Table of Contents

CHAPTER 1...............................................................................................................................3

Introduction............................................................................................................................3

Nature of the study.................................................................................................................4

Research Objectives...........................................................................................................4

Problem to be Examined....................................................................................................5

Significance and Need for the Study..................................................................................5

CHAPTER 2...............................................................................................................................6

Literature Review...................................................................................................................6

Intrafirm Coordination.......................................................................................................6

Interfirm Coordination.......................................................................................................6

Process Control..................................................................................................................7

Output Control...................................................................................................................7

Flexibility...........................................................................................................................8

Antecedents and Export performance....................................................................................8

Product Complexity...........................................................................................................9

Formalization.....................................................................................................................9

Export Market Stability......................................................................................................9

Export Performance...........................................................................................................9

Conceptual Framework and Hypothesis..............................................................................10

CHAPTER 3............................................................................................................................14

Research Methodology.........................................................................................................14

Research Design...............................................................................................................14

Item generation for questionnaire........................................................................................14

Description of the Questionnaire.........................................................................................15

1|Research Project
 Linking Table.......................................................................................................................16

Pre-coding of Questionnaire................................................................................................16

Sampling Plan......................................................................................................................18

Population definition & Sampling frame.........................................................................18

Sample size.......................................................................................................................18

CHAPTER 4............................................................................................................................19

Data Analysis.......................................................................................................................19

Two Cluster Solution...........................................................................................................21

Three Cluster Solution.........................................................................................................23

Comparing Performances of 2-cluster and 3-Cluster Solution............................................24

Test of Hypothesis................................................................................................................25

CHAPTER 5............................................................................................................................29

RESULTS............................................................................................................................29

CHAPTER 6............................................................................................................................32

Managerial Implication........................................................................................................32

Limitation and Direction for further Studies........................................................................32

REFERENCES.........................................................................................................................34

ANNEXURES..............................................................................................................................37

Annex-1 Questionnaire....................................................................................................37

Annex-2 Online Questionnaire.........................................................................................37

Annex-3 Pretested Questionnaire....................................................................................37

Annex-3 Inputfile..............................................................................................................37

Annex-4 Sample Frame....................................................................................................37

2|Research Project
 CHAPTER 1

Introduction
Export channel governance literature suggests that export manufacturers have struggled with
coordinating activities internally among functional units and externally with foreign
distributors. Cross-functional and cross-border coordination has become a top concern for
senior managers at a growing number of companies involved in international expansion. The
researchers cite numerous barriers to such coordination, including divergent goals between
cross-border partners and a desire for autonomy among the functional managers in a
company. The insufficient coordination resulting from such barriers is a major reason for the
mediocre export performance of many export manufacturers.

Export coordination is the process of facilitating information flows and aligning work-related
goals among entities involved in operations of moving goods across national borders. Export
coordination requires managing relationships with a network of people inside and outside an
export firm.

To explain the complexities of coordinating cross-function and cross-border transactions,

researchers have investigated four components of export coordination. Three out of these four
components belong to interfirm coordination strategy and the fourth one is intrafirm
coordination, or the coordination among the functional units of export manufacturer. The
three widely discussed interfirm coordination strategies are process control, output control,
and flexibility.
In this study we are trying to cluster the export manufacturers on the basis of coordination
strategy they use internally and externally. We also intend to find out the link between export
performance and various intra and interfirm coordination strategy.

3|Research Project
Intra- and Interfirm Coordination (Chun Zhang, Zuohao Hu and Flora F. Gu 2008)

Nature of the study

Research Objectives
The study aims to achieve the following objectives:

 To profile export manufacturers based on their intra and interfirm coordination strategies.

 To find out the effect of various intra and interfirm coordination strategies on export
performance.

 To find out whether an export manufacturer should concentrate on using a single strategy
or concurrently deploy multiple strategy.

4|Research Project
Problem to be Examined
There are so many small export manufacturers in India who do not have foreign based sales
offices or subsidiary. These firms usually lack foreign market knowledge or necessary
operational, financial or strategic capability. For many of these firms, exporting through
international intermediaries, such as foreign-based distributors, is a relatively easy but low-
control way to enter foreign market. Since key functions are delegated, manufacturers find it
difficult to coordinate foreign marketing for their products and are vulnerable to low export
performance. Similarly manufacturers have struggled with coordinating activities internally
also, which ultimately results in poor export performance.

The study aims at identifying various co-ordination strategies used by Indian export
manufacturers and the impact of these strategies on their export performance. Through this
study we intend to do the profiling of these export manufacturers based on their co-ordination
strategy

Significance and Need for the Study

Need

A lot of research has been done on export channel governance worldwide; however there are
very few studies which have focused their attention on intra as well as interfirm coordination
concurrently. Especially in Indian context, there is no evidence of such research having been
conducted earlier. This provides a strong case for carrying out this research in Indian context.

Significance

 Cross functional and cross border co-ordination has become a top concern for senior
managers at growing number of companies involved in international research.

 The study concurrently examines the internal and external domains of co-ordination.

 The study tests the effectiveness of various combinations of export coordination

strategies.

