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To cite this article: Nesredin Temam Hassen, Mesfin Lema & Gemechu Nemera (2024)
Financial and marketing approach to export performance: the mediation role of promotion
and research and development, Cogent Business & Management, 11:1, 2315658, DOI:
10.1080/23311975.2024.2315658
1. Introduction
In recent decades, an increasing number of firms have embraced international expansion through exports
in response to globalization, major markets, and trade liberalization initiatives in many countries, result-
ing in significant changes in the world economy (Buckley & Strange, 2015). Exporting represents a feasi-
ble strategic alternative for firms to internationalize, and has remained the most frequently used foreign
market entry mode chosen (Zhao & Zou, 2002). It is vital to affirm a firm’s survival or growth while
positively influencing current and future EXP by ensuring competitive advantage in international markets
(Navarro et al., 2010). While EXP is regarded as one of the key indicators of the success of a firm’s export
operations, it reflects firm-specific behavior in leveraging its resources and capabilities in an international
context at a given point in time (Beleska-Spasova et al., 2012).
It has been long documented that the investigation on EXP determinants is of vigorous interest to
public-policy-makers, practitioners, and researchers (Katsikeas et al., 2000). A number of recent empirical
studies have made an effort to investigate the impact of different internal and external factors on EXP
(e.g. Bodlaj et al., 2020; Durmaz & Eren, 2018; Ferreras-Méndez et al., 2019; Karami & Tang, 2019; Malca
et al., 2020; Osiyevskyy et al., 2020; Racela & Thoumrungroje, 2020; Sousa et al., 2020). This large volume
of publications is a strong testimony of not only the importance of the issue but also the legitimacy of
inquiry into export marketing. The recognition is well reflected not only by the fact that exporting
research has been flourished recently, but also by the sheer number of publications related to exporting
(Chen et al., 2016). However, despite these developments, some important issues still require attention
CONTACT Nesredin Temam Hassen nesredederino23@gmail.com Department of Management, College of Business and Economics,
Arba Minch University, Arba Minch, Ethiopia
© 2024 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group
This is an Open Access article distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/), which
permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. The terms on which this article has been
published allow the posting of the Accepted Manuscript in a repository by the author(s) or with their consent.
2 N. T. HASSEN ET AL.
in extant research. First, a review of recent publications indicates that, among the studies that investigate
internal factors of firm EXP determinants, with a few recent notable exceptions (i.e. Caban-Garcia et al.,
2020; Chosiah, Purwanto & Ermawati 2019; Pietrovito & Pozzolo, 2021), most of the studies have failed
to consider the role of firms’ financial variables such as CS and CA in determining firms’ EXP. Nonetheless,
assets and capabilities are the two essential resources that are imperative to create competitive advan-
tage (Gao, Murray, Kotabe, & Lu, 2010).
As pointed out by Strebulaev (2007), small adjustment costs may cause large variations in CS. Because
interest on debt is a tax-deductible expense, the firm effectively reduces its tax bill as it employs more
debt. Consequently, the cost of capital will not rise, even if the use of leverage increases to excessive
levels. The Trade-off theories of CS envisage that firms choose levels of debt in order to balance the
benefits from the interest tax shield with the costs of future financial distress or of current financial
inflexibility (Danis et al., 2014). The relationship between sources of financing firms’ business operations
and firm performance is well documented. Thus, we theorizes that there is strong relationship between
EXP and its CS.
The difference between firm’s cash inflow and outflow indicate the firm’s CA (Ogbeide & Akanji, 2017).
Cash policies unquestionably linked to the firm’s operations (Kroes & Manikas, 2014). It is widely linked
to firm’s financial performance. The Principal working capital management theory advocates (Brewer &
Speh, 2000; Theodore Farris & Hutchison, 2002) contend that firms can improve liquidity, and hence their
competitive positioning by handling their cash flows. Thus, we presume that firms should regularly
change the extent at which cash is spent to insure CA and enhance their international operations to
obtain higher performance.
