the importance of market intelligence in spanish firms’ exporting ... · export performance, (b)...

AbstractThis research aims to respond to a research gap in the literature concerning the role ofmarket intelligence in export activity. In particular, we examine the effects of market intel-ligence on the interrelationships between market distances (domestic vs. foreign) perceivedby export managers, strategic marketing mix decisions (standardisation vs. adaptation)and export performance (growth in foreign sales and satisfaction). The results of an empir-ical study using data from a sample of 212 Spanish exporters reveal that: (a) strategic deci-sions aimed at adapting the marketing mix to foreign markets have a positive effect onexport performance, (b) market distances associated with economic, legal, social, and cul-tural differences between Spain and overseas markets encourage conservative decisionmaking, embodied in a standardised international marketing mix (similar to that used inSpain), (c) however, when export managers have relevant foreign market information andanalyses, market intelligence processes reduce perceived market distances and encouragemore proactive strategic behaviour (adaptation of the marketing mix), resulting inimproved export performance.

Keywords: Market Intelligence, Perceived Market Distances, Marketing Mix Adaptation,Export Performance.

JEL codes: F20, M16, M31.

Esic Market Economics and Business JournalVol. 44, Issue 3, September-December 2013, 9-31

The importance of market intelligencein spanish firms’ exporting activity1, 2

Antonio Navarro-García*, Ramón Barrera-Barreraand Ángel Francisco Villarejo-Ramos

Universidad de Sevilla

Marta Peris-Ortiz

Universitat Politècnica de València

1 This paper was presented at the AEDEM Congress held in Islantilla –Huelva– (June, 2013) receivingthe award Esic Marketing Research.2 This work was funded by the Excellence Project of Andalusia’s Government P11-SEJ-7042 “Ori-entación y Gestión de los Mercados Exteriores Por las Pymes Andaluzas. Análisis Estratégico y Propues-tas de Mejora”.* Corresponding author. Email: [email protected]

ISSN 0212-1867 / e-ISSN 1989-3558© ESIC Editorial, ESIC Business & Marketing SchoolDOI: 10.7200/esicm.146.0443.1ihttp://www.esic.edu/esicmarket

10 Antonio Navarro-García et al.

1. Introduction

Market globalisation and the interrelation of economies have significantly accel-erated internationalisation processes throughout the world. In this context, export-ing is a traditional channel for entry into foreign markets and a fundamental strate-gic option for ensuring the survival and growth of companies that have chosen tointernationalise (Cavusgil and Zou, 1994). Many companies consider exporting as away to counteract growing competition from abroad in domestic markets, broaden-ing their market coverage and improving profitability. Exporting is not an end initself, however, as the ultimate objective of all exporting companies is to achievecompetitive advantages in the country-markets where they compete (Morgan et al.,2004). Effective and efficient marketing strategies must be designed so that compa-nies can adapt to the needs of foreign markets in order to achieve ongoing improve-ments in export performance with their available resources and capacities (Shoham,1999; Navarro et al., 2010a). Any adaptation must be based on knowledge of theeconomic and cultural differences and distances between domestic and foreign mar-kets. Companies therefore have to generate market intelligence to process relevantinformation on customers, competitors and suppliers and make that informationavailable throughout the organisation to enable strategic decision-making in theexport activity. However, studies on these interrelations are lacking, leading to a sig-nificant research gap (Haverila and Ashill, 2011). This present study aims to coverthat gap by analysing the role of market intelligence in the interrelationships betweenexport managers’ perceived market distance, strategic behaviours (adaptation versusstandardisation of the marketing mix) and export performance.

The work is divided into four parts. Firstly, based on the literature review, wedefine the study variables, the theoretical framework for the research, the proposedconceptual model and the hypotheses. Secondly, we describe the research methodol-ogy and define the sample, the information obtained and the analytical tools used totest the hypotheses. Thirdly, we report the results and interpret them to provide themain conclusions and managerial implications. And finally, we present the main lim-itations of the study and future lines of research.

2. Theoretical framework and research hypotheses

2.1. Export performance

Export performance is an essential aspect of international decision-making (Mad-sen, 1998). Cavugil and Zou (1994) define export performance as the extension bywhich firms achieve their objectives by exporting their products and brands to for-eign markets. It includes economic aspects (e.g. profit and sales) and strategic aspects(e.g. international positioning, increased market share due to exports and achieve-ment of objectives), involved in planning and executing export marketing strategies.

The reviewed literature (Zou et al., 1998; Rose and Shoham, 2002; Sousa, 2004)suggests three basic aspects of export performance: (1) it is a multidimensional con-cept that requires quantitative measurement (e.g. sales, profitability and growth) andqualitative measurement (e.g. perceived success, satisfaction and achievement ofobjectives); (2) assessment must address a given time horizon rather than the shortterm (Lages and Montgomery, 2004); (3) measures of performance should reflectmanagerial perceptions of achievement of the exporting objectives (i.e. managerialsatisfaction with export performance) (Lages et al., 2008).

