South African and Singaporean exporters: Their attitudes, information sources and export problems

Burgess, Steven M.; Oldenboom, Nicola Article South African and Singaporean exporters: Their attitudes, information sources and export problems South African Journal of Business Management Provided in Cooperation with: University of Stellenbosch Business School (USB), Bellville, South Africa Suggested Citation: Burgess, Steven M.; Oldenboom, Nicola (1997) : South African and Singaporean exporters: Their attitudes, information sources and export problems, South African Journal of Business Management, ISSN 2078-5976, African Online Scientific Information Systems (AOSIS), Cape Town, Vol. 28, Iss. 2, pp. 53-62, https://doi.org/10.4102/sajbm.v28i2.789 This Version is available at: https://hdl.handle.net/10419/218169 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by/4.0/ S.Afr.J.Bus.Manage.1997 28(2) S3 South African and Singaporean exporters: their attitudes, information sources and export problems Steven M. Burgess* Henley MBA Programme, Graduate Institute of Management and Technology, P.O. Box 4437, Rivonia, 2128 Republic of South Africa Nicola Oldenboom School of Economic and Business Studies, University of the Witwatersrand, P.O. Wits, 2050 Republic of South Africa Received February 1997 South Africa's emergence from years of political and regulatory trade barriers has focussed attention on South African exporters. In a replication of Elliot & Krasnostein's study of 54 Singaporean exporters, the perceptions, attitudes and characteristics of a representative sample of 321 experienced South African exporters and their decision makers were investigated. Consistent with other international studies, the results suggest that managerial, organizational and environmental forces and perceptions motivate export behaviour. However, South African firms clearly are responding to unique situational factors and national export resources as well. The findings indicate that managerial leadership, supportive attitudes and extensive exporting experience are widely available in South Africa. Secondary information sources could be improved and freight costs reduced to improve South African export effectiveness. Suid-Afrika se hertoetrede tot die intemasionale ekonomie na jare van politiese en regulerende bandelsversperrings bet Suid-Afrikaanse uitvoerders opnuut onder die soeklig laat kom. In navolging van 'n studie deur Elliot & Krasnostein oor Singapoerese uitvoerders, ondersoek hierdie artikel die persepsies, houdings, en eienskappe van 321 ervare SuidAfrikaanse uitvoerders en hulle besluitnemers. In ooreenstemming met intemasionale navorsing dui die resultate van die studie daarop dat bestuurs-, organisatoriese, en omgewingsfaktore en persepsies uitvoergedrag be"invloed. Die Suid-Afrikaanse firmas reageer egter ook op hul unieke situasie en op die bestaande nasionale hulpbronne vir uitvoerdoeleindes. Die resultate dui daarop dat bestuursleierskap, ondersteunende houdings en uitgebreide uitvoerervaring wyd beskikbaar in Suid-Afrika is. Sekond!re inligtingsbronnne kan verbeter word en vervoerkoste verminder word om Suid-Afrika se uitvoerdoeltreffendheid te verhoog. "'Author to whom correspondence should be addressed. Many international companies, especially high-tech companies, have established a South African market presence since the election of the Government of National Unity, according to frequent popular press reports. South Africa may contribute only 0.5% of world-wide GDP (World Bank, 1996: 211), but strategic location and developed infrastructure make South Africa an attractive market and an inviting base for sub-Saharan or Indian Ocean Rim operations. Entry by new competitors and the rapid repeal of protective regulations are well known to impact on rivalry within an industry (for example Porter, 1980: Chapter 1). The entry of so many firms after years of isolation suggests a challenging new competitive environment which may well compel many South African firms to seek growth in international markets. Regularly reported export and import trade statistics are available from reliable sources in South Africa but little international trade research has appeared in peer-reviewed academic journals concerning South Africa (notable exceptions include Dichtl, Leibold, Koeglmayr & Mueller, 1983 and Viviers, Kroon & Calof, 1996). No one has suggested a crisis; but it is important to note that Czinkota & Johnston (1983) maintained that American export problems of the late 1970s and early 1980s were preceded by a crisis in international trade research. South African companies seeking growth will learn from the dynamic and increasingly internationalized home market. However, opportunities in