final thesis Obi Damoah pdf.pdf

THE EXPORT BEHAVIOUR OF SMALL AND
MEDIUM-SIZED MANUFACTURING FIRMS:
EVIDENCE FROM THE GARMENT & TEXTILE
INDUSTRY OF GHANA
By
Obi Berko O. Damoah
Thesis submitted to the Cardiff School of Management in
partial fulfillment of the requirements for the degree of
Doctor of Philosophy
2011
Cardiff School of Management
Western Avenue, Llandaff
Cardiff, UK, CF5 2YB

DECLARATION
I declare that no portion of the work referred to in the thesis has been submitted in support of
application for another degree or qualification of this or any other university or other
institution of learning. Finally, I hereby give my consent for the thesis, if accepted, to be
available for photocopying and for inter-library loan, and for the title and abstract to be made
available to outside organizations.
------------------------------------------------------------------------
Obi Berko Obeng Damoah (Candidate)
------------------------------------------------------------------------
Prof. Robert Huggins (Director of Studies)
-----------------------------------------------------------------------
Prof. Graham Hall (Supervisor)
i

ACKNOWLEDGEMENTS
My appreciation goes to my lord and saviour Jesus Christ, who is my source of strength and
sense of living.
Particularly, I would like to thank my supervisors, Professor Graham Hall and Professor
Robert Huggins (Director of Studies) for their tolerance, professional guidance and support
throughout my PhD training at UWIC. In addition, I thank Professor Eleri Jones, the Director
of Research at the Cardiff School of Management, for her perpetual interest and continual
support.
I would also like to express my sincere appreciation to the government of Ghana through the
GetFund Administration for the financial assistance to undertake PhD academic training in
the UK. Specifically, I thank Mrs. Asamoh (head of the education section, Ghana High
Commission, London) and her team members (Angela and Obaapa Grace) for their
unflinching support for me and all my other colleagues who are being assisted by the
government of Ghana to study here in the UK. Additionally, I thank the staff of the Ghana
Scholarship Secretariat, Accra for their support.
Other thanks go to my PhD colleagues and the entire staff (i.e. the dean of the Cardiff School
of Management and his teaching and non-teaching staff) for their support during my time at
UWIC.
I also thank the neighbours (e.g. Mr. Isaac Darko, Alex and Pastor Sam and Family) I met in
Cardiff throughout my studies for their diverse support. Furthermore, I thank my wife and my
family members in Ghana for their encouragement and inspiration.
ii

ABSTRACT
The aim of this thesis is to examine why the majority of SMEs from the garment and textile
sub-sector decide to remain focused on the domestic market, while few choose to sell a
proportion of their goods abroad, even though they face similar market conditions and
operate in the same location. A variety of explanations to this problem exist in the literature
examining the export behaviour of small businesses. However, these explanations are
inconclusive and restricted in geographic scope (e.g. studies from the USA, Europe, and the
United Kingdom). Because geographic contexts are different it is uncertain whether or not the
recommendations based on studies from western countries can be implemented within the
Ghanaian economy. As a result, a research gap exists with regard to understanding the export
behaviour of SMEs from Ghana.
Following the recognition of a gap in the literature, this thesis seeks to shed light on the issue
from the Ghanaian context. The thesis proposes an integrated theoretical framework,
developed from an analysis of the extant literature review, to address an explanation why
some SMEs export and others do not. The proposed framework consists of a synthesised
integration of the following theoretical perspectives: the resource-based view of the firm;
stage theory; network theory, international entrepreneurship theory; and contingency theory.
The key assumption underlying the integrated framework is that SME export behaviour
represents a complex event, and therefore no single theoretical framework is robust enough to
explain the phenomenon in detail. In addition, as none of the theoretical frameworks are
without weakness it is argued their integration offsets the weaknesses of each, thereby
offering a deeper explanation of the factors underlying export behaviour.
Empirically, the thesis drawing on a set of quantitative data and more qualitative interviews
concerns the behaviour of both small and medium-sized exporting and non-exporting firms
from the garment and textile manufacturing sector in Ghana. An analysis of this data is
undertaken to empirically validate the proposed theoretical integrated framework. The
quantitative methods involve regression analysis, and the qualitative analysis is based on a
systematic content review of the data emanating from the interview data.
The results from the empirical analysis suggest that the proposed integrated framework
matches well with the empirical data. Overall, firm size, sector, workforce education levels,
and participation in international and domestic business networks are found to be the key
drivers explaining why some SMEs from Ghana choose to export, while majority of others
remained focused on the domestic market. Based on the findings it is concluded that SME
owner-managers in Ghana seeking to export should invest in the development of both
domestic and international networks as a means of improving their access to international
markets. From a policy perspective it is recommended that the government of Ghana should
provide further support to facilitate the activities of industrial associations in Ghana, since
their interaction and network development with indigenous firms has been shown to be of
importance in helping SMEs achieve export success.
iii

TABLE OF CONTENTS
CONTENTS Page
Nos.
Declaration i
Acknowledgements ii
Abstract iii
Table of Contents iv
List of tables x
List of figures xii
CHAPTER ONE: INTRODUCTION
1.1 BACKGROUND TO THE RESEARCH 1
1.2 THE RESEARCH PROBLEM 4
1.3 RESEARCH AREA OF THE THESIS 4
1.4 RESEARCH QUESTIONS 8
1.5 RESEARCH HYPOTHESES 10
1.6 RESEARCH OBJECTIVES 11
1.7 SMALL BUSINESS MANUFACTURING EXPORTS: 12
AFRICAN CONTEXT
1.8 METHODOLOGY 23
1.9 SIGNIFICANCE OF THE STUDY 24
1.10 OUTLINE OF THE THESIS 24
1.11 CONCLUDING REMARKS 26
CHAPTER TWO: LITERATURE REVIEW
2.1 INTRODUCTION 27
2.2 HISTORICAL BACKGROUND OF THE 29
2.3
INTERNATIONALISATION PHENOMENON
THEORIES OF INTERNATIONALISATION 31
2.3.1 Dimensions of Internationalisation Theories 31
2.4 THE BASIC ASSUMPTIONS OF 35
INTERNATIONALISATION THEORIES
2.4.1 The Basic Assumptions of the Classical Theories 36
2.4.2 The Basic Assumptions of the Generally Accepted 37
Internationalisation Theories
2.4.3 The Basic Assumptions of the Integrated Theoretical
Framework for the Thesis
40
2.4.3.1 The Basic Assumptions of the Stage 41
Theories of Internationalisation
2.4.3.2 The Basic Assumptions of the Network
Theory
iv
47

2.4.3.2.1 Gender & Networking 57
2.4.3.3 The Basic Assumptions of the 59
Resource-based View of the Firm
2.4.3.4 The Basic Assumptions of the 63
International
Theory
Entrepreneurship
2.5 LIMITATIONS OF THE PROPOSED INTEGRATED
THEORETICAL FRAMEWORK TO BE ADDRESSED BY
THE THESIS
72
2.6 JUSTIFICATION FOR THE INTEGRATED 73
2.7
THEORETICAL FRAMEWORK BEHIND THE THESIS
THE CONTINGENCY THEORY 75
2.8 SELECTED VARIABBLES BASED ON THE PROPOSED
INTEGRATED THEORETICAL FRAMEWORK
77
2.8.1 Ownership Structure and Export Propensity 77
2.8.2 Firm Size and Export Propensity 82
2.8.3 The Age of the Firm and the Propensity to 86
Export
2.8.4 Human Capital and Export Propensity 89
2.8.5 Sector’s Influence and Export Propensity 92
2.9 SUMMARY OF THE MAIN DIFFERENCES AND 97
SIMILARITIES AMONG THE SELECTED
THEORETICAL FRAMEWORKS
2.9.1 The Link between Importing and Exporting
Activity
101
2.10 NON-EXPORTING BEHAVIOUR 103
2.11 GENERAL EXPORT BARRIERS 112
2.12 HOW TO ENCOURAGE NON-EXPORTERS TO EXPORT 117
2.12.1 Export Stimulation 117
2.13 CONCLUDING REMARKS 119
CHAPTER THREE: THE STUDY’S CONTEXT
3.1 INTRODUCTION 121
3.2 BACKGROUND OF GHANA 121
3.3 THE MAIN SECTORS OF GHANA’S ECONOMY 122
3.3.1 Background of Garment & Textile Manufacturing 123
Sub-sector
3.3.2 Specific Export-led Programmes in the Garment & 124
Textile Sub-sector
3.4 GHANA’S DEVELOPMENT FRAMEWORK AFTER 126
INDEPENDENCE
3.5 EXPORT DIVERSIFICATION AND EXPORT 128
MANUFACTURING IN GHANA
3.6 ADDITIONAL MANUFACTURING EXPORT-LED 129
3.7
PROGRAMMES IN GHANA
CONCLUDING REMARKS 136
v

CHAPTER FOUR: RESEARCH DESIGN & METHODOLOGY
4.1 INTRODUCTION 137
4.2 THE STAGES OF THE THESIS 137
4.3 POPULATION AND SAMPLE OF THE THESIS 138
4.4 ANALYTICAL TECHNIQUES 140
4.4.1 The Critical Incident Method 140
4.4.2 Content Analysis 144
4.4.3 Analysing the Interview Transcripts 144
4.5 VALIDITY & RELIABILITY CONSIDERATIONS IN THE THESIS 146
4.5.1 Internal Validity 146
4.5.2 External Validity 147
4.5.3 Objectivity 147
4.5.4 Reliability 148
4.5.5 Validity & Reliability Considerations with the Interviews 148
4.6 ETHICAL CONSIDERATIONS OF THE THESIS 149
4.6.1 Informed Consent 149
4.6.2 Guarantee of Privacy and Confidentiality 150
4.6.3 Language 151
4.6.4 Deception 151
4.6.5 Accuracy 151
4.7 DEFINITION OF A SMALL BUSINESS IN THE THESIS 152
4.8 CONCLUDING REMARKS 155
CHAPTER FIVE: THE DETERMINANTS OF EXPORT PROPENSITY:
EMPIRICAL RESEARCH PART 1
5.1 INTRODUCTION 156
5.2 DATA AND ESTIMATION METHOD 157
5.3 DESCRIPTIVE STATISTICS OF THE DATA SET FOR THIS STUDY 159
5.4 MODEL SPECIFICATION 163
5.5 THE LOGIT ECONOMETRIC MODEL 164
5.5.1 Measurement of Variables 165
5.5.1.1 Dependent Variable 165
5.5.1.2 Independent Variable 165
5.6 ESTIMATION, ANALYSIS AND THE LOGIT REGRESSION 166
RESULTS
5.6.1 Stata Listwise Deletion Method 166
5.6.2 Stata Stepwise Logistic Regression Process 166
5.6.3 The Z-Statistics in Stata Logit Regression Analysis 169
5.6.4 Pseudo R-Squared from Stata Logistic Regression Output 169
5.7 ROBUST AND DIAGNOSTIC CHECKS OF THE LOGIT 175
5.8
REGRESSION RESULTS
DISCUSSION 177
5.8.1 Conclusions 180
5.9 CONCLUDING REMARKS 182
CHAPTER SIX: CRITICAL INCIDENTS WHICH TRIGGER EXPORT
INITIATION: EVIDENCE FROM THE GARMENT & TEXTILE SUB-
SECTOR IN GHANA: EMPIRICAL RESEARCH PART 2
vi

6.1 INTRODUCTION 184
6.2 BRIEF BACKGROUND OF THE GARMENT & TEXTILE SUB-
SECTOR IN GHANA
187
6.3 METHODOLOGY 188
6.3.1 Industry Selection 188
6.3.2 The Sample Frame & Sample Selection 188
6.3.3 Criteria for Selecting the Companies 189
6.3.4 The Data Collection Instrument and Method 190
6.3.5 The Analytical Method 193
6.3.5.1 Criteria for Identification of Critical Incidents
in the Study
193
6.4 RESULTS & DATA ANALYSIS 196
6.4.1 Analysis of the Profile of the Case Studies 196
6.4.2 Critical Incident Results & Analysis 203
6.4.2.1 Summary of Findings – Critical Incidents & Critical 204
Influence
6.4.2.2 Summary of Factors which Influenced the Capacity of 206
the Firms to Supply their Export Orders
6.5 DISCUSSION OF FINDINGS 208
6.5.1 Discussion of Critical Incidents which Trigger Export Initiation 208
6.5.2 Discussion of Factors that enable the Firms to Meet their Export 219
Orders
6.5.2.1 Stage Theory Factors 219
6.5.2.2 Resource-Based View Factors 222
6.5.2.3 International Entrepreneurship Factors 226
6.5.2.4 Network Theory Factors 231
6.6 CONCLUSION 236
6.6.1 Triggers of Export Initiation (Critical Incidents) 236
6.6.2 Factors which enabled the Firms to Meet their Export Orders 238
6.7 CONCLUDING REMARKS 246
CHAPTER SEVEN: UNDERSTANDING NON-EXPORTERS’
PERCEPTIONS OF THE CRITICAL INCIDENTS WHICH TRIGGER
EXPORT INITIATION: EMPIRICAL RESEARCH PART 3
7.1 INTRODUCTION 248
7.2 Methodology 250
7.2.1 The Sample Selection 250
7.2.2 The Pre-interview Screening and the Selection Criteria 250
7.2.3 Data Collection Method and Instrument 251
7.2.4 The Analytical Method 252
7.3 RESULTS, ANALYSIS & DISCUSSION 252
7.3.1 Profile of the Non-Exporting Firms 252
7.3.2 Results on Perceived Barriers & Reasons for Non-Exporting 253
7.3.3 Results on Critical Incidents Experienced by Non-Exporters 254
7.4 RESULTS, ANALYSIS & DISCUSSION 256
7.4.1 Perceived Barriers to Exporting 256
7.4.2 Actual Barriers Preventing Use of Critical Incidents to Initiate 263
Export
7.5 CONCLUSION 269
vii

7.6 CONCLUDING REMARKS 273
CHAPTER EIGHT: SUMMARY OF FINDINGS, CONCLUSIONS AND
IMPLICATIONS
8.1 INTRODUCTION 274
8.2 PRESENTATION OF THE RESEARCH QUESTIONS 276
8.2.1 Research Question 1 276
8.2.2 Research Question 2 278
8.2.2.1 Comparison of the Regression Results & the Outcome of
Interviews
282
8.2.3 Research Question 3 283
8.3 RESEARCH CONTRIBUTIONS 286
8.3.1 Contribution to Knowledge 286
8.4 IMPLICATION OF THE STUDY 288
8.4.1 Contribution to SMEs & or Practitioners 289
8.4.2 Contribution to Public Policy 291
8.4.3 Contribution to Theory & Future Research 292
8.4.4 Limitations of the Study 294
8.5 CONCLUDING REMARKS 295
9 REFERENCES 296
10. APPENDICES 325
Appendix A: Previous Application of Stage Theory on SME 325
Internationalisation
Appendix B: Previous Application of the Network Theory on SME 330
Internationalisation
Appendix C: Previous Application of RBV on SME Internationalisation 334
Appendix D: Sample Studies on the Attributes of International
Entrepreneurship
340
Appendix E: Previous Application of International Entrepreneurship on 342
SMEs’ Internationalisation
Appendix F: Previous Application of Integrated Theoretical Framework on
SMEs’ Internationalisation
346
Appendix G: Triggers of Export Initiations 348
Appendix H: Perceived Export Barriers by Non-Exporters – Leonidou
(1995b)
353
Appendix I: General Export Barriers – Leonidou (2004) 355
Appendix J: Filed Work Introductory Letter 362
Appendix K: Exporters Interview Guide 363
Appendix L: Procedure for the Interviews – Exporters & Non-Exporters 365
Appendix M: Profile of the Case-studies - Exporters 366
Appendix N: Non-Exporters Interview Guide 385
Appendix O: Profile of Non-Exporting Firms 387
Appendix P: Definition of Key Terms 397
viii

LIST OF TABLES
No. Title
CHAPTER ONE
Page
1.1 Ghana at a Glance: The Structure of the Economy 15
1.2 Comparison of Manufacturing Export Performance between Asia 19
and Africa
1.3 Research based on Internationalisation of SMEs in Africa
CHAPTER TWO
22
2.1 Evolution of Research into Internationalisation Activities 30
2.2 The Mechanisms of Network Internationalisation 49
Sample of Studies Based on the Network Theory on SME 54
2.3 Internationalisation
2.4 Selected Impacts of the Network Theory on SME
Internationalisation
56
2.5. Sample of Alternative Terminologies of International
Entrepreneurship
65
2.6 Sample Definitions of the International Entrepreneurship Theory 66
2.7 Summary of Findings Concerning the Effect of a Firm’s Size on
its Export Behaviour
83
2.8 Samples of Empirical Findings on Export Propensity 93
2.9 The Main Differences & Similarities among the Selected Theoretical
Frameworks
98
2.10 Sample of Studies on Discriminating Factors between Exporters 105
and Non-Exporters
2.11 Sample Reasons for Non-Exporting 110
2.12 Top 10 Barriers to Export Business as Perceived by Non-Exporters 111
2.13 Recent Research Findings on Barriers to SME Internationalisation 115
2.14 Factors that Trigger Export Initiation 118
CHAPTER THREE
3.1 Economic Indicators of Ghana’s Pre-liberalisation Period 127
CHAPTER FOUR
4.1 Selected Critical Incident Studies in this Research Field 143
CHAPTER FIVE
5.1 Composition of the Sample - Continuous Variables 160
5.2 Composition of the Sample - Categorical Variables 161
5.3 Model 1: Logit Regression Result to Predict the Propensity to Export 170
No. Title Page
5.4 Correlation Matrix of the Predictors and Export Propensity 172
5.5 Model 2, When Firm Size and Sector are dropped from the Model 173
5.6 Model 3, When Workers’ Education is dropped from the Model 174
5.7 Model 4, When the Education is changed to Dichotomous 176
Variable
5.8 Independent t-test of Continuous Variables and Export Propensity 177
ix

5.9 Chi-square Test of Categorical Variables and Export Propensity 177
CHAPTER SIX
6.1 Proportion of Non-exporting Firms by Sub-sector 186
6.2 Profile of the Case-studies 198
CHAPTER SEVEN
7.1 Relative Strengths of Reasons for Non-Exporting 254
7.2 Relative Strengths of Critical Incidents Experienced by the Non- 256
Exporters
7.3 Barriers Preventing Maximisation of Critical Incidents and
Consequent Initiation of Export
7.4 Sources & the Impact of the Reasons for Non-Exporting 270
x
269

LIST OF FIGURES
No. Title
CHAPTER ONE
Page
1.1 Integrated Theoretical Framework of SME Export Behaviour
CHAPTER TWO
7
2.1 Dimensions of Internationalisation Theories 34
2.2 Assumptions of the Stage Theory 43
2.3 The State and Change Aspects of Internationalisation 44
2.4 The Structure of Network Relations 52
2.5 RBV Framework 62
2.6 The Integrated Theoretical Framework for SME Export Behaviour 95
2.7 Summary of Previous Studies on the Barriers to 114
Internationalisation/Exports
CHAPTER THREE
3.1 Percentage of Manufacturing Exports by Industry 132
3.2 Ghana’s Trends in Merchandise Exports as a Ratio of its GDP: 134
2002-2007
CHAPTER SIX
6.1 Categorisation of the Findings on the Triggers of Export Initiation 205
6.2 Influential Stage Theory Factors in Ranked Order 222
6.3 Influential Resource-based view Variables in Ranked Order 223
6.4 Influential International Entrepreneurship Factors in Ranked Order 226
6.5 Influential Network Theory Factors in Ranked Order 231
6.6 Revised Integrated Theoretical Framework 244
xi

CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE RESEARCH
The internationalisation of small and medium-sized businesses (SMEs) has flourished in
recent times across the world (Etmad, 2004; Andersson et al., 2004; Orser et al., 2008).
About one-fifth of manufacturing SMEs obtain 10% - 40% of their sales revenues from
international sources (OCED, 2000). Various macro and micro benefits offered by
export business (referred to in the literature as the ‘export-led growth hypothesis’) have
been confirmed in many countries. The export-led growth hypothesis assumes that
export business causes growth at national and firm level. Support for this hypothesis has
been found in Canada (Serletis, 1992; Awokuse, 2003), the US, the UK, Japan and
Germany (Marine, 1992), Egypt (Abou-Stait 2005), Malaysia (Keong et al., 2005),
Argentina, Brazil, Mexico (Maneschiöld, 2008) and Jordan (Husein, 2009). Aboagye
(2006) argues that East Asia’s phenomenal economic performance over the last three
decades is accredited to export orientation policies.
The importance of SME internationalisation events has been recognised in sub-Saharan
Africa and Africa in general. In sub-Saharan Africa, Rankin et al. (2006) argue that the
domestic market is weak, and therefore, without export involvement, it will be unlikely
to propel firms into growth. In Africa, in general, Rankin et al. (2006), Kuada (2007)
and Wolf (2007) reported that the overall internal domestic market of the continent is
too small to propel firms’ growth. In addition, Etemad (2004) argues that because of the
influence of globalisation, firms are at increased risk of failure, if they choose to
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concentrate exclusively on their domestic market. Following these observations, it is
argued that internationalisation of firms from Africa represents one of the urgent and
most important policy initiatives to lead the African continent to socio-economic
prosperity (Rankin et al., 2006; Kuada, 2007; Wolf (2007).
Further to the evidence above, in most industrialised countries, researchers have
supported the importance of export manufacturing among SMEs in Africa. For example,
Bigsten et al. (2004) used firm-level data from the manufacturing sector in four African
countries to confirm the export-led growth hypothesis; in this study, the researchers
concluded that firms from Africa learn from export business. Ahmed et al. (2007) use
samples from five countries in sub-Saharan Africa (SSA) and also supported the
importance business and growth hypothesis. Likewise, Nyikam (2004) conducted a
similar study of 21 countries in SSA and found country-specific support for the
hypothesis.
Even though several entry strategies (e.g. franchising, licensing, exporting etc.) exist for
firms considering internationalisation as a strategic option, export business in particular
has been identified as the major internationalisation strategy pursued by SMEs. It is
argued that export business involves lower resource investments, lower risks and lower
total cost compared to other foreign investment modes (Zho & Zou, 2002; Sousa et al.,
2008; Leonidou et al., 2010). Efficient utilisation of scarce resources, innovation,
perceived success, goal achievement and sense of satisfaction are among the other
financial and non-financial benefits which internationalised SMEs gain compared to
similar others which do not pursue internationalisation.
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Additionally, export activity offers SMEs an opportunity to experience the ‘best
practice’ in their overall operations because they learn from successful international
competitors (Zou & Stan, 1998).
On the macro level, export activity among SMEs has shown the capacity to drive
economic development, according to the Organisation for Economic Co-operation and
Development (OECD, 2009). Export business integrates countries into the world
economy and mitigates them from external shocks from other countries. In addition to
this, export business serves as a source of foreign exchange to countries involved and
reduces potential balance of payment problems. Firms’ exports, therefore, create
employment in the domestic economy, which in turn increases consumption and private
spending. Furthermore, openness to trade improves international negotiations
concerning trade and tariff issues, and countries can use this platform for their own
benefit and build their respective welfare positions concerning trade barriers
(Maneschiöld, 2008).
Moreover, in addition to the specific macro and micro benefits, advancement in
international transportation and communication, reductions in trade barriers, the
shortening of product and technology life cycles, and large multinational enterprises
competing against SMEs in their own domestic market are also among the factors
facilitating the internationalisation of SMEs (Coviello & Munro, 1995, Rasmussen et
al., 2001; Etemad, 2004).
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1.2 THE RESEARCH PROBLEM
The main research problem this thesis seeks to address is: why is the export
involvement of manufacturing SMEs from the garment and textile sub-sector in Ghana
low and why do the majority of them focused on the domestic market? Extant empirical
findings in the field which relate to the problem above are based in a developed
countries context (e.g. North America & Europe). As a result, the understanding of
exporting and non-exporting behaviour of SMEs in Africa (i.e. Ghana) represents a gap
in the field. Therefore, this thesis seeks to identify key factors that determine exporting
behaviour of SMEs in Ghana. It is hoped that the outcome of this study will be to link
public policy (e.g. Ghana government’s manufacturing export-led programmes in
Ghana) more directly to firms that possess manufacturing export potential, in order to
encourage a more export involvement and export performance of Ghanaian
manufacturing SMEs. The intended outcome will also be to shed further light on the
extant assumptions and the behaviour of private business practitioners in Ghana through
application of a proposed integrated theoretical framework to the thesis.
1.3 RESEARCH AREA OF THE THESIS
The various issues raised above draw on the SMEs internationalisation research field. A
review of the extant theoretical assumptions in the field (e.g. the resource-based view
and the process theory), coupled with their corresponding empirical findings shed much
light on the SMEs export behaviour. For instance, among studies in the field, it is
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argued that the determinants of export decisions for the SMEs appear to consist of
external and internal factors, but it is the influence of the internal resource capacity
which significantly facilitates the export behaviour of the SME rather than the external
factors (McDougall et al., 1997; Rueber & Fischer, 1997; Ibeh, 2003; 2004; Westhead
et al., 2004; Ibeh, 2005; Ibeh & Wheeler, 2005; Sousa et al., 2008; Williams, 2008;
Lages et al., 2009). The core argument of these studies is that, although macro level
export promotion policies are necessary, they do not constitute the ultimate condition
for the SME to change its strategy from one of a wholly domestic firm to an
international firm.
Furthermore, neither do the macro level programmes constitute a sufficient condition
for existing exporters to improve their export performance. As a result, these authors
contend that for SMEs to respond positively to macro export promotions and change
from being wholly domestic firms to becoming exporters, the actual stimulus resides
within the firms’ internal resource capacity, including the personal aspirations and
subjective factors of its owner-manager. Although previous arguments appear to offer a
straightforward answer with regard to why export activity among Ghana’s SMEs is so
limited, the theoretical frameworks in the field were developed based on the export
behaviour of developed countries’ firms and so most of the empirical studies were also
mainly based on SMEs from the developed countries (e.g. North America & Europe).
Therefore, because the socio economic contexts of the developed countries differ from
those of developing countries (e.g. Ghana), the understanding of the export behaviour of
the SME from developing country contexts (e.g. Ghana) is limited in the literature. As a
result, the assumptions of extant theories applied in the field (e.g. the resource-based
Page 5

view and the stage theory), with their associated empirical findings, cannot
automatically be externally generalised to Ghana.
The present study therefore, extends the exporting behaviour of research into SMEs
using evidence from Ghana to shed light on the phenomenon. Building on the literature
review (Chapter 2), unlike previous studies (e.g., Bell, 1995; Coviello & Munro, 1995;
Reuber & Fischer, 1997; Westhead et al., 2001; Moen & Servais, 2002; Hall & Tu,
2003; 2004; Ibeh, 2005; Williams, 2008) that apply a single theoretical framework to
address the topic, a proposed integrated theoretical framework is applied in this thesis to
shed light on the export behaviour of the SMEs. The proposed integrated theoretical
framework applied in the thesis consists of combining the resource-based view, the
stage theory, the network theory and the international entrepreneurship theory.
The argument behind the proposed integrated theoretical framework that guides the
thesis follows that of Coviello & Martin (1999), Crick & Spence (2005), Coviello &
Cox (2006), inter alia, who contend that SME export behaviour is a complex
phenomenon that cannot be fully understood by applying a single theoretical
framework. Moreover, unlike other previous studies (e.g. McDougall et al., 1994;
Reuber & Fischer, 1997; Westhead et al., 2001; Moen & Servais, 2002; Manolova,
2002), this thesis also takes into consideration the influence of the external
environment in analysing the export behaviour of the SMEs. As a result, contingency
theory is also applied; this theory is used to supplement the four theoretical frameworks
so as to shed greater light on the phenomenon. The proposed integrated theoretical
framework, developed from the literature review (Chapter 2) to guide the exploration of
the research questions behind the thesis, is presented in Figure 1.1.
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Figure 1.1: Integrated Theoretical Framework of SME Export Behaviour
Environment
External Influences (the contingency theory)
-------------------------------------------------------------------------------------------------------------------
Stage Theory
Network Theory
Resource-based
View
International
Entrepreneurship
Internal Influences
Internal influence
--------------------------------------------------------------------------------------------------------------------
Environment
Stimuli
Export
Decision
Barriers
Export
Performance
Nonexporting
External Influence (contingency theory)
Source: Conceptualised, designed and integrated from the literature review (Chapter 2)
Page 7

The main argument behind the predictive integrated framework in Figure 1.1 is that of
the eleven generally accepted internationalisation theories reviewed in Chapter Two, the
resource-based view (RBV), stage theory, network theory and international
entrepreneurship offer the best and most detailed explanation of export activities of
SMEs than others (e.g. product life cycle theory, internalisation and transaction cost
theory) (Ruzzier et al., 2006; Johanson & Vahlne, 2009; Johanson & Vahlne, 2010).
Therefore, in order to understand export activities of SMEs in detail in an entirely new
context, the purpose is to integrate all the four frameworks in addition to the contingent
theory, so that no significant variable is left out from the analysis. In addition, the
review of the literature showed that as none of the theoretical frameworks shown in
Figure 1.1 is without weaknesses, an approach based on integrating them complements
each others strengths and eradicates their weaknesses. Moreover, following Bell (1995)
SMEs’ exporting activities represent a complex, dynamic and interactive phenomenon
which no single theoretical framework can explain it in fully and so the integration
approach adopted in this thesis provide a robust method for addressing SMEs’ exporting
activities that will be appropriate for the context of developing countries (e.g. Ghana).
Figure 2.6 in Chapter 2 describes the main explanatory variables for each of the
integrated theoretical frameworks in detail.
1.4 RESEARCH QUESTIONS
The research questions behind this thesis draw on the statement of the problem in
Section 1.2 above. In accordance with the statement of the research problem, the basic
research questions the study seeks to address include the following considerations:
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1) Following the theoretical assumptions of the integrated theoretical framework
for the thesis, as examined in the literature review (Chapter 2), what is the
likelihood that the firm’s size, age, workers’ education, foreign ownership and
sector and/or industry will predict the likelihood of a small and medium-sized
enterprises from Ghana changing its strategy from engaging wholly in domestic
business to becoming an international business firm?
2) Following the assumptions of the proposed integrated theoretical framework
which guides the thesis, which ‘critical incidents’ (Chapter 4, sub Section 4.4.1
& Chapter 6, sub-section 6.2.5.1) trigger the export initiation of SMEs from
Ghana, and what are the main factors which facilitate their capacity to supply
their export orders ?
3) To what extent do non-exporting SMEs from Ghana experience the same
‘critical incidents’ that catapult their counterpart exporting firms to initiate
export business? What main barriers prevent these firms from taking advantage
of critical incidents and initiating exporting business, and what are the general
reasons for not exporting?
Page 9

1.5 RESEARCH HYPOTHESES
Following the first research question above, the hypotheses that this study seeks to
examine will include the following:
H1: Domestic SMEs that have foreign ownership will be more likely to respond
positively to export stimuli and change their strategy from engaging wholly in domestic
business and enter the export market than their counterparts that are wholly
domestically owned.
H2: The larger the size of the firm, the more the likelihood that it will respond positively
to export stimuli and change its strategy from engaging wholly in domestic business to
enter the export market.
H3: The older the firm, the more the likelihood that it would react positively to export
stimuli and change its strategy from engaging wholly in domestic business and enter the
export market and become an international business firm.
H4: The aggregate full-time workers’ education level in a firm will be positively related
to the export propensity of the firm.
H5: There will be a positive association between the sector and/or industry’s influence
and the export propensity of a firm.
Page 10

1.6 RESEARCH OBJECTIVES
Drawing on the research questions and hypotheses above, the thesis seeks to achieve the
following objectives.
1) To undertake an extensive literature review on the extant theories that seek to
address the small firm’s export and non-exporting behaviour, and to develop
and/or propose an integrative predictive framework to address the research
questions;
2) To identify whether or not firm size, age, aggregate full-time workers’
education, foreign ownership and the sector/industry will be positively
correlated with the likelihood that the small firm from Ghana will export;
3) To identify the ‘critical incidents’ which trigger export initiation of SMEs from
Ghana and the key factors which facilitate their capacity to meet export orders;
4) To ascertain whether or not the non-exporting SMEs from the garment & textile
sub-sector experience similar critical incidents to those that catapult their
counterpart exporting firms to initiate export business. If they do, the aim is to
explore their reactions, the main barriers which prevent them from activating
similar events and becoming exporters as well as the general reasons for not
exporting;
5) To identify the implications of the study that can be recommended for future
research, for theory, practising owner-managers and public policy makers.
Page 11

1.7 SMALL BUSINESS MANUFACTURING EXPORTS: THE AFRICAN
CONTEXT
Hausmann et al. (2007) argue that what a nation exports matters most. However, for
various reasons, in terms of export composition in general, manufacturing exporting is
considered to be of the most importance. Teal (2008) argues that the great economic
success being achieved by most of the industrial nations over the last thirty years
correlates directly with their abilities to achieve a sustained growth in manufacturing
output and export manufacturing. Export manufacturing constitutes a key driver of
productivity of firms, which accelerates significant developments in standards of living.
Babatunde (2002) argues that trade structure of sub-Saharan Africa’s (SSA) economies
shows great dependence on export of unprocessed primary commodities, which slows
their economic growth trajectory.
Evidence from both advanced and emerging economies has converged to show that on
average exporting firms tend to be more productive relative to their counterparts which
remain focused on the domestic market (King et al., 2010). Naude & Gries (2004)
contend that the main reason for Africa’s lack of industrialisation and its gloomy
economic growth performance is because of its lack of adequate manufacturing exports.
Soderbom & Teal (2003) argue that the most prominent feature of the Asian tiger
economies was the growth in their export of manufacturing products.
Elhiraika (2008) sampled 36 African countries and found that an increased share of
manufacturing in total output has the potential to raise GDP growth and reduce growth
vitality. Soderbom & Teal (2003) further argue that the principal cause of the collapse
of the African economies in the period since independence is due to the collapse of
Page 12

exports, especially manufacturing exports. The reason for this is that most countries in
SSA started on import substitution ‘industrialisation’ immediately following
independence, but when inefficiencies associated with this policy arose, the
industrialisation agenda collapsed. Rankin et al. (2006) found that poor performance of
SSA economies was because of the low level of manufacturing exports.
King et al. (2010) contend that although SSA possesses about 12 per cent of the world
population, its contribution of world manufacturing exports is less than 1 per cent. King
et al. further argued that only five economies in SSA (Mauritius, South Africa,
Botswana, Swaziland and Namibia) exported more than US$100 of manufactured goods
per capita between 1994 and 2008. According to these authors, for most other
economies in SSA, the figure was below US$10 per capita. Therefore, despite the
significance of manufacturing exports worldwide (OCED, 2009), Africa’s contribution
– especially sub-Saharan Africa – is abysmally low compared to the rest of the world
(Cline, 2004; Broadman, 2006; Rankin et al., 2006; Wolf, 2007).
Erwin et al. (1990) contend that one of the major factors which significantly distinguish
the leading industrial countries from other developing countries is the variation in their
export performance. It is not uncommon, therefore, to find a statement bemoaning
Africa’s poor manufacturing export contribution. For example, the recent commission
on Africa’s study indicated that:
The last three decades have witnessed stagnation in Africa. The composition of
Africa’s exports has virtually remained unchanged and this has contributed to
the collapse in Africa’s share of world trade…. Africa will not be able to achieve
the Millennium Development Goals, nor set itself on a sustainable path to
growth and poverty reduction, without increased trade.
(Commission for Africa, 2005: 256).
Page 13

The quote above also confirms the “statistics” Broadman (2006: 8) presented to the
International Monetary Fund (IMF)’s direction on trade with regard to the declining
state of Africa’s exports contribution, compared to that of other world economies. Wolf
(2007) notes that Ghana’s exports composition is still dominated by a few unprocessed
primary commodities (e.g. cocoa and certain mineral products). The reason for this has
been attributed to the fact that Ghana’s manufacturing sectors are generally small and
underdeveloped (Asante, 2008). The manufacturing sub-sectors in Ghana include food-
processing, textiles and garments, furniture, sawmill and wood products. Of these-, this
study will focus on SMEs from the garment and textile sub-sector of Ghana’s
manufacturing sector. The reasons for this will be explained in detail in Chapter 3 (the
country context chapter). However, Asante (2008) maintained that since 1988 there has
been significant deterioration in the manufacturing performance of Ghana’s exporters.
Table 1.1 below from the database of the World Bank confirms the abysmal
contribution of Ghana’s manufacturing sector with reference to its annual growth rate.
Page 14

Table 1.1: Ghana at a Glance: The Structure of the Economy
% of GDP 1988 1998 2007 2008
Agriculture 49.6 36 33.9 33.5
Industry 16.6 25.3 25.3 25.3
Manufacturing 9.6 9 7.1 6.3
Services 33.8 38.7 40.8 41.2
Household consumption expenditure 84.9 79.4 74.6 76.7
Gov't. final expenditure 9.7 10.3 18.6 20.4
Import of goods and services 24.1 46.7 67 75.5
(% Average annual growth)
Agriculture 2.7 3.4 2.4 5.1
Industry 2.2 7 5.1 8.1
Manufacturing -5.3 - - -
Services 6.6 6.2 8.3 8.6
Household consumption expenditure 4.3 3.3 0.1 9.9
Gov't. final consumption
expenditure 4.9 -3.6 10.1 7.9
Import of goods and services 10 5.5 16.6 13.3
Source: Development Economics (LDB) Database (2009)
Page 15

The manufacturing portion of Table 1.1 is underlined because the purpose of the table is
to throw light on only the manufacturing performance, aside from all the other themes
(e.g. agriculture, industry services). Overall, the table shows that the contribution of the
manufacturing sector to the Gross Domestic Product (GDP) declined in the years from
1988 to 2008, whilst its average annual growth recorded negative figures up to 2008;
although some data for the period are missing.
However, Ghana is among the countries of sub-Saharan Africa which have embraced
export-led growth policies, especially regarding the manufacture of export commodities
(Adjasi, 2006). The government of Ghana has been paying significant attention to its
export manufacturing sector for two main reasons. First, it was identified that Ghana’s
initial unprocessed primary export commodities make a poor contribution to the
national economy with regard to: (1) foreign exchange earnings, (2) employment
generation, and (3) firm level learning (Kastner, 2005).
Second, Ghana has been motivated to make its export manufacturing sector the main
focus of its socio-economic development paradigm. This is because it is influenced by
the argument that the economic success achieved by most of the industrialised countries
and the tiger countries (e.g. the USA and Japan) in the previous thirty years was mainly
driven by the contribution of their manufacturing for export (Teal, 2008). As a result,
about three decades ago, the government of Ghana implemented various export-led
programmes which aimed to facilitate export involvement of its firms. Among the
export-led programmes, those that focused on export manufacturing have been awarded
top priority in terms of the general export-led programmes of Ghana’s government.
Page 16

Among the government of Ghana’s export-led programmes, those that specifically
aimed to enhance the capacity of its export manufacturing include the Economic
Recovery Programme and the Structure Adjustment Programme (SAP) of 1983. Both
the ERP and the SAP were recommended and jointly implemented by the World Bank
(WB) and the International Monetary Fund (IMF). However, the desire of Ghana to
promote export business was first recognised in 1969, when the Ghana Export
Promotion Council was formed under the legislation of NLC 1
mandate to develop and facilitate exports.
Decree 936 with the
Ghana’s interest in export/outward orientation actually deepened within the framework
2
of the Economic Recovery Programme (ERP) in the 1980s. As a result, it can be
argued that the ERP set the pace for Ghana’s international orientation. After the ERP,
subsequent export-led programmes have been implemented, which are captured in other
economic documents of the government of Ghana namely Ghana Vision 2020 3 and the
Ghana Poverty Reduction Strategy I & II (GPRS I & II) 4
. These two policy documents
(the GPRS I & II) were also preceded by Ghana Vision 2020. The ultimate thrust of
these documents is to improve the macroeconomic environment of Ghana for
accelerated economic growth linked to export promotion.
1
NLC represents National Liberation Council, which was the then ruling government in
Ghana;
2 Economic Recovery Programme (ERP) was recommended and supported by the IMF
and The World Bank and ushered Ghana into a significant outward orientation regime.
The ERP consisted of a comprehensive set of policies to reform the monetary, fiscal and
trade sectors in Ghana;
3 Vision 2020 is a long-term economic framework by the government of Ghana, which
is intended to usher the country into a middle income status by the year 2020;
4 GPRS I & II is another socio economic framework introduced by the government of
Ghana for its poverty reduction agenda, which developed out of the Vision 2020.
Page 17

Other export-led programmes which have subsequently been implemented include: (1)
the implementation of US$41million credit in 1994 as Private Enterprise and Export
Development (PEED) programme; and (2) the creation of the Ghana Free Zones Board
(GFZB) & the Export Processing Zones (EPZs) in 1995. The GFZB Programme was
designed to encourage processing and manufacturing of goods through the
establishment of Export Processing Zones. Through the GFZB, the whole of Ghana now
is accessible to potential investors (locally and abroad), who have the opportunity to use
the free zones as focal points to produce goods for foreign markets. A further initiative
introduced was (3) the restructuring of the Ghana Export Promotion Council (GEPC).
The GEPC was set up to promote exports from Ghana, but due to the import
substitution policy of the government at that time, it was under-resourced from the
1980s until the 2000s, when it finally became fully resourced.
The many other programmes include: (4) the West Africa Trade Hub (WTH); the WTH
is an initiative of the US government through the United States Agency for International
Development (USAID), established to facilitate export business from West Africa
including Ghana; (5) the implementation of the African Cashew Alliance (ACA); the
African Cashew Alliance (ACA) is an industry organisation established in 2006
comprising 24 public and private sector organisations and operating in all the major
Cashew Producing countries (i.e. cashew processing) in Africa (e.g. Ghana, Tanzania,
Mozambique); ACA seeks to promote the competitiveness of Africa’s cashew through
value added processing for export; (6) the implementation of the Business Development
Services Fund (BDSF); the BDSF is the World Bank (IDA) initiative in Ghana that
supports micro, small and medium-sized enterprises, paying for the cost of consultancy
and/or experts’ services, including technical assistance that enhances their growth in
Page 18

export manufacturing (see Chapter 3, Section 3.6 & Chapter 6, Section 6.2. for details
of additional manufacturing export-led programmes being implemented in Ghana).
Regardless of the implementations of these manufacturing export-led programmes, it is
argued that Ghana’s current export involvement and performance has not met
government targets (Kastner, 2005 5
). In addition, it is further argued that
internationally, Ghana is considered as one of the poorest export manufacturing
countries in sub-Saharan Africa (Zeufack, 2001; Soderbom and Teal, 2003; Rankin et
al., 2006; Robson and Freel, 2008). Table 1.2 below shows evidence of the decline in
involvement in manufacturing for export and of the poor performance of Ghana’s
economy.
Table 1.2: Comparison of Textile Manufacturing Export Performance between
Asia and Africa
Description Ghana India Kenya
No. of
Observations
% of firms that
export
% of output
export
% of firms that
export all their
products
Source: Zeufack (2001: 268)
144 2,733 687
6 37 23
2.54 26.14 10.99
1 21 7
5. Based on a study between the government of Ghana and USAID in 1997, North
Carolina, it was predicted that Ghana’s exports must grow to about US$16.3 billion by
the year 2020, if the middle income objective targeted by the government is to be
achieved. Of such amounts, it was further estimated that about US$11.9 billion is
expected to come from NTE (Non-Traditional Export), which represents 73% of the
total export earnings.
Page 19

Although Table 1.2’s samples concerns both large and SMEs from the three nations (i.e.
India, Ghana & Kenya), however, with regard to Ghana’s sample, it can be argued that
SMEs dominate. The reason for this is because Quartey (2006) maintained that the
garment & textile sub-sector in Ghana is mainly made up of SMEs, with few large firms
(e.g. the Ghana Textile Manufacturing Company (GTMC), the Akosombo Textile
Limited (ATL), the Ghana Textile Products (GTP) and the Printex Ghana Ltd.). Overall,
Table 1.2 shows that among the three countries, India is the leading exporting nation,
with 37% of its firms exporting an average of 26% of their output. Within the sub-
Saharan Africa, about 23% of Kenya’s firms export 11% of their output, whereas in
Ghana, only 6% of firms export their output and of those that do, less than 3% of their
output is sold abroad. This confirms the argument that Ghana remains one of the poorest
manufacturing export nations, since even among the firms that export, only 1% of them
are likely to export all of their output abroad compared to 21% and 7% in India and
Kenya, respectively. Additionally, Chapter 3 and Figures 3.1 & 3.2 present further
statistics about the declining involvement in export manufacturing and performance of
Ghana.
As shown in Tables 1.1 and 1.2, coupled with other evidence in Figures 3.1 & 3.2
(Chapter 3 - Country Context chapter), it can be contended that the argument that
‘Ghana’s manufacturing export involvement and performance is low’ can be supported.
In addition, from the World Bank data set used in this study, only 17 firms out 110
manufacturing small and medium-sized firms export (see Chapter 5, sub-Section 5.3).
Besides the low manufacturing export involvement and performance by Ghana’s firms,
it has also been identified that there has in general been a lack of research on the
Page 20

internationalisation of SMEs in Africa in comparison with the rest of the world (Zou
and Stan, 1998; Sousa et al., 2008). Following from this, Mitgwe (2004) contended that
most of the export-led efforts by governments in Africa lack the required firm level
research that should inform the various macro policies and the programmes developed.
Table 1.3 below sheds some light on the dearth of research on the internationalisation of
firms in Africa relative to the world at large.
Page 21

Table 1.3: Research based on Internationalisation of SMEs in Africa
Author (s) and
dates
1.Aaby &
Slater (1989:
55)
2.Chetty &
Hamilton
(1993: 26),
3. Cavusgil &
Zou (1994: 6),
4. Manolova &
Manev (2004:
7)
5.Zou & Stan
(1998: 337)
6.Sousa et al.,
(2008: 22),
Period of
Review
No. of
Papers
Reviewed
No. of papers per
Country
1978 – 1988 55 USA - 30; Canada,
Brazil, Norway, Peru.
Turkey, West
Germany and UK –
25 papers
1978 – 1991 111 All firms were from
1994 Did not
state
North America,
Europe and South
America
No. of studies
on Africa
None
None
USA None
1996 – 2001 25 About ¾ from
1987 – 1997
Greece and Norway,
and ¼ from USA
50 USA 24 studies,
Europe, Asia and
Latin America, 26
papers
1998 – 2005 52 12 papers from USA,
Source: Compiled from studies in Table 1.3
40 papers outside the
USA
None
None
None
Although the summary in Table 1.3 is not exhaustive, coupled other studies in the
literature review (Chapter 2) as well as studies presented in Appendices A – I, it can be
Page 22

argued that there is evidence to suggest that there is a lack of studies on the
internationalisation behaviour of firms from Africa compared to the rest of the world.
For instance, in Sousa et al.’s (2008) review, the authors indicate that they were happy
to find an improvement in the number of studies conducted outside the USA because
the USA remained the most researched country with regard to the topic. The authors
maintain that of the 52 studies they reviewed and synthesised, none included data on
African SMEs. They suggest that with the integration of the world economy, (including
African nations), the understanding of the research community in the field would not be
complete unless effort was put into building firm level research on Africa (Sousa et al.,
2008). Sousa et al.’s (2008) review confirms the findings of Rankin (2001), Bigsten et
al. (2001) and Granér & Isaksson (2007), who find that research on firms in Africa in
general is scarce, especially on firms from sub-Saharan Africa.
1.8 METHODOLOGY
The methodology used in this study reflects the research questions behind the thesis
(Section 1.5). The first research question is addressed and the secondary data set is
analysed using Logistic regression. Here, the aim is to ascertain the main determinants
of exporting and non-exporting small business behaviour. Research questions 2 and 3
(objective 3 & 4) use the case study research approach. With regard to these particular
questions the ‘critical incidents’ method coupled with the content analytical technique
are the main analytical tools used in the data collection and the analyses.
Page 23

1.9 SIGNIFICANCE OF THE STUDY
The purpose of the research is to address the current low involvement in manufacturing
export of SMEs in Ghana. The research seeks to ascertain exporting and non-exporting
SMEs behaviour in Ghana. By applying the proposed integrated theoretical framework,
the study intends to make a contribution to the field, using new insights on the exporting
and non-exporting behaviour of the small businesses in Ghana. Currently, the lack of
studies concerning the export behaviour of SMEs in Africa (e.g. Ghana) inhibits
understanding in this area. In addition, identifying the main firm-level capacity factors,
which significantly predict small business export decisions and export performance, will
lead to an efficient utilisation of resources. Moreover, public policy makers can draw on
the outcomes of the study to aid their decisions on which firms need export assistance in
order to make a contribution to the overall growth and prosperity of Ghana.
1.10 OUTLINE OF THE THESIS
The thesis comprises eight chapters. This first chapter introduces the background of the
study; it addresses the statement of the research problem, the research area of the thesis,
background of manufacturing exports from Africa (including Ghana, especially
regarding the main issues that inform the statement of the problem). Following the
problem statement, the chapter defines the research questions, the hypotheses, the
research objectives and the study’s significance. Chapter Two reviews the export and
Page 24

non-exporting behaviour of SMEs in general. In this chapter, on the basis of
amalgamation of various theoretical frameworks in the field, an integrated framework
(comprising five theoretical frameworks) is proposed to guide the thesis. The third
chapter introduces the study’s context, focusing on the manufacturing sector of Ghana,
including its various sub-sectors and the current trends of Ghana’s involvement and
performance in export manufacturing (e.g. Figures 3.1 & 3.2). In Chapter 3, the reason
for focusing the thesis on the garment and textile is explained.
Chapter 3 further substantiates the argument that Ghana’s involvement in export
manufacturing is low, even though the phenomenon has been identified as key to
Ghana’s socio-economic development. Chapter Four, the methodology chapter, presents
an overview of the various research approaches and methodologies applied in the
empirical chapters (i.e. Chapters 5, 6, & 7). It starts by outlining the main stages and
steps that were followed to achieve the research objectives behind the thesis. The
chapter also deals with the analytical techniques that were applied in the empirical
chapters. In this chapter, the concepts’ validity and reliability and how they were
observed in the thesis are also discussed. The chapter ends with a clarification of how
SMEs are operationalised in the thesis.
Chapters Five, Six and Seven focus on the empirical data analysis and discuss the key
research questions behind the thesis. Chapter Eight, the final chapter, summarises the
entire thesis, including the main findings, conclusions and implications for public
policy, practice and future research, as well as the limitations of the thesis.
Page 25

1.11 CONCLUDING REMARKS
The chapter presents a clear direction with regard to the focus of the study. It gives the
background concerning the general importance of the phenomenon worldwide and
specifically in relation to Ghana. As a result of Ghana’s current low level of
manufacturing export involvement and performance, coupled with the fact that the
phenomenon is extensively researched mainly in the developed economies, a research
problem is posed. Following the definition of the research problem, specific hypotheses
and research questions are deduced which are examined in detail in the empirical
chapters of the thesis (i.e. Chapters 5, 6, & 7). In addition, the organisation of the thesis
is also presented. In the absence of relevant literature, the study attempts to use new
evidence (based on the Ghanaian context) to address the phenomenon under
investigation. As a result, the outcome of the study will be a significant contribution to
the field deriving from the theoretical assumptions of the proposed integrated
framework. This will also answer the call in the literature to replicate studies from
developed countries to developing countries, especially African nations, in order to fully
understand the export behaviour of the small firm.
Page 26

2.1 INTRODUCTION
CHAPTER TWO
LITERATURE REVIEW
The chapter seeks to achieve research objective one of the thesis. The thesis concerns
the exporting and non-exporting behaviour (i.e. the export propensity and the export
performance) of the SME sector and the literature review consists of two main parts to
address this. The first part starts by introducing the historical background of the
internationalisation phenomenon. An overview of the extant internationalisation
theories follows (i.e. the classical theories and the generally accepted
internationalisation theories). Following the examination of the generally accepted
internationalisation theories, a proposed integrated theoretical framework, comprising
the resource-based view, stage theory, network theory and international
entrepreneurship theory, developed to address the research questions behind the thesis.
In addition, contingency theory examines the influence of the external environment on
the behaviour of the firm, and is also applied to supplement the integrated theoretical
framework in order to shed fuller light on the topic.
The analytical review of previous studies is discussed in the main body of the chapter,
whilst others are presented in the appendices portion of the thesis. These previous
studies consist of the factors which facilitate SMEs export behaviour. Major limitations
of some of the selected theoretical frameworks, which the thesis seeks to resolve in the
empirical chapters, are discussed. In addition, firm size, age, the aggregate education
Page 27

level of the full-time workers, foreign ownership and sector and/or industry’s influence,
which emerged as influential through application of the proposed integrated theoretical
framework, are reviewed extensively as the focus of the empirical analysis beginning in
Chapter 5. The first part of the literature review continues with a representation of the
proposed integrated framework, including explanations regarding its assumptions.
Finally, part one of the literature review ends with a table showing differences and
similarities among the proposed integrated theoretical frameworks.
The second part of the literature review focuses on the non-exporting SMEs’ behaviour;
it starts by discussing the types of firms that are non-exporting SMEs and whether or
not any theory has sought to address the behaviour of this category of firms. Part two of
the literature review continues with an analysis of the types of studies that address the
non-exporting behaviour of the SMEs. Three themes are identified in the literature with
regard to the studies that focus on non-exporting SME behaviour. These studies
comprise: (1) those that seek to differentiate between exporting and non-exporting
SMEs, based on certain firm characteristics such as the size, the age, the sector, the
owner-manager’s age, the firm’s ownership structure; (2) studies that seek to examine
the perception of the non-exporting SMEs about the factors triggering export initiation;
and (3) studies that attempt to examine the perceptions of non-exporting small firms and
barriers to export business. The second part of the literature review ends with a
discussion of strategies to encourage non-exporting SMEs to participate in export
business (i.e. export stimulation).
Page 28

2.2 HISTORICAL BACKGROUND OF THE INTERNATIONALISATION
PHENOMENON
The initial scholarly writing about the internationalisation phenomenon is credited to
Adam Smith (1776) (e.g. Simões & Crespo, 2002; Mtigwe, 2006). Adam Smith used
the nation as the unit of analysis in the study of internationalisation and advocated the
theory of absolute advantage to examine the wealth of nations. According to researchers
(e.g. Simões & Crespo, 2002; Mtigwe, 2006; Ruzzier et al., 2006), the
internationalisation of the firm was resurrected in the 1950s after the Second World
War, with the large multinational firm as the main unit of analysis. These authors
contend that the research on the internationalisation of SMEs started in the 1970s. Since
the 1970s, research on the internationalisation of the small and medium-sized
enterprises has been flourishing. Currently its most recent theoretical trend centres on
the internationalisation of the small new venture firm/international entrepreneurship
(McDougall et al., 1994; Zahra, 2005; Schulz et al., 2009). Overall, Table 2.1
summarises the evolution of internationalisation processes to date.
Page 29

Table 2.1: Evolution of Research into Internationalisation Activities
Stages Major Developments
1.
2.
3.
4.
5.
Formal writings on the internationalisation phenomenon started with Adam
Smith in the seventeenth century (Simões & Crespo, 2002; Mitgwe, 2006).
The nation as the unit of analysis dominated internationalisation research until
the 1950s (Simões & Crespo, 2002; Mtigwe, 2006).
Research into internationalisation of the firm was revived in the early 1950s
(Simões & Crespo, 2002; Mtigwe, 2006; Ruzzier et al., 2006).
The large multinational enterprise was initially used as the main unit of
analysis in internationalisation research (i.e. from the 1950s), excluding SMEs
(Simões & Crespo, 2002; Mtigwe, 2006; Ruzzier et al., 2006).
Internationalisation research was broadened to cover SMEs in the 1970s
(Ruzzier et al., 2006).
6. The internationalisation of the small new venture firm/ international
entrepreneurship (McDougall et al., 1994; Zahra, 2005; Schulz et al., 2009)
represents the current theoretical development in the SME internationalisation
phenomenon.
Source: Synthesised from studies in Table 2.1
Page 30

2.3 THEORIES OF INTERNATIONALISATION
Although this thesis does not seek to evaluate the extant theories of the
internationalisation research field as its main purpose, it does provide a general
overview of the major theories in the field.
2.3.1 Dimensions of Internationalisation Theories
Different researchers classify theories in this field differently. Mtigwe (2006) classified
internationalisation theories in the field into four dimensions. Mtigwe’s dimensions
comprise: (1) the classical internationalisation theories (i.e. the theory of absolute
advantage; the theory of comparative advantage; and the Heckscher-Ohlin factor
proportion theory); (2) the early market imperfection theories (i.e. the foreign direct
investment theory and international product life cycle theory); (3) the later market
imperfection theories (i.e. the portfolio theory; the internalisation theory; the eclectic
theory; and the resources advantage theory); and (4) the internationalisation theories
(i.e. the incremental theories; the network theory; and the international entrepreneurship
theory). In addition, Ruzzier et al. (2006) classified international business theories into
two dimensions, namely: (1) theories focusing on the large multinational enterprises
(i.e. the internalisation theory; the transaction cost theory; the eclectic paradigm; and the
monopolistic advantages theory) and (2) theories focusing on SMEs internationalisation
(i.e. stage theories; network theory; resource-based view; and international
entrepreneurship theory).
Page 31

Furthermore, Andersson (2000) and Hermannsdottir (2008) categorised
internationalisation theories into two dimensions, which comprise: (1) the economic
theories (i.e. the eclectic paradigm; the international product life cycle; and the
transaction cost approach) and (2) the behavioural theories (i.e. Aharoni’s decision
theory; the stage theory; the network theory; and the international entrepreneurship
theory). Moreover, Axinn and Matthyssens (2002) described the following theories: (1)
the industrial organisation theory, (2) the internalisation theory, (3) the transaction cost
theory, and (4) the eclectic theory as the traditional theories and those that focus on the
large multinational enterprise.
Lack of uniformity and consistency exist among the above dimensions; for instance,
what Mtigwe (2006) referred to as the traditional theories (i.e. the theory of absolute
advantage, the theory of comparative advantage, and the Ohlin factor proportion theory)
contradict what Axinn and Matthyssens (2002) classified as the traditional theories (i.e.
the industrial organisation theory, the internalisation theory, the transaction cost theory,
and the eclectic theory). Critically, what Axinn and Matthyssens described cannot be
classified as traditional and/or classical theories when considered in terms of Mtigwe’s
(2006) traditional and/or classical theories in the field. Furthermore, there is some
confusion about Mtigwe’s (2006) dimensions. Mtigwe referred to the following theories
(e.g. incremental and/or stage theory; network theory; and international
entrepreneurship theory) as ‘internationalisation’ theories. Such a dimension seems a bit
unclear because every theory in the field, from the absolute cost advantage theory to the
most recent theory (i.e. the international entrepreneurship theory), can be referred to as
an internationalisation theory.
Page 32

Moreover, whilst Ruzzier et al.’s (2006) dimensions, especially for theories that focus
on large multinational enterprises ( i.e. the internalisation theory; the transaction cost
theory; the eclectic paradigm; and the monopolistic advantages theory) resemble those
of other researchers (e.g. McDougall et al., 1994; Westhead et al., 2001; Axinn &
Matthyssens, 2002), their second dimension with regard to the theories focusing on
SME internationalisation (e.g. the stage theories; the network theory; the resource-based
view; and the international entrepreneurship theory) has been criticised (by e.g.
McDougall et al., 1994; Westhead et al., 2001) on the basis that these theoretical
frameworks are not solely focused on explaining the internationalisation behaviour of
the SME. According to McDougall et al. (1994) and Westhead et al. (2001), while these
frameworks account for both the large and SMEs, they explain the export behaviour of
the SME in detail. Taking the noted inconsistency in the extant dimensions of
internationalisation theories presented above into consideration, these dimensions are
re-categorised and summarised in this thesis in order to make them clearer, as shown in
Figure 2.1.
Page 33