This present study takes into account the above three aspects (1) it examines twodimensions of export performance, a quantitative one - growth in export sales, anda qualitative one - managerial satisfaction; (2) export performance is evaluated overa period of time, the last three years; (3) managerial perceptions are taken intoaccount (managerial satisfaction) in various measures of company success in foreignmarkets (e.g. reputation and image, international expansion and market share).

2.2. Exporting Company Marketing Mix Strategic Decisions: Adaptation versusStandardisation

Standardisation of the marketing programme consists in offering identical prod-uct lines at equivalent prices using similar distribution systems supported by identi-cal communication programmes (e.g. advertising and promotion) in a variety of dif-ferent countries (Theodosiou and Leonidou, 2003). Several authors recommend astandardisation strategy when target markets show similar characteristics andbehaviours (Kustin, 2004; Özsomer and Simonin, 2004). However, critics of stan-dardised marketing strategies in the international sphere point out that despite con-vergence in the socio-economic trends in some market segments, there are still sig-nificant inter-country differences generated by different national cultures, localmarket conditions, the application of very diverse public policies and legal regula-tions, and different consumer reactions to similar marketing stimuli mean that stan-dardised strategies can be counter-productive (Navarro et al., 2010a). For that rea-son, Albaum and Tse (2001) point out that adaptation is inevitable for exportingcompanies to achieve success in foreign markets. Such adaptation involves modify-ing product attributes (e.g. label or brand), price, distribution and communicationprogramme to suit the particular features and demands of each country-market (cul-ture, per capita income, consumer tastes and preferences).

In any case, strict application of the extreme positions of standardisation or adap-tation is impossible because, as the contingent approach indicates, the degree ofadaptation (versus standardisation) is a function of the characteristics of the prod-ucts, the industry, the market, the company and the environment where the compa-ny operates (Calantone et al., 2006). In this context, researchers prefer to speak ofdifferent degrees of adaptation (standardisation) of the marketing strategy associat-ed with the exporting activity (Lages and Montgomery, 2004). Bearing in mind these

The importance of market inteligence in spanish firms’ exporting activity 11


premises, this research evaluates export marketing strategy along the standardisa-tion-adaptation continuum, focusing on the degree of adaptation of the marketingmix (product, price, distribution and promotion) to demands in different country-markets arising out of the environment, consumer behaviour, use patterns and com-petitors (Cavusgil and Zou, 1994).

The literature suggests that a company’s ability to achieve and maintain compet-itive advantages in foreign markets is closely linked to the execution of a differenti-ated marketing strategy which requires it to adapt to the needs and desires of the tar-get markets (Morgan et al., 2004; O’Cass and Julian, 2003; Sousa et al., 2008). Inparticular, when an exporting company adapts its marketing mix to each country-market’s idiosyncrasy, its products are more likely to be perceived as being highervalue than those of local competitors and therefore it can expect a good result fromthe exporting activity (Theodosiou and Leonidou, 2003). Thus, various benefits areassociated with adaptation of export marketing tactics: (1) it enables the exportingcompany to adjust its supply to the particular characteristics of each market, reduc-ing uncertainty among foreign consumers (Madsen, 1998), (2) relationships withlocal intermediaries-distributors improve (Shoham, 1999), and (3) the company canachieve greater profitability by offering products perceived as different and adaptedto customer demand and can therefore apply a surcharge in relation to its directcompetitors (Leonidou et al., 2002). Thus exporting companies can improve exportperformance by adapting their marketing mix strategy (Zou and Cavugil, 2002;Navarro et al., 2010a). Therefore, we establish the following research hypothesis:

H1: A marketing mix strategy adapted to foreign market needs has a positive impacton export performance.

2.3. Market distances and their effect on export companies’ strategic marketingmix decisions

Management perceptions have a fundamental impact on decision-making and man-agement behaviour (Griffith and Lusch, 2007). For example, in their study White et al.(2003) show that marketing managers’ cognitive styles affect their interpretation ofmarket information and their response to it. In the case of exports, export managers’perceived advantages or obstacles condition business behaviour (Leonidou, et al.,1998). One of the major obstacles to a company’s progress in foreign trade operationsis management’s perception of how difficult it is to enter and expand in new country-markets (Dow, 2000). These perceptions are usually associated to economic, legal andsociocultural differences between the domestic market and the target market, and areknown as market distances. The literature refers to market differences as a focal pointduring the process of international expansion (Ellis, 2007).