5|Research Project
 CHAPTER 2

Literature Review
There are numerous studies which have focused their attention on export channel governance
and its performance. Likewise there are many studies which have evaluated interfirm
coordination and its effect on performance of the company. Following are some concepts
which are most relevant in our study and invariably appear in most of the export channel
governance literature. We shall now discuss these concepts in light of previous studies
conducted by various researchers.

Intrafirm Coordination
By intrafirm coordination, we mean flow of information among members of the export
department and those of other functional units. A high degree of intrafirm coordination within
an export manufacturer is an essential aspect of export coordination because it aligns the
goals of the marketing department with those of other functional areas (Cadogan et al. 2006;
John, Young, and Miller 1999).For example, marketing and manufacturing divisions in an
exporting firm might have conflicting goals regarding the complexity of International
shipping logistics and export customers’ diverse expectations about delivery (John, Young,
and Miller 1999). The export marketing department wants to satisfy the needs of
intermediaries and customers in the export market by ensuring timely delivery. In contrast,
the manufacturing division is interested in avoiding the additional costs incurred by meeting
the different delivery requirements of export customers. To reduce such goal conflict, export
marketing departments must provide manufacturing divisions with timely market-demand
information that minimizes the costs incurred (Kerr 2006).

Interfirm Coordination
The export channel governance literature conceptualizes interfirm coordination as referring to
both unilateral coordination initiated by export manufacturers and bilateral mutual
adjustments between export manufacturers and foreign distributors (e.g., Bello and Gilliland
1997). The unilateral coordination strategies focus on measuring either foreign distributor
behaviours through process control or outcomes produced by these behaviours through output
control (Bello and Gilliland 1997). Bilateral mutual adjustments emphasize aligning the
values and goals of transaction parties (Aulakh, Kotabe, and Sahay 1996; Zhang, Cavusgil,
and Roath 2003)and this co-ordination is known as flexibility.

6|Research Project
Process Control
Process control occurs when an export manufacturer monitors and influences the means by
which foreign distributors conduct operations (Chun Zhang, Zuohao Hu, and Flora F. Gu
2008). For example, export manufacturers can send personnel to conduct foreign distributor
training in the export market, educate them on new products and selling procedures, and help
them build relationships with local retailers and carry out promotional activities (Aulakh,
Kotabe, and Sahay 1996; Bello and Gilliland 1997; Cavusgil and Zou 1994). Through these
efforts, export manufacturers specify procedures and monitor how well foreign distributors
follow them.

Output Control
Output control is another type of unilateral coordination strategy that export manufacturers
deploy (Chun Zhang, Zuohao Hu and Flora F. Gu 2008). Rather than directly monitoring and
influencing foreign distributor behaviours, export manufacturers can use output control by
monitoring the results of foreign distributor behaviors (Aulakh, Kotabe, and Sahay 1996).
When using output control, export manufacturers often measure the economic outcomes
produced by foreign distributors, such as sales, market penetration, and market share for
exported product lines (Bello and Gilliland 1997). Unlike process control, output control
requires little international marketing knowledge on the part of Export Manufacturers
(Aulakh, Kotabe, and Sahay 1996). Instead, the success of output control depends on the
export manufacturer’s ability to specify desired performance outcomes correctly for export
product lines (Bello and Gilliland 1997). Output control facilitates export coordination by
enabling manufacturers to design effective performance-based incentives that align the goals
of export manufacturers with those of foreign distributors (Bello and Gilliland 1997). An
export manufacturer can direct foreign distributor efforts toward achieving favourable ratings
on the performance indexes with which the manufacturer is concerned Anderson and
Chambers 1985). Consequently, the goals of foreign distributors and export manufacturers
are aligned; both parties focus on the performance dimensions that are of common concern.
Furthermore, a primary advantage of output control is that it provides foreign distributors
with decision-making autonomy in local marketing efforts while allowing the manufacturer
to hold them responsible for sales, market penetration, market share, and other economic
outcomes. Freedom in selecting local market actions can enable foreign distributors to use
their local market knowledge to choose the best way to achieve pre-specified performance
goals in the export market (Bello and Gilliland 1997). As with process control, scholars have

7|Research Project
found mixed results regarding the effectiveness of output control (Aulakh, Kotabe, and Sahay
1996; Bello and Gilliland 1997). The controversy over output control, a unilateral, outcome-
based type of export coordination, warrants further examination.

Flexibility
Flexibility is a bilateral willingness to make adjustments as circumstances change (Chun
Zhang, Zuohao Hu and Flora F. Gu 2008). In an exchange between an export manufacturer
and a foreign distributor, the relationship will be subject to modification if a prescribed
practice proves to be detrimental to one or both parties (Zhang, Cavusgil, and Roath 2003).

