Impact of Technological Capability on the Export Performance of

SMEs in Thailand
1,2 3 4
Chantanaphant, Jirayuth , Md. Noor Un Nabi , and Utz Dornberger

Abstract
Technological capability (TC) is widely regarded as source of growth and wealth for the
nations and the firms (Manopoloulos et al, 2009). Researches on the role of technology on
economic development have emphasized two main issues. Firstly, they paid attention to the
emerging market countries adapting the imported technologies have become a decisive factor
in their ability to catch up. These studies emphasized on the industry and country phenomena,
where the firm-level phenomena have not much emphasized (Caniels and Romijn, 2003; and
Archibugi and Coco, 2004). Secondly, researches on the relationship between TC of the
emerging market countries small and medium-sized enterprises (SMEs) and their export
performance are required to generate better understanding (Figueiredo, 2002; and Guifu and
Hongjia, 2009).
Thailand is ranked 6th developing country exporter by The World Bank. 99% of the
enterprises in Thailand are SMEs (OSMEP 2010). They are dominant players in some of
Thailand’s major export sectors namely Apparel, Agricultural, Jewery, Plastic among others.
Plastic industry is the only technology-intensive sector in which SMEs are responsible for
50% of export turnover. Therefore, this study attempts to examine: the impact of TC on
export performance of SMEs in Thailand using the Plastic Industry as the main subject.
The positive relation between TC and export performance has been supported by various
arguments. Firstly, firms with superior TC can secure greater efficiency gains by pioneering
process innovations and can achieve higher differentiation by innovating products in response
to the changing market environment (Tsai, 2004). Secondly, firms with greater presence in
global markets require more proactive and aggressive technological capabilities (Figueiredo,
2002; and Lefebvre, Lefebvre and Bourgault, 1998). Lastly, TC plays an outstanding role in
ensuring the firms to achieve a higher level of international performance and to compete
successfully in foreign markets (Flur and Oltar, 2005; and Guifu and Hongjia, 2009). This
study contributes to the literature by providing better understanding of the relationship
between TC of the emerging countries SMEs and their export performance.
This is a quantitative study where data is gathered by personal and telephone interviews
with 111 SMEs in plastic industry in Thailand, who export. The descriptive and multiple
regression analyses were used to examine the impact of TC and export performance.
The findings of this research suggest that the improvements of manufacturing processes
and of product design are critical for the SMEs to successfully compete in the international
markets. These improvements are based on accumulative technological knowledge acquiring
from internal and external sources. These findings contribute to the understanding of how
SMEs in the emerging market countries use the available technologies to improve firm
performance and integrate them to the global economy.

                                                            
1and 2
Jirayuth Chantanaphant, PhD Candidate, International SEPT Program, University of Leipzig, Germany.
Jirayuth Chantanaphant, Faculty of Liberal Arts and Management Science, Prince of Songkla University,
Surat Thani Campus, Thailand.
3
Md. Noor Un Nabi, Post-doc Researcher, International SEPT Program and Center for Area Studies (CAS),
University of Leipzig, Germany.
4
Professor Utz Dornberger, International SEPT Program, University of Leipzig, Beethoven Str. 15, 04107
Leipzig, Germany. E-mail: dornberg@uni-leipzig.de, Corresponding author. 
  

Keywords
Technological capability, export intensity, export growth, export diversity, SMEs

