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The Role of Past Performance in Export Ventures: A Short-Term Reactive

Approach

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DOI: 10.1057/palgrave.jibs.8400339 · Source: RePEc

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 Journal of International Business Studies (2008) 39, 304–325
& 2008 Academy of International Business All rights reserved 0047-2506 $30.00
www.jibs.net

The role of past performance in export

ventures: a short-term reactive approach

Luis Filipe Lages1,2, Abstract

Sandy D Jap3 and This paper employs organizational learning theory to examine the short-term
effect of past export performance, and internal (management) and external
David A Griffith4 (market) forces on marketing strategy adaptation and current export
1
performance. Results from a survey of over 500 export managers indicate that
Faculdade de Economia, Universidade Nova current-period performance improvement (in terms of performance achieve-
de Lisboa, Portugal; 2Deshpande Center for
ment, export intensity, and performance satisfaction in the current year) is
Technological Innovation, MIT School of
Engineering, USA; 3Goizueta Business School, influenced by the firm’s commitment to exporting. Further, the authors found
Emory University, Atlanta, USA; 4Eli Broad that while performance satisfaction feeds performance improvement in the
Graduate School of Business, Michigan State following year, both the previous year’s export intensity and export
University, East Lansing, USA performance achievement produce a negative impact on current-period
performance improvement. More importantly, the level of development in
Correspondence: the export market facilitates marketing strategy adaptation in the short term, as
Luis Filipe Lages, Marketing and does export intensity in the previous year. However, satisfaction with previous-
International Business, Faculdade
year performance negatively influences the degree of distribution adaptation.
Economia, Universidade Nova de Lisboa,
Lisboa 1099-032, Portugal.
Implications for international business researchers and practitioners are also
Tel: þ 351 21 3801601; discussed.
Fax: þ 351 21 3886073; Journal of International Business Studies (2008) 39, 304–325.
E-mail: [email protected] doi:10.1057/palgrave.jibs.8400339

Keywords: past performance; short term; export performance; export marketing;

organizational learning; adaptation-standardization

INTRODUCTION
As competition in world markets has intensified, researchers and
practitioners have called for an increased understanding of the
drivers of export performance (Cavusgil & Zou, 1994; Morgan,
Kaleka, & Katsikeas, 2004), where export performance is defined as
the extent to which a firm’s objectives, both strategic and financial,
with respect to exporting a product to a market are achieved via the
execution of the firm’s export marketing strategy (Cavusgil & Zou,
1994). While a significant amount of research has been conducted
in the area of exporting, and the drivers of export performance, a
review of the literature reveals several shortcomings that have
limited our understanding of these issues.
First, Morgan et al. (2004) note that although much research has
been conducted on export activities, there are few strong theoretical
frameworks for researching marketing aspects of export activity.
Rather, they note that the majority of studies are descriptive, are
largely atheoretic, or draw upon divergent theoretical perspectives,
Received: 4 November 2003
Revised: 19 January 2006
thus making it difficult to integrate findings from prior work.
Accepted: 20 April 2007 Given the lack of theory in this area, they argue that the field is at a
Online publication date: 29 November 2007 standstill. Responding to this call, we adopt an organizational
 Role of past performance in export ventures Luis Filipe Lages et al
305

learning approach to better understand the theore- adaptation of marketing strategies and short-term
tical aspects of managerial decisions driving export performance using a 1-year period as a reference
marketing strategy and export performance. (cf. Cooper & Kleinschmidt, 1985; Lages & Lages,
Second, a synthesis of prior research on market- 2004; Lages, Lages, & Lages, 2005b). This approach
ing strategy within the exporting literature suggests helps to shed light on the initial managerial
that the main purpose of marketing activity is reactions and immediate adjustments to marketing
learning about local environments and the devel- mix strategy and their effects on annual perfor-
opment of capabilities that facilitate adaptation mance, thus providing a short-term reactive
(Dickson, 1992). Given this focus, the majority of approach to managerial action.
the marketing strategy export literature has focused Taken together, the shortcomings in the existing
on the issue of marketing strategy adaptation/ literature not only create theoretical and empirical
standardization. However, as Ryans, Griffith, and gaps, but leave international business academics
White (2003) conclude, with rare exception the and practitioners without a clear understanding of
majority of this research has been without a strong the factors influencing export performance. As the
theoretical foundation. The introduction of orga- underlying aspects of export marketing strategy are
nizational learning theory to the export marketing driven by managerial action, greater understanding
strategy literature provides a theoretical foundation of managerial learning from past performance can
for the seminal issue in the field of international provide international business academics and prac-
marketing. Specifically, the organizational litera- titioners with strategic insights into enhancing
ture reveals the importance of learning about a export performance (Lages, 2000). The purpose of
firm’s environment as a basis to develop internal this study is to contribute to the literature by add-
capabilities that facilitate adaptation (Dickson, ressing these issues within the context of exporters.
1992; Lord & Ranft, 2000; Özsomer & Gençtürk,
2003). Under this perspective, firms are theorized to THEORETICAL BACKGROUND
develop core competencies that allow them to
learn at least at the same baseline rate as that at Organizational Learning
which environments change (Stata, 1992). There- A large body of literature addresses the field of
fore, building on prior international business organizational learning (e.g., Crossan, Lane, &
literature (e.g., Luo & Peng, 1999; Sullivan & White 1999; Hult, Ketchen, & Nichols, 2002).
Nonaka, 1986), we adopt the organizational learn- Although many definitions and conceptualizations
ing perspective of marketing strategy adaptation to of organizational learning have been put forth in
consider how these strategies are formulated as a the literature (e.g., Levitt & March, 1988; March,
function of internal (management) and external 1991), consensus has not been reached (Fiol &
(market) forces, thus informing our overall under- Lyles, 1985; Tsang, 1997). However, as Lant,
standing of how marketing strategy is crafted in an Milliken, and Batra (1992) argue, common themes
exporting context. Thus we offer a more compre- to models of organizational learning exist. These
hensive, theoretically founded, understanding include the following:
of the simultaneous links among the internal and
(1) Managers are assumed to have set performance
external market forces of the firm, marketing
goals, which are compared with performance
strategy adaptation, and past and current export
outcomes (Lant, 1992; Lant et al., 1992).
performance.
(2) The discrepancy between goals and resultant
Third, although the majority of the export litera-
performance acts as a signal of success or failure
ture undertakes a long-term perspective of perfor-
(Cyert & March, 1963; Lant, 1992; Lant et al.,
mance, research suggests that managerial emphasis
1992; Levinthal & March, 1981).
within Western firms is more specifically focused
(3) Discrepancies between the managers’ goals and
on maintaining short-term performance (Doyle,
resultant performance influence managerial
Saunders, & Wong, 1992; Lages & Lages, 2004;
action and organizational change (Levitt &
Madsen, 1998), a key aspect of strategy modifica-
March, 1988; Lant & Mezias, 1992).
tion under an organizational learning perspective.
We therefore focus on the determinants of short- Given the common themes identified by Lant
term performance as a means to understand the et al. (1992), in this study we build upon the
building blocks of long-term performance. Specifi- conceptualization of organizational learning
cally, we investigate key determinants of short-term developed by Levitt and March (1988), whose