Export transactions between manufacturers and foreign distributors can be coordinated when
the two parties jointly manage distribution and selling functions in the export market through
a process of flexible negotiation and adjustments (Bello and Gilliland 1997; Zhang, Cavusgil,
and Roath 2003). The diverse political, cultural, and economic environments in the export
market make it imperative for export manufacturers and foreign distributors to be flexible in
dealing with differences in goals and in adapting to export market conditions (Aulakh,
Kotabe, and Sahay 1996).Export manufacturers and foreign distributors that adopt the norm
of flexibility are likely to coordinate distribution and selling tasks in the export market
effectively and efficiently (Bello and Gilliland 1997). Given that flexibility plays an
important role in export coordination, it has been a major subject of discussion in the export
channel literature (Aulakh, Kotabe, and Sahay 1996; Bello and Gilliland 1997; Cavusgil and
Zou 1994; Zhang, Cavusgil, and Roath 2003). Cavusgil and Zou (1994) suggest that bilateral
cooperation between channel partners leads to effective implementation of export marketing
strategy and better export performance. Several empirical studies further verify the
importance of flexibility in export coordination (Bello and Gilliland 1997; Zhang, Cavusgil,
and Roath 2003). Using samples of U.S.-based export manufacturers, Bello and Gilliland
(1997) and Zhang, Cavusgil, and Roath (2003) find consistent evidence that flexibility
enhances export channel performance.

Antecedents and Export performance

Three widely discussed antecedents in the literature of intra and interfirm coordination are –
Product complexity, formalized organization culture and export market stability(Chun Zhang,
Zuohao Hu and Flora F. Gu 2008).

8|Research Project
Product Complexity
Product complexity refers to the extent to which sophisticated manufacturing technology and
high levels of intellectual property (IP) content are embedded in the export product (Bello
and Gilliland 1997; Cavusgil and Zou 1994). Export manufacturers are likely to use both
process control and output control for complicated products with high levels of IP content in
the export market (Bello and Gilliland 1997). Exporters use process control to direct
distributors to sell products that require a great extent of customer learning. Exporters use
output control to monitor performance outcomes for complicated products with high levels of
IP content (Chun Zhang, Zuohao Hu and Flora F. Gu 2008). In addition, product complexity
affects the need for intrafirm coordination.

Formalization
Formalization is the degree to which export manufacturers use written rules, procedures, and
instructions to specify roles and responsibilities (Chun Zhang, Zuohao Hu and Flora F. Gu
2008). Export firms with a high degree of formalization heavily rely on fixed rules and
standard procedures to govern their interdepartmental links, roles, and functional
responsibilities (Cadogan, Diamantopoulos, and Siguaw 2002; Cadogan et al. 2006).
Formalization is likely to influence the intrafirm coordination component of export
coordination.

Export Market Stability

Export market stability is considered as a key characteristic of the export market environment
(Bello and Gilliland 1997; Cadogan et al. 2005). Bello and Gilliland (1997) propose that
market volatility creates adaptation problems for exchange parties in the export market, thus
requiring exchange parties to make subsequent, flexible adjustments. Furthermore, market
volatility also makes existing contracts incomplete, which creates a need for exporters to
make ongoing adjustments and use flexibility in interfirm coordination. Overall, export
market stability can affect the flexibility and intrafirm coordination components of export
coordination (Chun Zhang, Zuohao Hu and Flora F. Gu 2008).

Export Performance
We define export performance as the degree to which an export manufacturer achieves its
strategic and economic objectives in the export market (Bello and Gilliland 1997).We use
managers’ perceptual measures of outcomes of exporting activities in terms of profitability

9|Research Project
goals, sales growth, overall performance, and strategic goals. Although the perceptual
measures have certain limitations (Chun Zhang, Zuohao Hu and Flora F. Gu 2008), previous
research has suggested that there is a close correspondence between objective and perceptual
measures of export performance (Venkatraman and Ramanujam 1987).

Researchers have examined export performance as an important outcome of intra- (Cadogan

et al. 2005; Menon et al. 1999) and interfirm (Bello and Gilliland 1997; Zhang, Cavusgil, and
Roath 2003) coordination. It is important to understand which combinations of intra- and
interfirm coordination strategies produce superior performance in the export market. Linking
export performance with the distinct profiles of export manufacturers enables us to reveal
whether the use of certain combinations of intra- and interfirm coordination is associated with
superior export performance( Chun Zhang, Zuohao Hu and Flora F. Gu 2008)

Conceptual Framework and Hypothesis

Based on literature review and previous works of researchers following hypothesis have been
formulated

H1: The use of process controls increases export performance.

H2: The use of output controls increases export performance.

H3: The use of flexibility coordination increases export performance.

H4: The use of interfirm coordination increases export performance.

H5: Product complexity increases the use of (a) process controls over foreign distributors and
(b) output controls over foreign distributors.

H6: Market volatility reduces flexibility by the parties

10 | R e s e a r c h P r o j e c t
 Ifc2

Ifc3
Ifc1
Inter-firm Coordination
Ifc4
Form1
Formalization

Form3

Proc2
Form2 Proc3
Proc1
Process Control
Proc4

Prod1
Product Complexity Export Performance

Prod2

Output Control
Prod3 Exp3
Prod4
Exp2
Exp1
Stab1
Out1
Out3
Market Stability Out2

Stab2
Flexibility

Stab3
Flex1

Flex2

Conceptual Model

(Based on the studies of Chun Zhang, Zuohao Hu and Flora F. Gu (2008) and Bello, Daniel
C. and David I. Gilliland (1997))

11 | R e s e a r c h P r o j e c t
Process Control

Proc1: We influence the relationships between foreign distributors and their retailers.

Proc2: We influence foreign distributors’ selling policy and procedures.

