Effect of perceived environmental uncertainty on exporter–importer inter-organisational relationships and export performance improvement

International Business Review 18 (2009) 89–107

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Effect of perceived environmental uncertainty on exporter–importer inter-organisational relationships and export performance improvement Margaret Jekanyika Matanda a,1, Susan Freeman b,* a b

Department of Marketing, Monash University, Frankston Campus, Box 527, Frankston, Victoria 3199, Australia Department of Management, Monash University, Caulfield Campus, Victoria 3145, Australia

A R T I C L E I N F O

A B S T R A C T

Article history: Received 7 August 2007 Received in revised form 31 October 2008 Accepted 16 December 2008

Limited research exists on the effect of environmental uncertainty on inter-organisational relationships and export performance improvement in supply chains that transcend national boundaries, especially in developing markets such as sub-Saharan Africa. Despite the dominance of the economic perspective in export performance literature, increased attention over the last decade has turned to the Resource Base View (RBV) and the relational perspective. Highlighting this theoretical gap, we develop an approach that argues export market buyers gain advantage by leveraging internal resources and draw upon RBV and relational exchange theory. Data from 262 fresh-produce export suppliers in Zimbabwe was used to investigate the effect of perceived environmental uncertainty on inter-organisational relationships and supplier export performance. Results indicate that perceived environmental uncertainty dimensions have varied influence over interorganisational relationships. Results support the relational theory’s tenet that commitment to future exchanges is associated with export performance improvement, and driven by a reciprocal pattern of each partner’s perception of the other’s commitment, relationship-specific investments and dependence. These inter-organisational relationships are seen as complementary resources of the firm, which export market buyers can rely on through power to coerce developing export suppliers to cooperate in conditions of perceived market turbulence and high competitive intensity. Market turbulence emerged as a complex factor and is negatively linked to commitment and cooperation. Contrary to prior research, cooperation had a negative effect on export performance improvement. Crown Copyright ß 2009 Published by Elsevier Ltd. All rights reserved.

Keywords: Developing countries Export performance Fresh produce Inter-organisational relationships Perceived environmental uncertainty

1. Introduction The growing internationalisation of markets and increased participation of organisations in the global arena has resulted in export performance attracting considerable interest in prior research (Cavusgil & Zou, 1994; Katsikeas, Leonidou, & Morgan, 2000; Leonidou, 2003). Despite the dominance of the economic perspective, namely the industrial organization structure-conduct-performance (SCP) framework (Cavusgil & Zou, 1994; Zou & Cavusgil, 1996), increased attention from research relying on a resource based view (RBV) (Piercy, Kaleka, & Katsikeas, 1998) has emerged in the last decade, arguing that firms gain competitive advantage by leveraging internal resources. Dhanaraj and Beamish (2003) and Morgan, Vorhies, and Schlegelmilch (2006) confirm the use of RBV for the study of export performance. Not only is the RBV increasingly

* Corresponding author. Tel.: +61 3 9903 2674; fax: +61 3 9903 2718. E-mail addresses: [email protected] (M.J. Matanda), [email protected] (S. Freeman). 1 Tel.: +61 3 9904 4021; fax: +61 3 9904 4145. 0969-5931/$ – see front matter . Crown Copyright ß 2009 Published by Elsevier Ltd. All rights reserved. doi:10.1016/j.ibusrev.2008.12.004

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recognised as a key theoretical paradigm in export performance literature, but is now being combined with the SCP view (Morgan, Kaleka, & Katsikeas, 2004). An additional perspective is the relational approach (Styles, Patterson, & Ahmed, 2008). Underpinned by relational exchange theory, the relational approach rests on research that provides evidence of the importance, the nature and impact of exporter–customer relationships (Freeman, Edwards, & Schroder, 2006; Styles & Ambler, 1994, 2000; Styles et al., 2008). RBV suggests that resources and capabilities of firms differ significantly, which impact competitive advantage (Barney, 1991). Key internal resources, such as relationships and networks, enable smaller firms, many of whom are exporters, to overcome international constraints that are a result of their size and financial scarcity (Freeman & Cavusgil, 2007; Peng, 2001). Enhancing export performance is crucial for companies based in developing countries that view the global marketplace as a means to ensure growth, survival or competitiveness (Kumcu, Harca, & Kumcu, 1995). However, while export performance is a widely researched, it is one of the least understood constructs in international marketing (Katsikeas et al., 2000). However, the dominance of the economic perspective in export performance literature has limited advances in the application of other theories, such as RBV and relational approaches according to Styles et al. (2008). More importantly, Leonidou, Katsikeas, and Hadjimarcou (2002) argue this over reliance has stultified research in export performance. Further, while most research focusing on export performance has been undertaken in the United States and Europe, limited work has been conducted in developing countries, especially in sub-Sahara Africa (Sousa, 2004, see Zou & Stan, 1998). A growing body of work indicates the numerous problems faced by exporters from developing countries in maintaining a competitive edge (Andersen, 2006; Dominguez & Sequeria, 1991; Etemad, 2004; Ghauri, Lutz, & Tesform, 2003; Peng, 2001). While there is growing appreciation of the benefits of trade with emerging and developing markets there is also recognition that such linkages involve considerable risk due to their institutional complexity. However, despite these risks, western firms are increasingly willing to develop cross-border relationships through importing, exporting and foreign direct investment with organisations in developing regions, such as the Asia Pacific (Freeman, Cray, & Sandwell, 2007), sub-Sahara Africa (Dolan, Humphrey, & Harris-Pascal, 1999) and South America. However, given the nature of the export channel environment exporting firms cannot solely depend on internal capabilities and competencies for export success but have to also look beyond the firm’s boundaries to find and access the distinctive capabilities of supply chain partners (Bradley, Meyer, & Gao, 2006). Increased environmental volatility has led to a search for more flexible forms of organisation (Buckley, 2004) and those firms that cooperate effectively with buyers and distributors in export markets are better able to adapt to dynamic environmental changes and satisfy customers (Dimitratos, Lioukas, & Carter, 2004). Suppliers in market-driven export channels work on the basis of symbiotic relationships that facilitate the coordination of a set of transactions aimed at meeting customer demands (Zylbersztajn, 1996). Supply chain relationships enable buyers in export markets to link raw material characteristics with end-user demands and preferences (Bradley et al., 2006), as foreign distributors and middleman are generally an important source of information about the export market (Leonidou & Katsikeas, 1997). The increasing involvement of organisations in developing countries in global supply chains that transcend organisational, national and geographical boundaries (Chen & Paulraj, 2004), suggests the need to extend the study of inter-organisational relationships and export performance to less known, non-western contexts for several reasons. First, whilst interorganisational relationships have attracted the interest of researchers and practitioners for nearly three decades, the major focus has been on relationships between chain partners in the same country and limited attention has been paid to interorganisational relationships that transcend national boundaries (Skarmeas, Katsikeas, & Schlegelmilch, 2002). As a result, the way in which inter-organisational relational variables affect competitive advantage in an export setting remains largely unknown (Ulaga & Eggert, 2006). Leonidou (2003) suggests that the essence of export business is the company’s relationships with its overseas customers and export management should basically be considered as a process of relationship management. Second, firms in emerging industries frequently lack sufficient knowledge about consumers and can benefit from adopting supply chain management practices that facilitate access to practical and easy methods of information flow (Chen & Paulraj, 2004). Third, while environmental factors have been identified as a major driver of export performance limited attention has been paid to these factors, probably due to the complexity of business environment dimensions (Katsikeas et al., 2000). Fourth, most empirical work in the area has been in the US and Europe. A review of literature on export performance (see Leonidou, Katsikeas, & Samiee, 2002) indicates limited work has been done in developing countries. Researchers have also called for the need to test marketing theory not only in emerging industries, but also in developing countries (Kim & Frazier, 1997; Peng, 2001). Finally, despite the existence of some empirical work on environmental factors and the configuration of supply chains in developed countries, limited attention has been paid to these issues in developing countries (Dolan et al., 1999). This point of view is also held by Cunningham (2001), who argues that there is a serious deficiency of marketing channel research within developing markets, particularly in the sub-Sahara African context. The present study, therefore, addresses the gaps identified above by focusing on how export suppliers from a developing country use inter-organisational relationships to manage perceived environmental uncertainty in export markets. Greater understanding of exporter attitudes and perceptions is important as it influences the success of both importing and exporting firms, as well as the export marketing channel (Marshall, 1996). According to Ghauri et al. (2003) lack of institutional support in developing countries increases environmental uncertainty and promotes increased use of interorganisational relationships between suppliers and buyers in global marketing chains. Thus, addressing how managers utilise networking and relational strategies (Eiriz & Wilson, 2006) to cope with environmental uncertainty in export markets is important for export and import marketing strategy (Dominguez & Sequeria, 1991) and advancing theory in marketing channel research (Chen & Paulraj, 2004).

