Taxonomy for Measurement of Firm-Level Export Performance

Exporting is crucial to a country’s trade performance in terms of increasing its foreign exchange reserves and improving the terms of trade. At the firm-level too, exporting serves significant purpose by enhancing sustainability, profitability, and competitive position of firms in long-run. Hence, it is crucial to access the impact of exporting on the performance of such firms. Several measures, most of them multi-dimensional in nature, have been used to capture the construct of firm-level export performance. Past studies have used both absolute numbers as well as performance ratings as a part of measuring firms’ export performance. It is also revealed that export performance being a multi-dimensional phenomenon is best represented by the use of certain key dimensions explaining the firms’ performance in international markets. Research in this field is still evolving and paving way for further enrichment of its theoretical background. Assimilating the important work in this field, the paper highlights some key trends in measurement of firm-level export performance.


Introduction
In the current scenario, going global is essential for accelerating the growth and profitability of individual firms and enabling them to achieve sustained competitive advantages. This has led to a recent surge in the field of studies aimed at explaining firm-level export performance and the forces influencing it. Existing research has certainly enhanced the understanding of firms' export performance however; work in this field is still evolving. Several meta-analyses have highlighted the advances in this field e.g., Madsen [1], Aaby and Slater [2], Chetty and Hamilton [3], Leonidou and Katsikeas [4], Leonidou, Katsikeas, and Samiee [5], Zou and Stan [6], etc. These reviews have categorized several operational measures of firm-level export performance focusing on the key management areas viz. finance, strategy and human resources. Building upon earlier work in this field, the current study aims to review the published empirical work in this field to throw light on usage of various measures of export performance at the firm-level. The article begins with methodology employed for the review, followed by its key results and concludes with directions for future research.

Research Problem
Export performance of firm constitutes an important stream of research in international business. With steady increase in international business, understanding the export performance at firm-level has become largely essential. However, the difficulties associated with assessing export performance have made its evaluation mostly an elusive goal [7]. Despite of various export performance measures mentioned in the literature, few selected ones that are frequently utilized include export intensity [8], export sales growth [1,[10][11], export profitability [9], export market share [12], and satisfaction with the export venture [13]. The literature on measurement of firm-level export performance needs to be segregated on the basis of the way they are captured by the researchers. The current study aims at providing such a segregation thereby highlighting the use of various measures of firms' export performance i .

Methodology
The article focuses on empirical literature pertaining to commonly used measurements of firm's export performance. Studies in this review were identified by a process that includes a mix of electronic means with manual investigation. The identified articles come from some of the most popular journals in management and international business as can be seen in references to this paper. The approach used in this review is loosely based on meta-analysis technique. Classical meta-analysis requires a high degree of similarity amongst the studies reviewed with regard to the measurement of the variables and the statistical approach to data analysis [14], but as the firm-level export performance 194 Taxonomy for Measurement of Firm-level Export Performance studies are categorized by a diversity of measurement and analytical approaches only a weak form of meta-analysis is applied called the 'narrative approach' involving a subjective interpretation of the overall pattern of the variables used in measuring firm's export performance [2].

General Characteristics of the Reviewed Studies
Information on the studies' characteristics in terms of country(s) of the study, size of the sample, industry type, size of the companies studied, data collection method, analytical approach(s) and the unit of analysis used are discussed in subsequent paragraphs:

Country of the Study
Most of the initial work in firm-level export performance measurement was limited to developed countries including United States [7,13,16,36] and certain European nations [12,19]. However, recently more studies have been devoted towards other countries as well. The studies covered in the review involve apart from US and UK countries like Greece [20], Northern Ireland [45], Finland [29], Brazil [31,47]; India [10,17,32], Bangladesh [39], Taiwan [17], Jordan [42], Turkey [25,48], Nigeria [27,30], etc. This is an obvious indicator that firm-level export performance research has also gained momentum and credit in different parts of the world.

Size of the Sample
Sample size used in the studies lies within a range of 50 to about 1000 firms. However, majority of the studies reported sample size in the range of 100 to 250 [10,17,25,39]. Considering the number of independent variables studied and the statistical tools applied, the sample size tends to vary with focus group studies using a relatively smaller sample [27,30,44] while studies applying complex statistical tools using a higher number [29, 31-33, 38, 41].

Industry Type
Majority of studies reviewed draw sample from multiple manufacturing industry. Some studies however, focused on a single industry type as their sample [8][9][10][11][12]. Singer and Czinkota [15] in their study also included service firms along with manufacturing firms. However, most of the studies in the field have incorporated manufacturing firms only in their samples. This observation may be attributed to the fact that relatively greater importance has been given to manufactured exports compared to service exports owing to generation of higher revenues by the former. But, this trend could limit the generalization of the findings to other industry contexts and hence, specific studies including service sector firms must also be undertaken.

Size of Firms Studied
When looking at the size of firms included in the sample, most of the studies had firms from small and medium sized enterprises [25-27, 30, 33, 37, 38, 42, 45, 48-51]. It may be so because exporting by small and medium-sized firms forms the backbone of a country's economy. Also emphasis on this sector can be attributed to the facts that it leads to employment generation, reduces regional disparities of industries and promotion of effective entrepreneurship, particularly in developing economies. However, there were studies incorporating larger firms too in their sample [7-8, 31, 47] highlighting the determinants of success in case of large scale exporting firms.

Data Collection Methods
Majority of the studies reviewed used survey as a mean for data collection. Although, mail surveys were most preferred, the use of focus groups and in-depth interviews was also made to ascertain accurately the firms' response in an exploratory manner [16,23,27,30].

