Description
I need summary for this articleThe effect of local institutions on the competitive strategies of exporters.
The case of emerging economies in Latin America
Unformatted Attachment Preview
Journal of Business Research 169 (2023) 114256
Contents lists available at ScienceDirect
Journal of Business Research
journal homepage: www.elsevier.com/locate/jbusres
The effect of local institutions on the competitive strategies of exporters.
The case of emerging economies in Latin America
Jorge A. Heredia Pérez a, 1, Cristian Geldes b, Martin H. Kunc c, *, Alejandro Flores a
a
Department of Business Administration, Universidad del Pacífico, Calle Sanchez Cerro 2141, Jesús Maria, Lima 11, Peru
Universidad Alberto Hurtado, Faculty of Economics and Business, Erasmo Escala 1835, Oficina 204, Santiago, Chile
c
University of Southampton, Department of Decision Analytics and Risk/Southampton Business School, University Road, Southampton SO17 1BJ, United Kingdom
b
A R T I C L E I N F O
A B S T R A C T
Keywords:
Competitive strategy
Strategy implementation
Export performance
Local institutions
Marketing orientation
Emerging economies
This paper analyzes the effect of local institutions and market orientation on the export performance of Latin
American firms when they implement generic competitive strategies. A specific questionnaire sent to 201 ex
ecutives of exporting manufacturing and service companies in Brazil, Chile, Mexico, and Peru generates the data
for this research. Then, confirmatory factor analysis is used to develop the underlying multi-item constructs, and
a structural equation model tests the hypotheses. The results state that local institutions, directly and indirectly,
affect export performance through the marketing orientation of firms, and marketing orientation mediates the
implementation of the differentiation strategy but not the cost-based leadership strategy. The findings suggest
that firms with differentiation strategies benefit more from strong local institutions.
1. Introduction
Exporting is one of the most common ways for emerging-economy
companies to make a profit in the short term while also contributing
to their country’s development. Most research about exporting is done in
developed economies, considering external and internal factors (such as
market information, experience, and funding sources) (Aulakh et al.,
2000; Gertner et al., 2010; Yong et al., 2010; Carneiro et al., 2011).
However, exporting performance in emerging economies has only
attracted a limited number of studies given the importance of exports for
the survival of many firms (Aulakh et al., 2000; Peng et al., 2008, 2009;
Parnell, 2010; Yong et al., 2010; Heredia et al., 2018a).
The implementation of export strategies in emerging economies like
Latin America constitutes an essential aspect of the relationship between
competitive strategies and export performance (Aulakh et al., 2000).
Strategy failures occur more frequently in the implementation phase
than in the conceptualization or formulation phases, which reduces the
firm’s performance (Aulakh et al., 2000; Ortega, 2010; Voola & O’Cass,
2010; Parnell, 2011). Moreover, export performance reflects the het
erogeneity among exporting companies, mainly due to the differences in
implementing competitive strategies (Aulakh et al., 2000; Katsikeas
et al., 2000; Dhanaraj & Beamish, 2003; Leonidou et al., 2010).
There are multiple key factors influencing the implementation of
competitive strategies in Latin America, such as innovative capacity,
marketing, operating skills, and the quality of management (Brenes
et al., 2008, 2014; Pillania & Kazmi, 2008). The analysis of local in
stitutions, institutional quality, and their effects on international
competitiveness is a topic of growing interest that has been approached
from different theoretical and practical perspectives (Buitrago & Bar
bosa, 2021), and it has been demonstrated that the variation in insti
tutional forces within industries impacts the outcomes for firms (Elango
& Dhandapani, 2020). However, no research has identified the effect of
local institutions during the implementation of competitive strategies
and their impact on export performance in emerging economies (Cha
bowski & Mena, 2017; Ipek & Tanyeri, 2020). Competitive strategies,
such as cost-based leadership and differentiation, are primarily used in
studies on emerging economy implementation strategies as reflections of
firms’ behaviors and strategic choices (Aulakh et al., 2000; Gao et al.,
2010; Parnell, 2008, 2010; Brenes et al., 2014), with limited sophisti
cation in the options available to firms (Heredia et al., 2017, 2018a,
2018b). These strategies directly affect the market orientation adopted
by a company (Homburg et al., 2004; Wang & Ahmed, 2007; Voola &
O’Cass, 2010; Kharabsheh et al., 2015). In strategic management,
market orientation is defined as the strategic direction of a firm toward
* Corresponding author.