Figure 2.1: Dimensions of Internationalisation Theories
I
n
t
e
r
n
a
t
i
o
n
a
l
i
s
a
t
i
o
n
T
h
e
o
r
i
e
s
Source: By author
Dimension 1: the main classical theories/those that use
the nation as the unit of analysis
- Theory of absolute cost advantage
- Theory of comparative cost advantage
- Factor proportion theory
Dimension 2: the main theories that use the firm as the
unit of analysis
- Product life cycle theory
- Monopolistic advantage theory
- Internalisation theory
- Transaction cost theory
- Eclectic paradigm theory
- Oligopolistic reaction theory
- Stage theory
- Network theory
- Resource-based view theory
- Innovated related models
Dimension 4: theories that
mostly relate to SME
internationalisation
behaviour
Resource-based view
- International
entrepreneurship
- Stage theory
- Network theory
Dimension 3: theories
that mostly focus on the
internationalisation
behaviour of MNEs
- Product life cycle theory
- Monopolistic advantage
theory
- Internalisation theory
- Transaction cost theory
- Eclectic paradigm
theory
- Oligopolistic reaction
theory
- Stage theory
Page 34

Figure 2.1 classifies the theories in the field into four main dimensions and argues that
all the theories in the figure are internationalisation and/or international business
theories. Dimension 1 consists of the classical theories, which mainly use the nation as
its unit of analysis. Dimension 2 consists of theories that largely use the firm as the unit
of analysis. Dimension 2 implies that its theories are applicable to both the SMEs and
the large multinational enterprises (MNEs). Dimension 3 implies that although the
theories in dimension 2 apply to all firms in general (i.e. SMEs & MNEs), not all of the
theories explain internationalisation behaviour of SMEs in detail. As a result, dimension
4 represents theories that explain the internationalisation behaviour of SMEs in detail
and they are composed of the resource-based view, the stage theory, the network theory
and international entrepreneurship.
2.4 THE BASIC ASSUMPTIONS OF INTERNATIONALISATION
THEORIES
Having presented the main dimensions of internationalisation theories, the next sub-
section examines the main assumptions of each theory. This part is also sub-divided into
two sections, namely: (1) the basic assumptions of the classical theories, and (2) the
basic assumptions of the generally accepted internationalisation theories. For instance,
with the exception of the classical theories (i.e. the absolute cost advantage,
comparative cost advantage and factor proportion theory - Mitgwe, 2006), researchers
(e.g. McDougall et al., 1994; Morgan, 1997; Westhead et al., 2001; Andersson, 2004;
Ruzzier et al., 2006; Wright et al., 2007) refer to the rest of the theories (e.g. the
Page 35

international product life cycle theory, monopolistic advantage theory, internalisation
theory, transaction cost theory, theory of international production, oligopolistic reaction
theory, stage theories, resource-based view theory, network theory, innovated related
models and international entrepreneurship theory) as the generally accepted
internationalisation theories in the field. As a result, with regard to the assumptions of
the internationalisation theories, the discussion in this thesis is limited to these two main
themes – (1) the basic assumptions of the classical internationalisation theories, and (2)
the basic assumptions of the generally accepted internationalisation theories.
2.4.1 The Basic Assumptions of the Classical Theories
The three main classical theories are Adam Smith’s (1776) absolute cost advantage
theory, David Ricardo’s (1817) comparative cost advantage, and Hecksher-Ohlin’s
(1933) factor proportion theory. Each of these theories mainly uses the nation as its unit
of analysis. The comparative cost advantage theory seeks to improve upon the absolute
cost advantage theory whereas the factor proportion theory also improves upon the
comparative cost advantage theory.
First of all, the basic assumption of the absolute cost advantage theory is that trade
between countries can be made possible if nations allocate their scarce resources to
producing the set of goods or services for which they possess absolute advantage, and
leave those for which they possess absolute disadvantages entirely to other countries
(Morgan & Katsikeas, 1997; Andersson, 2004; Mtigwe, 2006). Second, according to
Morgan and Katsikeas (1997), Andersson (2004) and Mtigwe (2006), unlike Smith’s
absolute cost advantage theory, Ricardo’s comparative cost advantage assumes that
trade among countries will be more beneficial even when each country focuses on the
Page 36

production of every good or service, but in this case allocates the most resources to
producing the set of outputs for which it possesses comparative advantage, and focuses
less on the other set of outputs for which it has less advantage.
The main difference between the two theories is that whilst Smith (1776) placed
emphasis on solo, absolute and exclusive production principles, Ricardo (1817)
emphasised dual and/or all-inclusive production principles. Whilst the comparative cost
advantage theory sought to improve the absolute cost advantage theory, Mtigwe (2006)
argues that the theory was not able to justify why countries continue to use protectionist
policies to limit trade among themselves, despite the claim that trade between them is
profitable and beneficial. In addition, the basic assumption of the factor proportion
theory is that factor endowments should inform the basis of competitive advantage with
regard to trade among nations.
The basic difference between Ricardo’s theory and Hecksher and Ohlin’s theory is that
whilst Ricardo considered efficiency in production as the basis for national advantage,
Hecksher and Ohlin’s factor proportion theory assumes that natural endowment of
resources and the corresponding cost advantage in production should be the main
sources of a nation’s advantage with regard to trade with other nations.
2.4.2 The Basic Assumptions of the Generally Accepted
Internationalisation Theories
According to researchers (e.g. McDougall et al., 1994; Morgan & Katsikeas, 1997;
Westhead et al., 2001; Andersson, 2004; Mtigwe, 2006; Ruzzier et al., 2006; Wright et
al., 2007), the main generally accepted internationalisation theories are the following:
Page 37

(1) the international product life cycle theory (Vernon, 1966); (2) the monopolistic
advantage theory (Hymer, 1976); (3) the internalisation theory (Buckley & Casson,
1976); (4) the transaction cost theory (Teece, 1986); (5) the theory of international
production (Dunning, 1988); (6) the oligopolistic reaction theory (Knickerbocker,
1973); (7) the stage theory (Johanson & Vahlne, 1977); (8) the innovative-related
models (Bilkey & Teser, 1977; Cavusgil, 1980; Reid, 1981); (9) the network theory
(Johanson & Mattsson, 1988); (10) the resource-based view of the firm (RBV) (Barney,
1991); and (11) the international entrepreneurship theory (McDougall et al., 1994).
Of the eleven generally accepted internationalisation theories, the main assumptions of
the seven (i.e. the international product life cycle theory, the monopolistic advantage
theory, the internalisation theory, the transaction cost theory, the theory of international
production, the oligopolistic reaction theory and the innovated-related models) which
are not used to help address the research questions behind the thesis are examined
briefly, whereas the other four theories (i.e. the network theory, the resource-based view
(RBV), the stage theory and international entrepreneurship theory), which are integrated
to address the research questions in this thesis, are examined in detail. The reasons for
selecting these four theories are discussed in Section 2.6 below.
The first of the seven theories not used to inform this thesis is the product life cycle
theory (Vernon, 1966), which assumes that the internationalisation development of the
firm is similar to the product life cycle of a firm, which in turn consists of: (1) the
formation stage, (2) the growth stage, (3) the maturity stage, and (4) the decline stage.
According to this theory, a firm’s decision to enter the international market is tied to its
product life cycle trajectory. As a result, the time to internationalise and the choice of
the foreign market are linked to the product’s life cycle development of the firm.
Page 38

Secondly, the monopolistic advantage theory (Hymer, 1976) assumes that the firm
internationalises because it possesses a monopolistic advantage that competitors in the
home market and the host country do not possess. Third, the internalisation theory
(Buckley & Casson, 1976) and the transaction cost theory (Teece, 1986) seem alike
according to Wright et al. (2007).
Therefore, the internalisation theory and the transaction cost theory jointly assume that
cost reduction through undertaking international transaction activities in-house is the
main driver of international involvement. As a result, the international firm will enter
the international market by performing international transactions activities
independently. Furthermore, the theory of international production (Dunning, 1988)
assumes that international involvement is driven by three main sets of explanatory
variables (i.e. ownership-specific advantages, internalisation-specific advantages, and
location-specific advantages). Ownership advantages and internalisation advantages
emanate from the firm’s internal capacity and help it towards internationalisation, whilst
the location advantage refers to the macro level advantage in the host country which the
firm enjoys, thereby enhancing its capacity to internationalise.
Moreover, the oligopolistic reaction theory (Knickerbocker, 1973) assumes that a firm
enters foreign markets to reduce the liability of being different from other competitor(s)
that enter the international market. The purpose is to reduce the risk associated with
international market involvement in case the firm makes a solo attempt and fails. The
oligopolistic reaction theory assumes that internationalisation activities are risky and so
it is better for a firm to learn from others, than to go it alone. The innovative-related
models claim that the firm’s internationalisation behaviour is based on a linearly
progressive trajectory and argues that each trajectory represents innovation for the firm
Page 39

(i.e. Bilkey & Tesar, 1977; Cavusgil, 1980; Reid, 1981). These generally accepted
theories were developed to explain the internationalisation behaviour of the large firm,
and so they barely explain the internationalisation behaviour of the small business. As a
result, the RBV, the stage theory, the network theory and the international
entrepreneurship theory are preferred in the field (e.g. McDougall et al., 1994;
Westhead et al., 2001; Hall & Cook, 2009) with regard to the internationalisation
behaviour of the small firm. Therefore, in this thesis, they are proposed and integrated
to address the topic of this thesis and are examined in detail in the following sub-
sections.
2.4.3 The Basic Assumptions of the Proposed Integrated Theoretical Framework
for the Thesis
Each of the four theoretical frameworks selected to address the objectives of the thesis
is discussed in terms of the following seven themes: (1) the originating discipline of the
theory; (2) the alternative name (s) (i.e. whether more than two names are commonly
used to refer to the same theory); (3) the people and/or person(s) behind the theory (i.e.
its accredited writers); (4) the main assumptions of the theory with regard to the SME
export behaviour (i.e. explanatory variables); (5) the justifications for including the
theory in the thesis; (6) evidence of previous application of the theory to the SME
internationalisation phenomenon (i.e. samples of previous studies); and (7) the strengths
and/or weaknesses of the theory. Therefore, the basic assumptions of the four theoretical
frameworks are examined in turn.
Page 40

2.4.3.1 The Basic Assumptions of Stage Theories of Internationalisation
According to researchers (e.g. Andersen, 1993; Bell, 1995; Morgan & Katsikeas, 1997;
Fillis, 2002; Ruzzier et al., 2006), more than one stage theory exists. The main stage
theories are the Uppsala/process/stage theory and the innovative-related models (i.e.
Bilkey & Tesar, 1977; Cavusgil, 1980; Reid, 1981). As already mentioned above, the
innovative-related models assume that the internationalisation of the firm occurs
linearly through a progressive trajectory and contend that each trajectory represents
innovation for the firm. In this thesis, only the stage theory (Uppsala/process theory) is
selected and applied because: (1) the innovative-related models and the stage theory are
alike (i.e. they both argue that the internationalisation behaviour of the firm occurs in
stages and in a gradual succession); and (2) unlike the innovative-related models, the
stage model is more commonly applied to SME internationalisation (Bell, 1995;
Coviello & McAuley, 1999; Hall & Cook, 2009). As a result, testing and understanding
the assumptions of the stage theory in a new context (Ghana) will enable the result of
this study to be compared with a wide array of previous studies. In addition, from
Figure 2.1 it emerges as one of the theories that best explain SME export behaviour in
detail.
The stage/process theory originates from the internationalisation discipline and it is
similarly referred to as the Uppsala theory because it was first advocated by researchers
from the University of Uppsala, Sweden. Johanson and Wiedersheim-Paul (1975) and
Johanson and Vahlne (1977) proposed the stage theory. Johanson and Wiedersheim-
Paul (1975) investigated the international growth patterns of four multinational Swedish
firms and found that the international development patterns of the firms could be
directed along certain small incremental changes. According to the researchers, these
Page 41

changes together are generally called the internationalisation processes of a firm. The
incremental changes consist of four phases, namely: (1) no regular export activity (i.e. a
firm is not interested in export business); (2) export activity starts, but through
independent representatives or agents; (3) export activity continues, but through the
focal firm’s own overseas subsidiary; and (4) internationalisation through foreign direct
investment, as the ultimate means of serving the foreign market.
Johanson and Vahlne (1977) later built on Johanson and Wiedersheim-Paul’s (1975)
work and confirmed the stages of firms’ internationalisation behaviour. They
maintained that the gradual progression is driven by a lack of prior experiential
knowledge of the foreign market. In addition, Johanson and Vahlne (1977) contend that
the gradual development of export behaviour by the firm also reflects its lack of
appropriate resources to meet the demands of international markets.
Moreover, the gradual process reflects an assumption that firms are generally risk
averse regarding the prospects of internationalisation. As a result, because of the lack of
the appropriate resources, coupled with being risk averse, firms adopt a gradual
approach and reactive approach to mitigate potential risk associated with the
international market involvement. Furthermore, the risk aversion that a firm
demonstrates towards its international market development influences it to
internationalise only into countries whose psychological and geographical features are
similar to its own (defined in the field as psychic distance – i.e., similarities in laws,
language and business practices). These assumptions of the stage theory (Johanson &
Vahlne, 1977) are presented in Figure 2.2.
Page 42

Figure 2.2: Assumptions of the Stage Theory
Stages
Geographical
expansion
Export development chains
1 2 3 4
no interest in export via export via direct
export independent foreign overseas
representative subsidiary production
Increasing market commitment
Increasing market knowledge
Increasing the Intensity of Internationalisation
Market A
Domestic
market
Market B
Foreign market
Increasing geographic expansion
Market C
Foreign market
Reduction in psychological distance
Source: Adapted from Hollensen (2004: 53)
Market D
Foreign
market
Figure 2.2 implies that a firm starts in the domestic market (with no interest in
international business), acquires experience and builds its resource base, and later
begins international business (for example by being approached to deliver export
orders) through an independent agent in the foreign market, owned sales subsidiary and
eventually foreign direct investment. From Figure 2.2, the entry into market B is shown
to be gradual because of the lack of experiential knowledge and requisite resources, but
the subsequent entry into the foreign market C is quicker because of the previous
experience gained in market B. Also the firm gravitates towards market B because it
shares geographical and psychological characteristics. Over time, the firm is able to
penetrate foreign market D because the experience it has gained in markets B and C
Page 43

gives it the confidence to enter D, even though initially this market (D) may have
seemed very distant psychologically and geographically.
Johanson and Vahlne (1977) called the changes a firm goes through on its
internationalisation trajectory as the state aspect (i.e. the stage of development that the
firm has reached in relation to internationalisation) and change aspect (the requisite
restructuring and re-strategising in relation to the resource commitment that a firm has
to make). Figure 2.3 shows such changes.
Figure 2.3: The State and Change Aspects of Internationalisation
Market Market
knowledge
Knowledge
Market
commitment
(state)
Source: Johnson and Valhne (1977: 26)
Figure 2.3 is a cyclical model that, reading clockwise, shows how market knowledge
influences a firm’s decisions about committing resources to its internationalisation (i.e.
the changes it makes, and how these impact on the way it performs its activities in its
current markets and the intensity of its market internationalisation (i.e. its change
aspect). In the process, the level of its market knowledge affects its market commitment
(i.e. the state aspect).
Resource
commitment
decisions
(change)
Activities
in current
markets
Page 44

Overall, the gradual internationalisation process, the need for prior experiential
knowledge, and the psychic distance assumptions behind the stage theory imply that
larger and older firms will be more likely to export. In addition, it also implies that
firms with older managers will be more likely to export, develop their export business,
and eventually sustain the export venture. The reason is that by having these resources
(large size, older managers, prior experience in the domestic market) a firm will
overcome the barriers to export market entry.
Furthermore, the theory implies that a local firm acquires and develops all the required
stock of resources for its export business in-house without any collaboration with
formal/contractual/business and/or information/non-contractual actors (networking
parties). Moreover, the theory implies that it is only the internal influence that counts
with regard to the SMEs’ export behaviour and the influence of the external
environment is relatively unimportant. As a result, it is these factors that predict the
time, the entry mode, the choice of foreign market, and the subsequent export
development of the SME.
Following these assumptions, implicitly, the main explanatory variables of the stage
theory: (1) the firm’s size; (2) firm’s age; (3) the age of its owner-manager; (4) its
previous experience in the domestic market; (5) its prior export experiential knowledge;
(6) the nature of the geographical and psychological situation of the country it wants to
export to; (7) its own efforts at resource development for export business; (8) gradual
export development and (9) the influence of its internal environment lead the firm to
respond positively to the triggers of export initiation and facilitate its capacity to meet
export orders. In the light of the problem statement behind the thesis, these assumptions
imply that it is these variables that explain why one SME responds positively to export
Page 45

stimuli, initiates export business and successfully meets its export orders, whereas
similar others do not, regardless of the fact that they all operate in the same industry,
same location and face the same market conditions.
Stage theory is included in this thesis as it is one of the frameworks most commonly
applied to SME internationalisation, which will allow a wide array of previous studies
to be compared. The literature offers abundant evidence of previous application of the
stage theory to SME internationalisation. Some of the previous applications of the
framework involved the following countries: (1) the USA (Brush et al., 2002), (2)
Sweden (Svante et al., 2004) and (3) the UK (Hall & Cook, 2009). In addition,
Appendix A contains additional detailed evidence of previous applications of the stage
theory to SME internationalisation.
Despite the fact that the stage model is commonly applied to SME export behaviour, it
has been heavily criticised. First, in trying to explaining exporting activities of SMEs,
the stage theory excludes the role of owner-entrepreneur behind the firm and focuses on
only the firm (Wright et al., 2007). Second, the ‘gradualism’ assumption in the stage
theory has been heavily counteracted by the ‘born’ global literature (McDougall et al.,
1994; Zahra, 2005). In addition, the stage theory’s assumption that to enter the
international market a firm must first operate in the home market is challenged by the
international entrepreneurship theory (McDougall et al, 1994; Zahra, 2005).
Furthermore, while the stage theory assumes that a firm must overcome all the barriers
to participation in the export market, before it initiates export business in that direction,
the network theory (e.g. Coviello & Munro, 1995; 1997; Gorman & Evers, 2008)
challenges that assumption, and contends that SMEs’ exporting activity is an exchange
process whereby the focal firm benefits from networking with other businesses, buyers,
Page 46

suppliers, private sector organisations and government departments, ministries and/or
agencies, thereby bringing forward the time and accelerating the pace of export market
entry. Empirically, using samples from three countries (i.e. Finland, Ireland, &
Norway), Bell (1995) failed to find support for the ‘established chains’ proposed from
the stage theory. In addition, Calof (1993), employing a Canadian sample, found an
inverse relationship between firm size and degree of internationalisation. Furthermore,
Etemad (2004) argued that the forces of change (e.g. increasing homogeneity of
markets, efficiency and lowering cost of international communication and
transportation) nowadays lead the small and medium-sized owner-managed firm to
exploit an international market which hitherto was the exclusive preserve of large
multinational firms.
2.4.3.2 The Basic Assumption of the Network Theory
According to Portes (1998), network theory originates from sociology and it is
alternatively referred to as the social capital theory. Johanson and Mattsson (1988)
explored the influence of network relations on the internationalisation of a firm,
following the stage theory (Johanson & Vahlne, 1977). Stage theory predicts that export
market development is a solo activity for a firm and as a result the required stock of
resources and knowledge for internationalisation is developed and built through its own
efforts.
Network theory, on the other hand, challenges this premise and argues that
internationalisation is a collaborative activity that makes it easier (e.g. in terms of the
cost, time, resources and pace) for a firm to enter the international market than if it was
acting alone (Johanson and Mattson, 1988). Johanson and Mattson conceptualise
Page 47

internationalisation as relationships between network partners, both in domestic and
international markets. The network members (relations and/or ties) may be firms,
business associates and/or individuals, either in the home country or in the international
market. The network relations enable SME to access new, different and abundant
resources, including export information, both locally and abroad. Therefore, whilst the
stage theory prescribes that firms must possess all the essential resource stocks in-house
before they contemplate internationalisation, the assumptions from network theory
counter that argument. The enhanced resource capacity achieved through networking
with others (e.g. business associates and social relations) counteracts the gradual
assumption in the stage theory and facilitates the decision and the pace of
internationalisation.
Moreover, the benefits gained by associating with network relations eliminate the need
for automatic prior export experiential knowledge before contemplating
internationalisation, as is claimed in the stage theory. Furthermore, through the benefits
achieved from involvement in network relations, the stage theory requirement of
psychic distance also fails to be a pre-condition for the choice of the export market
destination. Furthermore, a firm’s size, its age, the age of its owner-manager and/or
managers are not the absolute determinants of its export behaviour. Overall, it is the
benefits of being in a pool of network relations that enhance the SMEs’ capacity to
respond positively to the triggers of export initiation and meet its export orders, develop
its export business and further sustain it.
Therefore, in the light of the SME export behaviour, in relation to the problem
statement behind the thesis, it can be argued that it is the benefits derived from
collaborating with network relations that enable SME to respond positively to export
Page 48

stimuli and which also facilitates its ability to meet its export orders whilst similar
competitors do not respond in this way, although they may all be operating in the same
domestic market, the same industry and face the same market conditions. Johanson and
Mattsson (1988) assumed further that the influence of network relations on international
market development consists of international extension, penetration, and international
integration. These mechanisms are represented in Table 2.2.
Table 2.2: The Mechanisms of Network Internationalisation
Stages Mechanism Precise description
Stage 1 International extension Entering the foreign market
through an established network
Stage 2 Penetration Investing in the current network in
the host country
Stage 3 International integration Ability to coordinate networks in
multiple countries
Source: Modified from Johanson and Vahlne (1990: 20)
The implicit assumption of the mechanisms in Table 2.2 is that psychological distance
and experiential knowledge do not wholly determine the choice of foreign market and
entry mode (see stage 1). As a result, it is the type and amount of network ties a firm
possesses which constitute its main determining factors in export business. In Stage 2,
because the involvement in the network relations has positively impacted on the firm’s
export development, the focal firm deliberately invests in its network relationships. As a
result, in stage 3, the use of the network relationships has become the norm of the firm’s
Page 49

internationalisation behaviour, and so it transcends into a variety of international
markets where the firm is involved in business.
Other researchers have extended Johanson and Mattsson’s (1988) framework SME
internationalisation, and have proposed different forms of network structures. Among
these structures are the internal and external network structures (Chetty & Agndal,
2007). According to Chetty & Agndal, the internal network structure consists of the ties
between and among staff members within the firm, while the external network structure
comprises the relation between the firm and its outside stakeholders (e.g. the customers
and the suppliers). There is also the personal and inter-organisational network structure
(Boojihawon, 2007). From Boojihawon, the personal network structure comprises the
owner-manager and his/her personal relationships (e.g. friends and family members),
whilst the inter-organisational network relations also consists of the SME’s
relationships with external stakeholders (e.g. customers, suppliers and other business
associates). A third structure is the formal and informal network structure (Gemeser et
al., 2004).
Following Gemeser et al., the formal network structure comprises the relationship
between the SME and its customers as well as suppliers, whilst the informal consists of
the relationship between the owner-manager and his friends and family members. The
final structure to discuss is the contractual and non-contractual network relationships
(Gorman & Evers, 2008). Contractual network relationships, which they also termed as
economic relationships, consist of the relation between the SME and its outside
stakeholders (e.g. the customers and suppliers agents including intermediaries, and
government agencies), whilst the non-contractual relationships (which they also termed
Page 50

non-economic relationships) comprise the relationships between the SME and its
informal/supportive relations (i.e. friends and family relations).
Generally, the structures offered by these studies are similar because they can be
summarised as comprising two main sub-divisions, namely: the formal network
relation/structure and the informal network relation/structure. Although some of the
authors use different terminologies (e.g. internal and external networks - Chetty &
Agndal, 2007; contractual and non-contractual - Gorman & Evers, 2008), they are
broadly referring to the same concepts (i.e. formal and informal structure). However, of
these studies, that of Chetty and Agndal (2007) failed to consider the informal
networking relations/structure of the entrepreneur firm (i.e. the role of the family
members and friends) in interpreting Johanson and Mattsson’s (1988) original
framework. However, the SME owner-manager’s network relations with friends and
family members are crucial to its development of internationalisation. For instance,
there is abundant evidence of the positive impact of the role of informal networking
relations on an SME’s internationalisation development (e.g. Coviello & Munro, 1997;
Meyer & Skak, 2002; Rutashobya & Jaensson, 2004).
Gorman and Evers (2008) have extended Johanson and Mattsson’s (1988)framework to
include government departments and agencies, including trade associations, further
extending the structure of the network relationship to include vertical and horizontal
relationships in more detail.
The categories and sub-categories of Gorman and Evers’ (2008) dimensions are shown
in Figure 2.4. In their framework, the only aspect they failed to include is the location of
the network relation(s). This is significant because the network relationship(s) (whether
Page 51

usiness or social, vertical or horizontal) can exist either in the domestic market or in
the international market or in both simultaneously. As a result, their framework is
modified in the figure below.
Figure 2.4: The Structure of Network Relations
Business ties/
Economic
exchange/
Contractual
Vertical Present contacts:
suppliers, agents and
intermediaries,
ancillary suppliers
to the firm
Horizontal
State support
agencies and export
promotion agencies,
sector trade
associations,
advisors/consultants,
joint venture
partners, other
partners and
alliances
Social ties/
Non-economic
exchange/
Non-contractual
Former contacts:
previous suppliers
in the industry
and previous
operators in the
ancillary support
firms (i.e.
packaging; R&D)
Competitors,
community
organisation,
friends,
acquaintances,
firms and family
members
Source: modified adapted from Gorman and Evers (2008: 40)
International
/Domestic
International
/Domestic
The modified framework in Figure 2.4 implies that network structuring, whether
vertical or horizontal, can take place in the domestic country or the export destination or
both simultaneously. Overall, the main explanatory variables in network theory on the
SME export behaviour include the benefits deriving from the network relations with
business associates, agents, customers and suppliers, family members and friends,
government department/agency/ministry and local business associations, either in the
Page 52

local market or the international market or both simultaneously. It is assumed that out of
these ties flow all kinds of resources that go to enhance the SME’s capacity to export. It
also determines the time of export, the mode to choose and how to develop and sustain
the export venture. Network theory is included in the thesis because it is widely applied
to SME internationalisation field, likewise the stage theory. For instance, some studies
based on developed countries have confirmed the predictive power of network theory on
SME internationalisation behaviour (e.g. see Coviello & McAuley, 1999; Wheeler &
Harris, 2005; Sandberg & Susanne, 2008). Among the developing countries in Europe,
it is also found that the network theory facilitates SME export behaviour (see Meyer &
Skak, 2002; Ruzzier & Antoncic, 2007). Studies (e.g. Ghauri et al., 2003: Wheeler &
Harris, 2005; Sandberg & Susanne, 2008) also confirm the importance of the
framework in both the developed and developing countries.
In developing countries such as in Asia, it has also been shown that network theory
enhances the export behaviour of SMEs (Ghauri et al., 2003). For example, in Ghauri et
al.’s (2003) study, whilst the authors confirmed the importance of network theory to
SME internationalisation in developing countries (excluding Africa), they also
presented a set of other studies in their paper that confirmed their support for network
theory. The sample studies cited by Ghauri et al. in their paper are shown below.
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Table 2.3: Sample of Studies Based on the Network Theory on SME
Internationalisation
Nature of network
Nike/Reebok and Asian
footwear producers’
subcontracting network
Brazilian Sinos Valley and
Mexican footwear
subcontracting network
The subcontracting
network
Network of foreign
multinationals and their
Ukrainian partners
Korean business networks
Peruvian export grouping
network
Nicaraguan export
grouping network
Chilean export grouping
network
Jamaica export grouping
network
Geographic context
Asia
Mexico and Brazil
n/a
Ukraine
Korea
Peru
Nicaragua
Chile
Jamaica
Source
Rosenzweig (1994)
Ceiglie and Dini (1999)
Sarathy (1996)
Bridgewater (1999)
Kienzle and Shadur (1997)
Visser (1996)
Ceiglie and Dini (1999)
Humphrey and Schmitz
(1995)
Ceiglie and Dini (1999)
Chinese export grouping
network
China
Welch et al. (1996)
Source: Ghauri et al. (2003: 734); n/a means not applicable
Studies in Table 2.3 provide useful insights for investigating the impact of network
relations on internationalisation behaviour of SMEs in Africa. The reason for this is that
Ghauri et al. (2003) found similarities with regard to SMEs, whether from Asia or
Page 54

Africa, although the degree and/or magnitude may differ. Therefore, in terms of the
benefits of networking relations and their positive impact on SME export behaviour, it
can be argued that if the export behaviour of SMEs from developed and other
developing (e.g. in Europe and some parts of Asia) countries is facilitated, it seems
plausible to argue that similar firms in Africa, which are regarded as the most resource
constrained, will benefit even more from the impact of network relations on their
internationalisation behaviour. For instance, Rutashobya and Jaensson (2004) have
found evidence of the impact of the network theory (relations) on SME
internationalisation in Tanzania. In addition, the network framework is applied to the
thesis in order to resolve the weakness inherent in the stage theory with regard to its
assumptions concerning a firm’s export behaviour (e.g. the gradualism, own exports’
resource mobilisation process and the psychic distance assumptions).
As already indicated, a sample of evidence from previous applications of the network
theory to SME internationalisation comprises studies in the following countries: (1)
Scotland (McAuley, 1999); (2) New Zealand (Chetty & Holm, 2000); and (3) Ireland
(Gorman & Evers, 2008). In addition, Appendix B contains a sample of further studies
that have applied network theory to SME internationalisation.
As regards the strengths and weaknesses of network theory in the light of SME
internationalisation, numerous researchers (e.g. Coviello & Munro, 1997; Chetty &
Holm, 2000; Gemser et al., 2004; Ruzzier & Antoncic, 2007) have contended that SME
have derived much benefit in developing export activity from their diverse network
relations, depending on the market. In Table 2.4, the various impacts of network
relations on SME internationalisation are presented.
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Table 2.4: Selected Impacts of Network Theory on SME Internationalisation
Advantages
1. Provides opportunities to address
resource scarcity (Coviello &
Munro, 1997; Chetty & Holm, 2000;
Gemser et al., 2004; Ruzzier &
Antoncic, 2007).
2. Provides opportunities to overcome
foreign liabilities (Coviello &
Munro, 1997).
3. Provides avenues for market
knowledge and information sharing
(Coviello & Munro, 1997; Meyer &
Skak, 2002; Gemser et al., 2004;
Chetty & Agndal, 2007; Ruzzier &
Antoncic, 2007; Gorman & Evers,
2008).
4. Provides avenues for higher sales
growth (Coviello & Munro, 1997).
5. Provides a springboard for a firm’s
own sales outlets and marketing
offices overseas (Coviello & Munro,
1997).
6. Facilitates the pace of
internationalisation (Coviello &
Munro, 1995; Boojihawon, 2007).
Source: By the author
Risks
1. Possible loss of control to stronger
network partners by the weaker
network firms/partners (Coviello &
Munro, 1997).
2. Possible limitations on future
market development by the weaker
network partners/firms (Coviello &
Munro, 1995; 1997).
3. Constraints on the weaker network
firms by further developing new
ties (Caviello & Munro, 1995).
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Despite the benefits, Table 2.4 indicates that having network relations in one’s
internationalisation trajectory is not without risks. However, it seems those risks may be
a result of having the contractual network relationship indicated by Gorman and Evers
(2008) (Figure 2.4). For example, network relationships with family members and
friends carry hardly any drawbacks, as indicated in Table 2.4. Despite these perceived
risks, the assumptions of network theory cannot be ignored, especially with regard to
SME internationalisation development.
2.4.3.2.1 Gender & Networking
Researchers (e.g. Cromie & Birley, 1992; Ibarra, 1997; Neergaard et al., 2006) has
extended the network theory to examine gender and its effects on SME owners’
networking and how that impacts on the behaviour of SMEs. The main argument from
this line of research is that women business owners differ significantly from men with
regard to: (1) the structure of the networking they choose (e.g. whether or not women
will use formal and/or informal networking and also whether or not within either
structures women will network only with women, or only with men or both), (2) the
kind of networking interactions they will maintain (e.g. whether or not women will
differ with regard to networking intensity, frequency of interactions, activeness, and/or
will loosely engage in networking concerning intensity, interaction and activeness) and
(3) the kind of networking content they will select (i.e. whether or not women will seek
emotional support, companionship support, informational support & tangible resource
support from the network relationships). The implicit assumption from this line of
research is that networking dynamics across the gender divide affect firm development
differently with regard to positive and negative firm outcomes.
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Following on from these assumptions, some researchers (Cromie & Birley, 1992; Shaw
et al., 2001; Neergaard et al., 2005) argue that the activity level of women
owner/managers concerning networking interaction, will be weak compared to that of
men. With regard to intensity, they further argue that women business owners will have
a sparse networking base compared to men and will be less active in networking
activities, regardless of whether it is formal networking, informal networking or both.
Furthermore, the researchers argue that between the two structures, women will network
more with fellow women compared to male counterparts. In addition, they further
contend that concerning network content, women will tend to seek emotional and
companionship supports rather than business and information supports that will impact
positively on their businesses outcomes.
Though this line of research is still evolving, its empirical front is already divided. For
example, Ibarra (1997) found that women tend to choose two business networking types
(i.e. one for friendship and emotional support and another for advice and information).
Moore (1990) and Renzulli (1998) found that women business owners include more
close associates (e.g. family members’ friends) in their business networking than men.
Therefore, they fail to acquire the required business advice and key resources that can
impact on their business economically. In contrast, Aldrich et al. (1997) found that
women owner-managers are just as active, serious and active in their business
networking activities (i.e. as regards network structure, network interaction or dealing
with network content). As a result, they appear to be as successful as their male
counterparts in achieving their networking goals. In addition, Cromie & Birley (1992)
found that the propensity of women to network, the activity level of their networking
and density as well as the profile of their network contacts were remarkably similar to
Page 58

those of the men. According to Cromie & Birley (1992), women were no more likely to
consult family and friends than were men, rather, both groups appear to draw upon the
skills, wisdom, and expertise of fellow business associates, especially people with
commercial or organisational experience.
2.4.3.3 The Basic Assumptions of Resource-based View of the Firm (RBV)
The resource-based view (RBV) is based on the early economic theory of Penrose
(1959), which has since been extended by a range of other researchers (e.g. Ansoff,
1965; Wernerfelt, 1984; Prahalad & Hamel, 1990; Barney, 1991; Grant, 1991; Teece et
al., 1997; Helfat & Peteraf, 2003). Various versions of the RBV framework have been
developed. These versions include but are not limited to: (1) dynamic capability theory
(Teece et al., 1997); (2) resource scarcity theory (Castrogiovanni et al., 2006); (3) the
resource dependency theory (Pfeffer & Salancik, 1978); (4) resource-exchange theory
(Zacharakis, 1997); and (5) the resource-based view of the firm (Barney, 1991).
However, whilst these versions derive their roots and inspirations from the writings of
Penrose (1959), many (e.g. the dynamic capability theory and the resource scarcity) also
build on of Barney’s (1991) framework, which achieved widespread popularity.
Barney’s version originates from strategic management and is alternatively referred to
as the resource-based theory (RBT). The basic assumption of the RBV (Barney, 1991)
is that a firm consists of different resource stocks that are immobile, rare, non-
substitutable and non-imitable from one firm to another. According to Barney, the
causality between these covariates (i.e. resources that are immobile, rare, non-
substitutable and non-imitable) and the performance of a firm or a group of firms is
highly ambiguous, equivocal and opaque, even to the beneficiary firms themselves.
Page 59

Following Barney, these explanatory variables mainly account for the variations among
firms’ performance and/or competitive advantage in a given industry.
The theory further implies that it will take competitors in the same industry longer to
discover the secrets behind the leading firm’s success (competitive advantage) because
of the heterogeneity and immobility of resources the beneficiary firm(s) possess.
Therefore, whilst the possession of such resources will accrue competitive advantage to
the industry leader(s) in the short term, the industry leader (s) can still sustain this
advantage for a long period and/or in the long run because rival firms will normally take
a longer time to catch up. As a result, the leading firm (s) can achieve long-term
sustainable competitive advantage.
With regard to SMEs’ export behaviour, the RBV (Barney, 1991) implies that an
exporting SME consists of resource stocks (i.e. resources that are immobile, rare, non-
substitutable and non-imitable). As a result, it is these unique resources that determine
variations among SMEs’ export involvement and performance. Following this theory,
the time to decide on export involvement, the type of entry mode to be used, and the
choice the export market to be selected are all based solely on the internal resource
capacity of the SMEs.
Implicitly, the framework assumes that every resource needed by the firm for its export
business development is solely achieved by its own efforts without consideration for the
impact of network partners’ resources on SME’s export behaviour. Moreover, the
theory further assumes that the determinants of SMEs’ export behaviour are wholly
internal factors, without any regard for the influence from the external environment. In
the light of the problem to be examined by this thesis, it can be argued that, from
Page 60

Barney’s (1991) perspective, the ownership of the unique resources is hypothesised as
accounting for why one SME will respond positively to export stimuli, initiate export
business and be in the position to meet its export orders whilst similar others do not.
This could be despite their operating in the same industry and location, facing the same
market conditions. In general, the main explanatory variables of the RBV on the SMEs’
export behaviour include every internal resource variable of the SME, either tangible or
intangible, including personality influence and/or characteristics of the owner-manager
behind the small firm.
Barney (1991) indicated that the peculiar resource characteristics (i.e. the immobility,
rarity, non-substitutability and non-limitability) that confer competitive advantage on a
firm cannot be tested empirically (i.e. the relationships among these factors are causally
ambiguous, as indicated above). As a result, researchers (Westhead et al., 2001; Hall &
Cook, 2009) distinguish between the strong version and the weak version of Barney’s
theory (1991). The weak version of Barney’s (1991) RBV (Westhead et al., 2001; Hall
& Cook, 2009) implies that whereas the basic assumptions of the RBV theory (Barney,
1991) remain unchanged with regard to ownership of key stock of resources, the
assumptions about its core characteristics (i.e. the immobility, rarity, non-
substitutability and non-limitability) are relaxed in its empirical application. Therefore,
although this study extends the basic tenets of Barney’s (1991) RBV, it uses the weak
version of the RBV (e.g. Westhead et al., 200).
The RBV is incorporated into the thesis because, just like the stage theory and network
theories, it is widely applied to the incidence of SME internationalisation. For example,
in the SME internationalisation literature the argument that the export success of SMEs
resides in its internal resource capacity draws on the RBV theory (e.g. see McDougall et
Page 61

al., 1994; Bloodgood et al., 1996; Reuber & Fischer, 1997; Westhead et al., 2001;
Dhanaraj & Beamish, 2003; Ibeh, 2003; Westhead & Ucbasaran, 2004; Ibeh, 2004;
2005; Ibeh & Wheeler, 2005; Rialp et al., 2005; Ruzzier et al., 2006). In addition, these
writers have argued that unlike the stage theory, which excludes the influence of the
SME’s owner-manager’s personality when analysing its internationalisation behaviour,
the RBV considers the firm (i.e. SME) as well as the personality influence of its owner-
manager in analysing its internationalisation behaviour. The prediction/assumptions of
the RBV are presented visually in Figure 2.5.
Figure 2.5: RBV Framework
----------------------------------------------------------------------------------------------------------
Internal environment
Internal
Resource
Capacity
Tangible Intangible
Short-Term
Competitive/
Export
advantage
Long-Term
Sustainable/
Export
advantage
Internal environment
--------------------------------------------------------------------------------------------------------
Source: Modified from Barney (1991: 112)
Figure 2.5 predicts that the SME’s stock of resources is developed by its own efforts
(i.e. all happening in the firm’s internal environment). These resources can be tangible
(e.g. financial capital) or intangible (e.g. brand name) and reside within the SME. It is
Page 62

the level of the resource advantage (independent of external environment/industry
influences) that enables the SME to decide whether or not to respond positively to
triggers of export initiation, meet its export orders and confer on it short- and long-term
sustainable export advantage over and above similar competitors.
Evidence of previous applications of the RBV theory to SME internationalisation
include studies from the UK (Hall & Cook, 2009), Nigeria (Ibeh, 2003a) and the USA
(Manolova et al., 2002). Furthermore, Appendix C contains a sample of additional
evidence of previous applications of the RBV to the SME’s internationalisation
behaviour.
With regard to strengths and weaknesses, the resource-based view is widely applied to
the internationalisation behaviour of the SME, and yet it remains silent on the influence
of the external environment on the SME’s export behaviour. In addition, like the stage
theory, it remains silent and fails to account for the benefits the SME may derive from
networking with various network relations (e.g. business associates, government
departments, industry associations, family and friends). Moreover, it is argued that the
resource characteristics outlined by Barney (1991) are abstract because their sources are
difficult to ascertain, a problem Barney himself indicated (Helfat & Peteraf, 2003). In
spite of such limitations, the RBV model is a framework that has been frequently
applied to the SME internationalisation phenomenon (Peng, 2001).
2.4.3.4 The Basic Assumptions of the International Entrepreneurship Theory
International entrepreneurship (IE) theory originates from the traditional
entrepreneurship field. Rialp et al. (2005) argued that the IE theory intersects the
entrepreneurship and internationalisation research fields. Mainly, the IE theory acts as a
Page 63

esponse to the ‘gradualism assumption’ in the stage theory. Oviatt and McDougall
(1994) are the accredited writers behind the IE theory. The IE theory represents recent
theoretical developments in the SME internationalisation field. For instance, a sample of
recent international entrepreneurship activities (e.g. annual doctoral consortia,
university sponsored workshops, publications of handbooks, doctoral theses, book
chapters and doctoral seminars) (McDougall et al., 2003; Rialp et al., 2005; Svensson,
2006; Zahra, 2005) confirm its wide recognition among academics. As regards its
alternative names, several conceptualisations/terminologies exist in the literature. Table
2.5 represents a sample of selected alternative terminologies.
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Table 2.5: Sample of Alternative Terminologies of International Entrepreneurship
1)
2)
3)
4)
5)
6
7
8
9
Source
McDougall (1989), Shrader et al. (2000), Zahra et
al. (2000)
Oviatt and McDougall (1994; 1997), McDougall et
al. (1994), Servais and Rasmussen (2000)
Ripollés et al. (2002), Zahra et al. (2003)
Oviatt and McDougall (1995)
Rennie (1993), Autio and Sapienza (2000), Madsen
et al. (2000), Aspelund and Moen (2001),
Rasmaussen et al. (2001), Wickramasekera and
Bramberry (2001), Moan (2002), Moan and Servais
(2002), Andersson and Wictor (2003), Sharma and
Blomstermo (2003)
Knight and Cavusgil (1996), Knight (1997), Bell
and McNaughton (2000)
Bell et al. (2003)
Mamis (1989), Jolly et al. (1992), Oviatt and
McDougall (1995)
Rialp et al. (2005)
Source: Svensson (2006: 1312)
Term
New ventures
International new ventures
Internationalisation of
new ventures
New venture
internationalisation
Born global(s)
Born global firm(s)
Born-again global firms
Global start-ups
Early internationalisation
Although many alternative names have been given by different scholars, it is clear that
the term born global is repeated more frequently than the others (e.g. the early
internationalisation and new venture terminologies). In addition, whereas different
Page 65

esearchers offer the theory different terminologies, similarly, different researchers
define it differently. Table 2.6 presents selected definitions of the phenomenon.
Table 2.6: Sample Definitions of the International Entrepreneurship Theory
Author(s)
Conceptualisation
McDougall et al. (1994: 470) “a business organisation,
McDougall and Oviatt (1997:
293)
which seeks to derive
significant competitive
advantage from the use of
resources and the sale of
outputs in multiple countries
from the inception”
“new and innovative activities
that have the goal of value
creation and growth in
business organisations across
national borders”
McDougall et al. (2000: 903) “is a combination of
Continue on the next page
innovative, proactive, and
risk-seeking that crosses
national borders and is
intended to create value in
organisations”
Purpose of the study
Explains the formation of
international new ventures
based on the limitations of
generally accepted
international business
theories
Examines the international
entrepreneurship literature
in the 1990s and the
directions for future
research
Examines how the
international
entrepreneurship
phenomenon intersects the
international business and
entrepreneurship
disciplines
Page 66

Table 2.6 Continued
Knight and
Cavusgil (2004:
124)
Oviatt and
McDougall (2005:
540)
Ruzzier et al.
(2006: 489)
Dimitratos and
Plakoyiannaki
(2003)
Source: By Author
“business organisation that from or
near their founding, seek superior
international business from the
application of knowledge-based
resources to the sales of outputs
from multiple countries”
“is the discovery, enactment,
evaluation and exploitation of
opportunities – across national
borders – to create future goods
and services”
“a research approach to the
internationalisation of the small
businesses from the
entrepreneurial perspective”
“an organisational-wide process
which is embedded in the
organisational culture of the firm
and which seeks through the
exploitation of opportunities in the
international market place to
generate value”
Examines the critical role
of innovative culture,
knowledge and
organisational capabilities
at the initial stage of born
global firms and later
success
Defines international
entrepreneurship and the
pace of its
internationalisation
Reviewing trends in SME
internationalisation: past,
present and future
Provides a conceptual
framework to examine
international
entrepreneurship by
investigating the general
organisational context in
which it is embedded
Table 2.6 shows various definitions of IE applied by different authors and also confirm
the increasing recognition of the phenomenon amongst researchers. With regard to the
SME internationalisation, the basic assumption of IE theory is that certain unique
entrepreneurial behavioural characteristics cause some SME to enter the international
market at their inception. In addition, the framework implies that the time to enter the
international market, the nature of entry mode to be used, the choice of export market to
be selected and subsequent development of the export business are driven by
exceptional entrepreneurial factors to spot export business opportunities. In relation to
the problem statement the thesis seeks to investigate, the IE assumption implies that it is
Page 67