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Douglas and Craig (2006) have noted that while international marketing research plays a vital role as firms expand globally, very limited attention is paid to the conceptual underpinnings of research needed to guide this expansion. They suggest two alternative approaches to undertaking cross-cultural research – the adapted etic and the linked emic. The etic ‘‘approach assumes that the theory and constructs are universal’’ (p. 3). In contrast the emic approach ‘‘argues that constructs and theories are specific to and need to be developed and studied within a clearly defined context’’ (Douglas & Craig, 2006: p. 3). This paper supports the emic approach to avoid a principal limitation of the etic approach ‘‘that it will result in a pseudoetic perspective or bias. . . that is, theories and constructs are assumed to be universal when they are actually emic’’. The paper is structured as follows: first, to ground the study, the resource-based view (RBV) theory is outlined to provide a theoretical understanding of the constructs. According to the RBV theory resources are heterogeneous and immobile (Conner, 1991; Hunt & Morgan, 1995) and this enables resource rich organisations to out compete their competitors. As a result organisations establish relationships to access scarce resources and enhance their competitive advantage. Such relational capabilities can be rare, inimitable and insubstitutable at a company level (Kale & Singh, 1999). This additional perspective is the relational or behavioural perspective (Styles et al., 2008) and is discussed reference to relational exchange theory. Then a review of literature on environmental uncertainty, inter-organisational relationships and export performance improvement is provided, together with the hypotheses for the study. Next the survey methodology adopted for the development of the sampling frame, data collection procedures and operationalisation of measurements is presented. Finally, the results are discussed and the paper concludes by outlining theoretical and managerial implications, limitations and areas for future research. 2. Theoretical foundations As environmental uncertainty increases, various types of interfunctional expertise are required, as more diverse skills and knowledge are required to develop solutions and remain competitive (Fredricks, 2005). Consequently, inter-organisational relationships can be used to bring in complementary and create idiosyncratic resources that can enhance the competitive advantage of organisational in the relationship. Idiosyncratic resources are developed during the lifetime of the alliance or relationship (Lambe, Spekman, & Hunt, 2002). Complementary resources are an outcome of the combining the resources of partnering firms and when inter-organisational resources turn to capabilities they can be used in the marketplace to create a competitive advantage (Lambe et al., 2002). In fast changing and turbulent environments it is not feasible for an organisation to acquire all the information and resources needed to effectively serve its customers on their own (Gulati & Garino, 2000). The RBV suggests that the lack of control over resources needed to manage export marketing functions creates uncertainty for exporting firms (Pfeffer & Salancik, 1978). Perceived environmental uncertainty (Dimitratos et al., 2004) results from the inability of individual managers to predict changes in the environment (resulting from changes in technology, markets, and income volatility), due to lack of information or knowledge necessary to distinguish data needed for decision-making (Andersen, 2006). As environmental uncertainty increases, various types of interfunctional expertise are required, as more diverse skills and knowledge are required to develop solutions and to remain competitive (Fredricks, 2005). As a result, interorganisational relationships are used to enable firms to leverage partners’ resources and capabilities to cope with perceived environmental uncertainty. Exporters use networking, inter-organisational relationships and strategic alliances as tools to overcome barriers and manage uncertainty in export markets (Bradley et al., 2006). Moreover, Styles et al. (2008) argue that ‘‘export performance literature is extended by studying. . . the effects of each party’s commitment towards the other partners across West-East cultures’’ (pp. 890–891). In their study of 125 West–East (Australia–Thailand) exporter–importer partnerships, they found that commitment is driven by the reciprocal nature of each partner’s perception of the other’s commitment, their level of relationship-specific investments and dependence. The cycle of commitment is influenced by the partner’s trust in the other, but different types of trust impact different types of commitment. ‘‘Trust and commitment are related to both interpersonal factors (i.e., affective communication, cultural sensitivity and likeability of partner) and firm factors (reputation and competencies of partner) (p. 891). It is, therefore, important for export researchers’ to investigate how organisations can enact strategies that enable them to acquire and leverage resources and capabilities across borders (Balabanis, Thoedosiou, & Katiskea, 2004). Thus, conceptually, inter-organisational relationships can be perceived as a key organisational capability, as described by RBV (Freeman & Cavusgil, 2007; Peng, 2001). The degree of perceived environmental uncertainty depends on managers’ perceptions of the environment and the decision-making processes used to deal with the environment (Dimitratos et al., 2004). Consequently, the threats managers perceive in the external environment (Etemad, 2004) determine a firm’s choice of strategic actions (Baum & Wally, 2003). According to Buckley and Ghauri (2004), information discontinuities stemming from differences in government policies, and geography and societal issues coincide with national boundaries, both creating search and deliberation problems for exporting, trading and manufacturing firms. To deal with these information discontinuities and turbulent environments firms use applied knowledge as a strategic resource for creating and sustaining competitive advantage (Grant, 1996). Environmental volatility can be managed as long as firms have the requisite resources. Only those organisations with limited adaptive capacity or resources are negatively affected by environmental volatility or turbulence (Hansen & Wernerfelt, 1989). Thus, inter-organisational relationships can be used to access information and knowledge required to deal with uncertainty and ambiguity in the market. This is consistent with RBV and also links into the relational exchange theory perspective, which Styles et al. (2008) found lent considerable support to the critical role that key relational variables, such as trust (e.g. contractual, competence and goodwill) and commitment (e.g. affective and calculative) have on export

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performance. Research also suggests that environmental factors can be antecedents to strategic intervention (Di Gregorio, 2005; Etemad, 2004). Managers can play a critical role in creating a fit between the firm and its environment (Dimitratos et al., 2004). For example, strategic inter-organisational relationships and joint value creation by supply chain members can be a source of competitive advantage in unstable environments (Kim, 2003). Thus, the attaining of a competitive advantage is, in part, determined by the extent to which organisational structures are designed to cope with uncertainties in the market place. Inter-organisational relationships are also used by supply chain participants to secure resources they do not have (Andersen, 2006; Bradley et al., 2006). Organisations rely on dynamic capabilities to build competitive advantage in periods of rapid change (Teece, Pisano, & Shuen, 1997) and inter-organisational relational capabilities can be developed into a dynamic capability. Access to an overseas supply partner’s capabilities and resources enables exporting firms to lower market entry costs into export markets (Morgan & Hunt, 1999) and to reduce risk in knowledge investment (Claycomb, Droge, & Germain, 2001). Success of suppliers in export channels depends on their ability to meet product and quantity specifications of export buyers as export buyers and distributors assist by generating and distributing product specifications to suppliers in export channels (Daviron & Gibbon, 2002). Styles et al. (2008) found that successful marketing, especially in a cross-cultural context, is reliant on cooperative behaviours, which influence commitment and export performance. For both their dependent variables – venture performance and venture satisfaction – affective commitment was found to be the strongest explanatory variable. They argued that this supported ‘‘recent trends to treat commitment as a multidimensional construct. . . This reinforcing effect is consistent with the notion of reciprocity and mutual commitment previously demonstrated in the distribution channels literature’’ (p. 892). Therefore, Styles et al. (2008) provide empirical support in export performance research, that ‘‘the theoretical lens a researcher looks through determines the variables examined’’ (p. 892). They argue that the limitation of economic theories is that they focus mostly on environment and strategy related variables and ignore internal capabilities and assets, which can be overcome by using the RBV perspective. The advantage of linking internal capabilities and assets to inter-organisational relationships in export performance is empirically established in Styles et al. (2008). By ‘‘clearly establishing the chain of antecedents that precede trust and commitment, with commitment strongly linked to performance, the importance of relational variables derived from the relational exchange lens has been demonstrated’’ (p. 892). Thus, the establishment of relationships with buyers in export markets can provide some of the factors considered important for the supplier’s performance and survival. 3. Conceptual framework and development of hypotheses 3.1. Export performance improvement A review of literature suggests that effort to measure export performance improvement has often been fragmented and uncoordinated (Katsikeas et al., 2000; Zou & Stan, 1998; Zou, Taylor, & Osland, 1998), due to lack of convergence on the on the best way to assess the construct (Walters & Samiee, 1990). Further, even less reliance has been placed on the development of the relational or behavioural approach, through relational exchange theory, not as a replacement of the other two theoretical alternatives, but ‘‘as an additional lens through which valuable insights into export performance can be obtained (p. 892). This relational approach has been extended to other modes that involves strategic partnerships (Freeman et al., 2006; Freeman & Cavusgil, 2007; Styles & Hersch, 2005). The wide range of measures used to conceptualise the export performance improvement construct suggest the multidimensional (Bijmolt & Zwart, 1994), offering possibilities for alternative and complementary theoretical approaches and thus addressing the complex nature of the construct. To facilitate theory development, some researchers have focused on classification and categorisation of export performance improvement measures. For instance, Madsen (1987) grouped export performance improvement measures into profitability, volume, growth and perceptual indicators such as perceived firm success and reputation. Other researchers classified export performance improvement measures and antecedents into economic and non-economic measures (Styles et al., 2008). Efforts to consolidate export venture performance measures were made by Zou et al. (1998) who developed the EXPERF a multidimensional measure that focuses on strategic, operational and satisfaction dimensions of performance. Lages, Lages, and Lages (2005) reconfigured the EXPERF scale and developed the annual performance measure of an export venture (APEV) scale and PERFEX scorecard to rate corporate exporting performance. The APEV scale includes the following five dimensions: annual strategic performance, annual export venture achievement, export venture financial performance, contribution of venture to exporting operations and satisfaction with annual export venture overall performance. Both the EXPERF and APEV scales were considered to be rather complex for respondent organisations in this study as most did not keep formal financial records and were general unwilling to divulge financial figures. Thus, a simpler measure of how the export venture performed in the current year compared to the previous 2 years on the basis of return on assets, profit margins and growth in operating profits adapted from Rose and Shoham (2002) was used. Another major problem in the conceptualisation of the export performance improvement construct has been the view that export performance improvement is a dependent variable, while for others it is perceived as an independent construct. The first group view export performance as an outcome of a firm’s activities in export markets (Shoham, 1998) and thus treat it as a dependent variable (see Zou & Stan, 1998). Work by these researchers have investigated the link between export performance and marketing strategy (Axinn, Noordeweir, & Sinkula, 1996; De Luz, 1993; Leonidou, Katsikeas, & Piercy, 1998; Samiee & Anckar, 1998) management attitudes and perceptions (Beamish, Craig, & McLellan, 1993; Czinkota & Ursic, 1991;