Journal of International Business Studies

 Role of past performance in export ventures Luis Filipe Lages et al
306

conceptualization incorporates these themes when extract knowledge from their local environment,
defining organizational learning as the organiza- thus learning to cope with local market conditions
tional encoding of inferences from past experiences (Özsomer & Gençtürk, 2003; Sinkula, Baker, &
into routines that guide behavior. While explora- Noordewier, 1997). Since exporting activity is con-
tion learning capabilities are associated with long- sidered to be an early stage of the internationaliza-
term issues such as risk taking, radical innovation/ tion process, exporting firms are viewed as enga-
disinnovation, discovery and less certain returns, ging in low-risk exploitation-type learning (Özsomer
exploitation learning capabilities are associated & Gençtürk, 2003). Exploitation-type strategies are
with issues such as adaptation to the local market, typically associated with issues such as adaptation
refinement of current strategies, incremental inno- to the local market, refinement of current strate-
vation/disinnovation, and a higher probability of gies, and a higher probability of short-term effi-
short-term efficiency. Since we are particularly ciency (cf. March, 1991). Hence, we draw on the
interested in better understanding the short-term exploitation side of the organizational learning
effects of past performance, we will focus primarily literature to understand export marketing strategy
on exploitation learning capabilities. implementation.
At a managerial level, managers attempt to Export marketing strategy is the means by which
understand the causal linkages between actions a firm responds to the interplay of internal and
and organizational outcomes within the environ- external forces to meet the objectives of the export
ment that the firm operates. Managerial reasoning venture involving aspects of the conventional
then shapes managerial actions and firm-level marketing plan (i.e., product, price, promotion,
outcomes (Lant et al., 1992; Luo & Peng, 1999). and distribution) (Cavusgil & Zou, 1994). There-
Therefore much of the research on organizational fore, the exploitative side of organizational learning
learning has focused on the interactive process of is aligned with the prevailing opinion in the export
trial and error (e.g., Levinthal & March, 1981; marketing strategy literature that marketing strate-
Sullivan & Nonaka, 1986). Under this perspective, it gies incorporate differences in the politico-legal,
has been argued that managers work to identify economic, and sociocultural characteristics of any
associations between firm-level behaviors that are host country (Cavusgil & Zou, 1994; Lee & Griffith,
associated with positive and negative outcomes, 2004). Specifically, the key issue within the export
repeating those behaviors that drive positive out- strategy literature has been the determination of
comes and eliminating behaviors that result in the degree to which export marketing strategy
negative outcomes (Cyert & March, 1963, Levinthal elements (i.e., product, price, promotion, and dis-
& March, 1981; Sullivan & Nonaka, 1986). Central tribution) are adapted, and of the internal and
to this stream of organizational learning has been external forces that influence these adaptations
organizational outcomes of firm performance and (Buzzell, 1968; Cavusgil & Zou, 1994; Douglas &
antecedents of prior firm performance and strategy. Craig, 1989; Ryans et al., 2003; Samiee & Roth,
Alternatively stated, managers examine past per- 1992).
formance in accordance with performance expecta-
tions. When performance has not met managerial Export Performance
expectations managers modify strategies, enhan- Export performance, both past and present, plays a
cing emphasis on those strategies that are believed critical role in organizational learning. Whereas
to enhance performance and de-emphasizing those past export performance motivates managerial
believed to decrease performance. Therefore a strategy actions, current export performance not
general model of organizational learning in this only signals the effectiveness of the strategy modi-
setting views the antecedents of export perfor- fications made by managers, but also sets forth new
mance as derived from strategies that are the result strategy actions. Export performance is defined as
of managerial decisions after an assessment of past the extent to which a firm’s objectives, both
performance, managerial forces and environmental strategic and financial, with respect to exporting a
forces (Ferrier, 2001; Lant et al., 1992; Luo & Peng, product to a market, are achieved via the execution
1999; Prietula & Watson, 2000). of the firm’s export marketing strategy (Cavusgil &
Zou, 1994). In the export marketing literature,
Export Marketing Strategy researchers have used a wide array of measures for
Organizational learning theory argues that learning performance (Diamantopoulos & Winklhofer, 2001;
will occur when firms build on their strategies to Katsikeas, Leonidou, & Morgan, 2000). Broadly

Journal of International Business Studies

 Role of past performance in export ventures Luis Filipe Lages et al
307

speaking, the literature considers both objective model incorporates financial and non-financial
(financial) and subjective (non-financial) measures measures of past performance, as well as managerial
of export performance (Zou & Stan, 1998); we employ and environmental forces as antecedents of export
a similar approach in this research. Specifically, we marketing strategy and financial and non-financial
consider three dimensions of export performance: export performance. In line with most recent
research (e.g., Morgan et al., 2004; Lages, Lages, &
 export intensity (i.e., the proportion of produc-
Lages, 2005a, b), the unit of analysis throughout
tion output to exports evidenced by the percen-
the discussion is an individual product–market
tage of exports to the firm’s total sales and profits);
export venture of the firm, involving a specific
 export achievement (i.e., the extent to which
product in a specific export market.
firms achieve their export objectives in terms of
sales, profitability, and market share, as well as
overall performance); and Export Marketing Strategy
 export satisfaction (i.e., a compound psychologi- Export marketing strategy is the means by which a
cal variable (an affective state) assessing the eff- firm responds to the interplay of internal and
ectiveness of a marketing program in terms of its external forces to meet the objectives of the export
sales, profitability, and market share, as well as its venture involving all aspects of the conventional
overall performance). marketing plan (i.e., product, price, promotion,
and distribution) (Cavusgil & Zou, 1994). Research-
ers argue that by adapting a firm’s marketing
strategy to market-specific characteristics a firm
HYPOTHESIS DEVELOPMENT can delivery greater value in the local market by
Figure 1 presents a conceptual model of the short-term meeting local market needs, thereby improving its
reactive approach to export marketing performance export performance (e.g., Cavusgil & Zou, 1994;
under an organizational learning perspective. This Koh, 1991; Shoham, 1999). These arguments are

MANAGEMENT FORCES
•Firm’s commitment h3 (+)
to exporting h5 (+)
•Management international
experience
h2
h4
(+
)
(+

EXPORT
)

EXPORT CURRENT YEAR

PERFORMANCE
PERFORMANCE IN ADAPTATION
IMPROVEMENT IN
PRECEDING YEAR OF MARKETING MIX
CURRENT YEAR
•Export intensity h8 (-) •Product adaptation h1 (+) •Export intensity
•Performance achievement •Promotion adaptation
•Performance achievement
•Performance satisfaction •Pricing adaptation
•Performance satisfaction
h9 •Distribution adaptation
(+
)
)
h6 (+
)
h7 (+

EXPORT MARKET FORCES

•Export market development
? (+/-)
•Export market competition

Figure 1 Conceptual framework.

Journal of International Business Studies

 Role of past performance in export ventures Luis Filipe Lages et al
308

supported by numerous empirical studies that strategies that are the result of managerial decisions
have found a positive relationship between influenced by managerial forces (Ferrier, 2001; Lant
product adaptation and export performance within et al., 1992; Luo & Peng, 1999; Prietula & Watson,
the United States (e.g., Cavusgil & Zou, 1994; 2000). Specifically within the context of export
Koh, 1991; Shoham, 1999; Zou, Andrus, & Norvell, marketing strategy, Cavusgil and Zou (1994) argue
1997). Similar findings have been found related to that marketing strategy adaptation decisions are
promotion adaptation (e.g., Seifert & Ford, 1989; influenced by management forces, such as a firm’s
Shoham, 1996, 1999), pricing adaptation (e.g., Das, international experience and its extent of interna-
1994; Koh, 1991; Leonidou, Katsikeas, & Samiee, tional business involvement. We therefore examine
2002) and distribution adaptation (e.g., Koh, 1991; the firm’s commitment to exporting and manage-
Shoham, 1996). ment’s degree of international experience as drivers
However, this is not to suggest that the literature of marketing strategy adaptation and current-year
examining the relationship of international mar- export performance.
keting strategy to performance is consistent (see
Katsikeas, Samiee, & Theodosiou, 2006). Rather,
some research has found that standardization of
The influence of commitment to exporting on export
marketing strategy elements can enhance export
marketing strategy and current-year performance.
performance. For example, Lages and Montgomery
The firm’s commitment to exporting refers to the
(2001, 2005) found that standardization of price
degree to which organizational and managerial
improves export performance. However, findings
resources are allocated to an export venture. As
contrary to adaptation may be due to inappropriate
increasing levels of resources are committed to the
adaptation efforts. For example, Cavusgil and Zou
export venture, the venture is able to improve
(1994) note that a negative adaptation effect can
its planning procedures and implement more
occur if the adapted marketing strategies are inap-
adaptive strategies, as adaptations require greater
propriate (e.g., when an adaptation eliminates the
resources. When the firm demonstrates a strong
universal appeal of the product, or if the adaptation
commitment to exporting, managers are moti-
is costly). As the fundamental element of value
vated to work harder on demanding tasks such as
delivery entails satisfying customers’ needs and
strategy adaptation. Without appropriate resources
desires, adaptation (which accommodates local
committed to the export venture the firm is unable
competitive practices, customs, traditions, religions,
to engage in the necessary adaptations of the
levels of education, ways of living, communication
firm’s marketing strategy in order to meet local
infrastructures, and government restrictions), of at
market needs.
least some degree, is theoretically justifiable and
The firm’s commitment to an export venture
suggestive of a positive effect. Hence, we theorize
should also directly influence the performance of
that performance improvement in the current year
the export venture, as the firm’s commitment will
is positively associated with the exporter’s adapta-
direct greater resources to the task, better enabling
tion of marketing strategy elements. This finding
the venture to achieve its exporting goals (Aaby
leads to the following hypothesis:
& Slater, 1989; Bilkey, 1978; Diamantopoulos &
Inglis, 1988; Shoham, 1999; Tookey, 1964; Zou
Hypothesis 1: Current-year export performance
& Stan, 1998). For example, the firm’s commitment
is positively influenced by:
to a particular direction may also enhance employ-
ees’ feelings of loyalty and duty to the organization,
(a) product adaptation
as well as increase clarity in the prioritization
(b) promotion adaptation
of tasks (Wiener & Vardi, 1980). We therefore
(c) pricing adaptation
hypothesize:
(d) distribution adaptation.
Hypothesis 2: A firm’s commitment to exporting
positively influences:
Internal (Management) Forces (a) product adaptation
As discussed previously, a general model of organi- (b) promotion adaptation
zational learning in this setting views the ante- (c) pricing adaptation
cedents of export performance as derived from (d) distribution adaptation.