E-mail addresses: [email protected] (C. Geldes), [email protected] (M.H. Kunc), [email protected] (A. Flores).
1
Jorge has passed away on April 14 2023.
https://doi.org/10.1016/j.jbusres.2023.114256
Received 31 May 2022; Received in revised form 29 August 2023; Accepted 2 September 2023
Available online 9 September 2023
0148-2963/© 2023 The Author(s). Published by Elsevier Inc. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/).
J.A. Heredia Pérez et al.
Journal of Business Research 169 (2023) 114256
et al., 2015). Two critical issues neglected in the extant research are the
institutional effect (Peng et al., 2009; Kallas et al., 2015) and the
institutional-based view (Peng et al., 2009; Lloret, 2016; Thomé &
Medeiros, 2016). For example, Viglioni et al. (2020) indicate that the
level of government support for innovation and business cooperation is
frustrating in Latin American and Caribbean countries compared to
OECD and “Asian Tiger” countries although exporting activities increase
as firms have more experiential knowledge in Latin American countries
(Geldres-Weiss et al., 2016).
Moreover, Malca et al. (2020) highlight the positive role of export
promotion programs in emerging economy firms’ export performance.
In this sense, Geldres-Weiss and Monreal-Pérez (2018) analyze the role
that public export promotion programs played for companies in Chile. It
is observed that participation in trade fairs has positive effects on the
growth of export sales, unlike participation in trade missions. Also,
export promotion agencies continued to play a critical role despite the
difficulties of the COVID-19 pandemic (Geldres-Weiss et al, 2021). In
this vein, seeking to integrate the view of the relationship between
internationalization and firm performance with the “institution-based
view” of strategy, Marano et al. (2016), indicate that a country’s local
institutions affect the strength of the relationship between internation
alization and performance. In addition, they highlight the importance of
including formal and informal institutions in the analysis to extend the
understanding of the effects of institutional complexity.
Although there are precedents in the effects of “local institutions”,
also known as “home country institutions”, on the development of
export strategies and the export performance of companies, less atten
tion has been paid to the implementation of generic cost leadership
differential strategies, especially in emerging economies where export
ing firms play an important role. The related hypotheses guiding this
study are set out below.
markets (Hakala, 2011), and market orientation is a critical behavior
that influences the implementation of a firm’s strategy (Kharabsheh
et al., 2015).
However, capabilities (Morgan et al., 2009; Gao et al., 2010)
together with company resources (Barney, 2001; Dhanaraj & Beamish,
2003; Kunc & Morecroft, 2010; Murray et al., 2011) are also necessary to
substantiate the observed performance of a firm (Katsikeas et al., 2000).
Prior literature has concluded that market orientation has mediating
value in implementing strategies (Voola & O’Cass, 2010; Kharabsheh
et al., 2015). However, most of these studies only considered a single
country in their analyses, and they did not consider Latin American
countries as an example of emerging economies with particular local
institutions (Heredia et al., 2018a; Jimenez & Geldes, 2019).
On the one hand, the international competitiveness of an emerging
economy is related to institutions and institutional quality (Buitrago &
Barbosa, 2021). From the institutional perspective, the quality of in
stitutions directly affects the firm’s formulation and implementation of
strategies and the firm’s export performance (Ngo et al., 2016; Brenes
et al., 2018). The institutional effect captures the complicated rela
tionship between organization and environment in emerging economies,
which can be defined as “the rules of the game” (Wright et al., 2005;
Peng et al., 2008; Hoskisson et al., 2000; Gao et al., 2010; Kallas et al.,
2015; Thomé & Medeiros, 2016). On the other hand, market orientation
is a client-centric concept that ignores other essential stakeholders in
emerging economies, such as formal institutions (regulators) and formal
and informal competitors (unregistered firms) (Vassolo et al., 2011;
Chabowski & Mena, 2017; Heredia et al., 2017, 2018a, 2018b). There
fore, there is a tension between two forces—institutions and market
orientation—that can affect the export performance of companies in
emerging economies.