Introduction
Technological capability (TC) is widely regarded as source of growth and wealth for
almost every nation on the planet. It is central to regional and economic change, job creation,
and job destruction (Ngoc Ca, 1999; Archibugi and Coco, 2004). Not only for nations, but
technology is also a core imperative for firms (Manopoloulos et al., 2009). The employment
of technology demands considerable effort, devoted to learning the new technology and
developing the capability, for the efficient development of industry. In this context, since the
1980s, TC has become the main focus of conceptualizing technology study (Rosenburg,
1976; Westphal, Kim and Dahlman, 1985; Bell and Pavitt, 1993).
Study of the role of TC in industry is a subject that has attracted the attention of both
academics as well as industry itself. It is the main and decisive factor in developing
competitive positions (Ernst, Ganiatsos and Mytelka, 1998), competitive strengths (Mytelka,
1993), and sustained growths (Ngoc Ca, 1999). Over the past decade, the technological
capability of firms has been regarded as an important strategic resource, enabling firms to
achieve competitive advantage within their industry. Those firms with superior technological
capability can secure greater efficiency gains by pioneering process innovations and can
achieve higher differentiation by innovating products in response to the changing market
environment (Tsai, 2004).
The development of technological capability by the small and medium-sized enterprises
(SMEs) is crucial for them to overcome the fast-changing and fiercely competitive global
markets. However, only a few numbers of SMEs in emerging economies are well equipped to
develop the necessary TCs (Caniels and Romijn, 2003) and the understanding of TC
development is still inadequate (Archibugi and Coco, 2004). In addition, despite significant
attention having been paid to the importance and understanding of technological capability,
considerably less attention has been given to empirical evidence of the impact of
technological capability on company performance (Tsai, 2004).
Although, these studies highlight the importance of technological capability in emerging
countries, several issues are not fully addressed. Firstly, several studies pay attention to the
development of technological capability in emerging economies e.g. Rosenburg, 1976;
Westphal, Kim and Dahlman, 1985, and Kim (1980; 1997; 1998), nevertheless, most of those
studies emphasized the development of technological capability at industry and country level.
Thus the development of technological capability at the firm level is not fully researched.
Secondly, even though, it is known that the accumulation of technological capability in each
firm is distinct because of the different learning styles and activities of the firm, which put the
firm’s capabilities regarding technological learning and activities in the balance (Guifu and
Hongjia, 2009). Thirdly, in spite of the fact that empirical studies e.g. Dahlman, Ross-Larson
and Westphal (1987), Lall (1992), and Bell and Pavitt (1997) identified distinct levels of
technological capability, they are not yet empirically tested on site. Lastly, Figueiredo (2002)
and Guifu and Hongjia (2009) concerned with the improvement of the firms’ performances
on the basis of accumulative technological capability proposed that a broader scope in
different industries and different countries is required.
Thailand is ranked the 6th developing country exporter by The World Bank. 99% of the
enterprises in Thailand are SMEs (OSMEP 2010). SMEs in Thailand provide three fourth of
the available countrywide labor force and generate 40% of total GDP. They are dominant

 
  

players in some of Thailand’s major export sectors namely Apparel, Agricultural, Wood and
Furniture, Jewelry, Plastic among others. Plastic industry is the only technological intensive
sector in which SMEs are responsible for nearly 50% of export turnover. There are three
main reasons that plastic industry is in focus of this study. First of all, it has kept gradually
expanding in the past four years. Moreover, it is listed in the top 15 exporting industries in
Thailand since 1993. Lastly, accordingly to Dunphy and Stace (1988), only the firms in
technology-intensive industry are more likely to have a chance to improve their TC and
performance. Therefore, this study attempts to examine: the impact of TC on export
performance of SMEs in Thailand using the Plastic Industry as the main subject.