Journal of International Business Studies

 Role of past performance in export ventures Luis Filipe Lages et al
309

Hypothesis 3: A firm’s export performance in the performance as derived from strategies that are
current year is positively influenced by a firm’s the result of managerial decisions influenced by
commitment to exporting. market forces (Ferrier, 2001; Luo & Peng, 1999;
Prietula & Watson, 2000). A firm’s ability to adapt
The influence of international experience on export quickly is associated with its ability to learn from
marketing strategy and current-year performance. market opportunities and environmental changes
Management’s international experience refers to (Özsomer & Gençtürk, 2003; Ulrich, Von Glinow, &
the degree to which the firm’s management has Jick, 1993). Export market development and export
overseas experience, having lived or worked abroad, market competition determine demand potential
as well as the accumulated skills and abilities that in a foreign market (Theodosiou & Leonidou, 2003)
support the achievement of the organization’s and affect the firm’s marketing strategy.
exporting objectives and goals (Cavusgil, Zou, &
Naidu, 1993; Das, 1994). Experience is a primary The influence of export market development on export
source of organizational learning (Penrose, 1959). marketing strategy. Export market development
Experience in a wide range of markets provides refers to the overall standard of living in the export
managers with a variety of insights, leading to a market, as evidenced by the level of economic
more extensive knowledge base (March, 1991). Once development and education levels in that market.
a firm has international experience, managers will As the level of development in an export market
better learn the specific contingencies of each export increases, firms adapt their marketing strategies. The
market, and the complex issues of marketing rationale for strategy adaptation is derived from
adaptation to the different markets will be easier to multiple factors. First, more developed countries
implement (Cavusgil et al., 1993; Douglas & Craig, have more developed regulatory environments,
1989; Levinthal & March, 1993; Seifert & Ford, 1989; often necessitating product modifications to local
Sinkula, 1994). standards (Cavusgil & Zou, 1994). Second, more
Further, as management’s experience in inter- educated and sophisticated consumers are less
national markets increases, the firm is better willing to accept products that do not specifically
able to achieve its exporting goals because interna- fit their needs and/or consumption patterns. Third,
tional experience promotes exploitative learning exploitation learning flourishes in more stable and
by helping the firm to identify and take ad- predictable environments, characteristic of more
vantage of exporting opportunities while avoiding developed markets, allowing managers to adapt
international threats (Özsomer & Gençtürk, 2003; marketing strategies more effectively (Jaworski &
Zou & Stan 1998). Madsen (1989) contends that Kohli, 1993). Export ventures in more developed
international experience leads to a better under- markets are therefore in a better position to
standing of market mechanisms and a network of build on existing routines and follow a strategy
personal contacts, resulting in improved marketing refinement approach of the firm’s existing strategy
decisions, and ultimately better performance. to the foreign market (Duncan, 1974).1 Hence, we
Therefore we theorize: theorize:

Hypothesis 4: A firm’s international experience Hypothesis 6: Export market development posi-

positively influences: tively influences:
(a) product adaptation (a) product adaptation
(b) promotion adaptation (b) promotion adaptation
(c) pricing adaptation (c) pricing adaptation
(d) distribution adaptation. (d) distribution adaptation.

Hypothesis 5: A firm’s export performance in the

current year is positively influenced by a firm’s The influence of export market competition on export
international experience. marketing strategy. Export market competition
relates to the extent to which businesses vie for
External Market Forces the economic rents of an industry. Competition
A general model of organizational learning in may vary along multiple dimensions, such as the
this setting views the antecedents of export number of competitors, price competitiveness, and

Journal of International Business Studies

 Role of past performance in export ventures Luis Filipe Lages et al
310

service/delivery. Research indicates that as the level Freeman, 1977). In a similar manner, it can be
of competition in the export market increases, theorized that a firm may be more likely to take a
firms engage in marketing strategy adaptation to standardized approach to its marketing strategy in an
differentiate their offerings from others in the export venture when its past export performance has
market and maximize value delivery (Cavusgil & been particularly strong (Lages & Montgomery, 2004).
Zou, 1994; Cavusgil et al., 1993). Without differen- In contrast, when an export venture is not performing
tiation, a firm cannot gain an advantage over its well, managers do not have the privilege of
competitors to produce higher rents. Hence we maintaining the status quo. Hence, we theorize that
theorize: the firm will rely less on standardized strategies in
favor of adaptive strategies. More formally:
Hypothesis 7: Export market competition posi-
tively influences: Hypothesis 8: A firm’s export performance
in the preceding year is negatively related to
the firm’s:
(a) product adaptation
(b) promotion adaptation
(a) product adaptation
(c) pricing adaptation
(b) promotion adaptation
(d) distribution adaptation.
(c) pricing adaptation
(d) distribution adaptation.

Past Export Performance

As discussed previously, a general model of organi-
zational learning in this setting views the ante- The influence of past export performance on current-
cedents of current export performance as derived year export performance. Organizational learning
from strategies that are the result of managerial theory also argues that past actions have a cumu-
strategy decisions, such as marketing strategy lative effect on current actions and outcomes. For
adaptation. However, both strategy decisions and example, past performance plays a major role in the
current-year performance, under an organizational context in which current marketing strategy
learning perspective, can be viewed as driven by decisions are taken (Lages & Jap, 2003). These
managerial assessment of past performance. prior decisions also influence future performance,
which forms the basis for future decisions. The
The influence of past export performance on marketing reinforcing effect of this feedback loop is related to
strategy adaptation. Under an organizational learning the phenomenon of path dependence, where
perspective, managers are viewed as assessing past success in the past produces a tendency toward
performance in accordance with specified goals and similar behavior in the future (Cyert & March,
then determining necessary actions to be taken. 1963; Helfat, 1994; Nelson & Winter, 1982). As
Hence, managers can be viewed as reactive to past part of this discourse we theorize that past export
performance in the determination of current performance sets the stage for current export
strategies. Empirical research in organizational marketing decisions and also for current export
learning demonstrates that past performance performance (as the current strategies incorporate
influences current managerial decisions (Lant & prior strategy adjustments based upon learning).
Hurley, 1999; Lant et al., 1992; Lant & Montgomery, Thus we hypothesize that:
1987). These findings are consistent with a central
assumption of the organizational learning literature, Hypothesis 9: A firm’s export performance in the
which argues that organizations and individuals set preceding year is positively related to export
goals and adjust their behavior in response to performance in the current year.
favorable and unfavorable feedback (Cyert & March,
1963; March & Simon, 1958). For example, Greve METHODOLOGY
(1998) reveals that if performance increases, adaptive To examine the hypotheses we focused on the main
behavior declines. This decline occurs because organi- export venture of exporters from Portugal. We
zations exhibit political resistance to change, and selected this setting for three specific reasons.
managers face uncertainty regarding the oppor- First, our focus on a firm’s main export venture
tunities that exist in the environment (Hannan & derived primarily from exploratory interviews that