Given the background described above, this study considers the main
research question: Do local institutions (LI), when market orientation
(MO) is considered, affect export performance (EP) in the implementa
tion of competitive strategies of Latin American firms? In addition, other
questions are derived from the main research question, such as: Are
differentiation strategies more market-oriented than cost-based strate
gies? Does MO mediate the relationship between competitive strategies
and EP of firms? Does MO mediate the relationship between LI and the
EP of firms? To answer the questions, a theoretical model is proposed
and evaluated with confirmatory factor analysis, and the hypothesis is
tested with a structural equation model. The data come from a survey of
201 executives from Brazilian, Chilean, Mexican, and Peruvian export
ing manufacturing and service firms.
This paper examines how local institutions and market orientation
affect the export performance in implementing competitive strategies in
Latin American countries as examples of emerging economies. It finds
that, in implementing competitive differentiation and cost leadership
strategies for Latin American exporting firms, only the differentiation
strategy has a direct relationship with innovative performance, which is
mediated by marketing orientation. Also, local institutions have a pos
itive effect on firms’ marketing orientation and export performance,
which shows that local institutions play a key role in export strategies.
These findings remain the same even in different groups of firms. The
following sections present the theoretical framework, the methodology
and data, the results and discussion, and the conclusions and
implications.
2.1. Implementation of a competitive strategy
One of the critical aspects of successfully implementing a competi
tive strategy is a company’s market orientation (Cacciolatti & Lee, 2016;
Papadas et al., 2019). There is extensive research on the conceptuali
zation, definition, and impact of market orientation on business per
formance (Hult et al., 2005; Connor, 2007; Ketchen et al., 2007;
Kharabsheh et al., 2015). Market orientation represents a specific firmlevel capability (Kumar et al., 2011; Kharabsheh et al., 2015) that en
ables an organization to identify the requirements of the markets and
develop other capabilities, such as innovation capabilities (Kirca et al.,
2005), that connect the organization to its external environment. Market
orientation helps firms to achieve a competitive advantage when they
implement export strategies (Grönroos, 2004; Kirca et al., 2005; Ketchen
et al., 2007). Firms that follow differentiation strategies emphasize the
development of new and unique products and services (Porter, 1985;
Brenes et al., 2014). On the other hand, cost-based leadership companies
focus more on lowering the price they need to increase their internal
coordination capacity thus increasing their operational efficiency, and
less on customer-focused innovation (Kumar et al., 2002). Thus, differ
entiation strategies employ substantial market orientation (MO)
compared to cost-based strategies. Based on the above literature, this
paper hypothesizes the following:
H1: Differentiation strategies employ market orientation compared
with cost-based strategies in Latin America’s countries.
2. Theoretical framework
Different studies incorporated the importance of resources and ca
pabilities in implementing competitive strategies and their influence on
marketing orientation and performance. However, they did not include
the effects of local context that must be considered in the evaluation of
strategy implementation, especially in emerging economies such as
Latin American countries, with different local institutions (Homburg
et al., 2004; Voola & O’Cass, 2010; Rock & Ahmed, 2014; Kharabsheh
There are two perspectives on MO: behavioral and cultural (Kirca
et al., 2005). From a behavioral perspective, MO is a firm’s capacity that
allows the generation and dissemination of market intelligence to guide
the formulation of a competitive strategy (Ketchen et al., 2007). From a
cultural perspective, MO is the generation of policies that orient the
organization to generate new resources or capabilities according to the
competitive strategy to be implemented (Brenes et al., 2008).
2
J.A. Heredia Pérez et al.
Journal of Business Research 169 (2023) 114256
Fig. 1. Theoretical model.
Fig. 2. SEM Model. ***99%, *95%, *90% statistical significance.
One of the critical resources for implementing a competitive strategy
is the ability of the manager to identify and make decisions about the
strategic resources for implementing the competitive strategy (Brenes
et al., 2014; Kunc & Morecroft, 2010). These decisions must be trans
formed into policies that define the organization’s culture and guide
firm members to act in the established strategic direction. The cultural
perspective of MO is the foundation for the development of new re
sources and activities that lead to implementing the competitive strategy
(Golgeci & Gligor, 2017) and increasing their performance (Cano et al.,
2004; Brenes et al., 2008; Kunc & Morecroft, 2010; Kaliappen & Hilman,
2014; Rungsithong et al., 2017).