Literature and Hypotheses

Entrepreneurial Orientation and Technological Capability
Entrepreneurial orientation (EO), in this study, is defined as the firm-level process,
practices, decision making style, and strategic orientation of an entrepreneurially oriented
firm (Jantunen et al, 2005). The EO concept proposed by Miller (1983) is the most widely
accepted from the perspective of firm-level characteristics because it has been used and tested
in many studies (see Covin and Slevin, 1991; Morris and Sexton, 1996; Covin and Miles,
1999; Wiklund and Sheperd, 2003; 2005). Miller (1983) characterized EO as consisting of
three elements: innovation, proactiveness, and risk taking. Innovation refers to a firm’s
willingness to engage in and support new ideas, creativity, and experimentation, which will
result in changing the firm’s traditional business practices. Proactiveness is defined as an
organizational process aimed at pursuing entrepreneurial opportunities regardless of the
resources they control at any given time (Stevenson and Gumpert, 1985; Stevenson and
Jarillo, 1990). It helps a firm to change threats into opportunities (Westerburg and Wincent,
2008). Risk taking is defined by Miller and Friessen (1978) as the degree to which the
executives are intended to make large and risky commitments. Firms with EO are usually
classified by risk-taking behavior in the attention to obtain high profits by capturing
opportunities in the marketplace.
Innovation is the heart of entrepreneurship. Baker and Sinkula (2009) suggested that EO
is an innovation-based construct. They added further that the high level of EO in a firm
conducts the pursuit of new business opportunities, which brings about a good performance
only through innovation success or technology. The origin of these types of innovations bases
on management vision and strategies, not traditional customer research. EO, inspired
innovation processes (Baker and Sinkula, 2009), is aimed at the recreation, renewal, and
redefinition of firms, their markets, or industries (Covin and Miles, 1999). Lumpkin and Dess
(1996) referred that EO includes experimenting processes with promising new technologies.
In addition, the innovation element in EO supports creativity and experimentation in new
product development and technology adoption which lead to the technological capability
development and innovation success. Proactiveness, likewise, initiates firms to respond
immediately to the changes in both business environment and customers’ preferences. To be
the first mover, a firms needs to have high level of TC in order to continuously develop and
first introduce new products and services to the market. Lastly, the characteristic of the firm’s
risk taking which pursuit it to commit an extent of its resources to the new projects (Miller,
1983) supports the firm itself to develop better level of TC. Thus, Baker and Sinkula (2009)
claimed that firms with strong EO are presumably to develop utterly new product concepts
that respond latent customer need. Therefore:

Hypothesis 1: EO has a significant relationship to technological capability.

3

 
  

Technological Capability and Export Performance

In this study, TC is referred to the definition of suggested by Kim (1997) as the ability to
make effective use of technological knowledge in order to assimilate, use, adapt and change
existing technologies as well as the ability to create new technologies and to develop new
products and processes in response to the changing economic environment to the advantage
of the SMEs in question. There are many studies that have evidenced that TC is one of the
critical success factors for firms in emerging economies (Bell, Ross-Larsson and Westphal,
1984; Lall, 1984; Caniëls and Romijn, 2003). Firm level TC allows SMEs to reduce cost,
increase efficiency, develop new knowledge and technology rapidly, reconfigure foster firm
international structure, and upgrade its products and processes. Based on the work of Guifu
and Hongfu (2009), for this study, firm-level TC has been classified into three distinctive
levels: technological acquiring capability (TAC), technological operating capability (TOC),
and technological upgrading capability (TUC). TAC refers to capabilities to acquire new
knowledge through formal, informal, internal and external channels. In general, they form
their own TC by gradually absorbing, digesting and improving this knowledge. TOC refers to
capabilities to operate, use and sustain production equipments and facilities. Accompanying
with the TC promotion, firms will shorten the gaps with other leading companies when they
continuously introduce more advanced and more complex product and process innovation
and finally they will be able to produce the original product and process innovation. TUC
refers to capabilities to improve greatly on products and processes depending on firm’s own
strength and adjust the current product and process parameters according to changing market
demands. The upgrading results will allow the firms to reach higher TC level.
Empirical evidence has consistently found a significant relationship between the intensity
of technological effort and the proportion of its output that is exported (McGuinness and
Little, 1981). The positive relation between TC and export performance has been supported
by various arguments and theories. Firstly, Firm-level TC confers market power and
consequently facilitates better export performance (Pla-Barber and Alegre, 2007). Secondly,
firms with greater presence in global markets require more proactive and aggressive
technological capabilities (Lefebvre, Lefebvre and Bourgault, 1998; Dunphy and Stace, 1988;
and Pettigrew, Woodman and Cameron, 2001). Lastly, TC plays an outstanding role in
ensuring the firms to achieve a higher level of international performance and to compete
successfully in foreign markets (Flur and Oltar, 2005).
This paper hypothesized the relationship between TC and three export performance
measures: export Intensity; export Growth; and export Diversity. Export Intensity or the ratio
of export sales to total sales was suggested as an effective measure for export performance in
many of the past studies (Cooper and Kleinschmidt, 1985; Aaby and Slater, 1989; Moini,
1995; Ogunmokun and Ng, 2004; Iyer, 2010). The Higher the firms involve in international
market, the greater percentage of sales the firms achieve. It is observed that firms with higher
productivity are more likely to export and, export more of their output (Iyer, 2010). Several
scholars confirmed the positive relationship between TC and export intensity (Karagozoglu
and Lindell, 1998; Simon, 1992; Dhanaraj and Beamish, 2003; Pla-Barber and Alegre, 2007),
however, most of them are emphasized on large firms or SMEs in developed countries. The
relationship between TC and export intensity is still in doubt. As a result, in term of SMEs in
emerging economies:

Hypothesis 2: TC is positively related to export intensity.

Export growth is the percent change of growth rate. It is one of the most commonly used
dimensions to measure export performance (Aaby and Slater, 1989) and is viewed as an
4

 
  

important dynamic measure of export performance (Cooper and Kleinschmidt, 1985).

Practically, managers pursue export growth to reduce firm risk, and to escape low growth
domestic markets (Gourlay and Seaton, 2003). Firms can overcome some international risks
if they have a particular competitive advantage that differentiates them from indigenous
competitors. Cooper and Kleinschmidt (1985) emphasized that firm-level TC in terms of
R&D intensity and technological product advantages are strongly related to export growth.
Knogmanila and Takahashi (2009) mentioned in their literature review that innovative firms
tended to have higher export growth. In term of SMEs in emerging economies, we
hypothesized:

Hypothesis 3: TC is positively related to export growth.

Export diversity, in this study, is measured by number of export market. Leonidou and
Spyropoulou (2007) suggested that once the firm becomes a regular exporter, risk
diversification could also be achieved by adopting a “market spreading” strategy, i.e.
exporting to a wide number of countries, but with a relatively low penetration in each. Firms
attempt to increase their export diversity in the motives of economy of scales, resource
access, location advantages, growth, operational risk reduction, transaction cost decrease, and
importantly firms’ capability extension (Hitt et al, 2006; Tihanyi et al, 2009). One of the most
important firm capabilities emphasized in previous research (Almeida 1996; Feinberg and
Gupta 2004; Sanna-Randaccio and Veugelers 2007) on export diversity is TC. The
development of TC within the firms is required in order to capture the opportunities available
for firms to compete and diversify into foreign market (Gourlay and Seaton, 2003). Firms
which intend to develop their technological capabilities in general have a strong strategic
motivation to pursue export diversity (Hitt et al. 2006). It has been observed that small firms
with higher TC are tended to accelerate their international expansion (Karadeniz and Göçer,
2007). Technological intensity fosters international diversification (Tihanyi et al, 2009).
Thus, in term of SMEs in emerging economies:

Hypothesis 4: TC has positive relationship with export diversity

Methodology
Operational Definition
Entrepreneurial Orientation:
In this study, EO scale is adapted from that developed by Ripollés-Meliá et al (2007) and
Covin and Slevin (1989). This scale has been used by several researchers in various
researches setting which presented high levels of reliability and validity in the results
(Barringer and Bluedorn, 1999; Kreiser et al., 2002; Wiklund and Shepherd, 2003; 2005;
Covin et al., 2006). This EO scale has three dimensions, each of which contains three items.
The seven-Likert scale is used for the interviewees to evaluate their own firms to the extent
do the measure items apply to the firms regarding to the abilities of the competitors from
“totally disagree” (1) to “totally agree” (7).