Currently, study of the effect of market distances on export activity is a growingarea, and is particularly important in the debate over standardisation versus adapta-

tion of marketing mix strategies (contingent perspective) (Chung, 2003, 2005, 2009,2010; Sousa and Lages, 2011; Chung et al., 2012). Some authors claim that differ-ences between domestic and foreign markets generate psychological barriers forexport managers, thereby promoting non-proactive attitudes towards exporting(Özsomer and Simonin, 2004). These conservative attitudes usually result in a reluc-tance to change product attributes, vary prices or use different types of promotionaland advertising strategies according to each market idiosyncrasy (Sousa and Lengler,2009). These psychological barriers associated to market distances usually lead to alack of commitment to exporting and a tendency to adopt standardised strategicmarketing mix decisions, similar to those used in the domestic market (Albaum etal., 2003; Leonidou et al., 2002), not because there is a belief that these strategiesare more appropriate, but because managers are unable to overcome their mentalbarriers to take proactive decisions (e.g. adapt the marketing mix according to theneeds of each country-market) (Theodosiou and Katsikeas, 2001; Theodosiou andLeonidou, 2003). Therefore we posit:

H2. Export managers’ perceived market distance has a negative impact on the devel-opment of a strategy to adapt the marketing mix to foreign market needs.

2.4. Market intelligence in export activity

One of the main reasons for product failure in a new country-market is lack ofadaptation to local consumers’ needs (Osborne, 2002). This situation usually occursbecause companies fail to generate market intelligence or use it where needed torespond to foreign consumer expectations, desires and preferences. In this context,market intelligence is a recognised strategic resource which facilitates decision-mak-ing and promotes the achievement of competitive advantages in markets where thecompany is active (Day, 1994). Market intelligence can be defined as an organisa-tion’s ability to process, interpret and disseminate information from the market/envi-ronment, facilitating interfunctional coordination that permits an agile response tochange (Hughes et al., 2008). This view of market intelligence suggests it extendsthroughout the organisation and is the responsibility of all functional departmentswhich have some role in generating the knowledge and skills associated with the tri-ad products-customers-competition (Kahn, 2001; Moorman and Rust, 1999). Thegeneration of market intelligence for exporting includes acquiring knowledge aboutforeign consumers’ needs and competitors’ practices in international markets (Wrenet al., 2000). It also requires transfer of the knowledge to the functional areas of theexporting company for decision making purposes and such transfer requires func-tional coordination (Gresham et al., 2006).

The development of market intelligence systems is usually a clear indication of amarket oriented culture. Thus Kohli and Jaworski (1990) state that market intelli-gence and the ability to respond to the environment are critical elements in market


orientation crucial for improving business performance. Companies therefore needto develop marketing information systems for the ongoing capture and processing ofinformation on local competitors’ capabilities, strategies and actions and on foreigncustomers’ tastes, preferences and desires. The appropriate dissemination of thisinformation facilitates interfunctional coordination and decision-making, promotingthe development of a supply of products and services with higher perceived valuethan those of competitors over time (Slater and Narver, 2000; Calantone et al.,2002). Market intelligence should be seen therefore as a dynamic capacity associat-ed to organisational learning, which consists in developing processes and activitiesassociated with the acquisition, storage, interpretation and distribution of relevantmarket information (Sinkula, 1994; Pentina and Strutton, 2007).

Companies that want to penetrate foreign markets must develop market intelli-gence abilities because effective and efficient exporting requires detailed knowledgeof each country-market’s commercial practice, culture, and competitors. Appropri-ate marketing decisions are only possible after capturing and processing relevantinformation on each country-market and they have a decisive influence on exportperformance (Hughes et al., 2008). Thus market intelligence is a key factor forreducing uncertainty associated to foreign market environments, overcoming thepsychological barriers to export and facilitating strategic marketing management ofthe exporting company (Belich and Dubinsky, 1999; Cadogan et al., 2012). In fact,some studies have found that scarcity of information on a country is one of the mostserious problems for exporting companies when entering new country-marketsbecause it generates significant psychological barriers in export managers (Pentinaand Strutton, 2007). These psychological distances are the sum of factors affectingthe flow of information from and to foreign markets (Johanson and Vahlne, 1977),including cultural, economic, political, legal and social aspects that influence mana-gerial attitudes, motivations and perceptions associated to volatility in the externalenvironment, promoting conservative behaviour (e.g. standardisation) when makingmarketing decisions (Gray et al., 2007). However, specific knowledge about condi-tions in each country-market reduces export managers’ uncertainty and the psycho-logical barriers associated with the development of foreign trade operations (Hen-nart, 1988; Osborne, 2002). Market intelligence provides export managers withknowledge that influences the effect of perceived market distances on strategic mar-keting management by reducing the uncertainty associated with decision-makingand making companies less reluctant to adapt the marketing mix to foreign markets(Veldhuizen et al., 2006). Therefore:

H3: Market intelligence reduces the negative effects of market distance on the devel-opment of a marketing mix strategy adapted to country-market needs.