On the other hand, Rua et al. (2018) highlight the contribution of
strategic determinants that influence export performance by considering
the mediating effect of competitive strategy. In particular, their findings
suggests that entrepreneurial orientation positively affects differentia
tion strategy and export performance. In addition, they highlight the
role of intangible assets in differentiation and cost-based leadership
strategies. According to Falahat et al. (2020), three export capabilities
lead to the competitive advantage of exporting firms: market intelli
gence capability, product innovation capability, and pricing capability.
Moreover, competitive advantage only acts as a mediator between
pricing capability and the international performance of small and
medium-sized firms.
In summary, the company first needs to establish policies (e.g.,
market orientation) that guide its strategies, then develop new resources
or capabilities (e.g., product innovation) to implement its competitive
strategies to increase its competitive advantage. Therefore, we also hy
pothesize the following:
H2: Market orientation has a mediating role between competitive
strategies and the export performance of companies in Latin Amer
ican countries.
2.2. Local institutions in the implementation of competitive strategies
Institutional “rules of the game” significantly impact firm perfor
mance, particularly in emerging economies where companies require
institutional support in their early stages (Meyer & Peng, 2016, Buitrago
& Barbosa, 2021). The transaction cost theory complements the insti
tutional approach by explaining that a better quality of institutions
3
J.A. Heredia Pérez et al.
Journal of Business Research 169 (2023) 114256
H3: Market orientation mediates the relationship between firms’
local institutional and export performance in Latin America’s
countries.
Table 1
Main characteristics of the sample.
Characteristics
Peru
Chile
Mexico
Brazil
Industries
100.00%
(45)
40.00%
(18)
0.00% (0)
100.00%
(91)
15.38%
(14)
10.99%
(10)
45.05%
(41)
28.57%
(26)
100.00%
(42)
4.76% (2)
28.89%
(13)
31.11%
(14)
100.00%
(23)
21.74%
(5)
21.74%
(5)
43.48%
(10)
13.04%
(3)
11.11%
(5)
88.89%
(40)
60.87%
(14)
39.13%
(9)
39.56%
(36)
60.44%
(55)
71.43%
(30)
28.57%
(12)
82.22%
(37)
17.78%
(8)
65.52%
(15)
34.78%
(8)
80.22%
(73)
19.78%
(18)
54.76%
(23)
45.24%
(19)
237.98
747.04
318.71
89.33
640.26
12.51
2048.81
21.87
758.11
14.62
184.22
14.40
10.18
31.90
11.15
7.91
Agriculture and Fishing
Sector
Services Sector
Manufacturing of
durable goods
Manufacturing of nondurable goods
Type of Export Business
Firms B2B
Firms B2C
Export Destination
Developed Economies
Developing Economies
Average
The average number of
employees in a firm
(S.D)
The average number of
firm’s export
experience
(S.D)
In sum, the effect of institutional context (LI) on export performance
(EP) in Latin American firms is explained using a theoretical model that
considers the mediating role of MO in implementing competitive stra
tegies (Fig. 1).
54.76%
(23)
26.19%
(11)
14.29%
(6)
3. Data and methodology
The next section presents the sample and data collection and the
theoretical model’s construction.
3.1. Sample and data collection
This study collected primary data through a survey of executives
from exporting companies in Brazil, Chile, Mexico, and Perú. With
almost 400 million people, these countries account for 60.19% of the
total population, 66.14% of GDP, and 83.2% of exports in Latin America
and the Caribbean (ECLAC, 2021). The survey targeted executives of
exporting companies, excluding subsidiaries (Aulakh et al., 2000; Hos
kisson et al., 2000; Gao et al., 2010), using an email personalization
strategy (Sánchez-Fernández et al., 2012) and high-frequency contact
(every seven days) (Muñoz et al., 2010). A total of 4311 emails (one
email per company) were sent to executives responsible for export
strategies. Although we obtained 262 responses, only 201 responses
were usable. Table 1 summarizes the main characteristics of the sample.
(a) Absolute values are presented in parentheses.