Technological Capability:
Referring to the relevant researches done by Kim (1997), Hobday (2005), and Guifu
(2009), this study followed the suggestion of Guifu and Hongfu (2009) classifying TC into
three distinctive levels: technological acquiring capability (TAC), technological operating
capability (TOC), and technological upgrading capability (TUC). In term of TC, it needs to
5

 
  

be conceptualized in both dynamic and relative terms. Thus it is measured in comparison to

other competitors’ overtimes (Franco, Sarkar, and Raj Echambadi, 2009). Indicators within
the components had been designed and worded in such a way that they capture the position of
the individual firm in terms of comparison with its competitors’ position over last five years.
7-point ordinal Likert scales is applied to evaluate all measure items ranging from “totally
disagree” (1) to “totally agree” (7).

Export Performance:
Export performance has been measured by export intensity, export growth, and export
diversity. Export intensity is the ratio of export sales to total sales (Cooper and Kleinschmidt,
1985; Aaby and Slater, 1989; Moini, 1995; Ogunmokun and Ng, 2004; Iyer, 2010). Export
growth is the percent change of growth rate (Cooper and Kleinschmidt, 1985). Export
diversity is measured by number of international markets (Tihanyi et al, 2009).

Sample
The personal and telephone interview survey was used in order to get information from
the sampling group using questionnaire as the tool. The questionnaire was prepared in
English and then translated into Thai following the back-translation process for accuracy. The
measures used in the model mostly derived from previous empirical study and adopted for
this study. The interviews conducted mainly in Thailand, mainly in Bangkok and its outskirt,
during August 2010 - February 2011. The targets were selected from the list of company in
Plastic Industry in Thailand providing by the Petroleum Institution of Thailand. Only the
companies which labor force less than 200 people and fixed assets capital less than 200
million baht are the target. The respondents were contacted for their willingness to participate
in either personal or telephone interview. Only 111 companies were intended to take part in.
111 SMEs in plastic industry in Thailand, who export, have been interviewed for this
research. Most of the samples are located in Bangkok and its surrounded areas. The
respondents are mainly the CEOs or the owners whereas the left are the managers in related
functions who were assigned by the CEOs. 48 of the sample are small firms while 63 are
medium sized. The average capital is 20.52. The average number of employees is 81.55,
among this; the average number of engineers is only 2.26. From 111 SMEs, 95 firms export
their products to their neighborhood countries, whereas there are 37 firms export to Japan, 33
to China, 23 to India, 20 to USA, and 17 to Europe. Only 47 from 111 SMEs could identify
their R&D expenditure from their expense. The average ratio of R&D to total sales is 5.42%.

Analysis
Descriptive analysis such as mean, mode, standard deviation, as well as cross tab is
applied in this study to describe the sample group and for better understanding the variables.
Later, multiple regression analysis is being used to investigate the relationship among studied
variables. From the result, there is relationship only between TC and export intensity. As a
result, the criterion of export intensity is adopted into the multiple regression process to
improve the relationship between TC and export growth, and TC and export diversity.

Result and Implication

Cronbach’s Alpha for TC, mean and standard deviation for TC and export performance
measures are shown in Table 1. In average, the SMEs in Plastic Industry agree that they have
higher level of EO than their competitors in terms of innovation and proactiveness. The mode
value in Table 1could illustrate this picture well as nearly every measured items under

 
  