Proc3: We influence foreign distributors’ new product introduction activities of our products.

Proc4: We influence foreign distributors’ promotional activities.

Output Control

Out1: We monitor sales of our products in the export market.

Out2: We monitor the increase in customer base in the export market.

Out3: We monitor market penetration of our products in the export market.

Flexibility

Flex1: When some unexpected situation arises, both parties are willing to reach a new
agreement or modify the existing agreement.

Flex2: Both parties are willing to make adjustments to adapt to change occurring in the
export market.

Intrafirm Coordination

Ifc1: The export department exchanges valuable information with related functional areas
regarding the objectives and operations of exporting.

Ifc2: There are frequent communications among members of the export department.

Ifc3: The members of our export department include representatives from a cross-function
team.

Ifc4: We pay great attention to coordinating the relationship between the export department
and other related departments.

Export Performance

Exp1: Profitability goals

12 | R e s e a r c h P r o j e c t
Exp2: Export sales growth

Exp3: Strategic goals

Product Complexity

Prod1: The manufacturing technology of our export product is complex.

Prod2: Technology content of our export product is high.

Prod3: It is complex to use or operate our export product.

Prod4: We control a high level of intellectual property rights.

Formalization

Form1: We strictly follow the marketing plans during implementation.

Form2: We strictly follow procedures and rules in our decision making.

Form3: We strictly follow operating procedures and rules in our daily operation.

Export Market Stability

Stab1: The export market demands change rapidly.

Stab2: The export market is highly unstable.

13 | R e s e a r c h P r o j e c t
 CHAPTER 3

Research Methodology

Research Design
To collect data we used the personal interview and online survey method and structured
questionnaire was used to get the responses from the export manufacturers. A list of export
manufacturer was drawn using simple random techniques and their export manager or senior
executive in charge of export operation were contacted and their responses would be
recorded. However convenience sampling technique was adopted at the time of field work
due to extremely tedious nature of data collection and time constraint.

It is imperative that the respondent is well aware of firms export coordination strategies, and
that is why we identified only export managers or any senior executive in charge of export
operation for data collection. List of export manufacture was drawn from government’s
directory of export manufacturer and online directory of export manufacturers.

Item generation for questionnaire

Based on literature review (Chun Zhang, Zuohao Hu and Flora F. Gu 2008) and studies of
past researchers and my own experience gained during the research and pretesting following
variables are identified.

We influence the relationships between foreign distributors and their PROC1

retailers.
We influence foreign distributors’ selling policy and procedures. PROC2
We influence foreign distributors’ new product introduction activities PROC3
of our products.
We influence foreign distributors’ promotional activities. PROC4
We monitor sales of our products in the export market. OUT1
We monitor the increase in customer base in the export market. OUT2
We monitor market penetration of our products in the export market. OUT3
When some unexpected situation arises, both parties are willing to FLEX1
reach a new agreement or modify the existing agreement.
Both parties are willing to make adjustments to adapt to change FLEX2
occurring in the export market.
There are frequent communications among members of the export IFC1
department.

14 | R e s e a r c h P r o j e c t
 The members of our export department include representatives from a IFC2
cross-function team.
We pay great attention to coordinating the relationship between the IFC3
export department and other related departments.
The manuacturing technology of our export product is complex. PROCOM1
Technology content of our export product is high. PROCOM2
It is complex to use or operate our export product. PROCOM3
We control a high level of intellectual property rights. PROCOM4
The export market demands change rapidly. STAB1
The export market is highly unstable. STAB2
Profitability goals PERFMNC1
Export sales growth PERFMNC2
Strategic goals PERFMNC3

Description of the Questionnaire

The questionnaire is a self administered questionnaire. However the interviewer need to give
a brief overview about the questionnaire before administering it to the exporter.

Following is the description of each question contained in the questionnaire.

1. Question numbers 1-4 determine the level of process control used by the export
manufacturers
2. Question numbers 5-7 determine the level of output control used by the export
manufacturers
3. Question numbers 8 & 9 determine the level of flexibility adopted by the exporters
4. Question numbers 10-12 talk about intra-firm coordination
5. Question numbers 13-16 determine the level of product complexity
6. Question numbers 17 & 18 tell us about the perceived level of export market volatility
7. Question numbers 19-21 determine the export performance of export manufacturers

Linking Table
Objectives Hypothesis Question Number

H1: The use of process controls increases 1-4 and 19-21

export performance.
Obj. 1
H2: The use of output controls increases export 5-7 and 19-21
performance.

H3: The use of flexibility coordination 8-9 and 19-21

15 | R e s e a r c h P r o j e c t
 increases export performance.

H4: The use of interfirm coordination increases 10-12 and 19-21

export performance.
Obj. 2
H5: Product complexity increases the use of (a) 13-16
process controls over foreign distributors and
(b) output controls over foreign distributors.