international markets -now free from the legal and political impediments of previous decades -may demand new and unexpected competencies to compete effectively. Academic research plays an unbiased role in identifying and exploring key issues in this new environment. The desire to better understand the contributory factors underlying export success and interest in Singapore's success in world trade were the impetus for this study. Singapore's emergence as a wealthy nation during the past two decades - mainly as a result of manufacturing and trading prowess (Elliot & Krasnostein, 1990; Wee Chow Hou, 1993) -interests many South African exporters. Despite the obvious geographical and population size differences, the two countries share many important cross-cultural, developmental and infrastructural characteristics. Importantly, both are located strategically in the emerging Indian Ocean Rim. International export research has linked export success to firm and decision-maker characteristics, export information sources, reasons for exporting and exporting attitudes and perceptions among many other characteristics (compare Aaby & Slater, 1988; Bilkey, 1978; Cavusgil & Nevin, 1981; Cunningham & Spiegel, 1971; Eshghi, 1992). The current research (1) examines these concepts and their relationships in a representative sample of South African exporters, (2) compares the findings to Elliot & Krasnostein's (1990) study of Singaporean research and development-based manufactured goods exporters, (3) provides a foundation for more focussed explorations suggested by the findings and (4) contributes to the international literature concerning exporting in developing nations. It is not the purpose of the current research to establish causal links between the various attitudes, firm characteristics and export performance or to link firms with stages in an export adoption process model. S4 Literature rwlw, There are many comprehensive reviews of the export literature (i.e. Aaby & Slater, 1988; Bilkey. 1978; Morrison & Inkpen. 1991). Although such reviews conclude that sue· cessful exporters and export managers exhibit certain charact· eristics. competencies, perceptions and attitudes, the quantum of research including developing nation exporters often is insufficient to allow prudent application of the findings to exporting in the developing world. The following brief review of selected contributions to the literature highlights the importance of concepts included in the current research. Firm characteristics Many firm characteristics have been studied in the literature. Although results sometimes have been indeterminate, there is little doubt that firm characteristics influence exporting performance. Firm size may not be an important factor in exporting success. as the success of Germany's small and mid-size exporters demonstrates. Nevertheless size contributes to factors such as financial strength and scale economies that influence competitive advantage (Aaby & Slater, 1988: 21). Lack of size may lead to administrative problems impacting on export success such as problems handling export documentation (O'Rourke. 1985: 27). Years in exporting may influence exporting success when a relatively stable export environment provides the opportunity for cumulative learning (Daniels, 1971; Louter, Ouwerkerk & Bakker, 1991; Snavely, Weiner, Ulbricht & Enright, 1964; Welch & Wiedersheim-Paul, 1978). Keng & Jiuan (1989) suggest that younger firms are more interested in foreign markets than older more established ones. Export stages The idea that firms transit identifiable stages of involvement to ultimate export commitment, after early stages of progressive export experimentation, stimulated much research in the 1970s and 1980s. Among the many export adoption models proposed. Cavusgil's (1980) export adoption process model has been very influential (see the discussion in Viviers et al., 1996: 35). Export involvement is considered to be a major influence on export success and usually is measured by comparing export sales to total sales (export intensity). Firms with an export intensity greater than 50% have been described as high involvement exporters (Diamantopoulos & Inglis. 1988: 53). Export intensity, attitudinal scales and analyses of resource allocation by the firm all have been used to measure the ulti· mate stage of commitment. Increased commitment by managers and companies has a positive influence on export performance (Aaby & Slater, 1988: 17). Committed managers hold more positive perceptions and attitudes toward exporting and expect exporting to contribute to increased firm growth (Ali & Swiecz. 