Zambezia (1999), XXVI (ii).EXPORT ENTRY DECISION AND ORGANISATIONALCHARACTERISTICS OF TEXTILE AND CLOTHINGEXPORT FIRMS: ANALYSIS OF ZIMBABWEAN FIRMSZORORO MURANDADepartment of Business Studies, University of ZimbabweAbstractThis article reports the results of an exploratory study on export of textileand clothing by Zimbabwean companies. The objective of the study is toinvestigate the influence of organisational and behavioural characteristicson export entry decision, level of involvement, and hence performance.Observation shows most current textile and clothing exporters have limitedexporting experience. Motives for entering exporting centre on the enticingexport incentive, the shrinking domestic market, and the need to use excesscapacity. During the period 1991 to 1996 there was a strong shift towardincreasing exports by textile and clothing firms. Currently most exportersexport through foreign agents and are concentrating on the European Union(EU) and neighbouring markets. The EU is strongly preferred because exportsenter duty-free and quota-free through the Lome W Convention but mostimportantly, it offers market niches that are viable and stable.The motives underlying pursuance of exporting by an organisation defineto a large extent the vigour and commitment with which it undertakes theactivity. Several factors have been identified in research as motives forentering export marketing. Da Rocha and Christensen (1994, 114)summarised the motives as follows:i. Receipt of unsolicited orders or unexpected opportunities;ii. Government export incentives;iii. Saturated domestic market;iv. Seeking more profits;v. Enhance product image in the domestic market;vi. Market diversification;vii. Management desire to export;viii. Possession of a unique product to export;ix. Increase firm's competitiveness; andx. Exploiting past goodwill.According to Da Rocha and Christensen, the commonest motive toactively enter exporting is to escape from a saturated domestic market.This is particularly so in countries that have a small domestic market.183184 ANALYSIS OF TEXTILE AND CLOTHING EXPORT FIRMSGovernment incentives also have an important role in the decision toexport. However, government incentives become less important forcompanies that continue to export. This is because other factors helpcompanies already involved to continue dealing with external markets.Another major incentive noted by Da Rocha and Christensen is receiptof unsolicited orders from foreign buyers or having unexpectedopportunities. Other studies have also found unsolicited orders to be anImportant factor in motivating export operations (e.g. Bilkey, 1978; Bilkeyand Tesar, 1977; Brooks and Rosson, 1982). However, researchers suchas Johnston and Czinkota (1982), failed to find unsolicited orders as amotivating factor. Bilkey (1978, 39) notes that factors such as emphasison the "fortuitous order from foreign customers" being responsible forinitiating export entry have ignored two critical questions surroundingsuch stimuli-response explanation. First, why should a firm receive anunsolicited order at all? Second, why should one firm respond to thestimuli while another firm ignores? According to Reid (1980b) this suggeststhe existence of decision-maker characteristics at the level of the firmwhich can mediate the impact of the environmental and contextualcharacteristics in export decision making. Aharoni (1966) noted thatmarket knowledge along with idiosyncratic preferences of the decision-maker appears to play a dominant role in foreign marketing decisions.Similar results have been found by Kolde (1968), Mayer and Flynn (1973),and Carlson (1975). Johanson and Vahlne (1977, 27) emphasise theinfluence of knowledge on international actions by businesses. Ininternational activities, uncertainty is generally greater than in domesticoperations and the difficulties of getting information are normally huge. Itis the lack of market knowledge that is the greatest obstacle to the firstforeign venture, and it is the access to such knowledge which makes itpossible for the internationally experienced firm to extend its activitiesto new markets.Exporting is generally regarded as the dominant mode of entry into aforeign market. In this sense, export market motivation can be viewed asa measure of the generalised attitude toward exporting (Reid, 1981, 106).Schooler (1974) has found that not only foreign opportunity attractivenessvaries by form of entry but that this variance is affected by firm-strategicvariables and managerial factors. Root (1982) identifies three rules thatcan be followed in deciding on a foreign market entry strategy. First, isthe naive rule, that a manager follows by considering only one entrystrategy, thus limiting the generation and evaluation of strategicalternatives. While simplifying strategic decision-making this mode oftenleads to missed opportunities or an inappropriate strategy (Jones, et al.,1992,234). Second, is the pragmatic rule, that is similar to the incrementalapproach whereby the firm begins with a low cost entry strategy and ifZ. MUBANDA 185successful then adopts a more complex and costly strategy. The benefitof the pragmatic rule is that it saves time and costs in gathering andanalysing strategic information and in generating and evaluating strategicalternatives. While low in risk, the pragmatic mode fails to identify manyopportunities that might otherwise have surfaced had a more systematicdecision-making approach been used. Third, is the strategic rule that iscomparable to the comprehensive approach. This mode results in fewermissed alternatives.Decision-makers have often been found to respond to exportingcreatively, as in seeking sales growth, or reactively, as in trying to alleviateexcess capacity. Arpan (1972) has emphasised the reactive form of exportdevelopment. He notes that the exporter may sell simply because ofexcess capacity reasons, because a non-domestic buyer has run shortand needs an emergency purchase, or for a number of similar, lessplanned occurrences. According to Reid (1981,107) it would seem foreignmarket orientation can be interpreted as having the followingconsequences. First, it represents the expression of some differentiationin appropriate cognitive distances between individual foreign marketswhich, it is suggested, those who are entering foreign markets are morelikely to make than those not entering such markets. Second, it depictssome generalised appropriate cognitive distance between the home marketand foreign markets as a whole which those not entering such marketsare more likely to perceive compared with exporters entering thesemarkets. These cognitive