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Antecedents of international Antecedents of


international
performance performance

A service firms' perspective


Muris Cicic 1103
University of Sarajevo, Sarajevo, Bosnia-Herzegovina Received September 2001
Paul Patterson Revised November 2001
University of New South Wales, Sydney, Australia, and
Aviv Shoham
University of Haifa, Mount Carmel, Haifa, Israel
Keywords Service, International marketing, Export, Company performance,
Market orientation
Abstract Madsen synthesized international performance studies and identified 20 performance
antecedents. Of these, 12 are unrelated to international performance or have conflicting
relationships across the reviewed studies. We use his recommendations to increase the value of
international performance research. First, we include seven antecedents that cover the
organizational, environmental, strategic, and performance domains of his model, including
components of the market orientation model. Second, earlier studies involved mostly North
American and European goods exporters. This study extends previous research to the service
sector in Australia. Based on responses from 181 exporters, the importance of managerial
attitudes, perceived international barriers, and human resource efforts is shown to affect
international performance.

Introduction
Service enterprises operate in competitive domestic and global markets,
increasingly characterized by the speed and ease with which services cross
national borders, encouraging many to seek growth opportunities offshore. Yet
the literature is replete with studies examining service firms' international
performance.
Most previous studies in the manufacturing sector used the strategy-
structure-performance paradigm (Madsen, 1987), assuming that performance
depends on its structure, environment, and strategy. Only one structure
construct, three environment constructs, and four strategy constructs were
consistently related to international performance (Madsen, 1987).
Our paper extends previous research by using a more comprehensive set of
explanatory variables, selected by consistency of previous findings and
relevance to our study. Within structure, management support, a building-
block of market orientation, is included; within the environment, the
importance of international barriers is included; within strategy,
communications with customers and local representatives and support for the
local office, another antecedent of market orientation, are included. European Journal of Marketing,
Vol. 36 No. 9/10, 2002, pp. 1103-1118.
# MCB UP Limited, 0309-0566
Note: Authors' names listed in alphabetical order. DOI 10.1108/03090560210437352
European Second, we study service firms, providing an opportunity to uncover
Journal of manufacturing and service sector differences. Although there are studies of the
Marketing service sector (e.g. Cicic et al., 1999), few analyze international performance
antecedents. Third, we operationalize international performance by sales
36,9/10 intensity, satisfaction, and confirmation of expectations, answering the call for
multi-dimensional performance measures (Shoham, 1999).
1104 In sum, the international landscape has changed with many domestic
markets saturated, offering limited growth prospects. Furthermore, the digital
economy and globalization have encouraged service firms to export. Thus,
services' exporting deserves more attention.

Theory and hypotheses


International performance
International performance is four-dimensional: sales, profits, sales change, and
profits change (Madsen, 1987; Shoham, 1999; Styles, 1998). Prior research used
measures that tap into these sub-dimensions objectively and subjectively. Two
international firms with similar objective performance can differ on subjective
performance ± how satisfied managers are ± depending on how performance
compares with expectations (Shoham, 1999). We assess objective and
subjective performance.

Antecedents
Most studies of international performance assume that it depends on firms'
structure, international environment, and strategy. Strategy results from
matching a firm's skills and resources, environmental opportunities, and
managerial preferences; then, structure and strategy affect performance
(Rumelt, 1974). We follow Madsen (1987) and focus on factors that have
consistently affected international performance: two attitudinal, two barriers,
three strategies and one performance (Figure 1).
Strategy. Madsen (1987) identified two strategy factors that affect
international performance positively: communications with customers/local
representatives and the level of marketing/financial support for local
intermediaries. Importantly, communication has been a building-block in
market orientation models (Kohli et al., 1993). There has been a marked
increase in marketers' interest in market orientation, making it a central
construct in the study of domestic (e.g. Deshpande and Farley, 1998; Kohli and
Jaworski, 1990; Jaworski and Kohli, 1993; Narver and Slater, 1990) and
international performance (e.g. Cadogan et al., 1999; Diamantopoulos and
Cadogan, 1996). Market orientation includes three components (information
generation, information dissemination, and responsiveness). Information
generation pertains to communication intensity and requires an organizational
effort to gather data about present and future customer needs. Similarly,
customer and competitor emphases in Narver and Slater's conceptualization
(1990) involve information generation. Thus, information flow, aided by
communication intensity, is necessary for market orientation.
Antecedents of
international
performance

