qc Hb1.1, Hb1.2, Hb1.3, Hb1.4 Hb2.1,Hb2.2, Hb2.3, Hb2.4 Hc1. Hc1.1, Hc1.2, Hc1.3, Hc1.4, Hc1.5, Hc1.6, Hc1.7, Hc1.8, Hc1.9, Hc1.10 Hd Hd.1, Hd.1.1,Hd.1.2,Hd.1.3,Hd.1.4, Hd.1.5 Hd2,Hd2.1,Hd2.2,Hd2.3,Hd2.4, Hd2.5 • To recognize which external factors and internal factors associated with export performance of Iranian petrochemical firms in exporting to China market 2 • To analyze critically the key success factors and improvement for Iranian petrochemical firm’s export performance in China market 3 The results of Questions and Hypothesis INSPIRING CREATIVE AND INNOVATIVE MINDS

  14. Scope of Study • The scope of this research revolves around exploring the export performance of Iranian petrochemical industry to the China as emerging markets INSPIRING CREATIVE AND INNOVATIVE MINDS

  15. REVIEW OF LITERATURE REVIEW OF LITERATURES Export Performance: The range that company obtain its objective when export to international market Measurement of Export Performance categorized into: 1- Objectively measurement (with financial measures) 2- Subjectively measurement (with financial and non-financial measures) (Mohamadet al., 2009; Sousa et al., 2008; Mavrogiannis et al., 2008; Morgan et al., 2004; Sousa, 2004 Shamsuddoha, 2004; Cicicet al., 2002). • Determinants of Export Performance: • 1- Export marketing strategy elements • 2- Internal factors • 3- External factors • (ZarinNegar and Vazife Dost, 2009; Mavrogiannis, et al. 2008; Calantoneet al., 2006; Haahtiet.al, 2005; Shamsuddoha, 2004; Lages and Montgomery, 2004; O’Cass and Julian, 2003; Cicicet al., 2002; Leonidou et al, 2002; Baldaufet.al, 2000; Cavusgil and Zou, 1994)

  16. REVIEW OF LITERATURES Export marketing strategy Export marketing strategy played as central role in export performance and have direct impact on export performance (Mohamadet al., 2009; Salavou and Halikias (2008; Mavrogiannis, et al. 2008; Lages, 2003; Julian and O’Cass, 2003; Leoniduoet al., 2002)

  17. REVIEW OF LITERATURES INSPIRING CREATIVE AND INNOVATIVE MINDS

  18. REVIEW OF LITERATURES INSPIRING CREATIVE AND INNOVATIVE MINDS

  19. CONCEPTUAL FRAMEWORK

  20. RESEARCH METHODOLOGY DATA ANALYSIS DETAILS OF RESEARCH Multiple informants within each company will improve assessment on export performance (Sousa, 2004). MEASUREMENT Type of Investigation Research Type Measurement Descriptive Statistic, Correlation, Simple Linear Regression Research methods Researcher Interference 5 point likert scale Quantitative (Sousa et al., 2008; Zou and Stan, 1998). Survey Correlation Simple Linear Regression Minimal Applied Time Horizon Unit of Analysis Data Collection Cross-Sectional Individual (Manager and Non-Manager of petrochemical firms that export to China sufficiently and directly Questionnaire Sousa et al., (2008) 96% Zou and Stan, (1998) 86% Sampling Design Probability Sampling, Simple Random Sampling Questionnaire Response Rate Goodness of Measurements Sampling Size Reliability: Cronbach alpha Validity: Face and Content Respondent rate: 80.6 % Usable Return rate: 77.5% Morgan formula N = 98, S= 78 INSPIRING CREATIVE AND INNOVATIVE MINDS

  21. DATA ANALYSIS (Reliability) Sub -Variables Total Cronbach's Alpha Main Variable Price marketing strategy α = 0.740 Product marketing strategy α = 0.761 Export Marketing Strategy α = 0.895 Promotion marketing strategy α = 0.821 Place marketing strategy α = 0.723 External Factors Export market characteristics α = 0.816 α = 0.762 Domestic market characteristics α = 0.815 Firm characteristics α = 0.720 Internal factors Management skill-based α = 0.780 α = 0.797 α = 0.710 Management perception Firm Export Performance α = 0.942

  22. DATA ANALYSIS (Normality) Variables Skewness and Kurtosis Test Kolmogorov-Smirnov Test Export Marketing Strategy Sig.=0.077 Skewness =.449 Kurtosis= -.530 External Factors Kurtosis= 2.205 Skewness =-.877 Sig.=0.200 InternalFactors Skewness =.108 Kurtosis= -.150 Sig.=0.200 Firm Export Performance Skewness =.064 Kurtosis= -.630 Sig.=0.200