the possession of these unique entrepreneurial characteristics that determines why some
owner-manager-entrepreneurs enter the foreign market while similar others remain
focus on the domestic market, although they may all be operating in the same industry
and location, and face the same market conditions (McDougall et al., 1994; Oviatt &
McDougall, 1994).
Excessive alertness to profitable international opportunities, positive international
attitudes and international orientation, international business networking behaviour,
excessive proclivity for international ideas, a high need for international achievement,
strong personal drive, ambition and motivation for internationalisation and international
risk-taking behaviour are among the unique entrepreneurial behavioural characteristics
that set internationally entrepreneurial small firms apart from ordinary small
entrepreneurship firms and explain the speed of internationalisation (McDougall et al.,
1994; Oviatt & McDougall, 1995; Dimitratos & Plakoyiannaki, 2003).
Initially, it was assumed that internationally entrepreneurial small firms were mostly
found in the USA in the highly technological and knowledge-intensive sectors. This
suggests that the nature of a firm’s product and the industry it operates in are parts of
the explanatory variables of the event. In recent times, there has been a great deal of
evidence to show that the phenomenon is not country or industry-specific (Oviatt &
McDougall, 1994; Zahra & George, 2002b). For example, McDougall et al. (1994) find
that the geographical coverage of the event has been extended to cover Europe, North
America, South America, Asia, the Middle East and the South Pacific.
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In addition, McDougall et al. found that among the high-tech businesses, there were
also firms from the aquaculture and services sectors. An extensive review of 38 papers
by Rialp et al. (2005) on international entrepreneurship events between 1993 and 2003
found that 15 studies focused on firms outside the high-tech sectors, with samples from
Australia, the US, Canada, Switzerland, Ireland, New Zealand, the UK, Germany,
France, Spain, Israel, Denmark, Sweden, Norway and Finland.
With regard to the entrepreneurialism assumptions associated with the IE theory, an on-
going debate concerning the framework suggests that although Oviatt and McDougall’s
(1994) assumptions (e.g. IE firms internationalise at inception, are mostly from the
highly intensive technological sectors etc) are widely accepted, researchers (e.g. Zahra
& George, 2000b; Zahra, 2005; Zahra et al., 2005) argue that entrepreneurial actions
found to be associated to the event cannot be limited to a particular firm’s age (new
SMEs), size (small and/or medium-sized firms) and the time of a firm’s international
market entry (e.g. internationalisation at inception). Other researchers (e.g. Zahra &
George, 2000b; Knight & Cavusgil, 2004; Zahra, 2005; Ruzzier et al., 2006) concur
with the argument and state that entrepreneurial attributes (e.g. (1) international vision,
(2) international risk-taking behaviour and (3) international opportunity identification
(among others) as indicated for example by McDougall et al. (1994) cannot be limited
to the specific age of a firm (e.g. the born global), the specific size of a firm or the
specific industry (e.g. the highly technological and knowledge-intensive sector). As a
result, Dimitratos and Plakoyiannaki (2003) argue that entrepreneurial behaviours are
part of an organisational-wide process that is embedded in the culture of a firm.
Dimitratos and Plakoyiannaki, imply that the event can happen both in the small and the
large firm.
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As can be seen from Table 2.6, because of the criticisms from researchers (e.g.,
Dimitratos & Plakoyiannaki, 2003), McDougall and her colleagues have continued to
revise their definitions in recent years (1994, 1997, 2000 and 2005). As a result, the
current argument on the phenomenon is that although the entrepreneurialism
assumption (entrepreneurial behaviour) behind the phenomenon is accepted, it is not
limited to a particular firm. Consensus has been reached among researchers that the
event is not limited to a firm’s age, size, country and sector, although the ideal small
and medium-sized new venture firm from the high technology sector may exist
(McDougall & Oviatt, 2000; Zahra & George, 2000b; Oviatt & McDougall, 2005;
Zahra et al., 2005). Whereas it is argued that the event is not limited only to SME, in
this thesis, the event is applied only to SME as this constitutes the area of interest.
Extra characteristics of the international entrepreneurship event concerning the SME as
identified by other researchers are presented in Appendix D.
Moreover, Andersson (2004) and Etemad (2004) argue that in addition to the
entrepreneurial behavioural characteristics associated with the IE phenomenon, as
discussed above, the event is also facilitated by environmental factors such as
technological advancement in international transportation and communication and the
removal of trade barriers. The justification for incorporating the IE into the thesis is that
although it is argued that the RBV takes care of the influence of the SME owner-
manager’s personality and its impact on SME export behaviour, it is also arguable that
personality factors and/or the influence of the owner-manager of SME and their impact
on export behaviour can be understood in detail from the perspective of
entrepreneurship (McDougall et al., 1994; Ruzzier et al., 2006).Furthermore, it is found
that one of the most important variables behind SME internationalisation is the owner-
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manager (McDougall et al., 1994; Lloyd-Reason & Mughan, 2002; Ibeh, 2005). As a
result, because the thesis focuses on the entrepreneurial firm, it is thought that any
framework that focuses specifically on the influence of the entrepreneur owner-manager
of the SME and its internationalisation behaviour cannot be left out.
Although the IE event is associated with the speed of internationalisation, sector (e.g.
high technology industries), products (e.g. software products), developed countries (e.g.
the USA), new small and medium-sized firms (e.g. international new venture firms), the
time of internationalisation (e.g. internationalisation at inception) and the unique
entrepreneurial characteristics as discussed above, the thesis examines only the
entrepreneurial behaviour characteristics associated with the event. So it seeks to
explore the extent to which the entrepreneurial behaviours associated with the event
would trigger initiation of export activity by SMEs from Ghana, and the extent to which
they would facilitate the capacity of the firms to meet their export orders.
The entrepreneurial behavioural assumptions explored in this thesis are in line with the
findings by researchers (e.g. McDougall et al., 1994; Oviatt and McDougall, 1994;
Oviatt & McDougall, 1995; McAuley, 1999; Dimitratos & Plakoyiannaki, 2003).
Previous studies that apply the IE theory to SMEs internationalisation research include
countries like the USA (Knight & Cavusgil, 2004) and Finland (Autio et al., 2000;
Wickramasekera & Bamerry, 2003). Additional evidence of previous applications of the
IE theory to SMEs internationalisation is presented in detail in Appendix E.
In relation to its strengths and weaknesses, for example, IE theory was initially
criticised on the grounds that the entrepreneurial behaviour associated with the
phenomenon cannot be limited to small new venture firms (as already mentioned
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above), but it is a behaviour that can be manifested in the domestic firm, international
firm, the SME as well as the large multinational corporations. Another of its strengths is
that this framework has the capacity to capture the personality influence of the owner-
manager of a SME in detail when explaining its export behaviour.
2.5 LIMITATIONS OF THE PROPOSED INTEGRATED THEORETICAL
FRAMEWORK TO BE ADDRESSED BY THE THESIS
As can be seen from the above, none of the theoretical frameworks discussed are
without their limitations, but this thesis does not seek to resolve all the issues. However,
by examining the research questions behind the thesis, it seeks to address the following
limitations. First, stage theory predicts that: (1) a firm’s export behaviour is gradual, (2)
a firm internationalises into only psychologically close countries, (3) a firm’s resource
mobilisation towards its internationalisation activity is achieved by its own efforts and
(4) that the influence on a firm towards export activity derives wholly from its internal
environment, with no consideration given to the impact of the external environment.
Furthermore, stage theory focuses on the firm and excludes the owner-manager behind
it in analysing its export behaviour.
Second, the RBV theory also fails to consider the influence of the external environment
(e.g. the role of industrial associations & government’s departments) on the SME’s
export success. In addition, the RBV framework fails to consider the influence of
network partners’ resources, which can sustain export business where the firm’s own
capacity is exhausted and/or inadequate. Furthermore, RBV also fails to account for the
importance of the external environment on the SMEs’ export behaviour. It is assumed in
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this thesis that these limitations, associated with these two theoretical frameworks in
particular, limit in-depth understanding of the event under study. As a result, it is
expected that the integration of other theoretical frameworks (i.e. network and
contingency frameworks) to these frameworks in this thesis, with the evidence from
Ghana, would help resolve these weaknesses and shed fuller light on the topic.
2.6 JUSTIFICATION FOR THE PROPOSED INTEGRATED THEORETICAL
FRAMEWORK BEHIND THE THESIS
Although some studies (e.g., Bell, 1995; Coviello & Munro, 1995; Reuber & Fischer,
1997; Moen & Servais, 2002) apply a single theoretical framework to analyse the
SME’s internationalisation behaviour, this thesis departs from that line of research. The
thesis builds on the argument that the internationalisation behaviour of the SME
signifies a complex phenomenon that cannot be fully accounted for by any single
theoretical framework. As a result, the thesis builds on the work of researchers (e.g.
Coviello & Martin, 1999; Crick & Spence, 2005; Coviello & Martin, 2006; Rialp et al.,
2006; Hall & Cook, 2009) who apply more than one theoretical framework and thus
adopt a similar line of argument in their respective studies on the topic. Moreover, it is
stressed that an integrated theoretical framework offers greater potential to explain the
SMEs’ export behaviour than a single theoretical framework. As a result, it is not
uncommon to find a statement such as:
We are better able to understand the internationalisation process of
small businesses by expanding our research focus to include the models
of incremental internationalisation with the network perspectives.
(Coviello & Munro, 1997: 379)
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There is considerable justification for applying more than one theoretical framework.
For instance, apart from the fact that the event constitutes a complex phenomenon, none
of the theories is without weakness and hence integration offers mitigation of their
individual limitations. Previous studies have applied more than one theoretical
framework to address the topic in the following ways: (1) three integrated theoretical
frameworks (i.e. the network theory, RBV and international entrepreneurship theory)
(Coviello & Cox, 2006); (2) three integrated theoretical frameworks (i.e. the FDI
theory, stage theory and network theory) (McAuley, 1999); (3) three integrated
theoretical frameworks (i.e. the RBV, network theory and contingency theory) (Crick &
Spence, 2005); and (4) two integrated theoretical frameworks (i.e. the RBV and stage
theory) (Hall & Cook, 2009). Appendix F contains further synthesis of studies that have
used integrated theoretical frameworks to address the event in detail.
In this thesis, four theoretical frameworks are integrated and applied, since most studies
that address the topic employ one or more of the four selected theoretical frameworks
(see e.g. McDougall et al., 1994; Bell, 1995; Coviello & Munro, 1995; Oviatt &
McDougall, 1995; Covielo & Munro, 1997; Reuber & Fischer, 1997; McAuley, 1999;
Westhead et al., 2001; Moen & Servais, 2002; Reuber & Fischer, 2002; Ibeh, 2003;
Dimitratos & Plakoyiannki, 2003; 2004; Gemser et al., 2004; Knight & Cavusgil, 2004;
Ibeh, 2005; Ibeh & Wheeler, 2005; Boojihawon, 2007; Ruzzier & Antoncic, 2007; Hall
& Cook, 2009; Williams, 2009; Zhang et al., 2009)..
The factors in the four theoretical frameworks are integrated in such a way as to provide
the thesis with a streamlined and robust line of argument. Overall, it is proposed in this
thesis that the light shed by the integrated theoretical framework on the SME export
behaviour will be deeper than could be achieved using more limited alternatives.
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Finally, it is assumed in the thesis that full, detailed understanding of the event could
not be achieved, even with application of the four selected frameworks, unless the
strategies (planned or unplanned) of the SME are considered in the light of the changing
trends of the external environment. Consequently, the contingency framework is applied
in the thesis to supplement the integrated theoretical framework in order to address any
influences emanating from the external environment that impact on the SME export
behaviour.
2.7 CONTINGENCY THEORY
Contingency theory originates from the organisational management discipline. Kuada
and Sorensen (2000) credit the writings on contingency theory to Lawrence and Lorsch
(1967). According to Kuada and Sorensen (2000), Lawrence and Lorsch (1967) argue
that there cannot be an independent emergent and/or strategic approach by a firm,
because the structure of the environment and its conditions directly or indirectly shape a
firm’s strategy. As a result the firm adapts either directly or indirectly to the changing
trends of the environment, popularly called organisational adaptation and/or strategic fit.
With regard to the contingency theory and the SME’s internationalisation behaviour, the
contingency theory’s main assumption is that the internationalisation behaviour of the
SME is dynamic and multifarious because it is partly dependent on the firm’s capacity
and partly the environmental conditions (e.g. the demand condition, type of industry,
industry structure, general technological development and government programmes)
(Ibeh, 2003b; Crick & Spence, 2005; Li et al., 2004). Implicitly, although the
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environmental factors are exogenous to the focal SME, the SME’s behaviour is
consequently shaped directly or indirectly (formal or emergent) by the contingency
factors. Therefore, it is assumed that it is the forces of the four theoretical frameworks,
coupled with the contingency factors, which determine the SME’ capacity to respond
positively to triggers of export initiation and enable the SME to meet its export orders
and subsequently to develop and sustain its export business.
In terms of the problem statement the thesis seeks to examine, the contingency theory’s
assumptions imply that the ability of one SME to adapt the influences and requirements
of the external environment to its internal environment, whilst similar others cannot do
so, regardless of the fact that they all operate in the same industry, location and face the
same market conditions, would explain why that firm exports while the others do not.
Sample variables of the external environment include: competitor action, government
action, industry influence, technology and the influence of trade associations.
From the studies reviewed in this study, it can be assumed that insufficient research has
as yet been undertaken on the impact of the external environment on SME export
behaviour. This observation confirms the call by Sousa et al. (2008) for researchers to
advance knowledge in that area. Application of the contingency theory in this thesis
increases the robustness of the proposed integrated framework through seeking to
address some of the weaknesses in the RBV and the stage theory discussed above
(Section 2.5). For instance, the assumptions of contingency theory counteract certain
predictions made of RBV and stage theory by Barney (1991) and Johanson and Vahlne
(1977) respectively, as the two frameworks assume that the export success of a firm
emanates wholly from factors relating to its internal resource capacity.
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2.8 SELECTED VARIABLES BASED ON THE PROPOSED INTEGRATED
THEORETICAL FRAMEWORK
Drawing on the assumptions of the five proposed theoretical frameworks integrated to
guide the thesis, the following variables, namely (1) foreign ownership structure, (2)
firm size, (3) firm age and (4) human capital (i.e. the aggregate education level of full-
time employees), are examined in detail. These five main variables form the basis of
statistical analysis of the thesis (Chapter 5). They are discussed in turn.
2.8.1 Ownership Structure and Export Propensity
The body of studies in this area focus on the relationship between the ownership
structure of the SME and its influence on whether or not the firm will export. Within
this body of research, different dimensions of ownership structure are researched. Some
researchers study the influence of family ownership versus corporate ownership, and
whether or not this would lead the SME to export (Fernández & Nieto, 2006). Another
group (Hall & Tu, 2003) research the effect of independent ownership (e.g. managed by
the owner (s)) and subsidiary ownership (e.g. corporate ownership) and whether or not
the SME would invest abroad (Hall & Tu, 2003). Moreover, others have examined
public ownership (public limited liability) versus private ownership (private limited
liability), and its influence on the export propensity of the SME (Javalgi et al., 2000). In
addition, some have also examined the different institutional investors and their
influence on the SMEs’ scope to pursue international activities (Tihanyi et al., 2003;
George et al., 2005; Fernández & Nieto, 2006).
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Further to this, other researchers have investigated wholly domestic ownership versus
partial domestic ownership (i.e. partly foreign-owned and partly locally-owned), and
their influence on the export decisions of the SME (Cerrato & Piva, 2007). This present
study extends the latter line of research and examines the influence of wholly domestic
ownership versus partial domestic ownership on the export decisions of SMEs. Unlike
other studies (e.g. Javalgi et al., 2000; Tihanyi et al., 2003; Hall & Tu, 2003; George et
al., 2005), which examine the effect of a particular ownership structure (e.g. wholly
public ownership and wholly private ownership) on the SME export decision, the
uniqueness of the latter line of research is that it examines the combination of two
ownership structures and its effect on the SMEs’ international decisions (i.e. the hybrid
ownership structure). It is argued in this thesis that the sum of such a synergistic effect
will therefore be more than the effect of the individual ownership structures which the
previous studies above examine.
For instance, as a result of the importance of synergy between foreign partners and
indigenous local firms and its positive influence on the SME’s propensity to export,
most governments develop policies which attract foreign firms to invest in the host
country. Tax allowances and the lifting of duty as well as investment allowances are
among the policies most governments use to attract foreign investors to their countries
(Greenaway et al., 2004). Although studies have been carried out on the general effect
of foreign partners’ participation (spillover effect) in the host country, as regards the
activities of the indigenous firms, they mainly focus on the developed world. Therefore,
in this study, the debate is extended to cover Ghana since the government of Ghana has
implemented various policies over the years which seek to attract foreign investors to
the country (Abor & Harvey, 2008).
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Foreign firms which operate in various host countries augment the local firms’ resource
capacity with new technology, physical capital, management expertise, international
market knowledge and global distribution network opportunities (Zhang &
Felmingham, 2001). Moreover, while these advantages benefit the host country’s firms,
the foreign firms also gain, since in developing countries (like those of sub-Saharan
Africa for instance), they have access to cheap labour, land and raw materials. However,
most of the benefits will accrue to the local firms, as in Africa most firms are SMEs and
are more resource constrained than their counterparts in the developed world.
Kneller & Pisu (2007) classified the benefits which accrue to host country firms as a
result of partnerships with foreign businesses in terms of productive spillovers and
export spillovers. On one hand, as a result of the competition between the foreign firms
and the indigenous firms, the capacity of the indigenous firms is indirectly strengthened
(i.e. productive spillovers). On the other hand, some of the activities of the foreign firms
(e.g. partnership and/or alliances) will directly influence some of the indigenous firms
to initiate export business (export spillovers).
Despite the attention this line of research is gaining, its empirical front is divided. In a
recent study, Kneller and Pisu (2007) used a British manufacturing sample from 1992 to
1999, and considered whether export spillovers flow from foreign firms to the
indigenous UK’s firms. They found that the export decisions of the UK’s domestic
firms do not seem to be influenced by the contacts they may have with foreign
multinational enterprises, this being consistent with their 2005 paper (Kneller & Pisu,
2005). Barrios et al. (2003) studied a Spanish sample from 1990 to 1998 to investigate
the effect of foreign multinationals’ activities on the export behaviour of firms in Spain.
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In this study, the researchers failed to find evidence to support the proposition that
export spillover emanates from foreign firms’ activities to the domestic firms.
Likewise, Ruane & Sutherland (2005) studied an Irish sample from 1991 to 1998 to
examine the effect of similar influences; they found that the export intensity of foreign
owned enterprises was negatively associated with the export propensity and intensity of
Irish domestic owned firms. It would appear that the negative evidence above
discourages governments from developing policies to attract foreign direct investment
into their countries, but other reports exist to counter the above evidence. For instance,
Greenaway et al. (2004) studied a UK sample from 1992 to 1996 to analyse a similar
proposition; however, the authors found a strong association between the activities of
multinational firms and the export propensity of the UK firms.
In addition, Cerrato & Piva (2007) used 1,324 cross-sectional samples from Italy and
found that the presence of foreign partners among SMEs in Italy is positively associated
with their export propensity. Similarly, Aitken et al. (1997) researched 2,104 plants
from Mexico, from 1986–1990 to investigate the same association. In that study, the
researchers found that the foreign firms served as significant catalysts for the decisions
of Mexican firms to export. Furthermore, there has been some argument about whether
or not China’s export growth has been partly influenced by foreign investment flows
into the country. Following this debate, Zhang & Song (2000) found strong evidence to
show that the activities of foreign firms promote the successful export decisions of
Chinese firms, maintaining that the influence impacted on China’s export boom.
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Additionally, Sojöholm & Takii (2008) focused on 26,987 plants in Indonesia between
1990 and 2000 to examine the impact of foreign ownership and the export propensity of
Indonesian SMEs. The researchers found that plants in the Indonesian manufacturing
sector with foreign ownership were substantially more likely to start exporting than
wholly domestic-owned plants. Niringiye et al. (2010) found that in Uganda, firms with
foreign ownership were more likely to export. Rankin et al. (2006) also found that
foreign ownership predicted the propensity to export from sub-Saharan Africa. Using a
sample from Africa, Clark (2005) found that foreign ownership significantly predicts
the export involvement of firms from Africa. In a study on Slovenia and Estonia by
Matija et al. (2001), the researchers found evidence to show that foreign ownership
matters most as far as the export propensity of domestic firms is concerned.
In recent years, the government of Ghana has implemented policies which aim to attract
foreign investors. These policies include the Ghana Freezone Policy and the
establishing of the Ghana Investment Promotion Council (GIPC) (Abor et al., 2008). In
the wake of these measures, it is reported that between 1994 and 2002, the Ghana
Investment Promotion Centre registered 1,309 foreign direct investment projects
(FD1s). According to Abor et al. (2008), the project distribution among the various
sectors consisted of: the service sector - 388 projects; the manufacturing sector - 368
projects; the tourism sector - 153 projects; the building and construction sector - 106
projects and the agriculture sector - 105 projects. Of the 1,309 projects, the authors
report that 912 were joint foreign-Ghanaian ownerships, while 397 were wholly
foreign-owned. As a consequence of the above investment flow to Ghana, it can
therefore be argued that similar export spillovers will accrue to Ghanaian local firms.
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Hence, in line with the assumptions of the resource-based view (i.e. the total human
capital resource capacity the foreign partners (management team) bring to bear on the
indigenous firms’ capacity) and the network theory (i.e. networking/partnering with
foreign business people), the contributions by which foreign firms augment the capacity
of the domestic firms will place the beneficiary firms at an advantage. As a result, the
new level of resource capacity of the local firms will put these firms in a more
advantageous position to respond positively to export stimuli, organise themselves to
initiate export business and meet their export orders. The relationship between foreign
participation in the host country’s enterprises and their propensity to export will
therefore be explored statistically in Chapter 5 of the thesis.
2.8.2 Firm Size and Export Propensity
The assumptions of the resource-based view of the firm and the stage theory of
internationalisation stress the importance of the ownership of essential resource stocks,
commonly defined in the literature as the size of the firm and/or the productive capacity
of the firm (Calof, 1993; Obben & Magagula, 2003; Hall & Cook, 2009). The RBV and
stage theory predict that larger firms will be more likely to export because they will
possess much greater resource capacity, enabling them to serve the international market:
unlike SME that are resource constrained. Of these two theories, stage theory in
particular stresses the bulk of a firm’s resource capacity, while the resource-based view
focuses not only on the bulk, but also on the nature of the resource stocks (i.e. their
quality). As a result, both theories predict that an adequate volume of vital resource
capacity must precede initiation and subsequent development of export business.
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Although the empirical association between firm size and the probability of exporting
has been researched extensively, there is not complete concurrence among the
outcomes. This is illustrated by Banoccorsi (1992), who reviewed and synthesised
proportions of the previous research concerning the predictors of export propensity prior
to 1992; Table 2.7 summarises the papers.
Table 2.7: Summary of Findings Concerning the Effect of a Firm’s Size on its
Export Behaviour
Author, Date of
Publication
and General Description
Ried (1982), a review of 21
studies on firm size and
export behaviour
Gemunden (1991), a
general review of 50
studies in which 30 include
size among their
independent variables
Miesenbock (1988), a
general review of 200
studies
Source: Bonaccorsi (1992: 607)
Major Findings Empirical Support
Firm size is related to
exporter/non-exporter
variable
Firm size is related to
exporter/non-exporter
variable
There is a positive
relationship between firm
size and export propensity
Three out of four studies
supported the hypothesis
Eleven out of 12 studies
supported the hypothesis
Eighteen out of 20
studies supported the
hypothesis
The findings in Table 2.7 reflect divided positions. Some studies found no relationship
between size and export behaviour while others found a strong relationship. Further,
Bonaccorsi (1992) concluded that his empirical survey on Italian firms supported the
positive association between size and export propensity. More recently, Hall & Cook
(2009) sampled 74 firms in the UK and tested the effect of size on whether or not the
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small firm would export; but found no significant results to support either effect. In
addition, Calof (1993) used 38 samples from Canada to conduct a similar examination.
Here it was concluded that size did not appear to limit a firm’s ability to initiate export
business. However, large firms in particular demonstrated a higher propensity to export
than their smaller counterparts. Furthermore, Philip (1998) sampled 280 manufacturing
firms in Australia and investigated the effect of the very small firm (VSF) and the
likelihood of its export propensity. In this study, it was concluded that the size variable
was not a significant discriminator of export propensity and that it made very little
contribution in explaining probability of export in Australia.
It seems paradoxical that the firm’s size, which represents its productive capacity, might
not be a predictor of a decision to export, and in contrast, Hall & Tu (2004), in studying
42,721 plants from the UK in 19 sub-sectors, found a strong association between size
and export propensity. Mittelstaedt et al. (2003) sampled 2,822 plants from 49 different
industries in the USA and also found a significant relationship between size and export
propensity. They concluded that, regardless of a firm’s productivity level, capital
intensity, product and service characteristics, size constitutes a significant discriminator
of the export propensity of firms. Here, the authors recommended a minimum
workforce size of 20 employees as the threshold for firms that intend to consider export
business. Obben and Magagular (2003) undertook a similar investigation into
manufacturing SMEs in Swaziland, in the course of which they found a significant
effect between size and the propensity to export. Latterly, Mittelstaedt & Ward (2006)
followed up their earlier study in 2003; they sampled 43,707 manufacturing SMEs
located across eight states in the USA and found support for the effect of size on export
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propensity, consistent with their 2003 findings. However, they maintained that smaller
firms with less than 20 employees could export if they were located in urban centres.
Furthermore, in another recent study, Poff et al. (2008), although they agreed that the
larger firm is more likely to export than the SME, challenged the initial threshold
requirement of 20 employees of Mittelstaedt et al. (2003) and contended that the SMEs
– even those with zero or one employee – were capable of exporting. As a result of the
positive evidence and the counter findings above, it appears that more research is
needed in order to establish the existence and the direction of such a relationship. In
fact, the variations concerning the construct measurements with regard to the actual
definition of size could be one of the major causes of division on the empirical front.
For example, while in some studies micro firms are defined as those having nine or
fewer employees (e.g. Philip, 1998), in other studies the definition used can be fewer
than two (e.g. Obben and Magagular (2003).
Inconsistencies also occur in studies which use a sales value as the proxy for size, with
regard to the exact definition of figures (see Calof, 1993). Furthermore, Soderbom &
Teal (2003), using macro and micro evidence from nine African countries, found that
the most important factor in predicting whether or not a firm will export both regionally
and internationally is its size.
Regardless of the above divisions on the empirical front concerning the effect of size
and the propensity to export, the theoretical and intuitive reasons behind the hypothesis
remain strong because of the fixed cost element associated with export business. Hall &
Tu (2004) and Mittelstaedt et al. (2003) argue that the dimension of the fixed cost
attached to export business justifies the need to build the firm’s size, this being an
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indicator of its productivity, especially prior to initiating export business. Mittelstaedt et
al. (2003) contended that the cost of International Standard Organisation (ISO) training,
which appeared to be compulsory for firms planning to internationalise, ranged from
US$30,000 to US$750,000 in South Carolina, USA. According to the authors, such a
pre-condition may be difficult for the SMEs to bear.
As a result, following the economies of scale and fixed cost assumptions, it seems
reasonable to argue that the size of the firm is an important determining factor of
whether or not a firm will export. The economies of scale assumption implies that the
impact of fixed costs will be lesser on firms that are larger (e.g. due to their large
activity/sales levels and also profitability). This proposition is important to this study’s
context because in Ghana firms tend to be extremely small and medium-sized compared
to similar firms in developed economies. As a result, firms in Ghana will have to ensure
that they are large enough to meet the demands of the international market in order to
fund the search and negotiation costs associated with international business. Such a test
could be of benefit to both policy makers and practitioners. Based on the argument
above, the relationship between the size of the firm and its propensity to enter the export
market will be examined statistically in chapter 5 of the thesis.
2.8.3 The Age of the Firm and the Propensity to Export
Stage theory and the RBV theory provide considerable support for the positive effect of
a firm’s age on its export propensity. The resource-based view predicts that the
ownership of important resources accounts for the variations in firms’ performance in
an industry, whether domestic or abroad. In addition, stage theory predicts the need for
prior experiential knowledge in the export business and also predicts that a firm can take
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a long time to accrue experiential knowledge. What can be implied here is that the two
theories predict that older firms will possess more experience (resources) than new and
younger firms in the same industry.
As with the size of the firm and its ownership structure (sub-Section 2.8.1), the
empirical outcomes regarding the effect of age and whether or not the SME will export
also vary. Zahra (2005) and Schulz et al. (2009) argue that the unusual presence of
small and medium-sized new venture firms in the international market at their inception
challenge the assumption of a positive effect of the age of a firm on its propensity to
export (i.e. as claimed by the stage theory). McDougall et al. (1994) examined the
behaviour of new international venture firms and found that the new small and medium-
sized venture firms do not follow the gradualism hypothesis suggested by the stage
theory, which indicates that younger firms are unlikely to export. Moen and Servias
(2002) examined the export behaviour of small and medium-sized enterprises in
Norway, Denmark and France. In this study, the authors did not find evidence to
support the proposition that export market decisions are influenced by the age of the
firm. Similarly, Bell (1995) undertook a cross-national investigation in Finland, Ireland
and Norway of the gradual export development assumption in the stage theory, but
failed to support the hypothesis. In addition, Wolff & Pett (2000) used sample of 157
firms from the US to examine the link between the gradualism hypothesis and the
export behaviour of the SME, but also failed to find support for the hypothesis.
Andersson et al. (2004) investigated a set of contingent factors and their impact on the
international activities of small businesses. In their study, using data from Sweden, the
authors found that the number of years a firm had been in existence was not a
significant determinant of the level of its internationalisation. Some researchers argue
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that, as firms grow in years, they face structural inertia, which makes them relax, even
as regards decisions on export business (Autio, 2000; Williams, 2006).
Etemad (2004) contends that globalisation forces have rendered irrelevant the criterion
adopted by the stage theory of the time which firms have to wait before they gain the
necessary experience enter the export market. That is, although some firms may follow
stages, the stages are now shorter. According to Etemad (2004), because of
globalisation, firms have access to a constant stream of diverse information, which
counters the gradualism hypothesis in the stage theory; as a result, age may not count in
the decision as to when to enter the export market. Hall & Cook (2009), using a UK
sample, also found that age was not a significant predictor of export propensity.
Boojihawon (2007) and Ruzzier & Antoncic (2007) further argue that the gradual
process of resource acquisition and learning do not hold since network ties enable SMEs
to access a wide range of resources and consequently to enter the export market at a
faster pace.
In contrast, Brouthers and Nakos (2005), using a Greek sample, found that older firms
were associated with a greater level of export activity than younger firms. Javalgi et al.
(2000) sampled 20,204, manufacturing firms from the US and tested the effect of firm
age on the propensity to export; here they found support for the effect of age on the
firm’s propensity to export. In this study, the authors contended that both at the
aggregate and firm level, the increase in age increased the propensity to export. As a
result, despite the division of this proposed association, it is theoretically and intuitively
plausible to argue that a firm’s years of practice in an industry constitute its stock of
knowledge and experience (resources). Therefore, drawing on the resource-based view
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of the firm as well as the stage theory, the relationship between the age of the firm and
whether or not it will export will also be examined empirically in the thesis.
2.8.4 Human Capital and Export Propensity
Within the internationalisation research field, the effect of human capital on the export
decisions of the small business is contentious. Various lines of research exist in this
debate. Generally, human capital refers to factors related to the owner-manager’s
personality and the impact this has on the firm’s export behaviour. This perspective is
popular in the literature (see Manolova, 2002; Ruzzier et al., 2007; Hall & Cook, 2009).
Dimensions of the entrepreneur’s human capital that have received recent attention
include the entrepreneur’s international business skill, international business travel and
orientation, management know-how and perception of the level of environmental risk
(Manolova, 2002; Ruzzier et al., 2007).
In addition, Hall & Cook (2009), drawing on a UK sample, added the following human
capital dimensions of the entrepreneur: (1) the possession or lack of a degree – which
they defined as the entrepreneur’s education; (2) the years of previous business
experience; (3) previous managerial experience in the export firm, and (4) proficiency
in one additional foreign language. Other researchers have used some of the above
dimensions and combined them with other variables, depending on the research
question they wished to address; in particular, the entrepreneur’s education level, gender
and age have received attention (Obben & Magagula, 2003; Orser et al., 2009).
In contrast, some researchers have shifted the focus away from the owner-manager’s
human capital dimensions and examined instead the human capital dimensions of the
management team from the entrepreneurial firm and its influence on the SME export
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ehaviour (Reuber & Fischer, 1997; Hutchinson & Quinn, 2006). Another group of
researchers have turned their attention to the human capital of the general workforce of
the entrepreneurial firm and its effect on the firm’s propensity to export. This line of
research is motivated by the argument that workers’ skills and competence are linked to
their levels of education and, therefore, the higher the quality of the workforce, the more
likelihood there is that the entrepreneurial firm will export (Bernard & Jensen, 2004;
Alvarrez, 2007; Cerrato & Piva, 2007).
The present study extends the latter line of research, arguing that in respect of this
information, neither age nor one person nor a group of persons (e.g., the entrepreneur
and/or his top management team) can be the sole major factor behind a firm’s success.
Therefore, successful organisations in the international market will be those that draw
on the skill set of the entire workforce and not solely on one entrepreneur or the
management team.
Following Varga (2000), Audretsch & Thurik (2001) and Audretsch et al. (2005),
workforce human capital and its influence to enhance a firm’s decision to enter the
export market can be said to be linked to the knowledge spillover theory. Knowledge
spillover theory concerns the direct and indirect transfer of knowledge from one firm to
another (Audretsch & Thurik, 2001; Audretsch et al., 2005; Gilbert et al., 2008). The
spillover theory assumes that innovative activities of firms (e.g. technological
innovation, innovative information about new products or services and innovation about
organisational processes and routines) spill over to other firms, which impacts
positively on the recipient firms’ behaviour, including export decisions. The beneficiary
firms may be in the same industry, operate as clusters, operate in the same location or
sometimes may be operating in regional centres. Studies (e.g. Almeida, 1996; Lee et al.,
Page 90

2000; Fabel et al., 2002) contend that the primary means for knowledge spillover within
a geographic region is through employees’ mobility. Lee et al. (2000) argue that
workforce mobility from firm to firm facilitates knowledge spillover; consequently, the
whole nation gains as knowledge spreads throughout the regions. In relation to export
propensity, it can be argued that workers who have worked previously in export
companies are likely to carry over their tacit knowledge into the current firm, thereby
facilitating the firm’s export decision.
This line of research is not yet popular in the field, but some empirical evidence does
exist. For example, Bernard & Jensen (2004) used a panel of US manufacturing plants
to examine factors which increased the probability of the firm’s entry into the export
market. In the study, the authors found that the quality of the workforce was defined in
terms of high average wage and level of white collar employment, which were
significantly correlated with the probability of exporting.
In addition, Alavarex (2006), using a sample from Chile, found that firms with qualified
workers were more able to enter the export market. Furthermore, Cerrato & Piva (2007),
using a sample of 1,324 SMEs in Italy, discovered that the number of graduates in the
workforce, in relation to the firm’s total number of employees, positively and
significantly influences the decision of SMEs to export. Gilbert et al. (2008) confirmed
the knowledge spillover hypothesis, using a US sample. Therefore, following the RBV
of the firm, organisations with an educated workforce will possess a greater variety of
skills and abilities than similar firms which do not possess such an educated workforce.
This diversity of skills of the educated workforce will then enable the entrepreneur firm
to respond positively to the export stimuli and enter the export market. In accordance
Page 91

with this line of argument, the effect of the workers’ education on decisions whether or
not to export will also be examined statistically in the thesis.
2.8.5 Sector’s Influence and Export Propensity
It is argued that the understanding of the event under study would not be fully
unravelled unless the impact of the external environment is understood (Sections 2.7).
In the literature, the importance of the external environment’s influence on the SME
export behaviour has received some attention. Among the external factors, the influence
of foreign and domestic market characteristics on the export behaviour of the SME has
been emphasised (Zou & Stan, 1998; Zhao & Zou, 2002; Sousa et al., 2008). Among
domestic market characteristics, a sector’s export intensity and propensity, sector size
and industry concentration have all received researchers’ attention (Zhao & Zou, 2002;
Suárez-Ortega & Ălamo-Vera, 2005; Iyer, 2010). As the firms in the data set used in
this study (Chapter 5/Empirical Chapter 1) belong to different manufacturing sectors
(i.e. the machine sector, the metal sector, the furniture sector, the garments & textiles
sub-sector and the wood sector), industry specific effects come under examination.
Therefore, in the light of assumptions of contingency theory concerning the influence of
the external environment on the small firm’s export behaviour, the relationship between
sector/industry influence and export propensity of the SMEs are examined statistically
in the thesis.
The table below provides a summary of the selected empirical findings in relation to the
effect of foreign ownership, firm size, age (among others) and export propensity.
Page 92

Table 2.8: Samples of Empirical Findings on Export Propensity
Country Author Theory Indicative Findings
Spain Barrios et al. 2003 FDI Firm Size (+), firm age
(+), skilled workforce (+)
Italy Cerrato & Piva (2007) RBV Firm age (+), firm size
USA Mittelstaedt & Ward
(2006)
(+), f.ownership (+),
number of graduate
workers, (+)
n/a Firm size (+)
UK Hall & Tu (2003) RBV & Stage Theory Firm size (+), Firm age (-)
Spain Maňez et al. (2004) n/a Firm age (+), firm size
(+), f.ownership (+)
textile sector (+), wood
sector (+)
Chile Alvarez (2007) n/a Firm size (+), skilled
Italy Toni & Nassimbeni
(2001)
workforce (+),
f.ownership (+)
n/a Firm size (+), firm age (+)
UK Hall & Tu (2004) Stage theory Firm size (+), firm age (+)
USA Javalgi et al. (2000) n/a Firm size (+), firm age (+)
Belgium Vermeulen (2004) Factor content &
Swaziland Obben & Magagula
(2003)
economies of scale
theories
Firm size (+), skilled
workers (-)
n/a Firm size (+)
USA Javalgi et al. (1998) RBV Firm size (+), firm age (+)
Continued on the next page
Page 93

Table 2.8 continued
Spain Suárez-Ortega et
al. (2005)
RBV Firm size (+)
China Zhao & Zou (2002) n/a Firm size (+),
textile & apparel
sector (+)
Colombia Robert & Tybout
(1997)
n/a Firm size (+), firm
age (+), textile
sector (+), chemical
(+)
Mexico Aitken et al. (1997) n/a Firm size (+),
f.ownership (+)
USA Bernard & Jensen
(2004)
n/a Firm size (+),
skilled workforce,
f.ownership (+)
Sources: Synthesised from studies listed in Table 2.4
Keys: f.ownership= foreign ownership; n/a =not applicable in the study
An overall illustration of the proposed integrated theoretical framework applied to the
thesis is supplied in Figure 2.6 below.
Page 94

Figure 2.6: The Integrated Theoretical Framework for SME Export Behaviour
Environment’s influence
Source: Proposed by Author
External Influence (contingency theory)
---------------------------------------------------------------------------------------------------------------
Stage Theory
Network Theory
Resource-based View
International
Entrepreneurship
Internal influence
Internal influence
---------------------------------------------------------------------------------------------------------------
Environment’s influence
Stimuli
Export
Decision
Barriers
Export
performance
Non-exporting
External influence (contingency theory)
Figure 2.6 implies that each of the theoretical frameworks integrated into the thesis has
its limitations. Therefore, this integration highlights and attempts to offset their
respective weaknesses. In addition, in order to provide a fuller understanding of what is
assumed to be a complex phenomenon, the figure represents the combination of factors
from: (1) stage theory (e.g. prior operating domestic experience, prior experiential
knowledge in the export market, receipt of unsolicited orders, psychic distance, firm
size, firm age, gradual export development, and firms with older managers); (2) network
theory (e.g. the network relation with business associates, agents, customers and
suppliers, family members and friends, government department/agency/ministry and
Page 95

industrial associations, either in the local market or the international market or both); (3)
the RBV theory ( e.g. internal resource stocks of the small firm, including the
personality characteristics of the owner-manager); (4) IE theory (e.g. excessive alertness
to profitable international opportunities, positive international attitudes and orientation,
international business networking behaviour, international orientation, an excessive
proclivity for international ideas, a high need for international achievement, strong
personal drive, ambition, and motivation for internationalisation, international risk-
taking attitude) and (5) contingency theory factors (e.g. competitor action, government
action, industry influence, and the influence of trade associations).
Furthermore, it is assumed that the integrated framework will offer a full understanding
of why one SME responds positively to export triggers, initiates export business and is
able to meet its export orders while similar others do not, even though they all operate
in the same industry, location and face the same market conditions. In addition, the
proposed framework further implies that whilst the firm can explore export
opportunities through its own motivations and/or capacity (i.e. RBV and stage theories
influence), such internal capacity alone is not enough, especially when considering a
firm in a developing African country (e.g. Ghana). As a result, it is a firm’s access to its
network relations’ stock of resources that brings it into the position to achieve export
success. The framework suggests that, in today’s fast-changing world, a successful
decision requires a firm to possess the ability to align its strategy (planned and/or
emergent) to the changing trends of the external environment. Hence, to be successful in
the export market a firm must be alert to the contingency factors in the external
environment.
Page 96

2.9 SUMMARY OF THE MAIN DIFFERENCES AND SIMILARITIES
AMONG THE SELECTED THEORETICAL FRAMEWORKS
In addition to the graphical representation of the proposed integrated theoretical
framework, each theory is briefly summarised by comparing and contrasting them using
the following themes, namely (1) the accredited writer(s), (2) any acronym, (3) the
alternative name, (4) the main dependent variable, (5) the main independent variables
and (6) originating discipline, (7) time to enter the international market, (8) mode of
entry (9) sustaining internationalisation operations, (10) pace of internationalisation,
(11) resource mobilisation and development for internationalisation activity (12)
whether the theory focuses on the firm and/or the entrepreneur, or both in explaining
export behaviour and (13) environmental influence (Table 2.9).
Page 97

Table 2.9: The Main Differences & Similarities among the Selected Theoretical Frameworks
Theory Accredited writer Acronym Alternative names Main dependent
(s)
variable
Resource-based Barney (1991) RBV Resource-based Firm
view
theory (RBT) performance/Export
behaviour
Network theory Johanson & n/a Social
Firm
Mattsson (1988)
capital theory performance/Export
behaviour
International
entrepreneurship
Stage
Theory
Contingency
theory
Continued on the next page
Oviatt &
McDougall (1994)
Johanson &
Vahlne (1977)
Lawrence &
Lorsch (1967)
IE Born global theory Firm
performance/Export
behaviour
n/a Uppsala
internationalisation
Theory/process
theory
n/a Organisational
adaptation
Firm
performance/Export
behaviour
Firm
performance/Export
behaviour
Page 98
Main independent
variables
Internal tangible
and intangible
resources
Resources from
formal & informal
network relations
(e.g. financial
capital,
information,
training, etc.)
International
entrepreneurial
behaviour (e.g.
vision, risk taking,
strong drive, global
mind-set, etc.)
Firm size, age,
psychic distance,
previous domestic
market experience,
etc.
External factors
(e.g. government
support, industry
structure and
condition, etc.)
Originating
discipline
Strategic
management
Sociology
Entrepreneurship
International
business
Organisational
behaviour

Table 2.9 continued
Themes
Theories
Time to enter the
international market
The stage theory The Resourcebased
view
After resources &
experience have
been built in the
domestic market –
takes time
Mode of entry Export business
first
Sustaining
internationalisation
operations
Pace of
internationalisation
Continued on the next page
Unilinear
Depends on the state
of the internal
resource capacity of
the firm
Depends on the
internal resource
capacity level of the
firm
Depends on the
internal resources
capacity level of the
firm
Gradual Depends on the
internal resource
capacity level of the
firm
The network theory The IE theory The contingency
theory
Depends on own
resources and
resources of formal
& informal network
relations, both in the
domestic
internal market
and
Depends on own
resource level & the
level of resources of
network partners
Depends on own
resource level & the
level of resources of
network partners
Depends on own
resource level & the
level of resources of
network partners
Page 99
Can be at inception
because of unique
entrepreneurial
behavioural factors
Depends on the
entrepreneurial
behavioural factors
Depends on the
entrepreneurial
behavioural factors
Depends on the
entrepreneurial
behavioural factors
Depends on the state
of relationship
between the external
environment and the
firm
Depends on the state
of relationship
between the external
environment and the
firm
Depends on the state
of relationship
between the external
environment and the
firm
Depends on the state
of relationship
between the external
environment and the
firm

Table 2.9 continued
Themes
Theories
Whether the theory
focuses on both the
firm & the ownermanager
Environmental
influence on the
export behaviour of
the firm
Resource
mobilisation and
development for
internationalisation
activity
Source: by Author
The stage theory The Resourcebased
view
The firm
No
A firm’s own efforts
The firm & the
entrepreneur-ownermanager
No
A firm’s own efforts
The network theory The IE theory The contingency
theory
The firm & the
entrepreneur-ownermanager
Yes
A firm’s own efforts
and the resources of
its network partners
Page 100
The entrepreneurowner-manager
Yes
Depends on the
entrepreneurial
factors to access
network relations’
resources
The firm & the
entrepreneur-ownermanager
and the
external
environment
Yes
Depends on the
external
environment and the
firm

2.9.1 The Link between Importing and Exporting Activity
While much research attention has been paid to outward internationalisation (e.g. export
business), it is also noted that conducting import business before exporting might
impact positively on export business. However, very little research as yet exists to shed
light on how initial importing activities might impact positively on later exporting
activities (Korhonen, 1996; Karlsen et al., 2003; Overby & Servais, 2005). As a
consequence, private practitioners and public policy makers have very little relevant
information to draw on with regard to how import business can impact on export
development. According to Korhonen (1999) and Karlsen et al. (2003), linkage exists
between import and export business and the causality runs from import business to
exporting. The basic assumptions from these researchers are that import activities (e.g.
purchasing of raw materials and purchasing of equipment and machinery) create the
opportunity for importers to build networks with foreign actors. These connections
generate benefits, including information about foreign businesses. Another assumption
is that through involvement in import business SMEs owner-managers learn the
dynamics of international business from their own experience. Implicitly, as a result of
importing experience and its attendant benefits, SME owner-managers’ export
behaviour is facilitated with regard to time of export market entry, the pace of the
exporting process, the choice of export market and the resources needed for further
export development.
While the proposed link between initial import business and subsequent export business
development seems plausible, contrasting results do exist. For instance, a European
study by Karlsen et al. 2003, failed to established support for the proposed link between
Page 101

initial export business and later export business. In another European study, Forsman et
al. (2002) failed to confirm the benefit of initial importing activities on later exporting.
In contrast, in a study of Finnish SMEs, Korhonen et al. (1996) found that most of the
Finnish firms start internationalisation activities on the importing side, before starting to
export, thereby supporting the assertion of the benefit of conducting initial importing
activities before exporting.
Page 102

2.10 NON-EXPORTING BEHAVIOUR
This section of the literature review focuses on the behaviour of non-exporting SMEs.
Non-exporting firms are classified into two dimensions in the literature: (1) firms that
have exported before but have now withdrawn from export business, and (2) firms that
have not exported before (no export experience) (Leonidou, 1995a; Williams, 2006).
Whereas most of the internationalisation literature focuses on the export behaviour of
the SME, only a few studies pay attention to the proportion of SMEs that do not engage
in export business (Leonidou, 1995b, 1995c, Fillis, 2002).
Leonidou (1995a) argued that such a gap exists because most policy makers find it
easier to encourage existing exporting firms to increase their export activities than to
expend fresh resources on encouraging non-exporters to initiate export business.
Another contributory reason may be that the earlier philosophical paradigm of this
research field was based on positivist philosophy. Generally, positivist philosophy seeks
to test existing theories, whereas qualitative research uses case studies to encourage new
theory building. As a result, researchers were not motivated to build new theories from
unexplored areas (e.g. on non-exporting small business behaviour).
Although there is a call to undertake qualitative research through case study research in
the field (Yang et al., 2006; Sousa et al., 2008), not many studies on non-exporting exist
compared to the number of studies that discuss the export behaviour of the SME. With
regard to existing studies on non-exporting behaviour, three main themes have
appeared: (1) studies that focus on the factors that discriminate between exporters and
non-exporters; (2) studies that focus on the non-exporters’ perceptions about the factors
Page 103

that trigger export initiation/export stimulating and/or facilitating factors; and (3)
studies that focus on the non-exporters’ perceptions of the problems exporters encounter
(i.e. export barriers). The first category of studies mainly aims to identify the
characteristics of non-exporting SME by comparing them with their counterpart
exporters on similar factors. A sample of the studies that have compared behaviour of
exporting and non-exporting SMEs is presented below.
Page 104

Table 2.10: Sample of Studies on Discriminating Factors between Exporters and
Non-Exporters
Author(s) Major Variable
Westhead et al.
Examined
Entrepreneur age,
(2001)
previous managerial
experience in
similar start-ups,
previous exporting
experience, ownermanagers
with
denser information
and
networks
contact
Hall and Cook
(2009)
Firm size, firm age,
CEO’s education,
CEO’s years of
business
experience, CEO’s
previous experience
in an export firm,
CEO’s previous
experience abroad,
CEO’s foreign
language
proficiency
105
Methodology Major Findings
Data collection
method: mail
survey; Sample size:
621 SMEs in
1990/91 & 116
SMEs in 1997;
Country: UK;
Industry: service,
manufacturing and
construction
Data collection:
face-to-face
questionnaire
survey; Sample
size: random sample
of 74 SMEs;
Country: UK;
Industry: Software
and food companies
Hall and Tu (2004) Firm size, firm age Data collection:
FAME database;
Sample size: 42,721;
Country: UK;
Industry; 19 multisectors
Continued on next page
Older entrepreneurs,
entrepreneurs with
specific industry
know-how, previous
exporting
experience, owners
with denser
information and
network ties are
more
export
likely to
CEO’s previous
experience abroad
and level of
education predict
export propensity.
Firm’s size
positively affects
export propensity;
firm’s age predicts
export propensity

Table 2.10: continued
Author(s) Major Variable
Cerrato and Piva
(2007)
Nassimbeni and
Toni (2001)
Vermeulen (2004)
Examined
Family
management,
educated workforce,
foreign ownership,
firm size, firm age
Firm age, firm size,
human resource
policies
Human capital, firm
size, capital
intensity and
manufacturing firm
versus service
Javalgi et al. (2000) Firm size,
employment
growth, total sales,
total sales growth,
firm age, firm age
growth, ownership
structure, type of
industry
Continued on next page
106
Methodology Major Findings
Data collection:
Survey
questionnaire;
Sample size: 1,324;
Country: Italy;
Industry:
Manufacturing
Data collection:
Survey
questionnaire;
Sample size: 165
firms; Country:
Italy; Industry:
multi-sectors
Data collection:
Survey
questionnaire;
Sample size:
random sample of
444 firms; Country:
Belgium; Industry:
manufacturing and
services
Data collection:
Survey
questionnaire;
Sample size: not
applicable; Country:
Ohio, USA;
Industry:
manufacturing
Educated
workforce, foreign
ownership, firm size
and firm age
significantly predict
the propensity to
export
Larger, older firms,
with HR incentive
packages for their
staff were more
likely to export
Firm size, capital
intensity and being
in the
manufacturing
sector are
significant
predictors of export
involvement
Firm size, growth of
employment size,
total sales, total
sales growth, firm
age, growth of firm
age, publicly held
firms and
manufacturing firms
significantly predict
export propensity of
firms

Table 2.10 continued:
Obben and
Magagula (2003)
Firm size, foreign
language, owner’s
education and age
Isgut (2001) Firm size, sector,
industry, labour
productivity and
rate of growth
Westhead (1995a) Owner-manager’s
age, firm size,
employment
growth,
manufacturing
versus service firms,
firm age,
entrepreneur work
experience
Data collection:
survey
questionnaire;
Sample size:
random sample of
40 SMEs; Country:
Swaziland;
Industry:
manufacturing
Data collection:
secondary data set;
Sample size:
random, but no. not
applicable; Country:
Colombia; Industry:
107
manufacturing
Data collection:
mail survey; Sample
size: random sample
of 267 firms;
Country: Britain;
Industry:
manufacturing and
producer services
Source: compiled and synthesised from studies in Table 2.10
Firm size, foreign
language
proficiency and
older managers
below 65 predict
export involvement
Firm size, higher
labour productivity
and higher rate of
growth discriminate
significantly the
exporters from the
non-exporters
The exporting firms
were significantly
larger in firm size,
employment growth
and firm age
compared with the
non-exporting
firms. In addition,
the founders of
exporting firms
were older and had
more experience
than their nonexporting
counterparts. Also,
being in the
manufacturing
sector predicts the
likelihood of
exporting.
The studies in Table 2.10 indicate that by regressing variables (e.g. firm age, firm size
etc.), it can be argued that compared with exporting firms, non-exporting SMEs: (1) are
smaller in size; (2) do not contribute much to the employment growth in a country; (3)
do not have much sales growth; (4) do not contribute much to a county’s gross domestic

product (GDP); (5) are generally younger in industry experience; (6) mostly operate in
sectors other than manufacturing sectors; and (7) are less likely to have foreign
ownership. The implications of such studies on public policy and practice are that in
order to increase employment growth and GDP, attention must be paid to encouraging
firms to export. Although the types of studies in Table 2.10 reveal which types of firms
are non-exporters, they fail to account for why these firms remain as non-exporters. As
a result, another group of researchers has sought to identify the perception of non-
exporters about factors that trigger export initiation/and or facilitating factors.
Among this group of researchers is Leonodou (1995c). The author used 22 export
stimuli from a review of previous empirical studies on export stimulation. It was found
that the non-exporting group of SMEs held a positive perception of export business, just
as the exporters did. In that study it was found that factors such as (1) the need for
potential for extra sales, (2) the need for potential for extra growth resulting from
exports, (3) the need to achieve economies of scale from exporting, (4) the need for
potential extra profit resulting from exporting and (5) the production of goods with
unique qualities were among the positive perceptions non-exporters held about export
business (i.e. in order of importance).
This type of non-exporting study (Leonidou, 1995c), however, avoids some of the
weaknesses of the type of non-exporting studies listed in Table 2.10. The reason for this
is that the latter study addresses the issue of whether or not non-exporting SMEs
perceive anything positive at all from export business, rather than merely identifying,
for example, that they are of a smaller size and contribute less to domestic employment
growth. However, a limitation of a study such as this (Leonidou, 1995c) is that it fails
108

to identify why there is still such a concentration of non-exporters in the domestic
market, even though they have such positive perceptions about export business.
Furthermore, because the concept of perception is different from that of experience,
Leonidou’s study failed to consider whether or not any of the non-exporting firms from
his sample had the opportunity to export, but could not or did not do so, and for what
reasons. As a result, in Chapter 7 of this thesis the gap is partly filled through an attempt
to identify the non-exporters’ perception of the factors that trigger export initiations and
the factors that enable exporters to meet their export orders. Moreover, Chapter 7 seeks
to ascertain whether some of the non-exporters have had the occasion to initiate export
activity (e.g. been approached to export), but declined to do so for one reason or
another. The main reasons that made it impossible for them to meet such export orders
are also explored in Chapter 7 of the thesis.
The next type of non-exporting study in the literature focuses on the examination of
non-exporters’ perception about export barriers. Exemplar studies of this type include
research by Yaprak (1985), Keng (1989), Leonidou (1995b), Fillis (2002) and Shaw and
Darroch (2004). This class of non-exporting studies sought to identify the reasons why
non-exporters do not export and the degree of severity of the challenges they perceive
with regard to the export business. Again, these studies extend and improve the non-
exporting literature because they depart from non-exporters’ perceptions about export
stimulating factors and explore new areas by examining non-exporters’ views about
barriers to exporting. However, within this type of study none of the researchers
incorporate examination of whether any of these challenges have actually prevented any
of the non-exporting firms from exporting (i.e. experience versus perception). Here
again, Chapter 7 will examine the reasons for non-exporting and also aim to ascertain
109

which of the problems non-exporters have actually experienced previously when they
made attempts to export. The justification for this is that, as already indicated,
perceiving a barrier is different from having experienced it. A sample of non-exporters’
perceptions of export barriers is shown in Table 2.11.
Table 2.11: Sample Reasons for Non-Exporting
Perceived reason for non-exporting
(n=48) as % of respondents, based on
Keng and Jiuan (1989: 31)
Focus was on satisfying domestic
demand – 27%
Product not marketable in foreign markets
– 25%
Lack of foreign market contacts to identify
buyers – 13%
Lack of financing – 10%
Perceived difficulty in gaining market
entry (e.g. due to price disadvantage) –
10%
Operational problems (lack of manpower
and the size of the firm) – 10%
Lack of knowledge and exposure to
market opportunity and demand – 8%
Exports handled by agents – 8%
110
Perceived reason for non-exporting
(n=40) as % of respondents, based on
Yaprak (1985: 77)
Lack of information about exporting –
58%
Lack of foreign market contacts to
identify buyers – 57%
Production is absorbed by domestic
demand – 52%
Have not given much thought to
exporting – 48%
Lack of personnel for export operations –
33%
Too much red tape – 25%
Sources: Yaprak (1985: 77) and Keng and Jiuan (1989: 31)
The required financial investment is too
high – 24%
Cannot maintain management control
over exports – 22%
Product are not marketable in export
markets – 20%
Other reasons (e.g. foreign exchange,
legal, tax, economic regulations, etc.) –
36%

The challenges listed in Table 2.11 look similar despite the studies being conducted by
different authors at different times and locations. For example, Yaprak’s (1985) study
took place in Detroit, USA, whilst Keng and Jiuan (1989) conducted their study in
Singapore. Both studies used small and medium-sized manufacturing businesses. This
confirms Ghauri et al.’s (2003) assertion that small business problems appear to be
similar, regardless of the geographical location, though the magnitude may differ. To
complement the information on non-exporters’ perceptions of the barriers to export
business (Table 2.11), a study by Shaw and Darroch (2004) is represented below.
Table 2.12: Top 10 Barriers to Export Business as Perceived by Non-Exporters
Non-Exporters
1. Firm size
2. Limited foreign market knowledge
3. Limited export business experience
4. Limited financial resources
5. Lack of knowledge of international
opportunities
6. Fear of the unknown in export business
7. No time to explore international
opportunities
8. Lack of experience in export business
9. High cost of selling abroad
10. Export transportation cost
Source: Shaw and Darroch (2004: 336)
111
Likely Exporters
1. Limited financial resources
2. Limited export business experience
3. Limited access to capital
4. Lack of foreign selling experience
5. Lack of government incentives
6. High cost of selling
7. No time to explore foreign market
opportunities
8. Lack of access to distribution channels
9. Limited export market knowledge
10. Fear of the unknown in export
business
Shaw and Darroch’s (2004) study is based on small and medium-sized manufacturing
businesses, and was conducted in New Zealand. In addition, Appendix H lists additional
studies about the non-exporters’ perceptions of the barriers to export business (for

example, based on Leonidou (1995b) and Fillis (2002)). However, taking all these
studies into consideration, the core message they present is that the perceived obstacles
to export business consist of both internal and external factors (e.g. foreign exchange,
legal issues, taxation, economic and regulatory challenges and small firm size).
Moreover, it can be concluded from these studies that the perceived difficulties
associated with internal barriers outweigh the external perceived barriers.
2.11 GENERAL EXPORT BARRIERS
Apart from studies (e.g. Yaprak, 1985; Keng & Jiuan, 1989; Leonidou, 1995b; Shaw &
Darroch, 2004) that examine the perceptions of non-exporters of the barriers to export
business, there is a body of studies that research the general barriers to export business,
based not on non-exporters perceptions, but actual barriers to export business which
exporting SMEs encounter. Such studies include Leonidou (2004) (a comprehensive
analysis of 39 export barriers extracted from a systematic review of 32 empirical studies
between 1960 and 2000), Fillis (2002) (an examination of 55 craft small business
exporters in the UK about export barriers) and Shaw and Darroch (2004) (i.e. the
examination of 285 international small new venture exporting firms, mostly in the
manufacturing sector of New Zealand, about export barriers).
Other studies include: Tesfom and Lut (2006) (a systematic review of 40 papers
published between 1980 and 2004 on manufacturing SMEs in developing countries
concerning export barriers), Neupert et al. (2006) (an examination of 19 exporting
SMEs in the USA, Idaho and Vietnam, concerning export barriers), Hutchinson et al.
(2009) (an examination of export barriers based on 12 small exporting business in the
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UK’s retail sector) and OECD (2009) (findings concerning barriers to SME
internationalisation in OECD and APEC member countries). Building on these studies,
actual export barriers represent any challenge that obstructs the ability of a SME to
initiate (i.e. pre- and during export business), develop and sustain export business. A
common theme that also runs through the studies on export barriers (i.e. the actual
barriers exporters encounter) (e.g. Fillis, 2002; Leonidou, 2004; Shaw & Darroch, 2004;
Tesfom & Lut, 2006; Hutchinson et al., 2009; OECD, 2009) is that these barriers
consist of both internal and external factors.
According to these authors, internal actual export barriers consist of inability by the
SMEs to initiate, develop and sustain export business because of problems endogenous
to the firm. Some researchers have further sub-divided the internal export barriers into
informational barriers, functional barriers, marketing barriers, logistical barriers,
financial barriers and human resource barriers (see e.g. Leonidou, 2004; Tesfom & Lut,
2006). In addition, the actual external barriers represent barriers that are exogenous to
the SME (i.e. barriers emanating from the external environment). Researchers have sub-
divided these types of barriers (e.g. Leonidou, 2004; Tesfom & Lut, 2006) into industry
barriers, procedural barriers, social cultural factors and customer barriers (i.e. customer
perception of product characteristics and lack of government incentives). Figure 2.7
shows additional actual barriers as cited in Shaw and Darroch (2004).
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Figure 2.7: Summary of Previous Studies on the Barriers to
Internationalisation/Exports
Financial barriers
- financial barriers in general (e.g. Ward, 1993; Campbell, 1996; Burpitt &
Roundinelli, 2000)
- lack of resource availability (e.g. Ali & Camp, 1993; Karagozoglu & Lindell, 1998)
- high cost of operating overseas (e.g. Ward, 1993)
Managerial barriers
- problem with managerial attitudes (e.g. Andersson, 2000; Burpitt & Rondinelli,
2000; Zahra et al., 2000; Manolova et al. (2002)
- lack of international experience and skills (e.g. Chandler & Janson, 1992;
Karagozoglu & Lindell, 1998; Manolova et al., 2002; Rhee, 2002)
- lack of commitment (e.g. Lamb & Liesch, 2002)
- partnership difficulties (e.g. Karagozoglu & Lindell, 1998)
Market-based barriers
- liability of foreigners (e.g. Chen & Martin, 2001; Lu & Beamish, 2001; Rhee, 2002)
- negative environmental perception (e.g. Andersson, 2000; Manolova et al., 2002)
- government regulations including tariff and non-tariff barriers (e.g. McDougall,
1989; Cambell, 1996; Karagozoglu & Lindell, 1998)
- unfavourable economic conditions (e.g. Burpitt & Rondinelli, 2000)
- lack of market knowledge (e.g. Karagozoglu & Lindell, 1998; Lamb & Liesch,
2002)
- cultural differences/psychic distance (e.g. Bell, 1995; Karagozoglu & Lindell, 1998)
- problem with access to distribution channel (e.g. Karagozoglu & Lindell, 1998)
- strong domestic market position (i.e. a resolution to remain focused on the domestic
market) (Autio et al., 2000)
Industry-specific barriers
- Competition (e.g. Karagozglu & Lindell, 1998)
- Technology (e.g. Chetty & Hamilton, 1996; Fontes & Coombs, 1997; Karagozoglu
& Lindell, 1998)
Firm-specific barriers
- liability of newness (e.g. Lu & Beamish, 2001; Rhee, 2002)
- limited resources (e.g. Fills, 2001)
- small firm size (Ali & Camp, 1993; Calof, 1993; Cambell, 1996; Chetty &
Hamilton, 1996)
Source: Shaw and Darroch (2004: 330)
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Table 2.13 lists additional barriers identified as significant in recent studies in various
countries and the authors of those studies.
Table 2.13: Recent Research Findings on Barriers to SME Internationalisation
Country Barrier* Author/s
Australia a, c EFIC (2008)
Canada A Riding et al. (2007)
Finland a, e Ojala and Tyrvainen (2007)
Ireland and India A Terjesan, O’Gorman and
Acs (2008)
Korea E Suh et al. (2008)
Spain A Lopez (2007)
Sweden A Rundh (2007)
Turkey a, d Ozkem, Benek and Akdeve
(2006)
UK D Barnes et al. (2006)
UK d, e Crick (2007)
UK D Knell and Pisu (2007)
USA and Canada E UPS (2007)
China A Zhang, Sarker and Sarker
(2008)
India and USA E Smith, Gregiou and Lu
(2006)
India E Vivekanandan and
Rajendran (2006)
Indonesia A Wengel and Rodriguez
(2006)
Source: modified from OECD (2009) *Keys: a) shortage of working capital to finance
exports; b) identifying foreign business opportunities; c) limited information to
locate/analyse markets; d) inability to connect with potential overseas customers; and e)
lack of managerial time, skills and knowledge.
Additionally, Appendix I contains extra evidence of previous findings on the actual
export barriers. Overall conclusions can be drawn from the studies that focus on export
barriers (i.e. actual and perceived export barriers of the small firm) (e.g. Figure 2.7,
Tables 2.12, 2.13, and those compiled and synthesised in Appendix I). First, as the non-
exporters, like the exporting SMEs, perceive export barriers as deriving mostly from the
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firm’s lack of capacity, it can be seen that barriers to their export initiation also arise
more from the internal capacity of the firm than from external factors. This finding in
the literature supports the researchers (e.g. McDougall et al., 1994; Bloodgood et al.,
1996; Reuber & Fischer, 1997; Westhead et al., 2001; Ibeh, 2003; Ibeh, 2005; Ibeh &
Wheeler, 2005; Ruzzier et al., 2006; Iyer, 2010) who argue that, the export success of
SMEs resides more within their internal resource capacity.
Overall, although the previous studies into export barriers to the SME are different with
regard to the author(s), the location and time of the research, there are likenesses among
the findings/barriers, except in relation to “the country of origin effect” (Testform &
Lutz, 2006: 277). This effect implies that a product coming from a developing country
(e.g. African country) will signal low confidence with regard to attitudes among
international buyers towards these products compared with those coming from
developed countries (e.g. the USA, the UK). Otherwise the barriers are similar across
the world, though their degree and magnitude may vary.
Another observation identified from these studies (exporting barriers) is that very few
focus on developing African nations (e.g. among the reviews on export barriers, only
one study focused on South Africa, one on Kenya and one other on Zimbabwe). The
majority of the studies focus on developed countries and other developing countries in
Latin America and Asia.
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2.12 HOW TO ENCOURAGE NON-EXPORTERS TO EXPORT
2.12.1 Export Stimulation
It appears that practitioners and public policy makers can draw on the factors reviewed
above to encourage non-exporting firms into exporting activities. However, a group of
researchers (e.g. Hutchinson et al., 2007; Leonidou et al., 2007; Williams, 2008) focus
their studies on export stimulation factors, which can be the starting point with regard to
encouraging non-exporting small firms to export. For the purpose of parsimony, these
researchers classify export stimulation factors according to whether or not the trigger
emanates from the firm’s internal proactive behaviour (e.g. the desire for higher
corporate growth), their internal reactive behaviour (e.g. accumulation of unsold
inventory), external proactive behaviour (e.g. responding positively to external
government assistance) or external reactive behaviour (e.g. close physical proximity to
the export market).
Among the export stimulating factors, Leonidou et al. (2007) synthesised 32 empirical
studies conducted between 1974 and 2005. In that synthesis, researchers identified 40
factors that trigger export initiation. In addition, Williams (2008) identified 20 factors
that trigger export initiation by SME in the Caribbean (Jamaica). Furthermore,
Hutchinson et al. (2007) found similar factors among small businesses in the UK which
participate in international business. Here, again, despite the differences in these studies
(i.e. Hutchinson et al., 2007; Leonidou et al., 2007; Williams, 2008) with regard to: (1)
author (s), (2) geographical location of the study, (3) time of the study and (4) type of
industry, one can find that the factors generally look alike, although their importance
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(i.e. frequency and ranking) will vary with regard to the firm or industry in question. A
sample of export stimulating factors is presented in the table below.
Table 2.14: Factors that Trigger Export Initiation/Export Stimuli
Sample of internal proactive factors Sample of internal reactive factors
• Strong brand identity
• International experience of the
founder
• Potential for extra sales/profit
• Special managerial urge/interest
• Possession of a unique product
• Utilisation of special managerial
talents
• Potential for extra growth
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• Utilisation of excess capacity
• Offsetting sales of a seasonal product
• Clearing unsold stock/inventory
• The need to reduce dependency on the
domestic market
• Stagnation and decline in domestic
sales
Sample of external proactive factors Sample of external reactive factors
• Business contacts in foreign market
• Government support
• Contact after participating in a trade
fair
• Identification of an attractive foreign
market
• Possession of exclusive information
on the export market
• Unsolicited orders from foreign
customers
• Saturated domestic market
• Competitor starting exporting
• Proximity to the foreign market
• Intense domestic competition
• Favourable foreign exchange rate
Source: synthesised and combined from Hutchinson et al. (2007); Leonidou et al.
(2007); Williams (2008) (also see Appendix G for the specific findings by Leonidou et
al., 2007; Williams, 2008).