Second, strategically export success of firms depends not only on its controlled resources and capa-
bilities, but also on how the institutional and industrial environment can configure its behaviors through
cognitive, normative, and regulative mechanisms (Welter, 2011; Welter & Smallbone, 2011). However,
despite the urge by Leonidou and Katsikeas (2010), only few studies have tried to inject a theoretical
perspective in researching institutional and industrial environment effects on export performance, which
has been endemic to empirical research in the overall exporting field. The lack of empirical validation of
integrative model of both internal (firm-level) and external factors-EXP relationships on a comprehensive
pool is also a major limitation in the existing literature (see Chosiah et al., 2019; Pietrovito & Pozzolo, 2021).
This leads the researcher to posit that the Resource based theory (RBT), Dynamic capability view (DCV),
and Institution-based view (IBV) can provide a suitable theoretical platform to explain and predict the firm’s
performance in international markets (Hoskisson et al., 2000; Peng et al., 2009; Wright et al., 2005).
The RBT has emerged in the past decades as a very influential framework to analyze the sources and
sustainability of a firm’s competitive advantage in export research (Nakos et al., 2019). It accentuates how
organizations achieve viable competitive advantage by developing resources and capabilities (Hennart,
1991). It has been a central foundation of firms’ internationalization theories in developing the concept
of firm-specific advantages (Dunning, 1988). DCV are ‘the organizational and strategic routines by which
firms achieve new resource configurations as markets emerge, collide, split, evolve and die’ (Eisenhardt
& Martin, 2000). DCV integrates the strategic management with entrepreneurial orientation, which a sig-
nificant application to diverse and changing contexts as is international markets (Knight & Liesch, 2016).
The study also founded on IBV to argue that political instability and competition from informal sector in
home countries directly affect firm export performance. IBV highlights the significance of institutional
environment, and advocates that institutional forces shape firms’ strategic decisions and determine their
performance (Tina Dacin et al., 2002).
Thus, founded on RBV, DCV, and IBV, the researchers contend that CS, CA, CI in home countries, and
PI in home countries directly affect firm EXP. Hence, this study reveals the direct and indirect impact of
CS, CA, CI, and PI in home countries on EXP. Particularly, this study examines the marketing effort route
through which CS and CA influences EXP. The marketing effort routes focus on the mediating role of PR
and RD activities in explaining the relationship between CS, CA, and EXP.
The contribution of this study is twofold. First, on the methodological front, this study is focused on
advancing and empirically validating a RBT, DCV, and an IBV integrative model of export performance.
Particularly, the study focuses on investigating the direct and indirect (marketing mix strategy route)
effect of EXP antecedents. This holistic analysis approach could make it possible to estimate the
Cogent Business & Management 3
complicated associations among critical internal and external factors, consequently providing more
sophisticated results as compared to the previous studies. Second, on the practical and policy fronts, this
study used data from firms in developing countries for empirical validation of the theoretical model,
which could enhance our understanding of how firms’ specific and institutional factors drive EXP in a
developing economy. Specifically, this study provides an important insight for practitioners and/or man-
agers in developing countries when venturing abroad carefully considering the consequences of financial
variables, political instability, and competition from informal sector firms’ EXP relationships. Similarly, it
helps policymakers identify the important factors to consider in enhancing the EXP of firms and coun-
tries. Thus, it is in this way this study contributes to international marketing literature thereby enhancing
our understanding of determinants of EXP while facilitating theory development.
Miller (1963) subsequently corrected their irrelevance proposition for taxes. Because interest in debt is
tax-deductible, a firm effectively reduces its tax bill as it employs more debt. This implies that the cost
of capital will not increase even if leverage increases to excessive levels.
However, Solomon (1963) argues that in an extreme leverage position, the cost of capital must
increase. This is because excessive debt induces markets to react by demanding higher rates of return.
Therefore, to minimize the weighted average cost of capital, firms avoid a pure debt position and seek
an optimal mix of debt and equity. In conclusion, the literature on the CS debate has progressed from
the irrelevant propositions of Modigliani and Miller (1958) to counter arguments based on more realistic
assumptions. The train of thought in CS irrelevance propositions has developed to a general consensus
among researchers that there is an optimal CS.
