RESEARCH METHODOLOGY
3.3 Operational Definition, Indicator, and Measurement/Method
3.3.2 Export barriers, as a Dependent Variable
Refer to factors that hamper small and medium enterprises to start up, expand, and survive in foreign markets (Leonidou et al., 2007). Two types of export barriers are as follows.
3.3.2.1 Internal barriers refer to obstacles that occur within an organization, including resources utilization and management capability, which are within the control of the organization.
3.3.2.2 External barriers refer to external factors beyond the control of small and medium enterprises (Leonidou, 2004).
1) Internal Export Barriers
Can be classified into three types: 1) informational barriers, 2) functional barriers, and 3) marketing barriers, according to systematic literature review of 32 empirical research works about exporting (Leonidou, 2004).
2) Informational Barriers
Information barriers refer to issues about ineffective data use for selection and contact of international markets and limited information for market establishment or analysis, i.e. problem with international market data, difficulty in seeking international business opportunities, and inability to contact overseas customers (Leonidou, 2004).
3) Functional Barriers
Functional barriers in exporting denote limits with reconfiguring on small and medium enterprises' internal processes to meet the demand of export markets (Vozikis et al., 1985). The functional barriers in exporting involve human capital, resources, and management capabilities, which obstruct policy formulation and the implementation of policy strategies necessary for exporting success.
4) Marketing Barriers
Even though small and medium enterprises can mitigate functional barriers, which restrict their ability for new resources arrangement meeting international market demand, there still remain export barriers, e.g. marketing barriers. Marketing barriers affect the ability of small and medium enterprises with respect to price setting, distribution, and promotion of goods and services overseas (Kidea and Chhokar, 1986; Moini, 1997), which collectively are termed marketing mix.
Marketing mix refers to marketing instruments that a business uses to achieve its marketing objectives. These instruments, or 4Ps, consist of product, price, place, and promotion. Their variables are as follows (Kotler, 1997: 98)
1) Product consists of a variety of products, quality of design, brand, packaging, warranty, size, form, and service.
2) Price includes product price, discounts, consumer‟s price perception, and time of payment.
3) Place comprises sales channels, location, inventory, and shipping.
4) Promotion includes promotions, advertising, public relations, direct sales, and sales through dealers.
Using marketing mix will affect products presentation for the consumer to the end customer, which business can change its long-term sales channels. Therefore, short-term minor change can achieve marketing objectivea. In addition, in the consumer‟s perception, these marketing instruments display consumer benefits.
Suwasa Chaisurat (1994: 30-31) mentions that marketing mix in all business conducts can be affected by different factors. Marketing operation is particularly influenced by two factors: internal factors, which are controllable as per company policy established by management or entrepreneur; and the uncontrollable external factors that affect company operation. Thus, internal factors must be tuned to be in keeping with the external factors, such as economic, social, political, competitive, cultural, legal, and the technological environment.
Marketing mix is the controllable marketing factor that a business must collectively employ to serve the needs of the target market, i.e.
relationship of 4Ps: product, price, place, and promotion. These are controllable marketing instruments jointly used by a business to satisfy customer demand objectives (target market), which consist of goods, price, sales location, and marketing promotion (Boone amd Kurtz, 1989: 9). In short, the concept of marketing mix illustrates marketing components that prompt a consumer‟s buying decision.
Many researchers suggest that inefficient marketing is the major obstacle for small and medium enterprises export businesses (Groke and Kreidle, 1967; Kedia and Chhokar 1986). The main difference between functional barriers and marketing barriers is that functional barriers are more strategic, while marketing barriers are tactical. The scope of functional barriers is broader than marketing barriers as a result of many organizational constraints.
The most critical marketing barriers constraining efficient exporting are unreliable foreign representation and the lack of a plan by small and medium enterprises‟ plan with respect to the promotion of constant overseas markets development (Leonidou. et al., 2007). Such barriers render higher costs for small and medium enterprises because they must search for individuals in the foreign market whose criteria are met with organization‟s structural, operational, and behavioral
requirements (Leonidou, 2004). When the desired representatives are discovered, they may have already chosen other competitors.
Small and medium enterprises attempt to adapt their promotional activities suitable for a diverse pattern of consumption and different overseas markets trade regulations by largely focusing on the consumers in the target market to understand their norm and values. Apart from advertising, promotional barriers also include effective changes in product and packaging (Terpstra and Sarathy, 2000), more competitive price offering to consumers (Doole and Lowe, 2001), as well as the availability of products and services in the market (no shortage) through extensive distribution networks.
5) External export barriers
Can be classified into four types: 1) procedural barriers, 2) governmental barriers, 3) task barriers, and 4) environmental barriers.
6) Procedural Barriers
Procedural barriers represent obstacles caused by export operations with customers abroad.
7) Governmental Barriers
Governmental barriers signify two aspects of obstacles from the government: the lack of government support for exporters and the government trade barriers on export-related tax and non-tax measures.
8) Task Barriers
Task barriers refer to obstacles from customers and competitors in foreign markets.
9) Environmental Barriers
Environmental barriers denote obstacles from economic, political, legal, social, and cultural situations in foreign market.
In conclusion, export barriers as a dependent variable are comprised of two types: internal barriers and external barriers. Related research works indicate that the lack of a knowledgeable workforce for export markets, failure to achieve quality standards in foreign markets, shortage of financial support, know-how deficiency in international markets, disappointment with product design features, as well as unpopular image in overseas markets, are major internal barriers threatening
small and medium enterprises (Czinkota and Ricks, 1983; Tesfom and Lutz, 2006).
Because of these reasons entrepreneurial orientation played a key role in fostering export performance opportunities for the organization on fighting internal organizational challenges.