H6: Market volatility reduces flexibility by the 17-18

Obj. 3 parties

Pre-coding of Questionnaire
Colum Variable Description Variable Range of
n Name Value
1 Respondent Number RSPN 1-100
2 We influence the relationships between foreign PROC1 1-7
distributors and their retailers.
3 We influence foreign distributors’ selling policy PROC2 1-7
and procedures.
4 We influence foreign distributors’ new product PROC3 1-7
introduction activities of our products.
5 We influence foreign distributors’ promotional PROC4 1-7
activities.
6 We monitor sales of our products in the export OUT1 1-7
market.
7 We monitor the increase in customer base in the OUT2 1-7
export market.
8 We monitor market penetration of our products in OUT3 1-7
the export market.
9 When some unexpected situation arises, both FLEX1 1-7
parties are willing to reach a new agreement or
modify the existing agreement.
10 Both parties are willing to make adjustments to FLEX2 1-7
adapt to change occurring in the export market.

16 | R e s e a r c h P r o j e c t
 11 There are frequent communications among IFC1 1-7
members of the export department.
12 The members of our export department include IFC2 1-7
representatives from a cross-function team.
13 We pay great attention to coordinating the IFC3 1-7
relationship between the export department and
other related departments.
14 The manufacturing technology of our export PROCOM1 1-7
product is complex.
15 Technology content of our export product is high. PROCOM2 1-7
16 It is complex to use or operate our export product. PROCOM3 1-7
17 We control a high level of intellectual property PROCOM4 1-7
rights.
18 The export market demands change rapidly. STAB1 1-7
19 The export market is highly unstable. STAB2 1-7
20 Profitability goals PERFMNC1 1-7
21 Export sales growth PERFMNC2 1-7
22 Strategic goals PERFMNC3 1-7

Sampling Plan

Population definition & Sampling frame

The target population for the study are the export manufacturers in the region of Chandigarh
and Jalandhar. Our sampling frame contains the list of export manufacturers in Chandigarh
and Jalandhar obtained from chamber of commerce and industry, Chandiharh(and yellow
pages).

Sample size
Sample size would consist of 60 respondents from Chandigarh and Jalandhar. However for
multi-variate techniques any number above 40 would suffice. Previous studies suggest
comparatively low level of incidence and completion rate in such studies. So taking a
conservative approach,

Incidence rate = 60%

Completion rate = 85%

Thus,

17 | R e s e a r c h P r o j e c t
Total sample to be taken out = 60/(0.6*0.8) = 120 (approx)

The following steps were followed to draw the sample,

1) A number was randomly chosen from the statistical table. The number selected was
row 16 column 3, “51821”. The first 3 digits were considered. Which are 518.
However, the population has values till 200 only.
2) I moved vertically downwards to view the numbers. The first sample selected thus
was, 055. This is from the row 23 column 3.
3) Like-wise, I moved on to select only those number which fell within 1 to 205.
4) The details of the samples selected have been given in the following table and random
table is attached in appendix.
However due to various complexities encountered at the time of data collection, I used
convenience sampling technique to collect the responses.

CHAPTER 4

Data Analysis
I collected the data mostly from the export manufacturer located in and around tricity.
However I got few responses from Jalandhar also. I used personal interview and online
questionnaire to collect the data. In all I got 41 responses out of which 26 responses were
collected through personal interview and 15 responses were collected through online
questionnaire. Out of 15 responses collected through online questionnaire 14 were complete
in all respect and 1 response was incomplete, I discarded the incomplete questionnaire from
the further analysis.

To evaluate the reliability and construct validity of export coordination strategies I used
Crobanch’s alpha and factor analysis, the results of which are tabulated below.

Variable Crobanch’s alpha

Process Control 0.911
Output Control 0.577
Flexibility 0.790
Intrafirm 0.634
Product Complexity 0.827
Stability 0.801
Performance 0.922

18 | R e s e a r c h P r o j e c t
All the above values are well above 0.6 except for output control, which signifies that
contructs are reasonably reliable. To determine the reliability and validity, I also conducted
the factor analysis and the rotated component matrix shown blow gives the factor loading of
different constructs. All Factor loadings are reasonably good except for OUT3 and
PROCOM1.Nonetheless literature review suggest that these two variables are important for
the study and hence I decided to keep the variable for the further analysis.

I followed a two-stage clustering technique to develop profiles of export manufacturers using

export coordination strategies. Specifically, I combined the use of agglomerative hierarchical
cluster analysis and k-means (non-hierarchical) cluster analysis. The two-stage technique is
considered superior to other alternative methods because it combines the advantage of

19 | R e s e a r c h P r o j e c t
hierarchical approaches with that of non-hierarchical approaches. First, I used Ward’s method
in hierarchical clustering to obtain preliminary cluster solutions. After examining the
agglomerate schedule, I determined that both a three- and a three-cluster solution might be
appropriate. Then, I proceeded to the k-means analysis to refine the cluster solutions using
the initial cluster solution obtained from hierarchical analysis as inputs. I obtained k-means
clustering solutions for two and three clusters.
I used t-test to find whether the two clusters of 2-cluster solution vary significantly and for
the same purpose I used ANOVA in 3-cluster solution. The 2-cluster solution was found to be
better in comparison to 3-cluster solution as we got two distinct clusters with fairly even
distribution of cases in the two clusters. Next I used t-test to see if the mean values of
coordination strategies vary significantly across the two clusters.
I used linear regression for the hypothesis testing however in some cases I tried quadratic
model also.