1105

Figure 1.
Hypothesized model

The number of visits to the foreign market serves to provide support to foreign
intermediaries and is an important predictor of communication intensity
(Rosson and Ford, 1982). International firms should stay close to the market via
frequent visits (Bilkey, 1982) and Shoham (1998) documented that the
frequency of such visits affected international performance positively.
Gomez-Mejia (1988) studied performance-enhancing human-resource
strategies, such as the systematic exploration of international opportunities,
which requires sufficient allocation of managerial resources. Additionally,
firms are more successful internationally when they are committed to and
support international marketing (Cavusgil and Shaoming, 1994; Shoham, 1998).
This is also in line with Kohli and Jaworski's (1990) model of market
orientation, which requires a firm-wide effort to gather and disseminate
information, particularly in services, where face-to-face contact is needed
during service delivery. Thus, appropriate HRM policies are essential to
maintain service quality and consistency:
H1. The stronger the management's support of international operations
through the use of human resources, the higher the international
performance.
Environmental structure. Internal and external barriers affect international
performance negatively (Patterson and Cicic, 1995). Barriers are important for
firms in early and late stages of internationalization (Czinkota, 1994) ± the
technical aspects of marketing are difficult for inexperienced firms, quality is
important at later stages, and communication barriers hinder all exporters
(Karafakioglu, 1986). Smaller service firms encounter logistics, promotion,
European overseas markets contacts, market information availability, and legal barriers,
Journal of because employees had little training in international business (Winsted and
Marketing Patterson, 1998). These barriers impede international performance (Patterson
and Cicic, 1995). The existence of barriers creates a negative environment, in
36,9/10 which the international firm has to operate the more severe the barriers, the
larger the negative impact on performance. Therefore:
1106
H2. The higher the perceived [a] internal and [b] external international
barriers, the lower the performance.
Barriers may also have an indirect effect on performance through their impact
on international strategy. If firms perceive that barriers exist and are
important, they may act to reduce their impact by allocating more resources to
combat them (Shoham and Albaum, 1995). Here, too, market orientation can
play an important part. Information generation can reduce the impact of
barriers. Monitoring target markets and being market-driven (Jaworski and
Kohli, 1993) reduce the importance of external barriers (Shoham and Albaum,
1995). Thus, barriers should indirectly affect performance through firms' effort/
strategy:
H3. The higher the perceived importance of [a] internal and [b] external
international barriers, the stronger the firm's strategic effort.
We premise a relationship between the importance of international barriers and
the international attitudes of top management. As more barriers are recognized,
managers' attitudes about the risks/benefits of international operations may
change (Axinn, 1988). Here, too, the market orientation literature is informative.
Jaworski and Kohli (1993) noted that managers' risk taking affects firms'
market orientation. H4 may only hold in cross-sectional research because, long-
range, if the effort hypothesized in H3 is successful in reducing barriers'
impact, attitudes will be re-adjusted. Therefore:
H4. The higher the perceived importance of [a] internal and [b] external
international barriers, the more negative the firm's international
attitudes.
Organizational structure. Only management support had a consistent impact
on international performance (Madsen, 1987). Management support (Bilkey,
1982) and commitment (Aaby and Slater, 1989; Cavusgil and Shaoming, 1994)
are exhibited through the international outlook (Cunningham and Spigel, 1971)
and attitudes (Cavusgil, 1984) of top management. Commitment affected the
propensity to enter international markets and international sales positively
(Rosson and Ford, 1982). Moreover, success of new innovations depends on top
management support for issues such as the creation of a market orientation
(Jaworski and Kohli 1993). Jaworski and Kohli (1993) documented the
importance of top management emphasis on customer needs via tracking and
responding to market changes.
Given that management support is applied through human resources Antecedents of
strategies (H1), we do not formulate a hypothesis here. However, management international
support and commitment are exhibited through the international outlook of top performance
managers (Cavusgil, 1984; Cunningham and Spigel, 1971). Commitment
includes two components ± attitudinal and behavioral. Lim et al. (1992) noted
that visionary, committed managers, who mobilize resources to support
international marketing, characterize international firms. They suggest a 1107
direct, positive link from the attitudinal to the behavioral sub-dimensions of
commitment. Formally:
H5. The more positive the international attitudes of top management, the
stronger the level of management support and international strategic
commitment effort used by the firm.
Attitudes directly affect performance beyond the effort-mediated relationship
(Aaby and Slater, 1989; Madsen, 1987). Adopting an international outlook is a
vital stage in policy formulation (Cunningham and Spigel, 1971) and negative
risk perceptions can serve as internationalization barriers (Axinn, 1988). This is
due to the role that top managers' risk-taking tendencies play in creating
market orientation. Positive perceptions about the potential of international
sales to contribute to profitability are associated with advanced international
stages and proactive managerial orientations (Shoham et al., 1995). The extent
of firms' adoption of an international outlook enhances performance (Shoham,
1999). Similarly, the international orientation of firms' plans enhances
international market share, intensity (Gomez-Mejia, 1988), and effectiveness
(Gomez-Mejia and McCann, 1992):
H6. The more positive the international attitudes of top management, the
higher the export performance.