distances represent the two aspects of themarket discrimination capacity of the decision-maker.Other internal factors that have a motivating influence on companiesto export have been found by other researchers as:i. Production of a (domestically) seasonal product;ii. Availability of excess capacity;iii. Management's familiarity with the countries to be exported to;iv. Management's familiarity with the language of the foreign market; andv. Entry of domestic rivals into exporting.Research is not conclusive as to which factors, internal or external,have more influence in driving the company into exporting. Simpson andKujawa (1974, 111) conclude from their study that stimuli per se are notsufficient in themselves to bring about the initiation of ex*port activities,since as many non-exporters are exposed to the same stimuli as exporters,but with no positive results. The decision to export is therefore acombination of the proper stimuli and the proper perception of thefactors involved in the export process itself.This article reports on an exploratory study of entry into the exportmarket by Zimbabwean companies in the textile and clothing sectors. Itinvestigates the role of organisational characteristics in the determination186 ANALYSIS OF TEXTILE AND CLOTHING EXPORT FIRMSof the export entry decision; and, second, it investigates the influence oforganisational characteristics in determining the level of exportinvolvement by the exporter.METHODOLOGYThe study was exploratory by virtue of its background and themethodological procedures adopted. Due to lack of well-establishedconceptualisation or measures of relevant constructs in export marketingliterature (Aaby and Slater, 1989,23), an exploratory study was preferred.At the time of initiating the study there were no comprehensive academicstudies to use for comparative purposes. Study variables tested in thisresearch were therefore mainly derived from relevant literature based onexport studies conducted in other countries.SamplingAH sample units interviewed in this study were from a single industry.The purpose behind selecting a single industry was to minimise sampleheterogeneity. A decision was also made to focus on manufacturing firmscurrently exporting textile and clothing products.The general population from which the sample was selectedcomprised 122 firms in the textile and clothing industry. The 122 werederived from the Zimtrade1 database. The list also comprised companiesnot involved in export operations although their industry of operation istextile and clothing.For a firm to be part of the sample it had to fulfil the followingcriteria:i. a manufacturing firm exporting textile and/or clothing products directlyto its client(s) in another country or countries; and/orii. a manufacturing firm exporting textile and/or clothing productsthrough an agent and/or distributor and/or some such otherintermediary to another country or countries; and/oriii. a manufacturing firm which has a subsidiary in a foreign country or isin a joint venture with a manufacturing partner, or has a sales office ina foreign country through which they export textile and/or clothingproducts.When the above criteria were applied only 40 companies emerged asthe target population. Although all the 40 companies had been targetedas the study sample, only 31 companies became the final sample. Nine of1 Zimtrade is Zimbabwe's export trade agency. It operates as an autonomous arm of theMinistry of Industry and Commerce.Z. MURANDA 187the companies refused to participate offering various reasons for theirrefusal. The response rate in this study was therefore 77.5%. A 1998 studyby the Economic Affairs Division of the Commonwealth Secretariatconcludes that there are no more than 175 exporters in the wholemanufacturing sector in Zimbabwe. The same study also found that only43 companies (as at 1997) are involved in exporting textiles and clothing(see Lall, etal, 1998,41). These figures are quite consistent with what wasfound during the conduct of this study with very minor expected variationsshowing.Data collectionA structured questionnaire was used to collect the data. The questionnaireincluded variables and corresponding measurement scales intended tosolicit information on the following organisational characteristicspresumed to have influence on export entry decision and level of exportinvolvement:a. ownershipb. sizec. motivating factors for entering export marketd. export entry modese. export experiencef. export commitment.Based on the pretest, revisions were made to the questionnaire. Thereliability of the scales used was evaluated on the basis of the Cronbachalpha. All the scales used in the questionnaire had to have a Cronbachalpha value greater than 0.50, which satisfies Nunally's (1967) threshholdlevel of acceptable reliability for exploratory research.Companies interviewed were located in different towns in the country.However, most are located in Harare and Bulawayo, with the lattercontributing the larger number. Respondents interviewed in the studywere either Chief Executives or Marketing Executives who know aboutexport operations of the company. The focus on executives (keyinformants) assures reliability of information provided (Huber, 1985).Questionnaires were first sent to the companies to be involved in thestudy. This was followed by a telephone call to each company seeking anappointment. A covering letter attached to the questionnaire explainedthe background and purpose of the study. During interviews probing waswidely used to ascertain some unclear responses. Where necessarymanagers were requested to provide documentary evidence to supportresponses made in interviews.Some information was collected from government departments thatdeal with external trade. The other information was collected from the188 ANALYSIS OF TEXTILE AND CLOTHING EXPORT FIRMSConfederation of Zimbabwe Industries, Zimbabwe National Chamber ofCommerce, Clothing Council of Zimbabwe, and Central Africa TextileManufacturers Association. These secondary sources provided substantialbackground information on the industry.Variables and operational measuresVariables in this study were grouped into different 'clusters' at the timeof analysis. However, the sequencing of questions in the questionnairedid not follow the variable grouping which was done at the time ofanalysis. Grouping questions in the questionnaire according to eachvariable being investigated was consciously avoided to counter thepossibility of the 'halo effect'. The major dependent variable used wasexport performance. Export performance is conceived as theaccomplishment of strategic as well as economic