Two Cluster Solution

Final Cluster Centers-(K-Means Clustering)

Cluster
1 2
PROCESSCONTROL 2.684 5.179
FLEXIBILITY 5.342 5.381
INTRAFIRMCOORD 4.842 5.254
OUTPUTCONTROL 5.596 6.016

Number of Cases in each Cluster

Cluster 1 19.000
2 21.000
Valid 40.000
Missing .000

20 | R e s e a r c h P r o j e c t
 Final Cluster Centers

6.000
Variables
PROCESSCONTROL
FLEXIBILITY
INTRAFIRMCOORD
OUTPUTCONTROL

4.000
Values

2.000

0.000
1 2

Cluster

Cluster 1 has lowest score on process control, output control and fairly good score on
flexibility and intrafirm coordination. Cluster 2 has highest score on all the four coordination
strategy.


* * * * * * H I E R A R C H I C A L C L U S T E R A N A L Y S I S * * *
* * *
Dendrogram using Ward Method
Rescaled Distance Cluster Combine

C A S E 0 5 10 15 20 25
Label Num +---------+---------+---------+---------+---------+
16 
30 
22 
40 
29  
8  
24  
36 

4   
14   
33    
35   
2   
7  
15  
39  
28  
31  
19  
32   

21 | R e s e a r c h P r o j e c t
 37   
11   
34   
13 

38   
9   
20   
25  
3  
1  
17   
10  
26   
21  
23  
12  
5 
6 
27 
18 

Three Cluster Solution

Final Cluster Centers
Cluster
1 2 3
PROCESSCONTROL 1.333 4.978 2.946
FLEXIBILITY 6.000 5.565 4.893
INTRAFIRMCOORD 5.667 5.362 4.429
OUTPUTCONTROL 5.667 6.058 5.452

Number of Cases in each Cluster

Cluster 1 3.000
2 23.000
3 14.000
Valid 40.000
Missing .000

22 | R e s e a r c h P r o j e c t
 Final Cluster Centers

6.000 Variables
PROCESSCONTROL
FLEXIBILITY
INTRAFIRMCOORD
OUTPUTCONTROL

4.000
Values

2.000

0.000
1 2 3

Cluster

Cluster 1 has 3 cases in it and it has lowest score on process control but highest score on
flexibility. Cluster 2 has 23 case and highest score on process control and output control and
middling score on flexibility and intrafirm coordination strategy. Cluster 3 has 14 cases and
lowest score on flexibility and intrafirm coordination strategy. Since there is asymmetric
distribution of cases among the clusters, so I decided to go ahead with 2-cluster solution.

Comparing Performances of 2-cluster and 3-Cluster Solution

Group Statistics

Std. Error
Cluster Number of Case N Mean Std. Deviation Mean
PERFORMANCE 1 19 4.68421 1.119268 .256778
2 21 5.07937 1.357714 .296277

Independent Samples Test

Levene's Test for

Equality of Variances t-test for Equality of Means
Sig. (2- Mean Std. Error
F Sig. t df tailed) Difference Difference
PERFORMANCE Equal variances
assumed .890 .352 -.998 38 .325 -.395155 .395921

23 | R e s e a r c h P r o j e c t
 Equal variances
not assumed -1.008 37.697 .320 -.395155 .392065

The above table on t-test indicates that the performance of the two variables does not vary
significantly however the group statistics table indicates that mean value of performance of
cluster 2 is greater than that of cluser 1.

Descriptives

PERFORMANCE

N Mean Std. Deviation Std. Error

1 3 5.55556 1.170628 .675863
2 23 5.05797 1.380427 .287839
3 14 4.47619 .958224 .256096
Total 40 4.89167 1.250385 .197703

ANOVA
PERFORMANCE
Sum of
Squares df Mean Square F Sig.
Between Groups 4.375 2 2.188 1.430 .252
Within Groups 56.600 37 1.530
Total 60.975 39

For three cluster solution also, the performances of three clusters do not vary significantly.

Test of Hypothesis

H1: The use of process controls increases export performance.

Coefficients

Unstandardized Standardized
Coefficients Coefficients t Sig.

Model B Std. Error Beta

1 (Constant) 4.701 .589 7.978 .000
PROCESSCONTROL .048 .139 .056 .345 .732
a Dependent Variable: PERFORMANCE

Significance level 0.732 indicates that the there is no significant relationship between use of
process control and performance. Hence the hypothesis is rejected.

H2: The use of output controls increases export performance.

24 | R e s e a r c h P r o j e c t
 Coefficients

Unstandardized Standardized
Coefficients Coefficients t Sig.

Model B Std. Error Beta

1 (Constant) 1.485 2.106 .705 .485
OUTPUTCONTROL .586 .361 .255 1.625 .113
a Dependent Variable: PERFORMANCE

Although output control and performance are positively related, but significance level of
relationship is 0.113 which is greater than .05. Hence hypothesis is rejected. There is no
significant relationship between the use of output control and the performance of export
manufactures.

H3: The use of flexibility coordination increases export performance.

Coefficients

Unstandardized Standardized
Coefficients Coefficients t Sig.

