Factors influencing export performance : the case of Saudi Arabia

Abstract

This research expands the current body of export performance research by examining the factors influencing export performance among private sector exporting firms in a developing country, namely Saudi Arabia. This study identifies the internal and external factors that influence firms' export performance, empirically examines those factors' influence on export performance, and derives guidelines for both managers and government policy makers concerning the best policies and strategies for improving export performance. Based on the existing literature, a theoretical model for the relationship between export performance and sixty-five independent variables was developed. Three measures of export performance were operationalised: export intensity, export sales growth, and export profitability. The independent variables included both internal and external variables. Internal variables were grouped under firms' differential advantages, export marketing strategy, and management quality. External variables were grouped under local market environment, national environment, and foreign market environment. The analysis and hypothesis testing were carried out for each measure separately. The hypotheses were tested using data collected by means of mail questionnaire from 154 exporting manufacturing firms in Saudi Arabia. Additional data were collected through six in-depth interviews. The results of the analysis revealed the importance of many internal and external factors in influencing firms' export performance. These results differed across different export performance measures. For example export intensity was explained significantly by export marketing strategy, export sales growth was a function of management quality, and export profitability was explained mainly by firms' differential advantages. Moreover, external variables were found to explain export performance. Export intensity was associated positively with exporting to Asia and export profitability was positively associated with exporting to Arab countries.