DIFFERENTIALS IN MODE CHOICES OF EXPORT ENGAGEMENT: A study on the small and medium-sized manufacturing firms in Vietnam

The literature on export management and export behaviors conventionally analyze export as a general mode without distinguishing different options of choice. In the process of internationalization, small firms build up unique perceptions and pursuits of their international opportunities. Within different levels of internationalization, exporting firms also develop a different approach to the exploitation of capabilities and resources. The lack of resources and capabilities of small and medium enterprises is among the major obstacles for their internationalization. This research explores how firms develop capabilities and utilize external resources during their internationalization process. The study aims to answer the two main questions: What are the patterns of capabilities and resources utilization in SMEs export mode choices? How do these patterns explain the differentials in the export mode choices? Two phases of empirical investigation have been conducted, focusing on explaining the differentials of capabilities and network resources in different mode choices of export engagement. By applying a mixed method, the study ensures validity by using multiple sources of data. In the exploratory phase, three different groups of SMEs are investigated, including non-regular exporters, indirect exporters using independent agents, and regular direct exporters. The preliminary research phase examines essential patterns of dynamic capabilities and network resources that enable SMEs in different export modes. A series of semi-structured interviews were conducted with senior business managers, coming to the aid of drawing the research model and building up reliable constructs. In the findings, the thematic content analysis technique was used to generate important patterns and themes with the presence of quotes and evidence from the respondents. The analysis was in conjunction with the literature review with the aim of drafting the questionnaire survey. The confirmatory phase specifies insights and differences in the direct and indirect export mode choice. Outcomes from the non-parametric test show that direct exporters have a significantly greater endowment of dynamic capabilities and network resources than indirect exporters. This explicit evaluation of dynamic capabilities and network resources support firm decisions to choose between direct and indirect export mode or the combination of both. The results enrich the contextual understanding of the differentials in mode choices of export engagement, thus, contributing to the export management literature an empirical input of the SMEs participation in the global trade. The findings corroborate that researchers should not generalize SMEs internationalization export mode as a whole, given the significant differences between direct and indirect exporters. Understanding different mode choices of export, especially in their development of dynamic capabilities and utilization of network resources can help firms improve performance on their export journey. In the specific context of this study, it is strategically for small manufacturing exporters to select the appropriate entry mode. As overcome resource scarcity is vital for firms to succeed in coping with business risks and uncertainties in accessing foreign markets. Last but not least, the study also suggests some directions for future research in the internationalization process of small and medium enterprises.:TABLE OF CONTENTS ABBREVIATIONS LIST OF TABLES LIST OF FIGURES 1 INTRODUCTION 1 1.1 Research background 1 1.2 Research question 6 1.3 Structure of the thesis 8 2 VIETNAMESE ECONOMY AND THE MANUFACTURING INDUSTRY 11 2.1 Vietnam economic outlook 11 2.2 Description of manufacturing SMEs in Vietnam 13 2.2.1 SMEs definition 13 2.2.2 SMEs in manufacturing sector 14 2.2.3 Development characteristics during 2006-2015 16 2.3 International trade and export status of Vietnamese manufacturing SMEs 18 2.4 Vietnam government support policies to SMEs 23 2.5 Remaining challenges 25 3 LITERATURE REVIEW 32 3.1 Internationalization theories 32 3.1.1 The network theory 35 3.1.2 The transaction cost theory 36 3.1.3 The eclectic paradigm 37 3.1.4 The resource-based view 37 3.2 The internationalization process of SMEs 39 3.2.1 The Uppsala models (U-model) 39 3.2.2 The Innovation-related internationalization models (I-models) 42 3.2.3 The born-global phenomenon 44 3.3 International market expansion strategy and entry modes 46 3.3.1 International market expansion strategy 46 3.3.2 International market entry modes 47 3.3.3 Foreign market entry decisions 55 3.4 Proposed research model for further research on firm internationalization 56 3.4.1 Capabilities and resources as drivers of export 58 3.4.2 SMEs mode choice of export engagement 68 4 RESEARCH METHODS 73 4.1 Research strategy 73 4.1.1 Design rationale 74 4.1.2 Research process 78 4.2 Phase I: Qualitative research approach 80 4.2.1 Qualitative research design 80 4.2.2 Subject identification and sample 82 4.2.3 Instruments and interviews 82 4.2.4 Data analysis 86 4.3 Phase II: Quantitative research approach 88 4.3.1 Quantitative research design 88 4.3.2 Data preparation 90 4.3.3 Pre-testing 91 4.3.4 Survey instruments 92 4.3.5 Questionnaire design 95 4.3.6 Exploratory factor analysis 100 4.3.7 Reliability and validity test 108 4.3.8 Data analysis 111 5 RESULTS AND DISCUSSION 112 5.1 Results of Phase I 112 5.1.1 Code structure 112 5.1.2 Motivation to export 116 5.1.3 Frequencies of codes 119 5.1.4 Capabilities and Resources utilization in First-time export 123 5.1.5 Current Status of Capabilities and Resources utilization 133 5.1.6 Future importance of Capabilities and Resources utilization 142 5.1.7 Code relations 150 5.1.8 Most important patterns 150 5.1.9 Summary of Qualitative research results 153 5.2 Results of Phase II 165 5.2.1 Respondent profile 165 5.2.2 Results of the descriptive analyses 168 5.2.3 Results of the non-parametric tests 176 5.2.4 Summary of Quantitative research results 188 6 CONCLUSION 211 6.1 Implications for firms 214 6.2 Implications for policymakers 216 6.3 Limitations and direction for future research 217 REFERENCES 220 APPENDICES Appendix 1. Interview Guide for the Semi-structured Interview 242 Appendix 2. Survey in English version 243 Appendix 3. Code Hierarchy 247 Appendix 4. Zusammenfassung 250 Appendix 5. Lebenslauf 257 Appendix 6. Erklärung 26