2007 Oxford Business & Economics Conference ISBN : 978-0-9742114-7-3

AN ANALYSIS OF THE INTERNAL CAPACITIES OF REGIONAL EXPORTERS IN NSW, AUSTRALIA.

Abstract submitted to

Oxford Business & Economics Conference

June 24-26, 2007

Oxford University, UK

Assoc. Prof. Ann Hodgkinson

School of Economics and Information Systems

Faculty of Commerce

University of Wollongong

Northfields Avenue

Wollongong, 2522

New South Wales

Australia

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AN ANALYSIS OF THE INTERNAL CAPACITIES OF REGIONAL EXPORTERS IN NSW, AUSTRALIA.

Abstract

An analysis of networking activities among SME exporters in regional NSW, Australia indicated that they tended to be isolated entrepreneurs, who relied primarily on their internal innovation and marketing capacities rather than on local networks and clusters as suggested by regional development theory (Vaessen and Keeble 1995). Many of these firms were small, new ‘born global’ firms that had entered world markets with an innovative niche product and helped by the very low Australian exchange rates prevailing at that time (Hodgkinson 2003).

In this paper, the internal entrepreneurial capacities of these exporters are analysed from the perspective of the resource-based view (RBV) literature. This approach proposes that performance is the result of internal attributes (resources and capabilities) of the firm. To be a successful exporter, the small firm must acquire sufficient resources to cover the higher risks of operating in international markets. Exporters are divided into five categories based on their growth performance between 1996/97 and 2000/01: negative, zero, modest, good and fast. Each group is analysed to determine the relationship between their export growth performance and a series of internal resource and capability variables. These variable are (a) formation of strategic partnerships (Dhanaraj and Beamish 2003); (b) sources of information; (c) types of technological change; (d) export strategy; (e) organisational corporate and production strategies (Priem and Butler 2001); (f) investment in physical capital; (g) employment growth (Barney 1991). The analysis is performed using the Probit logistical model.

Results indicate that those exporters with the fastest growth focused on new product development rather than production innovations in their R&D strategies and sourced new technology from others through adapting market innovations and partnerships with other firms rather than relying on self development of innovations. Exporters with good or fast growth sourced information by individual travel to visit clients, agents, etc., from trade and business magazines, and from equipment and business suppliers external to their local region, while those with poorer export growth had negative results for these sources of information.

It is also argued in the RBV that sustained performance depends on a firm’s capacity to anticipate changes in the economic structure of their markets (Barney 1991). Exporters with good or fast growth only perceived barriers to future growth in terms of remaining technologically and cost competitive with their rivals rather than from internal capacity problems.

The results from this study thus indicate that NSW regional exporters are isolated entrepreneurs who rely heavily on their internal capacity and resources to achieve high export growth, consistent with the RBV. Their capacity for sustained growth over time will depend on their ability to harness these resources and capabilities to adjust to changing market competitive conditions as the competitive advantage of their initial innovation wains and exchange rates rise.


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June 24-26, 2007
Oxford University, UK