objectives (Cavusgiland Zou, 1994, 1)- The level of export commitment (involvement ininternational marketing) was used as a surrogate dependent variable insome instances to corroborate evidence of relationships between exportperformance and the independent variables. Researchers have advocatedin the past, use of involvement as a measure of export marketing strategy(Cunningham and Spiegel, 1971; Reid, 1982; Cooper and Kleinschmidt,1985)Export performance was derived from a constellation of factors ratherthan a single measurement. The factors used to define export performancewere:i. annual export sales growth over a period of five years (1991-1996);ii. export sales volume; andiii. exports as a percentage of total sales over a five-year period (1991-1996).The assumption used in coming up with this criterion was that all thethree factors had equal weighting in the combination. Profit as a variableis not included as a performance measure due to problems such asdifferent accounting systems (Banhardt, 1968), used by individualorganisations in coming up with the final profit figure. Companies tend tovary quite significantly in terms of factors charged to operating profitbefore coming up with the net profit hence the decision to leave out thatvariable.Other export performance measures which are not necessarilycomplementary but which can be regarded as indicative of growing exportcommitment, can be regarded as surrogate indexes of export adoption(Reid, 1981). These measures are likely to include growth, absolute levelof exports, relative growth of export sales, rate of new market expansion,and rate of new product introduction into foreign markets. They representcommon dimensions of export behaviour (Reid, 1980a; Reid and Mayer,1980). Researchers appear to be converging on the conclusion that studiesZ. MURANDA189which measure export performance along a continuum of success orthose that propose a multidimensional approach reflect an improvementover the categorical approach, since a single measure for export activitymay indeed be misleading (Reid, 1981; Aaby and Slater, 1989).Operational modelThe proposed model in this study is that external (domestic andinternational) and internal (intra-company) variables operate in co-allianceto influence the level of export entry and level of involvement whichultimately influences export strategic choices and hence performance.See Figure 1 below.Figure 1MODEL ON EXPORT STRATEGIC CHOICEExternal EnvironmentalVariables1. Trade policiesExport entry andlevel of involvementInternal Variables1. Internationalization2. Commitment to exportmarketing3. Knowledge of exportenvironment-ŁrExport strategicchoice and formulationiLPerformance190 ANALYSIS OF TEXTILE AND CLOTHING EXPORT FIRMSDISCUSSION OF MODEL VARIABLESExternal environmental variablesExternal environmental variables are those variables that define the setof external influences on the firm. In the model the external environmentis looked at both from the domestic and international perspectives. Bothare assumed to have a strong influence on export marketing of textile andclothing products. The aggregate environment comprises factors such aspolitical environment, legal environment, economic environment,technological environment and socio-cultural environment. In this studythe external factor looked at is trade policies, both domestic andinternational. Of interest is the influence of trade policies on exportstrategic choices and behavioural tendencies of exporters. Trade policyis the country's policy framework that defines policy measures on entryand exit of goods, services, enterprises, and service providers. It isenshrined and reflected in the country's domestic economic regulatoryframework. It is also reflected in the country's economic and developmentstrategy and is the cornerstone of trade negotiations with other countries.Domestic trade policy has to be aligned with the country's tradeobligations at bilateral, regional, and multilateral levels.Internal variablesIn this variable the focus shall be on three factors: knowledge of exportmarkets being dealt with, internationalisation of operations by the exporter,and commitment to export marketing. The model proposes that knowledgeof export markets is the basis of entry and expansion by exporters.Success in export operations will develop into commitment as the exporterfocuses more resources into exporting. At each stage of the firm's exportdevelopment process, strategic choices will change to reflect the shift instages.Export involvementThis variable represents the extent to which the exporter is involved inexporting. This is measured by use of the export ratio. The export ratiorepresents the ratio of export sales to total sales of the firm. Thismeasurement is a relative measurement expressed in percentage terms.HypothesesThe following hypotheses were derived from the model and relevantliterature.HI: . There is no significant relationship between export firm size andexport market entry mode used by the company.Z. MURANDA 191H2: There is no significant difference between export performance ofsmall and medium textile and clothing exporting companies andlarge exporting companies.H3: The export commitment level of a company is positively relatedwith the growth of its export operations.H4: Export performance is positively related with export experience.Analysis and interpretationRelationships in the study were measured using Spearman rank-ordercorrelation (rs) and Chi-square (x2). In situations where chi-square wasused Cramer's contingency coefficient (V) was used to assess the degreeof association between the two nominal variables compared. Cramer's Vwas selected because it is appropriate for any size contingency table. Incase of a perfect correlation V=l, whilst V=0 if the variables areindependent. Cramer's V has an advantage over other measures ofassociation because other coefficients are only applicable in 2x2 tablesand in some the upper limit of the coefficients is below one. In this study,the Spearman rank-order correlation coefficient had to have a significancelevel of p < 0.05 to warrant further investigation and thorough discussion.In situations where chi-square was used, both the chi-square coefficientand Cramer's V were considered significant when p < 0.05.FINDINGSOwnership patternThe ownership pattern in sample companies shows the following featuresas reflected in the table.Table 1TEXTILE AND CLOTHING FIRMS' OWNERSHIP PATTERNNature of Frequencyownership (n=31)Family as private shareholders 14 (45.2%)Assorted private shareholders (includes partnerships) 8 (25.8%)Public shareholders 5 (16.1%)Joint ventures 1 (3.2%)Subsidiary