As the Trade-off theories of CS envisage, firms choose levels of debt in order to balance the benefits
from the interest tax shield with the costs of future financial distress or of current financial inflexibility
(Danis et al., 2014). The relationship between the sources of financing firms’ business operations and firm
performance is well-documented. The use of borrowed capital increases the level of investment under-
taken by the firm without incurring any additional costs for firm owners other than interest expenses
(Eriotis et al., 2011). However, despite the fact that borrowed capital increases the return on invested
capital, it also increases the risk for firms as well as for owners because borrowed capital creates fixed
expenses (i.e. interest); thus, a minimum profit level is necessary to finance the level of interest. Empirical
evidence (Salim & Yadav, 2012) confirms the negative relationship between firm performance and
short-term, long-term, and total debt. There is a significant negative relationship between financial lever-
age, measured by short-term debt to total assets, total debt to total assets, and firm performance (Khan,
2012). There is evidence of a negative, statistically, and economically significant effect of financial con-
straints on both the probability that a firm exports (the extensive margin) and the share of exports over
total sales (the intensive margin) (Pietrovito & Pozzolo, 2021).
Contrary to Khan’s (2012) findings, the results suggest that financial leverage measured by both short-
and long-term debt has a positive and significant effect on firm performance (Fosu, 2013). However,
there is also evidence that the relationship between CS and corporate performance depends on firm size
of the firms (San & Heng, 2011). Similarly, Degryse et al. (2012) argue that small and medium enterprises
(SMEs) use profits to reduce their debt level, and growing firms increase their debt position since they
need more funds. These contradictory findings can probably be attributed to firm size. The indicators of
CS regard the repartition between equity and debt in the company’s resources. The researcher argues
that the burden of making regular interest payments to debt holders can pressure managers to cut the
short-term investment required to enhance a firm’s EXP. Thus, the researcher theorizes that there is a
strong relationship between EXP and CS. This leads to the following hypothesis:
Hypothesis 1: There is significantly negative relationship between firm capital structure with high debt and
export performance
CA is determined by the difference between the working capital and working capital needs. If it is pos-
itive, it means that the company has sufficient liquidity to face all its short-term obligations, which will
be more important when the company increases and intensifies its export activity (Maurel, 2009). This
means that if more money is coming in than is going out, there will be a ‘positive cash position’ situa-
tion, which will help firms pay for bills. Thus, based on extant studies, the researcher presumes that firms
should regularly change the extent to which cash is spent to ensure CA, enhances their international
operations and obtains higher performance. Hence, in this sense the researcher proposes the following
hypothesis:
Hypothesis 2: There is significantly positive relationship between availability of cash and firm export
performance
Hypothesis 3: There will be a negative relationship between the degree of competition from the informal
sectors in their home countries and the formal firm export performance.
Hypothesis 4: There will be a negative relationship between political instability in their home countries and
the firm export performance.
6 N. T. HASSEN ET AL.
Hypothesis 5: There is significantly negative relationship between firm capital structure with high debt and
firm export promotion activity
Hypothesis 6: There is significantly negative relationship between firm capital structure with high debt and
firm research & development activity
Hypothesis 7: There is significantly positive relationship between availability of cash and firm export promo-
tion activity
Hypothesis 8: There is significantly positive relationship between availability of cash and firm research &
development activity
Hypothesis 9: There is significantly positive relationship between promotion activity and firm export performance
Hypothesis 10: There is significantly positive relationship between research & development activity and firm
export performance
Hypothesis 11: Firm export promotion activity significantly and negatively mediate the effect of capital struc-
ture with high debt on export performance
Hypothesis 12: Firm research and development activity significantly and negatively mediate the effect of
capital structure with high debt on export performance
Cogent Business & Management 7
Hypothesis 13: Firm export promotion activity significantly and positively mediate the effect of availability
cash on export performance
Hypothesis 14: Firm research and development activity significantly and positively mediate the effect of avail-
ability of cash on export performance
3. Methods
3.1. Variables and measures
3.1.1. Dependent variable
We have one dependent variable in the theoretical model. Firm EXP, which refers to all products exported
to the foreign market, is used as the unit of analysis. EXP is the degree to which a firm completes its
purposes by exporting its products to foreign markets, comprising economic or operational facets (profit,
sales, etc.) and strategic aspects (international positioning, increased market share from exporting,
achievement of objectives, etc.) (Cavusgil & Zou, 1994). The two principal modes of EXP assessment
identified in the general literature are objective (e.g. based mainly on records relating to absolute figures
of company profitability and sales level) and subjective (e.g. managers’ perceptions) measures (Katsikeas,
1996). Following our theoretical bearings, we focus on the operational performance encompassing firms’
export sales volume and revenue from export of commodity (objective measure) as EXP measures. Thus,
the EXP measurement in this study does not include the companies’ sales or revenue from selling its
product in the domestic market. The researchers used total unit a firm sold during specific period as
sales volume. We solved sales and price faction to obtain revenue of specific firm. It means we calculated
revenue for specific firm by multiplying total unit sold during given period by unit price. The following
equations (Equations 1 and 2) were used to measure EXP:
where sales represent total unit sold during a given time period, sales*price represent revenue during a
given time period.