(b) S.D. – Standard deviation.
reduces opportunities for opportunism and instability, which reduces
the firm’s transaction costs. Good institutional quality (free trade,
respect for property rights, and control of corruption) decreases insta
bility, uncertainty, and opportunity by reducing a firm’s transaction
costs (Faruq, 2011; Chabowski & Mena, 2017; Brenes et al., 2018).
Therefore, it allows the company to focus its resources on increasing its
market orientation, leading to more competitive advantage and higher
performance.
Institutions fundamentally shape the strategies and behaviors of
firms in emerging economies because they are sources of uncertainty
and external resources, especially in Latin America (Kallas et al., 2015;
Ngo et al., 2016; Heredia et al., 2017, 2018a). In this sense, Marano et al.
(2016) highlight the need to include formal and informal institutions to
understand the home country’s effect on the internationalization of
firms. Additionally, Krammer et al. (2018) state that emerging economy
firms’ export performance depends on their specific capabilities and the
home institutional environments (local institutions). Specifically, polit
ical instability and informal competition have robust effects on the
export propensity of emerging economy firms.
Government policies and trade agreements reinforce the relationship
between implementation strategies and performance, which leads to the
concept of a “strategy tripod,” representing the integration of the
institutional perspective with the internal perspective of a firm. The
firm’s export performance is influenced by local institutional effects
(Faruq, 2011). According to institutional theory (Peng et al., 2008; Gao
et al., 2010; Thomé & Medeiros, 2016), government support, such as
export promotion (Shamsuddoha et al., 2009; Leonidou et al., 2011),
affects marketing strategies and the export performance of the firm
(Korey, 1995; Grönroos, 2004; Chailom & Kaiwinit, 2010; Malca et al.,
2020). Government promotion is a component of local institutional
enablers (Peng et al., 2008) which affect market orientation during the
implementation of strategies (Homburg et al., 2004; Wang & Ahmed,
2007; Voola & O’Cass, 2010; Kharabsheh et al., 2015). Both market
orientation and government promotion increase the competitive
advantage and performance of the firm (Chabowski & Mena, 2017).
Hence, this paper hypothesizes the following:
3.2. Theoretical model
The theoretical model proposed is built on exploratory factor anal
ysis (EFA) and confirmatory factor analysis (CFA) (Edwards, 2010; Hair
et al., 2013). The hypotheses are tested with Structural Equation
Modeling (SEM). The measurement variables (factors) are obtained from
the literature. The dependent variable, EP, is a second-order construct
composed of five factors: “Financial Performance,” “Strategic Perfor
mance, ”Product Performance,“ ”Customer Performance,“ and
”Distributor Performance“ (Aulakh et al., 2000; Hult et al., 2008; Gao
et al., 2010; Voola & O’Cass, 2010). However, according to the EFA and
CFA models, only three of these factors apply to this study: ”Product
Performance,“ ”Customer Performance,“ and ”Financial Performance.“
These factors are consistent with previous studies on emerging econo
mies (Aulakh et al., 2000; Gao et al., 2010; Gertner et al., 2010; Voola &
O’Cass, 2010; Carneiro et al., 2011).
Concerning the independent variables, the constructs’ competitivebased cost leadership and differentiation strategies are measured ac
cording to previously validated scales (Aulakh et al., 2000; Gao et al.,
2010; Voola and O’Cass, 2010; Brenes et al., 2014). The measurement of
MO is based on previously validated scales and consists of two con
structs: “reactive market orientation” (oriented to the actual needs of the
client) and “proactive market orientation” (oriented to the possible
needs of the client) (Voola & O’Cass, 2010). After processing the data
and executing the EFA and CFA models, these two factors are collapsed
into one named MO (Table 2).
In the case related to the effect of institutions abroad, as presented by
Chao and Kumar (2010), the construct “Local Institutional” refers to the
impact of local institutions on a firm’s exports (Faruq, 2011). In addi
tion, the cases of Peru, Chile, México, and Brazil are considered sepa
rately because this allows us to capture the institutional context’s
variability to evaluate each one’s impact on the firm export perfor
mance. Including these countries allows this limitation of previous
studies that consider only one country in their analysis of emerging
economies to be overcome (Kallas et al., 2015).
4
J.A. Heredia Pérez et al.
Journal of Business Research 169 (2023) 114256
Table 2
Variables in the proposed model.