Model B Std. Error Beta

1 (Constant) 2.409 1.312 1.837 .074
FLEXIBILIT
.463 .242 .296 1.913 .063
Y
a Dependent Variable: PERFORMANCE

Although there is positive relationship between flexibility and performance but the
significance level of this relationship is 0.063 which is greater than 0.05. Hence hypothesis is
rejected

H4: The use of inter-firm coordination increases export performance.

Coefficients

Unstandardized Standardized
Coefficients Coefficients t Sig.

Model B Std. Error Beta B Std. Error

1 (Constant) 2.864 1.378 2.079 .044
INTRAFIRMCOORD .401 .270 .234 1.487 .145
a Dependent Variable: PERFORMANCE

There is positive relationship between the use of intrafirm coordination strategy and
performance of the export manufacture but result is not significant, hence hypothesis is
rejected.

25 | R e s e a r c h P r o j e c t
H5: Product complexity increases the use of (a) process controls over foreign distributors and
(b) output controls over foreign distributors.

Coefficients(a)

Unstandardized Standardized
Coefficients Coefficients t Sig.

Model B Std. Error Beta B Std. Error

1 (Constant) 2.046 .835 2.451 .019
PRODCOMPLEXITY .468 .194 .365 2.418 .021
a Dependent Variable: PROCESSCONTROL

The above result shows that there is significant relationship between the product complexity
and use of process control and hence hypothesis is accepted.

Coefficients(a)
Unstandardized Standardized
Coefficients Coefficients t Sig.

Model B Std. Error Beta B Std. Error

1 (Constant) 5.527 .331 16.716 .000
PRODCOMPLEXITY .070 .077 .146 .909 .369
a Dependent Variable: OUTPUTCONTROL

However there is no apparent relationship between the product complexity and use of output
control as significance level for the relationship is 0.369 which is greater than 0.05. Hence
hypothesis is rejected.

H6: Market volatility reduces flexibility by the parties

Linear Coefficients

Unstandardized Standardized
Coefficients Coefficients t Sig.

B Std. Error Beta B Std. Error

STABILITY .005 .094 .008 .049 .961
(Constant) 5.348 .315 16.987 .000

There is no linear relationship between the market volatility and flexibility, hence hypothesis
is rejected. However a scatter diagram of the two variables indicates that there might be
quadratic relationship between the market volatility and flexibility. A regression analysis for
quadratic model is shown below.

26 | R e s e a r c h P r o j e c t
Although the significance level for this model is also greater than 0.05, but it gives a better
explanation of relationship between the market volatility and flexibility.
Quadratic Coefficients

Unstandardized Standardized
Coefficients Coefficients t Sig.

B Std. Error Beta B Std. Error

STABILITY -.604 .450 -1.043 -1.343 .187
STABILITY **
.084 .061 1.074 1.383 .175
2
(Constant) 6.266 .733 8.552 .000

FLEXIBILITY

Observed
6.000
Linear
Quadratic

5.000

4.000

3.000

2.000
1.000 2.000 3.000 4.000 5.000 6.000 7.000
STABILITY

The diagram indicates that the use of flexibility initially decreases with the increase in market
volatility and after certain point use of flexibility starts increasing as the market volatility
increases further. However this relationship is not significant and hence hypothesis is
rejected.

27 | R e s e a r c h P r o j e c t
 CHAPTER 5

RESULTS
Balanced Coordinator

Exporter manufacturers in the balanced coordinator group are well balanced in their use of
intra- and interfirm coordination strategies. They rely on all means of interfirm coordination
and have relatively high levels of intrafirm coordination. Members of this group of exporters
are most easily distinguished by their use of high input control and high output control, which
is significantly higher than that of the other groups. Moreover, this group displays high
flexibility and intrafirm coordination. Balanced coordinators ranked the highest on flexibility
and on intrafirm coordination also. So in nutshell, balanced coordinators use all type of
coordination strategy simultaneously.

28 | R e s e a r c h P r o j e c t
 Final Cluster Centers

6.00 0
Variables
PROCESSCONTROL
FLEXIBILITY
INTRAFIR MCOORD
OUTPUTCONTROL

4.00 0
Values

2.00 0

0.00 0
Flexible C oordinator Balanced C oordinators
Cluster

Flexible Coordinators

Export manufacturers in flexible coordinators put more stress on bilateral control than the
unilateral control (Process control and Output control). Exporters in this cluster scored lowest
in process control. This implies that these exporters give significant level of autonomy to
their overseas distributors. They have scored relatively high on flexibility. The t-Test shown
below clearly states that the two clusters vary significantly in their use of unilateral controls
(Process Control and Output control). However there is no significant difference between the
two clusters in terms of flexibility and intrafirm coordination strategies. The significance
level of mean values of process control and output control are 0.000 and 0.013 respectively
which are less than 0.05 which implies that their means vary significantly between the two
clusters. However significance level for flexibility and intrafirm coordination are 0.881 and
0.075 which are greater than 0.05 and hence their mean do not vary significantly across the
two clusters.