Journal of International Business Studies

 Role of past performance in export ventures Luis Filipe Lages et al
311

indicated that Portuguese exporters typically devel- construct. The survey was revised according to their
oped a marketing strategy only for their main comments. Finally, the revised instrument was then
export venture. Further, the focus on a single pre-tested with a sample of 15 managers involved
export venture allowed us to associate marketing in export operations. Pre-test results were used to
strategy more precisely with its antecedents and refine the questionnaire further.
outcomes, as the main export venture involved a
single product or product line exported to a single Data collection. Individuals identified in the source
foreign market. Second, Portugal was selected directory were contacted via mail and asked to have
because of the small size of the domestic market, the person most involved with the daily admini-
which puts pressures on domestic firms to become stration of the exporting relationship complete the
internationally oriented (Sousa & Bradley, 2006). survey. In the first mailing, a cover letter, a ques-
Third, Portugal is an interesting context owing to tionnaire, and an international postage-paid
the importance of exporting in the country and its business reply envelope were sent to the person res-
membership of the European Union (EU). The EU is ponsible for exporting in each of the 2500
the world’s largest exporter of goods, maintaining a Portuguese firms. A follow-up survey packet was
stable share of approximately one fifth of total sent after a 4-week interval. To enhance the
world exports (intra-EU trade excluded) since 1990 response rate, respondents were offered a list of
(European Commission, 2000). As in many coun- potential overseas importers or clients in return for
tries in the EU, economic growth in Portugal a completed survey.
depends heavily on the exporting success of its Of the 2500 surveys mailed, 29 were returned
firms. Since entering the EU in 1986, the country’s indicating that they no longer exported, and 119
export growth has boomed. In fact, exporting is questionnaires were returned by the postal service
viewed as an important means for quickly decreas- as undeliverable. These firms had either closed
ing the nation’s budget deficit (Financial Times, down or had moved without leaving a forwarding
2002). address. Thus the sample size was reduced to 2352.
Of these, 519 usable questionnaires were returned,
Sample a 22% response rate.
Collectively, these characteristics indicate that both The Portuguese exporting industry consists pri-
Portuguese firms and the national government are marily of small to mid-sized firms. Exporters from
motivated to develop successful export marketing all the Portuguese regions participated in the
strategies in the short term, an ideal context for survey. The average annual sales of these firms
considering the activities of export marketing ranged from h1.5 million to h5 million, with 27% of
performance and strategy definition. the firms having sales below h1.5 million, 31%
Data used to test the model were collected from h5 million to h35 million, and 8% of the
through a self-administered questionnaire sent to companies having annual sales over h35 million.
exporters in Portugal. A sample of 2500 firms was With regard to the number of employees, 19% had
randomly generated from a government agency fewer than 20 employees, 27% had between 20 and
database of ICEP-Portugal. 49, 22% between 50 and 99, 27% between 100 to
500, and 5% had more than 500 employees. Over
Pre-test. Pre-testing was conducted of three stages. 75% of the respondents reported on ventures with
The first stage consisted of refining the English other European countries, while the remainder
version of the survey instrument and cover letter. occurred with the United States and other non-
The initial survey format was developed based upon European countries. The average sales volume of
pre-existing measures developed for and used the main export venture ranged from h400,000 to
within the United States (see Measures section h1.5 million. The vast majority of firms had
and Appendix). Next, the survey instrument was significant experience in international business:
translated and back-translated. In order to avoid 22% had 2–7 years, 39% had 8–15 years, 26% had
translation errors, a different researcher translated 16–30 years, and 13% had over 30 years.
the questionnaire into English. During this stage Respondents held positions such as president,
the content and face validity of the items were marketing director, managing director, and export-
assessed by four Portuguese judges (university ing director. Thirty-nine percent of the respondents
lecturers in marketing); each judge was asked to indicated that they had been responsible for the
assess how representative each item was of the final exporting operations of their firm for 8–15 years,

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 Role of past performance in export ventures Luis Filipe Lages et al
312

while 81% of the respondents ranged from 3 to 30 from Kaynak and Kuan (1993) (apreceding¼0.96;
years of responsibility for the operations. Respon- acurrent¼0.96).
dents were also asked to indicate their degree of Management’s expectations and perception of
experience in exporting, on a scale where 1¼none the achievement of exporting goals play a key role
and 5¼substantial. The mean response was 3.6 in the definition of firms’ export activities. Perfor-
(s.d.¼0.84, range 1–5). Collectively, this indicates mance achievement refers to the extent to which
that although the title of the respondents’ positions firms achieve their export objectives in terms
may be wide ranging, the individuals appear to of sales, profitability, and market share, as well
have significant knowledge in the specific export- as overall performance (cf. Katsikeas, Piercy, &
ing activities of the firm, and are experienced with Ioannidis, 1996). Export performance achievement
exporting in general. was measured via a five-item scale adapted from
Non-response bias was tested by assessing the Katsikeas et al. (1996) (apreceding¼0.92; acurrent¼0.95).
differences between the early and late respondents Finally, performance satisfaction is defined as a
with regard to the means of all the variables compound psychological variable (an affective
(Armstrong & Overton, 1977). Early respondents state) assessing the effectiveness of a marketing
were defined as the first 75% of the returned program in terms of its sales, profitability, and
questionnaires, and the last 25% were considered market share, as well as its overall performance
to be late respondents. These proportions approx- (cf. Bonoma & Clark, 1988). Satisfaction with
imate the actual way the questionnaires were export performance was measured via a five-item
returned. No significant differences among the scale adapted from Shoham (1998) (apreceding¼0.94;
early and late respondents were found, suggesting acurrent¼0.97). By measuring performance achieve-
that response bias was not a significant problem in ment and satisfaction with performance, instead of
the study. performance per se, we were able to capture the
degree to which performance matched the goals
Measures. Table 1 provides an overview of the and aspiration levels of the firm, and compare it
construct means, standard deviations, and corre- across a variety of exporting firms. In this manner, a
lation matrix among the 14 constructs. boundary was incorporated from the perspective of
Export performance is conceptualized as the the firm and used as a reference point for perceived
extent to which a firm’s objectives, both strategic success and failure under a learning orientation
and financial, with respect to exporting a product perspective.
to a market are achieved via the execution of the Export marketing strategy was assessed along the
firm’s export marketing strategy (Cavusgil & Zou, elements of product, promotion, price, and dis-
1994). The export literature considers both objec- tribution. Product adaptation was measured via a
tive (financial) and subjective (non-financial) mea- four-item scale adapted from Zou et al. (1997)
sures of export performance (Zou & Stan, 1998). We (a¼0.81). Promotion adaptation was measured via a
therefore consider three dimensions of export five-item scale adapted from Zou et al. (1997)
performance: export intensity, export achievement, (a¼0.89). Price adaptation was measured via a
and export satisfaction. All three dimensions were four-item scale adapted from Shoham (1999)
measured for both the preceding year and the (a¼0.85). Distribution adaptation was measured
current year. by a four-item scale adapted from Shoham (1999)
Export intensity refers to the proportion of (a¼0.87).
production output to exports, as evidenced by the Measures for firm’s commitment to the export
percentage of exports to the firm’s total sales and venture (a¼0.81), management’s international
profits. This variable is one of the most widely used experience (a¼0.75), export market development
measures of performance in the literature on (a¼0.77), and export market competition (a¼0.79)
international marketing (Katsikeas et al., 2000). were also developed for this study, based upon
Although objective assessments of actual perfor- existing conceptualizations and items (e.g., Cavusgil
mance may be regarded as trustworthy, this type of & Zou, 1994). Further, to minimize spuriousness of
approach can also raise various measurement pro- results, a number of covariates were included in the
blems. We therefore also consider two forms of analysis. Specifically, size of the firm, distance of
subjective measure: performance achievement and export market from home country, number of
satisfaction with performance. The measure of export export markets and export sales volume were
intensity consisted of a three-item scale adapted included.

Journal of International Business Studies

 Table 1 Means, standard deviations, and correlations among constructs

Construct Mean s.d. Min Max 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

1. Product 2.2 0.88 1.0 5.0 1

adaptation
2. Promotion 2.5 0.81 1.0 5.0 0.22 1
adaptation
3. Pricing 2.8 0.93 1.0 5.0 0.35 0.37 1

Role of past performance in export ventures

adaptation
4. Distribution 3.1 0.97 1.0 5.0 0.14 0.41 0.44 1
adaptation
5. Firm’s 3.3 0.87 1.0 5.0 0.17 0.08 0.02 0.09 1
commitment to
exporting
6. Management 3.0 0.74 1.0 5.0 0.01 0.07 0.06 0.09 0.39 1
international
experience
7. Export market 3.7 0.87 1.0 5.0 0.14 0.11 0.02 0.14 0.30 0.14 1
development
8. Export market 3.8 0.73 1.0 5.0 0.06 0.01 0.00 0.04 0.22 0.14 0.25 1
competition
9. Export intensity 3.3 1.02 1.0 5.0 0.03 0.02 0.02 0.00 0.14 0.09 0.05 0.06 1
improvement in
current period
10. Performance 3.3 0.89 1.0 5.0 0.10 0.08 0.08 0.04 0.14 0.15 0.04 0.07 0.74 1

Luis Filipe Lages et al

achievement
improvement in
current period
11. Satisfaction with 3.1 0.92 1.0 5.0 0.08 0.02 0.10 0.05 0.13 0.14 0.02 0.00 0.72 0.86 1
performance
improvement in
current period
12. Export intensity 2.7 1.31 1.0 5.0 0.18 0.05 0.01 0.02 0.54 0.25 0.20 0.20 0.00 0.02 0.02 1
in preceding
year
13. Performance 3.2 0.76 1.0 5.0 0.01 0.08 0.07 0.00 0.34 0.27 0.14 0.04 0.01 0.15 0.09 0.35 1
achievement in
Journal of International Business Studies

preceding year
14. Satisfaction with 2.8 0.75 1.0 5.0 0.00 0.02 0.07 0.05 0.27 0.24 0.16 0.02 0.04 0.15 0.20 0.29 0.77 1
preceding year’s
performance
15. Number of 2.6 0.98 1.0 5.0 0.04 0.18 0.07 0.10 0.19 0.25 0.04 0.06 0.06 0.06 0.03 0.14 0.18 0.13 1
countries
16. Size 3.6 1.37 1.0 6.0 0.07 0.10 0.02 0.06 0.07 0.16 0.10 0.07 0.13 0.12 0.09 0.01 0.09 0.04 0.32 1
17. Distance 2608 2305 502 11286 0.01 0.04 0.15 0.08 0.08 0.01 0.16 0.11 0.06 0.01 0.02 0.12 0.03 0.04 0.09 0.11 1
18. Export sales 3.6 1.66 1.0 8.0 0.04 0.11 0.00 0.03 0.43 0.37 0.17 0.16 0.17 0.20 0.16 0.39 0.39 0.31 0.44 0.52 0.12 1
value

All correlations p0.09 or X0.09 are significant at a¼0.05.