Method
Research design
We sampled Australian service firms, which provide a promising context for
this study. Services exports have been expanding internationally at a fast pace
(Lovelock et al., 2001). Limiting data collection to one country reduces validity
threats, since firms share identical culture, infrastructure, and country of
origin.
Initially, we conducted semi-structured interviews to gain an understanding of
internationalization motives, risks/benefits, barriers, management commitment
and attitudes, export strategies, entry modes, and problems/opportunities,
followed by a survey. The sampling frame was constructed from 1,144 non-
overlapping firms that are members of the Australian Coalition of Service
Industries and the Australian Marketing Institute or appear on the list of largest
500 exporters and in service trade directories. A cover letter and the
questionnaire were mailed to international operations managers, followed by a
reminder letter. Since 183 questionnaires were undeliverable and 176 firms were
European not involved in services, the sample size is 785, of which 292 firms provided
Journal of usable questionnaires (37.2 per cent). The analyses are based on responses from
Marketing the 181 international firms. We assessed non-response bias by comparing
responses to key questions from early and late respondents. As no differences
36,9/10 were identified, non-response bias appears to be minimal.
Table I profiles the sample. Of the 181 firms, 163 (90.1 per cent) are providers
1108 of services primarily. Services account for 84.9 per cent of their sales on
average and total sales range from under AUS$10,000,000 (43.4 per cent) to
over AUS$500,000,000 (10.4 per cent).

Measures (see Appendix)


International performance. Objective and subjective measures of performance
were assessed. Respondents indicated their firms' objective ratio of
international to total sales for the latest year, similar to measures used
previously (Axinn, 1988; Cooper and Kleinschmidt, 1985). Three previously
used items operationalized subjective confirmation of performance
expectations (Patterson, 2000). Factor analysis resulted in one factor,
accounting for 66.5 per cent of the variance. The items were averaged to form a
reliable scale ( = 0.74).
Subjective satisfaction with performance was measured by six items,
structured after the consumer satisfaction scale (e.g. Patterson, 1993). One
factor was identified, accounting for 69.8 per cent of the variance. We formed a
reliable ( = 0.91) average satisfaction index from these items.
This procedure resulted in three performance scales. We standardized the
scales and averaged them (Cavusgil and Shaoming, 1994). Factor analysis
yielded one factor, accounting for 61.4 per cent of the variance. The averaged
scale exhibited acceptable reliability ( = 0.65).
Management support. Three items measured management support. The first
is the extent of top management involvement, measured by an open-ended item
asking respondents to indicate the number of senior managers involved in
international decisions. The second was the percentage of the workforce

Number
Service type (n) Per cent

Business advisory services (marketing, legal, accounting, strategy, etc.) 95 32.5