Furthermore, a company’s ability to adapt to conditions in a given country-mar-ket depends largely on its skill at processing and interpreting relevant market infor-mation. Market intelligence helps export managers to make appropriate marketing


decisions at all times, encouraging them to proactively seek and exploit foreign mar-ket opportunities (Gray et al., 2007). Thus the accumulation of relevant foreign mar-ket information and knowledge is crucial for enabling exporting companies to knowwhat, how, when and where to adapt their marketing mix according to each country-market, helping them to gain market shares in foreign countries by improving theirpositioning and international competitiveness (Menon and Varadarajan, 1992; Zouand Cavusgil, 2002). By promoting export-associated interfunctional coordination,market intelligence also increases the speed of response to foreign consumer needsaccording to the country-market. Thus adaptations of the marketing elements will bethe ones that are needed, thereby promoting differentiated marketing and contribut-ing to the achievement of improved export performance (Calantone et al., 2002).Market intelligence provides export companies with a weighty tool, the ability todecide under what conditions and exactly what attributes of the marketing mix needstandardising or adapting to conditions in each country-market, thereby increasingthe efficiency and effectiveness of the export activity and considerably increasing thelikelihood of success in foreign markets (Cadogan et al., 2012). Therefore:

H4: Market intelligence positively moderates the relationship between marketingmix adaptations to foreign markets and export performance.

3. Methodology

3.1. Measurement scales

The use of latent variables evaluated through different indicators requires a defi-nition of the type of relationship between the construct and the observed variablesthat define it. There are two possible perspectives: (1) reflective scales; (2) formativescales. The most traditional perspective in marketing is to consider measurementscales as reflective (Diamantopoulos, 2008), assuming that indicators fluctuate inaccordance with variations in the latent variables (Edwards and Bagozzi, 2000).


Figure 1. Graphic Description of the Model

Perceived MarketDistances

Strategic BehaviourAdaptations of the

Marketing MixH2

ExportPerformance

Foreign MarketIntelligence

H1

H3 H4


However, the latent construct is often formed by indicators which, although theymeasure the same concept, are different in nature. In this context (Diamantopoulosand Winklhofer, 2001; Jarvis et al., 2003; MacKenzie et al., 2005; Diamantopoulosand Siguaw, 2006), the use of formative scales is increasing as they imply thatchanges in indicators generate variations in the latent concept. That is, the constructis formed by a normally linear combination of its indicators plus an error term(Bollen, 1989; Bollen and Lennox, 1991). In this direction, Diamantopoulos (1999)indicates that a formative approach can be very attractive for evaluating very com-plex constructs. We believe this approach applies to this study of export perform-ance, as a second-order formative construct with two very different dimensions(growth in sales and satisfaction). From this perspective, following Cadogan et al.(2002), the study evaluates export performance qualitatively through export man-agers’ perceived satisfaction at the achievement of five objectives in the last threeyears (growth in international sales, image and notoriety in foreign markets, prof-itability of the export business, market share and international expansion) and quan-titatively through export sales growth in the last three years (Cavusgil and Zou,1994; Navarro et al., 2010b). The rest of the scales are reflective. Following severalauthors’ recommendations (Lages and Montgomery, 2004; Leonidou et al., 2002;Theodosiou and Leonidou, 2003), the study measures adaptation of the marketingmix strategy by the degree to which the exporting company adapts (or standardises)its marketing mix to foreign market demands or requirements; it is a second orderreflective construct, defined by four dimensions: product, price, communication anddistribution. Perceived market distances, following Sousa and Lages (2011), are asecond order reflective construct based on differences associated to the country (e.g.legal and economic environment) and the people (e.g. culture, uses and custom).Finally, the study adapts export market intelligence to Naver and Slater’s (1990) pro-posed scale, but takes into account the necessary foreign market adaptations(Williams and Chaston, 2004). Thus, foreign market intelligence is considered a sec-ond order reflective construct, defined by three dimensions: intelligence on foreignmarket consumers and competitors and interfunctional coordination associated withthe exporting activity. See Annex 1 for the different measurement scales

3.2. Sample and field work

This study uses a multi-industry sample to increase observed variance andstrengthen generalisation of the results (Morgan et al., 2004). After consulting theSpanish Foreign Trade Institute (ICEX) website, 1250 export managers at Spanishexporting companies were sent e-mail questionnaires. They returned 212 valid ques-tionnaires for a 17% response rate, which is between the 15 and 20% considered asan adequate response rate (Menon et al., 1996).