313
 Role of past performance in export ventures Luis Filipe Lages et al
314

ANALYSIS Larcker (1981) test; all possible pairs of constructs

passed this test. Evidence of discriminant validity
Confirmatory Factor Analysis was revealed by the fact that the shared variance
In order to assess the validity of the measures, the among any two constructs (i.e., the square of their
items were subjected to a confirmatory factor intercorrelation) was less than the average variance
analysis, using full-information maximum likeli- explained in the items by the construct (Fornell &
hood (FIML) estimation procedures in LISREL 8.3 Larcker, 1981; MacKenzie, Podsakoff, & Rich, 2001).
(Jöreskog & Sörbom, 1993). In this model, each
item was restricted to load on its pre-specified Structural Model Estimation
factor, with the 14 first-order factors allowed to The hypotheses were tested using FIML estimation
correlate freely. The chi-square for this model was procedures in LISREL 8.3. The estimation results for
significant (w2¼3975.79, 1393 d.f., po0.00). Since the significant structural paths are exhibited in
the chi-square statistic is sensitive to sample size, Figure 2. The results of the structural equation
we also assessed additional fit indices: the com- model testing indicate an acceptable fit (w2¼4356.82,
parative fit index (CFI), the incremental fit index d.f.¼1577, po0.00, CFI¼0.90, IFI¼0.90, TLI¼0.89,
(IFI), and the Tucker–Lewis Fit Index (TLI). The CFI, RMSEA¼0.058). Significance of the parameter esti-
IFI, and TLI of this model are 0.90, 0.90, and 0.89, mates was assessed using t-values.
respectively. The RMSEA was 0.061. Hypothesis 1 indicated that current-year export
As shown in the Appendix, all constructs present performance would be positively influenced by (a)
the desirable levels of composite reliability (cf. product adaptation, (b) promotion adaptation, (c)
Bagozzi, 1980). Convergent validity was evidenced pricing adaptation, and (d) distribution adaptation.
by the large and significant standardized loadings The hypothesis was examined employing three
of each item on its intended construct (average measures of export performance (intensity, achieve-
loading size was 0.81). Discriminant validity among ment and satisfaction). In all, only one of the rela-
the constructs was assessed using the Fornell and tionships was significant (i.e., product adaptation

γ71 = 0.17
Management forces
γ61 = 0.16
Firm’s commitment γ51 = 0.20
to exporting
ξ1
γ1 =
1 0.1 Current year adaptation
4
Management of marketing mix
international experience
ξ2 Product
adaptation
η1
Export performance
-0.

Export performance
improvement in
11

in preceding year γ 15 = 0.20 Promotion current year

γ65 = -0 adaptation
Export .18 η2
γ55 = -0.12 Export
intensity
ξ5 γ75 = -0 intensity
.18
η5
γ56 = -0.26
Performance Performance
γ76 = -0.32
achievement achievement
ξ6 η6
γ57 = 0.19
γ67= 0.16
Performance Performance
γ77 = 0.40
satisfaction 4 satisfaction
ξ7 γ4 = 0.
1
η7
14

7 -0.2 = Pricing
0
0.

γ 13
=

adaptation
23

η3
γ

Export market forces

Distribution
Export market γ43 = 0.18 adaptation
development η4
5
0.1

ξ3
5
6

0.0
0.0

Number of markets 0.09

Export market
competition Export 0.11
ξ4 Size Distance sales value 0.10

Figure 2 Summary of significant relationships. For simplicity of depiction we do not include non-significant relationships, observable
indicators, factor loadings, measurement and latent errors, inter-factor correlations, or t-values.

Journal of International Business Studies

 Role of past performance in export ventures Luis Filipe Lages et al
315

has a significant negative effect on performance Hypothesis 7 indicated that export market com-
achievement; b61¼0.11, po0.05). Hence we did petition would positively influence (a) product
not find support for H1a–H1d.2 adaptation, (b) promotion adaptation, (c) pricing
Hypothesis 2 indicated that a firm’s commitment adaptation, and (d) distribution adaptation. Export
to exporting would positively influence (a) product market competition has no significant effects on
adaptation, (b) promotion adaptation, (c) pricing product (g14¼0.04, n.s.), promotion (g24¼0.08,
adaptation, and (d) distribution adaptation. Sup- n.s.), pricing (g34¼0.01, n.s.), or distribution
portive of H2a, the firm’s commitment to exporting adaptation (g44¼0.02, n.s.). Thus no support was
has a significant, positive effect on product adapta- found for H7a–H7d.9
tion (g11¼0.14, po0.05). Support was not found for Hypothesis 8 indicated that a firm’s export
H2b (g21¼0.02, n.s.), H2c (g31¼0.01, n.s.), or H2d performance in the preceding year would nega-
(g41¼0.06, n.s.).3 tively relate to the firm’s (a) product adaptation, (b)
Hypothesis 3 argued that a firm’s export market- promotion adaptation, (c) pricing adaptation, and
ing performance in the current year would be (d) distribution adaptation. The results indicate
positively influenced by the firm’s commitment that prior period export intensity exerts a positive
to exporting. The hypothesis was examined em- significant effect on product adaptation (g15¼0.20,
ploying three measures of export performance po0.01), but has no significant effect on promo-
(intensity, achievement, and satisfaction). Firm tion (g25¼0.00, n.s.), pricing (g35¼0.01, n.s.), or dis-
commitment to exporting significantly influenced tribution (g45¼0.02, n.s.) adaptation. Prior period
export intensity (g51¼0.20, po0.01), performance performance achievement has a marginally signifi-
achievement in the current period (g61¼0.16, cant, positive effect on promotion adaptation
po0.01), and performance satisfaction (g71¼0.17, (g26¼0.13, po0.10), but non-significant effects on
po0.01).4 Thus H3 was fully supported. product (g16¼0.05, n.s.), pricing (g36¼0.09, n.s.),
Hypothesis 4 indicated that a firm’s international and distribution (g46¼0.09, n.s.) adaptation. Prior
experience would positively influence (a) product period performance satisfaction produces a signifi-
adaptation, (b) promotion adaptation, (c) pricing cant negative effect on distribution adaptation
adaptation, and (d) distribution adaptation. (g47¼0.20, po0.05), and a marginally significant
Management’s international experience was not effect on promotion adaptation (g27¼0.13, po0.10),
significantly related to product (g12¼0.11, n.s.), but does not have a significant effect on product
promotion (g22¼0.02, n.s.), pricing (g32¼0.07, n.s.), (g17¼0.05, n.s.) or pricing (g37¼0.03, n.s.) adap-
or distribution adaptation (g42¼0.08, n.s.). Thus tation. Thus there is partial support for H8a–H8d.
H4a–H4d are not supported.5 Hypothesis 9 indicated that a firm’s export perfor-
Hypothesis 5 indicated that a firm’s export mance in the preceding year is positively related to
performance in the current year would be positively export performance in the current year. The results
influenced by the firm’s international experience. indicate that there is a significant negative effect of
The results indicate that management’s interna- prior-period export intensity on current-period
tional experience is not significantly related to export intensity (g55¼0.12, po0.05), performance
export intensity (g52¼0.02, n.s.), performance achievement (g65¼0.18, po0.01), and performance
achievement in the current period (g62¼0.04, n.s.), satisfaction (g75¼0.18, po0.01). Prior-period per-
or performance satisfaction (g72¼0.06, n.s.). Thus formance achievement has significant negative
H5 is not supported.6 effects on export intensity (g56¼0.26, po0.01) and
Hypothesis 6 indicated that a firm’s inter- performance satisfaction (g76¼0.32, po0.01), but
national experience would positively influence (a) not on current performance achievement (g66
product adaptation, (b) promotion adaptation, ¼0.08, n.s.). Prior-period performance satisfaction
(c) pricing adaptation, and (d) distribution adap- has significant positive effects on export intensity
tation. The results indicate that export market (g57¼0.19, po0.01), performance achievement (g67
development was positively related to product ¼0.16, po0.05), and performance satisfaction (g77
(H6a: g13¼0.14, po0.05), promotion (H6b: g23¼0.14, ¼0.40, po0.01). Thus there is partial support for H9.
po0.05), and distribution (H6d: g43¼0.18,
po0.01) adaptation, but is not significantly DISCUSSION
related to pricing adaptation (H6c: g33¼0.00, n.s.). This study was motivated by a desire to gain a
Thus the results provide support for H6a, H6b better understanding of managerial learning from
and H6d.7,8 past performance in the enactment of marketing