1991: 74). Committed firms are more likely to allocate specific human and financial resources or to establish a separate export department (Cavusgil & Nevin, 1981: 115). It is also important to note that committed firms can become exposed to increased foreign exchange rate fluctuation risk, although smaller firms may be less affected by this problem (Cavusgil, 1984: 204). Cavusgil (1984: 198) classified firms exporting less than 10% of total output as experimental S.Afr.J.Bus.Muqe.1997 28(2) exporters and those exporting more than 40% of total output as committed exporters. Singapore's trading success has attracted a large number of multinational firms intent on exporting to affiliates - so many that Keng & Jiuan ( 1989: 32) reported that 44% of Singaporean exporters had some foreign equity. Bilkey (1978: 37) suggests that a large proportion of exports to affiliates in foreign countries may indicate the ultimate current stage of a firm's export process. Altogether 39 of the 53 Singaporean firms reporting sales derived from exports indicated that over 50% of sales were derived from exports -an export intensity characterizing these firms as involved or committed using the traditional definitions above. There is some concern about using traditional measures, such as export intensity, to characterize the involvement or commitment of South African firms (see Viviers et al., 1996: 38). The qualitative research participants consistently expressed four notions that caused us to question the reliability of traditional operational concepts of involvement and commitment. The following four paragraphs capture the essence of these notions: 1. South African exporters were hindered by unique political and regulatory impediments in recent decades. These impediments were withdrawn swiftly in an environment of great political and socio-economic uncertainty in the home market during the year prior to the research. Relatively new exporters generally indicated that their firms were responding to the repeal of regulatory barriers by taking dramatic steps indicative of high involvement or commitment, such as setting up foreign sales offices. 2. Political and regulatory barriers often made it very diffi. cult to open foreign trading offices and local foreign exchange controls further limited foreign investment opportunities. These conditions contributed to an extraordi· nary concentration of company ownership in the home market featuring the common adoption of strategic business unit (SBU) and divisionalized organizational struc· tures. Most exporters operated from export departments (a sign of commitment to exporting). often in divisions selling a range of products from a group of companies. Although export managers knew the sales of their department and their ultimate group holding company, they often could not accurately quantify their proportions of intermediate divisionalized company sales. Participants indicated that exports represented a small proportion of group company sales but that exports probably repre· sented a more significant proportion of sales in certain in· dividual divisionalized companies with the group. 3. Qualitative research suggested that a culture of secrecy concerning export sales developed over the decades due to fear of becoming a sanctions target. One common response appears to have been active export through inter· mediaries. Most of the exporters participating in the qualitative phase reported that such sales occurred but few could quantify them. Further, many participants reported resentment that such sales often were considered domestic sales for reporting purposes. 4. Considering the nature of the political sanctions exporters faced, the failure to attain export sales exceeding 40% of S.Afr.J .Bus.Manage.1997 28(2) total output could be expected in many industries even when the level of commitment or involvement was equal to that of other international firms. Many South African companies have exported successfully for decades but political and regulatory barriers precluded export to many markets (over 25% of respondents in the current research reported exporting for more than 15 years and about twothirds reported exporting more than five or more years). Success in the countries which did not participate in political sanctions was unlikely to lead to meaningful global market shares or to significantly increased overall sales. These four notions were held almost universally by the qualitative participants. As a result, it was decided that the identification of export stages would not be a focus of the research but rather should be the focus of another devoted study. The South African Foreign Trade Organisation (SAFfO) senior managers participating in the qualitative research suggested that the characteristics and export experience of dues-paying full members were