3.1.2. Predictors
Based on the literature review, we distinguished between internal and external EXP determinants (Chen
et al., 2016). Firms CS and CA are used as internal environmental factors. Following other studies in
international business, CS and CA were measured as managers’ responses to the five-point Likert scale
question, ‘How do you assess the level of long-term and short-term debt financing of your organization
relative to the industry?’ and ‘How do you assess liquidity and cash following your organization’s position
relative to the industry?’ respectively.
The first factor related to the external environment is informal sector competition (CI), which captures
the extent to which competition from the informal sector in home countries affects the EXP of formal firms
(‘To what extent are the practices of competitors in the informal sector an obstacle to the current export
activity?’). The second factor related to the external environment is political instability (PI), which measures
the impact of political instability based on managers’ responses to the question: ‘To what extent is political
instability an obstacle to your current to the current export activity?’ For both CI and PI, the responses have
five possible values: no obstacle (0), minor (1), moderate (2), major (3), and very severe obstacles (4).
3.1.3.1. Promotion mix activities (PR). A specific combination of promotional methods used for one
product or a family of products is promotion mix. The main purpose of promotion is to warrant that
customers are cognizant of the existence and positioning of products. Promotion mix is one of the most
8 N. T. HASSEN ET AL.
powerful elements in the marketing mix. Promotion activity of a firm can create brand equity by
informing customers, and differentiating products from competition. It is marketing manager who decides
the level of marketing expenditure on promotion (Singh, 2012). Thus, the promotion mixes activity of a
firm during a given time period were measured by the level of its promotion mixes expenditure.
Promotion expenses range from giveaways, free samples, or other promotional gimmicks in order to help
boost sales and revenue. Promotion expense can promote firm value and create potential intangible
asset that may not be measurable by increasing future demand and brand loyalty.
3.1.3.2. Research and development activity (RD). Research & development activity of a firm represents the
activities companies undertake to innovate and introduce new products and services or to improve their
existing offerings and allows the company to stay ahead of its competition (Kang et al., 2017). Due to
increasing competition, firms should be innovative at an extraordinary pace. Innovativeness is one of the
vital gadgets of growth strategies and provides the company with a competitive edge (Gunday et al.,
2011). This requires the companies’ put forth large expenditures on RD. Thus, expenditures on RD help
companies maintain their competitive advantage and ensure their future viability. Hence, the innovative
effort of a firm is peroxide by its RD intensity of which can be measured by the firms’ RD expenditure
(Baumann & Kritikos, 2016). Thus, the study used RD expenditure to measure the firms’ RD activity during
a given time period.
where & 1 and & 1 are coefficients of the CS and CA capturing their effect on PR respectively. W and X
represent the control variable in the model. & 0 represent the constant term, the subscript i and t donate
the sampled companies as well as the year respectively. ε PRi ,t captures the error term of PR at firm i
and year t.
Cogent Business & Management 9
where Ω1 and Ω1 are coefficients of the CS and CA capturing their effect on RD respectively. W and X
represent the control variable in the model. α 0 represnt the constant term, the subscript i and t donate
the sampled companies as well as the year respectively. ε RDi ,t captures the error term of RD at firm i
and year t.
β 0 β1CSi ,t + β 2 CAi ,t − β3 CIi ,t − β 4 PIi ,t + β5 PRi ,t + β 6 RDi ,t + β7 CSi ,t *PRi ,t + β 8 CSi ,t *RDi ,t
EXPi =−
+ β 9 CAi ,t *PRi ,t + β10 CAi ,t *RDi ,t + W + X + ε EXPi ,t (5)
β i ,t‘s are public coefficients of the corresponding variables of firm i and year t. W and X represent the
control variable in the model. β 0 represent the constant term, the subscript i and t donate the sampled
companies as well as the year respectively. ε EXPi ,t captures the error term of EXP at firm i and year t.
study was 11 and the sample size was 161, this is well above the required size. This approach proposes
that the study be conducted in two stages to analyze and interpret PLS results (Chin et al., 2020): (1)
evaluation of the outer model (measurement model), and (2) estimation of the inner model (structural
model). Construct reliability and validity assessments were conducted before evaluating the inner model.