Journal of International Business Studies

 Role of past performance in export ventures Luis Filipe Lages et al
316

strategy and implications for export performance. organizational actions’’ (Sinkula et al., 1997: 308).
We employed an organizational learning per- In these situations it is better to standardize the
spective, within a short-term reactive approach, to domestic strategy to the foreign market rather than
understand how internal, external, and past per- adapt wrongly (Cavusgil & Zou, 1994). Further, in
formance influenced marketing strategy and cur- terms of distribution adaptation, the results are
rent-year performance. Our findings offer insights supportive of organizational learning, which would
into these issues and provide significant implica- imply that lower satisfaction with performance
tions for international marketing academics and would require adjustments in strategy. For example,
practitioners. Greve (1998) argues that when performance
increases, adaptive behavior declines, because orga-
Theoretical Implications nizations exhibit political resistance to change, and
In this study we adopted the organizational learn- managers face uncertainty regarding existing
ing perspective to consider current export perfor- opportunities (Hannan & Freeman, 1977).
mance as a foundation of export marketing stra- However, the general lack of a higher number of
tegies, preceding-year export performance, internal short-term effects related to the performance–
(management) and external (market) forces. The strategy–performance relationship should not be
central element of the study was the short-term viewed as disconfirmation of organizational learn-
impact of past export performance on export ing theory, but rather within the context of
marketing strategy and current-year export perfor- organizational learning theory. Specifically, accord-
mance. Surprisingly, the results suggest that in the ing to organizational learning theory, learning may
short term the preceding year’s export performance affect strategy definition without affecting short-
has little influence on current-year marketing term performance. For example, Sinkula et al.
strategy adaptation, and that current-year market- (1997: 307) argue: ‘‘In the short run, measures of
ing strategy adaptation has little influence on market performance may mask real improvements
current-period performance improvement. In fact, in the learning capabilities of an organization
the only significant relationships identified between [because] before market performance changes can
preceding-year export performance, marketing strat- be expected, absolute thresholds of improvement
egy adaptation, and current-period performance must be surpassed.’’ Therefore the general lack of
improvement were related to product adaptation findings in this study related to the influence of
(i.e., preceding-year export intensity positively influ- preceding-year export performance on export mar-
ences product adaptation, and product adaptation keting strategy may be due to the short-term focus,
negatively influences current-year export perfor- as it may take longer than the current year to
mance achievement) and distribution adaptation observe the impact of adapting marketing strategies
(i.e., preceding-year export performance satisfaction on export performance. Furthermore, the lack of
is negatively related to distribution adaptation). findings may result from differences in product
One rationale for the significant findings is that types. In fact, the extant adaptation/standardiza-
product standardization might improve perfor- tion literature suggests that type of product may
mance, particularly if it enables the alleviation of significantly influence marketing strategy adapta-
gray markets or economies of scale in marketing tions. Post hoc analysis conducted along product
efforts. Another possible explanation might be type supports this conclusion, providing further
based on the fact that managers use mental models insights into the hypotheses (see notes 2–8), thus
to interpret reality. It might be possible that the suggesting the complex relationships that can be
assumptions about the market that led to actions uncovered via the employment of organizational
are not completely accurate (Day, 1994; Day & learning theory.
Nedungadi, 1994; Senge 1990, 1992). For example, The results also indicate complex relationships
if a firms does a market study that determines that between measures of preceding-year export perfor-
it is important to adapt to the foreign market brand mance and current-year export performance, and
name, product design, product labeling and variety therefore highlight the importance of employing
of the main exporting product line, and managers multiple measures of export performance. For in-
have flawed models that lead them to act on the stance, satisfaction with the preceding year’s
assumption that brand name is the key criterion, performance reinforces export performance imp-
‘‘then misinterpretation of the information is rovement (in terms of performance achievement,
likely to lead to flawed learning and thus flawed export intensity, and export satisfaction) in the

Journal of International Business Studies

 Role of past performance in export ventures Luis Filipe Lages et al
317

short term. It can be argued that satisfaction with marketing strategy adaptation and current-year
past performance facilitates the availability of more export performance. In relation to the influences
resources, which in turn enables the firm to search of internal (management) forces, the results indi-
broadly for information and to conduct the in- cate that a firm’s commitment to exporting, as
depth analyses necessary to promote and sustain opposed to having significant international experi-
strong performance into the future. ence, facilitates performance improvement in the
However, it is important to note that export current year. A possible explanation of this result is
intensity in the preceding year was found to that management experience might affect perfor-
negatively influence current-year export perfor- mance primarily in the long term, rather than the
mance achievement and satisfaction with export short term. Additionally, as managers’ commitment
performance. One explanation for the negative to exporting activities increases, a firm tends to
effect of past-period export intensity might be that allocate more financial and human resources to
when export intensity in the prior period is high, these activities, which improves performance in the
the firm increases slack and decreases effort on the current period. In relation to the influences of
exporting operations, which may negatively affect external (market) forces, our results indicate that
performance achievement, satisfaction, and export export market development significantly influ-
intensity in the short run. This finding is supported enced product, promotion, and distribution adap-
to some extent by the negative relationship found tation. These findings suggest that external forces
between the preceding year’s export performance play a significant role, and more importantly a
achievement and current-year export satisfaction. more significant role in marketing strategy adapta-
An alternative explanation for why past perfor- tion than preceding-year export performance or
mance achievement and export intensity would internal forces.
yield a negative effect on current-year performance The employment of the covariates also added
improvement is the possibility that maintaining insights into the model. Specifically, as would be
high levels of export intensity or ambitious perfor- expected, as a firm’s export volume increases, there
mance goals is difficult year to year. is a positive effect on current performance achieve-
Since the majority of the firms in the sample are ment, satisfaction, and export intensity. This is
in medium to high stages of exporting involvement reflective of organizational learning theory’s rein-
(over 80% of the sampled firms have maintained forcing behavior. Moreover, the results indicate that
international operations for more than eight years), the further away the export market is, the more
these firms may have high goals and expectations pricing and distribution are adapted to the export
for the following year. Consequently, the likelihood market. Additionally, as the number of countries
of frustrating or falling short of expectations exported to increases, promotion mixes are adapted
increases. At these levels, little room exists for to the export market. This suggests that, as firms
improvement, and more often than not firms gain experience with more markets, they are better
might only reduce or slightly increase their export able to understand and recognize the specific
intensity and achievement of objectives in the contingencies of those markets and alter their
short term. This inability to improve might explain strategies to fit those markets.
the lack of a significant relationship between past
and current performance achievement, as well as Managerial Implications
the lack of influence of the preceding year’s export The model presented in this paper helps managers
performance on marketing strategy adaptation to systematize the short-term relationships operat-
when viewed within organizational learning theo- ing in the complex export-marketing phenomenon
ry. Specifically, organizational learning suggests and, simultaneously, might help to improve their
that managers work to identify associations bet- marketing expertise and enhance their ability to
ween firm-level behaviors that are associated with protect and perform better in the domestic market.
positive and negative outcomes, repeating those First, the results indicate that firms are likely to
behaviors that drive positive outcomes and elim- improve their export performance in the short term
inating behaviors that result in negative outcomes if they are more committed to export operations.
(Cyert & March, 1963, Levinthal & March, 1981; Hence, companies may profit by investing in ex-
Sullivan & Nonaka, 1986). porting operations by allocating more human and
Further, the findings of this study present insights financial resources to these activities. However,
into the influence of internal and external forces on marketing strategy may be more difficult to adapt