of a foreign public company 2 (6.5%)Subsidiary of assorted foreign private shareholders 1 (3.2%)Results on ownership show a strong dominance of family ownershipin the textile and clothing industry (Family ownership is being defined192 ANALYSIS OF TEXTILE AND CLOTHING EXPORT FIRMSwith reference to domestic families). With 45.2 percent of the companiesinvolved in exporting being in that category of responses, such anownership pattern could play a role in explaining organisationalcharacteristics that determine export behaviour and therefore strategicchoices in exporting. This argument is based on the assumption thatownership translates to influencing export policy in the companies Anumber of reasons can be forwarded for this kind of pattern. Firstly, of allcategories of ownership, family ownership has suffered lowerimpediments. For example, during economic sanctions families couldstill establish companies without much restraint eveit-though foreignfamilies or companies could not do it without facing international tradepolicy risks. Secondly, there are no serious capital entry barriers in thetextile and clothing industry.However if you break the industry into the different stages ofproduction from spinning down to garment (clothing) manufacturing,there is a characteristic of more involvement of family ownership inclothing manufacturing than in textile manufacturing. Of the 14 familyowned companies in the sample, 13 (41.93 percent) are into clothingmanufacturing. Only one of the companies is a textile mill. Textilemanufacturing is more capital intensive than clothing manufacturing whichpresents an entry barrier to small investors. Family-owned companies inthis industry can be mainly categorised as small to medium.Ownership pattern also shows eight (25.8 percent) of the companiesbeing owned by assorted domestic private shareholders. Six are clothingmanufacturing companies while two of the companies have verticallyintegrated processes. This could mainly be explained by the nature ofproducts the companies are involved in. One of the companies is involvedin manufacturing of male socks and it holds a patent from Walt Disney touse pictures of their characters used in their entertainment productions.They are also involved in unique heritage picture designs that use picturesfrom the country's natural heritage. Because of the uniqueness of theproduct designs, the company runs an integrated manufacturing system.The other company in assorted private ownership with also an integratedproduction system is a carpet manufacturing company.Five of the companies are public companies quoted on the stockexchange. Four are mainly owned by domestic shareholders investing inthe stock exchange. The fifth company is not listed on the domestic stockexchange but is on the Johannesburg Stock Exchange.There is only one company in the sample that is a joint venture. It isowned jointly by the government and a South African company. TheSouth African partner holds the licence to all the labels used by thecompany on its manufactured designs and styles.Z. MURANDA 193Two companies in the sample are subsidiaries of foreign-basedcompanies. The head office of one of the companies is based in theUnited Kingdom and the other in South Africa. The last company, whichcould be categorised on Its own, is a consortium of foreign privateshareholders.Ownership appears to have no influence on firm size In the textileand clothing sector. This result is consistent in both large and smallexporters. In an industry where family ownership is dominant the resultis expected since the dominant ownership pattern transcend both smalland large exporting firms (See Table 3).Finn sizeFirm size is being defined in this study in terms of employment level. Thechoice of this criterion is based on the fact that textile and clothingcompanies in Zimbabwe are known to be still relatively labour intensive.Employment level is therefore a fair proxy of size of all companies forcomparative purposes. The size grouping of the companies is as in Table2 below.Table 2SAMPLE FIRM SIZE BY EMPLOYMENT LEVELNo. of firms No, ofEmployment in the employees inlevel sub-sample sub-sample Firm size50-300 employees 16(51.6%) 2 479(15.95%) Small and medium301 and above 15 (48.4%) 13 063 (84.05%j LargeTotal 31 (100%) 15 542 (100%)As Table 2 shows, the number of companies in the two groups seemsto be fairly distributed. However, the contribution to total employment ofsample companies of each firm size grouping shows large differencesbetween the groups. There is a disproportionately larger contribution tototal employment by larger companies than by small to mediumcompanies. The sample standard deviation in employment levels of 808.33with a skewness of 4.50 strongly shows the influence of large companieson this variable. An examination of the influence of firm size usingSpearman rank-order correlation on organisational variables in the tableshows the following results:194ANALYSIS OF TEXTILE AND CLOTHING EXPORT FIRMSTable 3SUMMARY OF THE CORRELATES OF FIRM SIZEVariable/Firm SizeSpearmanCorrelationCoefficientSignificanceLevelSmall and Medium Size CompaniesExport sales ratioExport sales growth over past 5 yearsAnnual salesTotal investment levelsInvestment growth over past 5 yearsOwnershipLarge Size companiesExport sales ratioExport sales growth over past 5 yearsAnnual salesTotal investment levelsInvestment growth over past 5 yearsOwnership0.22620.12540.58760.14570.0008-0.31010.15240.18980.45800.66450.59930.34430.4000.6440.017*0.5900.9980.2420.5880.4980.0860.007**0.018*0.209*p <0.05**p<0.001As Table 3 shows there is no evidence that firm size (when measuredin terms of employment size) is consistently associated with exportperformance as seen by lack of significant relationship between size andperformance variables. This result is consistent among both small andmedium sized companies and large companies. Firm size therefore appearsto be independent of export performance.However, results tend to show a positive correlation between annualexport sales level and firm size for small and medium size firms. Such arelationship does not exist for large companies. An explanation for thisapparent contrast is that export sales ratio and export growth levels overthe past five years do not explain the internal limitation of productioncapacity because the two are relative measures. Annual sales show thatcharacteristic because they are an absolute measure. There is a limit asto how much a company can export per year if all exports it markets areassumed to originate from its own production facilities. Smaller companieswill therefore tend to have more upward room