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Evangelista, 1994), firm characteristics (Cavusgil & Zou, 1994; Diamantopoulos & Schlegelmilch, 1994), industry and market characteristics (Cavusgil & Kirpalani, 1993; Holzmu¨ller & Kasper, 1991) and environmental factors (Leonidou, Katsikeas, & Samiee, 2002). On the other hand, other researchers argue that the above approach ignores how firms react to previous outcomes and conceptualise export performance as an antecedent to export behaviour and marketing strategy (Lages & Montgomery, 2004; Skarmeas et al., 2002). For instance, Lages (2000) and Lages and Montgomery (2004) argue that there is need to investigate export performance as an independent variable as export performance plays a crucial role in determining export strategy. This view is consistent with the position is taken by other researchers who focused on the effect of export performance on marketing strategy (Lant & Hurley, 1999; Lages & Melewar, 2000), export intensity (Majocchi & Zucchella, 2003) and exporting capabilities (Kaleka, 2002). However, in line with most prior research in the area (Lages, 2000; Lages & Montgomery, 2004; Styles, 1998) in this study export performance is treated as a dependent variable. According to Diamantopoulos and Kakkos (2007), export performance is often conceptualised as a dependent variable as it helps managers to pinpoint the drivers of success in export markets. In recent research, Styles et al. (2008) argue ‘‘that it appears that the degree to which a partner is psychologically bonded to the other party (affective commitment) is particularly strong in explaining I [importer]–E [exporter] venture performance’’ (pp. 891–892). They define export performance and venture satisfaction as both dependent variables. They found affective commitment as the stronger explanatory variable and treat it as a multidimensional construct, explained by relational exchange theory and RBV. 3.2. Developing country exporters The past three decades have witnessed a surge of export-led growth and privatization strategies in most of the developing world (Bair & Gereffi, 2001). Increased liberalization, integration, and competition in world economies have promoted the participation of organisations from developing and emerging markets into global markets (Douglas & Craig, 1995). Export ventures funded and promoted by international organisations such as the International Monetary Fund (IMF) and World Bank have enhanced the participation of exporters from developing countries in sub-Sahara Africa in international markets (Barret, Ilbery, Brown, & Binns, 1999; Hughes & Merton, 1996). However, limited knowledge regarding export activities and information, results in higher levels of environmental uncertainty, which is characteristic of domestic markets from developing countries (Czinkota & Ronkainen, 2003). Literature focusing on exporters in developing countries has argued that the local-global link, and in particular the role of foreign buyers, is not well understood (Bair & Gereffi, 2001). Styles et al. (2008) argue that because of the ‘‘exponential increase in the number of East-West exchange relationships likely to occur this century, we believe this context is an important one in which to test our theory’’ (p. 881), using competencies and competitive lens through the RBV and the relational paradigms. There is need to understand the role of inter-organisational relationships in these global chains, as the success of exporting firms is at times shaped by the type of firms that lead the supply chain governance structures (Gereffi, 1999). Consequently, there is need to analyse global food chains to identify where local upgrading is facilitated or hindered by these global buyers (Schmitz & Knorringa, 2000). 3.3. Perceived environmental uncertainty and export performance improvement Both the task and macro environment have been identified as some of the major drivers of export performance (Aaby & Slater, 1989). However, limited empirical work has focused on the link between environmental factors and export performance (Katsikeas et al., 2000). Export market environmental forces have been found to influence the degree of product and promotion adaptation (Cavusgil & Zou, 1994). Perceived environmental uncertainty is usually conceptualised as a multidimensional construct including environmental volatility (Kohli & Jaworski, 1990), environmental munificence, competitive intensity (Castrogiovanni, 1991), market turbulence (Jaworski & Kohli, 1993), and environmental hostility (Khandwalla, 1977). In this study, perceived environmental uncertainty was conceptualised as a multidimensional construct comprising market turbulence, environmental volatility and competitive intensity (Jaworski & Kohli, 1993). 3.3.1. Market turbulence and export performance improvement Export market turbulence is the extent to which the composition and preferences of the organisation’s customer needs fluctuate over time (Cadogan, Sandqvist, Salmineni, & Puumalainen, 2005). During times of high competitive intensity, technological change, regulatory pressure, and market turbulence, there is a greater likelihood that the synchronization between the firm’s offerings and export customers’ needs may be lost unless there is an emphasis on export-market orientation activities, which can off-set environmental uncertainty (Cadogan, Diamantopoulos, & Siguaw, 2002). Bourgeois (1980) found that firms were more likely to adapt their operations to customer needs in turbulent environments than in stable ones. Kohli and Jaworski (1990) also found that organisations make fewer changes to the marketing mix in stable environments. Due to a long history of a market economy and continuous innovation, developed markets have more market turbulence and dynamism than emerging and developing ones (Aulakh, Katobe, & Teegan, 2000). Thus, export suppliers from developing countries are more likely to perceive developed export markets as more turbulent and will invest more resources in changing their operations and products to meet expectations of customers in export markets. For instance, fresh produce exporters from sub-Sahara Africa make asset-specific investments in irrigation equipment, temperature controlled grading