Journal of International Business Studies

 Role of past performance in export ventures Luis Filipe Lages et al
318

so as to alter performance in the short term. Export of the conceptual framework of interest. However,
managers are particularly encouraged to reflect on if common method bias exists, a CFA containing
the fact that quite often it will not be possible to see all constructs should produce a single method
the effects of preceding strategies in the long run factor (Podsakoff & Organ, 1986). The goodness-
because strategies are determined every year as a of-fit indices (CFI¼0.60, IFI¼0.60, TLI¼0.58) indi-
reaction to the previous year’s results. cate a poor fit for the single-factor model, which
Second, results suggest that marketing strategy suggests that biasing from common method var-
definition in the short term is strongly influenced iance is minimal. Future research could address this
by internal and external forces of the firm as well as issue via data collection from multiple sources,
by past performance levels. Short-run adaptive such as other elements involved in the supply
strategies require significant resources (both finan- chain (see Skarmeas, Katsikeas, & Schlegelmilch
cial and human), and should be used when the firm (2002) for the importer side).
is exporting to developed markets, or has a strong Further, the research context limits the findings.
commitment to those markets. Additionally, the The fact that the research context involved only
findings might also be informative when a firm is one country and small to moderate size firms may
assessing its propensity to explore new markets, as limit the generalizability of the results to some
at this stage the firm may have to take into account degree. However, Western countries in situations
the degree of competition and market development similar to that of Portugal may also benefit from the
in making the decision. findings. For example, since American and British
Third, the results highlight the importance of firms tend to be more orientated to short-term
action, in that if the previous year’s performance is objectives than their Japanese rivals (Doyle,
unsatisfactory, failure to adapt will result in con- Saunders, & Wong, 1986, 1992), the framework
tinued failures. It is particularly interesting to presented here might better explain export market-
observe the negative relationship between past ing reality within their context. Nevertheless, it
export intensity and current-period performance. would be interesting to apply this framework, for
This might suggest that firms chase annual perfor- example, to Japanese exporters to better under-
mance when the importance of the export activity stand possible short-term reactions of firms that are
within the firm is lower. By better understanding typically long-term oriented (Doyle et al., 1986,
the relationship between past and current-period 1992; Wong, Saunders, & Doyle, 1987).
performance, and by making the appropriate co- Extending beyond the limitations, we believe
alignment with the internal and external context of that this research provides a foundation for sig-
the export venture, managers can avoid repetition nificant research endeavors to advance the field.
of unsatisfactory export performance. For example, this research has shown the empirical
link between previous year and current perfor-
LIMITATIONS AND DIRECTIONS FOR FUTURE mance improvement. However, research still needs
RESEARCH to investigate this link systematically and thor-
Although this study provides a number of new oughly. As stated by Sinkula et al. (1997: 308), ‘‘the
insights, it is important to note its limitations. We extent to which organizations are able to store and
will address future research directions in the con- access past lessons of history will affect their ability
text of, and as extensions to, the limitations. First, to maintain a steady pace of long-term learning
this study employed a cross-sectional survey meth- that continuously builds from the past.’’ By con-
od, and therefore suffers from the common limita- sidering how strategy is affected in the short term,
tions of the method, for example, cross-sectional we provide insight into the building blocks of long-
design, common method. Although we attempted term learning. Our results indicate that, in the short
to capture the dynamics of the exporting phenom- term, performance satisfaction tends to be perpe-
enon by focusing each question on specific time tuated, so that negative past performance satisfac-
periods, thus building in a logical progression, the tion leads to negative current-period performance
study is cross-sectional. Future research should seek satisfaction, and vice versa. However, is it possible
to overcome this limitation. Also, the survey through marketing strategy development to break a
methodology may have created common method negative cycle and improve performance satisfac-
variance, which could have inflated construct tion in the short term?
relationships. This inflation could be parti- Conversely, both past export performance
cularly threatening if the respondents were aware achievement and export intensity lead to lower

Journal of International Business Studies

 Role of past performance in export ventures Luis Filipe Lages et al
319

export performance (in terms of performance This study was motivated, to some extent, by
achievement, export intensity, and performance Morgan et al.’s (2004) call for more theory-driven
satisfaction) in the short term. This finding suggests export performance research. Through the employ-
that prior performance exerts complex effects on ment of organizational learning theory, and more
marketing strategy and current performance, and specifically exploitation learning capabilities, we
that this effect varies, depending on which dimen- were able to develop and test a model of short-term
sion of performance is being considered. Specifi- export performance. The findings of this research
cally, additional research should explain how past echo Madsen’s view (1998: 82) that ‘‘the real world
performance affects current performance, particu- is not as simple as the economic theory, according
larly when different measures of past performance to which the long-term profitability or maximiza-
are negative or positive. Overall, this remains an tion of rent-earning abilities are the ultimate goals
intriguing direction for future work. We hope that for the firm.’’ Clearly, managers appear oriented
the empirical findings of this study will encourage toward the short term when they define their
academic researchers to reflect more often on the strategies and assess the performance of an export
importance of previous export performance for venture. By better understanding this phenomen-
current export marketing strategy and current on, we increase our understanding of strategy
export performance. definition and its evolution in international mar-
Further, past research suggests that long-term keting exchanges.
success is founded upon the capability not only to
learn when faced with environmental changes, but ACKNOWLEDGEMENTS
also to adapt continuously in the short term, even This research was funded by the following research
when the firm is performing well (Sinkula et al., grants to the first author: by FCT-EU (2000–2001)
1997). Hence, research opportunities exist in the while a Visiting Scholar at MIT Sloan School of
investigation of learning simultaneously through Management and Stanford University Graduate School
exploration- and exploitation-type capabilities of Business; by NOVA EGIDE (2001–2007) and 6th
(cf. Atuahene-Gima, 2005; March, 1991; Özsomer & European Framework Program (2004–2006) while
Gençtürk, 2003). Research indicates that, through affiliated with Universidade Nova de Lisboa; and by
the refinement of existing knowledge, export FCT-EU (2006) while a Visiting Scholar at London
managers are expected to exhibit a self-reinforcing Business School. The authors acknowledge Tim
bias toward exploitation learning – more short-term Ambler, Pedro Pita Barros, James Harris, Jose Mata,
oriented – which will damage their capacity for David Montgomery, Aviv Shoham, Jose Tavares, JIBS’
explorative learning – more long-term oriented editors, and three anonymous reviewers for comments
(Levinthal & March, 1993). We therefore argue that on earlier versions of the manuscript.
future export marketing research relating to under-
standing the balance between exploitation and NOTES
1
exploration learning capabilities and their influ- Earlier research on the impact of export market
ence on short- and long-term export marketing forces on export performance yields mixed findings
performance could provide new insights into the (cf. Austin, 1990; Beamish, Craig, & McLellan, 1993;
field. Additionally, the majority of organizational Sriram & Manu, 1995). In light of these mixed results,
learning theorists accept that organizational learn- and the lack of strong theory based upon organiza-
ing ultimately manifests itself through organiza- tional learning to posit such relationships, we do not
tional actions (Sinkula et al., 1997). In this study we hypothesize the relationships between the export
focus on marketing strategy modifications (export market forces and performance improvement in the
adjustments of domestic strategies) as a conse- current period.
2
quence of previous performance. Future research However, while taking into consideration the
is strongly encouraged to analyze whether a comment of an anonymous reviewer, we split the
strategy (e.g., degree of innovation vs disinnova- sample into exporters of consumer products (n¼416)
tion) has been changed from one year to the and exporters of industrial products (n¼103). After
following in response to past performance, and analyzing the correlation matrices we found some
the rationale behind this change. support for H1. An analysis of the correlations revealed
In summary, the findings of this study provide that, for industrial exporters, distribution adaptation is
theoretically founded contributions to the extant significantly correlated with current-period export
literature related to export marketing performance. intensity (r¼0.21, po0.05). This split also indicated

Journal of International Business Studies

 Role of past performance in export ventures Luis Filipe Lages et al
320

that our initial finding, that product adaptation is distribution adaptation (r¼0.10, po0.05). Moreover,
negatively correlated with performance achievement, we also found that when satisfaction with past per-
is found to be significant only in the case of consumer formance is low there is a positive correlation between
goods (r¼0.12, po0.05). experience and distribution adaptation (r¼0.17,
3
After splitting the sample, we found additional po0.05).
6
support for H2d because for industrial exporters a After splitting the sample we found partial support
firm’s commitment to exporting is significantly corre- for H5. In the case of exporters of consumer products,
lated with distribution adaptation (r¼0.21, po0.05). experience is significantly correlated with current-
While taking into consideration the comment of an export intensity (r¼0.12, po0.05), current perfor-
anonymous reviewer, we used the mean of the past mance achievement (r¼0.16, po0.01), and current
performance factors to divide the sample into expor- performance satisfaction (r¼0.15, po0.01). Surpris-
ters with low/high past export intensity (n¼265/ ingly, we also found that experience is correlated with
n¼254), low/high past performance achievement the three dimensions of current performance (inten-
(n¼240/n¼279), and low/high past satisfaction sity, achievement and satisfaction) only when past
(n¼212/n¼307). After splitting the sample, we found intensity is high (r¼0.12, n.s.; r¼0.20, po0.01; r¼0.16,
that commitment is correlated with promotion adap- po0.01, respectively), past achievement is low (r¼0.18,
tation when past intensity (r¼0.20, po0.01) and past po0.01; r¼0.17, po0.01; r¼0.17, po0.01, respec-
satisfaction (r¼0.14, po0.05) are high. Moreover, tively), and past satisfaction is low (r¼0.18, po0.05;
commitment is also correlated with distribution adap- r¼0.21, po0.01; r¼0.23, po0.01, respectively).
7
tation when both past intensity (r¼0.16, po0.05) and After splitting the sample, we found that only in the
past satisfaction (r¼0.12, po0.05) are high. case of consumer goods is export market development
4
Surprisingly, we found that the correlations positively correlated to product (r¼0.16, po0.01),
between commitment and the three dimensions of promotion (r¼0.15, po0.01) and distribution (r¼0.16,
current performance (intensity, achievement, and po0.05).
8
satisfaction) are positive only for exporters of con- Although we did not hypothesize specific effects
sumer goods (r¼0.15, po0.01; r¼0.15, po0.01; between export market forces and current-period
r¼0.13, po0.01, respectively). We also found that performance improvement, we estimated the effects,
the relationship between commitment and the three only to find that export market forces produces no
dimensions of current performance is positive only significant effects on current-period export intensity
when past intensity is low (r¼0.20, po0.01; r¼0.17, (g53¼0.01, n.s. for market development and
po0.01; r¼0.16, po0.05, respectively), past achieve- g54¼0.06, n.s. for competition), performance achieve-
ment is low (r¼0.24, po0.01; r¼0.19, po0.01; ment (g63¼0.02, n.s. for market development and
r¼0.19, po0.01, respectively), and past satisfaction g64¼0.08, po0.10 for competition) or current-period
is low (r¼0.21, po0.01; r¼0.17, po0.05; r¼0.20, performance satisfaction (g73¼0.04, n.s. for market
po0.01, respectively). development and g74¼0.01, n.s. for competition).
5 9
However, after dividing the sample we found However, we found some support for H7. When
some support for H3. For exporters of consumer past export intensity is low, competition is correlated
products, experience is significantly correlated with with product adaptation (r¼0.14, po0.05).