Similarly, studies concerning the triggers of export initiation can be summarised as
follows. The findings agree that the triggers consist of firm-level factors and external
factors. Here the evidence with regard to the triggers of export initiation counteracts the
assumptions of the stage theory (Johanson & Vahle, 1977) and the RBV (Barney, 1991)
that export determinants are wholly internally influenced. In addition, of the selected
studies reviewed (e.g. Hutchinson et al., 2007; Leonidou et al., 2007; Williams, 2008),
none focuses on African firm(s). As already mentioned above, this gap consolidates the
call by Sousa et al. (2008) regarding the need to extend research on SME
internationalisation to SMEs in Africa.
2.13 CONCLUDING REMARKS
The literature review mainly examines the exporting and non-export behaviour of the
SMEs. With regard to the exporting behaviour, the chapter unravels the general
theoretical frameworks that predict the behaviour of the exporting firm. Among these
theoretical frameworks, not all are appropriate for application to the SME, and only five
are proposed for integration to address the research questions behind the thesis. The
justification for the proposed integrated theoretical framework is then presented, along
with selected integrated variables which arose as influential in the course of the review
and therefore are analysed in detail in the empirical examination in Chapters 5, 6 & 7 of
the thesis. The second part of the literature review addresses non-exporting small firms’
behaviour. It is identified that although some studies address the export stimulating
factors and export barriers with regard to the perceptions of the non-exporting firms,
most of the studies fail to ascertain whether some of the non-exporters have actually
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experienced any of the factors in an attempt to initiate export business. As a result, part
of this thesis (Chapters 6 & 7) contributes to filling this gap in the field. The chapter
ends by addressing the problem of how to encourage non-exporters to export and
presenting the overview of export stimulating factors as the starting point in stimulating
non-exporters to consider export business. From the literature review as a whole
(including the studies presented in the appendices), it is evident that there is a marked
lack of studies focusing on exporting and non-exporting behaviour of SMEs in sub-
Saharan Africa, and Africa in general.
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3.1 INTRODUCTION
CHAPTER THREE
THE STUDY’S CONTEXT
Various countries in sub-Saharan Africa (e.g. Nigeria, Kenya, Zimbabwe & Ghana)
have shifted their development framework from an inward (i.e. import substitution
coupled with protectionist policies) to an outward-oriented approach (i.e. export-
led/internationalisation-led approach). It is argued that an outwardly oriented
development model can make a greater contribution to the nation’s socio-economic
prosperity compared with the inward-orientation development model (Ruzzier et al.,
2006).
3.2 BACKGROUND OF GHANA
Ghana covers an area of about 92,000 square miles. It is located on the coast of West
Africa and its population is about 22 million (Robson & Freel, 2008). It was a British
colony before gaining independence in 1957. Ghana is endowed with mineral resources
such as gold, diamonds, and manganese among others, and was the first sub-Saharan
Africa country to gain independence (Robson & Freel, 2008). According to Robson &
Freel, Ghana’s GDP per capita used to be higher than South Korea’s, but currently is
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about 35 times lower than that of South Korea. Teal (2002) also shows that Ghana’s
export per capita peaked at US$300 in 1954, but by 1998 it had fallen to around
US$100. Furthermore, it has been indicated that Ghana has fallen behind its previous
peers within the Africa sub-region with regard to socio-economic development (IMF,
2006).
3.3 THE MAIN SECTORS OF GHANA’S ECONOMY
Ghana’s economy, according to the Institute of Statistical Social and Economic
Research (ISSER, 2007), consists of three main sectors. First, the agricultural sector
comprises sub-sectors of cultivation of mangoes, pineapples, cocoa, cereal, vegetable
and other crops. Other sub-sectors comprise the farming activities of poultry production,
cattle and sheep rearing and a fishing sub-sector/industry. In Ghana, the majority of
crop farmers are smallholders who lack appropriate machines and as a result have low
productivity. This low productivity is partly because of a heavy reliance in Ghana on
natural factors such as rain and bush burning in farming activities. The agriculture
sector represents the mainstay of the Ghanaian economy as it is the leading contributor
to the country’s GDP. Its contribution to GDP is about 39% and it accounts for about
55% of employment (ISSER, 2007).
Second, the services sector of Ghana’s economy consists of six main sub-sectors: (1)
transport, storage and communication; (2) the wholesale and retail trade as well as
restaurants and hotels; (3) finance, insurance, real estate and business services; (4)
government services; (5) community, social and personal services, and (6) producers of
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private non-profit services (ISSER, 2007). According to ISSER (2007), the services
sector is the second mainstay of the Ghanaian economy after the agricultural sector. The
manufacturing sector is the least important of the three mainstay sectors of Ghana’s
economy, and its sub-sectors include: (1) garments and textiles, (2) food processing, (3)
soap and detergents, (4) timber products (wood), (5) furniture, (6) cement, (7) metal, (8)
machinery and (9) paper production. According to ISSER (2007), while it is hoped that
the manufacturing sub-sector of Ghana will drive the overall growth of the country,
allowing it to achieve its middle income status goal, it still continues to record the
lowest growth compared to the agriculture and services sectors (ISSER (2007).
3.3.1 Background of Garment and Textile Manufacturing Sub-sector
The garment and textile manufacturing sub-sector of Ghana is one the dominant sectors.
For instance, it was most represented sample (26%) among the sub-sector represented
entire World Bank (RPED)’s study on Ghana’s manufacturing sector. Concerning
portion of the World Bank data set used in Chapter 5 of this thesis, the garment and
textile sub-sector ranked the highest in terms representation, consisting of 35 % of the
total sample. In addition, in a study concerning the export involvement of key selected
manufacturing sub-sectors of Ghana in Figure 3.1 below, the garment and sub-sector is
the second most represented apart from the wood sub-sector.
Therefore, as indicated in Chapter 1, Section 1.7, the study largely focuses on the
garment and textile manufacturing sub-sector of Ghana. The reasons for this include,
but are not limited to, the following. First, the government of Ghana has targeted the
garment and textile sub-sector to drive its socio-economic prosperity agenda because it
possesses much manufacturing export potential which can impact on manufacturing
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export behaviour in similar sub-sectors in Ghana (Quartey, 2006; Kuffour, 2008).
According to Kuffour (2008), 90% of the people employed in the garment and textile
sub-sector in Ghana are women, owner-entrepreneurs as well as workers, and because
women dominate Ghana’s population, promotion of the sub-sector has become a key
strategy for the government of Ghana in pursuing its poverty reduction agenda,
including attaining its Millennium Development Goals. This strategy is enshrined in
Ghana’s development documents (GPRS, I & II, Ghana’s Budget Statement, 2008) as
indicated in Chapter 1, Section 1.7. Moreover the garment and textile sub-sector has the
potential to combine indigenous technology with modern technology and to maximise
one of Ghana’s competitive advantages – cheap labour (Soderbom & Teal; 2000;
Soderbom & Teal, 2003).
3.3.2 Specific Export-led Programmes in the Garment & Textile Sub-sector
The Ghana government’s drive to promote the garment and textile sub-sector and
exploit its export potential has included the following specific export-led programmes:
(1) the provision of GH2.00 million (about $2 million USD) for the rehabilitation and
operation of the redundant Juapong Textile Company under the new name - Volta Star
Company Limited (ISSER, 2007); (2) the provision of 3,200 new sewing machine
operators at the Clothing Technology Centre in Accra (ISSER, 2007); (3)
implementation of the President’s Special Initiative (PSI) for the garment and textile
sub-sector in Ghana. The PSI was launched in 2001 as a public partnership programme
which aimed to support, accelerate and develop the garment and textile industry and
enable it to become a lead export sector and the primary source of employment
generation in Ghana (Kuffour, 2008). Within the PSI, the government supports
businesses in this sub-sector with modern factory machinery, clothing technology and a
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training centre, as well as technical assistance programmes. A whole garment village,
which benefits from customised industrial facilities, has been created for the sector in
Tema, near Accra (Kuffour, 2008);
(4) The Africa Growth Opportunity Act (AGOA) is another policy initiative aimed at
boosting the export capabilities of the sub-sector. AGOA is a United States initiative
that was signed into law on May 18, 2000 as the Trade and Development Act. Under
AGOA, Ghana is one of the 34 sub-Saharan African countries eligible for duty and
quota free access to the US market for the textile and garment trade. Quratey (2006)
explains that some of the PSI programmes for the garment and textile sub-sector aim to
enhance the sector’s ability to maximise the AGOA initiative and (5) The Textile and
Garment Cluster established by the government of Ghana in collaboration with UNIDO
(United Nation Industrial Development Organisation) aims to bring together and
enhance the capacity of the micro, small and medium scale operators in the garment and
textile industry in another specific export-led programme. This cluster aims to remove
obstacles that hinder the sub-sector’s ability to export. Quartey (2006) argues that since
its establishment it has assisted in training firms in mass production strategies (a key
requirement in handling large export orders), sub-contracting as well as up-grading of
members’ technical, marketing, financial and managerial skills.
Another initiative is the Garment and Textile Training Centre, set up by the government
of Ghana in collaboration with UNIDO, which also aimed to enhance the capacity of
firms in the sub-sector to take advantage of AGOA (USA) and other export destinations
of Ghanaian firms. In addition, Quarter (2006) maintained that the sub-sector is also
supported by 21 national vocational training institutes which provide basic practical and
theoretical training in tailoring and dressmaking. Such export-led initiatives, specific to
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the sub-sector, make exploration of the key factors and their potential to promote export
growth, extremely feasible.
3.4 GHANA’S DEVELOPMENT FRAMEWORK AFTER INDEPENDENCE
As indicated in Section 3.1, Ghana began to implement the import substitution
industrialisation development framework after gaining independence in 1957. This
framework focused on large scale and capital intensive manufacturing enterprises.
Within this development framework, private enterprises were replaced by direct state
intervention. The import substitution policy coupled with the direct state intervention
carried high tariff barriers and relied heavily on short to medium-term foreign
borrowing (Dinye & Nyaba, 2001). In the literature, it is argued that because of
inappropriate domestic policies, natural disasters, low foreign exchange inflow, poor
industrial competition, as well as a lack of effective firm level learning, Ghana recorded
a serious economic decline throughout the period of implementation of its import
substitution and protectionist development framework (Kuada & Sørensen, 2000;
Sørensen & Nyanteng, 2000; Dinye & Nyaba, 2001). Therefore, due to the deteriorating
economic performance up until the early 1980s, Ghana changed its development
framework from inward orientation based on import substitution and protectionist
policies to a development framework of total liberalisation based on outward orientation
and export-led growth policies (Baah-Nuakoh et al., 1996; Dinye & Nyaba, 2001).
Table 3.1 presents sample evidence of Ghana’s economic decline from the 1970s until
1983.
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Table 3.1: Economic Indicators of Ghana’s Pre-liberalisation Period
Indicator 1970 1975 1980 1983
Current account (USD$M) -81 -51 -55 -230
Debit servicing ( as a % of exports) 5.4 5 7.7 20.9
Government deficit (as a % of GDP) - 27 18 8
Official exchange rate (Cedi per the
USD $) 1.02 1.15 2.75 3.45
Rate of inflation (% p. a.) 9 30 50 122
Source: Dinye & Nyaba (2001: 3)
Table 3.1 confirms Ghana’s economic decline up to the mid 1980s. In terms of the
evidence indicated in Table 3.1, the first major openness policy which reflected Ghana’s
change from the inward development model to one of wholesale liberalisation and
outward orientation included the Economic Recovery Programme (ERP) and the
Structure Adjustment Programme (SAP) of 1983. The ERP and the SAP consisted of
two phases. Phase 1 (ERP I) covered four years, 1983– 1986, while the second phase
(ERP II) took place from 1986–1991. The purpose of Phase 1 was to liberalise the
Ghanaian economy in order to set the pace of a new macro-economic framework to
reverse the economic decline suffered from the 1970s to 1983. Among the policies in
the first phase were monetary and fiscal policies (which sought to reduce the level of
inflation indicated in Table 3.1), rationalisation (e.g. depreciation) of the exchange rate
to stimulate exports and reallocation of resources to productive sectors of the economy.
The second phase included structural adjustment policies which were intended to
achieve sustained growth for the country by expanding the productive sectors of the
country and further boosting exports, especially export manufacturing.
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3.5 EXPORT DIVERSIFICATION AND EXPORT MANUFACTURING IN
GHANA
Until the 1980s, Ghana’s exports consisted of unprocessed agricultural products
(cocoa), timber and mineral commodities. The initial phase of the structural adjustment
programme focused more on the reallocation of resources to agricultural commodity
exports, since it was thought that Ghana’s competitive advantage lay in commodity
agriculture (Owusu-Frimpong & Mmieh, 2007; Robson & Freel, 2008). However,
Robson & Freel (2008) argue that as worldwide agricultural tariffs ran at 40%, in
contrast to 4% on manufacturing goods, the government decided to diversify its export
base to cover non-traditional export (NTEs 6
). On this basis the government emphasised
manufacturing exports commodities as the main driving force, and increased the
competitiveness of the manufacturing sector to drive Ghana’s economic development.
The export diversification policies in Ghana, also known as the non-traditional export
commodities’ promotion, are classified into three themes: (1) new agricultural export
products, namely: fruits, vegetables, roots/tubers/plantains (fresh and processed) and
other food items; (2) new timber products (including handicraft products); and (3) new
processed and semi-processed manufacturing products such as: wood products, machine
products, furniture, metal products, chemical products, bakery products, and garments
and textiles (Owusu-Frimpong & Mmieh, 2007).
In 1986, towards the end of the first phase of the ERP & the SAP (1983-1986), the total
export earnings of the non-traditional export commodities (NTEs) increased to $23.8
million – representing 3.2% of that year’s total export earnings – and then rose to
6 NTEs refer to new export products that did not form part of Ghana’s traditional export
commodities – cocoa, raw timber and mineral commodities.
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US$62.34 million or 7.0% of the total export earnings in 1990 (Kastner, 2005). This
initial increase in the export contribution brought considerable optimism to the nation.
As a result, and based on a study jointly undertaken in 1997 by the government of
Ghana and the United States Agency for International Development (USAID) in North
Carolina, it was predicted that Ghana’s exports would need to grow to about US$16.3
billion by 2020 if the middle income status goal was to be achieved. It was estimated
that approximately US$11.9 billion of this amount would come from NTE (Non-
Traditional Exports, especially manufacturing exports), which would represent 73% of
the total required export earnings (Kastner, 2005).
From the 1980s onwards, various export-led policies have been implemented by the
government of Ghana with the aim of increasing manufacturing exports in order to
achieve its middle income status for citizens. Therefore, to augment the sample of
manufacturing export-led programmes discussed in Chapter 1, the next section
discusses a further sample of major manufacturing export-led policies implemented in
Ghana to make export manufacturing more competitive and become the driving force of
the economic development agenda.
3.6 ADDITIONAL MANUFACTURING EXPORT-LED PROGRAMMES IN
GHANA
Further such manufacturing export-led programmes include the following. The first is
the establishment by the government of Ghana in 1997 of the Export Development Fund
(EDIF), which operated under the Bank of Ghana (under the Exim Guarantee Company
Scheme). Textiles and garments, wood processing, food processing and packing
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industries are among the sub-sectors which have been given priority under the scheme
(Aryeetey & Ahene, 2005). The second is the Tax and Duties Incentive Regime. Under
this regime, the non-traditional exporters bear only 8% tax, and are exempt from most
export duties. Among the incentives for exporters is the Export Proceed Retention
Scheme (EPRS). This scheme allows exporters to retain 35% of foreign earnings in
foreign bank accounts, which are intended for related import purchases and expenses
(Aryeetey & Ahene, 2005).
There is also a Customs Duty Drawbacks package which allows manufacturing
exporters to claim back up to 100% of any import duty and other taxes on imported raw
materials that are meant for the export business in Ghana. Moreover, manufacturers of
agricultural products (e.g. food processing) who export either part or 100% of their
output abroad are entitled to claim a 40-70 % tax rebate (under the Corporate Tax
Rebate Scheme). The government of Ghana also allows export manufacturers a
Customs Licence which enables them to hold any imported raw materials intended for
export in a Bonded Warehouse (secured storage) without payment of duty.
In addition, the government specifically designed and implemented a Medium Term
Plan for development of Non-Traditional Exporters called the non-traditional export
scheme (1991-1995). The Ministry of Trade and Industry (MOTI) jointly implemented
this scheme with the Ghana Export Promotion Council (GEPC) (Aryeetey & Ahene,
2005). The US government sponsored the Trade and Investment Programme (TIP)
through its agency (the United States Agency for International Development/USAID).
The TIP programme aimed to increase firm level and national export earnings, to boost
employment and attract more business into the export manufacturing sector of Ghana.
According to Aryeetey & Ahene (2005), the scheme was also devised to influence
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government policies and lessen the various bottlenecks that hinder export growth, as
well as to provide support services to the Ghana Export Promotion Council (GEPC) and
the Ministry of Trade and Industry (MOTI).
Aryeetey & Ahene (2005) explain that in addition to the above macro policy
programmes, there have been other donor-funded programmes, including the Private
Sector Development Programme (PSDP), funded by the International Development
Association (IDA), the Capacity Development and Utilisation Programme (CDUP),
funded by the United Nations Development Programme (UNDP) and the DFID-
supported Challenge Fund, funded by the UK’s Department for International
Development (DFID).
In addition, Ghana opted for debt relief under the Heavily Indebted Poor Country (HIP)
programme (recommended by the World Bank and the International Monetary Fund) in
2002 and signed up with the Millennium Challenge Corporation (MCC) in 2006. The
MCC’s scheme was offered by the US government as a bilateral scheme and sought to
transform Ghana’s agricultural output through internationalisation (Central Intelligent
Agency, 2010). The list of the export-led programmes is almost endless, but because
the focus of the thesis is not to evaluate these measures, it is not the intention to review
all in detail here. However, records show that despite the government’s vigorous efforts
at implementing all these manufacturing export-led programmes, Ghana’s
manufacturing export involvement and performance is still low. Figure 3.1 below
supports this argument.
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Figure 3.1: Percentage of Manufacturing Exports by Industry
Source: Söderbom (2003: 1)
Figure 3.1 shows that of these countries within the sub-Saharan Africa sub-region,
Ghana is the lowest exporter of manufactured goods, although it has some advantage in
the wood sub-sector. From the three countries compared in Figure 3.1, Ghana and
Kenya’s export performances are inferior to that of Zimbabwe. This poses something of
a puzzle because among SSA countries, Ghana and Kenya implemented comprehensive
liberalisation policies in the early 1980s, before corresponding action was taken by
Zimbabwe in the 1990s, yet their export response is below that of Zimbabwe in this
case. This picture confirms Zeufack’s argument (2001) that while Ghana and Kenya
score highest with regard to the Sachs and Warner index of openness 7
7 The Sachs and Warner index, which ranks countries on a scale of 0-1, based on the
depth of trade liberalisation policies undertaken since 1960, is widely used in the new
geography literature as a proxy for policy reforms. The trade openness database is
available at www.cid.hardvard.edu/ciddata
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rankings
compared to other countries in SSA (i.e. 0.23 and 0.11 respectively on a scale from 0 -

1), it is not understood why Ghana is considered one of the lowest exporters among
African countries. Implicitly, it is argued that what may be causing Zimbabwe’s export
supply to be above those of Ghana and Kenya stems from a number of factors.
Soderbom (2003) contends that while Ghana and Kenya’s manufacturing intensity are
denominated in few sub-sectors, but that of Zimbabwe is spread across industries. Biggs
& Raturi (1999) argued that unlike most countries in sub-Saharan Africa (SSA), firms
in Zimbabwe exhibit strong capabilities (e.g. production capability, technological and
firm learning). In addition others (e.g. Soko & Balchim, 2009; Kaminski & Ng, 2011)
attribute Zimbabwe’s export potentials to its closeness to the South African market.
In addition, the Institute of Social Statistical and Economic Research (ISSER) has
argued that Ghana’s export manufacturing output does not in any way reflect the
amount of export-led policies implemented so far. For instance, according to the
Institute, the total export as a percentage of GDP continued to decline from 2002 –
2007, as shown in Figure 3.2 below.
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Figure 3.2: Ghana’s Trends in Merchandise Exports as a Ratio of its GDP: 2002-
2007
Source: ISSER, (2007: 103)
In Figure 3.2, the vertical axis denotes the value of exports in percentages, while the
horizontal axis represents the years 2002 - 2007. Figure 3.2 indicates that between 2002
and 2007, Ghana’s manufacturing exports as a proportion of GDP declined. Therefore,
by comparing the stylised facts on export-led policies discussed in Chapter 1, Section
1.2, with the data added in this chapter, it could be argued that it is possibly paradoxical
that a variety of export-led strategies are being implemented in Ghana and yet export
involvement and performance among its firms continues to decline, both within the
country and compared to the rest of the world. The evidence from the different sources
presented in this thesis confirms Ghana’s low export involvement and performance,
although it is unclear why so few firms choose to export whilst the majority of others
remain focused on the domestic market.
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However, it is argued that whereas Ghana’s current export’s manufacturing involvement
and performance is low, the country has little choice but to refocus its attention on the
export of manufacturing output if the country is to achieve its socio-economic
objectives and develop a middle income status (IMF, 2006; Kuada, 2007; Teal, 2008).
Here it is possible to argue that the government of Ghana’s policy to use its
manufacturing sectors (especially export manufacturing) can be achieved if the
manufacturing export-led programmes continue to be strengthened and also if such
policies are linked with firm level research.
Consequently, in accordance with Ghana’s current socio-economic status, this study
seeks via recommendations to public policy makers, owner-managers and future
researchers to play a significant role in Ghana’s future economic transformation. The
reasoning behind this is that the outcome of the study will be the identification of
potential exporting firms that merit government support, coupled with insights into how
SME owners can improve on their practice. Furthermore, in the light of this study’s
Ghanaian context, acting on the outcomes of this research will accelerate the social-
economic prosperity Ghana hopes to achieve.
The aim of this thesis to facilitate Ghana’s export growth agenda through studying the
garment and textile sub-sector is driven by the fact that, currently, Ghana continues to
depend heavily on international financial and technical assistance from both bi-lateral
and multi-lateral organisations (e.g. the World Bank, the IMF, and DFID). Here, gold,
cocoa outputs (though mostly unprocessed) and individual remittances still constitute
the principal sources of foreign exchange for Ghana. Even though large deposits of oil
have been discovered in recent times, processing is yet to commence (Central Intelligent
Agency, 2010). As a result, strengthening manufacturing export growth through SMEs
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small which make up the bulk of businesses in Ghana, will contribute greatly to
Ghana’s development agenda.
3.7 CONCLUDING REMARKS
This chapter has presented the context of the thesis (i.e. in Ghana). It has traced the
development framework followed by Ghana from independence until the acceptance
and implementation of the liberalisation framework in the early 1980s. The conclusion
is that whilst Ghana has identified that the attainment of its socio-economic
development goals hinges on its manufacturing exports; its current performance is
extremely low. As a result, the present thesis becomes timely with regard to facilitating
manufacturing export growth in Ghana and attaining its socio-economic goals.
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CHAPTER FOUR
RESEARCH APPROACH & METHODOLOGY
4.1 INTRODUCTION
This chapter presents the outline of the methodology used to validate the proposed
integrated theoretical framework (Chapter 1, Figure 1.2). The main themes of this
chapter include: (1) the stages followed from the start of the thesis to its end (Section
4.2 below); (2) the research population and the sample, (3) the analytical techniques; (4)
how internal validity, external validity, objectivity, reliability, informed consent,
guarantee of privacy, preferred language, avoidance of deception and accuracy were
ensured in the study and (5) the definition of SMEs applied to the thesis.
4.2 THE STAGES OF THE THESIS
In this thesis, a four-stage research strategy is used. The four-stage strategy consists of
10 steps; the steps are: (1) 3 steps – employed in stage 1; (2) 3 steps – used in stage 2;
(3) 3 steps – applied in stage 3 and (4) 1 step – applied in stage 4. The four main stages
running through the thesis are outlined in detail as follows. First, the 3 main steps
followed in stage 1 were:
• Choice of the research area;
• Literature review, research problem and;
• Method of empirical analysis.
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Stage 2 involves the use of a World Bank secondary data set and the design of case
study interviews. The 3 steps followed in this stage were:
• Application of logit and Ordinary Least Square (OLS) regressions in the World
Bank’s secondary data set
• Analysis and results of the secondary data set
• Case study interviews based on the analysis of variations of non-exporters in the
sectors contained in the secondary data set
Stage 3 comprises interviews with exporters and non-exporting firms from the garment
and textile sub-sector in Ghana. In this stage, 3 steps were also pursued, namely:
• Interviews with the exporters
• Interviews with the non-exporters
• Analysis of interview transcripts
Stage 4 involved only 1 step, namely:
• Summary of findings, conclusions and implications of the study
4.3 POPULATION AND SAMPLE OF THE THESIS
The population of interest behind this research consists of exporting and non-exporting
small firms from the Ghanaian manufacturing sector. Of this population, samples used
in the thesis (i.e. Chapter 5) were originally drawn by the World Bank (i.e. a secondary
data set) for the Regional Project on Enterprise Development (RPED) in 2002 in Ghana.
The application of a secondary data set in research is popular among academics since
this offers the advantage of speed and low cost. Consequently, some of the papers
reviewed for this thesis also use a secondary data set (e.g. Westhead et al., 2001; Hall &
Tu, 2003; 2004). However, the use of a secondary data set is not without its
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disadvantages: some data sets may have questionable sources and therefore, will have
problems with reliability. As a result, it is contended that academics and researchers
should therefore be cautious and use data sets that have been collated by credible
universities and organisations (Sorensen et al., 1996).
The World Bank’s study was implemented in collaboration with Oxford University (the
UK), the University of Ghana and the Ghana Statistical Service. The data set is named
the Regional Programme on Enterprise Development (REPD). Oxford University partly
controls the data set for academic purposes, and invites academics and the research
community to draw on it for various studies via the university’s website. Most
researchers (e.g. Söderbom & Teal, 2000; Rankin et al., 2002; Frazer, 2005) have drawn
on the data set in their various studies and attest to its reliability. Here the data set was
accessed via http//www.csae.ox.ac.uk/datasets/main.html.
The World Bank’s randomly drawn samples from five sub-sectors of the Ghanaian
manufacturing sectors included: the wood, metal, machine, furniture and garment and
textile sub-sectors. This secondary data set supplements the interviews concerning the
garment and textile sub-sector, which is the main focus of the thesis.
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4.4 ANALYTICAL TECHNIQUES
Logistic multiple regression is the main quantitative analytical technique used to
address the first research question of the thesis (Chapter 5). Multiple regression explains
the relationship between multiple independent variables and the response variable. In
this the response variable is qualitative and so compared to OLS, logit is appropriate.
Further qualitative analysis techniques were applied in the last two empirical chapters
(i.e., Chapters 6 & 7). Here, the critical incident technique, coupled with content
analysis, were the main analytical tools used.
4.4.1 The Critical Incident Method
Critical incident techniques are credited to Flanagan (1954), but since their original
formulation they have been extended by other researchers (e.g. Chell, 2004; Neupert et
al., 2006 and Zineldin, 2007). Flanagan (1954) first used the critical incident method on
a study concerning the aviation psychology programme of the United States’ Army Air
Force in World War II. Over the subsequent years, the critical incident technique has
become popular within the social science research field (Chell, 2004). According to
Flanagan:
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The critical incident technique consists of a set of procedures for collecting
direct observations of human behaviour in such a way as to facilitate their
potential usefulness in solving practical problems and developing broad
psychological principles. The critical incident technique outlines procedures for
collecting observed incidents having special significance and meeting
systematically defined criteria. By incident, Flanagan (1954) meant any
observable human activity that is sufficiently complete in itself to allow
inferences and predictions to be developed about the object, in this case a
person performing the act. To be critical, an incident must occur in a
circumstance where the purpose or intent of the act seems fairly clear and direct
to the actor and where its consequences are sufficiently definite to leave little or
no doubt concerning its current and subsequent results.
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Flanagan (1954: 1)
In the light of this initial definition, other researchers operationalised the technique to
suit their research purposes. For example, Chell in applying the technique to suit his
research defined the critical incident as:
The qualitative interview technique which facilitates the investigation of
significant occurrences (events, incidents, processes or issues), identified by the
respondent, the way they are managed, and the outcomes in terms of perceived
effects. The objective is to gain an understanding of the incident from the
perspective of the individual, taking into account cognitive and behavioural
elements.
Cope, too, applied the critical incident technique, defining the technique as:
Chell (2004: 48)
A positive or negative event with certain perceptual and chronological
parameters that is memorable to the individual concerned and has perceived
significance in personal or business terms, or both.
Cope (2003: 8)

From the three definitions above, it can be inferred that the context within which the
writers conceptualise the technique differs, and Flanagan maintained that his definition
should not be perceived as static, claiming it could be adapted. For instance, while
Flanagan’s (1954) conceptualisation is based on the direct observation research setting,
those of Chell and Cope are based on retrospective memory recollection of critical
incidents. In this study, the definition of Chell (2004) is adopted because the interview
process in this study follows the same procedure. That is in Chell (2004)’s study,
respondents were asked to tell a retrospective story of a critical incident, in a similar
way to the present study. Although in this research field not many critical incident
studies exist, a selected few are shown in detail in the table below.
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Table 4.1: Selected Critical Incident Studies in this Research Field
Author Critical Incidents
Explored
Kent et al. (2006) Firm’s worst
nightmare or
biggest challenge
in conducting
internationalisation
Kent et al. (2005) Firm’s worst
nightmare or
biggest challenge
in conducting
internationalisation
& the critical skill
necessary for
successful
internationalisation
in Vietnam
Zineldin (2007) Critical event of
the establishment
processes of two
Swedish companies
in foreign market
(Mexico)
Source: Synthesised from studies in Table 4.1
Methodology Major Critical
Incidents/Findin
gs
Data collection
method: interviews;
method; sample
size: 29 managers –
16 in Idaho & 13 in
Vietnam; Country:
Vietnam & USA;
Industry:
manufacturing &
service
Data collection
method: interviews;
method; sample
size: 74 managers
in Vietnam;
Country: Vietnam;
Industry:
manufacturing &
service
Data collection
method: interviews
- multi-case;
method; sample
size: 2 case firms;
Country: Sweden;
Industry:
manufacturing
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Country
difference;
logistics and
shipping process;
general business
risk,
documentation,
product operation
& customer
training &
product quality
issues
Legal issues,
contract
fulfilment,
communication
skills, marketing
skills,
interpersonal
skills
Managing
government
authorities, crossculture
management

With regard to the studies in Table 4.1, the focus of the critical incidents in each case
concerns certain antecedents which were connected to a specific firm’s behaviour (e.g.
the critical incidents that led to the establishment of Swedish companies in Mexico
(Zineldin, 2007). The application of critical incidents in this thesis (e.g. Chapter 6)
follows a similar pattern.
4.4.2 Content Analysis
In addition to critical incident analysis, content analysis according to Buglear et al.
(2004) represents a step which adds a quantitative element to the analysis of qualitative
data (i.e. words). Therefore, the frequencies with which the themes and issues (words)
appear in the interview transcripts are measured using descriptive statistics such as
frequency, percentages and rankings. The content analytical technique facilitates the
classification system of the theme and sub-themes (categories and main categories) in
the analysis of the critical incidents’ interview transcripts. Consistent with other
researchers (e.g. Katsikeas & Morgan, 1994; Owusu-Frimpong & Mmieh, 2007),
frequencies, percentages and rankings were the main analytical tools used to analyse the
critical incidents that emerged from the interview transcripts (Chapters 6 & 7).
4.4.3 Analysing the Interview Transcripts
Overall, the process of the data analysis involved reading the transcripts several times to
obtain a sense of the general themes (critical incidents). These were then triangulated
with the interview notes. The process enabled the researcher to understand the accounts
of each firm in depth. In accordance with Strauss and Corbin (1990), the interview
transcripts were then coded (i.e. open coding). On one hand, Leonidou (1995b) and
Leonidou et al.’s (2007) technique with regard to the categorisation of export
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stimulating factors was adapted. As a result, Leonidou et al.’s dimensions of export
stimulation factors guided categorisation of the critical incidents that triggered the
export initiation of the firms identified from the interviews. Following Leonidou et al.
(2007), the themes (the critical incidents) which triggered export initiation among the
firm were categorised depending on whether or not they fall under proactive internal,
proactive external, reactive internal or reactive external triggers.
On the other hand, the main factors and/or influence which facilitated the capacity of
the firms to meet their export orders were also categorised and/or open coded based on
whether or not they pertained to the RBV, the network theory, the stage theory, the IE
theory factors and the contingency theory factors. Overall, the themes which emerged as
the critical incidents were examined for differences, similarities and connectedness,
according to which the categories were grouped. This approach builds on the ‘within
case’ and ‘across the cases’ analysis suggested by Miles & Huberman (1984). As a
result, a theme in each case study is viewed as information requiring replication in other
case studies, and thus the analysis proceeds by analysing within-case evidence, which
then leads to a search for a cross-case pattern (Eisenhardt, 1989) (see Appendix N Table
2 – 6 for the within-case and cross-case synthesis).
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4.5 VALIDITY & RELIABILITY CONSIDERATIONS IN THE THESIS
Validity and reliability criteria consist of built-in mechanisms in the research process
that ensures rigour and/or credibility. These credibility criteria include: (1) internal
validity, (2) external validity, (3) objectivity and (4) reliability.
4.5.1 Internal validity
Chapter 5 of the thesis aims to ascertain the cause and effect relationship between a
dependent variable and its independent variables. Here, the internal validity concerns
whether or not the research evidence justifies the claim (Ghauri & Grønhaug, 2004;
Fisher et al., 2007). Various statistical tests such as the f-test, the likelihood ratio, the t-
test, z-test and chi-square were all applied in order to ensure that the result of each
variable was internally valid. Related to internal validity is construct validity. As
regards the construct validity, while internal validity ensures that claims of relationships
among variables supply statistical justifications, construct validity ensures that variable
operationalisations and/or definition actually measure the concepts they seek to measure
in order to bring about a meaningful interpretation of the research findings. According
to Ghauri & Grønhaug (2004), construct validity can be ascertained in a number of
ways, namely:
(1) Face validity – which ensures whether or not the operationalisation of the variables
makes sense both theoretical and institutive;
(2) Convergent validity – which also establishes whether or not multiple measures of
the same variable produce comparable results; and
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(3) Discriminant and/or divergent validity – which ascertains whether or not variables
have a meaning of their own which does not overlap with other variables.
To ensure that construct validity is not threatened in this thesis, the constructs and/or the
measurements of the variables (e.g. the export propensity, firm size, firm age, aggregate
full-time workers education level, foreign ownership and sector) on which the
hypotheses were based, were measured in a similar way to previous applications in
published studies in the field.
4.5.2 External Validity
One of the core tenets in positivist research is a generalisation of the research findings;
consequently, external validity concerns whether or not the study’s findings can be
generalised to comparable units of analyses in comparable settings. As a result of this
criterion, the positivist tradition uses probability sampling techniques and a large
sample size to prevent threats to external validity (Fisher et al., 2007). The stratified
random sampling method was applied by the World Bank’s team to draw the RPED
data set in large samples and therefore any possible threat to external validity is avoided
in this thesis, and external validity with regard to the regression results in Chapter 5 is
largely ensured.
4.5.3 Objectivity
The positive tradition assumes that the objective knowledge systematically pursued by
researchers is based on general causal laws. Furthermore, the philosophy assumes that
as knowledge is externally objective, researchers take strictly neutral and detached
positions towards the phenomenon being investigated (i.e. value free research process).
Such a stance ensures that the values and biases of the researcher do not affect the study
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and thereby threaten its validity. In accordance with this criterion, closed ended
questions were used to capture the World Bank data set used in this study. In addition,
in analysing the data set, various statistical tests were applied.
4.5.4 Reliability
Reliability in positivist research encompasses the reliability of variable measurements
and the extent to which results are consistent over time. Moreover, reliability concerns
the extent to which the results can be repeated and replicated in comparable settings.
This concept relates to the external validity (sub-Section 4.5.2) Once all the
assumptions of the positive research are met, positivist research can exhibit a high
likelihood of reliability, enabling confident replication and/or repetition in similar
settings. In this thesis, the various robust checks were further performed on the
regression results. Consequently, other researchers can replicate the study in the study
in similar contexts.
4.5.5 Validity & Reliability Considerations with the Interviews
The major validity and reliability considerations involved in the interview portion of the
thesis concern two main issues. First, for an incident to be judged as critical incident, it
should be differentiated from a mere influence; as a result the critical incidents selected
in the study were screened against certain key criteria, usually associated with critical
incident method (i.e. Chapter 6, sub-section 6.3.6.1). This is in accordance with
previous studies (e.g. Cope, 2003; Chell, 2004). Second, the variables which were
explored in the interview process in accordance with the proposed integrated theoretical
framework were themes and/or variables used in previous studies in the field (e.g.,
Chatty, 1999; Gorman & Evers, 2008).
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4.6 ETHICAL CONSIDERATION OF THE THESIS
The secondary data set put together for the first empirical chapter (Chapter 5) was
obtained freely from the Oxford University website in 2008. This source is duly
acknowledged and cited in this thesis, as well as those from studies which have used the
same data set. With regard to the interview portion of the thesis, the following ethical
standards were observed: (1) informed consent (the extent to which the consent of
potential respondents was sought in advance); (2) guarantee of privacy and
confidentiality (the extent to which every interviewee’s privacy was duly respected); (3)
language (the extent to which the preferred language of the interviewee was used); (4)
deception (the extent to which no respondent was coerced to offer information); and (5)
accuracy (the extent to which accuracy is ensured in the data collection and analysis of
the study).
4.6.1 Informed Consent
With regard to conducting the interviews, first, some key organisations in Ghana (e.g.
the Ghana Statistical Service/GSS, the Ministry of Trade and Industry/MoTI and the
Association of Ghana Industries/AGI) which provide widespread support to businesses
in Ghana were contacted and informed about the study. Following these initial contacts,
three lists were compiled to form the sample frame for the study. Following receipt of
authorisation from the AGI, telephone calls were made to introduce the study to
prospective interviewees. From the lists obtained, small businesses from the garment
and textile sub-sector in Ghana which met the size criteria on the basis of the first
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empirical analysis (Chapter 5) were contacted to request their participation in the study
(see Chapter 6, Section, 6.3.4for the criteria for selecting the companies).
In the process of seeking their consent, owner-managers were made aware that
permission to call them had been obtained from the AGI. The main aim of the study, its
nature, data generating method, the instrument to be used (i.e. the audio tape recorder
and handwritten notes) and the consequences of the study were made clear to them. As a
result, the participants understood the data gathering process in advance and recognised
that their participation was purely voluntary and that the study was purely for academic
purposes.
4.6.2 Guarantee of Privacy and Confidentiality
In the case studies section of the thesis, during the time of seeking the consent of the
owner-managers to participate in the study, the researcher assured the participants of
their rights to: (1) confidentiality and anonymity; (2) ask questions and seek
clarification from the researcher; (3) refuse to participate without any consequences; (4)
refuse to answer particular questions. These explanations gave the participants advanced
notice of what to expect in the interview process and the type of information that would
be required of them. They were also assured that neither their personal names nor their
companies would be used in the discussion without their permission. In addition, copies
of the official introductory letter sent from the researcher’s university were given to the
participants (i.e. those who requested for it) for their records. The introductory letter
described who the researcher was and also contained the contact details of the names of
people to contact at the researcher’s university in case they needed more evidence to
support the source of the researcher or if further queries arose.
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4.6.3 Language
English is the official language in Ghana since it is used to be a British colony. During
the interviews, the respondents were given the choice to either speak English or their
local dialect (the common Ghanaian Language called Twi). However, all the interviews
were conducted in English as the interviewees preferred it, with exception of one
owner-manageress (case study 23 among the exporters) who offered to speak Twi. Her
portion of the interview was later transcribed into English.
4.6.4 Deception
No information (e.g. the list of the firms, the name of their owners and their contact
phone numbers) was obtained without the appropriate permission/authorisation. In
addition, the purpose of the study and what the results would be used for were all made
clear to the respondents in order for them to decide whether to participate or not.
4.6.5 Accuracy
The study has as far as possible ensured the accuracy of its data generation by avoiding
omissions and fabrications. As a result, the source of the secondary data set is explicitly
indicated, whilst the procedures used to collected interview data (e.g. authorisation from
the appropriate institution in Ghana, the use of the audio tape coupled with hand written
notes) ensured accuracy in the data collection and analysis of the data.
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4.7 DEFINITION OF SME USED IN THE THESIS
For various reasons this study focuses entirely on SMEs rather than large firms. It is
argued that the average African firm is a small and/or medium-sized enterprise (Rankin
et al., 2006). According to UNIDO (1999), SMEs represent 90% of private businesses
in Africa and account for more than 50% of employment and 50% of GDP. In the
Republic of South Africa, it is found that SMEs represent approximately 91% of the
formal businesses and contribute about 57% and 61% to GDP and employment
respectively (Berry et al., 2002). In sub-Saharan Africa, it is said that SMEs represent
more than 95% of businesses (Fjose et al., 2010). In Ghana, SMEs make a significance
contribution to the economy by providing about 85% of the employment in
manufacturing in Ghana and accounting for 92% of the business (Kuffour, 2008; Abor
& Quartey, 2010). Moreover, they contribute about 70% of Ghana’s GDP and are
considered as crucial to industrial development in sub-Saharan Africa (Fjose et al.,
2010).
The government of Ghana has targeted the SMEs as the catalyst for economic growth
due to the fact that they are the major providers of income and employment (Agyapong,
2010). In addition, in Ghana SMEs are used by the government as the key strategy to
boost employment, poverty reduction and economic growth through accelerating the
capacity and activities of their manufacturing activities (GPRS II, 2003 8
). Moreover,
development of manufacturing among SMEs is hailed by Ghana’s government as a
significant measure in attainment of anti-poverty objectives of the United Nations
8 Ghana’s Poverty Reduction Strategy II (GPRS II) is an extension of the government of
Ghana’s economic strategic document, developed out of GPRS I for its poverty
reduction, growth and human development agenda in the light its Vision 2020
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(UN)’s Millennium Development Goals (MDGs) (GPRS II, 2003, Budget Statement,
2008).
However, the question is: how do SMEs in Ghana compare with their counterparts in
the rest of the world? As shown in Appendix Q, SME definition varies in both official
and research sources and these trends are no different in Ghana. In Ghana, various
organisations and individuals use different definitions to describe this group of firms.
First, the Ghana Statistical Service (GSS) defined a small-scale business as a firm with
9 or less workers, and those with 10 and above as medium and large firms (Kayanula &
Quartey, 2000; Abor & Quartey, 2010). Second, Ghana’s National Board for Small
Scale Industries (NBSSI) uses both the number of employees and the amount of fixed
assets to define a small business.
NBSSI considers small business to be firms with 9 employees or less that possess plants
and machinery (excluding land, buildings and vehicles) and which do not exceed GHC
10, 000, 000 (i.e. about $1,000.00 USD). The NBSSI revised this definition in 1998 and
distinguished a micro-firm from a small business. In the new definition, the NBSSI
defined a micro-firm as any business with 5 or less workers which has fixed assets,
excluding land and buildings and not exceeding US$10, 000, while it considered small
businesses as firms with 29 or less employees (i.e. 6-29) that have fixed assets,
excluding land and buildings and not exceeding a turnover of US$100,000 (Puplampu,
2005).
Besides drawing on the preceding sources for an official definition of SMEs in Ghana,
some researchers (e.g., Steel & Webster, 1991; Osei et al., 1993) have operationalised
other definitions of an SME to suit the purpose of their research concerning Ghana. For
example, Steel & Webster (1991) used the number of employees as a cut-off point of 30
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or less to describe small scale businesses from Ghana; here, without any division
between small and medium-sized firm. On the other hand, Osei et al. (1993) broke
down the concept of the small firm into micro, small and medium-sized firms, defining
them as follows: (1) micro firms – firms employing 6 or less workers; (2) very small
firms – those employing 7–9 people, and small firms – those employing 10–29 staff.
A recent definition, now applied by most researchers (e.g., Adjasi, 2006; Aboagye,
2006; Abor & Harvey, 2008; Abor & Quartey, 2010), is that formulated by the World
Bank’s study on SSA, called the Regional Project on Enterprise Development (RPED).
The RPED categorised firms into: (1) micro, (2) small, (3) medium-sized, and (4) the
large firms; the study classified SME in Ghana into: (1) micro firms – those employing
5 or less; (2) small firms – those employing between 6 and 29 workers; and (3)
medium-sized firms – those having between 30 and 99 workers. However, firms with
100 workers and above are considered to be large firms. In this thesis, the World Bank’s
definition of SME in Ghana is applied for three reasons. While the World Bank’s study
included all firms, in this study those employing more than 100 employees (large firms)
are excluded because the study is limited to SMEs.
First, the thesis draws on the secondary data set by the World Bank in order to maintain
consistency, and also in order to compare the results of this study to others that build on
a similar data set in sub-Saharan Africa. Second, this is the most recent definition of
SMEs in Ghana and is widely used by researchers, and the thesis thereby continues the
current trend with regard to SME definition in Ghana. Third, the World Bank’s
definition compares favourably with the definition of SMEs in similar countries in sub-
Saharan Africa. Definitions of other key concepts which form the core themes of the
thesis are clarified and presented in Appendix Q. Among these key concepts are:
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• Introduction to the definition of SME
• The US’ Official Definition of SME
• Britain’s Official Definition of SME
• European Commission’s Definition of SME
• The UNIDO’S Definition of SME
• Assessment of SME’s Definition
• Definition of Exporting
• Definition of Internationalisation
• Definition of Resources
• Definition of entrepreneurship and international entrepreneurship
4.8 CONCLUDING REMARKS
This chapter presented the general summary of the specific methodologies applied in the
empirical chapters of the thesis. The chapter examined the main procedures followed to
address the research question of the thesis. In all, four phases and ten steps were
followed as shown above. The analytical techniques for the empirical chapters were
introduced. The chapter further considered the population and sample utilised in the
thesis. In addition, the chapter describes how reliability and validity standards coupled
with consideration of ethical issues were used to ensure the integrity of the thesis. The
chapter ends by clarifying how the concept of ‘SME’ is operationalised in the thesis.
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CHAPTER FIVE
THE DETERMINANTS OF EXPORT PROPENSITY:
EMPIRICAL RESEARCH PART 1
5.1 INTRODUCTION
This chapter addresses the first research question of the thesis and seeks to achieve the
second objective of the study. In this chapter, the main variables that are examined with
regard to export propensity (the dependent variable) are: (1) firm size, (2) firm age, (3)
aggregate full-time workers’ education, (4) foreign ownership and (5) sector. These
variables are drawn from the literature review (Chapter 2, Sections 2.8 - 2.8.5).
Moreover, the variables are selected because, whilst they seem theoretically and
intuitively plausible to positively influence the export behaviour of the SMEs, their
empirical findings remain inconclusive in the literature. Therefore, on the basis of the
theoretical and intuitive reasoning from the proposed integrated framework that informs
the thesis they are hypothesised as follows.
Following the first research question above, the hypotheses that this study seeks to
examine will include the following:
H1: Domestic SMEs that have foreign ownership will be more likely to respond
positively to export stimuli and change their strategy from engaging wholly in domestic
business and enter the export market than their counterparts that are wholly
domestically owned.
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H2: The larger the size of the firm, the more the likelihood that it will respond positively
to export stimuli and change its strategy from engaging wholly in domestic business to
enter the export market.
H3: The older the firm, the more the likelihood that it would react positively to export
stimuli and change its strategy from engaging wholly in domestic business and enter the
export market and become an international business firm.
H4: The aggregate full-time workers’ education level in a firm will be positively related
to the export propensity of the firm.
H5: There will be a positive association between the sector and/or industry’s influence
and the export propensity of a firm.
5.2 DATA AND ESTIMATION METHOD
As already presented in the methodology chapter (Chapter 4, Section 4.3), the data for
this portion of the thesis follows the World Bank’s secondary data set (i.e. the RPED).
The World Bank’s study originally aimed to identify the business knowledge and policy
advice which would be useful for the development of private sector manufacturing in
sub-Saharan Africa (Frazer, 2005). According to Frazer, the World Bank first
recommended and sponsored the Structural Adjustment and Economic Recovery
Programmes (SAP & ERP) in the early 1980s in most sub-Saharan African countries,
which the majority of governments in the sub-region implemented. Frazer (2005) and
Biggs & Srivastava (1996) maintained that the World Bank, having realised that the
macro-level economic reforms it implemented in the 1980s were not a pre-condition for
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private sector growth and development in Africa, initiated the RPED study to enhance
its understanding of firm level factors that could enhance manufacturing private sector
growth in sub-Saharan Africa.
The various themes which influenced the RPED study included the firm’s capacity,
labour relations, financial market characteristics, conflict resolution, infrastructure,
regulations and the uses of business support services by firms in sub-Saharan Africa.
The World Bank designed the study in three phases in each sampled country: these
included: (1) a panel survey of SME to large organisations; (2) case studies of selected
firms in each country, and (3) cross-country studies on the themes above (Biggs &
Srivastava, 1996). Ethiopia, Mauritius, Zambia, Cameroon, Côte d’Ivoire, Ghana,
Kenya and Zimbabwe were among the countries sampled for the study (Rankin et al.,
2002, Abor et al., 2008).
The World Bank study covers eight manufacturing sectors, each consisting of exporting
and non-exporting firms. These sectors were (1) garments; (2) textiles; (3) furniture; (4)
metal; (5) bakery; (6) wood; (7) machines and (8) chemicals. Harding et al. (2004)
contended that the World Bank selected these sectors because they accounted for
approximately 70% of the manufacturing employment generation and value added
outputs in the respective countries. De Toni & Nassimbeni (2001) confirmed this
assertion, reporting that in Italy, small organisations active in export businesses are
mostly found in similar sectors.
The samples were randomly drawn in each country. Teal (2002) and Van Biesebroeck
(2005) reported that in Ghana specifically, the sample was drawn randomly from a list
of firms contained in Ghana’s Census of Manufacturing Activities, this being a broader
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industry directory. Questionnaires and interviews were the main instruments used in the
various World Bank’s study and, according to Teal (2002); the questionnaires were
designed and structured by a research team from the World Bank. The broader RPED
study uses the multiple informants’ techniques, using the owner-managers, senior
managers and workers as the main respondents for the study (Harding et al., 2004).
5.3. DESCRIPTIVE STATISTICS OF THE DATA SET FOR THE THIS STUDY
In line with regression models by Hall & Tu (2003; 2004) and Hall & Cook (2009), this
study is based on a cross-sectional model. Although the World Bank’s data set (the
RPED) is a panel study, in the current study the cross-sectional model is based on the
2002 responses (data). The 2002 data set is used in this study because it was the most
recent data set publically available as at the time the data set was retrieved. In addition it
was the data set with less missing data 9
. As indicated in Chapter 4, Section 4.7, while
the RPED data set covers micro to large enterprises, only SMEs are used because the
focus of the study is to understand the exporting and non-exporting behaviour of this
group of firms.
In addition, SMEs are used because it has been established that Ghanaian firms are
mostly SMEs and so it is the target of the government to promote this cluster of firms to
reduce poverty (Abor & Quartey, 2010). In all, 110 SMEs were analysed from the 2002
data set for this chapter. The 110 firms consisted of 17 exporters and 93 non-exporters
(i.e., 15% exporters and 85% non-exporters). This total sample compares favourably
9 The data set was accessed from: www.csae.ox.ac.uk/datasets/main.html.
159

with the earlier work of Westhead et al. (2001). Tables 5.1 and 5.2 present the
composition of the sample used in this study.
Table 5.1: Composition of the Sample - Continuous Variables
Variable N Mean Std. Dev. Min Max
Workers
education
Exporters
Year 2002 17 11 3.771749 2.80129 20.97284
Non-
exporters
Year 2002 89 9 2.392789 0 14.51876
Firm age
Exporters
Year 2002 17 25 11.61895 10 53
Non
exporters
Year 2002 90 23 10.38945 8 52
Source: RPED (2002)
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Table 5.2: Composition of the Sample - Categorical Variables
Variable Frequency Per cent Cum
Firm size
Exporters
Year 2002 Medium(30-99)
Non-Exporters
Small (6-29)
Year 2002 Medium(30-99)
Ownership
Exporters
Small (6-29)
Micro (1-5)
Year 2002 Partly foreign
Non- Exporters
Wholly local
Year 2002 Wholly local
Partly foreign
Continued from previous page
Table 5.2 continued
16
1
28
45
20
10
7
83
10
161
94.12
5.88
30.11
48.39
21.50
58.82
41.18
89.25
10.75
94.12
100.00
30.11
78.5
100.00
58.82
100.00
89.25
100.00

Variable Frequency Per cent Cum
Exporters
Year 2002 Chemical
Furniture
Garments
&Textiles
Metal
Wood
Non-exporters
Year 2002 Bakery
Chemical
Furniture
Garments
&Textiles
Machine
Metal
Wood
Sec. education
& above or
middle sch.
education or
below
Exporters
Year 2002
Sec. education
& above
otherwise
middle &
below
Non-exporters
Year 2002 Sec. education
& above
otherwise
middle &
below
Source: RPED (2002)
1
1
2
2
9
11
4
19
26
3
17
1
14
3
36
57
162
6.67
6.67
13.33
13.33
60.00
13.38
4.94
23.46
32.10
3.70
20.99
1.23
76.47
23.53
38.71
61.29
6.67
13.34
26.67
40.00
100.00
13.38
18.52
41.98
74.08
77.78
98.77
100
76.47
100.00
38.71
100.00
From Table 5.1, it can be seen that the average age of an exporting firm is two years
greater than that of a non-exporting counterpart, and while the average aggregate
educational level of a full-time employee in the exporting firms is 11, for the non-
exporting firm it is 9 years. Moreover, despite the differences in the continuous

variables, the categorical variables also show different features between the two groups.
Table 5.2 indicates that micro firms do not export in Ghana and while medium-sized
firms account for 94% of exporters, small firms amount to only 6%. As regards
ownership characteristics, 59% of the exporting firms consist of firms with foreign
ownership, while only 11% of the non-exporting firms have foreign ownership. In terms
of sector category, the largest percentage (60%) of the exporting firms is involved in the
wood sector, followed by garments and textiles and the metal sub-sector.
Notwithstanding this, a high proportion of firms that do not export are also in the
garment and textile sub-sector, accounting for 32% of such firms, while the wood sector
is the least represented among the non-exporting firms, making up only 1%.
5.4 MODEL SPECIFICATION
The matter of whether or not a firm will export can be modelled by employing the linear
probability model (i.e. the probability of event happening), where Ordinary Least
Square (OLS) and/or linear probability model can be applied in a straightforward
manner. According to Gujarati (1999), if the linear probability model is used, the
predicted values may lie outside the values 0 & 1. Consequently, such a challenge limits
the OLS regression for a dichotomous dependent variable. Therefore, when the response
variable is qualitative, using OLS and/or linear probability model leads to
misspecification of the model. Following Hall & Cook (2009), the Cumulative
Distribution Function (CDF) that takes a logistic distribution is used to transform the
model so that results of the dependent variable can produce a probability value in the
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ange of 0 and 1. Once the model is correctly specified via the logit function, it prevents
omitted variable bias which could affect the direction of the causality.
5.5 THE LOGIT ECONOMETRIC MODEL
In accordance with Gujarati (1999: 449), the following econometric logit model was
adapted:
In(Pi/1-Pi)
where Pi is the probability of an SME becoming an exporter and (1 – Pi) is the
probability of an SME not becoming an exporter. The ratio Pi/ (1-Pi), known as the
odds ratio, is simply the odds in favour of an SME becoming an exporter. The natural
log of this odds ratio is called the log odds, and therefore the above model is known the
logit model, which means the log of the odds ratio is a linear function of the explanatory
variables. Here is the constrained model whilst the is the error term. The acronyms
in the model above are explained as follows, but because the garment & textile sub-
sector is used as a reference group it does not appear in the model.
• Workers’ education (wdu) = aggregate education levels of full-time workers
• Firm age (fge) = age of the firm in calendar years
• Medium sized firm (msz) = medium-size firm
• Foreign ownership (fsp) = foreign ownership
• Wood (wod) = wood sector
• Metal (mtl) = metal sector
• Chemical (cml) = chemical sector
• Furniture (fnl) = furniture sector
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5.5.1 Measurement of Variables
The manner in which the variables (i.e. the dependent and the independent variables)
are measured in this thesis is explained below.
5.5.1.1 Dependent Variable
In this study, the export propensity is used as the dependent variable. Therefore,
whether the firm will export takes the value = 1, and should it not export, this takes the
value = 0, consistent with previous studies (e.g. Obben and Magagular, 2003;
Mittelstaedt et al., 2003; Hall & Tu, 2004; Hall & Cook, 2009).
5.5.1.2 Independent Variables
In accordance with previous studies, the independent variables in this study are
measured as follows:
1) Firm size (mdSZ/msz) - measured as the total number of full-time employees
consistent with researchers (e.g., Zhao & Zou, 2002; Hall & Tu, 2004; Hall &
Cook, 2009);
2) Firm age (fmage/fge) - measured as the number of years a firm has existed since
starting the operation - consistent with researchers, (e.g., Toni & Nassimbeni,
2001; Hall & Tu, 2003; Hall & Cook, 2009);
3) Human capital (workersedu/wdu ) - measured as the aggregate education level
of the full-time employees. Here the levels of education are defined as: average
of up to 6 years – primary education in Ghana, average of up to 10 years -
middle education in Ghana, average of up to 17 years - secondary education and
the average of up to 21 years – university or degree education in Ghana,
consistent with how the World Bank defined average aggregate education levels
in its original study and similar to researchers (Abor et al., 2008);
4) Foreign ownership (fownership/fsp) - measured as the firms whose ownership is
partly foreign and partly local - consistent with researchers, (e.g., Aitken et al.,
1997; Cerrato & Piva, 2007); the last variable is the ‘sector’ of the firms, where
the firms that operate wholly in the garments & textiles sub-sector are used as
the reference group and the other categories include:
5) Wood (wood/wod) – measured as firms wholly in the wood sub-sector
6) Metal (metal/mtl) - measured as firms wholly in the metal sub-sector
7) Chemical (chem/cml) – measured as firms wholly in the chemical sub-sector
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8) Furniture (furn/fnl) – measured as firms wholly in the furniture sub-sector.
5.6 ESTIMATION, ANALYSIS AND THE LOGIT REGRESSION RESULTS
Unlike previous studies (e.g. Zhao & Zou, 2002; Hall & Tu, 2004; Hall & Cook, 2009)
which use SPSS for their data analysis, the Stata Statistical Software Package (SSSP) is
the statistical software used to run all the analysis in this chapter.
5.6.1 Stata Listwise Deletion Method
In this study Stata listwise method became appropriate due to sample missing variables.
The listwise method in Stata is not appropriate in Statistical Programme for Social
Sciences (SPSS) and so Stata became helpful and was used. The listwise method in
Stata Statistical Software Package (SSSP) makes it works slightly different from the
Statistical Programme for Social Sciences (SPSS) with regard to how it performs its
analysis and presentation of outputs. Following Acock (2008), a key inbuilt mechanism
within (listwise deletion method) differentiates it from SPSS. What listwise deletion
means is that, for example, in a regression analysis if say there are 5 explanatory
variables, but a case/ subject and/or firm did not supply data for one of these 5
explanatory variables, by default, Stata will delete that case from the regression analysis
thereby reporting a sample size based on cases that provided full data for each
variable.Here the reported sample size will be lower compared to when missing data
was not taken care of in the regression output. In this study because SSSP is used
throughout, all regression outputs are based on the listwise deletion (also called case-
wise deletion). So, for instance, in Models 1 & 2, (Tables 5.3 & 5.5) of the sample size
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110 firms used in the regression analysis, only 103 were reported on; what that meant
was that 7 firms did not submit data for some of the independent variables and as a
result Stata deleted them by default in performing the regression analysis. In addition, in
Table 5.6, Model 3, when different regressors were put in the model, the sample size
changes 107 out of 110 because of the listwise deletion method. Further, in all the
regression models (models 1 – 3) bakery and machinery sub-sectors did not appear; the
reason is that because from Table 5.2 none of the two sub-sectors submitted data for
exporting activities (i.e. they do not participate in export business), Stata deleted them
by default.
In addition, in all the regression analysis (Tables 5.3 – 5.6), the garments and textiles
sub-sector is used as the reference group and so as the reference group they do not
appear in the regression output, and the reaming sub-sectors in the model are interpreted
in reference to the garments & textile sub-sector. Besides the fact that due to statistical
purposes there must be one reference group with regard to categorical variables in a
regression equation, here the garments & textiles sub-sector in particular is used
because it is the focus of the study, as indicated in Chapter 1, Section 1.7, given the
country context (Chapter 3, sub-Section, 3.3.1).
5.6.2 Stata Stepwise Logistic Regression Process
Following Chen et al. (2003), like the SPSS, Stata uses the stepwise method to arrive at
the final model that best fits the observed data. Stata logistic regression is based on
maximum likelihood, which involves iterative procedures by comparing model to model
depending which one fits the data. The iteration is a step by step process, consisting of
listing of the log likelihoods at each iteration. The first iteration is called iteration zero;
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in this iteration, Stata selects only the constant model to assess the fitness of the model
to data. This is called the log likelihood of the constrained model (the null or empty
model), that is, a model with no predictors. In the next iteration/step, after the
constrained model, the predictor(s) are put in the model. At each step and/or iteration,
the log likelihood increases because the aim is to maximise the log likelihood.
Here the Stata examines the variables in the model to ascertain whether or not one or
some should be removed via the likelihood ratio statistic (LR stats). For instance, if the
removal of the regressor (s) will make a significant variation with regard to how well
the model fits data then software maintains the regressor (s). When the variation
between successive iterations is very small, the model is said to have ‘converged’; then
the iteration is stopped and the results are produced. Here the likelihood ratio statistics
will be produced with its corresponding p-value. This p-value assesses the probability of
ascertaining the chi-square statistic, granting that the null hypothesis is the case. Here
the null hypothesis is that none of the variables is different from zero and/or the model
does not fit the data. Therefore, the p-value is compared to the chi-square statistic (LR
stats) to determine the fitness of the final model to the data. Finally, the p-value, is then
compared to a critical value (e.g. .05 or .01) in order to decide whether or not the final
model is statistically significant and the fitness of the final full model is judged. So, if
the critical value is below .05 the null hypothesis will be rejected. In this study, for
example, the likelihood ratio statistics of the models (Models 1-4) are statistically
significant, supporting the final model from each output.
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5.6.3 The Z-Statistic in Stata Logit Regression Analysis
In a linear regression, the interest is not only in how the overall model fits the data, but
in addition, the contribution of the individual explanatory variables. In Ordinary Least
Square (OLS) linear regression, this can be identified through the t-statistic (i.e. the
estimated coefficient divided by their standard errors). In logistic regression, the statistic
is called ‘Wald statistic’ (Field, 2009). While SPSS software reports the Wald statistic,
Stata reports it as Z-statistic as can be seen in Models 1 – 4) (Acock, 2008). So here,
similar to the reporting of the Wald statistic (usually) by SPSS logistic output, Stata
reported the Z-statistic from its logistic regression outputs produced throughout the
study. Therefore the Z- value is used in Stata is based on 2-tailed hypothesis and an
associated p-value to assess the null hypothesis that none of the coefficients
(parameters) of regressors is different from zero similar to Wald statistic in SPSS.
5.6.4 Pseudo R-Squared from Stata Logistic Regression Output
The kind of pseudo-R 2 that Stata statistical software produces is the one recommended
by McFadden (1973, cited in Kohler & Kreuter, 2005). The McFadden r-squared is seen
by some statisticians as better measure of fit for the logit model. For instance, the Cox
& Snell, r-squared cannot reach the maximum value of 1 as such and is not the best
measure of a good fit (Hair et al., 1998). Therefore the Stata logistic r-squared used in
the regression models in this study is based on McFadden’s (1973) pseudo r-squared.
Field (2009) argues that unlike OLS estimation, where R 2 is normally employed in order
to ascertain the amount of variation based on the explanatory variables with regard to
the dependent, in logistic regression there is no such comparable or generally accepted
R 2 measure of model fitness, and therefore, different authors have suggested different
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statistics. While a common measure with regard to logistic regression is the pseudo-R 2 ,
yet according to Kohler and Kreuter (2005), various types of pseudo-R 2 can be found in
the literature, such as pseudo-R 2 by Veall and Zimmermann & Long (1994 cited in
Kohler & Kreuter, 2005) and by McFadden (1973, cited in Kohler & Kreuter, 2005). So
the type of pseudo r-squared statistic used in the regression model is clearly specified.
In Tables 5.3 – 5.6 below, the regression outputs are presented.
Table 5.3: Model 1, Logit Regression Result to Predict the Propensity to Export
Year 2002
No. of firms N=103
LR chi2 (8)=17.88;P>Chi2 = 0.0222
Pseudo R 2 0.5481
Variables Coef. Z-Stat.
Mediumsized
2.328* (1.68)
Workersedu 0.394 (1.59)
Fmage -0.002 (-0.08)
Fownership 2.015** (2.41)
Wood 3.974** (2.38)
Furniture -0.247 (-0.18)
Metal 1.091 (0.91)
Chemical -0.990 (-0.75)
Cons. -8.589** (-2.29)
Note: **** P

correlates with the size and sector. Consequently, in Model 2 (Table 5.5) the size and
sector variables have been dropped.
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Table 5.4: Correlation Matrix of the Predictors and Export Propensity
Variable 1 2 3 4 5 6 7 8 9
1 Exp.propensity 1.0000
2 Workersedu 0.2283** 1.0000
3 Wood 0.6522** 0.1257 1.0000
4 Furniture -0.1363** -0.0066 -0.2755** 1.0000
6 Metal -0.0623 0.0404 -0.2670** -0.1445** 1.0000
7 Chemical 0.0274 0.2471** -0.1275** -0.0690 -0.1029** 1.0000
8 Firm age 0.0670 0.0190 0.0145 -0.0050 -0.0074 -0.1059** 1.0000
9 f.ownership 0.4505** 0.1814** -0.0590 0.3429** -0.1611** -0.0907 0.2366** 1.0000
10 Medium-sized 0.4909** 0.3376** -0.2491** 0.3858** 0.0656 -0.0802 0.2306** 0.1252** 1.0000
NB. *correlation significant at 0.05 (2-tailed); **correlation significant at 0.01 (2-tailed)
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The correlation analysis in Table 5.4 is used to assess the strength and direction of
linear relationship between two variables. The Pearson correlation coefficient (r) takes
the values from -1 to +1. -1 means perfect negative correlation while +1 implies perfect
positive correlation. A perfect correlation of either -1 and/or +1 means that the value of
one variable can be determined exactly, just by knowing the value of the other variable,
while zero correlation implies no relationship (Pallant, 2007). Following Pallant (2007)
positive correlation means as one variable increases so does the other and the reverse is
true with regard to negative correlation. In the table below, Model 2’s output is
presented.
Table 5.5: Model 2, when Firm Size and Sector are dropped from the Model
Year 2002
No.
firms
of N=103
LR chi2 (3)=20.54;P>Chi2 = 0.0001
Pseudo R 2 0.2647
Variables Coef. Z-Stat.
Workersedu 0.256* (1.76)
Fmage 0.007 (0.23)
Fownership 2.633**** (3.80)
Cons. -5.149*** (-3.08)
Note: **** P