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and packing houses, as well as transportation facilities necessary to meet integrity and produce consistency requirements of the developed markets (Matanda & Schroder, 2002). Thus, export suppliers working in turbulent environments may find it hard to enhance performance and based on the above discussion the following hypothesis is posited: H1. Perceived market turbulence in export markets by export suppliers is negatively associated with export performance improvement. 3.3.2. Environmental volatility and export performance improvement Environmental volatility is the instability of aggregate market demand and has emerged as one of the central constructs in studying the relationship between the environment and organisational performance (Goll & Rasheed, 1997). Increased market turbulence and competition between supply chains has resulted in nurturing of supply chain relationships in an effort to develop sustainable competitive advantage for all supply chain members (Claycomb et al., 2001). Rapid changes in demand and supply aggravate environmental uncertainty because of the difficulties encountered in making accurate predictions (Achrol & Stern, 1988). Lack of institutional support in developing countries, results in limited access to marketing information (Ghauri et al., 2003), and this negatively affects the performance of exporters from developing countries. Ghauri et al., 2003) further suggest that in periods of environmental volatility small exporters find it more difficult to access export market information and this negatively affects there performance. Given that most suppliers in developing markets are small suppliers, the following hypothesis is advanced: H2. Perceived environmental volatility in export markets by export suppliers is negatively associated with export performance improvement. 3.3.3. Competitive intensity and export performance improvement Competitive intensity involves availability of opportunities and resources that can provide a firm with a competitive advantage (Castrogiovanni, 1991). Cadogan, Cui, and Li (2003) found that high competitive rivalry in export markets had negative effect on sales efficiency. Competitive intensity can also be defined as the degree of rivalry between competitors as shown in Porter’s Five Forces industry analysis model (Porter, 1980). Slater and Narver (1994) suggest that competitive intensity results in increased price competition which can reduce profitability. A higher degree of marketing mix adaptation is usually required in addressing economic, cultural, economic factors as well as legislative rules in developed countries (Lages & Montgomery, 2004), than in developing countries. Thus, suppliers serving markets in developed countries have to continuously monitor competitor moves and change their product and services offering than those in developing markets were the environment is less volatile. Consequently, the higher competitive intensity in developed markets (Sriram & Manu, 1995), requires suppliers to deploy more resources to enhance product and service offering to meet not only customer needs and demands, but regulatory and legislative requirements. For instance, Dolan and Humphrey (2000) found that even after making such investments some small export suppliers from developing markets were still unable to meet the health and safety requirements imposed by importers in developed markets. Some suppliers (for instance baby corn exporters from Zimbabwe) experience losses of up to 40% due to poor quality (Boselie, Henson, & Weatherspoon, 2003) and failure to meet the stringent and ever-changing market requirements. As a result, this increases costs and reduces the profitability of export suppliers. Therefore, the following hypothesis is posited: H3. Perceived competitive intensity in export markets by export suppliers is negatively associated with export performance improvement. 3.4. Perceived environmental uncertainty and inter-organisational relationships According to the RBV, and in particular resource dependency, organisations are unable to generate internally all the resources needed for a firm’s survival (Pfeffer & Salancik, 1978). As a result, firms that establish formal and informal relationships with other firms, increase their chances of access to resources (Heide, 1994). The ability to manage interorganisational relationships with supply chain partners whose resources can facilitate or constrain market performance is an important strategic asset (Awuah, 2001). A variety of factors have been identified as antecedents to such buyer–seller relationships, including commitment, trust, cooperation, long-term orientation, dependence, bonding, communication, flexibility, conflict and power (Aulakh, Katobe, & Sahay, 1996; Styles et al., 2008). In this study, three of the most frequently cited inter-organisational relational dimensions are incorporated – cooperation, commitment and power. 3.4.1. Perceived environmental uncertainty and cooperation Cooperation is characterised by the willingness of supply chain members to coordinate their activities to help all channel members achieve superordinate goals that are essential for achieving competitive advantage in export markets (Piercy et al., 1998). Other scholars view cooperation between buyers and suppliers to be a fundamental survival requirement and a critical component of supply chain strategy and organisational performance (Peck & Juttner, 2000). Within the supply chain context, cooperation is important for improving inter-organisational as well as intra-organisational relationships, and supply chain functions (Styles et al., 2008). For instance, technical cooperation in the supply chain can reduce waste and

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facilitate information flow, thereby increasing responsiveness to changes in the market. In fast moving or uncertain environments learning to adapt, is often more important than prior acquired knowledge (Autio, Sapienza, & Almeida, 2000) by suppliers and cooperation with export buyers can provide access to information that can facilitate adaptation process. Within the fresh produce markets, customer needs are more refined, with specific needs and preferences that exert inordinate pressure on suppliers. Therefore cooperation between buyers and suppliers can help supplier organisations to attain situation-specific knowledge about the market (Eisenhardt & Martin, 2000) needed to deliver value to customers in export markets. As a result, cooperation between buyers in developed markets and export suppliers enhances market access of suppliers in developing countries (Dolan et al., 1999). Access to information is particularly crucial in volatile markets where the unique nature of products exchanged requires a suitable match between the seller’s offer and the customer’s requirements (Evangelista, 1994), as in the fresh produce sector. Buyers in export markets have a better understanding of the changes in social, cultural and technological environments in export markets than export suppliers (Humphrey & Schmitz, 2002). As a result, cooperation and explicit coordination between buyers and sellers is a critical requirement for increasing competitiveness of supply chain members as well as the supply channel (Humphrey & Schmitz, 2002; Mohr & Spekman, 1994). Close cooperation between partners in supply chains designed to meet the fast changing needs of export target markets are especially important for the success of suppliers from developing countries (Kaynak & Kara, 2001). Exporters from developing countries need to cooperate with export market buyers to facilitate the delivery of highly customised products such as bar-coded, packaged and labelled pre-prepared or ready-to-eat vegetables that are easily transferred from the farm in developing countries to the supermarket shelves in Europe (World Bank, 2004) faster than competitors. Cooperation between export buyers and suppliers is important in increasing information flow on changes in the market on issues such as size, colour, weight, packaging and labelling that have major repercussions for the chain as a whole (Daviron & Gibbon, 2002). Thus, competitive pressure promotes cooperation between marketing channel participants and encourages product differentiation and innovation (Kim, 1999). Cadogan et al. (2002), found that exporters seek mechanisms to effectively synchronize the firm’s offering and export customers’ needs, and place emphasis on export-market orientation activities to off-set environmental uncertainty. Thus, given that market orientation encourages inter-organisational cooperation we would assume that environmental turbulence leads to cooperation. Thus, based on the above discussion the following hypotheses are posited: H4. Perceived market turbulence in exports markets by suppliers leads to cooperation between suppliers and their export buyers. H5. Perceived environmental volatility in exports markets by suppliers, leads to cooperation between suppliers and their export buyers. H6. Perceived competitive intensity in exports markets by suppliers, leads to cooperation between suppliers and their export buyers. 3.4.2. Perceived environmental uncertainty and commitment Commitment is the belief that a trading partner is willing to devote energy and resources to sustain a relationship (Spekman, Kamauff, & Myhr, 1999). Morgan and Hunt (1994) defined commitment as a belief by a channel member that the ongoing relationship with another channel partner warrants maximum effort to maintain the relationship. Most models analysing inter-organisational relationships view commitment as a crucial component of buyer–supplier relationships (Gundlach, Achrol, & Mentzer, 1995; Kumar, Scheer, & Steenkamp, 1995; Styles et al., 2008). As suppliers from developing countries often lack the needed resources (Leonidou, 1995) and have limited access to information about export markets, there is need to form relationships with committed export buyers who can supply the prerequisite resources and information. Thus, commitment of buyers in an export market can generate or increase an export suppliers’ experiential knowledge of a foreign market and can also facilitate the development of new relationships as the supplier uses the initial buyer as a bridgehead in the export market (Chetty & Eriksson, 2002). Environmental uncertainty in fresh produce markets is also an outcome of the highly perishable nature of fresh produce. A high degree of commitment between supply chain partners is necessary to facilitate asset specific investments needed to enhance quality and customer responsiveness (McLaughlin, 1995). In highly volatile environments, there is need for commitment and long-term orientation between buyers and suppliers so as to facilitate collaboration in making the capital intensive investments needed to set-up irrigation, grading and packaging facilities. For instance fresh produce suppliers from sub-Saharan African countries such as Ghana, Kenya, Zimbabwe and South Africa, have formed joint investments with buyers in Europe, Australia, the United Arab Emirates and Japan that have high capital outlays and longpay back periods (Dolan et al., 1999; Takane, 2004), to enable them to meet the needs of highly discerning export market buyers. Increased environmental volatility and competitive intensity have resulted in adoption of supply chain management as a tool to develop sustainable competitive advantage (Claycomb et al., 2001) as competition is now between supply chains, not individual organisations within the chains. Therefore, commitment in inter-organisational relationships symbolises stability and denotes the degree of long-term relationships as well as a positive view about the relationship (Han, 1992; Moorman, Deshpande, & Zaltman, 1993). Thus, based on the above discussion the following hypotheses are advanced:

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H7. Perceived market turbulence in exports markets by suppliers, leads to commitment between suppliers and their export buyers. H8. Perceived environmental volatility in exports markets by suppliers, leads to commitment between suppliers and their export buyers. H9. Perceived competitive intensity in exports markets by suppliers, leads to commitment between suppliers and their export buyers. 3.4.3. Perceived environmental uncertainty and power Prior research indicates that power is one of the most important control and communication mechanisms in marketing channels (Kim, 2000) as it can be strategically used in managing inter-organisational relationships. Power is the ability to change a relationship partner’s behaviour (Gaski & Nevin, 1985; Stern & El-Ansary, 1992) and is a primary driver of channel behaviour (Hanmer-Lloyd, 1996). Channel power is the degree of control supply chain members have to influence the decisions of other channel participants (Lusch & Brown, 1996). Power and dependence in an exchange relationship can make organisations more susceptible to the influence of other channel participants (Ballou, Gilbert, & Mukherjee, 2000). Increased competitive intensity and environmental volatility resulting from changes in safety regulations, and the need for due diligence and traceability (Stevens & Kennan, 2000) have resulted in retailers taking control of most supply chain functions. To facilitate fast and timely response to the ever-changing export market and environmental conditions, it is essential for some channel members to control the channel (Coughlan, Anderson, Stern, & El-Ansary, 2001). However, this has resulted in an imbalance of power within export chains. Power in inter-organisational relationship exists because one channel member has resources that other channel members need. Buyers in export markets have access to information about the final customer and market conditions, and thus are increasingly in a position to exercise power over suppliers who have limited means of setting distribution channels that offer the same economic benefits (Dobson, Waterson, & Chu, 1998). When there is an imbalance of power, the more powerful partner is more likely to use coercive rather than non-coercive power to influence the behaviour of less powerful members (Zhuang, Herndon, & Zhou, 2006). Thus, based on the above discussion the following hypotheses are posited: H10. Perceived market turbulence in export markets is positively associated with the use of power between suppliers and their export buyers. H11. Perceived environmental volatility in exports markets is positively associated with the use of power between suppliers and their export buyers. H12. Perceived competitive intensity in exports markets is positively associated with the use of power between suppliers and their export buyers. 3.5. Inter-organisational relationships and export performance improvement Environmental uncertainty requires organisations to innovate faster and more efficiently (Baker & Sinkula, 2005) to stay competitive, and cooperation between buyers and suppliers can facilitate the process. A recurring theme in literature is that inter-organisational relationships enhance organisational competitiveness by enhancing market-share, profits and customer satisfaction (Cravens & Piercy, 1994) in highly competitive markets. Inter-organisational relationships can create barriers to entry or competition thereby insulating the firm and consequently improving business performance (Gummesson, 1994). Kalwani and Narayandas (1995) state that engaging in long-term relationships has a positive effect on return on investment, net sales and inventory turnover. Cooperation and commitment between buyers and suppliers enables firms to access new technologies and markets and to increase product range, access to knowledge and sharing of skills (Powell, 1987). Styles et al. (2008) established the contention that commitment to future exchanges influences export performance, and is itself driven by the reciprocal cycle of each partner’s perception of the other’s commitment. Thus trust and commitment were found to be related to interpersonal factors and to firm factors. Suppliers’ skills in relationship building and monitoring customer relationships can facilitate and enhance export performance (Freeman et al., 2006; Piercy et al., 1998). Inter-organisational relationships focus on the maximisation of efficiency and minimising of total value-added costs of the entire value chain thereby becoming an important tool for all members of the value-adding chain (Dyer & Ouchi, 1993a, 1993b). The discussion above suggests that inter-organisational relationships enhance export performance. Thus, we hypothesise that: H13. Cooperation between export suppliers and their buyers enhances export performance. H14. Commitment between export suppliers and their buyers enhances export performance. Whilst cooperation and commitment enhance export performance, power has been found to reduce organisational performance and cooperation, and increase dissatisfaction of supply chain partners (Skinner, Gassenheimer, & Kelley, 1992). Other studies have found that when buyers have more power, they set prices that may limit supplier profitability. Thus,

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Fig. 1. Conceptual model and hypotheses.

given the imbalance of power between export buyers and suppliers, buyers are more likely to use coercive power in their business dealings. Thus, we hypothesise that: H15. Use of power between export suppliers and their buyers reduces performance of export suppliers. The relationships hypothesised above give rise to a conceptual model shown in Fig. 1. 4. Methods 4.1. The sample and data collection The sampling frame was drawn from data obtained from the government department in charge of extension services in the Zimbabwean horticultural sector and from a local horticultural producers association (Hortico). The two databases indicated that approximately 2500 suppliers were involved in commercial fresh produce production in the provinces (Manicaland and Mashonaland) where the survey was undertaken. To reduce travelling costs, the survey covered areas where most fresh produce exporters were located, based on the information supplied by the government and Hortico. Using random sampling technique 450 suppliers were selected and interviewed using a face-to-face interviewing technique. Of the selected respondents 145 were no longer involved in fresh produce production, 19 could not be located, 15 declined to participate due to lack of time. In total, 14 out of the 276 completed questionnaires were incomplete or had been completed by ineligible respondents. Thus, the response rate was 68%. This response rate is very high compared to response rates in previous studies in export marketing. For instance, Shoham (1998) indicated that a 40.1% response rate was well above previous research using export managers, which ranged from 7% to 83%. The 262 fresh produce suppliers interviewed had business relationships lasting more than 2 years with buyers located in the United Kingdom, UAE, Netherlands, Japan and Australia. The respondents were asked questions with respect to the relationship between the respondent firm and its major export market buyer. A closed question questionnaire was used in face-to-face interviews with key informants. Face-to-face interviewing techniques provide a better data gathering technique in rural areas of developing countries. Telephone interviews and mail interview techniques face problems due to poorly developed postal and telecommunications services and are problematic where there are high illiteracy rates. Furthermore, these techniques lack the flexibility of face-to-face interview techniques. A review of research methodologies in international business also recommends the use of personal interviews and mail questionnaire as ‘‘. . .directories are either incorrect or out of date. . .[Telephone]. . .does not constitute an especially feasible interviewing vehicle. . .and. . .[authors] recommend the use of mail questionnaire and/or personal interview in DCs [developing countries]. . .[and] suggest the use of personal distribution . . . to increase the return rate on mail questionnaires’’ (Yang, Wang, & Su, 2006: p. 612). The key informants were identified as senior managers involved in the decision-making process. Based on suggestions from previous research (Marshall, 1996) key informants were screened and chosen on the basis of their knowledge of the research issues and confidence to answer the questions, formal role in the organisation and willingness to respond. In line with most prior research (see Katsikeas et al., 2000) the export venture was used as the unit of analysis, as respondents were requested to respond to the questions in respect of horticultural exports to a single buyer (the major buyer) in a specific export market. Katsikeas et al. (2000) suggest that when the export venture is used as a unit of analysis, researchers should ensure that the criteria used are consistently understood by the respondent. Therefore to enhance consistency the measure were developed using a literature review, in-depth interviews with managers, consultation with industry experts and was pretested in the industry before the survey was undertaken. However, Diamantopoulos and Kakkos (2007) caution researchers that venture-level and firm-level analyses are usually influenced by contextual factors such as organisational, management and environmental factors.

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4.2. Instrument development The research instrument was designed and developed in several stages. The first stage involved both item and construct generation thorough a review of literature and consultation with industry experts. The second stage involved in-depth interviews with four academics and three senior managers who were asked to indicate the issues they regarded as important in managing global supply chains in the export business environment. The items identified were added to those items generated from prior studies and others were modified or dropped from the questionnaire. In the third stage, methods suggested by Brislin (1970, 1976) for achieving construct validity when multi-languages are used in research were utilised in developing the questionnaire. An initial questionnaire was developed in English and the version that was used for nonEnglish speaking export suppliers was translated (to Shona, a Zimbabwean dialect) by two bilingual translators. These translated questionnaires were collated to produce a common Shona version and this was, in turn, back translated into English to enhance face validity. The final stage involved a pilot study of the research instrument. During the pre-test stage, respondents were requested to indicate ambiguities, clarity and ease of response to the questionnaire. Subsequently, final modifications were made incorporating the suggestions from the pilot-study before the final questionnaire was taken into the field. 4.3. Measurement The measures of environmental uncertainty, inter-organisational relationships and export performance improvement were developed following the recommendations of Gerbing and Anderson (1988). Measures for all the constructs used in the study were adapted from previous research and confirmed using personal interviews with senior managers and academics working in the industry. Inter-organisational relational and perceived environmental uncertainty dimensions were measured using a 7-point Likert type scale anchored on ‘1’ = strongly disagree to ‘7’ = strongly agree. Export performance improvement measures were anchored by ‘1’ = much lower to ‘7’ = much higher. 4.3.1. Export performance improvement Export performance improvement can be measured in economic terms using financial measures such as export sales intensity or growth, profitability and market share, or by noneconomic measures that relate to product, market and experience elements (Cavusgil & Zou, 1994; Katsikeas et al., 2000). Export performance improvement was operationalised as a multidimensional subjective economic export performance measure. Prior research indicates that export performance is a complex construct and is best conceptualised as a multi-dimensional construct (Bhargava, Dubelaar, & Ramaswami, 1994). Export performance improvement was measured by asking respondents to rate how their export venture performed in the current year compared to the previous 2 years on the basis of return on assets, profit margins and growth in operating profits (Rose & Shoham, 2002). Subjective measures of business performance have been used in prior research as a positive association between subjective and objective measures has been demonstrated (Venkatraman & Ramanujam, 1986). The use of subjective or perceptual measures of export performance is viewed as a way to overcome problems associated with national and international accounting standards and unwillingness of respondents to report financial measures (Leonidou, Katsikeas, & Samiee, 2002). 4.3.2. Perceived environmental uncertainty Perceived environmental uncertainty was measured using subjective measures. Prior research suggests that perceptual measures should be used in measuring environmental uncertainty (see Sutcliffe & Huber, 1998), as they provide a better view of how managers deal with the environment than objective ones. Market turbulence was measured by using five items adapted from (Jaworski & Kohli, 1993). Environmental volatility was assessed through four items from Ganesan (1994). Four items adapted from Jaworski and Kohli (1993) were used to capture suppliers’ perception of competitive intensity. 4.3.3. Inter-organisational relationships Cooperation was measured using a five-item scale adapted from Ganesan (1994). The measure for commitment focused on expectations of continuity and was adapted from Dwyer, Schurr, and Oh (1987) and Wilson (1995). A five-item scale from Brown, Lusch, and Nicholson (1995) was utilised to assess power. Details of all the measurements used in this study are shown in Table 1. 4.4. Data analysis 4.4.1. Validation of measure Prior research suggests that given that export performance is inherently cross-cultural, it is critical to refine and validate the measures across different settings (Styles, 1998), so as to effectively contribute to theory development in international marketing (Katsikeas et al., 2000). Perceived environmental uncertainty measures were adapted from various literate sources and as there was no previous validation of the measures in a developing country both exploratory and confirmatory factor analysis were used to assess uni-dimensionality and determine the items that best captured the various dimensions of