innovation and proactiveness have mode value equal to 5. However, they did not view
themselves as risk takers. The Cronbach’ alpha coefficient for the nine items of EO is 0.888,
suggesting that the EO measure items have relatively high internal consistency. For TC,
SMEs in Plastic Industry in Thailand somewhat agree that they have higher level of TC than
their competitors, especially their technological upgrading capability. The Cronbach’ alpha
coefficient for the ten items is 0.961, suggesting that the EO measure items have very
relatively high internal consistency. From 2004-2009, the average export intensity is 28.13%,
average export growth is 4.47% and export diversity is 4 countries.
Table 2 presents the results of Multiple Regression Analysis between EO and TC and
their components. The statistical data shows that entrepreneurial orientation has significant
relationship with technological capability at the firm level. Nevertheless, risk taking has less
relationship as it provides the smallest coefficient of determination (R2).
Hypothesis 1: the results of multiple regression analyses showed in table 2 with F-value
= 68.08 and sig. = 0.00 which means that there is significant relationship between EO and TC
at the 95% of confidential level. As shown in table 2, the R2 value is 0.66. This result presents
EO has the power to explain firm-level TC at 66%. In addition, the multiple regression
analysis between EO and TAC exhibit F-value = 49.84 and sig. = 0.00 with R2 = 0.59. That
result of EO and TOC present F-value = 41.44 and sig. = 0.00 with R2 = 0.54 and that of EO
and TUC illustrate F-value = 54.89 and sig. = 0.00 with the highest R2 at 0.61. However,
there is multicollinearity problem with the component innovation as it is correlated to TC.
However, the F-value suggests that the model is reliable and the relationship is significant.
This finding confirms that EO is one of the critical factors to develop firm-level TC for SMEs
in Plastic Industry in Thailand.
Hypothesis 2: the result of multiple regression analysis presented in table 3 with F-value
= 6.202 and sig. = 0.001 which means that there is significant relationship between TC and
export intensity at the 95% of confidential level. As shown in table 3, the R2 value is 0.124
which means firm-level TC has the power to explain export intensity about 12.40%.
However, the result shows that TUC is not significantly related to export intensity as the t-
Value sig. is much higher than either 5% or 10% level of significant. Though, the F-Value
suggests that this model is reliable. Thus, this finding confirms that firm-level TC is one of
the critical factors to export success of SMEs in plastic industry in Thailand in terms of
export intensity.
Hypothesis 3: as the result from multiple regressions shows that there is no relationship
between TC and export growth. In this study, a criterion of export intensity was set up to
deselect some sample and improve the result. After several test, the criterion of export
intensity ≥ 10% (n = 72) is the most suitable. From table 3, the result of multiple regression
analyses between TC and export growth showed F-value = 2.519 and sig. = 0.065 which
means that there is significant relationship between TC and export growth at the 90%
confidential level. The R2 value in table 3 presented that firm-level TC has the ability to
explain export growth only for 10%. However, there is technological upgrading capability
(TUC) alone which is significantly related to the export growth with t-Value = 2.095 and sig.
= 0.04. Thus, this finding confirms that firm-level technological upgrading capability (TUC)
is one of the vital variables to export success of SMEs in plastic industry in Thailand in terms
of export growth.

 
  

Table 1 Descriptive Statistics

Variables Measured Items Aggregated Value
Mean Mode S.D. Mean Mode S.D. Cronbach’s
Alpha
Entrepreneurial Orientation (EO)1 37.85 40 10.24 0.888
Innovation 13.95 14 4.06 0.853
- Emphasis on research and development, 4.80 5 1.55
technology leadership, and innovation.
- Entered new businesses and marketed new 4.68 5 1.58
products during the past 5 years.
- Make significant changes in lines of 4.48 4,6 1.49
products or services regularly.
Proactiveness 14.05 15 3.69 0.764
- Initiate actions in the sector rather than 4.74 6 1.48
responds to competitors.
- Be the first to introduce new products or 4.51 5 1.55
services, administrative techniques,
operating technologies, etc.
- Prefer the competitive posture. 4.73 6 1.45
Risk Taking 10.04 8 4.57 0.912
- Eager to explore into new market. 3.17 2 1.70
- Prefer high-risk projects with chances of 3.29 2 1.63
very high returns.
- Make decision with an aggressive posture 3.44 2 1.64
in order to exploit potential opportunities.
Technological Capability (TC)1 44.86 50 11.95 0.961
Technological acquiring capability (TAC) 13.12 15 4.28 0.926
- Intensely cooperate with scientific 4.15 5 1.53
research institutions to develop
technologies.
- Cooperate with others 4.44 5 1.54
(suppliers/customer) to develop
technologies.
- Tie with the technology suppliers in the 4.53 5 1.51
market.
Technological operating capability (TOC) 13.15 13 3.88 0.901
- Manufacture with advanced technologies. 4.60 5 1.38
- Have more skilful technical workers and 4.22 4 1.40
operational workers.
- Have less operation discontinuity. 4.33 4 1.47
Technological upgrading capability 18.60 22 4.63 0.943
(TUC)
- Frequently modify production process. 4.65 6 1.34
- Strongly modify products according to 4.83 5 1.23
market demand.
- Improve greatly on production process 4.55 4 1.21
based on our own ideas.
- Develop and test new product design 4.57 5 1.22
generated from our own.
Export Performance2 - - - -
Export Intensity 28.13 - 25.43 -
Export Growth 4.47 - 6.66 -
Export Diversity 4.22 - 3.16 -

