Abstract
Exporting is a vital source of growth for Central and Eastern European emerging economies. Market liberalization at home and the rapidly changing global business environment have forced small and medium emerging-market firms to radically change their growth strategies by focusing on internationalization. As a consequence, the number of first-time exporters originating from European emerging markets has increased. The success of first-time internationalization however is not guaranteed for all emerging-market firms; failure rates in this process remained high and this calls for further examination of the internationalization strategies and patterns of internationalization. We study changes in internationalization patterns, by examining the strategies of new exporters from a small European emerging market. We explore how successful new exporters differ from unsuccessful ones by focusing on firms’ foreign market export destinations and exported product varieties. The analysis of firm-level data for Slovenian first-time exporters over the period 1994 -2010 revealed that successful international growth is related to an increased diversification in internationalization. By intensifying both geographical and product diversification first-time emerging-market exporters increased the probability of survival in export markets. Considering the predicaments of the Uppsala model of gradual (less risky) internationalization, we found that successful first-time exporters are more risk prone as they tend to follow more diversified internationalization strategies. Step-wise approach to internationalization by following a more focused exporting strategy diminishes emerging-market firms’ survival chances.
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Notes
- 1.
The average value of Slovenian exports of goods and services as a percentage of GDP from 1990 to 2015 was over 60 % with a minumum of 47 % in 1999 and a maximum of 90.76 % in 1990.
- 2.
Cadot et al. (2010) show that less than 20 % of newly formed trade relationships survive more than a year and examine the specific characteristics needed for survival.
- 3.
There is a break in the series from Slovenia’s accession to the EU in 2004 due to a changed system of recording trade flows. After 1 May 2004, only flows of firms with trade exceeding €100,000 on an annual level were recorded, while before that all trade flows were recorded by CARS. The smaller firms with lower values of total yearly exports are not able to make the cut, although they might still be exporting. This curtails the sample on one side. There is a limited solution to the problem, namely that the AJPES database, in which all firms are included, still records the trade status of a particular firm, namely, if a firm exports at all or does not (regardless of the value). Using the AJPES database to differentiate between firms concerning their export status avoids the break in the series, but it only applies to comparisons of firms’ characteristics, which are drawn from the AJPES database. The problem still remains when using information from the CARS database, and caution is needed when interpreting those results.
- 4.
Slovenia is categorized in the figures as not having any data since it does not have an export value (i.e. it does not export to itself). Moreover, Montenegro and Kosovo on their own also do not have any data, but are aggregated with exports to Serbia.
The same calculation and graphical illustration was used for all indicators studied below, however the space limitations per chapter do not allow us including all the Figures.
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Jaklič, A., Burger, A., Kunčič, A., Dikova, D. (2017). Growth and Value Creation Through Diversified Exporting. In: Marinova, S., Larimo, J., Nummela, N. (eds) Value Creation in International Business. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-39369-8_4
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