for the amount they canexport in terms of annual sales growth (in volume and nominal terms)when compared to larger companies. The result seems to indicate that asZ. MURANDA 195the firm grows there is a certain optimum level after which the relationshipbetween annual sales and size of the firm ceases to correlate. This maynot necessarily be the case. A closer look at the results shows some largecompanies had relatively small amounts of exports compared to theircapacity while on the other hand some small companies had relativelyquite high exports for their size thus the apparent contrast.As Table 3 above shows, there is a positive correlation between firmsize and present total investment in production for large firms. There isalso a positive relationship between firm size and investments inproduction over the past five years among large companies. There is norelationship among these variables in small and medium sized companies.These relationships appear to reflect the fact that larger companies interms of employment size tend to have larger investments in productionfacilities. Even though companies can be labour intensive especially as inthe textile and clothing sector in Zimbabwe, there also has to be abalance between investment in machinery and the labour force thatoperates that machinery. The results in Table 3 above appear to showfirm size in exporting more as a surrogate for advantages associated witheconomies of scale (in production) rather than any other exportperformance variables.SOLICITATION AND EXTERNAL INFLUENCE TO EXPORTIn going international respondents were asked whether they had activelysolicited or did not solicit their first export orders. Results show 58.1percent indicating that they actively solicited for export orders. Theother proportion of respondents (41.9 percent) report entering exportmarket as a result of receiving unsolicited orders. Indeed the closenessbetween the two responses gives weight to both forms of Initial entry intoexporting.Firms were asked to indicate whether they had had outside contactsinvolved in the initial export business or they had had no starting influencefrom any other source. The assumption in this question is that the firstorder is strongly influenced by the desire to learn the exporting processwithout risking the future reputation of the firm as an exporter. Becauseof risk avoidance, both firms that actively solicit for initial orders andthose that accidentally end up exporting as a result of unsolicited enquiriestend to rely on some other information and institutional intermediaries infilling the orders. External contacts reported by respondents are placedin categories below using the criterion of response frequency to eachcategory.Category 1: Zimtrade (26.8 %); General inquiries from importers (21.4%);Export Agent (19.6%).196 ANALYSIS OF TEXTILE AND CLOTHING EXPORT FIRMSCategory 2: Foreign distributors (8.9 percent); Zimbabwe NationalChamber of Commerce (7.1%); Ministry of Industry andCommerce (5.4%); Confederation of Zimbabwe Industries(5.4%).Category 3: Bank (3.6%); No initial assistance from any source (1.8%).As results showthe national trade agency, Zimtrade, general enquiriesfrom importers, and export agents constituting 67.8% of the responseshave played a significant role in motivating textile and clothing firms tostart exporting. Zimtrade appears to be a strong change agent instimulating firms to export. This could be explained by the strategicposition of the organisation. It is not only a source of information for theexporter but also an important source of contact for importers. Exporterswho manufacture products that are on the Zimtrade enquiries list aretherefore likely to get information through the agency. General enquiriesfrom importers and export agents are also playing a significant role in theinitiation of exporting by firms. Although the term general enquiries doesnot reveal the source of the enquiry Š whether the originator of theenquiry is an importer Š results in this study show export agents notonly playing a role in motivating firms to start exporting but also becomingan important channel for the exporters.The second category of external change agents involved in motivatingfirms to start exporting comprises distributors, the Zimbabwe NationalChamber of Commerce (ZNCC), The Confederation of ZimbabweanIndustries (CZI) and the Ministry of Trade and Commerce. Althoughdistributors would be expected to play the same role as export agents,the study shows their role being minimal and limited to only stimulatinginitial exports but do not seem to play any other active role in subsequentrelationships. The two chambers of commerce and the ministry appearto be playing a weak role in stimulating initial exports. Although the threeinstitutions have a lot of experience in acting as a source of informationfor domestic trade, their role in export marketing seems to be relativelyweak.The third category consists of the banks and externally unassistedinitial export contacts. Although banks play a role in providing exportfinance, their role in acting as a contact for aspiring exporters in thetextile and clothing industry is quite weak.FACTORS CONSIDERED AS MOTIVATING INFLUENCESCompanies which had actively solicited orders were requested to rankten motivating factors each of them between 1 Š important motivatingfactor for going into exporting, 2 Š not so important and not sounimportant, and 3 Š not an important motivating factor for going intoexporting.Z. MURANDA 197These factors can be divided into two groups. Benefits from incentivescheme and domestic competition can be regarded as external motivatingfactors. This is based on the fact that the influence of the two factors actas an external stimuli in the export decision function to exportingcompanies. On the other hand excess production capacity and financialgain are internal determinants i.e. they can be regarded as internal stimulito the export decision function.Benefits from the incentive scheme tend to have been a strong motivefor exporting for two reasons:i. The scheme provided cash remittance that could benefit evenunprofitable exporters. The remittance was based on the free-on-board value of exports which had nothing to do with other measuresof performance. Textile and clothing firms could therefore exportnominal amounts with the objective of earning the subsidy,ii. The incentive scheme tended to be used as a strategic tool forcompeting in price sensitive markets such as the EU where mostexporters have tended to focus.Responses show respondents indicating that in most markets theycannot charge a mark-up higher than 15 percent without