such as to suggest export commitment in most cases. Using an alternate view to adjust for the unique post-sanctions environment, if an export intensity of 10% is arbitrarily considered as a measure of export commitment and an export intensity of 5% is considered as an indicator of involvement, then 41 % reported commitment in the current research and 53% reported involvement or commitment (see Table 1). Manager characteristics Many studies have shown that involved and committed managers are more likely to succeed in exporting (see Aaby & Slater, 1988: 17). The literature suggests that visiting or living in foreign markets is a positive influence on export perf onnance and that younger, more educated managers have the strongest foreign market orientation (Axinn, 1988; Dichtl et al., 1983). When compared to non-exporters, export managers are less fearful of taking risks or overcoming communication differences (Dichtl et al., 1983: 8). Reasons for exporting The genesis of the export decision can be internal or external to the firm (Johnston & Czinkota, 1982). The most common source of exporting opportunity awareness is the receipt of unsolicited orders (Kaynak & Kothari, 1984; O'Rourke, 1985; Pavord & Bogard, 1975) and even this may not be a sufficient impetus to begin exporting (Dichtl et al .. 1983: 8). Excess capacity (Brooks & Rosson, 1982; Cavusgil, 1984; Johnston & Czinkota, 1982; Korth, 1991) and sluggish sales in home markets (Pavord & Bogard, 1975) also are often cited motivations. The potential for increased profits or economies of scale can be important internal motivators. Although exporting often leads to higher profits and sales (Johnston & Czinkota, 1982), it has been argued that this is not always a sufficiently strong incentive to enter into new markets (Cooper, Hartley & Harvey, 1970; Hunt, Froggatt & Hovell, 1967; Pavord & Bogard, 1975). The belief that exporting is in the national interest may be a fundamentally important top management attitude in exporting firms (Pavord & Bogard, 1975: 6), but the link between this attitude and behaviour is inconsistent (Eshghi, 1992: 48). SS Other less important motivators include enquiries from third parties, export assistance and incentives from foreign sources (Kaynak & Kothari, 1984) and opportunities found while travelling in foreign markets (Pavoni & Bogard, 1975: 7). Managers may gain personal satisfaction in dealing with foreign customers. However, it appears that the need to improve the firm's image is not always a major incentive to export (Pavord & Bogard, 1975: 8). Information sources Once the decision to consider exporting is made, information must be obtained to evaluate alternative export opportunities and formulate strategic plans. Decision makers generally rely on personal observation, contacts with foreign buyers and other primary information sources after having consulted secondary data sources (Cavusgil, 1985; Czinkota & Ronkainen, 1993). Elliot & Krasnostein ( 1990) found institutional sources to be unimportant although trade and industry publications (along with trade shows) are important information sources in the experimental and active export stages (Cavusgil, 1984). Foreign buyers can play an important role in estimating foreign market potential (Cavusgil, 1985; O'Rourke, 1985) and provide specific information required by the firm (Denis & Depelteau, 1985: 12). Generally, the literature suggests that committed exporters rely less on secondary information sources, such as governmental information, and feel less satisfied with the services provided by government departments (Denis & Depelteau, 1985; Keegan, 1967; O'Rourke, 1985; Pavord & Bogard, 1975; Tseng & Yu, 1991) although Sood & Adams (1984) would suggest otherwise. Problems Elliot & Krasnostein ( 1990: 28) reported that very few problems presented major limitations to Singaporean firms and concluded that this was an indication of the internationalization of the firms and their commitment to exporting. Small firms have reported problems with export administration and export managers often have reported problems with human resources, logistics and acquiring information. Exporters encounter unique problems that require specialized skills and knowledge (Pavord & Bogard, 1975: 7). Human resource problems in exporting generally concern identifying suitable distributors in foreign markets (Cavusgil, 1984; Keng & Jiuan, 1989), overcoming labour scarcity or recruiting suitable export management (Aaby & Slater, 1988; Bilkey, 1978; Keng & Jiuan, 1989). Identifying suitable foreign agents emerged as the second most reported major limitation for Singaporean firms (Elliot & Krasnostein, 1990). Firms may adapt to difficulty finding foreign agents by improving skills concerning staff recruitment in foreign markets. Managers also can design technical solutions, such as expert systems, to overcome skilled labour shortages. Spreading export management responsibilities over a number of departments is another organizational strategy firms can employ to cope with human resource constraints (Diamantopoulos & Inglis, 1988: 55). There is evidence that the inability to meet foreign competitor pricing is a major limitation for exporters (Elliot & S6 Krasnostein. 