Construct/
Variable
Description
Differentiation Strategy
ECD_22_1
Our firm is the first in marketing a new product.
ECD_22_2
Concerning the competition, our firm is always at the forefront of technological
innovation.
ECD_22_3
Our organization differentiates from the competition by offering quality products.
Cost-based Leadership
ECC_23_1
Our organization emphasizes the reduction of costs in all of its business activities.
ECC_23_2
Our organization invests mainly in big projects to achieve scale economies.
ECC_23_3
Our organization has a low-prices strategy, unlike our three main competitors.
Local
Institutions
ELI_11_1
Private Property Rights
ELI_11_2
Free Trade
ELI_11_3
Government Action
ELI_11_4
Control of Corruption
Market Orientation
OMR_24_1
We constantly monitor our level of commitment and service orientation toward our
customers’ needs.
OMR_24_2
The strategy of our competitive advantage is based on the understanding of our
customers’ needs.
OMR_24_3
We are more focused on our customers than on our competitors.
OMR_24_4
Data related to customers’ levels of satisfaction are diffused at all levels of the
company.
OMR_24_5
If an important competitor carries out an intense campaign targeting our foreign
customers, we would implement an effective response.
OMP_25_1
We continuously try to discover additional needs of our clients, even subconscious
ones.
OMP_25_2
We implement solutions in our products and services to address the future needs of
our clients.
OMP_25_3
We work very closely with our customers to try to recognize their needs; this is
months or even years before our competitors do.
OMP_25_4
We innovate even if we run the risk of producing obsolete products.
Financial Performance
DEF_14_1
Profitability
DEF_14_2
Sales volume
DEF_14_3
Growth rate
DEE_15_1
Global competitiveness
DEE_15_2
Strategic positioning strengthening
DEE_15_3
Global market participation
Product Performance
DEP_16_1
Number of successful new products
DEP_16_2
Speed of launching new products to the market
DEP_16_3
Product Innovation
Customer Performance
DEC_17_1
Relationship with our final customer
DEC_17_2
Firm’s prestige according to our clients
DEC_17_3
Final customer fidelity
DED_18_1
Relationship with our suppliers
DED_18_2
Prestige of our company according to our suppliers
DED_18_3
Fidelity of our firm’s distributor
DED_18_4
Satisfaction with the services and goods we provide
Peru(a)
Chile(a)
México(a)
Brasil(a)
N
Average
S.D.
4
4
4
2
5
5
4
3
201
201
3.64
4.01
1.81
1.87
7
5
7
5
201
5.44
1.59
6
2
3
7
4
2
7
5
2
5
3
4
201
201
201
5.00
4.07
3.58
1.69
1.82
1.80
4
6
5
4
6
7
6
6
5
7
5
3
5
5
5
4
201
201
201
201
4.90
5.53
4.42
3.79
1.50
1.50
1.54
1.78
6
6
6
6
201
5.27
1.51
6
6
6
6
201
5.46
1.35
6
5
6
7
7
7
6
7
201
201
5.45
4.93
1.43
1.75
6
6
5
4
201
4.59
1.83
5
7
6
6
201
5.07
1.54
5
6
6
6
201
5.13
1.48
5
6
6
6
201
4.81
1.61
5
2
6
4
201
4.13
1.77
4
4
4
5
5
3
5
6
5
5
5
5
5
5
4
4
5
4
4
3
3
4
4
3
201
201
201
201
201
201
4.06
3.92
4.05
4.08
4.19
3.61
1.45
1.57
1.63
1.48
1.43
1.64
4
4
5
5
5
6
4
4
5
5
3
3
201
201
201
3.94
3.65
3.94
1.88
1.75
1.76
6
6
5
5
6
6
6
6
6
6
6
7
6
6
5
6
5
4
6
6
6
5
6
7
6
6
6
6
201
201
201
201
201
201
201
5.00
5.44
5.08
5.27
5.56
5.28
5.58
1.51
0.138
1.60
1.39
1.28
1.34
1.08
(a) Average value by country.
3.3. SEM model
exposure and mediator variable adjusted for covariates. Predictions
from these models are then used within a Monte Carlo framework to
calculate the total, indirect, and direct effects (Hicks & Tingley, 2011;
Cheon & MacKinnon, 2012; Hayes, 2017).