Furthermore, in Model 3, Table 5.6, the workers’ education is dropped (because from
the Pearson r it positively correlates with the medium-sized variable) and so the size
variable is left in the model with the rest of the variables; the results are shown below.
Table 5.6: Model 3, when Workers’ Education is dropped from the Model
Year 2002
No. of firms N=107
LR chi2 (7)=23.95;P>Chi2 = 0.0012
Pseudo R 2 0.5206
Variables Coef. Z-Stat.
Mediumsized
2.602** (2.20)
Firm age 0.007 (0.32)
Fownership 1.676** (2.28)
Wood 3.325** (2.82)
Furniture -0.611 (-0.48)
Metal 0.753 (0.74)
Chemical -0.300 (-0.23)
Cons. -4.672*** (3.27)
Note: **** P

5.7 ROBUST AND DIAGNOSTIC CHECKS OF THE LOGIT REGRESSION
RESULTS
Other tests were also performed in order to confirm whether or not the regression results
above could be claimed to be robust. The first robust check is that the workers’
education variable was recorded as a dichotomous variable (though originally
continuous variable) in order to confirm the effect of the continuous variable on the
export propensity as found in the regression results in Model 2 above. As a result, the
workers’ education is coded as workers with secondary education and above = 1, or
otherwise (middle school and below) = 0 (Table 5.2). Therefore, the variable secondary
education and above (secedu&above) which equals one (1) and zero otherwise replaced
the workers’ education (workersedu) originally as in Model 2, and regressed in another
model called Model 4. The result of Model 4 (Table 5.7) is presented below. The results
in Table 5.7 show that when workers’ education was changed to a dummy variable,
firms which have workers with secondary education and above are more likely to enter
the export market compared to those that have workers with middle school education
and below. The results are shown in the table below.
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Table 5.7: Model 4, when the Education is changed to a Dichotomous Variable
No. of firms N=107
LR chi2 (3)=21.80;P>Chi2 = 0.0001
Pseudo R 2 0.2641
Variables Coef. Z-Stat.
Secedu&above 1.388** (2.14)
Firm age 0.003 (0.11)
Fownership 2.527**** (3.76)
Cons. -
(-3.98)
3.308****
Note: **** P

Table 5.8: Independent t-test of Continuous Variables and Export Propensity
Independent t-test on firm’s age and export dichotomous variable
Year 2002 Exporters (M = 25, SD = 11.61); Non-exporters (M = 23, SD = 10.38),
t(105) = -0.6946; P

associated with furniture and Chemical sub-sectors imply that firms from these sub-
sectors have less likelihood of entering the export market, compared to those in the
garment and textile sub-sector, even though, the negative relationships were not
significant. In addition, the positive sign associated with the metal sub-sector implies
that firms from metal sub-sector have a likelihood of entering the export market; even
though, here the positive relationship was also not statistically significant. Moreover,
firm’s age did not predict any better the response variable (export propensity), which
contradicts one of the assumptions in the stage theory. The positive non-significant
effect of the age variable (Models 2, 3, & 4) in this study supports the arguments of the
born global researchers (e.g. McDougall et al., 1994; Zahra, 2005; Schulz et al., 2009)
who contend that as firm grow in years structure inertia causes them to be less
competitive and so H2 is not supported. The finding of firm age in this study confirms
what was found in Sweden (Svante et al., 2004), but contradicts what was found in
Canada (McNaughton, (2003).
With regard to the significant variables, in the light of the results above, it can be argued
that the positive effect of medium-sized firm compared to small firm predicts the
decision to initiate export business from Ghana. This confirms the importance of fixed
costs and the economies of scale hypotheses associated with export business (e.g. Hall
& Tu, 2004; Mittelstaedt et al., 2003, 2006; Hall & Cook, 2009). The fixed cost
hypothesis with regard to small business export behaviour implies that export business
is attached to fixed costs (e.g. sunk cost) which exporting firms cannot avoid. Large
firms will have the wherewithal to meet the fixed cost associated with export business
and will find it easier to respond positively to export stimuli and initiate export business
compared to SMEs.
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In addition, because of the same fixed cost issue associated with export business, large
firms that enjoy economies of scale advantages will be less affected by the burden of the
fixed cost compared to the smaller size firms. Most researchers (e.g. Hall & Tu, 2004;
Mittelstaedt et al., 2003, 2006; Hall & Cook, 2009) use these two factors as a significant
justification for the importance of size on export decisions.
Based on this finding, the assumptions of the RBV and the stage models can be
supported as plausible theoretical frameworks for understanding SMEs’ export
decisions. This result also confirms the findings of Hall & Tu (2004) in the UK, the
USA (Mittelstaedt et al., 2003 & 2006) and in Jamaica (Williams, 2008). Over all, H1 is
supported.
The positive effect of having a partly foreign ownership compared to having a wholly
domestic owned firm to facilitate export initiation is also supported, which confirms the
importance of the export spillover hypothesis (Aitken et al., 1997; Greenaway et al.,
2004; Cerrato & Piva, 2007). Export spillover hypothesis assumes that formation of
alliances with foreign business by indigenous firms facilitates their (the indigenous
firms) export initiation. Furthermore, this finding consolidates the assumption of
network theory (Literature Review sub-Section 3.4.3.3) concerning human and other
capital resources, whereby alliances and/or partnerships with foreign partners contribute
to the resource capacity of the indigenous firms (Johanson & Mattson, 1988). In this
way, H3 is supported.
Another significant positive result is that the aggregate average full-time worker
education facilitates the firm’s transition from a wholly domestic business firm to an
international one, and theoretically the tenets of the RBV and the stage theory are
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supported. Empirically, this finding confirms what Alvarex (2006) found in Chile, as
well as what Cerrato (2007) discovered in Italy. Therefore, H4 is supported. The
positive effect of the sector variable supports researchers who argue that the external
environment exerts weight on whether or not the small business will initiate export
business and not solely the influence from a firm’s internal resource capacity. In this
study, firms in the wood sector are found to be more likely to export compared to firms
in the garment and textile industry. On the basis of this finding, the tenets of the
contingency theory (e.g. industry’s influence on small business propensity to export) are
supported. This finding contradicts Javalgi et al. (2000) as regards the importance of the
wood sector and export propensity. In the study of Javalgi et al. (2000), it was
discovered that firms involved in production of electrical and electronic machinery,
equipment and supplies as well as rubber and miscellaneous plastic products are more
likely to change from wholly domestic business to initiating export business, whereas
those in the lumber and wood products industries are the least likely to export. Robert &
Tybout (1997) also discovered that, in Colombia, in comparison to firms in the wood
industry, firms involved in textiles and garments as well as those in the chemical
industry were more likely to change from a wholly domestically focused to an
internationally focused strategy. Overall, the findings indicate that external uncontrolled
factors play an important role in the SMEs’ decision concerning whether or not to
initiate export business (Zou & Stan, 1998; Sousa et al., 2008).
5.8.1 Conclusions
First of all, with regard to the logit regression output there is more likelihood that
medium-sized firm, those with an ‘educated’ workforce, those that have foreign
ownership structure, coupled with those that operate in the wood sector, will respond
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positively to export stimuli and enter the export business. However, the significant
results from the logit model imply that the majority of non-exporting SMEs in Ghana
are small in size, have workers with low levels of formal education, do not have foreign
ownership and operate in sectors which are not export oriented. Following from these
findings, there is research evidence (e.g. Weasthead et al., 2004; Ibeh, 2005; Ibeh &
Wheeler, 2005; Ruzzier et al., 2006; Williams, 2008; Lages et al., 2009) to support the
argument that the export success of SMEs with regard to its decisions whether or not to
export resides highly within its internal capacity. While this is important, it must be
noted that the influence of the external environment plays an important role in
explaining the export behaviour of the SME in detail. This supports the argument of
researchers (Zou & Stan, 1998; Zhao & Zou, 2002; Sousa et al., 2008) who contend that
the phenomenon of the SME’s export behaviour cannot be fully understood if the
influence of the external environment is not considered together with the internal
environment.
Due to the positive significant effect of the firm size (the stage theory and the RBV),
worker’s education (the stage theory and the RBV), foreign ownership (the network
theory and RBV) and the sector/ and industry influence (the contingency theory), it can
be argued that the external validity of the proposed integrated theoretical framework
behind the thesis is supported. In addition, these findings support the argument that
because the export behaviour of the SME is a complex event, a single theoretical
framework is inadequate to shed full light on the phenomenon (e.g. Coviello & Martin,
1999; Crick & Spence, 2005; Coviello & Martin, 2006; Rialp et al., 2006). As a result,
the integrated theoretical approach may offer a more robust understanding of the SME
export behaviour than researchers (e.g. Bell, 1995; Coviello & Munro, 1995; Reuber &
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Fischer, 1997; Westhead et al., 2001; Moen & Servais, 2002; Ibeh, 2005; Williams,
2008) who use the single theoretical framework to address the same topic.
As foreign ownership became statistically significant with regard to the export
propensity, this indicates that the internationalisation process may not be as gradual as
assumed in the stage theory, but that through access to the network partners’ resources
(among those having a foreign partner) the pace can be faster. This finding supports the
assumption of the network theory (Johanson & Mattsson, 1988; Gorman & Evers, 2008)
as incorporated in the proposed integrated framework.
5.9 CONCLUDING REMARKS
Following the logistic regression model, the variables which discriminate best between
exporting and non-exporting small and medium-sized owner-managed firms from
Ghana are: firm size, aggregate full-time workers’ education level, sector and foreign
ownership structure. Firm size relates to the stage theory and RBV, aggregate full-time
workers’ education level relates to the RBV and the stage theory, the influence of sector
relates to the contingency theory, while foreign ownership relates to the RBV and the
network theory. This suggests that the integrated theoretical framework explains SMEs
export business in more detail than a single theoretical framework. Furthermore, while a
combination of various types of resources is critical in enhancing a firm’s ability to
enter the export market, the strength of these findings is that they are visible, accessible
and measurable. As a result, it offers policy makers a clear picture of the type of firms
they need to target with regard to stimulating export business.
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This chapter along with the literature review (Chapter 2), which examined the stimuli
that could stimulate the decision to enter export markets, indicates that to initiate export
business, factors within the SME’s environment (external environment and/or
contingency factors) as well as its internal resource capacity are crucial in driving
export behaviour. Both chapters have offered insights into why some firms choose to
enter the export market while similar others facing similar market conditions choose to
focus on the domestic market. While the World Bank data set used in this chapter is
based on five small and medium-sized manufacturing sub-sectors (i.e. garment &
textile, furniture, metal, chemical and wood), the two remaining empirical chapters
(Chapters 6 & 7) are based on the garment & textile sub-sectors, as it is the main focus
of the thesis.
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CHAPTER SIX
CRITICAL INCIDENTS WHICH TRIGGER EXPORT
INITIATION: EVIDENCE FROM THE GARMENT &
TEXTILE SUB-SECTOR IN GHANA: EMPIRICAL
RESEARCH PART 2
6.1 INTRODUCTION
This chapter addresses research question two and seeks to achieve research objective
three of the thesis. As set in Chapter 1, Section 1.7 and Chapter 3, sub-Section 3.3.1, the
whole of the interview portion of the thesis (this chapter and Chapter 7) is focused on
the garment & textile sub-sector. This is also in line with Chapter 5 where the garment
and textile sub-sector is used in the regression models as the main reference group,
unlike the furniture sub-sector or any other sub-sector. The chapter uses the case study
interview method to explore the critical incidents that trigger export initiation and the
factors that facilitate the capacity of SMEs to meet their export orders.
In these interviews, all the owner-managers interviewed were with the case-studies at
the inception of the businesses and when the critical incidents took place. In addition,
the data collected with regard to the firm size (sub-Section 6.4.2.2) indicate the data on
the date of the interviews rather than the date of the critical incidents took place.
Following the assumptions of the individual theoretical frameworks integrated in the
literature review, in this chapter, it is hypothesised that the following factors will
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emerge as triggers of export initiation during the interviews (by way of critical
incidents). Of the variables from the integrated theoretical framework that inform the
thesis, the following are hypothesised as critical incidents in line with the definition of
critical incidents in the study (sub-section 6.2.5.1). First of all, among the factors to be
explored from the stage theory are: (1) psychic distance and (2) being in receipt of
unsolicited order. Second, the factors to be explored from the network theory include
both formal (e.g. networking relations with other businesses, foreign partners) and
informal (e.g. networking relations with family and friends) relations.
Third, factors to be explored from the international entrepreneurship theory included:
(1) previous residency and work abroad and (2) previous overseas travel (i.e.
international orientation). Finally, government action is also selected from the
contingency theory to be explored in the interview. Besides these factors, it is further
hypothesised that the following factors will act as influences to facilitate the capacity of
the firms to supply their export orders. First, the factors to be examined from the stage
theory are: (1) firm size, (2) firm age, and (3) psychic distance. Second, the factors from
the network theory include both formal (e.g. networking relations with other businesses,
industrial associations, foreign partners/foreign ownership) and informal (e.g.
networking relations with family and friends) relations. Third, the factors from the
international entrepreneurship theory are: (1) alertness to profitable international
opportunities, (2) international orientation, (3) international business vision and (4)
international risk-taking behaviour.
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The RBV factors are: (1) financial capital, (2) amount of full-time employees, and (3)
stock of equipments and machineries. Lastly, the influence of sector is the contingency
variable selected for examination. The themes selected for exploration had emerged as
being influential in the literature review.
In Table 6.1 below, the frequency of non-exporting among each sub-sector is presented.
The table is based only on non-exporting firms from exporting sectors and so the bakery
and machinery sub-sectors that do not participate in exporting business are excluded.
Table 6.1: Proportion of Exporting and Non-exporting Firms by Sub-sector
Sub-sectors (A) Exporti
ng firms’ –
Frequency
(B) Nonexporting
firms’
- frequency
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Total (A+B) Percentage of
variations based
on nonexporting
firms
by sector
Chemical 1 4 5 80%
Furniture 1 19 20 95%
Wood 9 1 10 10%
Textiles &
Garments
2 26 28 93%
Metal 2 17 19 89%
Totals 15 67 82 367%
Source: RPED, 2002 (Chapter 5, Tables 5.2).
Table 6.1 shows that of the firms that participated in the study non-exporting firms are
most dominant in the furniture sub-sector (i.e. 1/20*100= 95%). This As a result, there
is evidence suggests that among the participating firms the majority of the non-
exporting firms are in the furniture sub-sector. Nevertheless, because the garment and

textile sub-sector is the focus of the thesis (Chapter 1, Section 1.7 and Chapter 3, sub-
Section 3.3.1), the interviews are entirely based on this sub-sector. This flows through
from Tables 5.3 to 5.6 in Chapter 5 where the garment & textile sub-sector is used as
the reference group in the regression models.
6.2 BRIEF BACKGROUND OF THE GARMENT & TEXTILE SUB-
SECTOR IN GHANA
The garment and textile sub-sector is one of the dominant sectors of Ghana’s
Manufacturing Sector (Quartey, 2006; Kuffour, 2008). The sub-sector is comprised
mainly of SMEs, with a few large firms, namely the Ghana Textile Manufacturing
Company (GTMC), Akosombo Textile Limited (ATL), Ghana Textile Products (GTP)
and Printex Ghana Ltd. Firms in the sub-sector produce for individual consumption and
organisations such as schools, corporate bodies as well as other government institutions,
including the police, the army and hospitals (among others), both at home and abroad.
Indigenous firms dominate the industry, and only 5% are partly foreign and partly
locally-owned, while the rest (95 percent) are wholly under local ownership (Quartey,
2006).
African prints, (e.g. wax, java (typical in Ghana)), fancy clothes (also common in
Ghana), bed sheets, and school uniforms, as well as household fabrics (e.g. curtain
materials, kitchen napkins, diapers and towels) are among the sector’s products. Others
include knitted blouses and socks, and bleached cotton fabrics, known as tie and dye or
batik clothes, constitute another major product of the sector. Tie and dye is a product
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where firms use handmade designs. Traditional or indigenous textiles called Kente
clothes (e.g. traditional woven fabric), Adinkra clothes (e.g. traditional hand-printed
fabrics) and other types of woven fabrics (such as smocks) are also popular products.
6.3 METHODOLOGY
This methodology addresses the procedures applied to explore the themes in Section 6.1
above.
6.3.1 Industry Selection
In line with the discussion of Table 6.1 coupled with Chapter 1, Section 1.7 and Chapter
3, sub-Section 3.3.1, this section of the thesis is limited to the garment and textile sub-
sector. In addition to the policy reasons for selecting the garment & textile sub-sector as
the main sub-sector of the thesis, as outlined in Chapter 3, researchers (e.g. Coviello &
Munro, 1997; Coviello & Martin, 1999; Chetty, 1999) argue that using one sector
minimises the impact of inter-industry variance.
6.3.2 The Sample Frame & Sample Selection
The sample frame used for this portion of the thesis was compiled from data sources
from three institutions in Ghana. The Association of Ghana Industries (AGI), the Ghana
Statistical Service (GSS) and the Ministry of Trade & Industry (MoTI) were the main
institutions which provided separate sample frames used in this study. The separate
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sample frames from each of these institutions were compiled into one sample frame and
applied in the study. The features of the sample frame consisted of:
• the name of the firms (from small to large firms);
• the name of the owner-manager or manageress, including his or her contact
number(s)
• the locations and the addresses of the firms;
• the sector of the firms;
61 garment and textile exporting firms were identified from the sample frame. Of these
47 firms became useable. The reason for this is that two companies’ owner-managers
were found to have passed away prior to the interviews, while another 12 firms were
confirmed to have ceased trading. Of the 47 firms left, 36 were interviewed because
they met the screening criteria behind the interviews, as set out in sub-Section 6.3.4.
The 36 firms interviewed were all continuous exporters.
6.3.3 Criteria for Selecting the Companies
Before the interviews started, telephone calls were made to the firms wherein the
researcher introduced himself and the study (see Appendix M for the detailed procedure
of the interview process and some of the problems encountered). In the course of the
initial telephone call, prospective interviewees were made aware that for them to be part
of the study; they must meet the criteria as set out below. As a result, every firm that
participated in the study met the following criteria:
• The firm must be small or medium-sized in order to adhere to the definition of
SMEs as put forward in the World Bank’s study on Ghana (Chapter 4, Section
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4.7). In this analysis, only small and medium-sized firms were selected because
the data set showed that the micro small firms in Ghana do not participate in
export business (Chapter 5, Tables 5.2);
• The firm must be engaged only in the garment and textile sub-sector (because it
is the only sector of interest) and located in Accra (Accra is the most industry-
concentrated area in Ghana (Abor et al., 2008). Here the study is limited to
Accra because Ghana is all about Accra.
• The exporting firm must have a minimum of two years of export experience,
excluding domestic market experience;
• The firm should be independent and indigenous, or partly foreign and partly
local (foreign ownership is defined in this thesis in Chapter 5, sub-Section
5.5.3), but it should not be a subsidiary of a larger domestic or international
firm, in order to avoid influence from the potential availability of resources on
its export decision-making.
6.3.4 The Data Collection Instrument and Method
Case study interviews were the main data collection instrument used to collect the
critical incidents from the perspectives of the owner-managers. The interviews followed
a semi-structured interview guide, which is presented in Appendix L. In the interview
process, the owner-managers of SMEs were interviewed because the intention was to
use the key informant technique. The key informant technique (e.g., SMEs research that
targets mostly owner-managers with regard to the data collection process) is mostly
used in the SMEs’ research field. For example, researchers (e.g. Chetty, 1999; Coviello
& Martin, 1999; Evangelista, 2005; Coviello & Cox, 2006; Williams, 2008) have
argued that because almost everything concerning the SME rests with its owner-
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manager: in contrast with large multinational firms, adequate and reliable information
about this business is mostly obtained from the owner-managers. However, in one case
study (case firm 8), the marketing manager was interviewed because the owner was
unable to give time for the interview. With this one exception, in all other firms, the
owner was interviewed.
The interview guide used in the interview process imposed order and structure on the
interview process. Sample statements in the interview guide include: (1) tell me a story
by describing when, how and why you formed this firm, (2) how many workers do you
have (3) describe when, how and why your firm has been involved in export business up
until now. In accordance with Coviello & Cox (2006), words such as ‘what’, ‘why’,
‘when’ and ‘how’ were included as the tools to probe for details in order to facilitate
richness and depth of data. Such interjections also encouraged the informant to talk
more. For example, one owner-manageress (case study 4) declared she would only have
30 minutes for me when she agreed to be part of the study, but by using these probes,
we were able to converse for one hour and 26 minutes.
The interview process took an average of 130 minutes. Every interview was digitally
recorded, and was simultaneously supplemented by handwritten notes. The handwritten
notes were included because this allowed the triangulation of all the information given
by interviewees for analysis. As a result, there was reliability of data generation. Whilst
the digital recorder enabled every detail of the interview conversations to be captured, it
also enabled the researcher to handwrite only the key incidents as well as facilitating
each interview in a relaxed manner.
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In accordance with McAuley (1999), all the handwritten interviews were read and re-
read at the close of each interview day and where a lack of clarity was detected, the
digital recording was replayed. Where clarity could not be achieved by such
triangulation, the interviewee was contacted first thing the next day by mobile telephone
for clarification. The rigour of the handwritten notes provided the researcher with a
prior opportunity to understand the critical events that triggered the export initiation of
the firms, including the variables that influenced the ability of firms to meet the export
orders, before the interviews were transcribed verbatim. Face-to-face interviews were
used throughout and the interview process took three months (July – September 2009).
The interviews ran from Monday to Saturday with a maximum of 2 interviews per day
and a minimum of 1 per day.
Two interviews (i.e. case studies 6 and 24) took place outside the premises of the firms.
In each of these two case firms, the owners had missed their first appointments because
of their changing commitments, and therefore the interviews were rescheduled. All the
other interviews took place on the premises of the firms in the owner-managers’ offices.
Moreover, except for one interview, all the interviews were conducted in the English
language. The reason for this is that as Ghana used to be a British colony, English has
been Ghana’s official language ever since; hence, it is commonly spoken in business
dealings. The owner-manageress (case study 23) who could not express herself in
English spoke her mother tongue, ‘Twi’ (a common dialect spoken by about three
quarters of the Ghanaian population). Her story was also recorded and written
concurrently, and then transcribed into English.
Some of the interviewees switched off their mobile phones voluntarily during the
interview process while others did not because they claimed that if they did, they might
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miss an important business call. As a result, random telephone calls to interviewees
threatened to disruption to the data creation process. Consequently, when an interviewee
received a call during the interview process, the theme (e.g. the main phrase) which she
or he was commenting on before the phone call would be quickly written down and the
digital recorder was turned off. When the interviewee finished answering the call, he or
she would be reminded of the phrase he or she was commenting on before the call
came. In accordance with this device, the interviewing process went smoothly, even
with respondents who did not switch their phones off during the interview.
6.3.5 The Analytical Method
As indicated in the methodology section of the thesis (Chapter 4, Sections 4.4.1 - 4.4.2)
critical incident and content analysis were the main analytical techniques used to guide
the data collection and analysis of the interview transcripts.
6.3.5.1 Criteria for Identification of Critical Incidents in the Study
Before arriving at the main findings with regard to the critical incidents, each incident
was screened in accordance with the criteria set out in the critical incident method. The
critical incident technique involves a set of prescribed criteria, originally suggested by
Flanagan (1954), which are often adapted by researchers to suit their various studies
(e.g. Chell, 2004; Neupert et al., 2006; Zineldin, 2007) . Therefore, drawing from the
examples of these researchers, the themes (i.e. critical incidents and facilitating factors)
which emerged from the interview transcripts were required to meet the following
criteria:
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• First, the incident had to be ‘critical’. What constitutes a critical incident is
debatable as it varies from study to study. For instance, in the study of Chell
(2004), the author mentioned that if a particular incident led to the demise of the
firm being investigated, the event is considered as critical. In addition, in the
study undertaken by Zineldin (2007), the author argued that if an event led
directly to the establishment of a Swedish company in Vietnam, this was
considered critical.
Moreover, in the work of Neupert et al. (2006), the authors argued that if the
respondent could establish that an incident was the worst possible thing that
could happen or an enormous challenge to conducting international business,
this was also considered critical. The pattern from these studies clearly implies
what constitutes a critical event, and the factors are informed by the research
question and the purpose of the study. In this study, an incident as well as a
factor (influence) can be considered critical on two grounds. First, from the
perspective of the respondent, an incident should directly trigger export
initiation (e.g. being in receipt of unsolicited order); in addition, the factor
and/or the influence (e.g. adequate financial resources), from the perspective of
the interviewee should facilitate the firm’s capacity to deliver the export order.
Second, a critical incident leading to export business initiation should be
different from an ‘influence’ and/or ‘facilitating factor’. This implies that a
critical incident should relate to an ‘occurrence’ which the exporter encountered
(e.g. contact established due to prior international travel), while factors that aid
the firm’s capacity to supply the export order should be in the form of an
influence (e.g. having sufficient factory hands);
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• The interviewee should be able to remember the incident with the help of the
probes incorporated into the interview process (examples of the probes include:
‘You said you export, but have you exported to the UK, US, Italy before?’; ‘You
said your first export destination was in the Netherlands, but how about Canada,
Nigeria, and Norway?; ‘You said the year of your first export was in ….. (e.g.
1998). Did you also export in 1999, 2000, 2001… 2009; ‘How and what was the
outcome?’). Such probing strategies clearly triggered memories easily and
quickly and steered the interview smoothly;
• The incident as well as the influence must relate directly to export initiation and
influence the capacity of the firms specifically to meet their export orders , even
where the firm serves both the export and domestic markets;
• There must be sufficient detail for both the interviewer and the interviewee to
understand information regarding, for example, the ‘What? ‘When?’ and ‘How?’
of things.
Based on the above criteria, any themes and/or factors which did not meet the above
standards were excluded from the analysis. In addition, it is important to indicate that
not everything the interviewees articulated was included in the analysis. As a result,
responses about what motivated them to form their businesses and the processes
involved were not analysed because some particular questions were asked (included in
the interview guide) with the sole aim of encouraging the interviewees to talk more and
to make the discussion sequential and interesting. In some cases, some new themes
emerged out of the conversational interviews as critical incidents. Although these were
not among those initially selected to be explored from the literature review, as they met
the above criteria (sub-Section 6.3.5.1), they have been included in the analysis.
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For instance, contacts established at trade fairs (critical incident triggering export
initiation), membership of many industrial associations, frequent interactions with
industrial associations, having a human resource incentive package, having skilled
production workers, having prior domestic market experience (facilitating capacity to
meet export orders), tying the long-term business growth goal to export market and
having a positive perception of the export market were among the factors which
emerged out of the interviews as critical incidents and influential factors which
triggered the export initiation and all of these facilitated the capacity of the firm to meet
their export orders.
6.4 RESULTS & DATA ANALYSIS
The findings and analyses of the interview transcripts consist of three parts, namely:
.
• Profile of the case firms
• Results on critical incidents
• Results on factors that influenced that capacity of the firms’ to supply their
export orders
6.4.1 Analysis of the Profile of the Case Studies
The number of firms (36 firms) interviewed does not allow the opportunity to describe
the profile of each case company, unlike in other studies, which have sampled a few
firms and were able to describe the profile of each (e.g. Oviatt & McDougall, 1995;
Arenius, 2005; Nummela et al., 2006). This study is in accordance with other
researchers (e.g. Coviello & Munro, 1995; MacDonald & Cook, 1998; McAuley, 1999;
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Chetty & Campbell-Hunt, 2003; Bell et al., 2004; Gemser et al., 2004; Evangelista,
2005; Hutchinson & Quinn, 2005; Hutchinson et al., 2006; Chetty & Agndal, 2007),
who sampled many firms and therefore summarised and combined the profile of their
case studies. In a similar manner, the table below summarises the profile of the firms
interviewed in the research.
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Table 6.2: Profile of the Interviewed Firms and their Entrepreneurs
Cases/firms 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
Year of
Formation
First year of
export
Domestic
experience
before
exporting
Export
experience
Ownergender
1997 1998 1999 1979 1997 2001 1999 2003 1989 1996 2003 2003 1993 1970 1996 1972 1997 2003
2001 2000 2004 1995 2001 2004 2003 2006 1996 2001 2005 2007 1998 1995 2002 1998 2001 2006
4 2 5 16 4 3 4 3 7 5 2 4 5 25 6 26 4 3
8 9 5 14 8 5 6 3 13 8 4 2 11 14 7 11 8 3
F F M F M F F M M M M F F M F M F F
Firm age 12 11 10 30 12 8 10 6 20 13 6 6 16 39 13 37 12 6
Firm size 17 98 24 88 24 23 22 33 26 16 30 6 22 44 6 17 6 45
Firm type S M S M S S S M S S M S S M S S S M
Continued on the next page
Keys: (1) Ownership gender - F= female & M= male; (2) Firm type - S= Small-sized firm & M= medium- sized firm
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Table 6.2 continued
Case-firms 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36
Year of
Formation
First year
of export
Domestic
experience
before
exporting
Exporting
Experience
Ownergender
2001 1975 1991 1985 1999 1995 1997 1991 1999 2000 1985 1998 2001 1980 1997 2001 1998 2003
2004 1995 1995 1994 2003 1999 2002 1996 2002 2004 1995 2001 2005 1991 2000 2004 2002 2006
3 20 4 9 4 4 5 5 3 4 10 3 4 11 3 3 4 3
5 14 14 15 6 10 7 13 7 5 14 8 4 18 9 5 7 3
F F F F F F F M F F F F F F F M F F
Firm age 8 34 18 24 10 14 12 18 10 9 24 11 8 29 12 8 11 6
Firm size 16 24 45 23 11 56 6 13 9 19 22 6 16 60 11 85 35 36
Firm type S S M S S M S S S S S S S M S M M M
Source: synthesised from the case studies
Keys: (1) Ownership gender - F= female & M= male ;( 2) Firm type S= Small- sized firm & M= Medium- sized firm
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In Table 6.2, the mean exporting experience of the firms was 8 years (see Appendix N,
page 3 for the calculations). Here, the mean age of exporting experience of Ghana’s
firms varies from, for example, what Neupert et al. (2006) found in Idaho (USA) and
Vietnam. In that study, the researchers indicated that the mean exporting experience of
the firms in the USA and Vietnam was 13 and 10 years respectively. It can be argued
that the variations may be due to differences in economic development among these
countries; the US and Vietnam are more advanced economically compared to Ghana,
and so it is plausible to find variety in the mean age of firms in terms of their exporting
experience. Furthermore, the average age (from formation until the time of the
interview) of the case study firm was 14 years whilst the average size of the workforce
was 28. This workforce size implies that garment and textile firms in Ghana are
generally small and may partly explain why most firms in the sub-sector choose to
concentrate on the domestic market. This supports the regression results in Chapter 5,
since in the logistic regression results it was found that the medium-sized firms from
Ghana will be more likely to export compared to small firms. As a result, the firm size
issue may partly explain the low propensity to export among the garment and textile
sector in Ghana.
Moreover, the average length of domestic operating experience before the
commencement of export business is six years. This figure deviates from the average of
three years, which Coviello & Munro (1997) found among New Zealand’s firms when
they commenced export business. This disparity with regard to average domestic market
experience before the time of commencing export business may be due to inequalities in
socio-economic development between New Zealand and Ghana. Furthermore, the
variation could be due to the differences in the sample populations. While this study
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uses the sample from the garment and textile sub-sector, Coviello and Munro sampled
software firms. Previous studies (e.g. McDougall et al., 1994; Oviatt & McDougall,
1994; Rialp et al., 2005; Hall & Cook, 2009) have established that software firms begin
to export sooner after their formation than firms in other sub-sectors.
From the profile of the case studies in Table 6.2, two interviews in the study are
considered outliers in terms of the mean length of domestic market experience before
commencing export business. The two firms were able to start exporting two years after
their formation; these are firms 2 and 11. When their interview transcripts were looked
at critically, it was found that the owner of case study firm 2 is a business woman who
has lived in the US for most of her life. She stated that she moved to Ghana to establish
her export business in order to maximise the AGOA initiative. She revealed that she
made all the contacts about her buyers before leaving for Ghana to start the business.
Her great propensity to export supports the positive relationship between the
entrepreneur’s international orientation (e.g. previous residency abroad and/or previous
work experience abroad) and export propensity knowledge. For example, her story also
confirms the findings of Hall & Cook (2009) in the UK and Ruzzier et al. (2007) in
Slovenia concerning the positive relationship between the entrepreneur’s international
orientation and the export proclivity of the UK and Slovenian firms respectively.
The second outlier (case 11) is a foreign owned firm (i.e. partly foreign-owned and
partly locally owned). The Ghanaian partner here indicated that their speed in entering
the export market can be explained by human capital resources and the network contacts
of his two foreign partners (an American and a Chinese man). This evidence also
supports the significant positive effect of foreign ownership and the likelihood of export
(as found in the quantitative analysis - Chapter 5). In the quantitative analysis, both the
201

logistic regression and the chi-square results confirm the significant positive
relationship between foreign ownership and export propensity. As a result, the case
study evidence in Ghana confirms what has been found in other countries regarding the
positive effect of foreign ownership and the propensity to export. Examples of countries
where this positive effect has been found include: (1) the UK (Greenaway et al., 2004),
(2) Italy (Cerrato & Piva, 2007), and (3) China (Zhang & Song, 2000). Only one firm
had part foreign and part local ownership (foreign ownership) among the 36 firms
interviewed. Therefore, like the small average size of the garment and textile firms in
Ghana, the fact that very few are under foreign ownership may also account for the
sector’s low export involvement in general. This suggestion is corroborated by the
secondary data analysis finding that firms with foreign ownership are more likely to
export compared to their counterparts that are wholly local.
Approximately 72 % of the owners of the firms are females. This supports the finding
by Kuffour (2008) that 90% of those employed in the garment and textile sub-sector in
Ghana are women, representing both workers and owner-entrepreneurs. Overall, the
case firms can be classified into four groups, namely fashion firms, garment firms,
textile firms and fabric firms, although all of them fall under the umbrella of the
‘garment and textile sub-sector in Ghana’. Examples of the products the case firms
produce include smocks, ladies wear, menswear, batik or tie and dye, fabric, kante,
napkins, cushion covers, bedspreads, chair backs, curtains and toys among others,
similar to the information already presented in Section 6.2 above. South Africa, the US,
the UK, Switzerland, Holland and Belgium are among the export destinations
mentioned by case firms.
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6.4.2 Critical Incident Results & Analysis
This analysis concerns the factors which were selected from the literature review to be
explored in the interview process and which met the criteria in sub-section 6.3.6.1. In an
approach consistent with other research (e.g. Coviello & Munro, 1997; MacDonald &
Cook, 1998; McAuley, 1999; Coviello & Martin, 1999; Huggins, 2000; Hutchinson et
al., 2006), selected direct quotes from the interviewees which indicate how a particular
theme was crucial in triggering export initiations are used to aid the analysis. Also in
line with other similar studies (e.g. Coviello & Muro, 1997; Hutchinson et al., 2006),
the original names of the firms have not been used, but are instead replaced with
numbers (e.g. case studies 1, 2, 3).
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6.4.2.1 Summary of Findings – Critical Incidents & Critical Influence
It can be stated that the hypothesis with regard to the critical incidents stated at the
outset of the chapter (Section 6.1) was only partially supported, as from the 2 stage
theory factors specified in Section 6.1, only receipt of an unsolicited order triggered
export initiation (supported). Contacts and recommendations gained via having foreign
ownership as well as having friends and family abroad were the two main network
factors which triggered export initiation among the 4 network theory factors initially
selected. Consequently, among the 2 international entrepreneurship theory factors only
previous residency and work abroad (international orientation) triggered export
initiation. Winning government awards (i.e. government action) was fully supported, as
hypothesised, as a contingency theory factor in triggering export initiation among the
firms. Contacts established via trade fair participation constituted the remaining
incident. Overall six main critical incidents were found.
These critical incidents are categorised using Leonidou et al.’s (2007) dimensions
concerning triggers of export behaviour of firms. According to Leonidou et al., triggers
of export initiation are classified on the basis of whether or not they fall under a firm’s:
(1) proactive internal behaviour, (2) proactive external behaviour, (3) reactive internal
behaviour and (4) reactive external behaviour. The six critical incidents are categorised
based on Leonidou et al.’s dimensions in the figure below.
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Figure 6.1: Classification of the Findings on the Triggers of Export Initiation
Internal a
proactive
Nil
Internal
reactive c
Nil
The
freq.
Rate
(%)
Nil
The
freq.
Rate
(%)
Nil
Rank
Order
Nil
Rank
Order
Nil
External proactive b
Contacts established at
trade fair
Contacts established
via international
orientation
Winning government
award
Contacts and
recommendations
gained via having
foreign ownership
External reactive d
Receipt of unsolicited
order
Contacts and
recommendation gained
via having friends &
family abroad
205
The freq.
Rate (%)
(N=36)
100%
81%
33%
3%
The freq.
Rate (%)
(N=36)
11%
50%
Source: synthesised from interview transcripts (Appendix N, Table 2.1)
Keys: a - proactive influence associated with a trigger internal to the firm
b - proactive influence associated with a trigger external to the firm
c - reactive influence associated with a trigger internal to the firm
d - reactive influence associated with a trigger external to the firm
Rank
Order
(N=36)
1
2
4
6
Rank
Order
(N=36)
5
3

Figure 6.1 indicates that overall the incidents which initiate export business are
triggered by an external stimulus. With regard to their relative differences, contacts
established via participation in trade shows represent the leading sparks of export
initiation among the garment and textile firms. Contacts established as a result of having
international orientation represent the next most significant trigger of export initiation,
while contacts and recommendations gained via having family and friends abroad
followed next. The fourth ranked incident was winning a government award, whilst the
receipt of unsolicited orders ranked as the fifth most critical incident. Contacts and
recommendations gained via having foreign ownership is the lowest ranked factor
among the critical incidents. Appendix N, Tables 2 & 2.1 contains the synthesis of the
critical incidents identified in the study.
6.4.2.2 Summary of Factors which Influenced the Capacity of the Firms to Supply
their Export Orders
First of all it must be pointed out that the detailed analysis and synthesis of these factors
is also presented in Appendix N, Tables 3- 6. Again not all the factors hypothesised in
Section 6.1 facilitated the capacity of firms to deliver their export orders, thereby only
partially supporting the second hypothesis (Section 6.1). The influential factors are
categorised according to the various theoretical frameworks used in the thesis, and are
summarised as follows. First, all three RBV factors specified (available financial
capital, large number of full-time workers – firm size, availability of a stock of
machinery and equipment) were found to significantly influence the capacity of the
firms to meet their orders, in addition to three further factors which were: available
human capital resources of the foreign partners (foreign ownership), having trained
production workers, and having a human resources incentive policy for workers.
206

Among the RBV factors, having a stock of machinery and equipment and the stock of
the financial capital were ranked equally as the overriding facilitating factors, while the
possession of skilled production workers followed.
Second, three factors (i.e. having export vision at the commencement of the business
and having international risk taking behaviour and having international orientation)
from the four international entrepreneurship theory factors hypothesised in Section 6.1
were found to influence the capacity of the firm to supply their export orders. Two
additional factors, namely: (1) tying the long-term business growth to export market
entry, (2) having a positive perception of the export market emerged in the interviews as
equally facilitating the firms’ capacity towards their export delivery. Of these factors,
the owner’s positive perception of the export market and his or her export vision at the
commencement of the business were both rated the most influential factors, while
international risk taking behaviour came next.
Third, only one stage theory factor (the influence of firm size) was supported among the
three factors hypothesised above. An additional factor which emerged as equally
significant in terms of the influence of stage theory factors related to initial domestic
market experience. Of these two factors, the influence of initial domestic operating
experience was rated the highest. Finally, all the four network theory factors (i.e. (1)
networking with industrial associations, (2) networking with fellow business people, (3)
networking with family and friends abroad) hypothesised (Section 6.1) were supported.
Two additional network factors that emerged as equally significant were: (1) a large
amount of networking ties with more than one industrial association and (2) maintaining
frequent interaction and/or contacts with industrial associations. Of these factors, having
network ties with an industrial association was rated as the leading influence, followed
207

y the extent of network ties with different industrial associations and the frequency of
interactions a firm maintains with industrial associations. However, the impact on the
sector from the contingency theory, also hypothesised at the beginning of this chapter,
did not receive support.
6.5 DICUSSION OF FINDINGS
The next sub-section sets out the context for a discussion of the results in relation to
research question two of the thesis and the literature. The section also comprises two
parts: the first section focuses on the critical incidents that triggered export initiation,
while the second section focuses on the factors which influenced the capacity of the
firms to meet their export orders.
6.5.1 Discussion of Critical Incidents which Trigger Export Initiation
As already mentioned, contacts established via participation in a trade fair event
represents the top event among the incidents that cause the firms to begin export
business, and all the exporting firms passionately attested to this (Figure 6.1). From
Figure 6.1, trade fair events are classified under the proactive external behaviour of the
firm since this constitutes an external stimulus, as in this case the firm adopted a
proactive initiative and maximised the event. The trade fair events, from the perspective
of the respondents, represented grand occasions that occasionally take place in Ghana
(although not at regular intervals according to the firms) or abroad (most frequently).
According to the case studies, the event brings a variety of buyers and investors (both
208

local and foreign) together at one point. According to the case firms, while instant credit
and cash sales are made during the fairs, most arrangements concerning subsequent
export orders are made through the contacts with foreign buyers during the fair. For
instance, one owner-manageress noted:
My entry into the Netherlands’ market took place during a trade fair in the UK.
You know that country is closer to the UK, OK [okay]. This buyer approached
me, examined the samples and said she liked the design and the price. She
followed up after the fair with the first order and since then she been reordering
and so I am always motivated to seek new markets during such events,
though the investment is huge, it works [pays off].
209
(Case 8)
Although this evidence stresses the importance of the role of trade shows as a
significant occurrence of export initiation, it is evident from the above quote that other
moderating factors interact to trigger the main incident. For example, part of the quote
above relates to investment in trade shows, and the willingness to commit resources to
such events. What is implied here is that a firm must vigorously explore trade fair
information in terms of its nature, time and venue, and must be prepared to commit
resources to it. The case studies revealed that as well as obtaining information about the
fair, a firm must register and purchase a stand (e.g. a place to showcase one’s products
and/or samples during the fair).
In addition, the case companies indicated that there is a need for a firm to arrange for
visa acquisition (especially if the fair is taking place abroad) and it must also be
prepared to pay the cost of board and lodging at the destination of the trade fair. As a
result, although trade shows appear to be the most important event for export initiation
among the firms, as has been demonstrated by the case firms, the management’s (the

entrepreneur’s) attitude, desire, willingness and capacity to appreciate the moderating
factors (e.g. the time and the investment) are the crucial antecedents to its success.
This finding confirms what McAuley (1999) found in Scotland and Nigeria (Ibeh &
Young, 2001; Ibeh, 2004). Here, the assumptions of the contingency theory with regard
to export initiation by the SME are supported (Lawrence & Lorsch, 1967; Kuada and
Sorensen, 2000; Ibeh, 2003b; Crick & Spence, 2005; Li et al., 2004). The contingency
theory argues in this respect that a firm’s ability to adapt to events in the external
environment (e.g. responding positively to trade shows) contributes to its export
success. In addition, as the incidents that triggered export initiation at the trade fairs
were connected to the contacts established at the fairs, it can be argued that the network
theory interacts with the contingency theory to produce this behaviour of the firm.
Consequently, the finding also supports the assumptions of the network theory
(Johanson & Mattson, 1988; Gorman & Evers, 2008). In this light, the theoretical
integration assumption that informs the thesis is supported.
A moderating factor relating to the capacity of the trade fair event to trigger export
initiation is a firm’s membership with industrial associations, as became widely evident
in the individual interview transcripts. According to the case companies, the activities of
an industrial association offer considerable trade fair opportunities because the
associations act as trade promotion organisations for their members. Among the various
industrial associations operating in Ghana, those cited by the case studies included: the
Ghana Chamber of Commerce and Industry, the Ghana Association of Women
Entrepreneurs, the Association of Ghana Industries, the Federation of Ghanaian
Exporters, the Spinnet Textiles & Garments Cluster, the Ghana Tailors and Dress
Makers Association, and the Ghana Association of Fashion Designers. Almost every
210

firm related its opportunity to participate in trade show to its membership (i.e. the
assistance it received) of one industrial association or another.
According to the experiences of the case study firms, because access to the internet at
business premises is not a common phenomenon among SMEs in Ghana, coupled with
the fact that unlike in advanced countries, postal services and telecommunications are
not well developed, the industrial associations serve as a major source of information on
export business development in Ghana. The benefits offered by the industrial
associations, as cited by the case firms, include detailed information about a trade fair
event (e.g. the time, venue and criteria for participation). One entrepreneur declared:
If you do not belong to an association, you cannot do anything. You see because
we are from a poor country, if you decide to go alone, it will take you days
[long] before you arrive [the export market] and you cannot bear the cost. Let
me ask you, can one firm or two organise trade fairs here in Ghana? [This
indicates that while the associations facilitate members’ access to fairs abroad,
they do extremely well by collaborating to host some of the fairs in Ghana,
occasionally]. Even our visa acquisition from the various embassies before you
attend the fairs overseas, I tell you if you apply the visa as an individual firm,
you will not get it [less likely to get], but if the association presents us as a
group, it is easy, even in seeking a stand [venue to showcase one goods at trade
fairs] abroad.
211
(Case 21)
While this quote supports the important role of industry associations with regard to
export initiation, it also implies that access to an international trade fair stand and/or
venue is easier if the firms are represented as members of an association abroad. It was
indicated in one interview that whenever a firm encountered a problem abroad, either
with customs or immigration abroad, while attending a trade show, it was easier to
obtain assistance from either Ghana’s mission abroad or the host country’s security

agencies when they were represented as a group, rather than when presenting
themselves as individual businessman or business woman from Ghana (Case 32).
Contacts established as a result of having international orientation represent the next
highest ranked incident (Figure 6.1). In terms of the interviews, foreign orientation
implies contacts established as a result of an owner-manager’s previous residency and
work abroad. When the individuals who have lived and worked abroad later leave the
overseas country and establish a business in their home country, they are able to contact
their extant acquaintances, which can lead to export initiation. According to the
interviews, the firms in the export destination countries feel secure in transacting
business with firms whose owners demonstrate international orientation, compared to
owner-managers that have not benefited from such prior opportunities. The case studies
with international orientation advantage indicated that such an advantage also alleviates
the normal uncertainties associated with export business, which similar owner-managers
who never had any international exposure may experience.
For example, exposure gained from previous work and residency in the US propelled
the setting up of one particular business in Ghana when AGOA was enacted (Case study
2). According to the owner-manageress, she used her foreign contacts to generate export
business when she commenced her business activities in Ghana.
She further stated that she received export orders through from contacts abroad, after
she had sent samples of her products to these acquaintances. According to her,
exporting to the US market did not present a problem because of her advantage via
foreign orientation. It must be noted that while the above forms of international
orientation represented a good platform for export business opportunity, the owner-
212

manageress stressed that they needed to be managed through frequent communication
and establishment of trust (Case study 2). Another owner-manageress commented:
Yes, although I have said most of my orders come from Belgium because of my
previous residency in that country initially, I must tell you that at least every two
years I visit Belgium to strengthen the ties I have with the shops with whom I do
[transact] business.
(Case 4).
This last quote also stresses the importance of efforts on the part of the export firms to
exploit export business opportunities through international orientation, because in this
case the advantaged firms have acted in a proactive manner, even though international
orientation can be considered an external stimulus. This finding confirms those from
Canada (Reuber & Fisher, 1997), Nigeria (Ibeh, 2004) and Slovenia (Ruzzier et al.,
2007) with regard to the link between propensity to initiate export business and
international orientation advantage. Theoretically, therefore, international
entrepreneurship literature is supported because capitalising on prior international
orientation to trigger export business represents a clear entrepreneurial action
(McDougall et al., 1994; Ibeh, 2004). In addition, the resource-based view framework –
which considers the behaviour of the SME owner-manager in understanding its export
behaviour (unlike the stage theory that focuses only the firm) – is also supported
(Barney, 1991; Westhead et al., 2001). For instance, the fact that the interviewees
themselves in a way initiate the move to maximise their prior international orientation
advantage, when they felt confident, was real evidence of a combination of RBV and
international entrepreneurship theory factors. In addition, with regard to this finding, the
influence of network theory is also demonstrated here through the triggering of export
213

initiation as a result of the contacts gained during the owner-manager’s previous
residency abroad.
Contacts established and recommendations gained via having family and friends abroad
represent the next cited incident; according to the interviewees, the impact of the
network relationship with family members and friends abroad on export initiation takes
two forms. First, some of the businessmen and women in Ghana have family and
friends who reside abroad (e.g. the USA, UK, Holland, Belgium) and who introduce
them to firms (foreign businessmen and women), churches and shops when they pay
them informal visits abroad, which later leads to the receipt of export orders. These
export orders come about as a result of contacts they make while on a visit aboard. The
case studies indicated that before they embark on such international visits, they always
have the idea of promoting their businesses whilst abroad. As a result, they go on such
visits with samples of their finished products, often in several large suitcases. For
instance, one owner-manageress commented:
The visits play a big role! I visited my brother-in-law in Atlanta in 1998 and I
made lots of sales and since that time I still receive orders from shops because
of that visit. In my case I made my brother-in-law and my sister aware that I was
coming to do business in addition to the visit. So on the Sunday of the first week
of my arrival they took me to a large church consisting of different nationalities
and by the pastor’s permission, they introduced me to the church about what I
do and I showed some samples of the clothes and, my brother that was the
beginning of greater things. So now most of us are using that strategy as well,
because if you use one strategy your business will not move [grow].
214
(Case study 32)

The second form of networking with family and friends abroad was where the friends
and family members abroad recommended the Ghanaian businesses to overseas
businesses and individuals. This occurs even when the Ghanaian exporter does not go
abroad himself or herself, but sends samples to businesses abroad through existing
acquaintances (family and friends), and in this way the export order takes place (see
case studies 13, 18, 32, etc., Appendix N). This finding on export initiation, involving
family and friends abroad, also confirms what has been found in: New Zealand
(Coviello & Munro, 1995; Chetty & Holm, 2000), Nigeria (Ibeh & Young, 2001),
Tanzania (Rutashobya & Jaensson, 2004) and Ireland (Gorman & Evers, 2008).
Therefore, the basic assumption of network theory applied in this thesis is supported
(Johanson & Mattsson, 1988; Gorman & Evers, 2008).
Another major incident indicated by some interviewees (e.g. 4, 5, and 9) was that of
winning a government award. This confirms or augments the export-led promotion
programmes being implemented in Ghana by the government. According to the case
studies, the government in collaboration with some industrial associations (e.g. the
Association of Ghana Industries, the Ghana Chamber of Commerce, the Association of
Women Entrepreneurs), coupled with the assistance of the Ghana Export Promotion
Council, purposively samples particular firms in each sub-sector and evaluates them
based on particular criteria (e.g. the firm’s product quality, employment size, the
number of years of operation). According to the case studies, firms which are selected
or emerged as winners are given an award (e.g. medal,) as a symbol of good
performance. Such firms will then receive free and full sponsorship to travel abroad and
represent Ghana by showcasing their businesses at top business shows.
215

From the interviews, following the opportunity of showcasing Ghana abroad, the
beneficiary firms then make sales abroad while showcasing their business on behalf of
Ghana, and receive export orders after these trips. The firms stated that the programme
is conducted periodically, except in particular cases where a change of government
delays it. They also indicated that they receive privileges (e.g. direct assistance from the
Ghana mission abroad) while showcasing abroad as they are representing by the
government of Ghana. Although firms winning the government awards are supported by
representing the government of Ghana abroad, they indicated that all the benefits go to
their business directly. Case studies 4, 5, 9, 20, 21 were among these firms. The
evidence below is taken from one of the firms.
But it is hard work, you see I told you even the premises I am using are rented
from the government because I have been promoting the country. Look on the
shelves, I received all these three gold and wooden awards [medals] from the
government in different years and so if they directed you here it is hard work
paa [a Ghanaian word which means – indeed or truly/greatly] but the direct
benefit is that is what has made me a big exporter, because [although] I go to
represent the country, the chunk of orders I have been doing [receiving] come
from that opportunity.
216
(Case 4)
This part of the interview transcripts implies that a firm’s own readiness to activate
export business opportunities is a critical export success factor. Considering this event,
in this instance, the product, the right size of a firm, relevant domestic market operating
experience, management desire and commitments were in place. Theoretically, the
contingency theory’s assumption (e.g. the role of government) coupled with
entrepreneurial proactive behaviour, act together to trigger the export initiation.
The receipt of an unsolicited order is another event which sparks export initiation.
According to the case studies, an advertisement led to one unsolicited order. Two of the

firms among the case studies (i.e. 3 & 13) indicated that they had developed a simple
book profiling their businesses (e.g. case study 13’s version is called African fashion
clothes). According to these firms, the books were deposited at selected international
hotels in Accra, Ghana (Crystal Royal Hotel, LaPalm Beach, Golden Tulip, Accra &
Novotel) while others were also sent abroad through their family and friends. From the
accounts of the case firms, this creative step (advertisement) resulted in unsolicited
orders from the UK, Spain, Italy and Canada. Of the four case firms which specified
unsolicited orders, the other two firms (Case studies 5 & 32) attributed the incident to
their firms’ websites. In the case of Ghana, an unsolicited order does not represent the
most important trigger of export initiation (being fifth in the ranking, see Figure 6.1).
On one hand, this finding runs counter to earlier studies which reported that unsolicited
orders signify the most important incidents in triggering the decision to initiate export
business among SMEs (Tesar & Tarleton, 1982; Ghauri & Kumar, 1989, cited in
Williams, 2008). Nonetheless, the finding (receipt of unsolicited orders) in this study
confirms others from Cyprus (Leonidou, 1995b), Scotland (McAuley, 1999), the UK
(Crick & Spence, 2005) and Jamaica (Williams, 2008). Theoretically, the assumptions
of contingency theory are supported.
The next and least critical incident that emerged was contacts and recommendations
gained due to having a foreign ownership business structure. According to case study
11, most of the export orders have come through the influence of its foreign partners
abroad. The owner-manager commented:
217

On that question, I can say my foreign partners did everything; they look for the
export order using their connections out there. Even all the machines you saw
there were brought from China, which was facilitated by the Chinese partner. As
a result, our capital finance is stable compared with the other people [other
firms] those are being and interviewed; our only problem is the bottlenecks in
the system which the new government promises to ease.
218
(Case 11).
The quote above implies that having foreign ownership (foreign partner(s)) not only
triggers export initiation, but also brings about the flow of resources into the host firm
(e.g. ‘…. Even, all the machines you saw there were brought from China, which was
facilitated by the Chinese partner. As a result our capital finance is stable….’). From
this case firm, it can be seen that two partners abroad (especially the one in the USA)
introduced the firm to potential buyers abroad. This firm is involved in mass production,
including school uniforms. However, only one firm (Case study 11) enthusiastically
described foreign ownership as catapulting it into export initiation.
As the theme was further explored in the interview process with other case firms, most
of them (i.e. 1, 6, 10, 15, 19, 25 etc.) indicated that they would have preferred a
partnership with a foreign business in order to grow their businesses through export
market penetration but they did not have this possibility. This implies that opportunities
for the indigenous firms in the garment and textile sector in Ghana to form partnerships
with foreign businesses in order to activate export business are scarce. The lack of
potential foreign partners to align with Ghanaian businesses confirms the finding of
Asiedu (2002). In that study, the author found that while from 1990 into the 2000s the
total inflow of foreign direct investment (FDI) into developing countries increased, the
sub-Saharan African share became marginally lower.

The finding also supports findings from Slovenia (Ruzzier et al., 2007), challenges
others from Ireland (Ruane & Sutherland, 2005), while confirming findings of similar
studies in China (Zhang & Song, 2000); the UK (Greenaway et al., 2004) and Italy
(Carrato & Piva, 2007). Theoretically, the role of foreign ownership and the export
propensity of the host country’s firm confirm the assumptions of network theory
(Johnson & Mattson, 1988).
6.5.2 Discussion of Factors that enable the Firms to meet their Export Orders
The specific factors from the proposed integrated theoretical framework that influenced
the capacity of the case studies to meet their export orders are discussed below.
6.5.2.1 Stage Theory Factors
Although the stage model has been criticised (e.g. McDougall et al., 1994), it continues
to receive empirical support from researchers (e.g. see Williams, 2008; Hall & Cook,
2009). Among the stage theory variables selected in (Section 6.1.), only the firm’s size
and prior domestic market experience were accorded significance in the interviews with
regard to their influence on the firm’s ability to meet its export orders. In terms of size
(the total number of full-time employees), the case studies pointed out that garment and
textile manufacturing involves mass production with different production lines involved
in the manufacturing process. For instance, the case studies (e.g. cases 2, 4, 8, 14)
strongly emphasised that for a firm to meet one job order (supply one export order) by a
stipulated time, many factory hands are needed simultaneously, especially because
labour intensive production methods are used among the firms in Ghana. As a result, it
has become evident that to supply the international market, large numbers of workers
219

are required. All the firms concurred that their reliable and sizeable workforces were a
critical success factor in supplying export orders. For example, one interviewee noted:
Yes that one [number of workers] is very important for our business here. You
know we do not have the required up-to-date machines which our counterparts
in countries like Sri Lanka, China & Pakistan have, and so most of the work we
do here is labour intensive, and so if you do not have the right number of
workers, you cannot do export business from this country. You see when I took
you round even the workers you saw are only the full-time team, when I get
more orders I have temporal workers that I call.
220
(Case study 2)
This quote contains two major points. For example, in the literature, one of the
explanations used to affirm the positive relationship between the firm size and the
propensity to export is the fixed cost component associated with export business (Hall
& Tu, 2003; 2004; Mittelstaedt & Ward 2006). Another study (William, 2008) argues
that a firm’s size is a proxy for the overall productive capacity of the firm. This
argument too is plausible because different workers will put different skills at the
disposal of the firm. However, further to this, the results in this portion of the thesis
imply that mass production, coupled with labour intensive export manufacturing,
confirms the positive relationship between the size of the firm and its propensity to
export. This finding confirms what has been found in the UK (Hall & Tu, 2004) and the
USA (Brush et al., 2002). Theoretically, therefore, the basic assumptions of the
resource-based view and stage theory have been confirmed with regard to firm size.
Prior domestic market experience became a dominant influence on the ability of firms
to meet their export orders – 49% (Figure 13 below) of the firms in the case studies
strongly affirmed that their long-standing domestic market experience enabled them to
understand how the Ghanaian business environment works. As a result, they have a

competitive edge (e.g. familiarity and credibility with government agencies, the
Customs Exercise and the Preventive Service (CEPS), and the port and regulatory
institutions) over firms that do not have these prior domestic industry experiences and
connections.
According to these case firms (e.g. case studies 4, 5, 6, 15, 35, 36), whenever they have
an export order to deliver and they encounter any problems they find solutions more
easily compared to competitors who do not have such domestic market experience.
Some of them strongly argued that they receive financial assistance to work on their
export orders from financial institutions, mainly because of their long practice in the
domestic market. The benefit of having prior domestic market experience concurs with
the assumptions of stage theory. In contrast, no significant influence was accorded to
psychic distance, the firm’s age or the age of the owner of the firm.
For instance, it was understood from the interview transcripts that the choice of export
market by the case study respondents was driven by a search for ready buyers (existence
of markets, mostly based on network contacts) as opposed to similarities between the
export market (the importing country) and the exporting country (i.e. psychic distance).
The relative importance and the difference between these two variables were content
analysed as shown in the table below.
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Figure 6.2: Stage Theory Factors in Ranked Order
RBV factors Frequency
N=36
222
Frequency rate (%)
Rank order
Firm size 36 100% 1
Prior domestic
market experience
34 94% 2
Total 70 194%
Source: Synthesised from the case studies (Appendix N, Tables 5 & 5.1)
From Figure 6.2, it can be seen that influence of firm size takes precedence over prior
domestic market experience with regard to the export development of the case firms.
The next sub-section discusses the key RBV factors that according to the interview
transcripts influenced delivery of export orders.
6.5.2.2 Resource-Based View Factors
The RBV factors that emerged as facilitating the capacity of the firms to meet their
export orders include: having a large number of workers, foreign ownership, having
adequate factory buildings, having a stock of equipment and machinery, having
adequate financial capital, having skilled production workers, and a human resources
incentive policy. Figure 6.3 depicts their relative importance and their differences.