The detailed analysis and estimated results are presented in the following section.
Table 4. Discriminant validity – Fornell and Larcker Criteria, and Heterotrait-Monotrait (HT-MT).
CA CS EXP IC PI PR RD
CA 0.974 0.826 0.789 0.863 0.872 0.869 0.830
CS −0.787 0.980 0.764 0.708 0.794 0.823 0.739
EXP 0.723 −0.705 0.944 0.762 0.806 0.827 0.853
IC −0.840 0.694 −0.719 n.a 0.886 0.833 0.804
PI −0.847 0.778 −0.761 0.886 n.a 0.863 0.858
PR 0.830 −0.793 0.766 −0.820 −0.849 0.938 0.886
RD 0.788 −0.706 0.786 −0.785 −0.837 0.850 0.954
Note: Diagonal and italicized are the square roots of AVE. Below the diagonal elements are the correlations between the construct’s values.
Above the diagonal elements are the HTMT values. CS = capital structure, CA = availability of cash, IC = competition from the informal sectors
in home countries, PI = political instability in home countries, PR = promotion, RD = research & development, EXP = firm export performance,
n.a = not applicable.
variance inflation factors (VIFs) values of the constructs were used to assess whether multi-collinearity is
present or not (Ke & Zhang, 2010). The presence of a multi-collinearity can be an issue if VIFs are higher
than 10 (Mason & Perreault, 1991). More strictly, a VIF thresh-old of 3.3 is recommended by Cenfetelli
and Bassellier (2009), and 3 is recommended by Hair et al. (2021). In this study, the results show that VIF
values range between 2.630 and 7.372 (Table 5).
The three-stage method proposed by Camps et al. (2016) were followed to assess the structural
model. First, coefficient of determination (value R2) for latent variables was assessed which followed by
the assessment of the predictive power (Q2) of the model. Finally the assessment of significance of the
structural model path coefficients and effect size (bootstrapping) were done.
Cogent Business & Management 13
The study used a bootstrap method with 5000 samples, each of which contains the same number of
observations than the original sample to test the accuracy of structural paths in the model (Hair et al.,
2013). The study makes an estimate of causal relations between latent variables in the model, through
the sign and degree of path coefficients.
R2 simply represents how much change in the endogenous variable can be accounted by one or
more independent variable(s). It denotes the variance in each of the endogenous constructs which
measure the model’s explanatory power, and it can also be called as in-sample predictive power
(Sarstedt et al., 2014). Chin (1998) recommended R2 values for endogenous latent variables based on:
0.67 (substantial), 0.33 (moderate), 0.19 (weak). However, Hair et al. (2013) suggested in scholarly
research that focuses on marketing issues, R2 values of 0.75, 0.50 or 0.25 for endogenous latent vari-
ables, as a rough rule of thumb can be described as substantial, moderate or weak respectively. In the
current study, for all endogenous latent variables R2 statistics take values between .641 to .740 (Table
5) indicating that the recommended theoretical model provides a moderate explanation of the vari-
ance of dependent variables.
In PLS path model, when an independent variable is omitted from the model, it measures the differ-
ence in squared correlation values and establish whether the omitted variable has a robust effect on
the value of endogenous variable. Effect size (f2) refers to the change in R2 if a given exogenous vari-
ables is omitted from the model and used to better estimate the explanatory value of each exogenous
variable in the model. The impact of exogenous variable is high at the structural level if f square is 0.35;
it is medium if f square is 0.15 and small if f square is 0.02 (Cohen, 1988). Precisely, effect size assesses
the magnitude of relationship between the latent variables. The results (Table 5) revealed that f-square
effect size ranged from 0.000 (negligent) for CA on EXP to 0.110 for RD on EXP. The dominant effect
size of RD and the negligent effect size of CA on export performance draw our attention, eliciting
vitality of RD in the proposed model. However, the dominant effect size of CA on both PR and RD is
also very striking (Tale 5). Furthermore, using Q2 the study establishes the predictive relevance of
endogenous constructs. Q square value 0.02, 0.15, 0.35 refers weak, moderate, strong degree of predic-
tive relevance of each effect respectively (Hair et al., 2013). Using the PLSpredict procedure, it is
observed that in all case the Q2 value is considerably larger than 0.35 (Table 5) backing strong predic-
tive relevance of the model with regard to all endogenous variables.