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Table 1 Confirmatory factor analysis results. Construct and source

Operational measures of construct

SFL*

t-Value

Model fit indexes: x2 = 52.45; df = 30; RMSEA = .052; GFI = .96; AGFI = .94; CFI = .91 i. In our line of business customer preferences change rapidly ii. Customers in this market are very price sensitive iii. There are always new customer demands in the market we serve iv. It is difficulty to monitor customer demands in the market we serve v. In our industry customer preferences in terms of quality are always changing

.84 .88 .75 .76 .67

12.96 13.20 – 11.89 9.09

a

Environmental uncertainty

1. Market turbulence (Jaworski & Kohli, 1993); AVE = .78

2. Environmental volatility (Ganesan, 1994); AVE = .69

i. The demand for the products we sell is unpredictable ii. The volume of production in this industry is unstable iii. Sales forecasts for our products are accurate (R) iv. In is difficulty to monitor price changes for our product in our market

.69 .81 .62 .65

10.64 12.49 – 9.24

3. Competitive intensity (Jaworski & Kohli, 1993); AVE = .53

i. The major source of competition in our industry is pricing ii. Product quality in our industry is rapidly increasing iii. The quality of other growers’ products is threatening our survival iv. New competitors enter this market regularly v. There are other horticultural products that can be sold as substitute for our products

.62 .56 .70 .69 .58

9.27 7.09 10.29 10.66 –

.75 .73 .69 .55

10.21 10.28 9.61 –

Inter-organisational relationshipsa 1. Cooperation (Ganesan, 1994); AVE = .68

2. Commitment (Dwyer et al., 1987; Wilson, 1995); AVE = .68

3. Power (Brown et al., 1995); AVE = .54

Export performance improvementb (Rose & Shoham, 2002); AVE = .84

Model fit indexes:x2 = 103.11; df = 46, RMSEA = .06; GFI = .95; AGFI = .93; CFI = .91 i. We cannot sell the same volume without the cooperation of this buyer ii. This buyer always gives us the support we need in times of difficulty iii. We have a good working relationship with this buyer iv. This buyer is always understanding of our problems i. We will do all we can to maitain the relationship we have with\ this buyer ii. If we switched to a competing buyer, we would lose a lot of the investment we have made in this relationship iii. This buyer has changed his/her operations to suit our products iv. This buyer has trained his/her sales staff to handle questions about our products v. We are committed to our relationship with this buyer

.73 .75

– 10.44

.48 .75 .69

5.67 10.22 9.87

i. Even if we disagree with this buyer we have to comply with their request ii. In case of disagreement buyer could penalize us iii. This buyer is able to make decisions that can alter our profit levels iv. This buyer can adversely influence the way we operate

.81 .71 .64 .52

10.67 10.42 – 5.87

i. Operating profits ii. Profit margins iii. Return on assets

.85 .89 .77

10.21 – 8.44

(Respondents were instructed to answer the above questions in respect of the major buyer in a specific export market). (–) Measurement item fixed for estimation. (R) Measurement items that were reverse coded. * A SFL standardized factor loadings. a Measures on 7-point Likert scale anchored on 1 = ‘‘strongly disagree’’; 7 = ‘‘strongly agree’’. b Measure on Seven-point Likert scale anchored on 1 = ‘‘much lower’’; 7 = ‘‘much higher’’.

environmental uncertainty. Exploratory factor analysis of the item-to-total correlation indicated that three out of the seventeen measurement items used to assess environmental uncertainty did not load on any factor and these were not included in further analysis. The three factors extracted were labelled environmental volatility, competitive intensity and market turbulence (see Table 1). Second, structural equation modelling using the Analysis of Moment Structures (AMOS) and the maximum likelihood estimation procedure was used to assess validity of all the constructs. When the ratio of the sample to the number of estimated parameters exceeds the five-to-one ratio then different measurement models should be estimated for the different constructs (Hair, Anderson, Tatham, & Black, 2005). As a result three confirmatory factor models that grouped related measures into a single model were specified so as not to compromise the sample to parameter ratio. 4.4.2. Convergent validity To assess convergent validity, a series of confirmatory factor analyses models were estimated (Bagozzi, Yi, & Phillips, 1991). Each measurement item was specified to load onto the pre-specified underlying construct. If items positively loaded on the assigned latent factor, then convergent validity was established. The models indicate factor loadings above .4 and the t-values were above 2 and significant at p < .05. Convergent validity was also assessed by loading each item on the construct it was hypothesised to represent and perform confirmatory factor analysis (CFA), and examining whether the average variance extracted exceeded the squared multiple correlation between all pairs of constructs (Fornell & Larkner, 1981). The

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Table 2 Standard deviations, and correlations and reliability coefficients of constructs.

Environmental volatility Competitive intensity Market turbulence Cooperation Commitment Power Export performance improvement

Mean

Standard deviation

1

2

3

4

5

6

7

5.36 4.92 3.96 5.63 5.36 4.47 5.67

1.05 1.02 1.47 1.12 .92 1.39 1.25

.67 .341** .135* .052 .170** .214** .001

.70 .088 .055 .033 .190** .041

.69 .014 .074 .089 .122*

.77 .456** .097 .075

.70 .176** .052

.69 .122*

.89

N = 262; *p  .05; **p  .01: reliability coefficients are on the diagonal.

results of the CFA models are shown in Table 1. During CFA measurement, items with low standardised factor loadings (SFL) or that cross-loaded were deleted after examining the pattern of residuals and item-total correlations (Bryne, 2001; Hattie, 1985). This is a well acceptable statistical procedure when estimating measurement models (Segar, 1997). The results of the CFA models are shown in Table 1. 4.4.3. Discriminant validity Discriminant validity is assumed when empirically measured scores of two values that are predicted to be uncorrelated in theory are found to be uncorrelated in a pattern of inter-correlations with a variety of other variables (Bollen, 1989). First, Pearson correlation coefficients were examined to assess discriminant validity. Discriminant validity is achieved if independent variables are not highly correlated. The correlation coefficients of all the constructs were below .5 (see Table 2). Thus, discriminant validity was then assumed. Second, additional assessment of discriminant validity was undertaken by using confirmatory factor analysis. Discriminant validity was assessed through examination of the x2 differences tests between a constrained and unconstrained model using AMOS. In the restricted model the phi coefficient was constrained to unity or fixed at 1 and compared to the original unrestricted model. The x2 results were compared and the restricted models had a poorer fit than the unrestricted ones, thus discriminant validity between the factors was assumed. 4.4.4. Reliability Internal consistency of the scales was assessed through the calculation of the coefficient alpha (Cronbach, 1951). The coefficients of constructs used in the study ranged from .67 to .89 and thus exceeded the .6 cut-off point suggested for exploratory analysis (Nunnally, 1978). Table 2 presents the correlation matrix, descriptive statistics and composite reliabilities. 4.4.5. Common method variance According to Buckley, Cote, and Comstock (1990), common method variance is the amount of spurious covariance shared among variables as a result of using a common method during data collection. Other factors such as wording, scale length and undesirability of measurements can also influence the way a respondent responds to questions (Malhotra, Kim, & Patil, 2006), resulting in common method bias in survey research (Tourangeau, Rips, & Rasinski, 2000). To test for common method variance bias the marker variable technique was used (Lindell & Whitney, 2001; Malhotra et al., 2006). Marker variables were introduced in each of the three CFA models. The x2 difference tests were used to compare models incorporating the marker variable and those that did not. The x2 and correlates of models with a marker variable were significantly different from those of the models without the variable maker. As a result, we assumed that common method bias did not pose a significant problem in this study. 5. Results 5.1. Hypotheses testing The primary purpose of this study was to investigate the influence of perceived environmental uncertainty on interorganisational relationships and export performance improvement, and this was tested using structural equation modelling. The model fit indices indicate a good fitting model on basis of the criteria outlined by Steenkamp and Baumgartner (1998), with x2 = 22.73, GFI = .99, AGFI = .96 CFI = .99, NFI = .98, TLI = .95 and RMSEA = .051. The standardised estimates, t-values and significance levels for each structural path are shown in Table 3. 5.1.1. Influence of perceived environmental uncertainty on export performance improvement Hypotheses H1–H3 predicted a negative relationship between perceived environmental uncertainty dimensions and export performance improvement. The results indicate that whilst market turbulence had no significant direct effects (b = .033, ns) on export performance improvement, it had significant indirect (b = .134, p < .01) and total (b = .139, p <.01) effects on export performance improvement, providing support for H1. Contrary to H2, environmental volatility had significant positive direct (b = .082, p < .01) and total (b = .072, p < 05) effects on export performance improvement,