Most exporting companies in the sample are small (61% or 130 companies withunder 50 employees) and they allocate scanty human resources to exporting (86%

with fewer than 5 employees associated with exporting). Most companies (81%)have an export manager, although a minority (33% - 70 companies) have created anexport department. Most companies have considerable experience in the industry(86% have been active for over 15 years) and in international business (61% havebeen exporting to foreign markets for over 15 years). Finally, most companies in thesample concentrate their sales strongly in very few markets (71% export to ! 5 coun-tries).

In each exporting company a single informant completed the questionnaire,thereby reducing the errors and bias associated to different perspectives on the samething which occurs when there is more than one informant in each company (Huberand Power, 1985). To ensure a reliable information source, the person responsiblefor the exporting activity was asked to complete the questionnaire. In addition, thequestionnaire included a specific section asking the interviewer about various per-sonal characteristics including their type of responsibility for the exporting activity,to avoid bias associated with any lack of knowledge of the issues raised.

3.3. Data analysis

The data were analysed with structural equation modelling (SEM) using PartialLeast Squares (PLS). PLS is a powerful analytical tool with several interesting char-acteristics for researchers in relation to other methods, including the following (Dia-mantopoulos, 1999; Diamantopoulos and Winklhofer, 2001): (1) PLS imposes norestriction on the type of variable distribution and there is no need for independentobservation (CHin, 2010). PLS is a nonparametric technique and therefore it is notnecessary to assume a normal distribution; (2) in comparison to covariance-basedSEM, PLS avoids two possible problems (Fornell and Bookstein, 1982): inadmissiblesolutions (e.g. negative deviations and standardised loads greater than 1) and deter-mination problems (Steiger, 1979), given that PLS uses scores for the latent variablesthat can be interpreted immediately from a predictive point of view (Chin, 2010); (3)demands on the type and nature of measurement scales are minimised in PLS, andnominal, ordinal and interval scales can be used, even jointly (Wold, 1985). Conse-quently, PLS does not require uniform metrics (Sosik et al., 2009); (4) PLS does notrequire large samples in comparison to other techniques (AMOS, EQS, etc.) toobtain robust results (Chin and Newsted, 1999; Reinartz et al., 2009), as in this pres-ent study (212 cases); (5) PLS can manage complex models (i.e. with numerous latentvariables, indicators and relations) with no estimation problems (Chin and Newst-ed, 1999), thanks to the limited information procedure (Barclay, et al., 1995); (6)PLS permits the simultaneous use of formative and reflective scales, avoiding inde-terminacy problems (Jarvis et al., 2003). This present study uses the Smart-PLS 2.0M3 statistical package (Ringle et al., 2005).


4. Results

4.1. Evaluation of the measurement model

There are two stages in the interpretation and analysis of the proposed modelusing PLS (Barclay et al., 1995). (1) evaluation of the measurement model and (2)evaluation of the structural model. This sequence ensures that the proposed meas-urement scales are valid and reliable before proceeding to test the hypotheses. Table1 shows the model evaluation parameters. As Table 1 shows, factor loads for thereflective scales are above the recommended value of 0.70 (Carmines and Zeller,1979). Composed reliability and average variance extracted (AVE) also exceed therecommended thresholds of 0.7 and 0.5 respectively (Nunnally, 1978; Fornell andLarcker, 1981). These values confirm the convergent validity of the reflective scalesin this study (perceived psychic distance, market intelligence and adaptation of themarketing mix). Finally, correlations (Table 2) between each pair of constructs donot exceed the AVE square root value for each construct (Barclay et al., 1995), there-by confirming discriminant validity. Inter-correlations between constructs are signif-icantly different from 1, providing additional evidence of discriminant validity in thecase of the reflective scales.

Validation of the formative scale “Export Performance” takes into account Dia-mantopoulos’ (2008) recommendations. Bearing in mind that we cannot omit oreliminate any of indicators from the scale because they are considered to contain rel-evant information, the absence of multicolinearity was confirmed through the vari-ance inflation factor (VIF) which is below the recommended value of 5 (Diaman-topoulos and Winklhofer, 2001).