Following the assessment of the general fit of the structural model, the next step was the assessment
of structural path for evaluation of path coefficients (relationship among the study constructs) and their
statistical significance.
Table 6 summarizes the results obtained for direct relationships in the structural model, including path coef-
ficients, t values, and the level of significance. H1 evaluates whether firm CS with high debt significantly and
negatively affects EXP. The results suggested that CS with high debt to have a negative and significant influ-
ence on EXP (B = −0.175, t = 3.416, p < 0.001). Hence, H1 is supported. H2 evaluates whether CA significantly and
positively affects EXP of a firm. As shown in Table 6, the CA is suggested to have no significant direct effect
on EXP (B = −0.026, t = 0.380, p = 0.352). This result suggests that H2 is not confirmed. H3 assesses whether CI in
home countries significantly and negatively affects EXP of formal firms. The results indicated that degree of CI
in home countries has no impact on formal firm export performance (B = −0.105, t = 1.277, p = 0.101). Hence,
hypothesis 3 is not supported. H4 evaluates whether PI in home countries significantly and negatively affects
14 N. T. HASSEN ET AL.
EXP of a firm. The results revealed that effect of PI in home countries is negatively related to export perfor-
mance (B = −0.127, t = 2.408, p = 0.008). Hence, this finding supports H4.
Furthermore, H5 evaluates whether firm CS with high debt financing significantly and negatively affects PR
activity of a firm. The results suggested that CS with high debt to have a negative and significant influence on
firm PR activity (B = −0.373, t = 4.441, p < 0.001). Hence, H5 is supported. Similarly, H6 evaluates whether firm CS
with high debt financing significantly and negatively affects RD activity of a firm. The finding of the study also
confirms that CS with high debt have significant influence on firm RD activity (B = −0.231, t = 3.038, p = 0.001).
Thus, H6 is supported. CA is suggested to have significant positive effect on PR activity (B = 0.415, t = 4.642,
p < 0.001). This result indicated that H7 is confirmed. Similarly, H8 evaluates whether CA significantly and posi-
tively affects RD activity of a firm. The results indicated that CA significantly and positively affects RD activity
of a firm (B = 0.476, t = 6.332, p < 0.001). This result suggests that H8 is confirmed.
Regarding H9, this hypothesis aims to investigate the impact of firm PR activity on EXP. The finding
of the study doesn’t support the presence of positive impact of firm PR activity on EXP (B = 0.086,
t = 1.015, p = 0.15). Hence, H9 is not supported. In addition, H10 assess how firm RD activity affect EXP
and it has been found that there is significant positive relationship between firm RD activity and EXP
(B = 0.444, t = 6.174, p < 0.001). Thus, H10 is supported.
Finally, though is not of interest to the study’s objectives, firm size and firm industry category were
included in the model as a control variable (Table 6) because it could influence the outcomes. The results
revealed that larger firm has more effect on both firm PR and RD activity compared to SMEs (B = 0.233,
t = 1.820, p < 0.034; B = 0.233, t = 1.929, p < 0.027) respectively. Regarding the effect of firm industry cate-
gory on firm PR and RD activity, the result confirms food & beverage industry has lesser impact on PR
and RD activity of a firm compared to leather, and textile & garment industry (B = −0.230, t = 2.589,
p = 0.005; B = −0.265, t = 2.733, p = 0.003) respectively.
