Sustaining Small Exporters’ Performance: Capturing Heterogeneous Effects of Government Export Assistance Programs on Global Value Chain Informedness

Jeong Hugh Han,Hyun-Yong Park

doi:10.3390/su11082380

Abstract

The previous literature extensively highlighted the importance of export promotion programs (EPPs) provided by governments to enhance small- and medium-sized enterprises’ (SMEs) export performance. However, the literature still (1) lacks sufficient depth in analysing the way different types of EPPs sustain SME export performance and (2) suffers from the absence of an EPP portfolio that guides an efficient resource allocation for different EPP types. To fill these gaps, our study (1) developed a research model that integrates three different types of EPPs and (2) tested their indirect impacts on sustainable export performance via global value chain informedness, which is a largely ignored but indispensable capability in exporting. Using a partial least-squares equation model (PLS SEM) method to analyze 156 samples collected from 1st of October to 31st of December of 2018 by accessing Korean SMEs’ export managers, our model addresses the different roles of EPP types and also the part of the SME value chain informedness that acts as a critical enabler for sustaining export performance. Furthermore, by complementing the PLS SEM with an importance and performance analysis matrix (IPA matrix), we provide an action plan that guides an appropriate resource allocation to different types of EPPs. In theory, we provide an explanation for how different EPPs work for SMEs via the value chain informedness of SMEs for the export performance. We further capture such EPPs operating over the longer term, with a lasting export performance of SMEs so as to supply a sounder theoretical rationale for the EPP provision. The action plan delivers strategic implications for policy makers dealing with export-assistance programs operations. With the importance of global network involvement and communication with foreign partners, the incorporation of value chain informedness uncovers the necessity of interfirm network-focused informedness in international business literature.

Highlights

Export promotion programs (EPPs) are provided by government bodies to support firms in overcoming export obstacles
This study required all the respondents to have an adequate level of knowledge and experience in EPP use, level of value chain informedness and sustainable export performance to evaluate every variable in the questionnaire
This study demonstrates that small and medium-sized enterprises (SMEs) are informed about the market, consumers, competitors, possible partners, logistics and export processes through different types of EPPs

Summary

Introduction

Export promotion programs (EPPs) are provided by government bodies to support firms in overcoming export obstacles. The problem in boosting the SMEs’ export performance for the national economy is that SMEs are constrained by a lack of experience and limited resources to acquire export-related information, so they are generally exposed to export barriers, such as new market trends, different customers, regulations and fierce competition [5]. They are less likely to venture into international markets without government support [6,7,8]. Even though behavioral variables such as trust, commitment and cooperation were found to be significant factors associated with export performance [12,13], the majority of prior empirical efforts have indicated that EPPs enable firms to acquire relevant information regarding exports market conditions, export processes and possible export partners, thereby improving exporting performance as reflected by the export intensity, profitability and international growth [3,6,8,9,10,14,15]

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