Table 1. Evaluation of the measurement model

AverageVariance Composed VarianceInflaction Reliability Extracted

CONSTRUCT/Dimension/Indicator Factor (VIF) Weight Factor load (!c) (AVE)

PERCEIVED MARKET DISTANCE (Second order reflective construct) 0.952 0.878

Country Distance (First order reflective construct) 0.936 0.895 0.592NIVELECOIND 0.815INFRACOMUNIC 0.862INFRAMARK 0.846NIVELTECNOL 0.778COMPETMERC 0.715ENTORNOLEGAL 0.612Person Distance (First order reflective construct) 0.949 0.897 0.623RENTAPERCAPIT 0.781PODERCOMPRA 0.763ESTILOVIDA 0.880PREFCONSUMO 0.811CULTURA 0.680


Table 1. Continuation


CONSTRUCT/Dimension/Indicator Factor (VIF) Weight Factor load (!c) (AVE)

ADAPTATION MARKETING-MIX (Second order reflective construct) 0.865 0.598

Product (First order reflective construct) 0.775 0.910 0.611PRODUCT1 0.723PRODUCT2 0.781PRODUCT3 0.741PRODUCT4 0.823PRODUCT5 0.811PRODUCT6 0.828Price (First order reflective construct) 0.756 0.884 0.594PRECIO1 0.819PRECIO2 0.856PRECIO3 0.822PRECIO4 0.729PRECIO5 0.622Distribution (First order reflective construct) 0.782 0.941 0.782DISTRIB1 0.893DISTRIB2 0.927DISTRIB3 0.859DISTRIB4 0.876Promotion (First order reflective construct) 0.815 0.973 0.825PROMO1 0.915PROMO2 0.948PROMO3 0.962PROMO4 0.912PROMO5 0.915PROMO6 0.821

FOREIGN MARKET INTELLIGENCE (Second order reflective construct) 0.882 0.685

Intelligence on Foreign Consumers (First order reflective construct) 0.889 0.884 0.559INTCUSTOR1 0.759INTCUSTOR2 0.826INTCUSTOR3 0.822INTCUSTOR4 0.665INTCUSTOR5 0.720INTCUSTOR6 0.744INTCUSTOR7 0.721Intelligence on Foreign Market Competition (First order reflective 0.813 0.892 0.724construct)INTCOMPET1 0.887INTCOMPET2 0.860INTCOMPET3 0.816Interfunctional coordination (First order reflective construct) 0.829 0.881 0.640COORDINTER1 0.681COORDINTER2 0.868COORDINTER3 0.840COORDINTER4 0.796

EXPORT PERFORMANCE (Second order reflective construct) n.a. n.a.

4.2. Structural model analysis

After confirming convergent and discriminant validity, the relationships betweenthe different variables were tested with the bootstrap method (1000 sub-samples) toobtain various statistical parameters (Table 3). The hypotheses were tested using thesign and significance of the t-values in each of the (!) relationships and the directionof the four hypotheses was verified


Table 1. Continuation


CONSTRUCT/Dimension/Indicator Factor (VIF) Weight Factor load ("c) (AVE)

Quantitative export performance 2.140 0.293 0.863 0.698(Reflective construct)Crev_2009 0.787Crev_2010 0.897Crev_2011 0.834Qualitative export performance 1.971 0.854 0.936 0.725(Reflective construct)SAT1 0.885SAT2 0.809SAT3 0.913SAT4 0.823SAT5 0.831

n.a.: not applicable

Table 2. Correlations between constructs. Discriminant validity

1 2 3 4 5 6 7 8 9 10 11

(1) People Distance 0.789

(2) Country Distance 0.65 0.769

(3) Customer Intel. -0.08 -0.16 0.748

(4) Competition Intel. -0.03 -0.11 0.43 0.851

(5) Interf. Coord. -0.07 -0.08 0.57 0.49 0.800

(6) Price 0.24 0.28 0.09 0.13 0.03 0.770

(7) Product 0.26 0.25 0.12 0.08 0.23 0.53 0.782

(8) Communication 0.22 0.26 0.08 0.05 0.09 0.44 0.53 0.908

(9) Distribution 0.43 0.38 0.03 0.02 0.12 0.37 0.47 0.37 0.884

(10) Sales Growth 0.19 0.17 0.04 0.04 0.08 0.23 0.18 0.26 0.25 0.835

(11) Satisfaction 0.16 0.09 0.17 0.25 0.16 0.13 0.15 0.09 0.19 0.38 0.851

The main diagonal shows the square root values of the Average Variance Extracted (AVE)

5. Discussion

The results validate and corroborate the proposed conceptual model. This mod-el provides a suitable framework for explaining how, in exporting activity, marketintelligence plays a fundamental role in interrelationships between managerial per-ceptions, strategic behaviours (adaptation of the marketing mix) and export per-formance. The relationships between the variables analysed suggest a number ofinteresting conclusions.

First, the results show that it is fundamental to adapt to each country-marketenvironment by making the necessary changes in product, price, distribution andcommunication because of the positive impact on export performance, as previousstudies indicate (Lages and Montgomery, 2004; Morgan, et al., 2004; Navarro et al.,2010b), thereby explaining confirmation of H1 (!1 = 0.298, t-value = 2.816). Fromthis perspective, organisations committed to their exporting activity will favourstrategic decisions tending to adapt to foreign market demands and needs from themarketing mix perspective. This approach will have a positive effect on export per-formance with an explained variance of 15.6% (R2 = 0.156).