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Table 3 Results of analysis. Hypotheses and prediction

Constructs and predicted influence

Direct effects

H1 ()

Market turbulence ! export performance improvement

.033

H2 ()

Environmental volatility ! export performance improvement

.082

Indirect effects

Total effects

t-Value

.134

.167

2.704

.010

.072

1.920

Conclusion Supported Not supported

H3 ()

Competitive intensity ! export performance improvement

.096

.018

.114

2.691

Supported

H4 (+)

Market turbulence ! cooperation

.046

.029

.075

2.01

Not supported

H5 (+) H6 (+)

Environmental volatility ! cooperation Competitive intensity ! cooperation

.138 .163

.008 .133

.130 .276

2.702 3.997

H7 (+)

Market turbulence ! commitment

.144

.001

.143

2.847

H8 (+) H9 (+) H10 (+)

Environmental volatility ! commitment Competitive intensity ! commitment Market turbulence ! power

.179 .146 .124

.007  .053

.172 .146 .177

2.977 2.926 3.102.

H11 (+)

Environmental volatility ! power

.160

.003

.163

2.817

H12 (+)

Competitive intensity ! power

.009

.118

.127

2.668

H13 (+)

Cooperation ! export performance improvement

.256

.003

.259

3.879

Not supported

H14 (+) H15 ()

Commitment ! export performance improvement Power ! export performance improvement

.139 .148

.091 .011

.048 .157

.924 2.993

Not significant Supported

Supported Supported Not supported Supported Supported Supported Not supported Supported

Model diagnostics: x2 = 22.73; RMSEA = .051; GFI = .99; AGFI = .96; CFI = .99; NFI = 98.

providing support for H2. Significant negative direct (b = .096, p < .05) and total (b = .114, p < .01) effects emerged between competitive intensity and export performance improvement as hypothesised in H3. 5.1.2. Influence of perceived environmental uncertainty on inter-organisational relationships Whilst both direct (b = .046, ns) and indirect (b = .029, ns) effects between cooperation and market turbulence were not significant, significant total effects (b = .075, p < .05) emerged between the two constructs, providing support for H4. Consistent with Hypothesis H5, there were significant positive direct (b = .138, p < .01) and total (b = .130, p < .01) effects between environmental volatility and cooperation. Significant direct (b = .164, p < .001) and indirect (b = .133, p < .01) effects emerged between competitive intensity and cooperation, resulting in positive total effects (b = .276, p < .001). Thus, H6 was supported. Contrary to H7, market turbulence had negative direct (b = .144, p < .001) and total (b = .143 p < .01) effects on commitment. As expected, significant positive direct (b = 179, p < .01) and total (b = 172, p < .01) effects emerged between environmental volatility and commitment. Thus, H8 was supported. Competitive intensity had significant positive direct (b = 146, p < .01) and total (b = 146, p < .01) effects on and commitment, providing support for H9. Market turbulence had significant positive direct (b = .144, p < .01) and total (b = .177, p < .01) effects on power. Thus, H10 was supported. The results did not provide support for H11, as the relationship was not in the hypothesised direction, as significant negative direct (b = .160, p < .01) and total (b = .163, p < .01) effects emerged between power and environmental volatility. Interestingly, while there were no significant direct effects between competitive intensity and power ((b = .009, ns), significant indirect positive effects emerged (b = .118, p < .01), leading to significant total effects (b = .127, p < .01). Thus, H12 was supported. 5.2. Influence of inter-organisational relationships on export performance improvement Contrary to H13, cooperation had positive direct (b = .256 p < .001) and total (b = .259 p < .001). It is interesting to note that whilst there were insignificant total effects between commitment and export performance improvement (b = .048, ns) as hypothesised (H14), significant positive direct (b = .139 p < .01) and indirect (b = .091 p < .05) effects were observed between the two constructs. As expected H15, export performance improvement was negatively associated with use of power as both significant negative direct (b = .148, p < .01) and total (b = .157, p < .01) effects were observed. 6. Conclusion, managerial implications and future research 6.1. Discussion and conclusion In sympathy with an emic approach to research design we have adapted western scales for testing our constructs in a developing market context, sub-Saharan Africa. The findings suggest that perceived environmentally uncertainty by suppliers in export channels has a negative effect on the success of the export venture. Perceived environmental volatility and competitive intensity by suppliers promotes cooperation and commitment between the suppliers and their buyers in

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export markets. This suggests that in situations perceived as environmentally unpredictable with high levels of competition, suppliers seek closer bonds or social relationships, such as personal relationships or even friendship (Mainela, 2007) with their buyers. However, this desire for closer relationships by developing market suppliers with their export buyers seems to be influenced strongly by the power and coercion exerted by buyers. This suggests an underlying dependency rather than trust in relational bonds on the part of developing country exporters in sub-Saharan Africa. We argue that this process is best described by an inter-relational perspective where the type of relationship is perceived as a direct influence on the buyer– seller relational process during periods of environmental uncertainty and competitive intensity. These environmental factors are especially attributed to the context in which developing market suppliers must interact with buyers, who are serving the ever changing demands of developed market global retailers. The RBV suggests that the social capital that can be embedded in personal ties, networks and contacts can be regarded as an intangible resource that is difficult to replicate, thus giving exporters with such ties a significant advantage (Mitchell, Smith, Seawright, & Morse, 2000; Peng & Luo, 2000). From a theoretical perspective, Peng (2001) and Shan and Song (1997) support the argument that RBV asserts that MNEs are both ‘‘pushed’’ by firm-specific advantages held by them, but also ‘‘pulled’’ by the resources and capabilities of the target firm overseas that can assist the MNE to develop new advantages, such as market entry. Hoskisson, Eden, Lau, and Wright (2000) have identified the RBV as one of three most insightful theories when probing into emerging economies. In addition, Pemg and Ilinitch (1998) suggest knowledge-based resources critical for international market activities do not have to reside within the firm. Finally, Freeman et al. (2006) found that inter-organisational relationships allow firms to connect to international partners and gain access to much needed resources to assist market entry and ongoing presence. This study refines existing theoretical understanding by supporting the relational and RBV as explanatory perspectives for export performance improvement in an East–West (sub-Sahara-West) context. Market turbulence and competitive intensity were both positively associated with power. This suggests that when faced with highly competitive markets, buyers use power as a tool to coerce developing market suppliers to cooperate. Developing market suppliers in sub-Saharan Africa come from regions with very few opportunities for expansion to overseas markets. They have very few resources to engage in strategic bargaining with their buyers, and thus are virtually, completely subject to the power executed by export buyers. Foreign market buyers are faced with several sources of risk (price, quality, timing of delivery, inventory, and storage) that emanate from the climate, culture, political environment and biological nature of agricultural products (Sporleder, 1993). As a result of increasing global pressures from retailers, buyers must provide very specific guidelines on the type and time of production, packaging, product, and grading and postharvest handling procedures. Failure of developing market suppliers to meet these guidelines is very likely to result in use of coercive power and termination of contracts by export market buyers. Where developing market export suppliers perceive very high levels of environmental volatility in export markets, such as found in sub-Saharan Africa, they are very likely to engage in cooperation and commitment with their buyers, suggesting the primary importance of relationships. The nature of these developing market export supplier–buyer relationships and the pressures they are subjected to is best explained by an interorganisational perspective. This also suggests an especially high level of supplier vulnerability, from developing markets, such as the sub-Saharan Africa, because of a particular lack of resources as well as capabilities exhibited by these developing market export suppliers, which is explained by complementary RBV and inter-organisational perspectives. In particular, Morgan et al. (2006) argue that RBV is a particularly appropriate theoretical framework for examining resource drivers of export venture performance in industrial firms. They provide ‘‘direct evidence to support the fundamental RBV prediction that the resource–performance relationship is dependent on the imitability and substitutability characteristics of available resources’’ (p. 622). Styles et al. (2008) are one of very few studies that tested and supported the applicability of a relational or behavioural paradigm to the study of export performance. In this study we support RBV and relational exchange theory as complementary approaches for explaining export performance improvement for emerging market firms. The very negative association between market turbulence and commitment indicates that the rapid changes in customer composition and preferences do discourage commitment between export buyers and developing market suppliers. There is also a particular industry dimension in fresh produce. Due to the time lag between production and consumption, very particular to fresh produce, rapid changes in customer preferences can result in export buyers or distributors not finding markets or acceptable prices for suppliers’ products. The increasing global demands for changes, lead to considerable fluctuations in buyer demands and expectations, and we argue they may also be perceived as a lack of commitment from buyers to their export suppliers. These complex factors explain the particularly negative association between market turbulence and export performance improvement. Meeting constantly changing customer preferences and demands may be too difficult or costly for export suppliers from developing markets that have very few resources both financial and human. We argue that this situation results in a strong and negative association between market turbulence and export performance improvement for developing market export suppliers. Unlike exporters from developed market with very supportive political, legal and economic factors, in developing countries, smaller export suppliers may not have the capabilities and resources to continuously change operations and processes to meet the ever-changing customer preferences via export buyers’ requests. Thus, market turbulence emerged as a particularly complex environmental uncertainty dimension to manage, in the developing market context, as it is negatively linked to commitment and cooperation. Market turbulence was positively associated with use of power, suggesting that export buyers do use power to coerce developing market export suppliers to change products and production processes so as to meet changing consumer demands. This seems more likely to occur in situations where export suppliers have little or no bargaining power, typical of the smaller exporter from a developing market, such as sub-Saharan Africa. This suggests that