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APPENDIX: SCALE ITEMS AND RELIABILITIES Scale: 1¼much worse in 1998 than in 1997;
5¼much better in 1998 than in 1997
a¼Internal reliability (Cronbach, 1951)
 Export sales volume (unit sales)
rvc(n)¼Variance extracted (Fornell & Larcker, 1981)
 Export sales revenue
r¼Composite reliability (Bagozzi, 1980)
 Export profitability
 Market share in the main importing market
Preceding Year’s Performance
 Overall export performance
Performance achievement in preceding year (a = 0.92;
qvc(n) = 0.67; q = 0.91)
Question: How well did your company achieve the Export intensity improvement in current period (a = 0.96;
following objectives for the main export venture in qvc(n)¼0.87; q = 0.95)
1997? Question: With regard to your main export venture,
Scale: 1¼very badly; 5¼very well to what extent did the following change from 1997
 Export sales volume (unit sales) to 1998?
 Export sales revenue Scale: 1¼large decrease from 1997 to 1998; 5¼large
 Export profitability increase from 1997 to 1998
 Market share in the main importing market  Percentage of exporting venture to total sales
 Overall export performance volume (unit sales)
 Percentage of exporting venture to total sales
revenue
Export intensity in preceding year (a = 0.96; qvc(n)¼0.86;  Percentage of exporting venture to total profit-
q = 0.95) ability
Question: With regard to your main export venture
in 1997, how do you assess the following?
Scale: 0–9%; 10–29%; 30–59%; 60–84%; 85–100%
Satisfaction with performance improvement in current
 Percentage of exporting venture to total sales period (a = 0.97; qvc(n)¼0.84; q = 0.96)
volume (unit sales) Question: How satisfied are you with the results of
 Percentage of exporting venture to total sales your main export venture from 1997 to 1998?
revenue Scale: 1¼much less satisfied in 1998 than in 1997;
 Percentage of exporting venture to total profit- 5¼much more satisfied in 1998 than in 1997
ability
 Export sales volume (unit sales)
 Export sales revenue
Satisfaction with preceding year’s performance (a = 0.94;  Export profitability
qvc(n) = 0.77; q = 0.94)  Market share in the main importing market
Question: How satisfied are you with the 1997  Overall export performance
results of your main export venture?
Scale: 1¼not satisfied at all; 5¼extremely satisfied
 Export sales volume (unit sales) Adaptation of the Marketing Mix
 Export sales revenue Question: Consider the main export venture over
 Export profitability the past year (1998). To what extent do the
 Market share in the main importing market following aspects differ in comparing the main
 Overall export performance export market to the domestic market?
Scale: 1¼no adaptation; 5¼extensive adaptation

Current Performance Improvement

Product adaptation (a = 0.81; qvc(n) = 0.52; q = 0.81)
Performance achievement improvement in current
period (a = 0.95; qvc(n)¼0.79; q = 0.95)  Product brand name
Question: How well did your company achieve the  Product design
following objectives for the main export venture  Product labeling
from 1997 to 1998?  Variety of the main exporting product line

Journal of International Business Studies

 Role of past performance in export ventures Luis Filipe Lages et al
324

Promotion adaptation (a = 0.89; qvc(n)¼0.62;  Ability to follow up on trade leads in the main
q = 0.89) importing market
 Advertising theme
 Media channels for advertising External (Market) Forces
 Promotion objectives
Export market development (a = 0.77; qvc(n)¼0.63;
 Budget for promotion
q = 0.77)
 Direct marketing
Question: Considering the main export venture
over the past year (1998), how would you char-
Pricing adaptation (a = 0.85; qvc(n)¼0.59; q = 0.85) acterize the following aspects of the export market?
Scale: 1¼none; 5¼substantial
 Determination of pricing strategy
 Degree of country’s development
 Concession of credit
 Level of consumer education in the importing
 Price discounts policy
country
 Margins
Export market competition (a = 0.79; qvc(n)¼0.56;
Distribution adaptation (a = 0.87; qvc(n)¼0.63; q = 0.87) q = 0.79)
 Criteria for selection Question: Considering the main export venture
 Transportation strategy over the past year (1998), how would you char-
 Distribution budget acterize the following aspects of the export market?
 Distribution network Scale: 1¼none; 5¼substantial
 Extent of price competition in the industry
Internal (Management) Forces  Competition in the accomplishment of delivery
deadlines
Firm’s commitment to exporting (a = 0.81; qvc(n)¼0.53;  Competition in the industry
q = 0.82)
Question: Consider the main export venture over Covariates
the past year (1998). To what extent do you agree or
disagree with the following statements? Size of the firm
Scale: 1¼strongly disagree; 5¼strongly agree Question: What was the total number of full-time
employees working in your firm last year (1998)?
 There was substantial planning for this export Scale: 1–9; 10–19; 20–49; 50–99; 100–499; X500
venture
 There was a significant amount of human Distance of export market to Portugal
resources involved in the exporting activity Question: Please indicate which was, in 1998, your
 There was a significant degree of management company’s main importing country of your main
commitment to exporting exporting product (or group of products): _______
 There were more financial resources for exporting (please indicate one country only)
than those used for the domestic market Scale: The distance in kms was computed as the
difference between Lisbon (Portugal) and the
capital of the country.
Management international experience (a = 0.75;
qvc(n)¼0.45; q = 0.76) Number of markets
Question: Consider the people involved in your Question: Last year (1998), how many countries
main export venture during the past year (1998). imported your main exporting product?
How would you classify their: Scale: 1; 2–4; 5–9; 10–25; 425
Scale: 1¼None; 5¼Substantial
Export sales value
 Degree of professional exporting experience Question: What was your company’s total export
 Degree of overseas experience–live/work abroad sales for last year (1998)?
 Degree of training in international business, for Scale: ph100,000; h100,001–350,000; h350,001–
example, attended formal courses and export 1.5m; h1.5m–3.5m; h3.5m–5m; h5m–35m; h35m–
seminars 145M; Xh145M

Journal of International Business Studies

 Role of past performance in export ventures Luis Filipe Lages et al
325

ABOUT THE AUTHORS doctorate in marketing from the University of

Luis Filipe Lages is Associate Professor of Market- Florida, USA. Her research interests include the
ing and International Business at Universidade development and management of interorganiza-
Nova Lisboa, Portugal, and Visiting Scholar at MIT’s tional relationships and e-procurement processes
Deshpande Center for Technological Innovation. such as online reverse auctions. She has published in
Born in Portugal, he is a Portuguese citizen. He the Journal of Marketing Research, Journal of Marketing,
received his PhD in marketing and international Management Science, and Organization Science. She
business from Warwick University, UK. His research can be reached at [email protected].
interests include international marketing, measure-
ment of intangibles, innovation/disinnovation David A. Griffith is Associate Professor of Market-
strategy, and technology-market transfer. His pub- ing in the Eli Broad Graduate School of Manage-
lications have appeared in the Journal of Interna- ment at Michigan State University. His research
tional Marketing, Journal of Business Research, interests include international marketing strategy
Industrial Marketing Management, among others. He and the employment of firm resources for strategic
can be reached at [email protected]. marketing effectiveness. He has published in the
Journal of Marketing, Journal of International Business
Sandy D. Jap is the Caldwell Research Fellow Studies, Journal of Operations Management, etc. He
Associate Professor of Marketing at the Goizueta earned his PhD at Kent State University and is a
Business School at Emory University. Born in native of the US. He can be reached at griffith@
Indonesia, she is a US citizen. She received her bus.msu.edu.

Accepted by Arie Y Lewin, Editor-in-Chief, 20 April 2007. This paper has been with the authors for three revisions.

Journal of International Business Studies

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