Advancing Theory in Export Performance as a Strategy to Boost Export Growth in Africa

Advancing Theory in Export Performance as a Strategy to Boost Export Growth in Africa

Gloria Sraha (Victoria University of Wellington, New Zealand)
DOI: 10.4018/978-1-4666-6220-9.ch013
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Abstract

This chapter presents literature on export performance in international business and discusses how exporting firms, especially in Africa, can improve their competitiveness in international markets. The chapter further outlines the dimensions and determinants of export performance as highlighted in the extant literature and the importance of diversification of raw material commodity exports to value added exports in Africa.
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Introduction

Export performance has attracted attention in international marketing literature by managers, academic researchers, and public policy makers. For more than three decades, work in the field has concentrated on the comprehension of export performance determinants and how exporting firms can maximise their potential in foreign markets to improve sales outcomes (Lages & Sousa, 2010). Through exporting, managers can boost their corporate growth and ensure company survival over the long-term through performance enhancement. Public policy-makers view exporting as a way of accumulating foreign exchange reserves, increasing employment, and improving productivity (Sousa, Martínez-López, & Coelho, 2008), whereas researchers advance knowledge in international business (Zou & Stan, 1998). Thus, the goal of many firms and national governments is to expand exports as exporting allows the amassing of wealth of national industries which promotes economic development (Leonidou, Palihawadana, & Theodosiou, 2011).

Exporting constitutes an attractive foreign market entry and expansion approach for firms, especially Small- and Medium-sized Enterprises (SMEs) which face certain economic conditions in their local markets (Hultman, Robson, & Katsikeas, 2009). International exposure can be used by small firms to improve their competitiveness at home through enhanced managerial skills and capabilities gained from operating in export markets (Madsen, 1987). The extant literature has noted that export market development has become a matter of survival rather than a choice for many firms which encounter slow growth in their local markets (O'Cass & Craig, 2003). Exporting brings many benefits to firms. At the firm level, the activity assists in raising sales and profitability, diversifying business, and improving productivity (Lages & Montgomery, 2004).

Exporting provides companies realistic opportunities for growth because of stagnant domestic market competition (Katsikeas, Samiee, & Theodosiou, 2006), as increasing exports leads to an enlargement of the customer base. International exposure can be used to improve competitiveness at home through enhanced managerial skills and capabilities gained from participating in export markets (Madsen, 1987). Firms performing well in the export business are more likely to withstand the intensified global competition generated by the increasing integration of regional and world markets as well as trade liberalization (Sousa et al., 2008).

Export performance has being studied in Africa at the country level in general. Etemad (2004) contends there is increasing globalisation tendencies across the world; therefore, SMEs stand an increased risk of failure if they choose to focus exclusively on their domestic markets. Based on this assertion, it is argued that export involvement of African firms represents one of the most important policy initiatives to lead the Africa continent to socio-economic development (Kuada, 2007; Rankin, Soderbom, & Teal, 2006; Wolf, 2007). In sub-Saharan Africa, Rankin et al. (2006) contend without export involvement, the domestic market will remain weak and unlikely to boost firm output in the region into growth. The overall internal domestic market of Africa is too small to propel growth if firms are not encouraged to internationalise outside their boarders to enhance economic growth (Kuada, 2007; Wolf, 2007).

Further evidence has shown in most industrialised countries that export manufacturing is important among SMEs. The use of firm-level data from the manufacturing sector in four African countries confirmed export led growth and concluded SMEs from Africa stand the chance to learn from exporting business (Bigsten, Collier, Soderbom, & Teal, 2001). Adbullahi, Cheng, and Messinis (2010) propose major outward strategies are necessary to boost exports in Africa. Adbullahi et al. (2010) argue the first string of strategies is to increase Africa’s participation in world markets and enhance its international competitiveness by further advocating international trade. This will allow African exporters to pursue opportunities in foreign markets.

Key Terms in this Chapter

Export Diversification: Expanding exports into new segments outside the scope of existing exports.

Value-Added Agriculture: Increasing the economic value of an agricultural commodity through changes in genetics, processing or diversification.

Value-Added Exports: Increasing the economic value of a commodity through changes in genetics and processing.

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