  23. KEY FINDING (OBJECTIVE 1) • The Correlation analysis revealed a moderate positive correlation between product marketing strategyand performance r = 0.475, (P-value< 0.05). • Thus, higher level of product marketing strategyassociated with higher levels of firm export performance. Concerning adjusted R square is adj.R2= 0.215 with Sig = 0.000. the product marketing strategy explains 21.5percent of variance in firm export performance. As a result, there is support for Ha1

  24. KEY FINDING (OBJECTIVE 1) • The results show a slightly positive significant correlation coefficient r = 0.365, (P-value < 0.05) between price marketing strategyand firm export performance. Concerning Adjusted R square is adj.R2 =0.121 with Sig = 0.001. As a result, the price marketing strategy explains 12.1% percent of variance in firm export performance. As a result, there is support for Ha2

  25. KEY FINDING (OBJECTIVE 1) • The Correlation analysis revealed a moderate positive correlation between promotion marketing strategyand export performance r = 0.444, (P-value < 0.05). • Thus, higher level of promotion marketing strategyassociated with higher levels of firm export performance. Concerning Adjusted R square is adj.R2= 0.186 with Sig = 0.000. the18.6% percent of the variance in FEP can be explained by the variance in promotion marketing strategy. As a result, there is support for Hypothesis Ha3

  26. KEY FINDING (OBJECTIVE 1) • Correlation analysis revealed a moderate positive correlation between place marketing strategyand firm export performance r = 0.404, (P-value < 0.05). Concerning adjusted R square is adj.R2 =0.152 with Sig = 0.000. As a result, the place marketing strategy describes 15.2% percent of variance in firm export performance As a result, there is support for Hypothesis Ha4

  27. KEY FINDING (OBJECTIVE 1) • The correlation between exportmarketing strategyand firm export performance was, r =0.535, (P-value< 0.05). Therefore, there is moderate and positive correlation between two variables. Concerning The Adjusted R square is adj.R2= 0.245 with (P- value= 0.000). The 24.5% percent of the variance in firm export performance can be explained by the variance in export marketing strategy. As a result, there is support for Hypothesis Ha

  28. KEY FINDING (OBJECTIVE 2) Correlation analysis revealed a strong positive correlation between export market attractiveness and performance r = 0.589, (P< 0.01). Concerning the adjusted R square is adj.R2= 0.338 with Sig = 0.000. the 33.8%percent of the variance in firm export performance can be explained by the variance in export market attractiveness. As a result, there is support for Hb1.

  29. KEY FINDING (OBJECTIVE 2) The correlation of cultural difference and firm export performance was, r = 0.035, p > 0.01.Thus, there was no correlation between two variables H1.2 cannot support.

  30. KEY FINDING (OBJECTIVE 2) Correlation analysis revealed a moderate or medium positive correlationbetween the export market competitiveness and performance r = 0.416, (P < 0.01). The adjusted R square is adj.R2= .173 with Sig = 0.000. As a result, about 17.3%percent of the variance in firm export performance can be explained by the variance in the export market competitiveness. As a result Hb1.3 is confirmed

  31. KEY FINDING (OBJECTIVE 2) Correlation analysis show a slightly negative significant correlation coefficient r = - 0.384, (P < 0.05) between the export market barrier and firm export performance. Concerning Adjusted R square is adj.R2 = 0.148, with Sig = 0.014 the 14.8 % percent of the variance in firm export performance can be explained by the variance in export market barrier. As a result, there is support for hypothesis Hb1.4

  32. KEY FINDING (OBJECTIVE 2) The results show a slightly negative significant correlation coefficient r = -0.247, (P < 0.05) between domestic market attractiveness and firm export performance. Concerning the adjusted R square is adj.R2 = 0.048 with Sig = 0.036 the 4.8% percent of the variance in firm export performance can be explained by the variance in domestic market attractiveness. As a result, there is support for Hb 2.1

  33. KEY FINDING (OBJECTIVE 2) There was no correlation between attraction foreign direct investment (FDI) and firm export performance due to r = 0.114, (P-value > 0.05). Hypothesis Hb 2.2 cannot support.