Remark 1 All items are measured by 7-point Likert Scale ranging from “totally disagree” (1) to “totally
agree” (7)
2 Export performance were measured by objective measurements.

 
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Table 2 Results Summary of Multiple Regression Analysis

Dependent Independent R2 F β t
Variable Variables (sig) (sig)
TC 0.660 68.083
(0.000)*
Innovation 0.081 0.741
(0.460)
Proactiveness 0.647 5.796
(0.000)*
Risk taking 0.185 2.952
(0.004)*
TAC EO 0.587 49.841
(0.000)*
Innovation 0.210 1.733
(0.086)**
Proactiveness 0.458 3.725
(0.000)*
Risk taking 0.221 3.203
(0.002)*
TOC 0.542 41.437
(0.000)*
Innovation -0.041 -0.320
(0.750)
Proactiveness 0.692 5.337
(0.000)*
Risk taking 0.157 2.160
(0.033)*
TUC 0.611 54.897
(0.000)*
Innovation 0.051 0.430
(0.668)
Proactiveness 0.668 5.588
(0.000)*
Risk taking 0.142 2.111
(0.037)*
Remark
* significant at the 5% level
** significant at the 10% level

Hypothesis 4: as the result from multiple regressions shows that there is no relationship
between TC and export diversity. In this study, a criterion of export intensity was set up to
deselect some sample and improve the result. After several test, the criterion of export
intensity ≥ 35% (n = 29) is the most suitable. From table 3, the result of multiple regression
analyses between TC and export diversity showed F-value = 4.857 and sig. = 0.036 which
means that there is significant relationship between TC and export growth at the 95%
confidential level. The R2 value in table 3 presented that firm-level TC has the ability to
explain export diversity for 15.20%. Nevertheless, there is technological upgrading capability
(TUC) alone which is significantly related to the export diversity with t-Value = 2.614 and
sig. = 0.014. Thus, this finding confirms that firm-level technological upgrading capability
(TUC) is one of the vital variables to export success of SMEs in plastic industry in Thailand
in terms of export diversity.

 
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Table 3 Results Summary of Multiple Regression Analysis

Dependent Independent R2 F β t
Variable Variables (sig) (sig)
Export TC 0.124 6.202
Intensity (0.001)*
TAC 0.521 3.242
(0.002)*
TOC -0.382 2.067
(0.041)*
TUC 0.159 0.905
(0.368)
Export TC 0.100 2.519
Growth*1 (0.065)**
TAC 0.123 0.687
(0.494)
TOC -0.282 -1.149
(0.255)
TUC 0.441 2.095
(0.040)*
Export TC 0.152 4.857
Diversity*2 (0.036)*
TAC 0.243 1.302
(0.204)
TOC 0.309 1.687
(0.103)
TUC 0.449 2.614
(0.014)*
Remark
1 Only selected cases which have export intensity equal or higher that 10% (n = 72).
2 Only selected cases which have export intensity equal or higher that 35% (n = 29).
* Significant at the 5% level
** Significant at the 10% level