Figure 6.3: Influential Resource-based view Variables in Ranked order
RBV factors Frequency
N=36
Frequency rate (%) Rank Order
Large number of
workers
36 100% 1
Foreign ownership 1 3% 5
Adequate Factory
buildings
14 39% 3
Equipment &
machinery
36 100% 1
Financial capital 36 100% 1
Skilled production
workers
34 94% 2
Human resource
incentive
Policy
6 17% 4
Total 163 453%
Source: Synthesised from the case studies (Appendix N, Tables 3 & 3.1)
From Figure 6.3 it can be seen that the availability of financial capital, the stock of
equipment and machinery as well as a large workforce were ranked highest among the
RBV factors. Some of the case firms (e.g. case studies 1, 2, 4, 10) revealed that their
international buyers rarely pre-finance the export orders they place, but where they do
they pay only 25 percent of the total cost. Consequently, it was the responsibility of the
owner to top up, and hence finance was of key importance in getting export orders
completed and delivered.
In addition, availability and good condition of machinery and equipment (e.g. sewing,
embroidery, knitting and dyeing machines) were indicated as other essential
requirements for delivery of export orders on time. Availability of a large number of
full-time workers was accorded much importance when the interview turned to RBV
factors; however, the influence of firm size on the case study firms’ ability to meet their
export orders is similar to that discussed under the stage theory factors (Figure 6.2). The
223

positive influence of firm size on the capacity to deliver export orders confirms findings
from the USA (Bloodgood et al., 1996; Brush et al., 2002), but contradicts what Svente
et al.(2004) found in Sweden. Although firm size is one of the strongest arguments in
stage theory, at the same time it is plausible to argue that it is also a resource-based
view variable since it captures the internal motivation ability of the firm. Theoretically,
therefore, the assumption of the RBV and the stage theory is confirmed.
Having skilled production workers is the fourth highest ranking category. According to
the firms, these workers not only carry out repetitive tasks, but they are knowledgeable
about the entire production system and therefore they act as supervisors and team
leaders in the production departments. Some of the case study respondents (e.g. firms 2,
14, 21, 34) indicated that a proportion of their production workers are expatriates (e.g.
from Sri Lanka, Pakistan & Mauritius), while others (e.g. those in the case studies, 1,
11, 13), indicated that they have trained some of their indigenous employees to master
the production process and they have therefore acquired a skilled production workforce.
The third ranking RBV critical influence is the availability and adequacy of factory
buildings (factory space and/or premises). Some firms in the case studies (e.g. 8, 11, 24)
stressed that availability of spacious factory buildings plays an important role in
enabling them to meet export orders. According to them, assets such as a separate
production area, a packaging section and a separate warehouse enabled them to deliver
orders and to work on many orders simultaneously. An owner-manageress noted:
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My factory buildings [factory space] are a major boost to me so that I do more
orders. I think as you have been going round you saw it. Some people are using
part of their homes as their plant site [factory and/or work place]. They are
doing well, but I think they are restricted as to how many orders they can accept
and how they can deliver. So that is why those with real factory facilities are
ahead.
225
(Case 24)
The importance of having factory facilities is reinforced from the quote above, with
regard to the capacity of the firm to meet its export order. One pattern indicated in the
interview transcripts was that almost all those who stressed the importance of factory
facilities were medium-sized firms, which further emphasises the importance of firm
size and its influence on the capacity to export. Another RBV factor relates to human
resource incentive policies for workers. Some selected case study companies (e.g. 3, 4,
10, 11) have policies which take care of their workers when they encounter life crises.
Examples of these are (1) when an employee wants to relocate their spouse from a
village to a city; (2) ill-health and (3) bereavement among the workers.
According to these case firms, such incentives encourage employees to show extra
commitment when working on orders because some of the incentives are directly linked
with working on export orders which they consider important. The worker incentives
motivate workers to work on export orders, which support findings in Italy (Toni &
Nassimbeni, 2001). Furthermore, foreign ownership also emerged as a significant RBV
influence. One firm (case study 11) highlighted the role of its foreign partners (foreign-
ownership) in enhancing the firm’s ability to meet its export orders. According to case
study 11, human capital, financial support and the international network resources of its
foreign partners served as a buffer for their firm whenever they faced a crisis in

delivering an export order. Here the assumption of the network theory is also supported
because its moderates the RBV.
6.5.2.3 International Entrepreneurship Factors
The international entrepreneurship factors which emerged as a critical influence in
facilitating the case companies’ capacity to meet their export orders include the
following: (1) tying the long-term business growth of the firm to export market entry;
(2) having export business vision at the commencement of the business; (3) having
international orientation; (4) having international risk taking behaviour, and (5) having a
positive perception of the export market. The relative importance and the differences
among these factors are also content analysed and presented in the figure below.
Figure 6.4: Influential International Entrepreneurship Factors in Ranked Order
RBV factors Frequency
N=36
Frequency rate (%) Rank Order
Tying the long-term
business growth to
export market entry
33 92% 2
Having international
orientation
3 8% 3
Having export vision at
the commencement of
the business
36 100% 1
Having international
risk taking behaviour
36 100% 1
Having a positive
perception of the
export market
36 100% 1
Total 144 400%
Source: Synthesised from the interview transcripts (Appendix N, Tables 3 & 3.1)
Among the five themes in Figure 6.4, having an export vision at the commencement of
one’s business, having a positive perception of the export market and possessing
226

international risk-taking behaviour shared the highest ranking. With regard to the export
vision at the commencement of the business, every case study respondent specified that
from the outset (from the inception of their business) the vision to enter the international
market was one of their goals and so, according to their accounts, their strong
internationalisation vision drives them whenever they receive export orders. However,
none of the firms had a formal strategic plan where this vision was expressly written
down, although it was possible to understand intuitively that internationalisation vision
was a characteristic of the firms from inception. From the accounts of the interviewees
the goal and/or the export vision implied a long-term business growth target envisaged
from the start of their respective businesses. One owner-manageress indicated that from
her school days (in the polytechnic) when she was sewing for friends, the customers
confirmed that she was good at her work and she conceived the idea of setting up her
business and taking it abroad from that moment. She stated: “I am in the international
market, isn’t that wonderful” (28). This supports findings in the USA (McDougall et al.,
1994; Oviatt & McDougall, 1995; McAuley, 1999; Dimitratos & Plakoyiannaki, 2003;
Ruzzier et al., 2006).
All the firms in the case studies complained about the risks they face concerning their
export business transactions. They indicated that because of the negative perceptions
about Africa, most international buyers are reluctant to pre-finance part of the cost of
the export order (as already stated). They therefore identified this problem as one of
their challenges because it pressures them to seek external funds in order to meet the
order. An owner-manageress complained and bemoaned:
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To do this export business here [Ghana] you must possess a high capacity to
take and absorb risk. You need funds to work on the orders and pay your
workers every month and so it is not easy. There are too many challenges; that
is why some have shut down. There was a time that my order was returned from
the US, because it got delayed. I hope case study 6 [actual name withheld], the
lady you said you just interviewed this morning before coming here, has told
you, because she has faced the same challenge last month [June, 2009], but she
re-organised herself immediately, because it is common with our business. My
brother, there are too many bottlenecks in the country; you see this small port
[harbour] before your goods can be sent abroad eh; [in fact] it is a headache
[difficult task]. But because I want to prove to my customers out there that I am
well able, I go all out to satisfy them. My husband has been telling me to shut the
business and come back to the States, but I think this is my country and therefore
I need to do something.
228
(Case 2)
The evidence above implies that the risks associated with the Ghanaian export business
are multifarious. These range from a lack of funds to pay staff wages, a lack of funds to
pre-finance orders and, generally, bottlenecks in the Ghanaian business environment.
What can be implied here is that an entrepreneur must possess risk taking behaviour
when doing export business in Ghana and s/he must be prepared to show a higher
amount of risk-taking behaviour beyond the borders of Ghana. Consequently, their
willingness and capacity to take risks in the international market influences them
positively, regardless of the challenges which go with meeting that order (e.g. … “but I
think this is my country and therefore I need to do something” (case company 2) – from
the preceding quote). The findings concerning the attitudes towards international risk-
taking support what was found in China (Zheng et al., 2009) and Vietnam (Thai &
Chang, 2008). In addition, this confirms the findings of Dimitratos & Plakoyiannaki
(2003) concerning the antecedents of international entrepreneurship behaviour as
reviewed in Chapter 2.

In terms of positive perceptions of the international market, every firm in the case
studies demonstrated from their conversation an inordinate belief that they would be
able to expand and achieve success in the international market compared to the
domestic market. Some firms (e.g. case studies 3, 6, 7, 10, 22, 23) also mentioned
indicated financial gain, business growth and survival in the export market. Others (e.g.
case studies 1, 22, 26, 28, 29) described benefits such as goal achievement, a feeling of
well being and a platform for social networking. For example, one owner-manageress
commented:
the fact is if you want to make it big, you must join the associations
[industry associations) and export. Once you are prepared to accept the
challenges, you will make it. You see, through this business I have built
my house, my two daughters are schooling in Canada, all from this
business. Now my husband is sick because he is old, but I am the one
taking care of him. And it is nice, my brother, as well as the money, you
meet lots of people and it is good name too for you and your business.
229
(Case study 22)
It is interesting to note that businesses have multiple goals when entering the
international market, which are different to the profit motive (as can be seen in the
above quotation). Another example of this is the owner-manageress of a firm in a case
study who simply takes delight in meeting people through international business.
Tying the long-term business growth goal of the firm to export market entry (fourth
highest ranked factor), drives the firms to do everything in order to meet their export
orders. Most of the companies in the case studies believed that the only way they could
achieve long-term business growth was by entering the international market. Factors
which they considered as indicative of ‘long-term business growth’ included: (1) having

a large amount of money in a firm’s bank account, (2) having many workers,
departments, ample equipment and factory space and (3) having many branches. The
majority of them (e.g. 1, 3, 6, 20, 26, 29, 30, 31, 32, 33, 34) held strongly that Ghana’s
domestic market was too small, hence their endeavours to realise their long-term
business growth through entry into the international market. They also maintained that
this strong belief helped them invest all their time, money and energy whenever they
received an order; by putting so much time and effort in, they aimed to keep their
customers and to receive repeat business and referrals.
The lowest ranked factor among international entrepreneurship behavioural factors is
the entrepreneur’s international orientation. While this factor forms part of the triggers
for export initiation (as already discussed under the triggers of export initiation/Figure
6.1), according to some of the firms it also served as a crucial consideration in meeting
their export orders. Two entrepreneurs (Cases 2 & 18) indicated that their previous
experience of living and working in the US and Belgium had impacted on their export
business because they had no problems with their buyers when they sent their export
orders. These case study firms indicated that they knew how western business culture
works before coming to settle in Ghana. Product quality, the speed of delivery, trust and
repeated communication were part of the western business way of life and they claimed
that they knew about this and that it facilitated their dealings with buyers abroad. These
key qualities developed and built through one’s international orientation and their
impacts on export business support previous findings (McDougall et al., 1994) in the
USA (Oviatt & McDougall, 1995), Scotland (McAuley, 1999), Vietnam (Thai & Chang
(2008) and the UK (Hutchinson et al., 2006).
230

6.5.2.4 Network Theory Factors
The main network theory factors which emerged include: (1) having network relations
with industrial associations, (2) network relations with other business people, (3) the
extent of a firm’s network relations with industrial associations, (4) the frequency of a
firm’s networking interaction with industrial associations and (5) networks with family
and friends. Figure 6.5 below shows the relative differences and ranking among these
themes.
Figure 6.5: Critical Network Theory’s Factors in Ranked Order
RBV factors Frequency
N=36
Frequency rate (%) Rank Order
Network with
industry associations
36 100% 1
Network with other
business people
10 28% 5
Amount of network
ties
27 75% 2
Frequency of
interaction
26 72% 3
Network with friends
& family
22 61% 4
Total 121 336%
Source: Synthesised from the interview transcripts (Appendix N, Tables 6 & 6.1)
From Figure 6.5, among the network factors, networking with industrial associations
ranked the highest because every firm attested to it. In terms of how this facilitates the
firms’ capacity to meet their export orders, the following is a sample of the comments
cited by the case study firms:
231

• Access to funds: the firms in the case studies indicated they were able to source
funds to work on their export orders through their membership of industry
associations (e.g. some mentioned the World Bank’s assistance through the
Business Development Fund established in Ghana in collaboration with the
government of Ghana) and from other banking and non-banking financial
institutions. According to these case firms, an individual firm may find it
difficult to access such sources of funds unless they apply through the various
industrial associations in Ghana;
• Capacity building: most of the case studies (e.g. 2, 4, 6, 7, 29, 34) strongly
emphasised various capacity building programmes (e.g. financial planning skills,
marketing skills and business communication skills) which they receive
periodically through their membership of industrial associations. They strongly
acknowledged that the skills they receive from such training enhance their
business processes and therefore they are well equipped to meet the expectations
of international buyers.
The impact of network relations with industrial associations and the capacity to export
confirms what has been found in Scotland (McAuley, 1999) and in Tanzania
(Rutashobya & Jaensson, 2004). This finding supports Gorman & Evers’ (2008)
network structure.
The next consideration was having membership of more than one industrial association.
This factor was ranked the second highest among the network factors. As already
mentioned under this discussion section, the case studies indicated that in some cases
the activities of industrial associations overlap, while in other cases the proportion of
232

enefit they offer, the time and contents differ. As a result, some firms (e.g. 10, 14, 16)
stressed that certain particular industrial associations are more resourced and have more
connections with international and local bodies (e.g. government ministries and foreign
commissions in Ghana) than others. Therefore, it is advantageous for firms to work with
more than one industrial association. The owner-manager of case study 10 pointed out
that it was through his second registration with another industrial association (i.e. Ghana
Chamber of Commerce) that he received training in commercial law. Implicitly, the
amount of support the case firms receive from industrial associations varies in content
and degree and so the more the memberships it has of industrial associations, the greater
the capacity of the firm to meet its export orders.
The frequency of interactions with one or more industrial associations is another critical
influence (i.e. third ranked influence). According to some of the case studies (e.g. firms
19, 20, 23, 24), each industrial association has periodic meeting days and others days
for other activities. Some of the case study respondents recounted that those who
attended meetings and participated in all the activities of one association or another
received greater benefits than their counterparts who, although members, did not
demonstrate much commitment towards the associations’ activities. They indicated that
although the benefits are the same as those discussed under the first point (membership
of industrial associations), this form of interaction (frequent interactions with the
industrial association (s)) is seen as offering more opportunities. One owner-manager
commented:
233

Whether you will do well or not also depends on you the person [entrepreneur].
Let me tell you, we have a lot of associations and, my brother, they help us a lot.
All that is required of you is commitment and you have to be faithful in paying
your dues. Me, I have registered with most of them. Unless I do not hear that
this association is here or there, massa [Ghana term which means – master) I
will go for it and once they know that you are serious, any opportunity that
comes you will be among the first that they will give priority to. You know most
of us do not have access to the internet at our job places and so, if you do not
attend meetings you will be left behind. The other day my friend said I am
selfish, but look he always stays home and does not attend meetings, but he
expects me to call him each time we go for meetings. How?
234
(Case 9)
The quotation indicates that while membership of associations builds a firm’s capacity,
individual businesses must be prepared to show commitment through repeated
interactions. The next critical factor was the networks with family and friends (the
fourth ranked influence). Some case study respondents indicated more than once that
they occasionally receive substantial financial support from friends and family, both in
Ghana and abroad, which they use to work on their orders. In some cases (e.g. cases 4,
11, 33, 34), such financial assistance was interest-free, in contrast to offerings from
financial institutions. The findings on benefits of network relations with family and
friends on the SME’s capacity to meet export orders confirm findings in the UK
(Boojihawon, 2007; Hutchinson et al., 2006), Ireland (Gorman & Evers, 2008) and
Tanzania (Rutashobya & Jaensson, 2004).
Networking with other business people is another influence (the lowest ranked). Some
of the people in the case studies (e.g. cases 20, 24, 28) indicated that their strong ties
with other exporters in the sub-sector (in Ghana) augmented their capacity. Some of the
interviewees stated they had received financial assistance from their fellow business

associates when they urgently needed money to work on their export orders (see case
studies 2, 4, 8, 20). In another incident, the interviewee in case study 2 indicated that
there was a time when she received more orders than she could cope with. She stated
that because of her good relationship with another firm (i.e. case study 4), she delivered
the orders on time without any problems (i.e. the two firms shared the orders and both
worked on them). These results confirm what has been found in the USA (Oviatt &
McDougall, 1995), the Netherlands (Gemser et al., 2004), New Zealand (Coviello &
Munro, 1995) and the UK (Hutchinson et al., 2006). This confirmation of network
theory factors in the study counteracts the weakness of the stage theory (Johanson &
Vahlne, 1977) and the RBV theory (Barney, 1991) identified in the literature review
with regard to ascertaining whether or not a firm’s capacity to export is the result of its
own efforts.
Although, most of the business owners were females, it was noted from the interviews
that they actively sought network opportunities for export business and seemed
successful at it. These women were proactive in their interaction with network contacts,
possessed a dense network of contacts, mixed with both men and women in their
networking, and accessed network information from both commercial people and
family. This result contradicts Ibarra (1997), who found that gender differences existed
with regard to business networking, but supports those researchers (Cromie & Birley,
1992; Aldrich et al. (1997) who found otherwise.
235

6.6 CONCLUSION
6.6.1 Triggers of Export Initiation (Critical Incidents)
With regard to the five theoretical frameworks integrated to explore the main critical
incidents of export initiations, it can be concluded that contingency theory became the
most important. The findings indicate that the main triggers of export initiation among
the garment and textile firms were largely based on external stimuli (Figure 6.1). Six
main themes emerged as the critical incidents, with contacts established at a trade fairs
the most important incident, followed by the contacts attained via international
orientation and contacts and recommendations gained via network relations with friends
and family abroad the third most important incident. These incidents support the
assumptions of the network theory (Johanson & Mattsson, 1988; McAuley, 1999;
Coviello & Martin, 1999; Gorman & Evers, 2008). Winning government awards was
the fourth ranked critical incident. However, the incidents based on receipt of
unsolicited orders and having foreign ownership were not significant. The finding on
the unsolicited order provides some support for the stage theory (Johanson & Valhne,
1997), but here the firms were not entirely passive players as stage theory suggests.
In most cases, the owners acted in a sufficiently entrepreneurial manner to identify and
maximise the incident which catapulted them into export initiation. With regard to most
of the critical incidents, the networking contacts established played the crucial role. For
example, contacts gained via trade shows, foreign orientation, having foreign ownership
and via friends and families abroad were the crucial incidents. In addition, the owner’s
international orientation also provoked export initiation. Consequently, the assumptions
of the international entrepreneurship theory are supported (MaDougall et al., 1994;
236

Oviatt & McDougall, 1995; McAuley, 1999; Dimitratos & Plakoyiannaki, 2003;
Ruzzier et al., 2006). In addition, winning a government award and unsolicited orders
also triggered export initiation. Whereas most of the incidents seemed mainly
spontaneous, serendipitous, episodic, fortuitous and accidental (e.g. receipts of
unsolicited orders), some case companies took full advantage of them and exploited
them. The act of maximising episodic events and being able to initiate export business
support both the international entrepreneurship and the contingency theories’
assumptions (Lawrence & Lorsch, 1967; McDougall et al, 1994; Kuada and Sorensen,
2000; Ibeh, 2003; Li et al., 2004; Crick & Spence, 2005).
The dominant impact of external stimuli on initiation of export activity among the
Ghanaian case companies contradicts some common findings on SMEs’ export
behaviour in developed countries. For example, according to the synthesis of Leonidou
et al. (2007) based on 32 empirical studies about export stimulating factors (between
1974 & 2005) in SMEs in the developed countries and parts of Asia, the internal
proactive factors appeared to be the leading sparks of export initiation among all the
SMEs. In addition, findings in Jamaica (Williams, 2008) based on 44 small exporting
firms and in the UK (Hutchinson et al., 2007) supported the findings of Leonidou et al.
(2007) on the influence of internal proactive factors in triggering export initiation
among SMEs. The dominant influence of internal factors in causing export initiation by
small firms in the developed world may be a reflection of these firms’ strong and rich
internal resource capacity, whereas SMEs in developing countries (e.g. Ghana) are
more constrained in this respect.
237

Therefore, it can be argued that the variation in terms of this finding (external proactive
stimuli export behaviour of Ghanaian SMEs versus the internal proactive stimuli/export
behaviour of developed countries’ SMEs) can be attributed to the differences in
resource stocks among the firms. This consequently supports the argument that the
resource-based view is one of the most useful frameworks in explaining the
internationalisation behaviour of SMEs (Barney, 1991; Westhead et al., 2001).
Although SMEs in general are universally known to be resource constrained, the
problem is most pronounced among African firms. Consequently, the finding that the
case studies in Ghana manifest proactive external export behaviour also confirms what
has been found in Nigeria (Ibeh & Young, 2001). Overall, the assumption of the
proposed integrated theoretical framework behind the thesis is supported in terms of the
findings on critical incidents that trigger export initiation. The findings described above
provide evidence that the influences of contingency theory, network theory,
international entrepreneurship and stage theory have all interacted to reproduce the
single behaviour of the firms (i.e. the export initiation).
6.6.2 Factors which enabled the Firms to Meet the Export Orders
The main factors from the proposed integrated framework which influenced the
capacity of the firms to meet their export orders are summarised as follows. Among the
variables the RBV factors which emerged included: (1) large number of factory hands,
(2) adequate equipment and machinery and (3) adequate financial capital were found to
be the most significant factors, (4) followed by a skilled production workforce. Having
foreign ownership and a human resource incentive package were the least significant
influences. Stage theory factors which emerged as significant included: (1) firm size and
(2) having adequate prior domestic market operating experience. Of the two factors,
238

firm size appeared to be the most significant. In addition, network theory factors that
emerged included: (1) networking with industrial associations, (2) networking with
other business people, (3) networking with family and friends abroad, (4) having many
networking ties with industrial associations, and (5) the frequency of a firm’s interaction
with its industrial associations. Of these factors, networking with industrial associations
was rated the most influential, followed by the amount of networking ties a firm
maintains with industrial associations and then the frequency of interaction with
industrial associations.
Networking relationships with friends and family and those with business associates
emerged as the least influential factors. Furthermore, international entrepreneurship
factors which were accorded significant influence were: (1) tying the long-term business
growth goal to export market entry, (2) having an international orientation, (3) having
export vision at the start of the business, (4) having an international risk taking
behaviour, and (5) having a positive perception of the export market. Among these
factors, the last three were rated as the greatest facilitators, whilst the first two were the
least significant. Considering in combination the critical incidents and the factors that
enabled the firms to meet their export orders, the following conclusions can be drawn.
Considering as a whole in the light of the variables from the proposed integrated
framework, first, contingency factors played an important role, implying the importance
of external factors and their influence on export propensity and export success of the
small firm. However, while the entrepreneurs of the firms proactively capitalised on
external stimuli (e.g. contacts made at trade fairs, government selection & unsolicited
orders), it can be argued that internally the firms had the capacity to meet export orders
in terms of their products, foreign ownership (human capital resources of the foreign
239

partner), factory buildings, stock of equipment and machinery, available financial
capital, skilled production workers, incentives for workers and prior domestic industry
experience.
This aspect of internal readiness supports the assumptions of RBV and stage theories
integrated in this thesis. It also implies that, while contingency factors are essential, the
internal capacity factors are crucial to the firms’ export success. For example to think
about taking advantage of a critical incidents and initiating export business a firms be
ready in terms of export product. However, it must be noted that though it is argued
here that in some sense the case companies were internally ready (e.g. as export
contingency factors came their way, they were able to maximise them), it can be
implied clearly from the interviews that the individual resource capacities of the
respective case companies were inadequate to meet the export orders, and as a result
they made use of the resource capacity of their network relations (e.g. networking with
the various industrial associations, networking with business associates, networking
with foreign partners). Therefore, internal readiness in the context of Ghanaian firms
must be understood in the context of their capacity to receive support from their
networking associates. This makes the assumption of network theory with regard to
export success of SMEs from Ghana crucial.
With regard to accessing resources from their various networking relations, it is worth
stating that the owners’ entrepreneurial qualities facilitated the process greatly. For
example, the case companies’ ability to link up with different types of network
associates (e.g. business associates, families and friends, industrial associations),
coupled with the frequency of their interaction with these associates, can be construed
as evidence of actual entrepreneurialism. For instance, a firm’s ability to identify its
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liabilities (resource constraints) and to spot alternative suppliers of these resources (e.g.
from industrial associations, foreign partners) and seize such opportunities to achieve its
export objective is a real international entrepreneurial action.
Following on from the literature review, this study set out to explore whether or not a
single theoretical framework could fully account for the internationalisation behaviour
of the SME. From the evidence in this study, it can be concluded that no one single
theoretical framework can fully explain the phenomenon. Both the triggers of export
initiation and the factors which enabled the case companies to deliver the export orders
appear to be complex, dynamic and interactive as some manifestations of each of the
five theoretical frameworks are reflected in the behaviour of the firms. Further, on the
evidence of the interviews, the event can be argued as consisting of a mixture of rational
(planned) and unplanned (serendipitous) events. For instance, the evidence in this study
on chance incidents (unsolicited orders), capitalisation on previous residency in the
export destination country, making the most of network relationships established via
trade fairs to create subsequent export orders are indications unplanned and/or
entrepreneurialism coupled with having a ready export product (planned action) .
Together the findings confirm the assumptions behind applying an integrated theoretical
framework to address the phenomenon.
Specifically, the influence of the network and the contingency theories behaviour of the
case companies resolve and counteract the weaknesses of the RBV and stage theories,
as identified from the literature review. For example, the resource-based view and stage
theory imply that the decision of the firm about whether or not to export and develop its
export business depends mainly on its own efforts. In addition, stage theory excludes
the role of the entrepreneur owner-manager in explaining the export behaviour of the
241

SME. Furthermore, these two theoretical frameworks ignore the influence of
environmental factors (e.g. chance event and serendipity) on SME export behaviour. On
one hand, the findings here support researchers who argue that no one theoretical
framework can fully account for the events, and who therefore use combined theoretical
models. Samples of these studies can be found in New Zealand (Coviello & Munro,
1997; Coviello & Martin, 1999; Coviello & Cox, 2006), the UK (McAuley, 1999; Crick
& Spence, 2005; Hall & Cook, 2009) and Sweden (Jansson & Sandberg, 2008).
However, the findings deviate from those of researchers (e.g. Reuber & Fischer, 1997;
Westhead et al., 2001; Manolova et al., 2002; Brush et al., 2002; Ibeh, 2003; 2004; Hall
& Tu, 2004; Hutchinson et al., 2006) who apply a single theoretical framework and at
least partly exclude the consideration of other theoretical influences on the topic.
Finally, the intention of understanding and testing the predictive power of each of the
theories integrated into the theoretical framework of the thesis was not to establish the
best theory, but to understand how all four theoretical frameworks coupled with the
contingency theory would be significant in fully explaining and understanding the
export behaviour of small businesses in Ghana. The evidence in the interview
transcripts indicates that in the case of Ghana, network theory, international
entrepreneurship theory and contingency theory are more dominant with regard to
influencing the SMEs to respond positively to export stimuli compared to the RBV and
the stage theory.
As already indicated, the network theory is dominant with regard to the critical
incidents. This occurs through making use of contacts and recommendations gained via:
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(1) international orientations, (2) trade fair participation, (3) via foreign ownership and
(4) friends and families abroad, which are all network factors. Also, taking advantage of
the owner’s international orientation (e.g. his/her previous residency, working abroad)
to trigger export initiation constitutes the interplay of networking influence (network
theory) and international entrepreneurial qualities. In addition, taking advantage of
contacts established at trade fairs to bring about subsequent export business amounts to
a mixture of network theory, contingency factors and international entrepreneurial
factors, whilst the ability to spot opportunities in the environment (e.g. during trade fair
events) and seizing them to initiate export business, can be considered as
entrepreneurial actions.
In addition, concerning the factors which influenced the capacity of the firms to meet
the export orders, the utilisation of networking relationships through industrial
associations played an important role as already discussed above. They also signify that
a combination of networking and entrepreneurial powers is in play. Consequently, the
original model as crafted from the literature review is revised to reflect the Ghanaian
experience as follows.
The revised integrated framework indicates that among the five theoretical frameworks,
network theory, international entrepreneurship theory and contingency theory are more
influential in explaining the export behaviour of the small business in Ghana. The
revised framework is presented in Figure 6.6 below.
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Figure 6.6: Revised Integrated Theoretical Framework of SME Internationalisation based on Ghanaian SMEs’ Export Behaviour
n
244
Contingency Theory Factors (e.g. unsolicited orders)
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Network
Theory
Factors
(i.e. the
Network
Relations’
Stock of
Resources)
Environmental/contingency factors
Firm capacity factors
Firm owned resource
factors (RBV)
International
Entrepreneurial
Factors
(personality/entrepreneuri
al factors of the ownermanager
or manageress)
Firm owned resource
factors (stage theory)
Internal environment
Internal environment
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Environmental/contingency factors
Positive stimuli
The decision whether
or not to export
Negative stimuli
Export involvement &
Export performance
Nonexporting/remai
ning focused on
the local market
Contingency Theory Factors (e.g. government selection)

Figure 6.6 implies that in deciding to enter the export market from Ghana, the small and
medium-sized firm already possess some of the necessary resources itself, as implied by
stage theory and the resource-based view theory (e.g. factory premises and export
products). These two sources of capacities are augmented by the business owner’s
personality factors (e.g. his drive, ambition – the international entrepreneurship theory
factors). However, the three composite resources (i.e. the RBV, stage theory and the
entrepreneurship factors of the owner-manager) are still inadequate. As a result, the
firm, through the owner-manager’s entrepreneurial qualities, accesses network relation
resources to augment its capacity. It is the unique entrepreneurial qualities of the owner-
manager that maximise network relation resources into the focal firm. Hence, with
regard to the firm’s capacity, a double sided arrow connects (Figure 6.6) the network
relation resources through to the entrepreneur (the owner) and then to the firm (i.e.
making entrepreneurial qualities very crucial and central in accessing of networking
relation resources by the firm). Here, the implication is that the network relations’ stock
of resources, which flows into the focal firm, does so by means of the owner-manager’s
unique entrepreneurial qualities.
As a result, because the network resources flow from the environment into the firm,
there is an arrow from the environment through the network to the owner- entrepreneur
and the firm. Therefore, due to the fact that networking seems to occupy a critical role
and be very dominant with regard to the firm’s export success, the figure for the
network relations’ stock of resources is literally enlarged in the figure above. In
addition, because it is the owner-manager’s entrepreneurial behaviour that connects
with and brings the network relations’ resources into the firm, coupled with whether or
245

not the firms will maximise chance events or not (e.g. winning government awards,
unsolicited orders – contingency theory factors) that (the entrepreneurial role) too is
literally enlarged. Again, according to the interviews, the critical incidents were mainly
triggered by external stimuli and so the influences of the contingency factors are
deemed crucial in explaining the export behaviour of the SMEs in Ghana. So the figure
which represents the external factors’ impact on the firm’s export success is also
enlarged in the figure above.
Consequently, the figures for the network relations’ stock of resources and the owner’s
personality/entrepreneurial factors and the contingency factors are written larger than
those of the RBV and the stage theory factors in order to, and clearly show their
importance, as the crucial role they play in terms of obtaining an export order and being
able to supply it is extremely important in Ghana’s context. Finally, through the impact
of these three key frameworks, the firm’s export decision and/or success is shown to be
vibrant and positive as opposed to negative in remaining focused on the domestic
market. Finally, the export involvement figure is also drawn considerably larger than
the non-exporting figure.
6.7 CONCLUDING REMARKS
The chapter set out to explore selected variables (Section 6.1) from the proposed
integrated theoretical framework applied in the study (Chapter 2, Literature Review).
The thinking behind this was to explore their significance in influencing SMEs in
Ghana to initiate export business, as well as influence on the firms’ capacity to meet
246

their export orders. The findings are that, first of all, not all the factors which trigger the
export initiation of the SMEs simultaneously facilitate their capacity to meet their
export orders. Secondly, the findings indicate that the triggers of export initiation by
firms in Ghana are based on proactive external stimuli. This implies that for the
Ghanaian context it is important that SMEs align their strategy (planned or unplanned)
to the changing trends of the external environment.
Whilst the influence of the external environment appears important, the firm must
develop their internal capacity appropriately (e.g. readiness of export product and
financial capital to work on the export order). Overall, the interaction of the key factors
appears complex, dynamic and interactive and this supports the application of an
integrated framework, as opposed to a single theoretical framework. Evidence in the
interview transcripts indicates that of the five theoretical frameworks the influence of
the network theory, the international entrepreneurship theory, and the contingency
theory appear to be significant in the Ghanaian context. The average size of firms from
the garment and textile sub-sector in Ghana is small, which implies low internal
resource capacity to enter the export market by its own internal efforts.
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CHAPTER SEVEN
UNDERSTANDING NON-EXPORTERS’ PERCEPTIONS
OF THE CRITICAL INCIDENTS WHICH TRIGGER
EXPORT INITIATION: EMPIRICAL RESEARCH PART 3
7.1 INTRODUCTION
Having identified the incidents which trigger export initiation and which influence the
capacity of the SMEs to meet their export orders in Chapter 6, this chapter addresses
research question 3 of the thesis and seeks to achieve objective 4 of the thesis. It
examines the perceptions and experiences of non-exporting SMEs in the same garment
and textile industry concerning the critical incidents identified in Chapter 6. In Chapter
6, six main incidents were found to be critical concerning the export initiation among
the firms. These six incidents are: (1) contacts established via trade fair participation,
(2) contacts established via having international orientation, (3) contacts and
recommendations established via having fiends and families abroad, (4) winning
government awards, (5) being in receipt of unsolicited orders and (6) contacts and
recommendation established via having foreign ownership. On the basis of these
findings, it is hypothesised in this chapter that non-exporting firms from the same sector
may have encountered these incidents in their operating lives, but due to one problem or
another they could not capitalise on them sufficiently to initiate export business.
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The literature review offered classification of non-exporters into two groups, namely the
SMEs that have exported before, but have withdrawn from the export business, and
SMEs which have not exported before (e.g. Leonidou, 1995a; Williams, 2006).
However, the non-exporters interviewed in the current study belong to the second
group. For example, among the non-exporting studies reviewed in Chapter 2, the study
of Leonidou (1995c) in particular examines the perception of non-exporters as regards
the factors that trigger export initiation. The contribution this study makes to such a
body of research is that it not only seeks to explore the perceptions of the non-exporters
about the occurrences that activate export initiation, but it ascertains whether or not
some or all of the non-exporters have experienced those critical incidents during their
operating lives.
To address the research question behind this chapter, the rest of the chapter is sub-
divided as follows. The methodology for the study is discussed in the next section, and
this is followed by the presentation of the results of the data analysis; these being sub-
divided into: (1) a description of the case companies’ profiles; (2) the analysis of
general reasons for non-exporting among all the sampled firms and analysis the case
firms which experienced the critical incidents of the exporting firms as well as the main
barriers which prevented them from acting upon those stimuli and becoming exporters.
The chapter ends with discussion and conclusions of the study.
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7.2 METHODOLOGY
This section sets out the procedure used to ascertain the perceptions of the non-
exporters concerning the critical incidents. The procedure consisted of the sample
selection, the data collection method and instrument as well as the analytical method.
7.2.1 The Sample Selection
66 non-exporting firms were identified from the sampling frame used in Chapter 6 (sub-
Section 6.2.2). Of these, 12 were no longer operating, leaving a usable sample of 54
firms. Of these 54 firms, only 33 met the pre-interview screening criteria (as outlined in
sub-section 7.2.2 below) and participated in the study.
7.2.2 The Pre-interview Screening and the Selection Criteria
As with the exporting firms in Chapter 6, before the actual interview, each firm was
contacted in advance by personal mobile phone. This call sought to introduce the study
to the firms, and the following criteria were also thoroughly explained.
• Each firm was required to be either small or medium-sized, consistent with the
World Bank definition of SMEs in Ghana applied throughout the thesis (Chapter
4, Section 4.7);
• Each firm had to be operating in the garments and textiles sub-sector and to be
located in Accra;
• Each firm was required to have a minimum of 5 years of domestic operating
experience. This criterion was motivated by Coviello & Munro (1997), who
250

argued that the average length of domestic market operating experience for a
small New Zealand exporting firm before exporting was three years. In
extending this argument to Ghana, since New Zealand is long way ahead of
Ghana in terms of socio-economic development, it was decided that an average
SME in Ghana should have 5 years of domestic operating experience before
contemplating moving into the export business. Therefore, if after 5 years, a firm
had not considered going into the export business and had not closed down, then
it would be considered worthwhile investigating why it had not considered such
activities when other similar firms had done so;
• Each firm had to be independent, indigenous or partly foreign and partly local.
None was to be a subsidiary of a larger domestic and/or an international firm ;
and
• None of the firms was to be a wholly international local firm.
7.2.3 Data Collection Method and Instrument
Similarly to the interviews with exporting firms, a semi-structured interview guide was
the main data collection instrument used (see Appendix O for the structure of the non-
exporters’ interview guide). Moreover, as with the exporting firms, each interview was
hand-written and digitally recorded. The interviews were face-to-face encounters and all
the interviewees were the owners of the respective SMEs. An average interview with
these non-exporters took 120 minutes. The interviews with the exporters were purposely
planned to precede those of the non-exporters because the intention was first to
understand the critical incidents from the perspective of the exporters in order to fuse
this information into the non-exporting study. Every interview took place on the
251

premises of the non-exporting firms (i.e. at the owners’ offices). Additionally, unlike
the exporting interviews where one woman chose to communicate in a language other
than English, every non-exporting firm freely agreed to communicate in English.
7.2.4 The Analytical Method
As with the analytical technique applied in the interviews with the exporting firms in
Chapter 6, in this portion of the study the responses from the non-exporting firms were
also content analysed using frequencies and rankings.
7.3 RESULTS, ANALYSIS & DISCUSSION
Appendix P contains the synthesis of results concerning this chapter. Consistent with
Chapter 6, in some instances, some of the direct quotations of the interviewees were
included to support the discussion, in line with MacDonald & Cook (1998).
7.3.1 Profile of the Non-Exporting Firms
Firstly of all, the average age of the non-exporting firm was 10 years. This deviates
from the average age of 14 found among the exporting counterparts, as analysed in
Chapter 6. It may be argued that the difference in the average firm age supports the
assumption of stage theory, which suggests that a firm should be longer established
before it starts to export (Johanson & Vahlne, 1977). Furthermore, none of the non-
exporting firms had foreign ownership, compared to 3% of the exporting firms as
indicated in Chapter 6. Overall, about 70% of the entrepreneurs were females, similar to
the proportion among the exporting firms.
252

7.3.2 Results on Perceived Barriers & Reasons for Non-Exporting
Nine main perceived barriers emerged among the 33 non-exporting firms in relation to
why they still choose to focus on the domestic market. The main findings were: (1)
having a small-sized firm, (2) the lack of finance to support export business, (3) having
a negative perception about the influence of industrial associations with regard to the
export business, (4) the lack of appropriate machinery & equipment, (5) having a
negative perception of the export market, (6) the availability of business in the domestic
market to fulfil the firm’s goals, (7) the lack of ambition for long-term business growth,
(8) a lack of government support, and (9) a lack of skilled and reliable workers (see the
synthesis in Appendix P, Table 4 & 4.1). Among these reasons, (1) having a small-
business firm, (2) lack of finance to fund export business and (3) the lack of appropriate
machinery and equipment to support an export production were the most influential
problems perceived by the non-exporting firms, while (1) perceiving sufficient business
in the domestic market to fulfil the firm’s goals and (2) the lack of concern for a long-
term international business growth motive were the least perceived problems. The
relative strengths of these factors are presented below.
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Table 7.1: The Relative Strengths of Reasons for Non-Exporting
Critical Frequency Percentage Ranking
Incidents (N=33)
Being too small 33 100% 1
Lack of finance 33 100% 1
Negative
perceptions
about industrial
associations
29 88% 2
Lack of
machinery &
equipment
33 100% 1
Negative
perceptions
about the export
market
29 88% 2
Confidence in
the domestic
market
6 18% 5
No concern for
long-term
business growth
12 36% 4
Lack of skilled
workers
26 79% 3
Lack of
government
support
19 58% 3
Total 220 667%
Source: Synthesised from the non-exporters’ interview transcripts (Appendix P)
7.3.3 Results on Critical Incidents Experienced by Non-Exporters
Of the six main critical incidents identified among the exporting firms in Chapter 6,
three were found to have been experienced by 14 out of the 33 non-exporting firms. Of
these 3 critical incidents, only one was an actual critical incident (as defined in sub-
Section 6.3.6.1, Chapter 6) while the other 2 were in the form of influences. The one
critical incident was being in receipt of unsolicited order. The other two influences came
from two critical incidents, namely: (1) contacts established via having international
254

orientation (i.e. international travel) and (2) contacts and recommendations established
via having friends and families abroad. For instance, with regard to ‘contacts
established via having international orientation’, some of the non-exporters agreed that
they had travelled abroad before to visit family members (i.e. they have had
international orientation experience), but in this case, they could not establish contacts
during their visits which might have led to receipt of export orders as experienced in the
case of the exporting firms (Chapter 6).
In addition, concerning the incident of ‘contacts and recommendations gained via
having friends and families abroad’, some non-exporters affirmed that they have friends
and families living abroad, but here again, they have not thought of using those
acquaintances to trigger export initiations. Compared to the exporting firms, these non-
exporters have not have discussed their business with their acquaintances abroad (e.g.
via sending them samples) to prompt their acquaintances to make contacts and
recommendations on their behalf to trigger export initiation. With regard to the relative
importance of the one incident and the two influences, the most influential among them
was the influence from having acquaintances that reside abroad, followed by the
influence from having experienced international orientation. The least influential was
the receipt of unsolicited orders. The relative importance of these themes is presented in
the table below.
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Table 7.2: Relative Importance of the Themes Experienced by the Non-Exporters
Critical
Incidents
Frequency (N=33) Percentage Ranking
Influence
having
from 4 12% 2
international
orientation
nd
Receipt
unsolicited
orders
of 2 6% 3 rd
Influence from 8 24% 1
having friends &
family that
reside abroad
st
Total 14 42%
Source: Synthesised from the non-exporters interview transcripts (Appendix p)
7.4 RESULTS, ANALYSIS & DISCUSSION
This section is sub-divided into two main parts. Part one discusses the main perceived
barriers among the non-exporting firms as a whole concerning non-entry into the export
market. Part two concerns the actual barriers and reasons affecting the 14 non-exporters
who experienced the one critical incident and the two influences and yet could not use
them to create export business.
7.4.1 Perceived Barriers to Exporting
Of the nine perceived barriers (Table 7.1), as already indicated, the three most
influential are (1) small size of business, (2) the lack of funds to finance the export
business, and (3) the lack of machinery and equipment. Among these three factors,
every non-exporter perceived that they had too small a firm which had nothing to with
export business. On the one hand, this perception supports the assumptions of the stage
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and RBV theories (Johanson & Vahlne, 1977 & Barney, 1991; Westhead et al., 2001
respectively) because these frameworks predict that firms must overcome all barriers to
export market entry before they can decide to export. However, a mere perception that
one’s business is small and, therefore, does not merit export business can be argued as a
lack of entrepreneurialism among these owner-managers. Hence, following the
antecedents about the international entrepreneurship phenomenon reviewed in the
literature (e.g. McDougall et al., 1994; Oviatt and McDougall, 1994; McAuley, 1999;
Dimitratos & Plakoyiannaki, 2003), it can be construed that the non-exporters in this
study lack international entrepreneurial skills.
The lack of funds to finance the export business, including the lack of working capital,
is another significant perceived barrier which, according to the cases studies prevents
them from contemplating entering the export market. Some of the case companies (e.g.
cases 7, 12, 13 & 16) mentioned a lack of funds to meet the day-to-day needs of their
firms, including funds for undertaking improvements in their plants. For instance, most
of the firms mentioned that they lacked the funds to buy new machines and/or repair
existing ones (1, 3, 10, 11, 12). According to the firms, the replacement and
maintenance costs of the machines they use (e.g. the machines for spinning, weaving,
knitting, finishing, dyeing, and embroidery) are exorbitant, and, in addition, machinery
and spare parts have to be imported. One woman lamented:
Our greatest challenge is the day-to-day money [working capital] to meet our
bills. You see as I am talking to you now I have such a large electricity bill
outstanding; they [the electricity company of Ghana] have threatened to cut off
my power on three occasions. Even sometimes some of my workers fall sick and
even the money to pay the hospital is a problem. If you go to the bank, they say
you do not have a track record….”
(Case-company 12).
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The perception of financial barriers supports what has been found in Cyprus (Kaleka &
Katsikeas (1995), United Kingdom (Fillis, 2002), New Zealand (Shaw & Darroch,
2004) and Singapore (Keng & Jiuan, 1989). In addition, it is also one of the export
barriers among SMEs in the developed countries found by Leonidou (2004) from
among the 32 empirical studies he reviewed. However, in Leonidou’s (2004) review,
whereas financial barriers were significant, they never formed part of the high impact
factors. Conversely, with the SMEs in Ghana, the perceived financial barriers represent
one of the high impact factors. The reason may be because of the differences between
the social economic development of Ghana and developed countries (e.g. North
America and the Europe). Moreover, the finding also supports what has found in
Indonesia, India, the USA and the UK (Table 2.13, Chapter 2).
Another barrier perceived as having a high impact is the lack of appropriate machinery
and equipment to produce export products. This barrier is linked to the financial
barriers. As already seen, the serious lack of machinery the case studies mentioned
included spinning, weaving, knitting, finishing, dyeing, printing and embroidery
machinery. This particular barrier was not often evident among the export barriers
examined in the literature review in this thesis. This may be partly because most of the
studies reviewed are based on firms in the developed economies who (in themselves)
are also the producers of capital goods. As a result, SMEs in the developed countries
may not have as big a problem with capital equipment as their counterparts in Ghana.
258

The negative perceptions concerning the prospects of the export market represent
another problem perceived as having high impact. Most of the non-exporting firms have
too many reservations about venturing into the export market. Among the major
negative perceptions sampled were: (1) limited information to locate potential
importers, (2) keen competition in the export market, (3) the huge cost of investment in
the export business, (4) too much corruption in Ghana’s ports to export goods abroad,
(5) the excessive bureaucracy in the Ghanaian business environment would hinder the
initiation of export business, and (6) perceived competitive nature of the export
business. Of these, the huge investment costs and the competitive nature of the export
business were found to be the most significant negative perceptions. The following
statement was captured directly from the interview transcripts:
To do what in the export market? To voluntarily add on more stress on myself?”
(case-company 28); “… but even here in the country look at the corruption
among the people at the CEPS [Ghana’s Customs Exercise & Preventive
Service), so with the bureaucracies and the corruption at the port do you think
one can profit by going into exporting coupled with all the bribes you will be
paying before you export a single consignment abroad?
259
(Case-company 17).
These perceived negative perceptions among the SMEs owners confirm the arguments
of some of the studies (e.g. Lloyd-Reason & Mughan, 2002; Westhead et al., 2004;
Ruzzier et al., 2006) reviewed in Chapter 2. These studies argue that for an SME to
export successfully, one of the most crucial variables is the influence of the owner-
manager’s subjective characteristics.

The next perceived barrier to be discussed is the negative perception about the influence
of industrial associations on the export business. The significance of membership of
industrial associations in Ghana was specifically explored among the non-exporters
because this incident was directly linked to the trade fair events, which catapulted most
of the exporting firms into the export market (Chapter 6). According to the interview
transcripts, the average non-exporting firm in the garment and textile sub-sector holds
that: (1) industrial associations are meant for big firms, (2) there is considerable
corruption associated with the activities of industrial associations in Ghana (e.g.
nepotism & favouritism), and (3) it is a waste of time. For instance, one owner (case-
firm 27) who stated she registered with the Ghana Association of Women Entrepreneurs
in 2003 (through her friend’s recommendation) confirmed that she had never attended
their meetings and nor has she since paid any membership dues, apart from on the day
when she first registered.
Overall, it can be inferred that a lack of interest in the activities of industrial
associations among the non-exporters is one of the root causes of the lack of export
business participation. The reason for this is that trade fair participation, coupled with
the membership of various industrial associations in Ghana (e.g. membership of the
Association of Ghanaian Industry, the Ghana Association of Women Entrepreneurs, the
Spinnet Textiles Garment Cluster, etc), became one of the significant influences which
catapulted the exporting firms into critical incidents that led them to export initiation
(sub-Section 6.5.1 of Chapter 6). The case firms also perceived that trade fair events are
meant for large firms that have the money to invest in them.
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The lack of government role/incentives represents another perceived barrier. According
to some of the case companies (e.g. firms 1, 2, 3, 4, 21, 22, 27), the government fails to
support them in most areas (e.g. in finance, machinery and equipment, training) in
developing their businesses to the point of being capable of entering the export market.
While this contradicts the motive of export-led programmes outlined in Chapter 6
(Section 6.2), some of the firms (e.g. case studies 1, 11, 13, 22 & 27) maintained that
government export-led programmes in Ghana are based on political party lines (i.e. a
person has to be a member of the ruling party). One entrepreneur noted:
Oh are you asking about that one [government export-led programmes] it purely
depends on whom you know. If you do not know anybody in the government then
forget it! I have a friend who said when AGOA was announced in 2002 she
submitted her name, but until today you are interviewing me that was the end.
She did not hear anything about it so what do you think about the government
role in promoting export business in Ghana?
261
(Case 11)
As already indicated, it can be argued that, in general, the non-exporting firms had
negative perceptions of the role of the government of Ghana in encouraging them to
export, despite the numerous export-led government programmes reviewed in this thesis
(e.g. see Chapter 1, Section 1.1, Chapter 3, Section 3.6 & Chapter 6, and Section 6.2).
However, this apparent contradiction seems to suggest that: (1) although there may be
many on-going export-led programmes, a perception of corruption may prevent most
small firms from accessing these promotional packages; (2) to a certain extent, past and
on-going government export-led programmes are only targeted at existing exporters and
exclude non-exporters; or (3) the programmes are not always effective.