Engineering/technical/architectural 35 12
Construction/mineral exploration 21 7.2
Training/education 20 6.8
Software/movies/music/book publishing 15 5.1
Information technology/telecommunications 25 8.6
Finance/banking/insurance 25 8.6
Hospitality/tourism/recreation 11 3.8
Table I. Transport and other services 43 14.7
Industry distribution of Not specified 2 0.7
firms in sample Total 292 100
directly engaged in international marketing. The third was the annual Antecedents of
frequency of overseas visits by senior managers. international
Items' validity was assessed by their correlations with two measures from performance
the questionnaire. First, all should be related positively and moderately with
the importance of international sales. This was the case (rinvolved-importance =
0.16, p  0.02; rworkforce-importance = 0.16, p  0.02; roverseas-importance = 0.31,
p  0.01). Second, only overseas visit frequency should be related to a measure 1109
of the required training of customers, since only visits can deliver training on a
regular basis. Indeed, it was the only sub-dimension significantly related to
required training (rinvolved-training = 0.08, p  0.15; rworkforce-training = 0.02,
p  0.41; roverseas-training = 0.27, p  0.01).
International barriers. Five external barriers were measured. A factor
analysis yielded one factor that captured 66.7 per cent of the variance. A
reliable, averaged scale was formed ( = 0.98). Five firm-controllable internal
barriers were included. A factor analysis resulted in one factor explaining 63.0
per cent of the variance. The averaged scale was reliable ( = 0.85).
The correlations within the two sets (external barriers: 0.47  r  0.72;
internal barriers: 0.38  r  0.72) were greater than the correlations between
items across the two (±0.05  r  0.37). Additionally, we calculated a
correlation matrix between the barrier items and measures of the attractiveness
of target markets. The set of external barriers (but not internal barriers) should
be moderately and negatively related with the items measuring such
attractiveness. This indeed was the case. All 20 external barriers' correlations
were negative; 19 were significant. The 20 internal barriers' correlations were
mixed; only one was significant.
International attitudes. International attitudes were operationalized by
positive and negative attitudes. Positive attitudes included seven items. Factor
analysis yielded one factor, capturing 50.2 per cent of the variance. An
averaged, reliable scale was formed ( = 0.83). The negative attitude scale
included five items. Factor analysis resulted in one factor, capturing 52.6 per
cent of the variance. Averaging the items resulted in a reliable scale ( = 0.82).
To assess the validity of the scales, we calculated within and between sub-
dimensions' correlations. Correlations across the two sub-dimensions
(0.20-0.27) were mostly insignificant. Correlations within the positive (0.25-0.59)
and within the negative attitude sub-dimensions (0.31-0.51) were all significant.
Furthermore, we expected the positive (but not the negative) sub-dimension to
be moderately and positively related to the importance of exporting to attaining
future firm goals. This indeed was the case. All seven correlation coefficients
for the positive sub-dimension were positive and significant. The coefficients
for the negative sub-dimension were mixed and only one was significant.

Results
Table II shows the means, standard deviations, correlations, variances, and
covariances for our measures. We tested our model by structural equation
modeling (LISREL).
European Mean SD A+ A± TM AB MI OV WI EX
Journal of
Marketing Positive attitudes 3.66 0.65 0.83 0.43 ±0.10 0.04 0.16 0.17 0.38 0.18 0.46
Negative attitudes 3.18 0.86 0.82 ±0.06 0.75 ±0.21 ±0.30 0.12 ±0.05 ±0.20 ±0.38
36,9/10 External barriers 3.72 0.92 0.98 ±0.03 ±0.18 0.85 0.27 ±0.19 0.01 ±0.07 0.10
Internal barriers 3.48 0.96 0.85 0.10 ±0.27 0.24 0.92 ±0.01 0.24 0.15 0.42
Managers' involvement 3.82 2.30 0.26 0.21 ±0.40 ±0.03 5.3 0.18 ±0.09 0.14
1110 Overseas visits 3.12 1.09 0.27 ±0.05 0.01 0.25 0.46 1.2 0.14 0.41
Workforce involvement 18.80 27.56 3.17 ±4.83 ±1.68 4.03 ±5.17 4.19 759.7 0.42
Export performance 0.01 0.77 0.67 0.23 ±0.28 0.07 0.32 0.25 0.35 9.03 0.59
Table II.
Correlation/covariance Note: Correlations above, variances on, and covariances below the diagonal. Correlations
matrix > 0.127 are significant at p < 0.05 level and correlations > 0.179 are significant at p < 0.01