1990; Keng & Jiuan, 1989). Inefficient logistics systems also can impact on the firm's ability to meet demanding delivery time requirements forcing firms to adapt the marketing mix to accommodate for inefficiency (Kaynak & Kothari, 1984: 65). High freight costs can be an important barrier to internationalizing the marketing effort (O'Rourke, 1985). Acquiring inadequate information can be a major limitation to exporting success (Keng & Jiuan, 1989). Method Questionnaire Elliot & Krasnostein ( 1990) was chosen as a starting point for the research after a literature review indicated that their study had measured the concepts of interest and after interviews with senior officials of the South African Institute of Marketing Management .and SAFfO had indicated a high level of interest in understanding South African exporters from the same perspective. Each concept measured by Elliot & Krasnostein (1990) was included in an initial draft questionnaire after small changes were made to effect consistency with normal South African grammar and spelling. The draft questionnaire was then discussed with senior managers in the SAFfO Research Department and more than 50 executives attending five South African Institute of Exporting strategic export marketing management seminars at SAFfO. This qualitative research evaluated the questions relating to sources of information, perceived export problems, and attitudinal statements. Five reasons for exporting tested by Elliot & Krasnostein ( 1990) were dropped because they were reported to be unlikely during the qualitative research. For instance, few South African banks abroad reported sales leads to South African exporters. Two reasons for exporting were added when they emerged regularly from the qualitative research. Based on the qualitative findings, only six of the eight information sources tested by Elliot & Krasnostein (1990) were retained in the current research. Ten additional information sources were noted for inclusion. Six problem statements were dropped from the study when the qualitative research indicated that they did not occur because of structural or environmental differences between the two countries. For example, the statement concerning a firm's ability to offer competitive credit terms was dropped because of constraints in this regard imposed by foreign exchange regulations. Seven exporting problems were added to measure difficulties understanding foreign culture and business practices, political problems, transportation, sanctions and receiving payment which emerged as important problems in the qualitative research. Seven statements about exporting tested by Elliot & Krasnostein ( 1990) did not apply and were discarded. For example, the statement suggesting that exporting should only be considered after receipt of a written order was dropped because South African exchange control regulations require proof of a written order prior to fulfilment of an export order. Other attitudinal statements were dropped because over 80% of the Singaporean sample disagreed with the statements and the qualitative research indicated that a similar South African result was likely. Additional statements concerning attitudes about risk avoidance, market analysis, marketing effort and S.Afr.J.Bus.Maaqe.1997 21(2) profit expectations were included after they emerged in the qualitative research. A questionnaire more appropriate for South African respondents emerged from this qualitative research. The final questionnaire included eight pages comprising seven sections. The questionnaire was posted to the SAFTO membership list. SAFfO is the largest private export promotion institution in South Africa. It was founded by business community leaders in 1963 and recently became an affiliate of the Industrial Development Corporation. The 1300 member companies, varied in size and industry and located across all provinces of the country, are principally involved in manufacturing and were actively involved in exporting at some time during the past five years. Respondents were allowed five weeks to respond by post. Altogether 321 questionnaires (25%) were returned. The pre-addressed return envelope included a return address card which identified the respondent firm