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suppliers in developing markets such as those, with particularly limited resources and capabilities are placed in an acutely vulnerable position. It also appears that developing market export suppliers have little prospect of avoiding coercion through power exerted by buyers trying to operate in turbulent market conditions. This is because demands from international customers are on the increase, and quickly transferred back up the supply chain through global retailers. Thus, the findings reveal a process characterised by a very noticeable lack of resources as well as capabilities by export suppliers leading to especially high levels of supplier vulnerability. This situation is best explained theoretically by the RBV of the firm, with the sub-Saharan export supplier distinguished by a very meagre, frequently subsistence level existence, implying very low levels of resources and capabilities to meet future fluctuating demands from buyers. Whilst Skarmeas et al. (2002) found no significant association between environmental volatility and commitment, the results of this study found that export suppliers that perceived export markets as volatile were more committed to relationships with their export buyer. This seems to be a very likely outcome for smaller exporters from developing markets such as the sub-Saharan, described as poorly managed and particularly vulnerable to high levels of political, economic and climatic uncertainty, where the willingness of buyers to deal with these economies is limited, leaving export suppliers no alternative but to commit to these relationships. In contrast to research in Western economies (Awuah, 2001; Peck & Juttner, 2000; Styles et al., 2008) on the three interorganisational relational variables examined, only commitment had a positive impact on export performance improvement. Thus, even though environmental uncertainty results in establishment of highly committed inter-organisational relationships not all outcomes of these relationships have a positive impact on business performance, when viewed from the context of sub-Saharan Africa. The results indicate that commitment of the buyer is important for the supplier’s performance. This is because commitment from their buyer is essential for suppliers in the fresh produce sector as some are involved in projects with long payback periods or investments in products with long gestation periods (Jaffe & Morton, 1995), and having a committed buyer reduces risk. This suggests the particular uncertainty of export suppliers in the fresh produce sectors. Thus, export suppliers may continue to cooperate with export buyers as a result of the contractual agreements even in situations when the relationship has negative effects on export performance improvement. We argue that this is because the context in which sub-Saharan exporters must operate in leaves them little option as the alternatives are few and far between. Given the frequent changes required by buyers, which suppliers are required to meet, through high costs and capital outlays which proportionally represent higher risk for resource poor developing market suppliers, the RBV provides an overarching explanation for their high commitment levels despite its negative impact on their export performance improvement. We argue that the reason for export suppliers’ commitment could be the lack of lucrative alternative markets available to them. The implication is that export suppliers from developing markets have to cooperate with export buyers even when they do not feel committed to the relationship. This latter argument, which suggests relationship commitment by export suppliers is driven by a lack of competencies and capabilities, especially noticeable in sub-Saharan Africa, is comprehensively explained by the complementarity of an inter-organisational relational perspective and RBV of the firm, previously identified in export performance studies by Styles et al. (2008). 6.2. Managerial implications The study contributes to marketing and managerial practices for the fresh produce industry. The study indicates that there are very complex relationships between environmental uncertainty, inter-organisational relational dimensions and export performance improvement, in the context of the developing market, but in particular those that are very poor economically and unstable politically, such as sub-Saharan Africa. Given the increase in competitiveness and environmental uncertainty, managers need to constantly monitor environmental uncertainty and to devise strategies to mitigate the potentially negative impact of these factors on export performance improvement. Thus, there is a need for developing country suppliers to develop long-term inter-organisational relationships with buyers, which can enhance export performance, despite the imbalance in power and real hardship this might inflict on them. However, developing market export suppliers need far greater access to resources and capabilities, including relationship building ability to locate buyer partners more willing to provide flexibility on orders, timing and quality, to reflect frequent climatic hostility and political and economic uncertainty facing developing market suppliers. This suggests a much stronger role for government and local government agencies in developing markets. Developments bodies at both the local and national level, for example, regional and local governments, and research centres need to work closely with developing market exporters to complement the work of Inward Investment Promotion Agencies (IIPAs), by extracting more value from the existing buyers. Through this strategy IIPAs must over time put more emphasis on the unique assets to be found in their distinct region and country. This type of policy seeks to differentiate the sub-Saharan region from others by highlighting the uniqueness of the location in their marketing programs for developing market exporters, as distinct from the generic advantages talked about by most locations. The agenda seeks to use differentiation strategies that are territorially specific (Raines, 2003). Given the difficulty that individual suppliers might face in developing markets, collaboration in global food supply chains provides more market access options for export suppliers through flexible offerings, timing, quality and consistency for this vulnerable group when negotiating with buyers. Findings suggest these developing market export suppliers are capable of high levels of commitment and adaptation of processes despite the considerable ongoing pressure that this places them under to meet exacting and constantly changing buyer needs short-term. Export managers face considerable barriers to enhancing their export performance objectives and managerial implications suggest they need to be able to develop considerable managerial

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capabilities and competencies to identify the specific environmental uncertainty dimensions they want to manage so as to formulate appropriate relational strategies. Thus our findings provide strong evidence to support a RBV perspective that the resource–performance relationship is dependent on imitability and substitutability of available resources, in support of Morgan et al. (2006). It extends theory to use the complementary relational approach to confirm interpersonal factors in line with Styles et al. (2008) for explaining resource–performance in exporters. Finally, it extends RBV as an appropriate theoretical perspective for emerging markets, by providing evidence for export performance for inter-organisational relationships between I and E (West-sub-Sahara). 6.3. Limitations and directions for future research Considering the growing importance of global supply chains, there is a need to understand factors that affect export performance at all levels of the supply chain. Additionally, research investigating similarities and differences in how managers in both developed and developing countries conceptualise perceived environmental uncertainty and its relationship with and between inter-organisational relational variables is important. Future research should focus on differences in perceptions of the environmental uncertainty dimensions, the association between environmental uncertainty dimensions and inter-organisational relational dimensions across the supply chain. Differences in interpreting perceived environmental dimensions across the supply chain may result in inhibited development of a shared vision and may retard channel efficiency. Finally, there are a number of limitations to this study. First, a cross-sectional methodology was used and thus views could be biased due to the common method variance used as it influences correlations and leads to overestimation of the hypothesized predictors. Second, inter-organisational relationships, which involve large capital outlays such as irrigation equipment, grading and packaging facilities are better analysed using longitudinal research especially in highly inflationary economies like those in most sub-Saharan African countries. Third, a longitudinal research design could be more effective in reducing bias resulting from respondents concentrating on problems they were facing at the particular time of the study. For example, the issue of shortages of foreign currency and high air-freighting costs dominated other environmental uncertainty factors. Fourth, this study focused on the use of three relational variables in dealing with environmental uncertainty. However, other factors that may be involved such as infrastructure availability, institutional and economic framework and management characteristics have not been investigated and could be incorporated into future studies for a more integrative understanding. 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