Lower Upper
−0.309 6.553 0.000 −0.175 3.416 0.000 H11: CS -> PR −0.032 0.036 0.889 0.187 −0.098 0.019
-> EXP
H12: CS -> RD −0.102 0.039 2.633 0.004 −0.174 −0.047
-> EXP
Total effect (CA -> EXP) Direct effect (CA -> EXP) Indirect effect of CA on EXP
Coefficient T p Coefficient T p Hypothesis Coefficient SE T p Percentile bootstrap
value Value value Value value Value 95% confidence
interval
Lower Upper
0.222 3.214 0.001 −0.026 0.380 0.352 H13: CA -> PR 0.036 0.035 1.017 0.155 −0.023 0.092
-> EXP
H14: CA -> RD 0.211 0.052 4.062 0.000 0.138 0.306
-> EXP
CA on EXP through RD (B = 0.211, t = 4.062, p < 0.001). The total effect of CA on EXP was significant
(B = 0.222, t = 3.214, p = 0.001), with the inclusion of mediator the effect of CA on EXP was not significant
(B = −0.026, t = 0.380, p = 0.352). This shows a complementary full mediation role of RD in the relationship
between CA and EXP. Hence, H14 is supported.
mix strategy. A recent study argues that resources available for export activities affect export marketing
mix strategy and performance (Imiru, 2018). Maritan and Lee (2017) urge more research that examines
resource allocation as a central focus of study for achieving deeper and better understandings about firm
strategies. Although it has been well argued in the resource-performance relationship literature, most
previous studies have only focused on the direct effect of firms’ CS, and CA on EXP, neglecting the medi-
ating role of export marketing mix strategy. This gives incomplete view of EXP determinants while hin-
dering the conceptualization of EXP construct. Based on the theoretical foundation proposed by different
authors in recent literature on Strategic Management (Deutscher et al., 2016) and internationalization
(Hagen et al., 2017; Paul et al., 2017), this study also investigates the mediating role of PR and RD in the
link the between CS, CA, and EXP.
Interestingly, this study shows that firm PR activity has no vital role in mediating the link between CS,
CA and EXP in the short run. However, the study revealed that RD activity is a key factor in mediating
the link between CS, CA and EXP. Meanwhile, the study uncovered that RD activity fully mediate the
relationship between CA and EXP while partially mediate between CS and EXP. However, non-significant
relationship between PR and EXP is interesting as previous scholars find support for the positive relation-
ship between firm PR activity and its performance (Thabit & Raewf, 2018; Nath et al., 2010). While we
know that PR activity of firms generally affect EXP, there may be limit as to its instant and linear nature
of the PR-EXP relationship, especially in the short-term. Too great a focus on linear relationship between
PR and EXP could be misleading. Thus, an interesting avenue for future research would be to look at
non-linear relationship between the constructs specifically using panel data. Together, these findings
begin to shine a light as to how resources influence both marketing mix strategy and performance
amplifying the Maritan and Lee’s (2017) urge to examine resource allocation as a central focus of study
for achieving deeper and better understandings about firm strategies and performance.
may not be comprehensive enough to capture the entire domain of the concept. It is possible that
financial variables utilization is a multi-faceted construct, which deserves further scrutiny and develop-
ment, since this construct is an inevitable part of business operations. Third, subjective (perceived) mea-
sures of CS and CA were used because objective measures were difficult to obtain during the pretest
stage of this study. While subjective and objective measures have been found to be highly correlated
(e.g. Boso et al., 2013), future studies should attempt to include objective measures. Finally, future stud-
ies should incorporate the consequence of the interaction between CS and CA on EXP as these two
financial variables are highly correlated.
Acknowledgements
The authors would like to thank Arba Minch University for their support in conducting this study. We are also grate-
ful to the sample managers and employees, enumerators, Ethiopian Ministry of Industry, Ethiopian Enterprise
Development Institute key informants, and local administrators of the study area for their kindness and cooperation
during fieldwork.
Disclosure statement
No potential conflict of interest was reported by the author(s).
Mesfin Lema is an Ethiopian lecturer trained as Business Administrator (MBA) and Economist (MA) at The Free University
and University of Technology, Berlin, Germany, respectively and Ph.D. in Business Administration at Bulacan State
University, the Philippines. He is now working as Associate professor at International Leadership Institute, Ethiopia.
Gemechu Nemera is an Assistant Professor of Management at Arba Minch University. He studded MBA and Ph.D. in
Business Administration. He is now working as assistant professor at Arba Minch University, Ethiopia.
ORCID
Nesredin Temam Hassen http://orcid.org/0009-0009-7838-8942
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