The lack of skilled workers is a further barrier. The case companies indicated that they
do not have skilled workers to make them confident in bidding for export orders. One
owner-manager lamented:
But one of the problems is also with our workers. In this country they say we
have polytechnics and the University Science and Technology (one of the public
universities in Ghana), but what do they do? They are producing school leavers
that can only read and write. Now they all want to work with banks when they
leave school.
(Case study 13).
It can be understood from the preceding quote that failings of the education system are a
partial cause of the under-industrialisation of Ghana. Another owner-manageress also
lamented:
You see apart from the skilled workers we need to operate the machines that are
used in this industry, our workers here are very poor at finishing skills [e.g.
putting on buttons, flaps and open stitches on clothes] which is also the critical
thing in producing clothing, especially when you want to send it abroad.
262
(Case-firm 22).
This lack of skilled, full-time time workers to work on export orders supports the
findings in Leonidou’s (2004) review of 32 empirical papers (Appendix I). Consistent
with what was found by Fillis (2002) in the UK and Ireland, some of the firms (e.g.
case-firms 1, 7 & 14) maintained that there is sufficient business for them in the
domestic market and consequently, they are not interested in entering the export market.
Some of the owner-entrepreneurs (e.g. case-firms 8, 11, 13) indicated that they had not
thought about the export business because they established their businesses just to
support their household, and therefore, business growth that transcends national borders
is not a priority. A common characteristic of this group of non-exporters (e.g. case-firms

8, 11, 13) was the ‘lack of a sense of seriousness’ in what they did. This barrier also
links to what Hutchinson et al. (2009) found from the UK sample, namely a lack of
export business vision. It can also be concluded that the barrier is connected with a lack
of entrepreneurial qualities among these owner-entrepreneurs in Ghana, and again
supports the importance of entrepreneurial qualities as proposed by the international
entrepreneurship literature (McDougall et al., 1994).
7.4.2 Actual Barriers Preventing Use of Critical Incidents to Initiate Export
The barriers that actually prevented the 14 out of the 33 firms that encountered the one
critical incident and two influences from exporting are discussed as follows. In Table
7.2, one of the influences that some of the non-exporters said they had experienced was
the ‘international orientation’ phenomenon. Four firms (i.e. firms 1, 7, 12 & 27) referred
to previous international travel as the main influence from their previous experiences.
From these four non-exporters (i.e. case studies 1, 7, 12 & 27), it was found that their
separate experiences were informal visits paid to families and friends overseas. Each of
the case firms indicated that they had had the opportunity to travel abroad once up until
the time of the interview. In terms of why they did not maximise the visits to initiate
export business, the owner-manager of case company 1 indicated he had paid a visit to
Amsterdam in 2001 to visit his brother in-law. According to this owner-manager, before
he travelled to Amsterdam, he knew it was an opportunity to promote his business
(because his business associate had told him he could use the occasion to promote his
business over there), but he refused.
Evidently, what prevented him was that it was his first visit to his brother-in-law and his
sister, and so he thought it would be impolite to seize the opportunity to promote his
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usiness. When he was asked whether or not he had talked about making a second visit
to his family in the Netherlands in order to promote his business, he answered ‘no’
because his business had been slowing down up until the time of the interview. The
barrier to this firm can therefore be interpreted as a lack of entrepreneurial spirit to
identify profitable export business since it was apparent from the results on the
exporting firms that he could still have done business in the Netherlands through his
hosts without travelling there directly (e.g. by sending samples to businesses and
churches). In addition, the owner of case company 27 revealed that she visited the
United Kingdom, but she went for personal reasons and not for business motives. She
observed:
For me the thought of trying to promote my business in the UK was not my main
intention and to be frank with you, the idea that I could use the visit to become
an exporter never struck my mind. In fact, I went to ‘abrotwere’ (i.e. a Ghanaian
terminology which is used to refer to every western country) for personal
ambition and for personal satisfaction and not because of my business. As you
know over here [Ghana], if you have travelled to ‘abrotwere’ before, you
command a lot of respect. So I took the opportunity to participate in my
brother’s graduation in Manchester in 2002 just to see the beauty of United
Kingdom because lots of people have said many things about the place. In fact,
when I came back, my family was very happy and proud!
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(Case study 27)
It could possibly be argued that the quote above reflects a lack of the necessary
entrepreneurialism to spot export business opportunities and/or lack of export business
vision. When the woman visited the UK she did not have her business in mind, although
she could indeed have formed alliances and used the African community there to
promote her business. In addition, she stated that she had never discussed with her host
if she could make a second visit, this time to promote her business, or whether there

could be an opportunity to send samples. Furthermore, the other two case studies (cases
7 and 12) among the four firms mentioned above also maintained that they had made
trips abroad, visiting the USA and the UK respectively over Christmas.
Neither were these visits for business purposes, but undertaken for personal reasons.
The owners of case companies 7 and 12 indicated that before they travelled abroad, they
too had never thought of taking their firms into the international market, because in their
view their firms seemed too small to achieve anything on the international market. From
these two case firms, having too small a business was the main ‘mental’ blockage
inhibiting their firms’ opportunity for growth. Having a small firm that did not merit
export business was among the perceptions of non-exporters discussed in the review of
export barrier literature and those presented in Appendices H & I. For instance, this
finding confirms what is found in the UK & the Republic of Ireland (Fillis, 2002) as
well as in New Zealand (Shaw & Darroach, 2004). Finally, what prevented these SMEs
from using their international visits, both during and after their time abroad, also
provides some evidence of the lack of entrepreneurial spirit and international business
vision on the part of these owner-entrepreneurs, coupled with the mental picture of
having a small-sized firm. The presence of the barrier concerning lack international
business vision among these non-exporting case companies supports similar findings
from the UK (Hutchinson et al., 2009).
Secondly, receipt of unsolicited orders is the one main critical incident two of the non-
exporters (i.e. case studies 10 & 13) encountered. According to the stage theory, an
unsolicited order can be defined as an approach to supply an export order which hitherto
a firm was not interested in doing, and/or not preparing for. First of all, the owner of
case-company 10 indicated that her unsolicited order was received in Ghana through an
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exporting firm (i.e. this was case-firm 4 among the exporting firms interviewed in
Chapter 6). According to this non-exporter, the exporting firm received a huge order
through the AGOA in 2003 (from the USA) and through her husband she had the
opportunity to co-produce the order. According to this owner-manageress, the two main
barriers that prevented her from working on the order were: (1) a lack of skilled and
reliable workers and (2) a lack of appropriate machinery and equipment. With regard to
the former, the owner-manageress indicated that she had nine full-time workers in
addition to herself, but the quality of work among her workers was insufficient to fulfil
an international order. She lamented:
You see the finishing skills of my workers are very poor; meanwhile this area is
the most critical and crucial with every garment to be manufactured, especially
those which are meant to be sold abroad.
(Case company 10)
According to her, in order not to cause a problem for the firm that gave her the
opportunity to be involved in exporting, she declined to work on the order. In addition,
the owner also indicated that she had a serious problem with absenteeism among her
workers which also made her unwilling to accept the order because she did not want to
spoil her relationship with her business associates (the exporting firm that gave her the
unsolicited order). Further, the owner of case firm 10 indicated that since most of her
machines were old (especially her embroidery and knitting machinery), she doubted
they could deliver the order on time and up to standard. The barrier of lack of skilled
workers to work on export orders, coupled with the barrier of a lack of appropriate
machinery and equipments, confirms the presence of the barriers to export business
reviewed in Chapter 2. In particular, it confirms what was found among similar small
businesses in Detroit, the USA (Yaprak, 1985), Northern Ireland and the UK (Fillis,
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2002). It can be confirmed that these barriers do hinder export initiation, just as, in their
absence, contrasting influences facilitated the capacities of the exporting counterparts to
deliver export orders (Chapter 6, sub-Section 6.5.2.2). With regard to unsolicited orders,
the owner of case company 13 said he had received an order in 1999 to deliver school
uniforms to France through his sister who is married to a French man. He identifies the
problems that prevented him from seizing that critical incident and becoming an
exporter as follows.
Well I did not set up this business actually to take it to the export market, but
when I had this order, I was so happy; however, main barriers were that: (1) I
did not have money to pre-finance the order as the importer too wanted it so
because she said she was dealing with me for the first time, that was her
condition and (2) my sewing machines were all old and I did not have knitting
and finishing machines at that time and there was no pre-financed money to
fund them. Eventually, I thought of collaborating with some other businesses,
but because of misunderstanding over sharing the work and the profit that
would arise, it did not work. So when the importer saw that I was delaying he
called me and stopped the whole deal.
(Case firm 13)
Besides the lack of funds, machinery and equipment, the preceding quotation also
shows that lack of trust/business collaboration and/or partnership among businesses in
Ghana has great potential to stifle export business initiations. The barrier of lack of
finance to fund export business appeared to be a common finding among researchers
(e.g. Fillis, 2002; Leonidou, 2004; Tesfom & Lutz, 2006; Hutchinson et al., 2009).
The other influence that some of the non-exporting firms experienced arose from the
fact that they have friends and family that reside abroad. Eight case firms (i.e. case
studies 2, 3, 4, 9, 15, 13, 21 & 28) maintained that they had friends and families residing
abroad. Of these eight firms none have ever visited their acquaintances abroad, nor had
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they discussed exporting opportunities with these acquaintances overseas up until the
time of the interview. Overall, all these firms (e.g. case firms 3, 4, 9, 15, 13, 21) stated
that their businesses seemed too small for them to think about export business, and they
had consequently not felt motivated to send samples of their products to solicit for
export orders.
The main reason why these firms never used these influences to initiate export business
is due to their perception of having too small a firm. However, this barrier can also be
interpreted as being linked to the lack of the entrepreneurial skills needed to spot
profitable export business opportunities and/or the lack of export business vision. For
example, having acquaintances abroad and not knowing that he or she can be used to
trigger export business shows a real lack of entrepreneurialism. This lack of
entrepreneurial skills supports findings by McDougall et al. (1994), while the
perception of having too small a business supports findings from the UK and the
Republic of Ireland (Hutchinson et al., 2009). The barriers that prevented the 14 firms
from converting the one critical incident and two influences they experienced into
initiation of export business are summarised in the table below.
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Table 7.3: Barriers Preventing Maximisation of Critical Incidents and Consequent
Initiation of Export
Barrier Frequency Percentage Ranking
Barriers that prevented the 12 firms from maximising the influence
Barrier
Frequency Percentage Ranking
Perception of 10 83 1
having too small a
firm
st
Lack
entrepreneurial
of 2 7 2
skills & or export
vision
nd
Total 12 100
Barriers that prevented the 2 firms from maximising the receipt of unsolicited orders
Lack of equipment
and machinery
2 100% 1 st
Lack of skilled 1 50% 2
workers
nd
Lack of funding 1 50% 2 nd
Total 4 100
Source: Synthesised from the non-exporters’ interview transcripts
7.5 CONCLUSION
Nine main perceived barriers emerged as being responsible for non-exporters choosing
to remain focused on the domestic market. They are summarised in Table 7.4 below.
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Table 7.4: Perceived Reasons for Non-Exporting and their Sources
Nature of Impact Type of Barrier
Very significant impact (3) (1) Being too small a firm(ib)
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(2) Lack of finance (ib)
(3) Lack of machinery and equipment
(ib)
Significant impact (3) (4) Negative perception about
industrial associations (eb)
(5) Negative perception about the
export market (ib)
(6) Lack of skilled workers (ib)
Least significant impact (3) (7) Lack of business support from
government (eb)
(8) Sufficient business in the
domestic market (eb)
(9) Lack of concern for long-term
international business growth (ib)
Source: reconfigured from Table 7.1
Keys: ib = the source is an internal barrier & eb= source is an external barrier
Table 7.4 indicates that the barriers perceived by the non-exporting firms derive mainly
from internal weaknesses. Surprisingly, lack of incentives from the government is one
of the lowest perceived barriers. Barriers and/or reasons (1), (2), (3) & (6) support the
assumptions of the RBV and stage theories about the determinants of SME export
decisions. In addition, barriers (5), (4) (7) & (8) support the assumptions of contingency
theories concerning how firms’ strategies (planned or emergent or both) are shaped

directly or indirectly by the influence of the operating environment. Moreover, barrier
(9) also supports the assumptions of the international entrepreneurship literature
concerning the behaviour that catapults firms into the export business. These results
support the assumptions that the export behaviour of the SME is indeed a complex
event which cannot be fully understood by a single theoretical framework. The results
also imply that external environmental factors are equally important in fully explaining
the export behaviour of the small firm.
Second, with regard to the main barriers and/or reasons which prevented some of the
non-exporters from exploiting the one critical incident as well as the two influences
which came their way, the following can be concluded. Of the six critical incidents
found in Chapter 6, only one incident (i.e. the receipt of unsolicited orders) and two
influences (i.e. (1) having international orientation – previous overseas travel - and (2)
having friends and family residing abroad) emerged as events that had been experienced
by the non-exporting firms interviewed, and then only by 14 of the 33 firms. Of these
three themes the influence from friends and family residing abroad (i.e. networking with
friends and family abroad) was the most significant, followed by the influence of having
international orientation. The receipt of unsolicited orders was the least significant
influence.
The main barriers which prevented the firms from converting the influence they
encountered into critical incidents which could have triggered export initiation were: (1)
having a very small business and (2) a lack of the entrepreneurialism needed to spot
profitable export business opportunity and/or lack of export vision. Of these two
barriers, the perception of having a very small firm was the most influential. Concerning
the receipt of unsolicited orders, the main barriers were: (1) lack of skilled workers to
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work on the orders, (2) lack of appropriate machinery and equipment and (3) lack of
funding to pre-finance the order. Among these factors, lack of having appropriate
equipment and machinery had the greatest influence, followed by a lack of funding and
skilled workers.
Overall, it can be concluded that both actual and perceived barriers were mostly
internal, which also supports the argument of the importance of SMEs’ internal resource
capacity to any subsequent export success (e.g. Ibeh, 2004). In addition, having the
perception that a firm is too small and cannot go into the export business until it
achieves a certain size supports the assumptions of stage theory (Johanson & Valhne,
1977). Furthermore, the lack of entrepreneurial vision on the part of the owners of the
firms to spot the opportunities (e.g. the receipt of unsolicited orders) to initiate export
business strongly supports the assumptions of the international entrepreneur theory
(McDougall et al., 1994). The lack of skilled workers, appropriate machinery and
equipment confirms the assumptions of the RBV theory. Overall, the manifestation of a
mixture of more than one theoretical framework in these findings supports the
assumptions of the integrated framework underlying this thesis.
Finally, these findings (i.e. the constraints on the non-exporting firms’ participation in
export business) can be compared and contrasted effectively with the findings from their
exporting counterparts in Chapter 6 (e.g. Chapter 6, sub-Sections 6.5.2.1, 6.5.2.2 &
6.5.2.3) on factors that influence the capacity of the exporters to meet their export
orders. The reason for this is because the factors which facilitated the capacity of
exporting firms (Chapter 6) to respond positively to export critical incidents are the
same factors non-export lacked and therefore, constraint their export involvement. In
addition, just as was found in Chapter 6, this implies that, regardless of the benefits of
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contingency factors, a certain amount of internal readiness, and/or preparedness (e.g. the
right product) on the part of the non-exporters toward entering the export market is
essential.
7.6 CONCLUDING REMARKS
It was hypothesised that non-exporters in the garment & textile industries in Ghana
experienced the same critical incidents which catapulted their counterpart exporting
firms into the export business. The hypothesis was partially supported, with 14 out of
the 33 non-exporters affirming some experience of one critical incident and two
influences from the 6 critical incidents found among the exporting firms. Overall, non-
exporters reject export stimuli and remain concentrated on the domestic market for
reasons that are mostly of internal origin. As a result of limited resource capacity, these
companies reject the export stimuli because of fears that they would not be able to
control the barriers in the export market. The strongest barriers seem to include the
perception that the firm is too small; export business is the preserve of the large firms,
negative perceptions about prospects in the export market as well as lack of
entrepreneurialism. The results indicate that, regardless of firm size, the reasons for
non-exporting show a similar pattern. Therefore, these empirical findings lend some
support to the non-exporting literature (Section, 2.10, Chapter 2).
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CHAPTER EIGHT
SUMMARY OF FINDINGS, CONCLUSIONS AND
IMPLICATIONS
8.1 INTRODUCTION
This chapter responds to objective 5 of the thesis; the main motivation for this thesis
was to understand the exporting behaviour of SMEs from the garment and textile
manufacturing sub-sector in Ghana. As a result, the thesis sought to answer the main
question: why is the export involvement of manufacturing (SMEs) in Ghana so low,
with the majority of the firms remaining focused on the domestic market? The literature
review established that this problem can be understood through focusing on the
internationalisation of the firm and/or the export behaviour of the firm. Most theoretical
frameworks (e.g. stage theory, international entrepreneurship theory, and the resource-
based view) in the field offer various assumptions with regard to answering the problem
above. Although empirical studies have been conducted to explore the assumptions of
these theoretical frameworks (i.e. the literature review/Chapter 2 & other studies -
Appendices A to I of the thesis), the theoretical frameworks used were based on the
export behaviour of firms in developed countries, and the empirical studies were mainly
based on small firms from developed countries (e.g. the North America & Europe).
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Therefore, because the socio-economic contexts of the developed countries differ from
those of developing countries, there has been little exploration of the export behaviour
of SMEs from a developing country like Ghana in the literature. As a result, the extant
frameworks in the field and the corresponding empirical findings cannot be merely
externally generalised to Ghana. Four theoretical frameworks (i.e. the resource-based
view, stage theory, network theory and international entrepreneurship) were identified
from the literature review to address the theme of the thesis in detail. While the
contributions of extant studies by previous researchers in the field are worthy of
appreciation, some studies (e.g. Bell, 1995; Coviello & Munro, 1995; Westhead et al.,
2001; Moen & Servais, 2002) apply a single theoretical framework to analyse the
phenomenon.
However, another group of researchers (e.g. Coviello & Martin, 1999; Crick & Spence,
2005) contend that SME export behaviour represents a complex and interconnected
phenomenon that cannot be fully understood through application of a single theoretical
framework. As a result, these researchers apply more than one theoretical framework to
the topic. Hence, in order to contribute to the latter argument, the four frameworks
above were integrated and applied in the thesis, taking into account the most influential
variables (e.g. firm size, firm age, foreign ownership, possession of adequate financial
capital, receipt of unsolicited orders, contacts based on prior foreign residency and work
abroad) in terms of inducing the firm to export.
In addition, because previous frameworks have not fully accounted for the influence of
the external environment on SME export behaviour, the contingency theory was added
to the four frameworks above in order to shed greater light on the phenomenon. As a
result, sector and/or industry influence was selected in addition to the variables above in
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order to account for the influence from the external environment. The assumption
behind the proposed integrated framework is that its in-depth examination of the
combination of variables offers a deeper understanding of why one small and/or
medium-sized firm will export from Ghana, while other similar firms will not, even
though they may all be operating in the same location and face the same market
conditions. Another inspiration behind the integrated framework is that by empirically
testing this framework in Ghana, researchers and practitioners can be offered a fresh
understanding of the topic in an African developing country in detail. As a result, the
major thrust of this research rests on empirically validating the proposed integrated
theoretical framework (i.e. achieved in Chapters 5, 6 & 7).
The remainder of this chapter is organised as follows. First, the research questions
behind the thesis are presented sequentially. This is followed by a summary of the major
findings of each research question together with the conclusions drawn. Next, the clear
contributions from the research are presented, followed by the implications of the
findings for public policy, private practice and future research. The chapter then focuses
on the limitations of the study approach before finally providing concluding remarks.
8.2 PRESENTATION OF THE RESEARCH QUESTIONS
8.2.1 Research Question 1
In research question 1 the thesis sought to test whether or not, in the light of the
theoretical assumptions of the integrated theoretical framework, there is likelihood that
firm size and age, average aggregate educational level of the workers, foreign
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ownership, and sector could predict whether or not a small business in Ghana would
enter the export market.
It was found that in relation to export propensity, the size of a firm predicts the decision
to initiate export business, whereas firm age was not found to be helpful in this respect.
Furthermore, having foreign ownership (i.e. being partly foreign-owned and partly
locally owned) predicts the likelihood of entering the export market and the aggregate
workers’ educational level (i.e. having secondary education and above) also facilitates
the firm’s transition from a wholly domestic to an international business firm. In
addition, the influence of the sector and/or industry also predicts the decision to export.
From these findings, the conclusions drawn are as follows. First, concerning the low
export propensity of SMEs from Ghana, it can be concluded that small firm size, the
low level of formal education of full-time workers, a lack of foreign ownership and
being in an inappropriate sector (e.g. sectors other than the wood sector), are
significantly associated with the majority of non-exporting SMEs in Ghana, thereby
suggesting the main reasons for low export involvement. Second, relating to the low
export involvement of SMEs from Ghana, it can also be argued that not being in the
appropriate sector (e.g. the wood industry), as well as being unable to learn and apply
the export behaviour of firms in the wood sector, contribute to the low export
involvement among Ghanaian firms.
Overall, the importance of the firm size (stage theory and RBV variable), aggregate
workers’ education level (RBV variable), foreign ownership, (the network theory
variable & RBV) and sector influence (contingency theory variable), interacting to
produce a single outcome (SMEs export behaviour), validate and reinforce the
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integrated theoretical framework argument that informs the thesis. Evidence from the
network and contingency theories addresses and counteracts the weaknesses of the RBV
and stage theories identified in the literature review (Section 2.5, Literature Review).
For instance, the significant influence of industry on export propensity implies that
external factors cannot be excluded if a deeper understanding of exporting and non-
exporting SMEs behaviour is to be achieved.
8.2.2 Research Question 2
In this research question, the thesis sought to identify the main critical incidents which
catapult export initiation among SMEs in Ghana and the main influences which enable
the firms to meet their export orders. Here the aim was to ascertain the main incidents
and the influences from the firm owners’ perceptions. In this chapter the main findings
were: (1) being in receipt of unsolicited orders, (2) contacts established through trade
fair participation, (3) contacts established via having foreign orientation, (4) contacts
and recommendation established via having friends and family residing abroad, (5)
winning government awards and (6) contacts and recommendations via having foreign
ownership. Of these six incidents, contacts established via trade fair participation,
contacts established via having international orientation, contacts and recommendation
gained via having friends and family abroad, as well as winning government’s awards,
ranked the highest in terms of impact (Figure 6.1, Chapter 6).
The main factors in influencing the firms’ capacity to meet their export orders are as
follows: of the stage theory variables, having a large number of full-time workers and
possessing adequate prior domestic operating experience were the most significant
factors (Figure 6.2, Chapter 6). Four variables from the RBV were found to be
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influential, these were: having a large number of full-time workers, holding available
financial capital, possessing a stock of appropriate equipment and machinery and an
adequate supply of skilled production workers. Among these factors, the first three were
ranked equally in terms of their relative importance, followed by skilled production
workers (Figure 6.3, Chapter 6).
Three international entrepreneurship factors were also found to be influential: having
export vision at the commencement of business, international risk taking behaviour, and
a positive perception of the export market. These three factors were ranked equally with
regard to their relative importance (Figure 6.4, Chapter 6). Finally, the most influential
network theory factors, in order of importance, were found to be: networking with
industrial associations, networking with a large number of industrial associations, and
maintaining frequent contact with industrial associations (Figure 6.5, Chapter 6).
From these findings, the conclusions drawn are as follows. The results on critical
incidents that trigger export initiation suggest that few SMEs in Ghana (e.g. from the
garment & textile sector) are able to participate in trade shows. Similarly, few of them
have had an opportunity to develop international orientation (i.e. experience of living
and working abroad). In addition, the majority of them lack the advantage of having
friends and family members that reside abroad. Moreover, few of them have the
capacity to win government awards. Therefore, these critical incidents also partly
explain the reasons why the export involvement of SMEs from Ghana is low.
The findings on whether or not a firm would be in the position to deliver any export
orders they might receive suggest that most non-exporting firms in Ghana are of a small
size, which confirms the results from the research question one. As a result, those firms
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might be offered an export business opportunity, but might not have the internal
resources (i.e. sufficient workers, including skilled production workers) to meet the
order. Second, the findings suggest that most non-exporting SMEs in Ghana (e.g. from
the garment and textile sector) lack adequate financial capital and appropriate stocks of
equipment and machinery; as a result of this they may not be able to meet export orders
even if they have the opportunity to export.
Furthermore, the findings reveal that most of the non-exporting firms lack an
international entrepreneurial outlook. In addition, the majority do not have: export
vision, possession of international risk taking behaviour, and do not possess a positive
perception regarding the prospects of the export market. The results also suggest that
non-exporting SMEs from Ghana do not possess networking relations with industrial
associations; and those that do, do not show commitment to the associations’ activities.
This failure among non-exporters to form networking relations with industrial
associations in Ghana limits their access to export business opportunities as well as the
opportunity to participate in trade fairs.
Here again, the findings show that the export behaviour of the SME is a function of a
multiplicity of complex factors, confirming the thesis argument that no single
theoretical framework can fully explain the process. Moreover, the findings from the
critical incidents indicate that the decision to export among the firms is partly caused by
external stimuli. This significantly supports the assumptions of contingency theory in
terms of the export behaviour of the small firm.
Through the application of the five theoretical frameworks to the thesis, experiences of
the case-companies demonstrated that three of these frameworks (i.e. the network
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framework, the international entrepreneurship and the contingency framework) appear
to have a significant influence on the export success of SMEs from Ghana. This is
explained by the fact that almost all of the critical incidents that activated export
initiation by the firms consisted of forms of interaction from within the network,
international entrepreneurship and contingency theories. For instance, four out of the six
critical incidents were all associated with networking factors (i.e. contacts established
via trade fair, contacts established via international orientation, contacts and
recommendations gained via having foreign ownership and contacts and
recommendations gained via having friends and family that resided abroad), thereby
affirming the importance of the network framework in the Ghanaian context.
In terms of meeting their export orders, it was again apparent that the internal capacity
of the exporting firms was inadequate and that they therefore benefited from access to
networking associates’ resource stocks (e.g. networking with industrial associations). In
most of these incidents, the ‘entrepreneurialism’ of the owner-managers enabled the
firms to seize external contingency factors (e.g. establishing solid contacts at trade
shows) as well as accessing the resource capacity factors of their networking associates
(e.g. keeping in frequent touch with industrial associations) . On the basis of this
evidence in the interview transcripts, the original integrated theoretical framework was
revised (see Chapter 6, Figure 6.6) to reflect the actual exporting behaviour of the firms
from Ghana.
The revised integrated framework predicts that while the average size of an exporting
firm from Ghana (e.g. from the garments and textiles sub-sector) is small, the
entrepreneurial qualities of the owner are crucial in enabling the firms to take full
advantage of contingency factors. The revised framework further implies that
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networking relations with associates (e.g. industrial associations) augment internal
resource capacity, enabling firms to respond positively to export stimuli and initiate
export business. Overall, the revised framework predicts that Ghanaian non-exporting
SMEs are on average too small to respond positively to export stimuli, but enhanced
entrepreneurial qualities (e.g. of the owner-managers risk taking behaviour) coupled
with access to the resource stocks of networking associates) the export success of SMEs
from Ghana can be facilitated.
8.2.2.1 Comparison of the Regression Results & the Outcome of Interviews
As it was not possible to prove causality from the regression analysis in Chapter 5, the
purpose of the interviews (Chapter 6) was to explore the critical incidents that cause
manufacturing SMEs from Ghana (e.g. the garment & textile sub-sector) to initiate
export business and to find out whether or not the factors that enable one firm to take
advantage of a critical incident and initiate export business were the same as those that
emerged as significant from regression results and the general factors arising from the
proposed integrated theoretical framework (Figure 1.1, Chapter 1 & Figure 2.6, Chapter
2).
However, the results from the interviews simply suggest variables (e.g. firm size,
importance of workforce education level, networking and human capital resources of
foreign partners) which emerged as statistically significant from the regression analysis,
were strongly confirmed in the interviews (see sub-sections 6.4.2.1 & 6.4.2.2). For
instance, concerning variables relating to networking resources of foreign partners, the
case company 8 indicated that the financial and the human capital resources brought by
the foreign partners put them at an advantage compared to others in relation to taking
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advantage of a critical incident and initiating export business. Taken in tandem, the
results of the interviews coupled with the regression analysis confirm the interacted
variables from the various theoretical frameworks that inform the thesis.
8.2.3 Research Question 3
In this research question, the thesis sought to examine the extent to which the non-
exporting SMEs in the garments & textiles sector experience the same ‘critical
incidents’ which enable their counterpart exporting firms to initiate export business.
Here the intention was to identify the general reasons for non-exporting among the
firms, including actual barriers constraining them from acting upon critical incidents
and becoming exporters. The results of this research question indicate that the
significant barriers to exporting were: (1) having a small-sized business firm, (2) lack of
funds to finance export business, (3) lack of appropriate machinery and equipment, (4)
having a negative perception about export market opportunities and (5) having negative
perceptions about export market opportunities. Of these five factors, the first three were
ranked equally as being of most importance, while the last two were both ranked next in
importance. The firm’s perception of the adequacy of the business in the domestic
market to fulfil its goals, the lack of ambition for long-term business growth (including
taking the export business to export market), and a lack of government support were
least perceived as barriers (Chapter 7, Table 7.1).
In addition, concerning the hypothesis that non-exporters experience similar critical
incidents to the exporters, the main findings were that 14 out of the 33 non-exporting
firms interviewed maintained that they had some experience of one critical incident and
two influences (from two critical incidents). These were: (1) receipt of unsolicited
orders (i.e. the one critical incident); (2) international orientation (an influence) (i.e.
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prior international travel) and (3) having friends and family that reside abroad (the
second influence). Among these 3 factors, having friends and families residing abroad
emerged as the most influential factor (Table 7.2, Chapter 7).
From the interviews, three main barriers were found to constrain the capacity of the 14
non-exporters to maximise unsolicited orders and become exporters; these were: lack of
finance, lack of skilled and reliable workers, as well as lack of appropriate machinery
and equipment. Of these three, lack of appropriate machinery and equipment was the
most significant barrier (Chapter 7, Table 7.3). Of the firms that experienced influences
from the two critical incidents, the main reasons that prevented them from converting
the influences into export critical incidents and becoming exporters were: (1) the
perception of having too small a firm, and (2) a lack of the entrepreneurial spirit to spot
export opportunities and/or lack of export business vision. Across these two factors, the
perception of having too small a firm was the most significant.
The conclusions that can be drawn for research question 3 are as follows. The actual and
perceived barriers that prevent non-exporters from venturing into export business
confirm the revised framework developed from the interviews with the exporters
(Figure 6.6, Chapter 6). The reason for this is that the factors from the three theoretical
frameworks that significantly explained the export success of exporting firms from
Chapter 6 were the main areas in which the non-exporting firms showed evidence of
weaknesses.
In particular, the findings from the non-exporters imply that due to the lack of
entrepreneurial outlook and networking with industrial associations, non-exporting
firms do not respond to changing trends of the Ghanaian business environment. While
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networking influenced the export success of the exporting firms, this was not the case
with the non-exporting firms. Here, it can be argued that the issue is not due to gender
difference, but differences in networking behaviour based on whether a firm is wholly a
domestic market business or exporting business. The explanation for this is that while in
both groups of firms (i.e. exporters and non-exporters) women owner-managers
represent about three quarters of the samples, non-exporting firms (wholly domestic
firms) appear to lack the density of networking contacts and degree of networking
interactions that facilitated the export success of the exporting firms. Therefore, the
variation is attributable to the distinction between a wholly domestic firm and an
exporting company and not to gender differences. This contradicts researchers (e.g.
Moore, 1990; Renzulli, 1998) who found gender to be relevant to differences in
business networking.
Over all, it can be concluded that non-exporters fail to spot and seize the contingency
factors which have the potential to propel them into the export market. Moreover, the
empirical findings on the perceptions of the non-exporting firms concerning the actual
and perceived barriers to exporting indicate that export success of the firms is connected
to both their internal and external behaviours, with internal proactivity seeming to be
particularly important. Finally, evidence on export barriers deriving from the RBV,
stage theory and the network theory (among others) supports the assumption behind
applying an integrated rather than a single theoretical framework to gain a deeper
understanding of such events.
Here, it must be also added that the results of the regression analysis (Chapter 5) lend
some supports to the perceptions on both perceived and actual barriers that prevented
some of the non-exporters from taking advantage of the critical incident which came
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their way and initiating export business. In fact, the same factors (e.g. firm size,
educated and/or skilled workforce) which enabled the export firms to maximise the
critical incidents that came their way and initiate export business (which also emerged
as significant from the regression analysis) were found to be lacking among the non-
exporters: in these cases preventing them from taking advantage of critical incidents and
initiating export business.
8.3 RESEARCH CONTRIBUTIONS
8.3.1 Contribution to Knowledge
The aim of the research was to understand the exporting behaviour of manufacturing
SMEs from the garment & textile sub-sector of Ghana. While export manufacturing in
particular has been hailed in Ghana as a significant driver for Ghana’s socio-economic
development, currently, local involvement in export business is low. As a result, the
research sought to examine why the majority of manufacturing SMEs in Ghana remain
focused on the domestic market. Although similar problems have been addressed in the
literature, the theoretical underpinnings of these studies are mostly based on the context
of developed countries (e.g. North America & Europe). Therefore, a research gap exists
with regard to the export behaviour of SMEs in Africa (e.g. Ghana). The problem here
is that not knowing how the behaviour of SMEs in Ghana relates to that of SMEs in the
developed economies has serious implications for practitioners and public policy.
The contribution of this thesis lies in the formulation of an integrated theoretical
framework set in the context of Ghana and its empirical validation using (1) the World
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Bank’s secondary data set, (2) case study interviews with 36 exporting small businesses
from the garment & textile sub-sector, and (3) another sample of case study interviews
with 33 non-exporting SMEs from the same sector. The application of the integrative
framework in this thesis extended a line of research in the field (e.g. Coviello & Martin,
1999; Crick & Spence, 2005) which contends that the export behaviour of the small
owner-managed firm represents a complex, dynamic and interactive event which cannot
be fully understood using a single theoretical framework.
This is the first study to systematically analyse the export behaviour of SMEs in Ghana,
especially the exporting and the non-exporting behaviour of SMEs from the garments
and textiles sub-sector. Previous studies (e.g. Quartey, 2006) on the sub-sector
examined the future prospects of all firms in the sector in terms of the challenges they
faced, without specifically focusing on the SMEs export potential of the sub-sector. The
reason for this is because development of SMEs export capabilities of the sub-sector has
been the focus of Ghana’s government agenda to develop manufacturing export due to
the potential export spillover effects from the garment and textile sub-sector to
manufacturing SMEs in other sub-sectors. In addition, whilst another study (Kuffour,
2008) has focused on the employment generating capacity of the firms from the sub-
sector in terms of the previous government’s Presidential Special Initiative (PSI)
programme, this study did not consider the internationalisation capacity of firms from
the sub-sector. In addition, it has been established that Ghana’s market level is too low
to mall that it cannot foster growth of its firms (Rankin et al., 2000). Therefore,
focusing this study to this sub-sector with regard to promoting manufacturing export
competitiveness of SMEs from Ghana is appropriate because it informs the
government’s police framework current being implemented in Ghana.
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This study is the most comprehensive so far on exporting and non-exporting SMEs
behaviour in Ghana in terms of the range of variables used to explain the theme of the
thesis. For instance, the integrated theoretical framework captures the major influential
factors discussed in the literature review (Chapter 2) (e.g. firm characteristics, the
entrepreneur owner-manager characteristics and external factors). Even within the
field, previous studies (e.g. Westhead et al., 2001; Obben & Magagula, 2003) have dealt
with only a few selected factors, namely firm and managerial factors, and human capital
resource factors respectively. Furthermore, it must be stated that developing an
understanding of firms’ export behaviour necessitates exploration of the attitudes of
both exporting and non-exporting firms in a single study. However, very few studies in
the field have focused on non-exporting SMEs’ behaviour (see Section 2.10, Chapter 2).
As a result, Chapter 7 of the thesis makes a fresh contribution to non-exporting
literature in the field based on evidence from Ghana. The importance of the contribution
to the non-exporting literature derives from the exploration by the thesis of the extent to
which some non-exporting firms may have actually been hindered by barriers in their
attempt to become exporters. This approach deviates significantly from those adopted
by extant studies (e.g. Leonidou, 1995b; Fillis, 2002).
8.4 IMPLICATIONS OF THE STUDY
The research holds possesses implications for public policy, practitioners and future
researchers, some of which are summarised in the following section.
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8.4.1 Contribution to SMEs &/or Practitioners
Due to the nature of export manufacturing in Ghana (e.g. labour intensive coupled with
mass production), non-exporting owner-managers who desire to enter the export market
must use part of their profits to attract more full-time workers, train and retain them. In
addition, SME owner-managers who wish to deepen their export involvement must also
increase the size of their firms and recruit full-time workers with higher levels of
education (e.g. workers with secondary education and above). The exporting firms, but
even more so the non-exporting firms must also vigorously explore opportunities to
form partnership with foreigners, since the findings from the studies indicated that such
partnerships would facilitate their export success. For example, the study indicated that
foreign partners have the potential to expose Ghanaian local firms to upstream and
downstream international networks and to thereby augment their internal resource
capacity. Moreover, non-exporting owner-managers from Ghana who desire to enter the
international market must understand that the phenomenon is a complex, dynamic and
interactive. They must therefore align their strategy (planned or emergent) to the
changing trends of the external environment, as both the results of the regression
analysis and interviews show that external stimuli appear crucial with regard to
promoting export success of Ghanaian firms.
For instance, specifically in terms of firms in the garments and textiles sub-sector, the
findings indicate that the export stimuli which drove the sub-sector were mainly
external pro-active stimuli, confirming the contingency theory findings from the
regression analysis. While the importance of the contingency factors has become
obvious, for Ghanaian firms to succeed in the export market they must constantly build
their internal resource capacity. Although various external stimuli (e.g. the availability
289

of trade fair events, government industrial programmes, and unsolicited orders) may
help to motivate entry into the international market, the firms must first prepare
internally (e.g. be ready with export product).
For example, findings from both the regression analysis (Chapter 5) and case study
interviews (Chapter 6) demonstrated that on gaining access to the resources of network
partners, the firms became fully ready internally (e.g. with appropriate firm size, foreign
ownership resources, a ready export product, appropriate equipment and machinery, and
adequate financial capital resources). On achieving this internal preparedness, there is
greater potential for non-exporters to maximise any contingency factors that might
come their way and subsequently to initiate export business.
In particular, those non-exporting manufacturing SMEs in Ghana should not remain
separated from the dynamics of the external environment. The findings from the non-
exporting firms suggest that they were not aware of the external stimuli which trigger
export initiation among the exporting firms (i.e. the critical incidents). In addition,
according to the findings from the exporting firms (Chapter 6), one of the major ways
for the non-exporters to achieve growth in international market knowledge and capacity
that would boost their export market entry would be through involvement in networking
with industrial associations in Ghana. In relation to this, non-exporters must develop the
habit of discussing their businesses with friends and family abroad, because such
actions can open up export opportunities.
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8.4.2 Contribution to Public Policy
A number of export-led programmes to encourage non-exporting SMEs in Ghana to
consider engaging in export business are already being implemented. However, the
findings from this study suggest that the perceptions of the users (i.e. non-exporters)
about the effectiveness of these export-led programmes are negative and their awareness
of the programmes is limited. As a result, the government should launch new
educational initiatives to publicise its export-led programme and develop new
programmes focusing on non-exporting firms and already exporting firms. Moreover, it
is crucial, in the light of the outcomes of this study, that any government programme to
target the non-exporting manufacturing firms and encourage them to enter the export
market must first deal with changing the perceptions of the owner-managers as regards
the prospects of the export business before focusing on the internal capacity constraints
on firms. The results of this study suggest that the majority of non-exporting SMEs in
Ghana possess negative perceptions concerning the prospects for export business in
Ghana.
It has been highlighted above that individual owner-manager from Ghana need to
become more motivated to seek international alliances with foreign partners. The
recommendation to the government of Ghana is that it should create a platform (e.g. by
sponsoring business development forums either home or abroad) where wholly local
businesses will have the opportunity to interact with foreign businesses to create
alliances for export success. Such a platform would enable the wholly indigenous firms
to explore opportunities for shared ownership with foreign partners. In addition, since it
has been found that foreign partners augment the resource base of indigenous firms, this
291

would make the firm more likely to respond positively to the on-going industrial export-
led programmes of the government and to initiate export business.
Furthermore, in the field of policy, governments in developing countries must host a
variety of industry fairs and subsidise international entrepreneurs who are willing to
participate in such events. Especially by hosting the event locally, the cost will be low
to attracting non-exporting firms to participate. The reason for this is that, findings from
the study indicate that some of the non-exporting firms perceived that they did not have
the wherewithal to participate in trade fairs. Some also perceived attendance at trade
fairs as being appropriate only for large businesses. The government must encourage
such initiatives because it would open up opportunities for wholly indigenous firms,
enabling them to showcase what they do, to interact with foreign business people, and
to form various alliances. The importance of this recommendation is reinforced by the
six critical incidents which emerged from the exporters’ accounts as causing export
business initiation; contact established via trade fair participation was the highest ranked
of these. Currently, most of these trade shows take place overseas based on the
interviews. So the government of Ghana must plan to subsidise participation in trade
fair event by its own firms.
8.4.3 Contribution to Theory & Future Research
The findings from the study have stimulated discussion of some basic extant concepts in
this research field. For instance, the results do not wholly support the widely accepted
contention that the stage theory (Johanson & Vahlne, 1977, Chetty, 1999) of
internationalisation represents a fully valid predictor of the type of market the small
and/or medium-sized firm will enter once a decision is made to initiate export business.
For instance, in this study, ‘psychic distance’ did not appear to be significant (i.e.
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neither the critical incidents nor the influential factors); rather, the firms exported to
where there were ready buyers and in some cases where a network party lived or where
foreign orientation had occurred. Therefore, future researchers must be careful when
applying this theory to explain the export behaviour of SMEs from different geographic
contexts (e.g. Ghana).
The study has also stimulated debate regarding the assumptions from both the RBV
(Barney, 1991) and the stage theory, which argue that the export development of a firm
is: (1) achieved by its own individual efforts (e.g. the process of resource mobilisation
and development for export) and (2) is also explained mainly by its internal capacity
factors. This confirms the need for future researchers to be cautious when applying
either stage theory or the RBV theory to an explanation of the small and medium-sized
export firm’s behaviour in a developing country like Ghana. The reason here is that
firms from this part of the world are heavily resource constrained, and any export
success they achieve can only be understood in detail only when it is considered in the
light of networking ties and contingency factors. This situation may differ from similar
firms in the advanced countries, which may feel confident in proactively seeking export
business because, in sharp contrast to their counterparts in Ghana, they may already
possess the necessary internal resource (Leonidou et al., 2007; Williams, 2008)
capacity.
As none of the theoretical frameworks used in the thesis is without weaknesses, coupled
with the fact that the event under study appeared complex, dynamic and interactive,
integrating the 5 theories offset the weaknesses inherent in one or the other. Moreover,
the proposed integrated framework arguably has more potential to explain this complex
phenomenon than a single framework. In particular, application of the network theory
293

and the contingency theory in the thesis resolves the weaknesses of the RBV and the
stage theory, making the examination provided by the thesis more robust.
With regard to extending the current thesis, the generalisation of the findings could be
widened if the study’s framework were to be replicated in similar SME manufacturing
sub-sectors in Ghana as well as in similar developing countries. In this case, the revised
framework (Chapter 6, Figure 6.6) could serve as a first step and as a theoretical basis
for such a study. On the basis of the qualitative responses, it might be suggested that the
relative differences and importance found among the factors could be tested in the
future studies using statistical tests. In addition, similar future work could repeat the
method applied here in other sectors (e.g. those of machinery, metal, furniture), in order
to ascertain whether the same critical incidents were evident.
8.4.4 Limitations of the Study
Notwithstanding the contribution of the thesis, the following limitations must be
highlighted. Although the variables used in some parts of the study (e.g. Chapter 6)
were operationalised in the light of previous studies, it should be indicated that in some
cases they do not measure the specific resource variable or the aptitude of a firm in
terms of facilitating export behaviour. These measures are proxies. For example, the
aggregate full-time workers’ education level measures the average level of the last
school attended. This proxy excludes other measures such as: ambition, motivation,
perseverance, enthusiasm and networking, which a person gains from formal education.
This must be taken into consideration when interpreting the results.
In addition, the results were based on SMEs from the manufacturing sectors, and so it is
not known whether similar firms from the service sectors in Ghana would manifest the
294

same behaviour. Therefore, this must also be taken into account when interpreting the
results. Furthermore, the critical incident studies were limited to the garments and
textiles sub-sector. As a result, given the circumstances of the case studies, the study
indicates the critical incidents the export behaviour of SMEs in this sub-sector in Ghana
even though other manufacturing SMEs from Ghana can be said to share similar
characteristics. Moreover, the data set upon which the study draws is based on the
context of one country.
8.5 CONCLUDING REMARKS
The major contribution of the thesis is the development and testing of an integrated
theoretical framework from the literature review to explain the export behaviour of
small owner-manager firms from Ghana. The use of evidence from Ghana (e.g. a non-
US or European context) to validate the proposed integrated theoretical framework
represents a significant contribution to the field by answering the call (e.g. Sousa et al.,
2008) to validate extant findings in the field using evidence from Africa. Consequently,
the results contribute to the literature on the export behaviour of SMEs in developing
countries. The study makes an additional contribution through shedding light not only
on export behaviour, which has already received some attention in the SME literature,
but simultaneously on non-exporting SMEs behaviour: an area in which there has been
very little research. In addition, the new insights from Ghana provided by this thesis on
the international entrepreneurship phenomenon (e.g. Chapter 6) will serve as important
guidelines in the current debate within the SME internationalisation literature.
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324

10. APPENDICES
Appendix A: Previous Application of the Stage Theory of SME
Internationalisation
Author Variable Researched Methodology Major Findings
Brush et al. (2002) Firm size, firm’s age,
previous international
experience
Brouthers et al.
(2009)
Specific market
knowledge, scope of
internationalisation,
firm size, firm age
Svante et al. (2004) CEO’ s age, firm’s
size and age
Rhee & Cheng
(2002)
Continue on next page
Foreign market
uncertainty,
organisational slack,
and resource
recoverability
Data collection:
questionnaire survey;
Sample size: random
sample of 284 SMEs;
Country: USA;
industry: industrial
technology sectors
Data collection:
questionnaire survey;
Sample size: random
sample of 119 SMEs
– Greece & 88 SMEs
– Caribbean; Country:
Greece & the
Caribbean; industry:
multi- industries
(manufacturing
sectors)
Data collection:
questionnaire survey;
Sample size: random
sample of 135 SMEs;
Country: Sweden;
industry: multiindustries
(manufacturing
sectors)
Data collection:
questionnaire
survey; Sample
size: random sample
of 61 firms;
Country: South
Korea; industry:
multi- industries
(manufacturing
sectors)
325
Firm size significantly
impacts on scope of
internationalisation,
but not firm’s age and
previous international
experience.
Firm size & specific
market concentration,
significantly impact on
SMEs’ export
performance, but not
age and scope of
internationalisation.
CEO’s age, firm’s size
and firm age do not
predict the probability
of exporting, but of
these factors, while
firm’s age predicts its
export performance,
the CEO’s age is
negative, and
significant.
Foreign market
uncertainty
positively impacts
on incremental
internationalisation,
but organisational
slack & resource
recoverability
negatively impact on
incremental
internationalisation.

Appendix A Continued
Chatty (1999) Psychic and
geographic distance,
incremental
internationalisation,
decision maker’s
previous experience
and perception of the
market
Rhee & Cheng (2002) Foreign market
uncertainty,
organisational slack,
and resource
recoverability
Wolf & Timothy (2000)
Firm size, export
intensity, competitive
patterns
Williams (2008) Gradualism (step-by
step) versus sporadic
exporting; firm size &
export propensity.
Continue on next page
326
Data collection:
interviews;
Sample size: 5 Case
firms;
Country: New
Zealand; industry:
Apparel
(manufacturing)
Data collection:
questionnaire survey;
Sample size: random
sample of 61 firms;
Country: South
Korea; industry:
multi- industries
(manufacturing
sectors)
Data collection: mail
questionnaire survey;
Sample size: random
sample of 157 SMEs;
Country: USA;
industry; n/a
Data collection
method: face-to-face
semi-structured
interviews/ mixed
method; Sample size:
44 firms; Country:
Jamaica; Industry:
Manufacturing and
Agriculture
Incremental
internationalisation,
psychic and
geographic distance
drive foreign market
selection, high
exporters possess
positive perception of
the environment in
contrast to low
exporters; previous
international
experience
determines export
involvement.
Foreign market
uncertainty positively
impacts on
incremental
internationalisation,
but organisational
slack & resource
recoverability
negatively impact on
incremental
internationalisation.
Export intensity of the
very small firm is not
different from the
medium and larger
firms and that there is
no significant difference
between size or
resource-based and
export competitive
pattern of small firms
Export development
pattern followed
systematic planning
as opposed to a
proactive response to
fortuitous events;
firm size significantly
differentiated whether
a firm will export or
not.

Appendix A Continued
Sullivan & Bayliss
(1990)
Whether perception
of managers about
obstacles and catalyst,
internationalisation
differed among firms
in different
internationalisation
scope in Austria,
Finland, Sweden and
Germany
Gemser et al. (2004) Network and
incremental
internationalisation
Calof & Viviers
(1995)
Continue on the next page
Perception of risk,
benefits and cost of
exporting
327
Data collection:
convenient mail
questionnaire survey;
Sample size: nonrandom
sample of 62
firms; Country:
Austria (4), Finland
(20), Sweden (20) &
Germany (20);
industry; forest
products
(manufacturing)
Data collection: indepth
interviews;
Sample size: 12 case
firms; Country:
Netherlands;
industry;
Mechanical
engineering and
computer software
(manufacturing)
Data collection: desk
research plus
questionnaire survey;
Sample size: random
sample of 172 SMEs;
Country: South
Africa; industry;
multi-sector
Managers’ objective
and experiential
knowledge brought
about
internationalisation,
but there was a lack
of support for the
psychic distance
logic.
Two-thirds of the
case-firms prefer
cooperative
internationalisation
via relational
contracting to solo
internationalisation
due to resource
constraints; also
majority of the firms
use the step-wise
approach in their
internationalisation
trajectory and
increased their
commitment to
internationalisation
over time
The higher the
perceived risk the
lower the export
intensity of the South
African firm,
indicating the
generalisability of the
stage model to the
South African
context.

Appendix A continued
Bell (1995) Initial market selection,
entry decision, their
internationalisation
process and export
barriers
Hall & Cook (2009) Firm size and age,
CEO’s education, years
of business experience,
previous experience in
an export firm,
previous experience
abroad and foreign
language proficiency
328
Data collection: mail
questionnaire survey
plus 24 case
interviews; Sample
size: random sample of
98 SMEs; Country:
Finland, Ireland &
Norway; industry:
Computer Software
Data collection: faceto-
face survey,
questionnaire survey;
Sample size: random
sample of 74 SMEs;
Country: UK; industry:
Software & food
companies
Hall & Tu (2004) Firm size & age Data collection:
FAME database;
Sample size: 42,721;
Country: UK; industry:
19 multi-sectors
Hall & Tu (2003) Firm’s & age, volume
of resources,
ownership structure
Continue on the next page
Data collection: from
the BVCA’s Directory
of Members, 2000,
database; Sample size:
124; Country: UK;
industry: Venture
capital firms
Psychic distant does
account for firms’
initial market selection
and subsequent
expansion into other
markets, but they are
influenced by
domestic and foreign
networks, targeting
niche market and
industry trends.
CEO’s previous
abroad experience &
level of education
predict export
propensity, but CEO’s
business experience
and previous
experience in
exporting firm do not.
Moreover, firm’s age,
& size do not predict
the propensity;
experience living
abroad and foreign
language proficiency
affect export
propensity
Firm’s size negatively
affects export
performance, but
positively affects
export propensity;
firm’s age predicts
export propensity, but
not on export sales
ratios.
Size predicts the
decision to invest
abroad, but ownership
structure, firm’s age
and volume of
resources do not
predict the decision to
invest abroad.

Appendix A Continued
Moen & Servais,
(2002)
Whether gradualism
can be found in: (1)
the type of
distribution used; (2)
the distance to the
market served; (3) the
development of the
market served; (4) the
development towards
global orientation and
the export intensity of
the firm
Brouthers et al., (2009) Specific market
knowledge over time
McNaughton, (2003) Firm’s age,
proprietary rights,
knowledge intensive
products
Source: Compiled from Studies in Appendix A
Data collection
method Survey;
Sample size: 677
SMEs - Norway, 335,
France, 70, Denmark,
272; Countries:
Norway, France,
Denmark; Industry:
All sectors
Data collection
method: mail survey;
Sample size: random
selection of 202 SMEs
– 119 from Greece &
83 from the Caribbean;
Countries: Greece &
the Caribbean;
Industry: multiindustry
Data collection
method: mail survey;
Sample size: 75 firms;
County: Canada:
Industry:
Manufacturing
329
Consistently in all
three countries no link
was found between the
firm’s year of
foundation and export
intensity; no
gradualism was found
with regard to the
global orientation, the
distribution channel
used, the geographical
market distance, the
development of the
market served thereby
challenging the
gradualism thesis in
the stage model; it was
also found that firms
that leapfrogged the
stages outperformed
those that started later
after
establishment.
their
Also the same across
the countries, small
firms that concentrate
on a few markets
develop knowledge
and build networks,
these being more
successful in the
markets than those
that did not
Firm’s age was
positively related to
the number of
geographic markets;
firm size was
negatively related to
the number of
geographic markets,
but this was not
significant; the number
of markets served was
positively associated
with knowledge
intensive products.

Appendix B: Previous Application of Network Theory on SMEs Internationalisation
Author Variable Examined Methodology Major Findings
Gemser et al., (2004) Formal and informal
networks relationships
Coviello & Munro
(1997)
Formal and informal
network relationships
& the stage model of
internationalisation
Boojihawon, (2007) Personal & interorganisational
ties
Continued on next page
Data Collection
Method: in-depth
interview; Sample
size: 12 case
companies; Country:
The Netherlands;
Industry:
manufacturing-
mechanical
engineering &
Computer Software
Data collection
method: in-depth
interviews plus
documents and
archival records’
analyses; Sample size:
Four case companies;
Country: New
Zealand; Industry:
manufacturing
software industry
-
Data collection
method: in-depth
interviews; Sample
size: four case-firms;
Country: UK;
Industry: Service –
advertising agencies
330
Two-thirds of the
sample prefer cooperation
with actors
in
internationalisation
the
process – this
preference being
greater than if they
were acting alone; the
personal network of
the CEO of regional &
national institutions,
customers & suppliers
- including education
institutions - were
found to highly
facilitate the
internationalisation
process of small firms
Network model when
integrated with the
stage models
facilitates a better
understanding of
SMEs’ initial market
selection, entry modes
and later export market
expansion
Personal and interorganisational
networks influence the
peace, pattern and
direction of SME
internationalisation

Appendix B Continue
Ruzzier & Antoncic,
(2007)
Entrepreneur’s
frequency of contacts;
network with fellow
business people; the
size of the network
(i.e., number of people
and/or firms in the
network system)
McAuley (1999) Triggers of export
involvement and
determinants of rapid
internationalisation
Coviello & Munro,
(1995)
Continued on the next page
331
Data collection
method: mail survey
questionnaire; Sample
size: a random
selection of 161 SMEs;
Country: Slovenia;
Industry:
Manufacturing
Data collection: mailed
survey, followed by
interviews; sample
size: 15 micro
businesses; country:
Scotland Industry: Arts
& Crafts
Network relationships Data collection
method: in-depth
interview followed by
mail survey
questionnaire; Sample
size: 4 case firms plus
25 mail survey firms;
Country: New Zealand;
Industry:
manufacturing -
software
Frequency of contact
with network (i.e.,
chamber of commerce,
professional
institutions
government
&
institutions) correlate
positively with SMEs’
degree
internationalisation;
of
ties with people in
business predicted the
likelihood of becoming
an exporter and
increases the degree of
internationalisation; the
size of the network
predicted higher degree
of internationalisation
only for a mediumsized
firm, but not for
the small firms.
Trade fairs, network
contacts, advertisement
and unsolicited orders
triggered initial export
decision; additionally,
the nature of a product,
the owner-manager’s
personality attributes,
industry features &
cognitive qualities
(e.g., drive, vision,
ambition)
rapid
facilitated
internationalisation
Network ties facilitate
the pace and export
development of the
firms; the survey
results supported the
findings of the
interviews concerning
the initial market
selection and the entry
modes used by the
firms, these being
triggered through
opportunities presented
by the formal and
informal networks.

Appendix B Continued
Chetty & Holm, (2000) Formal & informal
network relationships
Gorman & Evers,
(2008)
Rutashobya &
Jaensson, (2004)
Formal & informal
networks relationships
Formal & Informal
networks relationships
Meyer & Skak, 2002 Formal & Informal
networks relationships
Continued on the next page
Data collection
method: structured
interview in 1992 &
1995 followed by
direct observations;
Sample size: four case
firms; Country: New
Zealand; Industry:
manufacturing
Data collection
methods: personal
interview followed by
telephone interviews;
Sample size: five-casefirms;
Country:
Ireland;
Aquaculture
Industry:
Data collection
method: personal
interview followed by
survey; Sample size:
four case firms plus a
25 random selection of
survey firms; Country:
Tanzania; Industry:
Manufacturing – small
handicraft firms
Data collection
method: survey follow
by case data; Sample
size: 62 firms ;
Country: Denmark &
Austria; Industry: n/a
Network aids firms to
gain international
market knowledge; this
also enables resource
constraint firms to
penetrate international
markets via the
resources of the
network partners.
Social relationships
offer critical
information about
export market
opportunities; the
network relationship
diminishes the role of
psychic distance in
export
development.
market
Network with
suppliers, customer,
family, friend and trade
associations facilitate
high export market
selection
modes
and entry
Network relationships
predict the choice of
market selection; it
also offers country
specific knowledge in
the export market;
internationalisation of
SMEs’ development
co-evolves with
network ties.
Page 332

Appendix B Continued
Chetty & Agndal
(2007)
Network relationships
and SMEs international
market selection / entry
modes
Data collection
method: interview
followed by document
analysis; Sample size:
20 case firms: 10 from
Sweden & another 10
from Denmark;
Country: Sweden &
Denmark; Industry:
manufacturing
Source: Compiled and Synthesised from Studies in Appendix B
Network efficacy and
serendipity influence
SMEs’
internationalisation,
modes and choice of
market selection.
Page 333

Appendix C: Previous Application of RBV on SME Internationalisation
Author Variable examined Sample & Location Major Findings
Toni & Nassimbeni,
(2001)
Firm size, firm age,
HRM practices and
inter-organisational
relationships
Ibeh (2003a) Firm size, firm age,
educational level of the
entrepreneur,
entrepreneur’s ability
to develop new market,
adopting innovation,
and technologies,
abilities in developing
channel links
Continue on next page
Data collection
method: survey
questionnaire, Sample
size: random sample of
77 exporters & 88 nonexporters
(SMEs);
Country: Italy;
Industry:
manufacturing - woodfurnishing,
electronics
& mechanics
Data collection
method: survey
questionnaire, followed
by in-depth interviews;
Sample size: 78 SMEs
consisting of 34
exporters & 44 non-
exporters; Country:
Nigeria; Industry:
manufacturing -
textiles & clothing,
footwear & leather;
food processing; plastic
& furniture
Firm size positively
correlates to the
propensity to export;
firm age, horizontal
and vertical
relationship status of a
firm positively
correlate with export
choice; HRM practices
such as workforce
specialisation,
incentives for staff and
training do not
discriminate between
exporting or not
exporting.
No relationship was
found between firm
size and export
performance; firm age
and the education
level of the ownermanager
do not
influence export
performance either;
however, firm
competencies such as,
the adoption of
innovative technology,
foreign market
information searches
& managing channel
relationships impact
positively on the
firm’s export
performance.
Page 334

Appendix C Continued
Manolova et al.
(2002
Differences in
international business
skills, international
orientations,
perception of the
environment &
demographic
characteristics
between
internationalised and
non-internationalised
firms
Lages et al. (2009) Relationship between
organisational
learning capabilities,
relationship building
capabilities and
quality
capabilities/export
performance
Continue on the next page
Data collection: mail
survey questionnaire;
Sample size: 76 firms
in phase 1 in 1995 &
208 in 1996 for phase
2; Country: USA
Industry:
manufacturing -
technology
Data collection
methods: mail survey
questionnaire;
Sample size: random
sample of 419 firms;
Country: Portugal;
Industry:
manufacturing
International
orientation of ownermanagers
did vary
between
internationalised and
non-internationalised
firms; demographic
factors (e.g., firm age
& firm size) did not
distinguish between
international and the
non-international
firms; international
business skill and the
perception of the
external environment
differed significantly
between the
exporting and the
non-exporting SMEs.
Relationship
capabilities
significantly predict
product innovation,
product quality and
export performance;
product quality
capability
significantly predicts
export performance
of SMEs
Page 335

Appendix C Continued
Ibeh & Wheeler,
(2005)
Dhanaraji & Beamish,
2002)
Bloodgood et al.
(1996)
Continue on the next page
General resource
related factors of
export performance
Firm size, technology
& entrepreneurial spirit
Innovation, firm size,
international work
experience,
international schooling
Data collection
method: the study
reviews and
synthesises extant
empirical works about
predictors of UK
SME’s export
performance; it uses
the resource-based
framework as the main
theoretical basis for
identifying the
variables; the reviews
span from 1990 –
2003.
Data collective
method: survey
questionnaire; Sample
size: 157 SMEs
consisting of 87 from
Canada & 70 from US;
Country: Canada &
US; Industry:
manufacturing
Data collection
method: n/a; Sample
sized: 61 new US
Venture Capital Firms;
Country: US; Industry:
multi-industry
Top management
international
experience &
orientation; physical,
financial,
organisational
resources (export
planning behaviour,
export marketing
research, product
innovation etc. )
relational resources
(managing
relationships,
leveraging external
assets from allies in the
firm’s value chain and
cluster relations)
predict export
performance
Firm’s size predicts
export intensity for
both countries;
enterprise or
entrepreneurial spirit
predicts export
intensity for Canadian
firms, but not for US
sample; technological
intensity predicts
export intensity for US
sample and not for
Canada.
International work
experience, large firm
size strongly predicts
high scope of
internationalisation, but
not foreign schooling;
innovation predicts
export intensity.
Page 336

Appendix C Continued
Kaleka, (2002) Experiential
knowledge, scale of
operation, financial and
physical resources,
informational search
capabilities, customer
relationship building,
product development
capabilities and
supplier relationship
building capabilities
Reuber & Fischer,
(2002)
Reuber & Fischer
(1997)
Continued on the next page
Firm age, foreign sales’
growth, behaviour
integration (i.e.,
interaction and joint
decision making of
management
Firm age, firm size,
strategic partners delay
or facilitation of export
entry and international
experience of the
entrepreneur
Data collection
method: mail survey
questionnaire; Sample
size: random selection
of 202 exporting
SMEs; Country: UK;
Industry:
manufacturing
Data collection
method: research
assistants administered
survey; Sample size: 90
SMEs from the
software industry & 97
from the food
processing industry;
Country: Canada;
Industry: software
products
processing
& food
Data collection
method: research
assistants administered
survey;
Sample size: 49 SMEs;
Country: Canada;
Industry:
products
software
Physical resources,
supplier and customer
relationship
capabilities positively
impact on cost
advantage in export
market; financial
resources, information
capabilities & customer
relationship building
capabilities impact
positively on service
advantage in export
market; physical
resources, economies
of scale, product
development and
customer relationship
building capabilities
also positively impact
on product advantage
in the export market
The behaviour
integration of the top
management team
positively predicts
foreign sales’ growth;
firm age was
negatively related to
overall foreign sales
growth.
International
experience of
management team
greatly predicts the
degree of
internationalisation and
is moderated by
strategic foreign
partners and such
behaviour delay less in
entering international
market; firm size and
age do not predict
export intensity.
Page 337

Appendix C Continued
Iben, (2004) Entrepreneurial
orientation, –
innovativeness,
proactiveness and risk
taking behaviour
McDougall et al.
(1994),
Continued on the next page
General resources and
competencies of the
international & small
new venture firm
Data collection
method: research
assistants administered
survey follow by
interview; Sample
size:78 SMEs Country:
Nigeria; Industry:
multi-industries in the
manufacturing sector
Data collection
method: personal &
telephone interviews
plus document
analysis; Sample size:
24 case studies of
international new
venture firms; Country:
a cross- country study
with firms from North
America, South
America, Asia, the
Middle East & the
South Pacific; Industry:
manufacturing
Owners-managers
with
entrepreneurial
high
orientation are more
likely to achieve
higher levels of export
performance
experienced,
internationally
;
oriented and
connected managerial
staff were positively
associated with high
export behaviour
Cognitive abilities of
the owner-manager
and/ or his human
capital attributes,
network ties of the
owner-manager were
dominant over
environmental factors
in predicting the
successful behaviour
of new venture
internationalisation
Page 338

Appendix C Continued
Westhead et al. (2001) Entrepreneur age,
entrepreneurs’ parents
business history, male
entrepreneurs,
entrepreneur education
(undergraduate &
graduate degree),
previous managerial
experience in similar
start ups, SMEs with
partnership/ownership
structure, entrepreneurs
who use external
professional advisors,
previous exporting
experience, previous
high export sales ratio,
entrepreneurs’ previous
financial background;
owners with denser
information & contacts
networks
Hutchinson et al.
(2006)
Owner-managers’
knowledge, experience
and networks, attitudes,
perceptions and
personality
Data collection
method: mail survey:
Sample size: 744
SMEs in 1990/19 &
116 SMEs in 1997;
Country: UK;
Industry: service,
manufacturing and
construction
Data collection
method: face-to-face
semi-structured
personal interview;
Sample size: 9 multicase
small firms;
Country: UK;
Industry: retailing
Source: Compiled & Synthesised from Studies in Appendix C
Older entrepreneurs,
entrepreneurs with
specific industry
known-how, previous
exporting experience,
owners with denser
information and
network ties are more
likely to export; ability
to secure financial
capital did not predict
the likelihood of
exporting; specific
industry known-how
was associated with a
high export sales ratio;
previous exporting
experience did not
predict a high export
sales ratio;
Overseas experience,
ability to network,
both formally and
informally impact
positively on
internationalisation
development; foreign
travelling experience
and acquired knowhow
predict the
propensity of export;
owner-manager’s
subjective features
such as personality,
drive, vision, ambition,
attitude and ability to
take risks also impact
positively on the
choice of export & the
pace of international
expansion
Page 339

Appendix D: Sample Studies on the Attributes of the International Entrepreneurship
Antecedents Source & Purpose of study
Alertness to profitable resource combinations to
cease opportunities in foreign markets; previous
international experience – working and/or living
abroad; previous international education;
international business and personal networks
International product mix; international network
capabilities; international personal &
psychological characteristics of owner-manager
and industry factors
Global vision; successful international business
networks; unique product/service attributes;
unique intangible assets and/or tacit knowledge;
innovative culture; worldwide coordination of
R&D, marketing, procurement, production,
distribution and sales
Continued on next page
Examines the profiles of founders of successful
international new venture firms which emerged
out of 24 case companies (McDougall et al.,
1994)
Examines the key influences of instant
internationalisation of micro enterprises which
emerged out 15 case firms (McAuley, 1999).
Examines the characteristics of successful global
start-ups based on 12 case firms and their
founders (Oviatt & McDougall, 1995)
Page 340

Appendix D Continued
International market orientation - closeness to the
foreign customer posture; international learning
orientation – international market intelligence
about opportunities, risks and competition;
international innovation propensity – the firm’s
proclivity to new ideas in products, service and
the general approach; international risk attitudes
– risk resource commitments and allocation;
international networking orientation – the ability
to acquire resources through formal networks and
other informal means; international motivation -
incentive and rewards allocations to the
organisation towards exploring international
opportunities
New market conditions in many sectors of
economic activity; technological development in
areas of production, transportation and
communication, the increased importance of
global networks and alliances and entrepreneurial
actions of the owner-manager and/or founder
entrepreneurship
Conceptual dimensions emerged out of 120
studies which combined concepts from
organisational theory, strategic management and
marketing as well as another set of 160 studies
which also combined concepts from
international entrepreneurship and
entrepreneurship and international business
literature overall to develop the critical
dimensions of international entrepreneurial
culture (Dimitratos & Plakoyiannaki, 2003)
Examines major antecedents which came out of
the review of 38 major papers concerning the
phenomenon between 1993 – 2003 (Rialp et al.,
2005)
Source: Compiled & Synthesised from Studies in Appendix D
Page 341