Levene's Test for Equality

of Variances t-test for Equality of Means

F Sig. t df Sig. (2-tailed)

PROCESSCONTROL Equal variances
assumed 6.429 .015 -10.598 38 .000

29 | R e s e a r c h P r o j e c t
 Equal variances not
assumed -10.364 29.720 .000
OUTPUTCONTROL Equal variances
assumed .074 .787 -2.610 38 .013
Equal variances not
assumed -2.605 37.320 .013
FLEXIBILITY Equal variances
assumed .550 .463 -.151 38 .881
Equal variances not
assumed -.153 37.391 .879
INTRAFIRMCOORD Equal variances
assumed 3.980 .053 -1.831 38 .075
Equal variances not
assumed -1.792 30.053 .083

Export Performance
The balanced coordinators, which deploy all kind of coordination strategies, are better
performers with a mean score of 5.07937 than the flexible coordinators who have a mean
score of 4.68421. This result indicates that exporters should deploy multiple coordination
strategies

Descriptives

PERFORMANCE

N Mean Std. Deviation Std. Error

1 19 4.68421 1.119268 .256778
2 21 5.07937 1.357714 .296277
Total 40 4.89167 1.250385 .197703

ANOVA

PERFORMANCE
Sum of
Squares df Mean Square F Sig.
Between Groups 1.558 1 1.558 .996 .325
Within Groups 59.417 38 1.564
Total 60.975 39

Hypotheses Results

Hypothesis Result

H1: The use of process controls increases Rejected

export performance.

30 | R e s e a r c h P r o j e c t
 H2: The use of output controls increases export Rejected
performance.

H3: The use of flexibility coordination Rejected

increases export performance.

H4: The use of interfirm coordination Rejected

increases export performance.

H5: Product complexity increases the use of (a)Accepted (b) Rejected

(a) process controls over foreign distributors
and (b) output controls over foreign
distributors.
H6: Market volatility reduces flexibility by the Rejected
parties

CHAPTER 6

Managerial Implication
Our findings have important implications for export manufacturers. As competition
intensifies in international markets, export manufacturers find it immensely difficult to
coordinate activities within and across firm boundaries. To achieve superior export
performance, our results suggest that rather than focus on a subset of coordination strategies,
export manufacturers should simultaneously encourage both intra- and interfirm coordination.
Internally, export manufacturers should include representatives from a cross-functional team
in their export department and ensure that the objectives of the export department are
communicated clearly to other functional areas. Externally, export manufacturers should
deploy multiple strategies to coordinate activities with foreign distributors. They must clearly

31 | R e s e a r c h P r o j e c t
specify sales and market share targets expected of foreign distributors and be willing to make
adjustments when demand or other environmental conditions change in the export market.
They also must influence foreign distributors’ operating procedures to some extent, such as
how foreign distributors manage their relationships with local retailers and the distributors’
promotional and new product introduction activities. It is the combined use of these internal
and external coordination strategies that generates superior export performance. These
findings are of particular importance to international business managers who hope to
understand the coordination strategies adopted by indigenous export manufacturers in India.
We found that successful indigenous exporters in India are those that rely heavily on
performance evaluation of their foreign distributors, engage in mutual adjustments with these
host-country distributors, influence foreign distributor selling procedures, and ensure close
communication among diverse functional units within the firm. These aspects of coordination
strategies are important signals that separate competitive Indian manufacturers from the rest.

Limitation and Direction for further Studies

The findings of this research need to be interpreted in light of the following limitations:
1. Sample was comparatively small and sampling technique was convenience sampling
technique which might have induced bias in the result.
2. Sampling technique used was not random sampling, although initially random
sampling technique was proposed but due to problems related to data collection,
convenience sampling was ultimately used.
3. Although we discovered meaningful relationships between the combined use of
export coordination strategies and export performance, further research should
consider alternative ways of operationalizing the coordination strategies. Little
consensus has been reached in the literature on export coordination measures.(Bello
and Gilliland 1997; Heide 1994).
4. Further studies should separate further overall intrafirm coordination into different
dimensions, such as monitoring (process control), incentives (output control), and
socialization (normative governance) (Eisenhardt 1985; Wathne and Heide 2000;
Weitz and Jap 1995). Investigation of whether the match between specific forms of
intra- and inter-firm coordination leads to superior export performance would also be
worthwhile.
5. The perceptual data obtained from survey limited our ability to predict a firm’s long-
term performance and might raise concerns some form of bias. Our study captures

32 | R e s e a r c h P r o j e c t
 only the subjective performance of export manufacturers at a particular point in time.
Thus, further research should measure a firm’s export market performance relative to
that of major competitors or over time.
6. Furthermore, does the relationship between coordination strategies and export
performance vary depending on a firm’s stage of internationalization? As an exporter
expands further into the international market, should it opt for strategies that are less
dominated by output control than that used in the early stages of internationalization?
These questions merit further investigation.
7. A third area for further research is to compare the export coordination strategies of
indigenous exporters in India with those used by foreign-owned exporters, joint
ventures, and firms formed with foreign direct investments established in India.
Researchers should investigate whether the ownership structure affects the
coordination strategies adopted by an exporter from the same source country.

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 ANNEXURES

Annex-1 Questionnaire

Annex-2 Online Questionnaire

Annex-3 Pretested Questionnaire

Annex-3 Inputfile

Annex-4 Sample Frame

36 | R e s e a r c h P r o j e c t
37 | R e s e a r c h P r o j e c t