Five LISREL models were run. In Model 1, we included only the hypothesized
relationship between management support and performance and the effects of
attitudes and barriers were constrained to be indirect (through management
support). In Model 2, we constrained the analysis such that international
attitudes and management support had a direct impact on international
performance. In Model 3, only perceived barriers and management support had
direct impacts on performance. In Model 4, attitudes, barriers, and management
support had direct effects on international performance. Since the three
measures of management support are objective measures of observable
constructs, we fixed their coefficients at one. In all other cases, measurement
coefficients for the scales were fixed at and the error variance was fixed at [(1
± ) * variance].
Models 2 and 3 outperformed Model 1 significantly. Squared multiple
correlation for international performance was lowest (R2 = 0.48) when only
management support had a direct impact. When a direct impact for perceived
barriers was added (Model 2), R2 improved to 0.68. When a direct impact for
international attitudes was added (Model 3), R2 improved to 0.85. When
perceived barriers and international attitudes were included with management
support (Model 4), R2 improved to 0.88. The addition of either perceived
barriers or international attitudes to the analysis resulted in significant
reductions in 2 (82 for Model 1 = 78.13, 62 for Model 2 = 45.98, and 62 for
Model 3 = 17.21). Entering both direct effects simultaneously (Model 4) resulted
in significant improvements in 2 (42 = 6.90) over Models 2 and 3. These
analyses imply that international barriers and attitudes affect international
performance directly beyond the mediated impact through management
support.
In Model 5, we allowed barriers and international attitudes to affect
performance directly, but allowed neither to have a mediated effect on
performance. While the two models have a similar squared multiple correlation
for performance (R2 for Model 4 = 0.88; Model 5 = 0.87), the reduction in 2
from Model 5 to Model 4 is significant (72 for Model 5 is 34.29 and 42 for Model
4 is 6.90). In sum, barriers, attitudes, and management support affect
international performance directly. Additionally, barriers and international Antecedents of
attitudes affect performance indirectly through management support. international
Since Model 4 was the best in terms of the variance in export performance performance
accounted for and in terms of 2 (42 = 6.90, p = 0.14), tests of H1-H6 are based
on this model (Figure 2). Model 4 performed well on other measures of fit
(GFI = 0.99; AGFI = 0.92; SRMR = 0.03).
1111
Tests of hypotheses
Management support of international operations was expected to affect
international performance positively. In support of H1, the coefficients of all
management support factors are positive and significant. Australian service
firms that use more senior managers in international decision making, provide
a higher level of support to foreign customers and the local office through
frequent visits, and allocate a higher proportion of the workforce to deal with
international operations outperform firms that do not.
H2 posited that international barriers would have a direct, negative impact
on international performance. All coefficients emanating from internal barriers
are positive and significant, as expected. However, the impact of external
barriers was not. Thus, H2 is partially supported.
The impact of external barriers on the number of senior managers involved
in international decision making is significant and positive as expected (H3).
The impact of internal barriers on the frequency of overseas visits is
significant, but contrary to expectations. The higher the impact of these
barriers, the lower the visit frequency.
Barriers were expected to affect international attitudes negatively (H4).
Internal barriers significantly affected international attitudes in the expected
direction ± the higher the barriers, the higher the negative sub-dimension of
attitude and the lower the positive sub-dimension. External barriers did not
affect attitudes significantly, but their effect on the negative attitude sub-
dimension is in the expected direction and is marginally significant (p < 0.08).
Thus, H4 is partially supported.
Positive international attitudes were expected to enhance management effort
and support (H5). The positive attitude sub-dimension had a positive and
significant impact on the number of senior managers involved in international
decision making and on the frequency of overseas visits. Its positive impact on
the proportion of the workforce allocated to international operations was
marginally significant (p < 0.08). The expected negative impact of negative
attitudes on the proportion of the workforce involved in international
operations was also significant. The data provide partial support to H5.
International attitudes were expected to have a direct impact on performance
(H6). Indeed, the impact of the positive sub-dimension is positive and
significant and the impact of the negative sub-dimension is negative and
significant.
In sum, the data provide strong or partial support to all six hypotheses.
H1/H6 were supported, whereas H2-H5 were partially supported.
European
Journal of
Marketing
36,9/10