Unit of Analysis
Most of the studies used 'firm' as the unit of analysis [7-10, 25, 33, 41, 42, 49-51]. However, certain studies also used a particular 'export venture' as desired unit of analysis [16,28,35,38,46,47]. The appropriate level of analysis depends on the aim of the study. If the aim of the study concerns predicting the overall performance of the firm the appropriate level of analysis could be the 'firm-level'; while for studying specific product lines use of 'export venture' is considered worthwhile.

The Measurement of Firm-level Export Performance
Operationalization of the construct of 'firm-level export performance' has largely been diverse [16]. The article includes diverse performance indicators used by researchers to capture the multi-dimensionality aspect of the construct.
In this article, the measures of export performance used are grouped into two broad categories representing the 'observed' and the 'perceived' measures. 'Observed measures' are those indicators which are based on the absolute value of firm's export sales volume, profits, market share, etc. amongst others; whereas, the 'perceived measures' includes management's perception of the similar indicators. Research also reveals that observed and perceived measures are found to be positively co-related with each other [17]. Scholars in the field generally supports the use of perceived indicators over observed ones, as the decision makers are mostly comfortable in disseminating the company information on perceived ratings scales rather than the absolute observed values [18].
The studies in the article have measured export performance of the firms (either perceived or observed or both) under the following labels Tables 1 and 2): (i). the 'sales' category including measures of growth in export sales or relative measures like ratios of export sales to total or domestic market sales; (ii). the 'profit' including measures of overall export profitability or relative measures like ratios of export profit to total or domestic market profit; (iii). the 'growth-market share' measuring the changes in export sales or profits over a period of time, all measured either in absolute terms for observed measurement or rated on a perceptual scale for perceived measurement; (iv). 'satisfaction derived' measuring the managers' overall satisfaction with the company's export performance and finally, (v). 'composite scales' measuring the overall scores on a mix of above mentioned performance measures. Table 1 gives classification and frequency of use of firm's export performance measures of the reviewed studies. Table 2 gives the measures of firm-level export performance as used by various authors.

Conclusions
The above table highlights the use of different export performance measures in the empirical literature particularly from the past one decade (Table 2). Looking at the type of measurement, most of the studies have used composite scales rather than using a single indicator for measuring export performance to capture its multi-dimensional nature. Further, these composite scales were measured mostly on their perceived ratings (Table 1). However, the choice of type of measurement by the researcher is found to depend on some key factors like: (i). the unit of analysis i.e., 'firm' or 'export venture'. For 'firm' level data it is found that 'observed values' are more used for measuring export performance, as at that broad level the financial and sales related dimensions are easy to reveal by the firms' management. For example, Bonner and Mcguinness [45] in their study utilized firm-level data for a sample of Irish SMEs to access the impact of marketing assistance on export performance of firms, where the sample firms' export performance was measured as observed values of employment, turnover and assistance granted. Similarly, Chugan's [10] study of Indian auto-parts industry used data on annual exports and sales to measure firms' export performance.
At the 'export venture' level, it is found that the use of 'perceived ratings' is favored because for export ventures which include special product/market lines, management responses are generally blurred applying to a range rather than accurate figures. E.g., studies by Carneiro, Rocha and Silva [47], Durmusoglu et al [46], Lages and Montgomery [38], Lages, Silva and Styles [28], Ling-yee and Ogunmokun [35] etc., have used composite scales based on management's perception of export activity as the measures of export-venture level performance.
(ii). size of the firms is also a deciding factor on whether the data used is based on observed or perceived values. Studies focusing on SMEs have mostly used managerial perceptions relating to different aspects of firms' export activity viz. sales, profits, market share, satisfaction with exporting, etc., in operationalizing the export performance construct [26,27,37,39,42,46,48]. While studies on large scale firms were using more of absolute data, since it is easier to get data on sales and profitability related aggregates in this case [8,24,32].
(iii). the extent of internationalization was also found to influence the kind of export performance measure used. For the firms which were relatively new to exporting, the commonly used measures of export performance included total sales and profitability in the short-run. While for the established exporters, increasing the market share and deriving satisfaction from exporting were the criteria focused upon [7,11,18].
(iv). finally, the research design adopted by the study also influenced the measures of export performance used. Cross-sectional research designs used more of 'perceived' managerial responses [7,34,40,[48][49][50][51] while the studies using longitudinal design utilized 'observed' absolute/relati ve values over a period of time to measure performance [10,11,32].

Directions for Future Research
Considerable advancement has been made towards the empirical testing of firm-level export performance especially in the past decade. The number of studies conducted outside US/UK has grown considerably, incorporating diverse countries which is a positive trend as their inclusion will help in investigating whether the current knowledge can be generalized globally. Since, firm-level export performance is a multi-dimensional concept; it needs to be studied using various relevant indicators explaining the firm's performance in foreign markets. Few studies [13, 16, and 19] have dwelled explicitly on developing concrete models and multi-dimensional scales leading to strengthening of the theoretical foundations of this field. For this there is a need for further exploratory studies to assess more encompassing frameworks of measuring firm's export performance.
Further, there are some points which researchers may keep in mind while doing their future empirical work in this area: (i). most of the past studies have incorporated in their samples firms from SME sector only; hence more work should be done focusing on large scale firms too.
(ii). cross-country studies could also be undertaken to compare and generalize the findings from different sectors. Comparisons could be made using samples from developed and developing nations simultaneously.
(iii). service sector firms have been largely neglected in the past empirical work which is another area to be focused upon. E.g., Singer and Czinkota [15] in their study included service firms too along with the manufacturing firms.
(iv). lastly, the dearth of longitudinal studies is an inhibiting factor to dynamic model building. Future work should therefore, consider adopting a longitudinal design which might help with the development of firm-level export performance theory by evaluating the long-term effect of the functional relationships between firms' export performance and its determinants.