Second, exporting companies’ strategic behaviours are conditioned by manageri-al perceptions of economic, legal and sociocultural differences between the domesticmarket (in this case, Spain) and international markets. These market distances gen-erate psychological barriers in export managers so they tend to make conservativedecisions expressed in their reluctance to make the necessary changes in the market-ing mix according to each country-market’s idiosyncrasy (Leonidou, et al., 2002;Shoham, 1999). This finding explains the negative impact of perceived market dis-tances on strategic adaptation of the marketing mix thereby confirming H2 (!2 = -0.291, t-value = 4.252). The variance explained for adaptation of the marketing mixis 19.1% (R2 = 0.191).

Third, market intelligence plays a fundamental moderating role in export activi-ty. Thus, when exporting companies develop abilities associated to the capture, inter-pretation and dissemination of relevant foreign market information, export man-agers are able to overcome the psychological barriers associated to lack ofknowledge about the country-market (perceived market distances) and show positive


Table 3. Parameters associated to the hypothesis testing

Hypotheses ! t-value Confirmation

H1: Adaptation marketing mix- Export performance 0.298 2.816*** SiH2: Perceived market distance- Adaptation marketing mix - 0.291 4.252*** SiH3: Market intelligence * Perceived market distance- 0.395 5.091*** SiAdaptation mk mixH4: Market intelligence * Adaptation mk mix-Export performance 0.332 2.658** Si

*** p < 0.001, ** p < 0.01, * p < 0.05 ns = not significant (based on t(999), one-tailed test).

attitudes towards adapting the product, price, communication and distributionaccording to foreign consumer needs and preferences. This finding explains the pos-itive relationship between market intelligence-perceived market distances-adaptationof the marketing mix, thereby confirming H3 (!3 = 0.395, t-value = 5.091). Marketintelligence therefore reduces the negative effect of perceived market distances onproactive strategic behaviours such as developing an adapted marketing mix for eachcountry-market (Navarro et al., 2011b; Cadogan et al., 2012).

Fourth, the results also show that market intelligence facilitates decision makingover what, why, where and how to adapt the marketing mix, bearing in mind the dif-ferent characteristics of each country-market. Therefore, there is more likelihood ofsuccess in foreign markets, associated with an adapted marketing mix, when deci-sions are taken bearing in mind relevant information on each country-market thanwhen this market intelligence is avoided. This finding explains the positive moderat-ing role of market intelligence on the interrelationship between adaptation of themarketing mix-export performance, thereby confirming H4 (!4 = 0.332, t-value =2.658). The reason for the above is that market intelligence increases managerialproactivity in adapting the marketing mix to foreign consumer tastes and desires sothat exporting companies’ supply of products and services is perceived as being dif-ferent from local competitors, with a positive impact on export performance (Cavus-gil and Zou, 1994; Morgan et al., 2004).

In short, this study makes a significant contribution to covering an important gapin export research by showing the significant role of market intelligence in the inter-relationships between management perceptions-market distances-strategic behav-iours-adaptation of the marketing mix -and export performance-sales growth andmanagerial satisfaction. Market intelligence has a dual role: (a) it reduces psycho-logical barriers to the expansion of exporting activity; (b) it increases the proactivedevelopment of strategic behaviours in accordance with each country-market’srequirements, making a positive contribution to export performance.

6. Limitations and future research lines

Although this study offers important new contributions from the perspective ofinternational marketing and specifically in relation to the topic of export, there aresome limitations which constitute the starting point for future lines of research. Thefirst limitation concerns the type of study, based on information obtained at a spe-cific moment in time. A longitudinal study would be interesting to analyse how vari-ations in market intelligence in the exporting company over a period of time influ-ence relationships between managerial perceptions, strategic marketing behavioursand export performance.

The second limitation concerns the sample, which comes from a single country.Studies with samples from a wider geographical area are needed in order to gener-alise the conclusions. The final limitation concerns the effect on the model variables


of other factors not considered in this study. It would therefore be interesting to takeinto account characteristics such as the product, the industry, quality of relationswith international distributors and companies dynamic abilities, among others.(Leonidou, et al., 2002; Morgan, et al., 2006; Blesa and Ripollés, 2008).

