Firm Level Export Determinants in the Case of Ethiopian Garment and textile industry

Abstract

The objective of this study was to examine the firm level determinants of export performance of textile and garment firms in Ethiopia. A quantitative research design and explanatory research approaches were used. Primary data was collected using a five-point Likert scale. The study had 83% response rate. Statistical Package for the Social Sciences (SPSS) version 21 was employed to  analyze  the  data.  The  model  assessment  was  done  using  Partial  least  square  structural equation  modeling  (PLS-SEM).  Further  the  analysis  extends  the  application  of  partial  least squares  structural  equation  modeling  (PLS-SEM)  using  an  importance-performance  map analysis  (IPMA).  And  it  was  found  that  the  overall  mean  score  of  firm  characteristics,  firm capabilities,  management  characteristics,  export  marketing  strategy  and  export  performance ranges between 4.016 and 4.456 which show the higher level of agreement of respondents. the correlation result indicates high level of association of the independent and dependent variables. Through  the  measurement  model  analysis  the  factor  loadings,  Convergent  validity,  internal consistency reliability and discriminant validity was checked against the underlined assumptions before proceeding to structural model analysis the R2 value of export marketing strategy and export  performance  found  0.511  and  0.768.  The  result  suggested  firm’s  capabilities, management characteristics and export marketing strategy are good direct predictor of export performance.  Whereas firm characteristics and firm capabilities are good  predictor of export marketing  strategy.  It  was  found  that  export  marketing  strategy  has  full  mediation,  partial mediation  and  no  mediation  effect  in  the  case  of  firm  characteristics,  firm  capabilities  and management characteristics respectively to influence export performance of  firms.  Ultimately, the relative higher importance of the factors assumed to be export marketing strategy and firm capabilities  in  the  first  order  followed  by  management  characterizes  and  firm  characteristics sequentially.  Key  words:  Export  Performance,  firm  characteristics,  management  characteristics,  firm capabilities

CONTENTS

Abstract .......................................................................................................................................... vi

ACKNOWLEDGEMENTS ....................................................................................................... vii

ACRONYMS ............................................................................................................................... xii

LIST OF TABLES ..................................................................................................................... xiii

LIST OF FIGURS ...................................................................................................................... xiv

CHAPTER ONE ........................................................................................................................... 1 INTRODUCTION......................................................................................................................... 1

1.1 Background of the study ....................................................................................................... 1

1.2 Statement of Problem ............................................................................................................ 2

1.3 Research Question ................................................................................................................. 4

1.4 Objectives of the Study ......................................................................................................... 5

1.4.1 General Objective ........................................................................................................... 5

1.4.2 Specific Objectives ......................................................................................................... 5

1.5 Significance of the Study ...................................................................................................... 6 1.6 Scope of the Study................................................................................................................. 6

1.7 Conceptual Definitions .......................................................................................................... 7

1.8 Organization of the Paper ...................................................................................................... 7

CHAPTER TWO .......................................................................................................................... 8

REVIEW OF LITRATURE......................................................................................................... 8

2.1 Introduction ........................................................................................................................... 8

2.2 Theoretical Background ........................................................................................................ 8

2.2.1 International Trade Theory ............................................................................................. 8

2.2.2 Export performance determinants ................................................................................ 11 2.2.3 Measurement of Export performance ........................................................................... 14 

ix  2.2.4 Exporting firm .............................................................................................................. 15

2.2.5 The construct of Firm Factors ...................................................................................... 22

(ii)  Management Characteristics ....................................................................................... 23

(iii)  Firm Capabilities ........................................................................................................ 23

(iv)  Export Marketing Strategies ....................................................................................... 23

2.3 Empirical Evidences and Research Hypothesis .................................................................. 24

2.3.1 Firm level factors and export performance ................................................................... 24

2.3.2 Firm Characteristics and export performance .............................................................. 24

2.3.3 Management Characteristics and export performance ................................................. 25

2.3.4 Firm Capabilities and export performance ................................................................... 26

2.3.5 Export Marketing Strategies and export performance .................................................. 27

2.3.6  Firm  Characteristics,  Management  Characteristics,  Firm  Capabilities  and  Export Marketing Strategies .............................................................................................................. 29

2.4 Conceptual Framework of the research ............................................................................... 29

CHAPTER THREE .................................................................................................................... 31

RESEARCH DESIGN AND METHODODLOGY ................................................................. 31

3.1 Research Setting .................................................................................................................. 31

3.2 Industrial context ................................................................................................................. 31

3.3 Research Approach ............................................................................................................. 33

3.4 Research Design .................................................................................................................. 33

3.5 population and sampling ..................................................................................................... 34

3.6 Data source & collection Technique ................................................................................... 34

3.7 Methods of Data Analysis ................................................................................................... 35

3.8 Ethical considerations ......................................................................................................... 39

CHAPTER FOUR ....................................................................................................................... 40 

x  DATA ANALYSIS AND RESEARCH FINDINGS ................................................................ 40

4.1 Introduction ......................................................................................................................... 40

4.1.1 Questionnaire Response Rate ....................................................................................... 40

4.1.2 Demographic profile ..................................................................................................... 40 4.2 Descriptive analysis of the construct ................................................................................... 43 4.3 Correlation analysis ............................................................................................................. 45 4.4 Empirical Testing ................................................................................................................ 47 4.4.1 Measurement model ..................................................................................................... 47 4.4.2 Structural model analysis.............................................................................................. 52 4.4.3 Mediation analysis ........................................................................................................ 58 4.4.4 Validation of hypotheses .............................................................................................. 60 4.4.5 Important- performance map analysis (IPMA) ............................................................ 62 4.5 Secondary data analysis ...................................................................................................... 64

4.6 Discussion of Findings ........................................................................................................ 65

4.6.1 Firm characteristics and export performance ............................................................... 65

4.6.2 Management characteristics and export performance .................................................. 66

4.6.3 Firm capabilities and export performance .................................................................... 67

4.6.4 Export marketing strategy and export performance ..................................................... 68

CHAPTER FIVE ........................................................................................................................ 70

SUMMARY, CONCLUSION AND RECOMMENDATION ................................................. 70

5.1 Summary of findings ........................................................................................................... 70

5.2 Conclusion ........................................................................................................................... 73

5.3 Recommendation ................................................................................................................. 74

5.4 limitations of the study ........................................................................................................ 75

5.5  Future Research area ...................................................................................................... 76 

xi  References ..................................................................................................................................... 77 ANNEX............................................................................................................................................ i