Quality, export and domestic market performance: the case of pharmaceutical firms in Iran

Abstract

This study examines the relationship between export involvement/performance and domestic market performance of pharmaceutical enterprises in Iran, an area which has remained largely unresearched. The study seeks to address the following three research objectives: first, to assess the export performance of Iranian pharmaceutical companies; second, to assess the performance of Iranian pharmaceutical companies in the domestic market; and third, to examine the relationship between export involvement/performance and domestic market performance. Although existing literature claims that local performance (rivalry) leads to export performance, this study reveals that in the Iranian pharmaceutical industry, export involvement and performance enhance local market performance. The study provides empirical evidence on the relationship between export performance and domestic market performance, and adds depth to the understanding of the reasons why the traditional views did not explain the situation. A comprehensive literature review was used to build our conceptual and analytical framework upon the Export Performance (EXPERF) model for export performance evaluation. The European Foundation for Quality Management (EFQM) Excellence Model and assessment indicators of Innovativeness, Learning and Lean indices were used for measuring domestic performance. By using clustering, six clusters of similar companies were identified and the centroids of the six clusters chosen to verify the relationship between export performance and domestic performance. Correlation analyses confirmed that there was a significant positive relation between export performance and domestic performance. This means that export performance results in better domestic performance, and vice versa.