To build the SEM model, in the first part, the construct (latent var
iables) is validated with the following tests: (i) reliability (Cronbach’s
alpha > 0.7; construct reliability (CR) > 0.7); (ii) convergent validity
(standardized factor loading (FL) > 0.5; average variance extracted
(AVE) > 0.5); and (iii) discriminant validity (AVE > maximum shared
variance squared (MSV); AVE > average variance shared square (ASV).
In the second part, the SEM model is evaluated for “minimum” and
“good” fit of the model according to the following indicators: CMIN/df
(2×3; x2); NFI (x > 0.90; x > 0.95); CFI (x > 0.95; x > 0.99); and RMSEA
(2×3; x2) (Hair et al., 2013). Complementarily, we analyze the possible
mediation of “Market Orientation” in the two relationships: between
“Competitive Strategies” and “Export performance” and “Local In
stitutions” and “Export Performance.” First, two regression models are
fitted: the mediator is regressed on the exposure variable adjusted for
covariates, and a second in which the outcome is regressed on the
4. Results
The SEM satisfies the model fit indicators, and the latent variables
are statistically validated (Table 3).
The results of the relationships in the SEM model are displayed in
Fig. 2. Specifically, the Differentiation Strategy is positively correlated
to MO (0.42***) and the Cost-Based Leadership Strategy is not statisti
cally related; thus, Hypothesis 1 is not rejected. In addition, the Differ
entiation Strategy has a direct and indirect significant effect on Export
Performance through the MO. Table 4 shows the direct, indirect, and
total effects of the competitive strategies, and the results are supported
by previous studies (Voola & O’Cass, 2010; Kharabsheh et al., 2015).
5
J.A. Heredia Pérez et al.
Journal of Business Research 169 (2023) 114256
institutional changes in emerging economies (Kallas et al., 2015). To
analyze the variation of the structural coefficients of the model, we
performed SEM by groups, considering the main characteristics of the
firm that have been studied and that influenced its export performance:
type of business (Business to Business or Business to Consumers), type of
sector (manufacturing and non-manufacturing), and type of economy of
the country of export destination (developed and developing) (Aulakh
et al., 2000; Katsikeas et al., 2000; Hayes, 2017). Table 5 shows the
degree of adjustment of the structural model by groups. The adjustment
parameters are acceptable (Hayes, 2017).
Table 6 summarizes the direct and indirect effects of the model for
each group. Mainly, there are different effects between differentiation
strategies, MO, and Export Performance. Consequently, Hypothesis 2 is
accepted. LI also has direct and indirect effects on Export Performance
and MO for all analysis groups (Table 7). Then, Hypothesis 3 is not
rejected. Finally, in all the analysis groups, the total effect of the dif
ferentiation strategy on export performance is higher than cost strate
gies, so Hypothesis 1 is not rejected in the group analysis.
The results of the analysis by group suggest that MO mediates in the
implementation of competitive strategies, especially in the case of dif
ferentiation strategies. The result indicates that MO is a strategic ca
pacity that facilitates the company’s adaptation to different external and
internal conditions to increase its export performance (Dobni & Luff
man, 2003; Hult et al., 2005). Finally, LI affects the export performance
of Latin American firms, supporting the implementation of competitive
strategies regardless of the group studied.
Table 3
SEM Model.
Latent variable
Differentiation
Leadership
ECD_22_1
ECD_22_2
Cost-Based Leadership
ECC_23_1
ECC_23_2
Local Institutions
ELI_11_1
ELI_11_3
ELI_11_4
Marketing Orientation
OMP_25_1
OMP_25_2
OMP_25_3
Export Performance
Product Performance
Financial Performance
Customer Performance
Product Performance
DEP_16_1
DEP_16_2
Financial Performance
DEE_15_1
DEE_15_2
DEE_15_3
DEF_14_3
Customer Performance
DED_18_2
DED_18_3
DED_18_4
Model fit (indicators)
Model
Minimum fit
Good fit
FL
0.71
0.90
0.50
0.85
0.60
0.81
0.69
0.88
0.91
0.76
0.74
0.69
0.72
0.94
0.88
0.66
0.86
0.95
0.74
0.90
0.89
0.08
CMIN/df
1.77
2
Purchase answer to see full
attachment