  34. KEY FINDING (OBJECTIVE 2) The results show a slightly negative significant correlation coefficient r = -0.284, (P < 0.05) between the domestic export barrier and firm export performance. Concerning the Adjusted R square is adj.R2 = 0.091, with Sig = 0.019 about 9 % percent of the variance in firm export performance can be explained by the variance in domestic export barrier. As a result, there is support for hypothesisHb 2.1

  35. KEY FINDING (OBJECTIVE 2) There is no correlation between export assistance in Iran and firm export performance because r = 0.222, (P-value > 0.05). Hypothesis Hb 2.4 is rejected.

  36. KEY FINDING (OBJECTIVE 2) There was no correlation between bureaucracy in firmand firm export performance because r = - 0.096 and (p-value > 0.05). Hc1.1cannot confirms.

  37. KEY FINDING (OBJECTIVE 2) There is no correlation between firm relationship commitmentand firm export performance, because r = 0.190, P-value > 0.05 Hc1.2. cannot confirm.

  38. KEY FINDING (OBJECTIVE 2) Correlation analysis show weak positive correlation between firm technology leveland firm export performance r = 0.284, (P-value < 0.05). The adjusted R square is adj.R2=0.068 with Sig= 0.013. As a result, 6.8%of firm export performance is weakly related to firm technology level. Thus, Hc1.3 is confirmed.

  39. KEY FINDING (OBJECTIVE 2) The finding describes weak positive correlation between firm informationleveland firm export performance r = 0.268, (P-value < 0.05). The adjusted R square is adj.R2=0.059 with p-value < 0.05. As a result, 5.9 % of variance in firm export performance can be explained by variance in firm technology level. Thus, Hc1.4 seems to be confirmed

  40. KEY FINDING (OBJECTIVE 2) There was no correlation between connectedness in firm and firm export performance Hc1.5. cannot support

  41. KEY FINDING (OBJECTIVE 2) The correlation of conflict in firmand firm export performance was, r = - 0.097, (p > 0.01). There was no correlation between two variables. Hc1.6 cannot support

  42. KEY FINDING (OBJECTIVE 2) The correlation between firm international experienceand firm export performance was, r = 0.277, (P-value < 0.05). Therefore, there is weak correlation between two variables. . The adjusted R square is adj.R2=0.064 with Sig=0.016. As a result, 6.4 % of variance in firm export performance is related to firm international experience. thus, Hc1.7. was supported

  43. KEY FINDING (OBJECTIVE 2) The correlation of firm ageand firm export performance was, r = 0.125, (p > 0.05). The relationship was positive however; there was no correlation between two variables. Hc1.8 cannot support

  44. KEY FINDING (OBJECTIVE 2) The correlation of firm sizeand firm export performance was, r = 0.011, (p > 0.05).Thus, there was no correlation between two variables. Hc1.9 cannot support

  45. KEY FINDING (OBJECTIVE 2) The results Show a slightly positive significant correlation coefficient r = 0.371, (P-value < 0.05) between firmexport market orientationand firm export performance. The adjusted R square is adj.R2= =0.126 with Sig = 0.001. As a result, firm export market orientation describes 12.6% percent of variance in firm export performance. thus, Hc1.10 was supported.

  46. KEY FINDING (OBJECTIVE 2) Correlation analysis revealed a moderate and positive correlationbetween firm characteristicsand firm export performance was, r = 0.346, (P-value < 0.05). The adjusted R square is adj.R2= 0.108 with Sig= 0.002. As a result, 10.8 % of variance in firm export performance is related to variance in firm characteristics. As a result, there is support for hypothesis Hc1.

  47. KEY FINDING (OBJECTIVE 2) The correlation between management export commitment and supportand firm export performance was, r = 0.237, (P-value< 0.05). Therefore, there is weak and positive correlation between two variables. The adjusted R square is adj.R2= =0.043 with Sig = 0.040. As a result, of the management export commitment and support describe 4.3 % percent of variance in firm export performance. Thus, Hd.1.1 is confirmed.

  48. KEY FINDING (OBJECTIVE 2) The results Show a slightly positive significant correlation coefficient r = 0.331, (P-value < 0.05) between manager perception towards export opportunities and threatand firm export performance The adjusted R square is adj.R2= 0.110 with Sig =0.040. As a result, 11% of variance in firm export performance can be explained by the variance in manager perception towards export opportunities and threat. Thus, Hd1.2. is confirmed

  49. KEY FINDING (OBJECTIVE 2) The correlation between management international orientationand firm export performance was, r = 0.260, (P-value< 0.05). Therefore, there is weak and positive correlation between two variables. The adjusted R square is adj.R2= 0.055 with Sig= 0.023. As a result, the management international orientation explains 5.5% percent of variance in firm export performance. Thus, Hd.1.3 is confirmed

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