for sample composition analysis. To reduce response bias, respondents were not asked to identify themselves or their company on the questionnaire. Respondents came from a broad cross-section that is representative of SAFTOs membership. No attempt was made to match firms and questionnaires. Sample Both samples included firms exporting high technology products and services, although the South African sample also included some manufacturers of a wider range of goods. There was no significant difference (probability of X2 > 0.05) between the two samples concerning exporting status, years exporting or number of employees. Approximately 95% of both samples were actively involved in exporting at the time of the.study. There were significant differences concerning other sample characteristics. A larger proportion of the South African sample had been established 4--5, 11-15 or over 20 years or reported annual sales of Rl-R2 million or exceeding R20 million. Singaporean firms were more likely to have foreign ownership or to derive more than 50% of sales from exports. South African managers were older and were more likely to have not lived abroad. Singaporean managers were less likely to have been born on local soil or to have made no trips abroad. They were more likely to have lived abroad for less than a year and to have travelled overseas more than five times. Elliot & Krasnostein ( 1990) noted that the modal or typical firm in the Singaporean study was newly established or newly arrived in Singapore, was foreign-owned, employed more than 500 people, had annual sales in excess of S$40 million and derived more than 75% of sales from exporting. Bearing in mind the lack of divisionalized financial reporting by South African exporters, the typical firm studied in the current research was over 20 years old, had been exporting more than six years, was locally-owned, had annual sales over R20 million and derived less than 5% of annual sales from exporting. S.Afr.J.Bua.Manaae.1997 28(2) S1 Table 1 Characteristics: South African and Singaporean exporters Counlry Sinppan SoUlbAfric:a Prob. orx2 Crmner'1V Slallll Currmtap 9491, 9791, 0.1179 0.1069 Previo111 ap 291, 391, Never exp ·4'• 11' Yean 0 091, 191, 0.0000 0.3571 BIIOlilbed 691, 31' in lllil counay2 111' 291, 111' 391, 4-S 41' 31' 6-10 2491, 1391, 11-lS 1791, 101' 16-20 1S9' 991, fY!ler20 1391, Sl91, Yems 0 01' 41' 0.0760 0.2042 •porting 691, 71' 2 111' 71' 111' 71' 4 091, 991, s 41' 11' 6-10 2491, 231' 11-IS 1791, 891, 16-21S1' 131' fY!ler20 131' 1S9' Bmployea Leu tblll 20 1191, 1491, 0.4208 0.0168 20-99 221' 221' 100-499 3091, 3291, SOD or more 3791, 311' Poreip None 3891, 7491, 0.0000 0.3241 ownerobip Leu tblll 209!, 491, 191, 20-SK 41' 71' Greaier Ihm SK SS9' 1791, Total Rand 1-200K 691, S1' 0.0000 OAS93 ,Ilea >200K-1M 91' 61' >1M-2M 21' 691, >2M-10M 1991, 181' >10M-20M 131' 101' >20M SK S19' Unknown 21' S9' 1' oftolal Nooe 41' m, 0.0000 0.9228 Illes 1-S9' 49' 3491, 6-101' 01' 1291, 11-209' 81' 1391, 21-SK 119' 1391, greater tben SK 7491, 149' Aaeor LeudwiSO 7791, 341' 0.0000 0.3083 manager SO or more 231' 661' Country Siq/SA 421' S9" O.OlSI 0.12Sl bom Other "" 419' Yems Nooe 281' 401' 0.0000 0.2316 reaideot Leuthmooe 691, 09' lbrolld 1 or more 669' 609' B111in•1 Nooe 091, 11' 0.0019 0.1997 tripl 091, 691, 2-4 131' "" Sor more 179' 611' Noce: 1talillical telll cooduc!ed oo raw f'requellcy counts. SB Results Perceived reasons for exporting Managerial, organizational and environmental factors emerged as important reasons for exporting in both studies. Over 75% of each sample indicated that strong managerial goals, increased potential profits and potential economies of scale were important. A large proportion of each sample also indicated that enquiries from overseas firms were important. Not tested by Elliot & Krasnostein ( 1990), enquiries from distributors or agents were considered important by 78% of the South African sample. Compared to the Singaporean sample, more South African firms perceive utilization of excess capacity, expansion into neighbouring countries, enquiries from industry associates and export incentives from local government to be important. Only 13% of respondents indicated that excess capacity was not a reason for exporting. An owner/managers trip to a foreign country, export incentives from foreign governments, following competitors and improving the firms image emerged as much less important reasons to export in South Africa. Tabla 2 Reasons for exporting Sin~e S.Afr.J .Bus.Muqe.1997 28(2) Perceived information source importance Results for the six items measured in both studies reveal different information source usage and importance. Fewer South African firms perceived each item measured as an important information source and 32% did not use an information source, on average. Secondary information sources Governmental relations and sources of information can be of primary importance to successful developing nation business strategies (see Austin, 1990: espec. 