Key success drivers of service exports: the role of organisational characteristics, market characteristics and governance mechanisms.

Abstract

The global marketplace has become highly integrated, and global competition is increasingly intense and dynamic. To be successful in this competitive and hostile environment, international firms must be able to foster and maintain successful cross-border inter-firm relationships. At the same time, service exports have remarkably emerged as a crucial component of international trade, underpinning the future growth and prosperity of national economies worldwide. Yet scholars and business practitioners alike have recognised the significant paucity of research on the performance of service exporters. Similarly, despite the recent growth in research interests in international relationship marketing, theoretical development in this area has failed to keep pace with the increase in both volume and magnitude of inter-organisational transactions across national borders. This study addressed the key research question of “What are the key factors driving the export performance of service firms?”, based on an integrated theoretical foundation comprising the resource-based view of the firm, transaction cost economics, and the relational exchange theory. The study took into account the potential role of: (1) organisational characteristics, (2) market characteristics, and (3) the governance mechanisms deployed by service firms in their management of cross-border relationships with their business clients. A multi-method research design was utilised for this research, including two main studies. An exploratory study was first conducted, involving 10 in-depth interviews with service exporters in South Australia. Drawing from the outcomes of the exploratory study and a review of the international services marketing and international relationship marketing literature, the researcher proposed a conceptual framework and a set of testable hypotheses. These hypotheses were then tested in the second research phase, in which the researcher conducted a self-administered mail survey, utilising both postal and online means. An effective response rate of 32.77%, or 254 usable responses, allowed the researcher to further analyse the data using the principles of structural equation modelling in AMOS. Thereby, the researcher identified 17 pairs of significant relationships between the variables. The research findings show that the performance of an export venture of a service firm is directly influenced by the size of the firm, their export experience, their managerial commitment, and the performance of the relationship with a major overseas client. Such relationship performance is determined by both contractual-based governance, including contractual complexity and contractual explicitness, and relational-based governance, a higher-order factor incorporating relationship trust, relationship commitment, information exchange, relationship flexibility and relationship harmony. In turn, these governance mechanisms are determined by various organisational and market characteristics. Whilst firm size, resource commitment, and assistance programs by home government influence the level of contractual complexity, contractual explicitness is determined by management commitment, competitive intensity, and the favourability of host government policies. Furthermore, relational-based governance is driven by the export experience of the firms, their managerial commitment, and the favourability of host government policies. The study contributes to advancing the scant international services marketing literature and draws further research attention to the international relationship marketing paradigm. With regards to international business practice, the study provides service exporters with an understanding on the potential role of organisational characteristics and market characteristics in their exporting success. Finally, a successful management of cross-border relationship management and governance mechanisms will also lead them to superior export performance.