Discussion
The positive relationship between TC and export intensity at the firm level is supported
by the study of Karadeniz and Göçer (2007) and Knogmanila and Takahashi (2009).
Karadeniz and Göçer (2007) determined the significantly positive relationship between
technology level of firm measured by R&D intensity and the export intensity of SMEs in
Turkey whereas Knogmanila and Takahashi (2009) researched in Lao Republic. This finding
points out that the firms with knowledge-based products which required higher level of TC
are likely to engage themselves into international market. López-Rodríguez and García-
Rodríguez (2005) recommended that a firm in technology-intensive sector does not guarantee
that it has greater capacity to gain access to foreign markets if it lacks the competitive
advantages required to compete at the international level. Only when the firm has started to
export and accumulated experience, the export process as a result of technological spillovers
within the industry allow it to improve its TC at the firm level and hence its competitiveness.
This positively affects its export intensity.
The positive relationship between TC and export growth at the firm level was supported
by Macpherson (1994). He studied the influence of innovation on SMEs in USA. The result
presented the positive relationship between product innovation and export growth and the
strong relationship between process innovation and export growth as well. Flor and Oltar
(2005) found out the same phenomenon in their study on 88 Spanish exporting ceramics tile
firms.
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In this study, there is a significant relationship between TC and export diversity only if
the export intensity is greater than 35%. It follows the conclusion by Aaby and Slater (1989)
which stated that in companies where management is firmly committed to export, export
performance tends to be higher. Tihanyi et al (2009) suggested from their study in USA that
the relationship between TC and export diversity is more likely to be curvilinear rather than
linear. In addition the observation of Cooper and Kleinschmidt (1985) noticed that high
performance exporters tend to have diversified export markets. Iyer’s (2010) model presented
the positive relationship between export intensity and number of export markets.
Nevertheless, this finding can be concluded that, for export diversity, firm-level TC can be a
decisive factor to SMEs only if the firms are more export oriented.

Implication and Conclusion

This study provides several theoretical and practical implications for researchers and
managers who are concerned with TC development in SMEs in emerging countries. The
findings of this research suggest that the improvements of manufacturing processes and of
product design are critical for the SMEs to successfully compete in the international markets.
These improvements are based on accumulative technological knowledge acquiring from
both internal and external sources.
Practical implications of this work are considerable. First, the SMEs’ owners and
managers should be conscious of the importance of TC to the international competitiveness
of their firm, and hence of the need to invest more in technology to improve it. The higher
level of firm-level TC SMEs could achieve the better result SMEs perform in the
international market. Moreover, they should take initiative to empower TC within their firm
diversify international risk, boost up sales volume in foreign Markets, and consequently,
reduce their cost in order to maintain the existing export market as well as to enter into new
countries. Second, researchers can study the export performance for SMEs in emerging
economies from the concept of organizational capabilities. The studies of the impact of other
capabilities on SMEs export performance are needed to fulfill the understanding of this
phenomenon. Third, the policy makers should promote and stimulate the investment in TC
developing at the firm level for SMEs. However, there should be separated campaigns for
SMEs that engage intensively in international markets.
These findings contribute to the understanding of how SMEs in the emerging market
countries use the available technologies to improve firm performance and integrate them to
the global economy. However, from the result, the firm-level TC alone is not enough for
SMEs either to sustain their existing international customer and to spread themselves into
new foreign markets. Thus other relevant capabilities are needed to be included in further
study. Furthermore, this study concentrated only on plastic industry in Thailand. The studies
of the impact of firm-level TC on export performance in different industries and countries are
in requiring.
5

                                                            
Acknowledgement
Thanks the Royal Thai Government under the program "Strategic Scholarships for Frontier Research Network
of Thailand’s Commission on Higher Education", Prince of Sonkla University (Thailand), and DAAD
(Germany) for their supports on this study.

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