147-184). Elliot & Krasnostein suggested that 'it may be the case that authoritative and respected government sources in an export-intensive manufactwing economy are perceived as a more important information source than are their counterparts in economies such as Canada, Australia, New Zealand, Argentina and South Africa, where traditional export culture has developed around agricultural and mineral commodities' (1990: 22). Soulh Africa Important Unimportant Did not occur Important Unimportant Did not occur n Prob of X2 Cramer's V Cl nte proximity to ports 37% 34% 30% 307 Competition in Singapae 44% 24% 31% Enquiries from barks 7% 32% 61% Enquiries from distributors/agents 78% 13% 9% 312 Enquiries from industry associates 27% 32% 41% 48% 20% 32% 307 0.0076 0.2209 Enquiries from overseas firms 84% 9% 7% 83% 11% 6% 311 0.8681 0.0376 Enquiries from the Sin~ean Ministry of Trade 27% 41% 32% Enquiries from the Singapcnan Trade Commissioners 27% 36% 36% Export incentives from foreign government 27% 28% 46% 11% 21% 69% 302 0.0020 0.2492 Export incentives from local govecnmenl 49% 27% 2S% 76% 17% 7% 311 0.0002 0.29S2 Export improve image of firm• S9% 26% 1% 43% 42% 12% 319 0.0004 0.2786 Fellow competiton 48% 32% 21% 16% 43% 42% 308 0.0000 0.3S24 Increased profit potential 90% 2% 8% 77% 17% 6% 307 0.1178 0.1463 Overseas travel opportunities 21% 44% 3S% Owner's/manager's trip to foreign country 78% 11% 11% 42% 34% 24% 307 0.0000 0.3700 Potential economies of scale 73% 11% 17% 77% 17% 6% 307 0.0S14 0.1723 Received an unsolicited order* 37% 18% 2S% 38% 28% 34% 301 0.4989 0.0834 Satw-ated I ocal market 50% 20% 30% 47% 30% 23% 310 0.2212 0.1228 Strong managerial goals for expansion 15% 11% 0% 8S% 9% 6% 316 0.1337 0.1419 Successful expansion into neighbouring countries 29% 24% 47% 64% 17% 19% 311 0.0000 0.3623 Unique product 63% 13% 24% 48% 2S% 27% 310 o.osoo 0.1731 Utilization of excess capacity 29% 26% 43% 73% 16% 13% 311 0.0000 0.4300 Note: Elliot & Krasnostein (1990) did not report raw frequencies for export reasons Statistical tests d · compare respon ents to each statement. • percentages grossed up for these two reasons which did not total I 00% in the Singapae study. S.Afr.J.Bus.Manage.1997 28(2) S9 Table3 Sources of information Singapore SwthAfrica Sources Important Unimportant Did not occur Important Unimp<rtant Did not occur n Prob of X2 Cramer'sV Africa Swth of the Sahara 31% IS% SS% 276 Banks S8% 42% DNR 37% 24% 39% 277 0.66S6 0.0306 Economic Development Bank 91% 9% DNR Economist Country Report 31% 19% SO% 272 Firm's Market Research 89% 4% 7% 302 Foreign Government Bodies 6S% 3S% DNR Industry Trade Associations TI% 23% DNR 14% 22% 63% 272 0.0000 0.3850 Ministry/Department of Trade and Industry 83% 17% DNR 61.% 24% 14% 298 0.062S 0.1317 National Productivity Institute 9% 16% 7S% 272 Other local exporters 67% 33% DNR 41% 19% 40% 274 0.8800 0.0107 Personal business contacts 94% S% 1% 299 Potential fcreign buyers or agents 90% 10% DNR 89% 4% 7% 293 0.0')63 0.1176 Representatives of foreign market in SA 27% 21% S2% 270 SAFTO 72% 23% S% 311 Trade Commissioner/South African representative 71% 29% DNR 49% 23% 28% 298 0.6450 0.0326 Trade Fairs S4% 23% 23% 289 Trade Journals S8% 21% 21% 290 Wcrld Bank Reports IS% 22% 63% 269 Note: Elliot & Krasnostein (1990) did not report frequencies for information sources. Statistical tests compare proportional responses to each statement (percentages grossed up for RSA) Government information generally has been reported as less important (Cavusgil, 1983; O'Rourke, 1985; Pavord & Bogard, 1975). Trade commissioners were considered important by less than half of the South African sample. Foreign trade representatives were not used by over half of the sample and only 56% of those who used this source reported that it was important. While Elliot & Krasnostein (1990: 22) reported that 83% of the Singaporean sample felt the Ministry of Trade and Industry was at least somewhat important, the current research indicates that 61 % of the sample found Department of Trade and Industry information important. Industry trade association information also appears to be much less important than reported for Singapore by Elliot & Krasnostein ( 1990: 15). Only 14% of the South African sample claimed that industry trade associations are important and 63% report not using this source. Altogether 75% did not use the National Productivity Institute and only 34% of those who did found the information provided to be