Marketing Capability and Export Performance: the Moderating Effect of Export Dependence

Abstract

IntroductionMarketing covers all aspect of activities which can help a company to create customer value. The competency in planning and implementing a marketing program that aims to create customer value is one of the keys to success in not only domestic but also in international markets. Marketing has its roots in the advanced industrialized nations. This explains the dominance of firms from these nations in markets across the globe. The catch-up game by firms from newly industrializing nations has posed new challenges in marketing at the international level. Thailand is one of the newly industrializing nations that are aggressively promoting its products in international markets.The economic growth is dependent on the ability of firms at the micro level to compete with firms from other newly industrializing nations for a slice of the global trade. This study is undertaken to assess the marketing capability of agrobased Thai exporters and its relationship with export performance. It will also attempt to determine if such relationship is moderated by export dependence.Literature ReviewThe ability to exploit international opportunities is dependent on the firm's possession of valuable resources (Barney, 1991; Madhok, 1996). Resources include the assets, skill, capabilities, organizational processes, attributes, information or knowledge that is under an enterprise's control and that can be used to develop competitive strategies. The resource based theory of strategy asserts that there is a link between the resources and capabilities available to an organization and their impact on strategic options (Bretherton & Chaston, 2005). According to Grant (1991), resource-based view suggests that the ability to make a rate of profit above the cost of capital depends not only on the industry attractiveness but also on the firm's sustainable competitive advantage. Internally generated firm capabilities, such as technological and management capabilities are widely established in the current literature as critical firm-specific advantages for firm to go international (Lall & Siddharthan, 1982; Cleeg, 1987). One of the capabilities that have been identified to support a sustainable competitive advantage is the firm's marketing capability. Internationally competitive firms are those that recognize the critical role of marketing vis-a-vis other functions within the organization, define their target market and effectively blend the marketingmix with the help of support activities to favorably distinguish their products from their competitors (Piercy, 1982; Doyle, Suanders & Wong, 1992).Substantial empirical research has been undertaken to identify the contribution of marketing to export success. The integrative review of export literature concluded that a well-designed export marketing strategy can indeed determine export success. Market segmentation, product quality, pricing strategy, dealer support, and advertising were found to be significantly associated with export performance. This positive relationship is particularly stronger in research more recently conducted and most evident in studies undertaken within Europe (Madsen,1987; Aaby & Slater, 1989; Chetty & Hamilton, 1993; Zou & Stan, 1998; Leonidou, Katsikeas & Samiee, 2002).The popular notion among academicians and practitioners are that competitive advantages of firms from newly industrializing nations are based on price rather than on leading edge technology or product differentiation (Kumar & McLeod, 1981; Lall, 1983; Wells, 1983; Dominguez & Sequeira, 1993). They have to learn and develop capabilities to operate abroad. According to Wortzel and Wortzel (1981), export development of firms from the Far East is related to the ability to internalize marketing capabilities. Empirical evidence on the export performance of firms from newly industrializing nations tends to concur with the proposition that export performance is contingent upon their ability to internalize and implement marketing (Zou, Fang & Zhao, 2003; Tsai & Shih, 2004). …