The effect of foreign market knowledge on SME export performance: a study ofnon-traditional SMEs in Ghana
| DOI | https://doi.org/10.1108/GKMC-03-2021-0054 |
| Published date | 26 July 2021 |
| Date | 26 July 2021 |
| Pages | 546-563 |
| Author | Aidatu Abubakari,Kwame Simpe Ofori,Henry Boateng,Koffi N’Da,Robert Ebo Hinson |
The effect of foreign market
knowledge on SME export
performance: a study of
non-traditional SMEs in Ghana
Aidatu Abubakari
Department of Marketing and Entrepreneurship,
University of Ghana Business School, Accra, Ghana
Kwame Simpe Ofori
School of Business and Social Sciences, International University of Grand-Bassam,
Grand-Bassam, Côte d’Ivoire and Department of Computer Science,
Ho Technical University, Ho, Ghana
Henry Boateng
D’Youville College, Buffalo NY, USA
Koffi N’Da
School of Business and Social Sciences, International University of Grand-Bassam,
Grand-Bassam, Côte d’Ivoire, and
Robert Ebo Hinson
Department of Marketing and Entrepreneurship,
University of Ghana Business School, Accra, Ghana
Abstract
Purpose –It is well documented inthe extant literature that knowledge plays a crucial role in small and
medium enterprise (SME) internationalization. Exporting SMEs from developing economies faces many
challenges, including lack of knowledge about institutions in foreign markets, inadequate knowledge about
foreign institutions and limited internationalization knowledge (IK). However, research on the export
performanceof SMEs has thus far focused on theinternationalization strategiesof multinational corporations.
This study aimsto explore the effect of foreign marketknowledge on SME export performance.The authors
also assessedthe moderating effectof employee absorptive capacityin the knowledge-performancenexus.
Design/methodology/approach –The authors adopted a survey design to collect datafrom owners/
managers of SMEs exporters in the Greater Accra region of Ghana. A total of 350 questionnaires were
distributed based on convenience.Of this number, 257 usable responses were used in thefinal analysis. The
authors testedthe proposed model using partial least squares-structuralequation modeling.
Findings –The findings show that the three types of foreign market knowledge tested in this study,
namely, foreign institutional knowledge (FIK), foreign business knowledge and IK have positive and
significant effects on SME exporters’performance. It also shows that employees’absorptive capacity affects
the relationshipbetween FIK and SME exporters’performance.
Originality/value –The study demonstratesthe types of knowledge relevant to SME export performance.
The study further demonstrates themoderating effect of employee absorptive capacity on the relationship
between knowledge and exportperformance. The study advances existing knowledge on SME performance,
especiallyfrom an emerging economy context.
Keywords Knowledge, Ghana, SMEs, PLS-SEM, Absorptive capacity, Export performance
Paper type Research paper
GKMC
71,6/7
546
Received27 March 2021
Revised2 June 2021
Accepted21 June 2021
GlobalKnowledge, Memory and
Communication
Vol.71 No. 6/7, 2022
pp. 546-563
© Emerald Publishing Limited
2514-9342
DOI 10.1108/GKMC-03-2021-0054
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/2514-9342.htm
Introduction
The emergence of international business has contributed to the rapid growth of exporting
among small and medium enterprises(SMEs). Exporting has become an internationalization
option for (SMEs) due to the lower risk involved and the minimal resources it requires
(Njinyah, 2018). Exporting helps SMEs access new markets and creates additional
resources, ensuring survival, profitability and overall performance of SMEs
(Filatotchev et al., 2009;Musteen et al., 2014). Empirical findings from past studies on
export performance in the African context have revealed a multiplicity of factors
that influence the performance of exporting firms in the region. For instance, factors
such as firm size, resource availability, social capital and innovativeness have been
recognized as critical determinants of export performance of firms in developing
countries (Adu-Gyamfiand Korneliussen, 2013;Easmon et al.,2019;Olabode et al.,
2018). A study on the determinants of export performance in five manufacturing firms
in Africa (Ghana, Kenya, Nigeria, Tanzania and South Africa) demonstrated that firm
size and human capital were essential drivers of export performance (Teal et al.,2006).
As such, exporting SMEs from these contexts presents a unique case to examine export
performance. For instance, Khanna and Palepu (2000) note that emerging economies
lack the institutions necessary to ensure effective market exchange. In addition, capital
markets, labor markets, product markets and state regulatory mechanisms are more
advanced in western countries but are still at their nascent stages in developing
economies (Singh, 2009). In addition, emerging market environments are very risky as a
result of economic and political systems, hence, exposure of SMEs in these contexts to
foreign markets aggravates their challenges(Singh, 2009). Consequently, firms that
have better knowledge about internationalization and foreign markets are better off
than those that do not. As such, knowledge can act as a strategic resource that could be
used to curb the impact of some of these inefficiencies. It is, therefore, crucial for
exporting SMEs to use thisstrategic intangible resource to excel in foreign marketsas it
can act as a source of competitive advantage for these firms (Contractor, 2013;
Yildiz et al., 2019).
Recent scholarly pieces of evidence suggest that tangible and intangible resources
are needed by SMEs to succeed in foreign markets (Olabode et al., 2018;Paul et al.,
2017). Yet, resource constraints have been identified as a major challenge for exporting
SMEs from developing economies. Exporting SMEs further face liabilities such as
smallness, newness, foreignness, outsideness and home liabilities (Johanson and
Vahlne, 2009;Mejri et al., 2018). In particular, knowledge has been identified as a crucial
variable for firm performance in overseas markets (Mejri et al.,2018). Lack of
knowledge and misconception about foreign markets, as well as lack of employees
with relevant experience in foreign markets, are some of the significant export
problems of SMEs (Baykal and Gunes, 2004;Stoian et al., 2018). Inadequate knowledge
has been repeatedly linked to the failure of exporting SMEs (Adu-Gyamfiand
Korneliussen, 2013;Boso et al., 2016). Based on the evidence currently available, it
seems fair to suggest that institutional knowledge, foreign market knowledgeand
internationalization knowledge (IK) are important sourcesof competitive advantage for
exporting SMEs. For instance, research has shown that IK is necessary for firms to
grow in international business (Deligianni et al., 2015). However, the extant literature
has rarely empirically examined these types of knowledge and their relevance to
exporting SMEs.
Available literature depicts that the resource-based view (RBV) is a dominant
theory used to examine export performance (Chen et al., 2016;Mahmoud et al., 2020;
SME export
performance
547
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