Appendix E: Previous Application of the International Entrepreneurship on SME
Internationalisation
Author Variable Researched Methodology Major Findings
McDougall et al.,
(1994)
Knight & Cavusgil,
(2004)
Continued on next page
Antecedents of
international new
venture firms
Innovative culture,
knowledge &
capability
Data collection
method: document
analysis, personal
interviews & telephone
interviews; Sample
size: 24 case firms;
Country: multicountries;
Industries:
multi-industries –
service, aquaculture &
manufacturing
Data collection
method: mail survey;
Sample size: random
sample of 203 firms;
Country: USA;
Industry:
manufacturing - multisector
Founder’s personality
and psychological
factors coordinate
resources across
nations; access to
superior network &
information;
routines for managing
different workforces in
different countries, for
coordinating resources
located in different
countries & for
targeting customers in
many countries at the
same time;
additionally, the use of
alternative governance
structures to own assets
and manage
businesses highly
predict the behaviour
of new venture firms.
International marketing
orientation, global
technological
competence, unique
product development
attributes, quality focus
culture & leveraging
foreign distributor
competence engender
development & success
of international new
venture firms (INV).
Page 342

Appendix E Continued
Knight, (2001) International
orientation –
international
preparation, strategic
competence &
technology acquisition
McDougall et al.
(2003)
Whether
entrepreneurial team
experience, strategy &
industry structure differ
between international
new venture firms and
domestic new venture
firms
Autio et al. (2000) International sales
growth, age at entry,
knowledge intensity,
limitability
Continued on the next page
Data collection
method: in-depth
interview follow by
mail survey
questionnaire; Sample
size: 23 different
individuals –
academics, trade
experts, consultants &
practitioners followed
by a random sample of
268 owner-managed
firms; Country: USA ;
Industry:
manufacturing – multisector
Data collection
method: secondary
data set from public
data via quantitative
methods; Sample size:
214 firms; Country:
USA; Industry: multiindustry
Data collection
method: longitudinal
data via mail survey in
1993 plus telephone
interview in 1997;
Sample size: 77 firms
in 1993 & 59 in 1997;
Country: Finland;
Industry:
Manufacturing –
electronic industry
Strategic competence
& international
preparation behaviour
significantly predict
international
performance of
INVEs, but the link
between technology
acquisition and
international
performance was
unclear
International new
venture firms differed
from domestic new
venture firms as
regards ownermanager’s
aggressiveness,
product innovation,
quality, service
marketing behaviour,
multiple channel usage
and globally integrated
sectors; but prior
technical experience
did not differ
significantly between
the two groups.
Firm age negatively
impacts on foreign
sales growth; firm’s
knowledge intensity
impacts significantly
on foreign sales
growth, limitability of
high technology firms
positively impact on
its foreign sales
growth.
Page 343

Appendix E Continued
Wickramasekera &
Bamerry (2003)
Time of
internationalisation,
drivers and difference
between born global
firms and non-born
global international
firms
Zhang et al. (2009) International
entrepreneurial
dimensions -
international learning
experience, marketing,
networking, innovation
and risk taking
capabilities
Continued on the next page
Data collection
methods: mail survey
followed by semistructured
interview;
Sample size: 106 firms;
Country: Australia;
Industry:
manufacturing
Data collection
method: survey
research; Sample size:
148 firms; Country:
China; Industry:
manufacturing
Born global event
happens in long
established firms;
international demand,
hostile domestic
market, international
foreign network are
key drivers of the pace
of
internationalisation of
born global firms;
significant differences
exist between born
global and non-born
global firms regarding:
(a) proportion of
output exported (b)
previous experience in
export firm but (c)
number of foreign
markets served were
more for the non-born
global firms than the
born global firms
International
entrepreneurial firms
had higher means with
all five dimensions
compared to the
traditional exporters;
alternatively, the born
global firms differed
significantly from the
traditional exporters as
regards: international
learning, international
networking and
international
experience capabilities
Page 344

Appendix E Continued
Thai & Chong (2008) General factors which
lead to the born global
phenomenon in
Vietnam
Data collection
method: in-depth
semi-structured
interviews; Sample
size: Four case firms;
Country: Vietnam;
Industry:
Manufacturing
Source: Compiled & Synthesised from Studies in Appendix E
Previous market
knowledge; prior
international network;
unique product; high
technological
innovation; high
entrepreneur
orientations (risk-taking
ability, pro-activeness
and aggressiveness);
firm size did not seem to
matter in early
internationalisation, but
desire for short-term
profit, favourable
foreign demand
conditions and industry
factors predicted the
early
internationalisation
events of the
Vietnamese firms.
Page 345

Appendix F: Previous Application of Integrated Theoretical Framework on SMEs
Internationalisation
Author No. of theories Type of
theories
Coviello & Cox Three Network theory,
(2006)
Resource-based
view &
International
entrepreneurship
Crick & Spence,
(2005)
Continued on the next page
Three Resource-based
view, Network &
the contingency
perspective
Methodology Main findings
Data collection
Method: in-depth
interview; Sample
size: 3 case firms;
Country: New
Zealand; Industry:
Manufacturing
Data collection
method: semistructured
interviews;
Sample size: 12
case firms;
Country: UK;
Industry:
Manufacturing –
high-technology
The nature of
SMEs’ resource
bases cause them
to create network
ties which act as
alternative sources
of resources for
the firms; a strong
link exists between
the three
perspectives and
so no single
theory can fully
account for the
export behaviour
of SMEs
Triggers of the
high-performing
firms include: (1)
network ties (2)
the availability of
internal resource
stocks and (3)
environmental
contingency
events. In
conclusion: “no
single theory can
fully account for
the event of SMEs
internationalisation
but the integrated
model is more
robust”.
Page 346

Appendix F Continued
Coviello &
Martin, (1999)
Jansson &
Sandberg, (2008)
Three FDI, Network &
Stage theory
Two Stage theory &
the Network
theory
McAuley, (1999) Three Foreign direct
investment; stage
& network
theories
Coviello &
Munro, (1997)
Two Network & stage
theory
Source: Complied & Synthesised from Studies in Appendix F
Data collection
method: in-depth
interviews;
Sample size: four
case companies;
Country: New
Zealand;
Industry: Service-
Engineering
consulting
Data collection
method: mail
survey followed
by interviews;
Sample size: 116
survey firms plus
10 case firms;
Country: Sweden;
Industry:
manufacturing
Data collection
method: mail
survey followed
by interviews;
Sample size: 15
micro businesses;
Country:
Scotland;
Industry:
manufacturing –
Arts & Crafts
Data collection
methods: in-depth
interviews:
Sample size: 4
case firms;
Country: New
Zealand;
Industry:
manufacturing –
Computer
software
“Internationalisation
of SMEs could not
be explained by one
framework because
concepts which
reside in the three
frameworks are all
evident in the case
firms and they are
interrelated”
The higher the
network ties the
higher the
international
involvement; unlike
psyche distance,
network ties highly
determined the
choice of market
selection and the
entry mode.
“All the three
theories were
supported, but of
these three models,
the network theory
appears to influence
internationalisation
behaviour more
strongly than the
other two”
“The network
model shapes the
firms’ initial
decisions to
internationalise and
later expansion
especially initial
market selection
and mode of entry,
but the theoretical
integration brings
internal and external
views together
which shows a
richer
understanding of
both theories
regarding SMEs’
internationalisation”
Page 347

Appendix G: Triggers of Export Initiations
Human
resource (3)
Special
managerial
interest/urge (pi)
Utilisation of
special
managerial
talent/skills/time
(pi)
Management
trip overseas (pi)
Domestic
market (5)
Shrinking
domestic market
(re)
Need to reduce
dependence on
the domestic
market (re)
Reducing power
of the domestic
customer (pe)
Unfavourable
state of the
domestic
economy (re)
Favourable
foreign
exchange (re)
Financial (4)
Stagnation in the
domestic
sales/profit (ri)
Potential for
extra sales/profit
(pi)
Potential for
extra growth (pi)
Possession of
financial
competitive
advantage (pi)
Foreign market
(3)
Possession of
exclusive
information
from the foreign
market (pe)
Identification of
opportunities
abroad (pe)
Close physical
proximity in the
foreign market
(re)
16 Internal Stimuli
Production (4)
Accumulation of
unsold stock (ri)
Achievement of
economies of
scale (pi)
Availability of
unutilised
production
capacity (ri)
Smoothing
production of
seasonal
products (ri)
16 External Stimuli
Home
Government (3)
Government
export
incentives (pe)
Ministry of
Trade mission
activities (re)
Encouragement
by the
government
agencies (re)
Research &
development (3)
Possession of
proprietary
technical
knowledge (pi)
Possession of a
unique and
patented product
(pi)
Extending the
life-cycle of
domestic
products (pi)
Foreign
government (2)
Relaxation of
foreign rules in
certain foreign
markets (re)
Reduction of
tariffs/nontariffs
in certain
overseas
countries (re)
Marketing (2)
Possession of
marketing
competitive
advantage (pi)
Ability to easily
adapt marketing
for foreign
markets (pi)
Intermediaries (3)
Encouragement
by trade
association (re)
Encouragement
by financial
institution (re)
Encouragement
by
brokers/agents/
distributors (re)
Keys: ri - reactive internal; pi – proactive internal; pe – proactive external; re - reactive
external factors
Page 348

Appendix G Continued
Competition (4)
Intense domestic
Competition (re)
Initiation of export by
domestic competitor (re)
Entry of a foreign competitor
in the home market (re)
Gaining foreign expertise to
improve domestic
competitiveness (pe)
8 External Stimuli
Customers (2)
Receipts of unsolicited
orders from foreign
customers (re)
Receipts of order after
participating in trade fair
(re)
Miscellaneous (2)
Proximity to international
ports/airports (re)
Patriotic duty of a local firm
(pe)
Keys: ri - reactive internal; pi – proactive internal; pe – proactive external; re - reactive
external factors: Source - Leonidou et al. (2007: 739)
Page 349

Appendix G: Ranked Order of Factors that Trigger Export Initiation
Nature of impact
Very High Impact (5) Potential for extra sales/profit from exporting
Potential for extra growth from exporting
Possession of unique/patented product
Need to reduce dependence on and risk of
domestic market
Receipts of unsolicited orders from
customers
High Impact (7) Special managerial interest/urge
Availability of unutilised production capacity
Saturation/shrinkage of domestic market
Possession of financial competitive
advantage
Achievement of economies of scale
Possession of proprietary technical
knowledge
Identification of better opportunities abroad
Moderate Impact (10) Utilisation of special managerial
talent/skills/time
Stagnation/decline in domestic sales/profit
Smoothing production of seasonal product
Possession of a marketing competitive
advantage
Possession of exclusive information about
foreign markets
Receipt of orders after participating in trade
fairs
Encouragement by industry, trade and other
associations
Encouragement by banks/financial
institutions
Encouragements by brokers,
agents/distributors
Proximity to international ports/airports
Low Impact (9) Accumulation of unsold inventory
Ability to easily adapt marketing for foreign
markets
Favourable foreign exchange rates
Government export assistance/incentives
Ministry of Commerce/Trade mission
activity
Intense domestic competition
Initiation of exports by domestic competitors
Patriotic duty of local firms
Close physical proximity to foreign markets
Continued on the next page
Page 350

Appendix G Continued: Ranked Order of Triggers of Export Initiation Continued
Nature of impact
Very low impact (9) Management trips overseas
Extending life-cycle of domestic products
Possibility of reducing the power of domestic
customers
Unfavourable state of domestic economy
Encouragement by government agencies
Relaxation of foreign rules and regulations in
certain foreign markets
Reduction of tariffs and non-tariffs in certain
overseas countries
Entry of a foreign competitor in the home
market
Gaining foreign expertise to improve
domestic competitiveness
Source: Leonidou et al. (2007: 740)
Page 351

Appendix G Continued: 20 Export Stimuli based Williams (2008)
Export Stimuli & their Category Rank
Internal/proactive stimuli (5)
Potential for extra sales/profit
Need to achieve extra growth for the business
Special managerial urge/interest
Possession of unique product
Possession of unique competitive advantage
Internal/reactive stimuli (4)
Reduce dependence on domestic market
Utilise excess capacity
Decline in domestic sales/profit
Offsetting sales of seasonal product
External/proactive stimuli (4)
Identification of attractive foreign market
Encouragement by external agency
Contact after participating in trade fair
Government assistance/incentive
External/ reactive stimuli (7)
Unsolicited order from foreign customer
Unsolicited order from overseas agent
Competitive pressure from the overseas
market
Unsolicited order from domestic partner with
business overseas
Saturated domestic market
Unsolicited order from social group overseas
Competitor began exporting
Source: Synthesised from Williams (2008: 112)
1
2
3
4
5
7
8
14
15
2
6
12
17
5
7
10
9
11
13
16
Page 352

Appendix H: Perceived Export Barriers by Non-Exporters, based on Leonidou (1995b: 19)
Locus
Area
Home c
Foreign d
Internal Frequency
Rate (%)
Inadequate/untrained export staff
Insufficient production capacity
Lack of managerial personnel/time
Shortage of working capital to finance export
Limited information to locate/analyse foreign
markets
Different product standards/specs abroad
Difficult/slow collection of payment from abroad
Difficult to locate/obtain adequate representation
High risks/costs involved in selling abroad
Inability to offer competitive prices abroad
Inability to offer technical /after-sales service
Lack of /inadequate foreign distribution channels
Problematic transport/high shipping cost
38
33
54
49
56
12
28
45
53
57
15
44
48
Rank
Order
12
13
4
8
3
19
14
10
5
2
18
11
9
External Frequency
Rate (%)
Difficult handling of
documentation/procedures
Lack of governmental
assistance/incentives
Different foreign
consumer habits/attitudes
Difficult to understand
foreign business practices
Existence of
language/communication
problems
Imposition of high
tariff/non-tariffs barriers
Keen competition in
foreign markets
Unfavourable/fluctuating
foreign markets
Restrictions imposed by
foreign rules and
regulations
Keys: a Barriers arising from within the organisation, usually associated with organisational resources or export market strategy
b Problems found in the external environment where the firm operates (either domestically or in foreign markets)
c Barriers identified in the home country where the firm’s manufacturing facilities are located
d Impediments found in foreign market(s) where the firm intends to operate in future
Page 353
23
52
15
25
18
48
71
51
38
Rank
Order
16
6
18
15
17
9
1
7
12

Appendix H Continued, the Non-Exporters’ Perceptions about factors limiting the
decision to export based on Fillis (2002: 917)
Firm and managerial factors limiting decision to export Rank
Not enough production capacity
Too small to start exporting
No time to research new markets
Lack of marketing knowledge
Lack of financial resources
No motivation to export
Lack of personnel
Lack of business experience
Exporting is too risky
No time to conduct research into cultural differences
No time to conduct research into language differences
Unwilling to investigate new markets
No foreign travel experience
External barriers
Sufficient business in the domestic market
Lack of exporting enquiries
Complicated exporting regulations and procedures
Lack of exporting assistance
Lack of government incentives
Lack of foreign channels of distribution
Difficult to communicate with internal customers
Exposure to increased competition
Source: Synthesised from Fillis (2002: 917)
1
2
3
4
5
6
7
8
9
10
10
12
13
1
2
2
4
5
6
7
8
Page 354

Appendix I General Export Barriers: 39 - Export Barriers based on 32 Empirical
Studies between 1960 and 2000
Informational
(4)
Limited
information to
locate/analyse
markets
Problematic
international
data
Challenges in
identifying
foreign
business
opportunities
Difficulties in
contacting
overseas
customers
Logistics (2)
Unavailability
of warehousing
facilities
abroad
Excessive
transportation
and insurance
costs
Functional (4)
Lack of managerial
time to deal with
exports
Inadequate/untrained
staff on export
business
Lack of access to
production capacity
for exports
Lack of working
capital to finance
exports
Promotion ( 1)
Adjusting
promotional
activities
Continued on the next page
24 Internal Barriers
Product (5)
How to develop
new products
for exports
Adapting export
product/style
Meeting export
product quality
standards
Meeting export
packaging/
labelling
Requirements
How to offer
technical
after-sales
service
Price (3)
Offering
satisfactory
prices to
customers
Difficulty in
matching
competitors’
pricing
Granting
credit facilities
to foreign
customers
Distribution (5)
Complexity of
foreign
distribution
channel
Accessing
export
distribution
channel
Obtaining
reliable foreign
representation
Maintaining
control over
foreign middlemen
Difficulty in
supplying
inventory
abroad
Page 355

Appendix I Continued: 39 - Export Barriers based on 32 Empirical Studies between
1960 and 2000 Continued
Procedural (3)
Unfamiliar
exporting
procedures/
paperwork
Problematic
communication
with overseas
customers
Slow collection
of payments
from abroad
Sociocultural
Factors (3)
Unfamiliar
business
practices
Different social
cultural traits
Governmental (2)
Lack of home
government
incentives
Unfavourable home
rules and
regulations
15 External Barriers
Task (2)
Different
foreign
customer habits
Keen
competition in
overseas
markets
Verbal/nonverbal
language
differences
Source: Compiled & Synthesised from Leonidou (2004: 283)
Economic (2)
Poor/deteriorating
economic
conditions abroad
Foreign currency
exchange risk
Foreign (3)
Strict foreign
rules and
regulations
Political
instability in
the foreign
markets
High tariffs &
non-tariff
barriers
Page 356

Appendix I Continued: Rank Order of Export Barriers based on Leonidou (2004: 286)
Nature of impact
Very High Impact (8) Limited information to locate/analyse
markets
Inability to contact overseas customers
Identifying foreign business opportunities
Difficulties in matching competitors’ prices
Excessive transportation/insurance costs
Poor/deteriorating economic conditions
abroad
Political instability in foreign markets
High Impact (8) Offering satisfactory prices to customers
Accessing export distribution channels
Obtaining reliable foreign representation
Granting credit facilities to foreign customers
Unfamiliar exporting
procedures/documentations
Unfavourable home rules and regulations
Foreign currency exchange risks
Strict foreign rules and regulations
Moderate Impact (14) Problematic international market data
Lack of managerial time to deal with exports
Inadequate/untrained personnel for exporting
Shortage of working capital to finance export
Providing technical/after-sales service
Complexity of foreign distribution channel
Adjusting export promotional activities
Problematic communication with overseas
customers
Slow collection of payment from abroad
Lack of home government incentives
Keen competition in overseas markets
High tariff and non-tariff barriers
Unfamiliar foreign business practices
Different socio-cultural traits
Low Impact (3) Meeting exporting product quality
standards/specs
Lack of access to production capacity for
exports
Verbal/non-verbal language differences
Continued on the next page
Page 357

Appendix I Continued: Rank Order of Export Barriers based on Leonidou (2004: 286)
Continued
Nature of impact
Very low impact (6) Developing new products for foreign markets
Adapting export product design/style
Meeting export packaging/labelling
requirements
Maintaining control over foreign middlemen
Difficulties in supplying inventory abroad
Unavailability of warehousing facilities
abroad
Source: Leonidou (2004: 286)
Page 358

Appendix I Continued: Export Barriers of the Craft Small Business based Fillis (2002)
Barrier Percentage of barrier
N=55
Choosing a reliable
16
distributor
Difficulties in meeting 14
competitor’s prices
Promoting the products 14
Trade barriers
10
Inadequate export support 8
services
Communication with foreign 8
customers
Unfair competition from 7.3
foreign businesses
Obtaining information 6
Insufficient market
5
information
Inadequate distribution 4
channel
Source: Fillis (2002: 918)
Rank
Appendix I Continued: Barriers to internationalisation based on Hutchinson et al.
(2009)
Internal export barriers
Lack of management vision
Fear of losing control of the business operation when entering into the export market
Lack of international market knowledge
Difficulty in selling the firm’s brand overseas
Lack of resources
Full concentration in the domestic market
External barriers
Legislation in the foreign market
Exchange rate fluctuation
Cultural differences in the foreign country
Logistic problems in the export market
Lack of government support
Source: Hutchinson et al. (2009)
1
2
2
4
5
5
7
8
9
10
Page 359

Appendix I Continued: Export Barriers based on Neupert et al. (2006)
Internal & External export barriers
Foreign government bureaucracy
Cultural and government differences
International language problems
Problems with representation in foreign market
Problems with export documentation
Problems with product
Inadequate training in export business
Source: Neupert et al. (2006: 541)
Page 360

Appendix I Continued: Export Barriers, based on Tesfom & Lutz’s (2006) Review
Barrier Country Authors
Lack of experience in
exporting
China Li (2004)
Inadequate market
information
South Africa Weaver & Pak (1990)
Inability to identify
Brazil Christensen & Da Rocha
customers in the international
market
(1994)
Difficulty in making
customer contacts and
communication with clients
overseas
Cyprus Kaleka & Katsikeas (1995)
High cost of capital to
finance export
Cyprus Kaleka & Katsikeas (1995)
Credit unworthiness Kenya Collier & Gunning (1999)
Lack of managerial capacity Latin America, LDCs Ibeh (2004)
Product design and
specification problems
Venezuela, Peru, Chile Brooks & Frances (1991)
Fear of facing large firms in
the export market
India Naidu et al. (1997)
Unreliability in the supply of
raw material
Zimbabwe Collier & Gunning (1999)
Aggressive competitors Vietnam Nadvi & Jhouburn (2004)
Country of Origin effects Developing countries Lall (1991), Ford et al.
(1996)
Export documentation and
paperwork
Peru Jones & Jones (2004)
Source: Compiled and Synthesised from Tesfom & Lutz’s (2006: 265-268) review of
previous literature
Page 361

Appendix J: Fieldwork Introductory Letter
Page 362

Appendix K: Exporters’ Interview Guide
Qualitative Interview Guide – the Exporters Section
Introduction
The study concerns your experiences of the critical incidents and factors that trigger your
export initiations and that facilitate your ability to deliver the export orders you receive. The
conversations and the stories are in two parts: the first focuses on critical incidents that
trigger export initiation in this firm and the second concerns the critical factors that facilitate
the delivery of the export orders you receive.
Part 1
(1) Tell me a story by describing when, how and why you formed this firm.
(2) How many workers do you have?
(3) Describe when, how and why your firm became involved in the export business up until
today.
(4) How many countries have you and/or do you export to, to date? (e.g., I have exported to China
before, I have exported to the USA, before, I have or do export to Holland etc).
(5) In which years did this occur? (e.g. in the USA, it was in 1995; in Holland in 2001 etc.).
(6) Why those specific countries and years, including this year? (e.g., because Holland is
close to Ghana, because that country shares similar psychological characteristics just like
Ghana, because the UK is closer to Ghana, or because my buyer lives there or because my
network partners reside there etc. etc. and also it was 1995 (2001, 1999) because my business
was doing well at that time). For example, you said you export, but have you exported to the
UK, US, Italy before?’; ‘You said your first export destination was in the Netherlands, but
how the about Canada, Nigeria, and Norway etc,?; ‘You said the year of your first export was
in ….. (e.g. 1998), but did you also export in 1999, 2000, 2001… 2009?; ‘How and what was
the outcome?
(7) Which specific incidents directly trigger the receipt of export order(s)? In this question, I
want us to explore the extent to which any, all and/or combination the following factors
became the most critical incidents:
The stage theory’s factors: (1) psychological distant (Psychic distant) – defined as events in
terms of the geographical and the psychological closeness between Ghana and the country of
your export destinations and (2) receipts of unsolicited orders – defined as event in terms of
being approach to supply an export order which previously the firm has not be prepared for.
Page 363

The network theory’s factors: (1) event as a result of the influence of formal network
relations (e.g. networking relations with other businesses, industrial associations, foreign
partners/foreign ownership) and (2) event as a result of informal network relations (e.g.
networking relations with family and friends) were explored.
The international entrepreneur theory’s factors: (1) event as a result of international
orientation – previous residence, work and travelling abroad.
Contingency theory’s factors: (1) event as a result of government action.
Part 2
After you have received export orders, to what extent can you recollect, affirm and
confidently describe the following factors as significantly facilitating the capacity of your
forms to deliver its export orders.
The resource-based view factors: (1) financial capital, (2) the quantity of available full-time
employees and the stock of equipment and machinery;
The network theory’s factors: (1) the influence of formal networking relations (e.g.
networking relations with other businesses, industrial associations, foreign partners/foreign
ownership) and (2) informal networking relations (e.g. networking relations with family and
friends);
The international entrepreneur theory’s factors: (1) excessive alertness to profitable
international opportunities, (2) international orientation, (3) international business vision and
(4) international risk-taking behaviour;
The stage theory’s factors: (1) the size of your firm, (2) the age of your firm, (3)
psychological distant and (4) and
Contingency theory’s factors: (1) the influence of sector.
Page 364

Appendix L: Procedure for the Interview
The procedure used in the interview process is outlined as follows. The first procedure
concerns advanced telephone calls to the prospective interviewees from the sample frame.
The calls offered the opportunity to introduce and explain the study in detail to them.
Following these calls, owner-managers who willingly accepted to be part of the study and
who also met the screening criteria set out in the study (Chapters 6 & 7) will give the
directions to their companies’ premises in detail for the interview to be conducted. These
directions then became the map followed to the precise location on the day of the interview.
Furthermore, apart from the introductory call, on the day of the interview, a prospective
interviewee would be called again as a reminder.
Page 365

Appendix M: Profile of the Case studies – the Exporters
Table 1: Profile of the case-companies
Cases/firms
Year of
Formation
First year
of export
Domestic
experience
before
exporting
Export
experience
Ownergender
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
1997 1998 1999 1979 1997 2001 1999 2003 1989 1996 2003 2003 1993 1970 1996 1972 1997 2003
2001 2000 2004 1995 2001 2004 2003 2006 1996 2001 2005 2007 1998 1995 2002 1998 2001 2006
4 2 5 16 4 3 4 3 7 5 2 4 5 25 6 26 4 3
8 9 5 14 8 5 6 3 13 8 4 2 11 14 7 11 8 3
F F M F M F F M M M M F F M F M F F
Firm age 12 11 10 30 12 8 10 6 20 13 6 6 16 39 13 37 12 6
Firm size 17 98 24 88 24 23 22 33 26 16 30 6 22 44 6 17 6 45
Firm type S M S M S S S M S S M S S M S S S M
Entry
mode
Expor
t
Source: from the case studies
Export Export Export Export Export Export Export Export Export Export Export Export Export Expo
rt
Keys: Owner gender F = female, M= male; Firm type S = Small firm, M = medium-sized firm
Page 366
Expor
t
Expor
t
Export

Appendix M Table 1 continued
Cases/firms 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36
Year of
Formation
First year of
export
Domestic
experience
before
exporting
Exporting
Experience
Ownergender
2001 1975 1991 1985 1999 1995 1997 1991 1999 2000 1985 1998 2001 1980 1997 2001 1998 2003
2004 1995 1995 1994 2003 1999 2002 1996 2002 2004 1995 2001 2005 1991 2000 2004 2002 2006
3 20 4 9 4 4 5 5 3 4 10 3 4 11 3 3 4 3
5 14 14 15 6 10 7 13 7 5 14 8 4 18 9 5 7 3
F F F F F F F M F F F F F F F M F F
Firm age 8 34 18 24 10 14 12 18 10 9 24 11 8 29 12 8 11 6
Firm size 16 24 45 23 11 56 6 13 9 19 22 6 16 60 11 85 35 36
Firm type S S M S S M S S S S S S S M S M M M
Entry mode
Export Export Export Export Export Export Export Export Export Export Export Export Export Export Export Export Export Export
Source: synthesised from the case studies
Keys: Owner gender F = female, M = male; Firm type S = Small firm, M = medium-sized firm
Page 367

Mean Calculations:
(1) Mean export experience:
(8+9+5+14+8+5+6+3+13+8+4+2+11+14+7+11+8+3+5+14+14+15+6+10+7+13+7+5+14+8+4+18+9+5+7+3)
=303/36=8.4= 8 years (rounded)
(2) Mean years of domestic experience before export
(4+2+5+16+4+3+4+3+7+5+2+4+5+25+6+26+4+3+3+20+4+9+4+4+5+5+3+4+10+3+4+11+3+3+4+3)=230/36=6.3 = 6 years
(rounded)
(3) Mean age of the firms
(12+11+10+30+12+8+10+6+20+13+6+6+16+39+13+37+12+6+8+34+18+24+10+14+12+18+10+9+24+11+8+29+12+8+11+6)=533/
36=14.8 = 14 years (rounded)
(4) Mean size of the firms
(17+98+24+88+24+23+22+33+26+16+30+6+22+44+6+17+6+45+16+24+45+23+11+56+6+13+9+19+22+6+16+60+11+85+35+36=1
040/36=28.8 = 28 employees (small firm)
Page 368

Appendix M Continued Table 1.1: Descriptive Statistics of the Case-Companies’ (from Table 1 above)
Description Frequency (N=36) Per cent Cumulative
Size
Small
Medium
Owner Gender
Male
Female
Type of ownership
Foreign participation
Wholly local
Firm age
1-5 years
6-10
11-15
16 -20
21 and above
24
12
10
26
1
35
0
14
13
3
6
Source: Synthesised from the exporters’ case-companies
67
33
28
72
3
97
0
39
36
8
17
Page 369
67
100
28
100
3
100
0
39
75
83
100

Appendix M Continued Synthesis of critical incident results
Appendix M: Table 2: Synthesis of cross-case’s critical incidents that trigger export initiation
Case/firm
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
Critical
Incidents
Contacts at Trade
fair
* * * * * * * * * * * * * * * * * *
Contacts via
international
orientation
* * * * * * * * * * * * * *
Contacts &
recommendations
gained via
networking with
family & friends
abroad
* * * * * * * *
Receipts
of unsolicited
order
* * *
Contacts via
having foreign
ownership
*
Winning
Government
award
* * * * *
Source: Synthesised from the cases’ interview transcripts;
Key: * means that the factor is strongly present in that firm
Page 370

Appendix M Table 2: continued
Case/firm
19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36
Critical
Incidents
Contacts at trade
fair
* * * * * * * * * * * * * * * * * *
Contacts via
international
Orientation
* * * * * * * * * * * * * * *
Contacts &
recommendations
gained via
networking with
family & friends
abroad
* * * * * * * * * *
Receipts
of unsolicited
order
Contacts via
having foreign
ownership
*
Winning
Government
award
* * * * * * *
Source: Synthesised from the cases’ interview transcripts
Key: * means that the factor is strongly present in that firm
Page 371

Appendix M Continued: Table 2.1: Summary of Critical Incidents which Triggered Export Initiation
Critical incident Frequency (N=36) Per Cent Cumulative
Contacts at trade
fair’s participation
36 36 36
Contacts via having
international
orientation
29 29 65
Contacts &
recommendations
gained via having
networking with
family
and friends abroad
18 18 83
Receipts of
unsolicited
4 4 87
Wining government
award
12 12 99
Contacts via having
foreign ownership
1 1 100
Total 100 100
Source: the interview transcripts; n.b. percentages are rounded
Page 372

Appendix M Continued: The Critical Factors that Influenced the Capacity of the Firms to meet their Export Orders
Appendix M Continued, Table 3: Synthesis of RBV factors that facilitated export orders’ delivery
Case/firm
Critical
Incidents
Having large
number of
full-time
workers
Having
human capital
of foreign
partners
Having large
factory
buildings
Having stock
of equipments
&
machineries
Having
adequate
financial
capital
Having
skilled
production
workers
Having
workers’
incentive
policy
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
* * * * * * * * * * * * * * * * * *
* * * * * * *
* * * * * * * * * * * * * * * * * *
* * * * * * * * * * * * * * * * * *
* * * * * * * * * * * * * * * *
* * * * *
Source: Synthesised from the cases’ interview transcripts; Key: * means that the factor is strongly present in that firm
*
Page 373

Appendix M Table 3: continued
Case/firm
19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36
Critical
Incidents
Having large
number of fulltime
workers
Having foreign
ownership
* * * * * * * * * * * * * * * * * *
Having large
number of
factory
buildings
* * * * * * *
Having stock of
equipment &
machinery
* * * * * * * * * * * * * * * * * *
Having
financial capital
* * * * * * * * * * * * * * * * * *
Having skilled
production
workers
* * * * * * * * * * * * * * * * * *
Having workers
incentive/human
resource
Policy
* * *
Source: Synthesised from the cases’ interview transcripts
Key: * means that the factor is strongly present in that firm
Page 374

Appendix M Continued, Table 3.1: Summary of RBV factors that facilitate export order delivery
Critical factor Frequency (N=36) Per Cent Cumulative
Having firm size/
large no. of full-time
workers
36 22 22
Having foreign
ownership
1 1 23
Having large factory
building
14 8 31
Having stock of
equipment &
machinery
36 22 53
Having financial
capital
36 22 75
Having skilled
production workers
34 21 96
Having incentive
package for workers/
human resource
Policy
6 4 100
Total 163 100
Source: the interview transcripts; n.b. percentages are rounded
Page 375

Appendix M continued, Table 4: Synthesis of international entrepreneurship factors that facilitate export order delivery
Case/firms
Critical
Incidents
Tying the
long-term
business
growth to
exporting
Having
international
orientation
Having
international
vision at the
start of the
business
Having
international
risk-taking
behaviour
Having a
positive
perception
of the
export
market
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
* * * * * * * * * * * * * * * * * *
* * *
* * * * * * * * * * * * * * * * * *
* * * * * * * * * * * * * * * * * *
* * * * * * * * * * * * * * * * * *
Page 376

Appendix M, Table 4 Continued
Case/firm
19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36
Critical
Incidents
Tying the
long-term
business
growth to
exporting
Having
International
orientation
* * * * * * * * * * * * * *
Having
international
Vision at
start
* * * * * * * * * * * * * * * * * *
Having
international
risk-taking
behaviour
* * * * * * * * * * * * * * * * * *
Having a
positive
perception
of the export
market
* * * * * * * * * * * * * * * * *
Source: Synthesised from the cases’ interview transcripts
Key: * means that the factor is strongly present in that firm
Page 377

Appendix M, Table 4.1: Summary of International entrepreneurship factors that facilitate export order delivery
The Critical factors Frequency (N=36) Per Cent Cumulative
Tying the long-term
business growth to
exporting
33 23 23
Having international
Orientation
3 2 25
Having international
Vision at the start of
the business
36 25 50
Having international
risk-taking behaviour
36 25 75
Having a positive
perception of the
export market
36 25 100
Total 144 100
Source: the interview transcripts; n.b. percentages are rounded
Page 378

Appendix M Continued, Table 5: Synthesis of stage theory’s factors that facilitate export order delivery
Case/firm
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
Critical
Incidents
Proximity to
Market/
Psychic
distant
Firm size * * * * * * * * * * * * * * * * * *
Receipts of
unsolicited
orders
Firm age
Prior
domestic
market
operating
Experience
* * * * * * * * * * * * * * * *
Source: Synthesised from the case studies interview transcripts; Key: * means that the factor is strongly present in that firm
Page 379

Appendix M Table 5 continued
Case/firm
19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36
Critical
Incidents
Proximity to
the export
Market/Psychic
distant
Receipts of
unsolicited
order
Firm size * * * * * * * * * * * * * * * * * *
Firm age
Prior domestic
market
operating
experience
* * * * * * * * * * * * * * * * * *
Source: Synthesised from the cases’ interview transcripts; Key: * means the factor is strongly present in that firm
Page 380

Appendix M Table 5.1: Summary of Stage theory factors that facilitate export order delivery
The Critical factors Frequency (36) Per Cent Cumulative
Proximity to the
export
Market
0 0 0
Receipts of
unsolicited order
0 0 0
Firm size 36 51 51
Firm age 0 0 51
Domestic
market experience
34 49 100
Total 70 100
Source: the interview transcripts; n.b. percentages are rounded
Page 381

Appendix M Continued: Table 6: Synthesis of network theory’s critical factors that facilitate export order delivery
Case/firm
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
Critical
Incidents
Networking
with
industrial
associations
* * * * * * * * * * * * * * * * * *
Networking
with other
business
people
* * * * *
Having
many
networking
ties
* * * * * * * * * * * *
Frequency
of
interaction
with ties
* * * * * * * * * * *
Networking
with friends
and family
abroad
* * * * * * * * * *
Source: Synthesised from the cases’ interview transcripts; Key: * means that the factor is strongly present in that firm
Page 382

Appendix M Table 6 Continued
Case/firm
19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36
Critical
Incidents
Networking
with
industrial
associations
* * * * * * * * * * * * * * * * * *
Networking
with other
business
people
* * * * *
Having
many
network ties
* * * *
* * * * * * * * * * *
Frequency
of
interaction
with ties
* * * * * * * * * * * * * * *
Networking
with friends
and family
abroad
* * * * * * * * * * * *
Source: Synthesised from the cases’ interview transcripts; Key: * means that the factor is strongly present in that firm
Page 383

Appendix M Continued: Table 6.1: Critical Network theory’s factors that facilitate export order delivery
The Critical factors Frequency (N=36) Per Cent Cumulative
Networking with
industrial
Associations
36 30 30
Networking with
other business people
10 8 38
Having many
networking ties
27 22 60
Having frequent
interaction with
networking ties
26 21 81
Networking with
friends and family
abroad
22 19 100
Total 121 100
Source: from the interview transcripts; n.b. percentages are rounded
Page 384

Appendix N: Qualitative Interview Guide – the Non-Exporters’ Section of the Study
Introduction
The study forms part of a broader study which concerns entrepreneurs’ experiences of critical
incidents which trigger export initiations and the actual factors that facilitate the capacity of
the exporting firms to meet their export orders. Although you operate in the same sub-sector
and location, I understand that you do not participate in export business. As a result, I would
like know in this interview whether your business:
Part 1
(1) Has attempted to export before?
(2) Has been called upon by a government ministry, agency or department for a
nomination to be selected to represent Ghana’s garment and textile sub-sector abroad
in connection with export business?
(3) Has received an unsolicited export order before? If yes, in which year (s) and from
which country or countries?
(4) Has experienced or participated in trade fairs or shows, whether here in Ghana and/or
abroad, in connection with export business?
(5) Has advertised its profile/product(s) in any medium – for example, the internet or a
book - in an attempt to export? Or has received an unsolicited order before?
(6) Has had an offer of partnership by an international partner(s) as joint owners of the
firm in an attempt to enter the export market?
(7) And/or have you have lived, travelled and worked abroad, where these can impact on
your opportunity to enter the export market?
Part 2
In any of the above questions where you answer is in the affirmative, I would like you to
tell me how you reacted to any of those incidents. In specific, what made it difficult or
prevented you from seizing and maximising such events and becoming an exporter?
Could it be said that any of the challenges that prevented you from maximising such
opportunities and become an exporter were due to lack of and/or inadequate of:
The resource-based view factors: (1) financial capital, (2) the quantity of available full-time
employees and the stock of equipment and machinery;
The network theory’s factors: (1) the influence of formal networking relations (e.g.
networking relations with other businesses, industrial associations, foreign partners/foreign
ownership) and (2) informal networking relations (e.g. networking relations with family and
friends);
Page 385

The international entrepreneur theory’s factors: (1) excessive alertness to profitable
international opportunities, (2) international orientation, (3) international business vision and
(4) international risk-taking behaviour;
The stage theory’s factors: (1) the size of your firm, (2) the age of your firm, (3)
psychological distant and (4) and
Contingency theory’s factors: (1) the influence of sector.
Part 3: Reasons for non-exporting
Lastly I will also like you to tell me the reasons why you have not considered the export
market, especially after operating more than five years in this domestic market until now.
Page 386

Appendix O, Table 1: Profile of Non-exporting Firms
Cases/firms 1 2 3 4 5 6 7 8 9
10 11 12 13 14 15 16 17 18
Year
Formation
of 1998 1995 2002 1985 1975 1995 1986 1987 1986 1987 1997 1996 1988 1998 2000 1996 1990 1996
Domestic
Industry
9 12 7 15 16 7 16 11 9 14 12 13 14 7 6 7 14 11
experience in
years before
the time of the
interview/firm
age
Owner-gender M F F M F M F F F F F F M M M M F M
Firm size 33
Firm type M
6 6 34 17 9 9 6 8 9 11 17 6 17 9 6 7 17
S S M S S S S S S S S S S S S S S
Source: from the non-exporting case studies
Keys: (1) Ownership gender - F= female & M= male; (2) Firm type - S= Small-sized firm & M= medium- sized firm
Page 387

Appendix O: Table 1 continued
Case-firms 19
20 21 22 23 24 25 26 27 28 29 30 31 32 33
Year
Formation
of 2001 1986 1998 1998 2002 2004 2001 1992 1996 2002 1991 1997 2003 2001 1997
Domestic
industry
8 12 11 11 7 5 8 11 13 7 8 9 6 8 12
experience in
years before
the time of
the
interview/firm
age
Owner-gender M F F F F F F F F F F F F F M
Firm size 6
Firm type S
9 9 7 13 6 6 14 16 6 6 6 22 16 7
S S S S S S S S S S S S S S
Source: synthesised from the case studies
Keys: (1) Ownership gender - F= female & M= male ;( 2) Firm type S= Small- sized firm & M= Medium- sized firm
Page 388

Mean Calculations:
(1) Mean domestic operating experience/firm age at the time of the interview
(9+12+7+15+16+7+16+11+9+14+12+13+14+7+6+7+14+11+8+12+11+11+7+5+8+11+13+7+8+9+6+8+12)=336/33=10.18= 10
years (rounded)
(2) Mean number of full-time employees
(33+6+6+34+17+9+9+6+8+9+11+17+6+17+9+6+7+17+6+9+9+7+13+6+6+14+16+6+6+6+22+16+7)=376/3=11.39 = 11 full-time
employees (rounded)
Appendix O Continued: Table 1.1: Descriptive Statistics of the Non-exporting Case-companies
Description Frequency Per cent Cumulative
Size
Small
Medium
Owner Gender
Male
Female
Firm age
1-5 years
6-10
11-15
16 -20
21 & above
31
2
10
23
1
9
13
2
8
Source: from the non-exporting case-companies
94
6
30
70
3
27
39
6
25
Page 389
94
100
30
100
3
30
69
75
100

Appendix O Continued: Table 2: Experience of critical export incidents since formation
Case/firm
Critical
Incidents
Participation
In trade shows
International
orientation
Networking
with family
and friends
abroad
Unsolicited
order
Having foreign
ownership
Wining
government
Award/
government
selection
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO
YES NO NO NO NO NO YES NO NO NO NO YES NO NO NO NO NO NO
NO YES YES YES NO NO NO NO YES NO NO NO YES NO YES NO NO NO
NO NO NO NO NO NO NO NO NO YES NO NO YES NO NO NO NO NO
NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO
NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO
Page 390

Appendix O, Table 2: continued
Case/firm
Critical
Incidents
Participation in
trade shows
International
orientation
Network with
family &
friends abroad
Unsolicited
order
Foreign
ownership
Winning
Government
award/
Government
selection
19 20 21 22 23 24 25 26 27 28 29 30 31 32 33
NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO
NO NO NO NO NO NO NO NO YES NO NO NO NO NO NO
NO NO YES NO NO NO NO NO NO YES NO NO NO NO NO
NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO
NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO
NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO
Source: Synthesised from the cases’ interview transcripts
Key: ‘YES’ means that that firm said it has experienced that critical incident whilst ‘NO’ means a has not experienced that incident over its operating
experience
Page 391

Appendix O Continued: Table 2.1: Summary of Firms that Said Yes or No to the Critical Incidents in Table 2 Above
The Critical Incidents Number of that said they have experienced Number of firms that said they have not
the incident
incident
Participation in trade fairs
None 33 firms
International orientation
4 firms 29 firms
Having networking with families and friends
abroad
8 firms 25 firms
Receipts of unsolicited order
2 firms 31 firms
Government selection
None 33 firms
Having foreign ownership
Source: summarised from Table 2 above
None 33 firms
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Appendix O Continued: Table 3: Barriers that Prevented 14 Non-exporting firms from maximising the Critical Incidents that came
their way
The Main Barriers Frequency Percentage Cumulative
Lack of entrepreneurship spirit to
spot export opportunities & lack
of export business vision
The perception of having a small
business size
Lack of skilled works, equipment
& machinery
8 44 44
8 44 88
2 12 100
Total 18 100
Source: Analysed & synthesised from the non-exporters interview transcripts
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Appendix O Continued Table 4: General Reasons for not exporting by non-exporters
Case/firm
Nonexport
reasons
Having too
small-size
Lack of
finance
Lack of
machinery
and
equipments
Negative
perception of
the export
market
Sufficient
business in
the domestic
market
No long-term
international
business
growth aim
Lack of
skilled
workers
Lack of
government
support
Negative
perception of
industrial
associations
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
* * * * * * * * * * * * * * * * * *
* * * * * * * * * * * * * * * * * *
* * * * * * * * * * * * * * * * * *
* * * * * * * * * * * * * *
* * * *
* * * *
* * * * * * * * * * * * * *
* * * * * * * * * *
* * * * * * * * * * * * * * *
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Appendix O Table 4 Continued
Case-firms
Nonexport
reasons
Having too
small-size
Lack of
finance
Lack of
machinery
and
equipments
Negative
perception of
the export
market
Sufficient
business in
the domestic
market
No long-term
international
business
growth aim
Lack skilled
workers
Lack of
government
support
Negative
perception
about
industrial
associations
19 20 21 22 23 24 25 26 27 28 29 30 31 32 33
* * * * * * * * * * * * * * *
* * * * * * * * * * * * * *
* * * * * * * * * * * * * * *
* * * * * * * * * * * * * * *
* *
* * * * * * * *
* * * * * * * * * * * *
* * * * * * * * *
* * * * * * * * * * * * * *
Source: synthesised from the non-exporting case-companies – nb. * indicate that, that factor is present in that firm
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Appendix O Continued, Table 4.1 Summary of Generals Reasons for not exporting by the Non-exporting Companies
Reasons for non-
exporting
Frequency (N=33) Per Cent Cumulative
Having too smallsize
33 15 15
Lack of finance 33 15 30
Negative perception
about industrial
associations
Lack of machinery
and equipments
Negative perception
of the export market
29 13 43
33 15 58
29 13 71
Sufficient
business in the
domestic market
6 3 74
No concerned for
long-term business
growth
12 5 79
Lack skilled workers 26 12 91
Lack of business
government support
19 9 100
Total 220 100
Source: Synthesised from Table 3
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APPENDIX P: DEFINITION OF OTHER KEY TERMS
1.1 INTRODUCTION TO THE DEFINITION OF A SMALL FIRM
Varied definitions of SMEs exist from both official and academic sources. Notable
official sources come from the USA, the UK and Europe (i.e. the European
Commission) in general. The official definitions of these countries are often cited
because they are the countries which are most researched, especially with regards to the
SME internationalisation research field and the small business research field in general
(Sousa et al., 2008).
1.2 THE US’ OFFICIAL DEFINITION
The Small Business Administration (SBA) in the USA uses two quantitative measures
to define SME, namely the number of employees and the annual sales revenue. These
two criteria are used to define SMEs in seven main sectors which include: construction,
manufacturing, mining, transportation, wholesale trade, the retail business and selected
services. Table 1 presents a sample of firms of those industries to which the definition
applies.
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Table 1: US’ Classification of Small Business
SIC
Code Industry Annual sales or No. of employees
1521 General building contractor $17m
2311 Fabric apparel manufacturer 500 employees
2511 Wood furniture manufacturer 500 employees
3411 Metal can fabrication 1,000 employees
3571 Electronic computer manufacturer 1,000 employees
4724 Travel agency $0.5m
4212 Local trucking without storage $12.5
5072 Hardware (Wholesale 100 employees
5311 Department store $13.5m
5511 Motor vehicle dealer (new and used) $17m
5641 Children & infants' clothing store $3.5m
5944 Jewellery store $3.5m
7011 Hotel and motel $3.5m
7311 Advertising agency $3.5m
7841 Videotape rental $3.5m
Source: Hatten (1997)
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1.3 BRITAIN’S OFFICIAL DEFINITION
Britain’s official definition is mostly drawn from the Bolton Committee’s definition.
The problem of defining a small business is an old challenge and goes as far back as
1971. In 1971, the Bolton Committee attempted to resolve the challenge and so
formulated two definitions, these being ‘economic’ and ‘statistical’ definitions. On one
hand, the ‘economic’ definition of a small business is one which meets the following
criteria:
• A relatively small market share in the market place;
• Management which is personalised and unstructured as well as being wholly run
by the owners or part owners;
• Flexibility and independence since it does not form part of a large enterprise.
On the other hand, with regard to the statistical definition, a small business will be
defined as such based on the following factors:
• The size of the small firm’s sector and contribution to GDP, employment,
exports, etc;
• Whether or not the small firm sector’s contribution has changed over time;
• The possible application of the statistical definition in a cross-country
comparison for the small firm’s economic contribution.
For example, following the statistical definition, the committee contended that small
firms in the manufacturing sector are those with 200 employees or less, and in the
construction sector – 25 employees or less; in the mining sector – this is 25 or less. In
addition to the number of employees criterion, other criterion are defined in terms of the
annual sales turnover, these being: the retail sector – with a turnover of £50,000 or less;
miscellaneous – with a turnover of £50,000 or less; a service – with a turnover of
£50,000 or less; the motor trade – with a turnover of £100,000 or less; wholesale trade –
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with a turnover of £200,000 or less. However, other measures include those in road
transportation – five vehicles or less - and in catering - excluding multiples and brewery
– managed houses (Bolton Committee, 1971).
Storey (1994) criticises the Bolton committee’s definition (see sub-Section 1.6 below).
As a result of the weaknesses associated with the Bolton’s committee’s definition (sub-
Section 1.6), the UK’s companies Act 1989 issued another definition that matches the
reporting requirements of small and medium-sized firms. The Act also recommends the
following criteria: a firm is said to be a small business if, for the financial year and the
one immediately preceding it, two out of the following three conditions apply:
• Turnover does not exceed £2 million;
• The balance sheet total does not exceed £975,000;
• The average weekly number of employees does not exceed 50.
The Act further separates small business from medium-sized firms, unlike the Bolton
committees’ definition, and also recommends that a firm may be defined as medium-
sized, if for the financial year and the one immediately preceding it, two out of the
following three conditions apply:
• Turnover does not exceed £8 million;
• The balance sheet total does not exceed £3.9 million;
• The average weekly number of employees does not exceed 250.
1.4 EUROPEAN COMMISSION’S DEFINITION
As a result of the challenges associated with the concept of ‘small business’, in 1996 the
European Commission (EC) coined the term SME and recommended a single
definition. The EC divided small firms into three components, namely the micro, the
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small, and the medium-sized enterprises, and applied the following definitions as shown
in Table 2 below.
Table 2: Definition of SME – the European Commission
Criterion Micro firm Small Firm
Medium-sized
Firm
Maximum no. of employees 9 49 249
Maximum annual turnover n/a 7 million euros 40 million euros
Maximum annual balance sheet n/a 5 million euros 27 million euros
Maximum percentage owned by
one, or several enterprises not
satisfying the same criteria n/a 25% 25%
Source: European Commission (1996)
1.5 THE UNIDO’S DEFINITION
The United Nations Industrial Development Organisation (UNIDO) also applies the
number of employees to define SMEs. The organisation distinguishes the definition of a
small business in industrialised countries from those in developing countries. According
to UNIDO, SMEs in industrialised countries consist of the following: large firms – with
500 workers or more; medium-sized firms – with 100 – 499 workers, and small firms
with 99 workers or less. However, for developing countries, SMEs are classified in the
following way: large firms have 100 workers or more; medium-sized firms have 20 – 99
workers, small firms have 5 – 19, and micro-firms have 5 workers or less.
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1.6 ASSESSMENT OF SMEs’ DEFINITION
Although, the above official definitions of SMEs vary, they provide the foundation for
extant definitions on policy, practical and theoretical research. However, these official
definitions are not without criticisms. As can be seen above, several variations exist; for
instance, the Small Business Administration in the US uses only quantitative criteria,
based on two different measures (i.e. the number of employees and annual sales
revenue). In addition, although, the Bolton’s report uses qualitative and quantitative
measures (i.e. economic and statistical), and has too many criteria for different sectors
in the same country. Storey (1994) criticised the Bolton’s (1971) definition because it
regards a small firm as a homogenous entity with no demarcations. In addition, Storey
(1994) further criticised the Bolton’s definition by arguing that the committee assumed
that the management of small firms will always be unstructured and personalised.
Following the weaknesses of the official definitions, coupled with the variations among
them, the ‘definition of the small business’ among academic researchers also vary
depending on a study’s purpose and the country of the study. A sample of how the small
business is defined among researchers is discussed below.
For example, Sousa et al. (2008) reported that from their review of 52 studies on the
export behaviour of SMEs (Table 1.3), it was identified that most researchers applied
different definitions. In this review, the researchers found that for studies in China,
SMEs were conceived as enterprises with less than 3,000 employees. This deviates from
a Swaziland study by Obben & Magagula (2003), who defined a small business as a
firm with 20 employees or less. Further to this, in an Australian study, Philip (1998)
used 10 employees or less to define the very small firm. Hence, form an objective
consideration of previous work; it can be argued that what constitutes a small business
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depends on a number of factors, including: (1) the purpose of the research, (2) the
country of the study, and (3) the industry where the study is conducted.
1.7 DEFINITION OF EXPORTING
Firms which intend to consider international business can do so using various strategies.
These strategies include: exporting, licensing and foreign direct investment (Hutchinson
et al., 2005; Petersen & Welch, 2002). Of the strategies that exist, SMEs are noted for
their export business strategies. By definition, the export business constitutes the
transfer of goods and services across national boundaries, either through direct or
indirect methods (Lee & Brasch, 1978; Hatten, 1997). According to these authors, the
indirect method involves export through representatives, whereas the direct method
involves export directly through foreign customers such as the buyers or the importers.
This study applies the above definition, but while it is specified above that the export
business can be composed of services or merchandise products, only firms that export
merchandise products across the national boundaries of Ghana are captured in this
thesis.
1.8 DEFINITION OF INTERNATIONALISATION
Like the concept of a ‘small business’, there are major variations regarding what
constitutes internationalisation in the literature, with a variety of writers in the field
presenting the concept from different perspectives. Initially, Johnson & Vahlne (1977),
two of the earliest proponents of the concept, defined internationalisation as an outward
movement of individual firms. These authors implied that a firm moves from operating
solely in the domestic market to expanding across its national border, supplying goods
or services to the foreign markets. Johnson & Vahlne’s (1977) idea of
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internationalisation is that it has a unidirectional approach, rather than being a
simultaneous act that involves both buying from and selling to international markets.
In addition, Elango (2000) perceives the internationalisation as the degree to which a
firm operates internationally, while Ruzzier et al. (2006) too define internationalisation
as an outward movement of a firm’s international operations. Thee two definitions (e.g.
Elango, 2000 & Ruzzier et al., 2006) seem similar to that of Johanson & Vahlne (1977).
Other writers argue that a holistic definition of internationalisation must take into a
consideration of both the outward and the inward processes, since the phenomenon is
bi-directional (Etemad & Wright, 1999; Jones, 1999; Rialp & Railp, 2001). This is
clearly a robust approach because while a firm can sell goods or services in the
international market, it may also purchase from international suppliers. Although
inconsistencies in the definitions of internationalisation are recognised, it can be stated
that researchers adapt a definition based on the purpose of their research.
However, a recent argument about the definition of SME internationalisation seems to
shift the focus from whether or not the event is outward or inward or both. The current
argument is that internationalisation phenomena encompass the overall behaviour of the
small business with regard to how it mobilises the resources that are needed for its
outward internationalisation (McDougall et al., 1994; Reuber & Fischer, 1997;
Westhead et al., 2001; Brush et al., 2002; Ibeh, 2003a; 2004; Westhead et al., 2004;
Ibeh, 2005; Ibeh & Wheeler, 2005; Ruzzier et al., 2006).
These researchers imply that SMEs internationalisation can be understood better from
the point of view of how the firm organises the process of assembling and expanding
the essential stock of resources for internationalisation activity. Therefore, while it is
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agreed that the internationalisation of SMEs can be both inward and outward, the thesis
extends the outward dimension of the SMEs’ internationalisation and similarly views
internationalisation as the process of assembling various resource stocks by the SME
towards its internationalisation activity. The outward internationalisation is of particular
focus because it is argued that it offers many micro and macro benefits to countries
compared to import business or inward internationalisation (Ruzzier et al., 2006).
Lastly, it is worthy of note that even though exporting is one of the approaches to a
firm’s internationalisation (sub-Section 1.11.1); in this thesis the two concepts (export
and internationalisation) are used interchangeably. This implies that, for example, SME
internationalisation is commonly referred in the thesis as the same as SME export
behaviour.
1.9 DEFINITION OF RESOURCES
The concept of resources originates from Penrose (1959), who conceptualises firms as a
collection of productive resources that enables them to compete successfully against
other firms. As a result, it is commonly argued that the resource-based view (RBV)
builds on the writings of Penrose (Wernerfelt, 1984; Barney, 1991). The RBV’s
framework remains one of the significant frameworks in SMEs internationalisation
research field (McDougall et al., 1994; Westhead et al., 2001; Rialp et al., 2005;
Ruzzier et al., 2006), with their key argument being that SMEs’ internationalisation
behaviour centres on resource mobilisation and development toward the
internationalisation activity. As a result, the whole argument behind the phenomenon
has become a resource mobilisation oriented one.
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Likewise, with the concepts of a ‘SME’ and ‘exporting’, as discussed above, the
definition of resources also vary from researcher to researcher. For example, Ruzzier et
al. (2006: 97) defines resources as “stocks of available tangible or intangible factors that
are owned or controlled by the organisation and converted into products or services by
using varieties of other resources and [a] co-ordinating mechanism”, and in this study,
the authors’ sub-divide resources into organisational, financial, human and social
capital. In addition, Toulan (2002) views resources as a firm’s stock of assets, and
categorises them into physical, human, organisational and financial capital as well as
technological resources. Dhanaraj & Beamish (2003) also group resources into
organisational or managerial, entrepreneurial and technological categories, while Brush
et al. (2002) group them into human, organisational and financial divisions. In addition,
Barney (1991) defines resources as the immutable, rare and non-substitutable stock of
available assets, tangible or intangible owned by a firm. Therefore, while various
classifications differ, what is seen in the literature is that each author’s, or group of
authors; conceptualisation is also based on the purpose a study seeks to address. This
thesis extends Barney’s (1991) conceptualisation of resources.
However, because Barney indicated that the relationship between his resources
attributes (i.e. rarity, immutable, and non-substitutability etc.) and the performance of a
firm’s is causally ambiguous, researchers (e.g. Westhead et al., 2001; Hall & Cook,
2009) distinguish between the strong versions of Barney (1991) from the weak version.
According to these authors, the weak version of Barney’s framework relaxes its core
attributes (i.e. rarity, immutable, and non-substitutability etc.) in its empirical
application. As a result, this thesis uses the weak version of Barney (1991) to
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operationalise the concept of resources and so does not seek to examine resource rarity,
immutability, non-substitutability etcetera.
1.10 ENTREPRENEURSHIP AND INTERNATIONAL
ENTREPRENEURSHIP
According to Shaw & Darroch (2004), entrepreneurs are people who take risks and start
something new. Other researchers extend this entrepreneurial behaviour and argue that
entrepreneurs are mainly people who possess the ability to spy, identify and assemble
resources in order to seize business opportunities (Schumpeter, 1961; McDougall et al.,
1994; Covin & Slevin, 1991; Ibrahim, 2004; Jones & Coviello, 2005). Researchers (e.g.,
Dimitratos & Jones, 2005; Crick & Spence, 2005) do not refute this line of debate, but
argue that, this line of thinking omits the role of ‘chance’ in the entrepreneurial process.
Such researchers consider that in real life, some particular owner-managers
(entrepreneurs) react to serendipitous events, which is different to systematic
opportunity identification.
An entrepreneurial event (i.e. chance opportunity and systematic opportunity
identification) cannot be said to be limited to the domestic market, but extends into the
international market as well. This view has led to the recent growing popular
phenomenon referred to as ‘international entrepreneurship’ within the small business
internationalisation research field (i.e. entrepreneurship across the national borders).
Different writers have given a variety of definitions to the phenomenon ‘international
entrepreneurship’, the most common one being “a combination of innovative, proactive,
and risk-seeking approaches that cross national borders and are intended to create value
in organisations” (McDougall et al., 2000: 903).
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This definition has been criticised because it was geared towards international new
venture firms (the born global firm), and the original authors revised it later as “the
discovery, enactment, evaluation and exploitation of opportunities-across national
borders-to create future goods and services” (Oviatt & McDougall, 2005: 540). In
addition, other researchers also defined the phenomenon as “a research approach to the
internationalisation of the small businesses from the entrepreneurial perspective”
(Ruzzier et al., 2006: 489). The definitions of Oviatt & McDougall (2005) are broad
because they cover the ordinary SMEs as well as international new venture firms.
However, in this thesis, the definition of Ruzzier et al. (2006) is adopted because their
definition views international entrepreneurship simply as the SME internationalisation
event from the perspective of the entrepreneur owner-manager, which is also the focus
of the thesis.
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