1112

Figure 2.
Structural coefficients
The overall impact of each independent construct is reflected in the table of Antecedents of
direct and indirect effects (Table III). international
performance
Discussion
We first discuss the cases where the data provided partial support. The direct
link between external barriers and performance was disconfirmed. Earlier, we
argued that such barriers are more important for inexperienced firms 1113
(Karafakioglu, 1986). Most respondents have been active internationally for
over three years, so they have had an opportunity to counter the effect of
barriers. Another explanation arises from the way in which the importance of
barriers was measured. Managers indicated the extent to which barriers
hindered their firms from expanding internationally. Measures of performance,
however, included satisfaction and confirmation of expectations that may have
tapped into non-sales facets of performance. If barriers only affect sales, their
relationship with a performance scale that taps into profitability may have
been weakened. These explanations are weakened by the fact that internal
barriers were related to performance, as expected. We draw on Shoham and
Albaum (1995), who note that experience-based decision making reduces the
impact of external barriers, due to the importance of experience for avoiding
operations in high-barrier markets.
The importance of external barriers was associated with senior management
international involvement, but not with visit frequency or the proportion of
workers involved in international operations. This is consistent with Shoham
and Albaum (1995), who find that the importance of external barriers can be
reduced internally through experiential decision making, but not by other
decision-making characteristics. Top managers can stimulate the government
to act to reduce the barriers imposed by foreign governments. Sales visits and
allocating a higher proportion of the workforce to international operations will
not help combat these barriers.

Total
Indirect standardized
Explanatory variables Direct effects effects effects

Attitudes to exporting
Positive attitudes 0.35 0.11 0.46
Negative attitudes ±0.38 ±0.07 ±0.45
Barriers to exporting
External ± non-controllable 0.03 0.03
Internal ± controllable ±0.26 ±0.31 ±0.57
Managerial support Table III.
Senior management involvement 0.15 0.15 Direct, indirect and
Frequency of overseas visits 0.21 0.21 total effects of
Proportion of workforce involved in explanatory variables
international marketing 0.31 0.31 on export performance
European The weak relationship between internal barriers and attitudes may be due to
Journal of the fact that these barriers are firm-controllable. For example, if there are
Marketing insufficient international contacts, the firm can act to locate such contacts
through international databases, embassies, or trade missions.
36,9/10 Negative attitudes affected the proportion of the workforce involved in
international operations, but not management involvement or overseas visits.
1114 Negative attitudes include perceptions of international operations being riskier/
costlier than domestic operations, which may have been accounted for by
previous managerial action. Since the sample includes mostly experienced
firms, persistent negative attitudes may have been handled by managers'
involvement and visits early in internationalization. Because ensuring
consistent quality of services is difficult, senior management involvement and
visit frequency should affect performance.
The explanation for positive attitudes affecting top management
involvement and overseas visits, but not the proportion of the workforce,
mirrors this logic. Positive attitudes include perceptions of international
operations contributing to sales and profits. If managers have positive
attitudes, continuous involvement and overseas visits are required.

Implications
Theoretical implications
The findings offer substantial support to the links in Figure 1. Testing a
multivariate model of Madsen's (1987) factors shows that the structure of
relationships is more complex than previously thought.
Our model includes organization structure, environment structure, strategy,
and performance constructs (Madsen, 1987). Earlier research modeled these
factors as affecting international performance directly. Our study suggests that
the effect of barriers on performance is negative, the effect of positive attitudes
is positive, and the effect of top management support is positive as found
previously. Including all three dimensions resulted in a high proportion of
explained variance in international performance (88 per cent). This compares
favorably with previous research, meta-analyzed by Shoham and Rose (1993),
who reported that previous studies explained, on average, 22.3-31.4 per cent of
the variance in performance. First, the study was conducted in a services
context. The explanatory variables used here are more relevant to a services
context. For example, export barriers have the capacity to more seriously
impede services export because services rely on local presence from day one.
Second, because people provide services, service quality is difficult to manage
(Lovelock et al., 2001); hence senior management involvement, overseas visits,
and communication frequency should affect export performance.
Many of our findings can be viewed in the context of the market orientation
model. Market orientation, which involves data generation and dissemination,
can reduce the impact of internal barriers. Future longitudinal research is
needed to directly test the potential reduction in barrier perceptions.
Additionally, market orientation can enhance positive and reduce negative
export attitudes. Given the impact of such attitudes on international Antecedents of
performance, a high level of market orientation should enhance performance international
directly, as documented in domestic and international settings (Cadogan and performance
Diamantopoulos, 1995; Cadogan et al., 1999; Jaworski and Kohli, 1993; Narver
and Slater 1990), and indirectly, through attitudes, as documented here.