important. The findings confirm past research indicating industry trade associations are considered important information sources by only 20% to 30% of companies (Pavord & Bogard, 1975). Cavusgil (1983) and Reid (1984) suggested that exporters may not rely heavily on published secondary data. Less than half of the respondents in the current research consult World Bank reports, Africa South of the Sahara or Economist country reports and about half of those using these sources considered them to provide important information. Primary information sources Primary information sources are much more important than secondary sources to South African exporters, confirming prior research (Keng & Jiuan, 1989; Tseng & Yu, 1991). Altogether 83% of the sample conducted proprietary marketing research in foreign markets and 96% of those who did found it useful. Trade fairs and trade journals -perhaps more widely acknowledged as vehicles for direct selling in foreign markets -provided useful information to over 70% of those utilizing these sources. The findings support the unimportance of banks as an information source. Contrary to previous findings concerning the unimportance of institutional information sources (see Elliot & Krasnostein, 1990: 22), SAFfO was considered to be an important information source by 72% of the sample. This result needs to be considered in the context of the source of the sample (paid SAFT() members) and the extensive range of informational services offered by SAFTO (internationally accredited training courses in all aspects of exporting, primary research for clients in foreign markets, secondary research information on foreign markets and culture and trade fairs for companies, industries and the government). It is unclear which of these individual services was considered as an important information source by the respondents. Personal business contacts and potential foreign buyers or agents were considered important by almost every respondent. Information from other local exporters was considered important by only 41 % of the sample -although 68% of those who use this source consider the information provided to be important. 60 S.Afr.J.Bus.Muqe.1997 21(2) Table 4 Problems in exporting Singapore South Africa Does Major Minor No Does not Major Minor No not n Prob of Cramer's limitatio Problems n limitation limitation apply limitation limitation limitation apply X2 v Ability to offer competitive credit terms 19% 46% 15% 19% Difficulty in handling export documentation 2% 10% 48% 40% 3% 19% 53% 26% 318 0.0820 0.1831 Difficulty in locating satisfactory foreign agents 29% 23% 21 % 27% 20% 44% 18% 316 0.0164 0.2266 Difficulty in making contacts in foreign markets 19% 39% 26% 16% 317 Difficulty in obtaining funds necessary to expand 14% 31 % 25% 31 % 15% 30% 28% 316 0.9446 0.0435 Difficulty in receiving payment from foreign markets 15% 48% 25% 12% 318 Difficulty in understanding foreign business practices 7% 45% 28% 20% 317 Difficulty in meeting foreign delivery dates 12% 39% 27% 23% 7% 32% 40% 22% 317 0.2077 0.1509 Exchange rate Ouctations 23% 38% 31% 8% 17% 51% 26% 6% 318 0.3178 0.1327 Formal franchise agreement with overseas parent 6% 4% 14% 77% High freight costs to foreign markets 10% 37% 37% 17% 30% 50% 13% 7% 318 0.0000 0.3673 Inability to find suitable staff for foreign branch 10% 15% 25% 50% 3% 14% 20% 63% 316 0.1189 0.1711 Inability to meet competitiw prices in foreign market 31% 33% 17% 19% 35% 39% 17% 9% 314 0.2295 0.1469 Inability to modify product for foreign market tastes 10% 17% 37% 37% 5% Inability to obtain suitable export 20% 42% 33% 318 0.5017 0.1086 manager 8% 14% 27% 52% 2% 10% 43% 44% 316 0.0402 0.2037 Inability to service overseas buyers 12% 26% 37% 26% 7% 28% 40% 25% 316 0.6807 0.0868 Lack of continuity of orders 21% 27% 13% 39% 21 % 47% 23% 9% 315 0.0000 0.3670 Lack of useful information about foreign markets 27% 33% 14% 27% 11% 48% 28% 14% 317 0.0003 0.3043 Licensing agreement imposed on overseas product design 10% 10% 14% 67% Limitation imposed by parent company on marketing plans 12% 8% 19% 62% 9% Limitations from parent company 10% 28% 53% 315 0.4017 0.1212 restricting local products 4% 8% 15% 43% Patent restrictions 4% 15% 12% 69% Political problems in foreign markets 13% 44% 27% 16% 317 Political problems in local market 20% 48% 18% 15% 318 Sanctions 20% 40% 21% 19% 318 Scarcity of skilled labour in country 21% 33% 25% 21 % 17% 33% 31% 19% 317 0.7617 0.0763 Transportation problems in foreign market 6% 33% 41 % 20% 316 Unwillingness to compete with affiliated firms in overseas market 6% 14% 21% 60'I, Note: Elliot & Krasnostein (1990) did not report frequencies for export problems. Statistical tests compare proportional responses to each statement.