jeopardisingtheir competitiveness. In fact the response of exporters is that "there isno easy money in exporting". A 9 percent free-on-board cash remittancewas therefore a cushion for undercutting competitors in the same exportmarket niches.Excess production capacity ranks second as a motivating factor forgoing into export marketing. Since the early 1990s companies have beeninvolved in re-equipping their production systems presumably becauseof easier access to foreign currency to import the capital goods. However,during this same period the domestic market has suffered seriousdownward purchasing power surges due to a number of factors such ashigh inflation, frequent droughts, and high interest rates. As a strategicmove to deal with slack in manufacturing, textile and clothing firms havediversified into exporting.Due to a liberalised import policy, competition has intensified in thedomestic market primarily from three sources. The first source has beencheaper but in some instances high quality imports by domesticcompetitors. The second source has been imports (new and second-hand) by ordinary consumers who now have access to imported textileand clothing products for personal use. The third source has been newentrants into the market who have increased in the recent years asshown by results on firm establishment. A potential reason why domesticcompetition has a lower relative significance in the ranking as a motivatingfactor could be attributed to tariffs which have to some extent acted as a198 ANALYSIS OF TEXTILE AND CLOTHING EXPORT FIRMSprotective cushion against competition from imports although this hasdismally failed to reign in on illegal imports.Although revenue and profitability would be expected to be the mainmotive to push firms into exporting, results seem to show this as asecondary consideration. This result apparently seems to show thatgiven a strong and stable domestic market most firms who are intoexports may move back to the more familiar and secure market wherethey have the opportunity to charge higher margins. The result alsounderscores the perception of management of exporting firms about therisks in exporting.EXPORT ENTRY MODES USED BY TEXTILE AND CLOTHING EXPORTERSThere are various ways of entering foreign markets, both direct andindirect. Results in this study show 71 percent of the textile and clothingexporters having used export agents in entering the export market. Ofthe export agents used, only one is a local agent. Other exporters haveused methods such as direct contact with the buyer, using a tradingcompany, etc. High preference of the same entry mechanism could beexplained by the fact that textile and clothing exporters from Zimbabweare relatively small by global standards. Exporting through agents istherefore a strategic choice to hedge against lack of market informationand the risks of competition in unfamiliar channels. Fifty percent reportthey did not have exclusive information on foreign markets they entered.However, this interpretation is weakened by the fact that even experiencedfirms have continued to use export agents. Exporters tend to preferdirect rather than indirect exporting. They also prefer agents anddistributors as channel intermediaries.Given the structural nature of the Zimbabwe textile and clothingsector, there are various explanatory reasons why there are limitedoptions that have been used by exporters to enter foreign markets.Firstly, the choice of markets by the textile and clothing exporters appearto be on two extremes and concentrated on two regions. The maindestination of the exports, the European Union, has a different environmentwhen compared to neighbouring countries who are also the other majordestinations. Regional markets appear to have suited entry by directexporting because of their small size. Except for the South African market,the other markets, i.e. Malawi, Zambia, Botswana, and Namibia happen tobe smaller than the Zimbabwean market. Entry through setting upproduction facilities in these countries would require that there be otherbenefits to such entry mode that would override the weaknesses of thesmall size of the markets. The individual markets in the European Unionon the other hand are quite large by themselves when compared to theZ. MURANDA 199home market. However, these markets being highly developed, presenthigh production costs for manufacturers. Companies of relatively smalland medium size such as the ones found In Zimbabwe would find itdifficult, if not untenable, attempting entry through setting up ofproduction facilities in such markets. In fact, this would be counter logicconsidering that textile and clothing companies in EU markets are movingout to set up their production facilities in developing markets especiallyin Asia where labour costs are still low and there is an abundance ofskills. Although the domestic market is small, the differential cost structurebetween attempting to produce the export product in the host marketand in the home market logically favours the latter option.Secondly, most exporters of textile and clothing products are onlytargeting niche markets in their export markets. In the European Unionexporters from Zimbabwe have a market share no more than 1 percent.This is quite a small proportion of the market and therefore the entrydecision naturally favours exporting against other modes. The EU marketis very competitive and the sales potential for small and medium exportersare limited. It presents less risk then to export into that market thanattempting other expensive entry modes especially those that may requireputting up manufacturing facilities.Thirdly, both the EU market and the regional market have favourableimport policies. Zimbabwean exporters into the EU do not pay duties andtheir exports are not subject to quotas as preferential treatment underthe Lome IV Convention. In the region exports to neighbouring countrieseither have a preference through the regional Common Market of Easternand Southern Africa (COMESA) or through bilateral arrangements. Thesearrangements tend to favour exporting as an entry mode other than othermodes that may be subject to restrictions.EXPORTING EXPERIENCEThe exporting experience of textile and clothing companies in the sampleshow a low experience level for a globally mature industry as this one.The experience of exporters in this study appears highly concentrated onthe lower side. The modal group, which is the 1 to 5 years, contains adisproportionately higher frequency of 41.9 percent of all the respondents.When combined with the 6 to 10 years category, the two categoriesconstitute 67.7 percent of the exporters. The results therefore show thatthe largest proportion of textile and clothing exporting companies inZimbabwe are relatively lowly experienced in exporting (See Figure 2below).200 ANALYSIS OF TEXTILE AND CLOTHING EXPORT FIRMSFigure 2EXPORTING EXPERIENCE OF TEXTILE AND CLOTHING COMPANIES INZIMBABWE14Less than one year 6-10 years Over 201 to 5 years 11 to 15 yearsResults on number of years the company has been in operation showyoung companies in the sample established within the last 15 years (35.5percent) having taken the initiative to move into exporting at a muchearlier stage of their operations than the older companies. Exportingexperience is therefore being strongly influenced by the companyestablishment pattern.