Managerial implications 1115


Madsen (1987) recommended that managers should maintain personal contacts
with the market and maintain continuously good relations with customers and
the foreign channel. This is even more important for services where a high
degree of interpersonal contact is needed. Similar recommendations can be
made on the basis of our findings. Firms should involve a sufficiently large
number of managers in international decision making, visit overseas
frequently, and allocate a high proportion of the workforce to international
operations. Internationalization should be a part of the culture from top
management to production personnel, in line with Patterson and Cicic (1995),
who find that top management commitment to internationalization enhances
service export performance, and with market-orientation-based findings, which
show that top management emphases drive performance through market
orientation. Additionally, support, commitment, and competencies, which drive
international performance, should be stressed. An international vision and
favorable attitudes, exhibited through positive international attitudes, are
necessary.
The negative impact of barriers can be reduced through favorable
international attitudes and training. Internal-controllable barriers, which had
the highest impact on performance, can be corrected by a commitment to staff
training and development. If barriers are important inhibitors of
internationalization, top management can develop firm-wide positive
international attitudes. Managers and workers need to be made aware of the
potential contribution of international sales to the firm. Negative export
attitudes should be reduced. Higher levels of senior management involvement
in decision making, frequent visits, and allocating a high proportion of the
workforce to exporting can reduce the negative impact of barriers.
Additionally, the more information the firm acquires through overseas visits,
the stronger its market orientation ± critical in services to achieve high levels of
service quality, which enhances performance.
International attitudes had an indirect impact on performance via top
management support. Thus, to the extent that managers want to change
human resource allocation from domestic to international operations, they
should include a change in international attitudes. Change agents can be
internal (top management) or external (governments or agents). For external
barriers, external change agents may provide more accurate information about
foreign markets, help in circumventing such barriers, or exert pressures on
foreign governments to reduce them. For internal barriers, top management
can act to reduce their impact.
European Finally, of the three groups of factors, positive managerial attitudes and the
Journal of level of management support have the strongest positive impact, while the
Marketing negative attitudes and internal firm barriers have the strongest negative direct
impact on performance. The route to improved performance should include
36,9/10 addressing perceived internal barriers through training, recruitment, and
seminars. Further, a concerted effort is required to change attitudes.
1116
Limitations
Our results are based on a sample of Australian service firms. Further research
is needed in other countries to assess whether the structure uncovered is
universal.
Our study is cross-sectional. While the measures of performance cover past
and present, the ones for attitudes, barriers, and management support cover the
present time. Some of the variance in today's performance may depend on past
attitudes, barriers, and support. Longitudinal research can shed light on the
importance of the measures' time horizon.

Summary
The limitations suggest directions for future research. The results of this study
show that using more comprehensive models and multiple measures for latent
variables and accounting for specification and measurement errors have the
potential to uncover relationships that were not tested in earlier studies. As
Madsen (1987, p. 197) points out: ``Taking just some (of these requirements) into
consideration, however, would still have the potential of pushing empirical
export performance research further ahead.''
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Appendix: Partial list of measures (complete list available from the authors)
Target market barriers ( ˆ 0:98)
To what extent has each of the following factors hindered your organization from expanding
your export program (1 = hindering to great extent, 5 = not hindering at all)? Note, items reverse
scaled prior to analysis:
(1) Too many export restrictions in our target countries.
(2) Foreign exchange control in target countries.
Internal access barriers ( ˆ 0:85)
To what extent has each of the following factors hindered your organization from expanding
your export program (1 = hindering to great extent, 5 = not hindering at all)? Note, items reverse
scaled prior to analysis:
(1) Lack of contacts in foreign markets.
(2) Difficulty of gaining foreign market entry.
Positive export attitudes ( ˆ 0:83)
Please indicate the extent to which you agree or disagree with each of the following statements (1
= strongly disagree, 5 = strongly agree):
(1) Exporting could make a major contribution to my firm's growth.
(2) Exporting is potentially more profitable than selling in the Australian market.
Negative export attitudes ( ˆ 0:82)
Please indicate the extent to which you agree or disagree with each of the following statements (1
= strongly disagree, 5 = strongly agree):
(1) Exporting involves a greater risk than selling in the local Australian market.
(2) Exporting involves a greater cost than selling in the local Australian market.
Satisfaction with performance ( ˆ 0:91)
Thinking about your overall export performance, indicate the extent to which you agree or
disagree (1 = strongly disagree, 5 = strongly agree):
(1) I am very satisfied with our decision to export.
(2) If we had to do it all over again, we would still enter foreign markets.
Confirmation of expectations ( ˆ 0:74)
Thinking about your firm's overall export performance over the past one to three years, how
close did it come to what you expected?: Much worse than expected (1) to much better than
expected (5).

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