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ANNEX 1: MEASUREMENT SCALES

Export Performance- Quantitative Dimension: Export sales growth in the last three years (2009; 2010;2011): (1) negative; (2) zero; (3) 1-10%; (4) 11-20%; (5) > 20%- Qualitative Dimension: Managerial satisfaction with the achievement of the fol-lowing objectives (1=very dissatisfied; 5= very satisfied)

SAT1 Export sales growthSAT2 Notoriety and image in foreign marketsSAT3 Export profitabilitySAT4 Market shareSAT5 International expansion

Perceived Market Distance: Indicate to what extent (1.- Very similar….5.- Very dif-ferent), the foreign markets where your company is active are similar or different tothe Spanish market:

Associated to the country Associated to the peopleNIVELECOIND: Level of economic and industrial RENTAPERCAPIT: Per capita incomedevelopmentINFRACOMUNIC: Communication infrastructure PODERCOMPRA: Customers’ purchasing

powerINFRAMARK: Marketing infrastructure ESTILOVIDA: Peoples’ lifestyleNIVELTECNOL: Level of technological development PREFCONSUMO: Consumer preferencesCOMPETMERC: Market competitiveness CULTURA: Cultural values, beliefs attitudes

and traditionsENTORNOLEGAL: Legislation

Adaptation of the Marketing-Mix: Answer the following questions on a scale of 1-5(1=None; 5=Considerable). Adaptations to…

PRODUCT COMMUNICATIONPRODUCT1: Product quality PROMO1: Idea/advertising themePRODUCT2: Product design and style PROMO2: Advertising and promotional contentPRODUCT3: Product guarantee PROMO3: Advertising media strategyPRODUCT4: Product labelling PROMO4: Sales promotion toolsPRODUCT5: Commercial brand of product PROMO5: Promotional approachPRODUCT6: Packaging/labelling PROMO6: Communication budget

PRICE DISTRIBUTIONPRECIO1: Price strategy DISTRIB1: Distribution channelsPRECIO2: Discount policy DISTRIB2: Control over distribution channelsPRECIO3: Margins DISTRIB3: Strategy / Transport policyPRECIO4: Credit assignment DISTRIB4: Distribution budgetPRECIO5: Collection security

Foreign Market IntelligenceThe following block of questions evaluates the level of foreign market intelligence inyour company on a scale of 1-5 (1= Totally agree; 5=Totally disagree)


Intelligence on foreign consumersINTCUSTOR1: Our firm captures information on foreign consumers’ needsINTCUSTOR2: Our firm captures information on foreign consumers’ tastes and preferencesINTCUSTOR3: Our firm captures information on foreign consumers’ cultural valuesINTCUSTOR4: Our firm captures information on foreign consumers’ lifestylesINTCUSTOR5: Our firm captures information on foreign consumers’ purchasing powerINTCUSTOR6: Our firm captures information on foreign consumers’ purchasing behaviourINTCUSTOR7: Our firm captures information on foreign consumers’ customs and habits

Intelligence on foreign market competitorsINTCOMPET1: Our company obtains information on foreign competitors’ products and pricesINTCOMPET2: Our company obtains information on foreign competitors’ communication actionsINTCOMPET3: Our company obtains information on foreign competitors’ distribution channels

Interfunctional coordinationCOORDINTER1: In my company, all the functional areas are involved in export activity decisionsCOORDINTER2: In my company, relevant information on foreign consumers is disseminated to all func-tional areasCOORDINTER3: In my company, relevant information on foreign competitors is disseminated to allfunctional areasCOORDINTER4: In my company, the different functions are integrated to serve the needs of our foreignconsumers


Notes on Contributors

Name: Antonio Navarro-GarcíaPosition: Profesor Titular de Universidad (Área de Marketing)School / Faculty: Facultad de Ciencias Económicas y EmpresarialesUniversity: Universidad de SevillaAddress: Avda. Ramón y Cajal nº 1. 41018 SevillaTelephone: 34 954554436Email: [email protected]

Name: Ramón Barrera-BarreraPosition: Profesor Colaborador (Área de Marketing)School / Faculty: Facultad de Ciencias Económicas y EmpresarialesUniversity: Universidad de SevillaAddress: Avda. Ramón y Cajal nº 1. 41018 SevillaTelephone: 34 954554436Email: [email protected]

Name: Ángel Francisco Villarejo-RamosPosition: Profesor Titular de Universidad (Área de Marketing)School / Faculty: Facultad de Ciencias Económicas y EmpresarialesUniversity: Universidad de SevillaAddress: Avda. Ramón y Cajal nº 1. 41018 SevillaTelephone: 34 954554436Email: [email protected]

Name: Marta Peris-OrtizPosition: Profesora Titular de Universidad (Área de Organización de Empresas)School / Faculty: Departamento de Organización de Empresas y MarketingUniversity: Universitat Politècnica de ValènciaAddress: Camino de Vera s/n, 46022 ValenciaTelephone: 34 963877680Email: [email protected]


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