(Influencing factor) (Export market entry timing)Establishment patternŠ^Choice to enter exportingŠ^Experience patternStrongly noticeable in the results is the empty category of experienceyears between 16 to 19 years i.e. the years between 1977 and 1980.Companies with the highest experience have been placed in the above 20years and above category A number of explanations can be offered forthe experience pattern arising out of these results.Firstly, if looked at graphically the results show potentially anexplanation of the impact of international trade policy, domestic tradepolicy, and the political environment. The reason for high concentrationof companies in the 1 to 5 years experience could be related to theshrinking of the domestic market which has characterised the market forZ. MURANDA 201textile and clothing products over the past five to six years. As a sign of apoorly performing domestic market a sizeable number of companies Inthis industry has been liquidated. Companies have therefore been takingthe Initiative to move into export marketing as an alternative to reivingon the shrinking domestic market.Secondly, the empty experience category between 16 and 19 years(1977-1979) could be because of tightened economic sanctions thatstopped domestic companies from trading with foreign companies Theabsence could also be a result of the import-substitution policy that wasin operation during the corresponding period.Thirdly, another potential explanation is that the national exportpromotion agency (Zimtrade) which was set up five years ago could haveplayed a strong motivating factor for the 1 to 5 years exporting experiencecategory.In order to validate whether exporting experience has any influentialrelationship with export performance variables a correlation analysiswas performed. In conducting the correlation analysis the exportingexperience variable was divided between less experienced firms namely10 years experience and below and more experienced firms covering 11years and above. As Table 4 shows the only significant correlation forless experienced companies is between exporting experience and exportratios for 1991 and 1993. Such a relationship is not showing for moreexperienced companies.The positive relationship for less experienced companies could beexplained by the fact that a lot of companies moved into exporting duringthe early 1990s (See also discussion on export intensity below) Thedomestic economy also shrank quite noticeably during this periodproviding an external drive for the companies to move into exportingLack of a relationship for more experienced companies could be explainedby the fact that most are already having their export sales nearer or atmaximum levels they prefer not to exceed. Despite the external factorinfluences discussed above which were a drive for less experiencedcompanies, most experienced companies did not shift around their exportratios.A positive correlation is also showing between experience and thenumber of exported product lines. Basically the relationship is showingthat most experienced companies in this industry tend to export arelatively higher number of lines than less experienced companies.Two more significant relationships are showing with exportingexperience but are failing to discriminate between less experienced andmore experienced companies. Year of establishment is showing a negativerelationship with experience (p = -0.4046; p < 0.05). This relationshipreflects what the results showed on export entry. The older companies202ANALYSIS OF TEXTILE AND CLOTHING EXPORT FIRMSmoved into exporting at a much later stage of their life span. Youngcompanies appear to have taken an early initiative to enter exporting.Exporting experience also shows a positive relationship with numberof export markets (countries) the company is exporting to (p = 0.5059; p< 0.05). This relationship is not discriminating between less experiencedand more experienced companies. In general it appears that companiestend to diversify their markets as they accumulate exporting experience.It should however, be noted that this interpretation would be stronger ifcorrelation could discriminate between less experienced and moreexperienced companies.Table 4CORRELATES OF EXPORTING EXPERIENCEVariableSpearman CorrelationCoefficientLess experienced companiesExport growth over past 5 yearsExport ratio in 1991Export ratio in 1993Export ratio in 1995Number of product lines in the companyNumber of product lines being exportedRisk perceptionMore experienced companiesExport growth over five yearsExport ratio in 1991Export ratio in 1993Export ratio in 1995Number of product lines in the companyNumber of product lines being exportedRisk perception0.1549 (NS)0.5808**0.6650**0.2253 (NS)0.0468 (NS)0.3871 (NS)0.1246 (NS)-0.1387 (NS)-0.0468 (NS)0.3236 (NS)0.3915 (NS)-0.1857 (NS)0.6705*" ." (cannot be calculated)*p<0.05**p<0.01NS = Not SignificantEXPORT COMMITMENTCommitment to exporting is being measured in this study by:i. Investment patterns;ii. Purchasing of production equipment;Z. MURANDA 203iil. Training of staff;Iv. Organisational position of the export marketing function; andv. Export intensity.As discussed above the investment pattern into production as aresult of exporting increased but with varying degrees in the sample.Firstly, investment pattern over the past five years appearconcentrated on the $lm to $9,99m range which constitutes 48.4% of theresponses. The modal group of the pattern is the $lm to $4,99m. Incomparison to the total investment size of individual companies, which isalso concentrated between $lm and $9,99m with 71% of the companies inthis category, the investment pattern could be interpreted as havingstrongly impacted on the exporting decision function. The investmentcommitments shown above strongly explain one reason why the exportingexperience is mainly within the 1 to 5 years range. From a strategicperspective the extra