Export Barriers and Firm Internationalisation from an Emerging Market Perspective
| DOI | https://doi.org/10.1108/15587890880000489 |
| Published date | 01 September 2008 |
| Pages | 33-41 |
| Date | 01 September 2008 |
| Author | Zafar U. Ahmed,Craig C. Julian,Abdul Jumaat Mahajar |
| Subject Matter | Strategy |
Journal of Asia Business Studies FALL 2008 33
INTRODUCTION
The economic capacity of an emerging market, particularly its in-
dustrial and agricultural capabilities, determines the trend that its
exports follow. International Trade has always been important for the
Malaysian economy. Its importance to the economy has grown stron-
ger over the years. The composition and direction of trade flows have
changed significantly, reflecting the dramatic transformation of the
primary-producing economy into a rapidly industrialising one. In-
terestingly, structural changes in the Malaysian economy during the
last three decades or so have enhanced the economic openness of the
country so much so that Malaysia continues to project itself as one of
the most open emerging markets in the world. Malaysia’s export per-
formance is a major determinant of the state of the economy. Rapid
economic growth at the annual average rate of about 7.0 percent since
the early 1980s, has much to do with Malaysia’s export performance.
Imports have also contributed much to the economic development
of the country, by providing not only competitively priced consumer
and capital goods, but also intermediate inputs for Malaysian manu-
factures that have rendered Malaysian-manufactured exports com-
petitive in world markets (Central Bank of Malaysia, 1999).
Malaysia has mostly enjoyed a favourable trade balance in its bal-
ance of payments current account. More often than not, the surplus
trade balance was large enough to finance the deficit in the servic-
es account and also to produce a sizeable current account surplus.
However, in the 1990s Malaysia posted serious trade deficits. The
large trade deficits incurred in these years were due to the low export
prices of primary commodities, high priced imports as a result of the
rapid industrialisation in the country, and the appreciation of major
currencies especially the Japanese Yen, the Deutsch mark, the Korean
Won and the New Taiwan Dollar. Imports of capital goods associated
with foreign investment activities in the country have contributed
much to the growing trade deficit. In other words, deficits have been
financed largely by foreign capital inflows (Central Bank of Malaysia,
1999).
Imports have exceeded exports, despite export-oriented industri-
alisation in these years, because foreign direct investment in manu-
facturing activities generated imports of capital goods immediately
where export output would begin to flow after a certain period of
time. The trade balance should reverse itself, with deficit giving way
to surplus once the export-oriented investment projects come on-
stream. However, the empirical evidence is inconclusive.
The relationship between imports and exports in recent times has
been problematic for Malaysia. Malaysia’s reliance on foreign direct
investment to make up for the balance of trade deficit shows how
fragile this relationship can be. There is a need for an action plan to
correct the situation, especially when there are no guarantees that
foreign direct investment in a receding global economy will be able
to cover the deficit in the trade balance in the future. As such, the
action plan needs to include what causes or prevents Malaysian firms
from exporting i.e. the various barriers to export Malaysian firms
face when entering the export market. This knowledge becomes of
critical importance if Malaysia, as an emerging market, is going to
start correcting its trade deficit and that is what has driven the need
for this study. A common objective in most countries today is to find
ways to increase exports. This can be achieved either by encourag-
Export Barriers and Firm Internationalisation from an Emerging
Market Perspective
Zafar U. Ahmed
Prince Sultan University, Saudi Arabia
Craig C. Julian
Southern Cross University, Australia
Abdul Jumaat Mahajar
Universiti Utara Malaysia, Malaysia
absTRaCT
This study is concerned with an empirical investigation that explores the barriers to export that emerging market entrepreneurs
face when engaging in international business. The data was gathered from a survey of 214 manufacturing firms, headquar-
tered in Malaysia, and considered to be an emerging market. Statistical analysis was carried out using one-way analysis of
variance and the Tukey-Kramer Multiple Comparison Procedure. The study’s key findings indicate that exporters and non-exporters
perceive the importance of the need to adapt products to meet foreign customer preferences and a lack of capacity dedicated to a
continuing supply of exports differently as barriers to export. However, other than those barriers to export the study findings indicate
no significant differences in the perceptions of exporters and non-exporters from an emerging market towards the different barriers
to export.
Key Words: Exporters, Non-Exporters, Barriers to Export, Malaysia, Emerging Market
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