investment could mean long term commitment toexporting in future as long as there is excess production capacity thedomestic market cannot absorb.A second measure of commitment is to study purchasing of equipmentand its age status at the time of purchasing during the same five-yearperiod. Responses to the question of the age status of equipment broughtin during the past five years show 67.7% saying they brought in newequipment and 71% of the equipment was imported. Although notempirically supported by research results in this study, importedequipment is usually assumed superior to equipment manufactured inthe domestic market. Due to weaknesses in the capital goodsmanufacturing sector in developing economies such as Zimbabwe, thesuperiority of the imported equipment and machinery as compared todomestic manufactured equipment is not ruled out. In any case suchequipment is normally more expensive due to added duties. Investmentin such equipment is therefore taken as a well-calculated decision.A third way of looking at commitment to exporting is by looking atthe training of export marketing staff to enhance marketing effectiveness.The assumption here is that training produces better export marketers.Results show two significant divisions on the question of training. A set of45.2% of respondents use in-house training whilst on the other hand,another 45.2% say they do not conduct training of export staff. Such aprominently high lack of training of own export staff underscores theweak marketing capacity among the exporters. This is however,interpreted cautiously given that some companies may have the resourcesto recruit well-trained export managers and forego the need for training.A fourth way to look at commitment to exporting is by looking at thestructural position which export marketing is given. Responses to thequestion show a strongly divided approach to handling of exports. On204ANALYSIS OF TEXTILE AND CLOTHING EXPORT FIRMSone hand 38.7% Indicate that they have an export department whichsystematically seeks and fills export orders. On the other hand, another38.7% indicate that nobody in the company is assigned to handling theexport market. The marketing department tends to handle both thedomestic and international markets as the situation arises. In 12.9% ofthe responses exporters have another company handling their exportmarketing. As results show there is no one prominent pattern coming outof structure as sign of commitment.A fifth measure of export commitment is to look at export intensity(measured as the ratio of export sales to total sales) over a five-yearperiod. The pattern of export intensity shows a strong shift towardhigher commitment to exporting by textile and clothing firms. The threegraphs below attempt to show how the shift from lower levels of exportinvolvement to higher levels has occurred.As the three figures below show, there has been block shifts inexport intensity since 1991. In 1991 most exporters were mainly in the 0-10 percent with another smaller block of exporters being in the 16-30percent region. By 1993 the 0-10 percent group of exporters appear tohave decreased but shifted quite substantially into the 30-40 percentratio. This continued and by 1995 a substantial number of the exportershad shifted their export ratios upward to over 40 percent leaving smallerFigure 3EXPORT RATIOS FOR 19916-10%16-20%31-40%Loss than 5% 11-15% 26-30%Exports as percentage of sales in 199141%«nd«bowZ. MURANDA206Figure 4SHIFT IN EXPORT RATIOS IN 1993.00 6-10% 16-2B% 31-40% 12.00Less than 5% 11-15% 26-30% 41% and aboveExports as percentage of sales in 1993Figure 5SHIFT IN EXPORT RATIOS IN 1995Less than 5%6-10%(n = 31 companies)16-20%26-30% 41 % and above31-40%21-25%Exports as percentage of sales in 1995numbers of exporters in the 16-30% export ratios. A study by Lall,Wignaraja, Sellek, and Robinson (1998) concludes that between 1990 and1995, export in textile and clothing by Zimbabwean companies grew by10.6%. This conclusion corroborates the increased involvement reflectedin the above graphs.206 ANALYSIS OF TEXTILE AND CLOTHING EXPORT FIRMSCONCLUSIONSOwnership of most exporting firms in textile and clothing is by familyprivate companies. In terms of capitalisation, textile producers tend tobe larger in size than clothing manufacturers. However, in terms of relativeexport involvement, there is no distinct difference between largeproducers and small producers. Ownership shows no significant influenceon export entry decision or level of involvement. Much depends onindividual company commitment to exporting.Most textile and clothing exporters have low export experienceirrespective of firm size. This conclusion is strongly linked to the patternof entry into exporting. Most textile and clothing exporters enteredexporting in the late eighties and early nineties thus the low experience.The low experience has to a large extent acted as a restraint into high-level export involvement by the textile and clothing firms.The motive to enter exporting by textile and clothing exporters InZimbabwe is strongly influenced by four factors. These are benefits thatwere associated with export incentives before the scheme was abandoned,the need to channel excess production capacity to profitable use, escapingfrom intensifying domestic competition mainly arising from imports, andthe possibility of lucrative profits from exporting. Export incentives hada major influence toward higher export involvement by Zimbabweancompanies. Even companies that originally did not have a real urge toexport other than for reasons of getting a share of the incentives endedup committed exporters after realising the benefits of exporting. Afterthe removal of the incentive scheme most companies have enteredexporting due to loss of the domestic market. Others have done so to re-channel the excess capacity saddling them. It is these negative factorsthat have led to increased interest in export in the recent past.Exporters have mainly favoured entering exporting through use offoreign agents and distributors. These channels are mainly preferredbecause of ease of control. Most exporters are targeting specific marketniches through the identified agents and distributors. The use of foreignagents and distributors as channels has led to increased exportinvolvement mainly because the two channels are quite knowledgeableabout international markets. They normally come with firm orders thusreducing the risk of producing without confirmed markets.Over the period 1991 to 1996, exporters showed a strong shift towardincreasing their involvement in exporting. 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