AN ANALYSIS OF PRODUCT-MARKET STRATEGY
AND EXPORT PERFORMANCE:
EVIDENCE FROM SME’S IN SAUDI ARABIA
M. Sadiq Sohail, King Fahd University of Petroleum & Minerals Aref A. Alashban, King Fahd University of Petroleum & Minerals ABSTRACT
This paper examines the relationship between product and export market characteristics with export marketing strategies and performance of SME’s in Saudi Arabia. Based on an extensive review of literature, a model was developed for the study and hypotheses were formulated. Empirical research was used to test the hypotheses. Primary data were collected through a survey from a sample of 214 exporting SME’s in Saudi Arabia. Results based on the use of multiple regression procedures suggest that while product and export market characteristics have an impact on export marketing strategy of SME’s in Saudi Arabia. Limited sample size and the generalization of results for the entire Kingdom although the sample are quite limited are the limitations of this study. The findings of this study provides useful insights to SME’s involved in exporting activities in marketing strategy deployment. This study makes a valuable contribution given the fact that there is a dearth of empirical studies c of this nature focusing on Saudi Arabia. Keywords: export, marketing strategy, performance, SME, Saudi Arabia INTRODUCTION
Exporting is one of the most common entry modes to international markets. Consequently, exporting and export behaviour have been a primary area of interest in the international marketing field and the focus of extensive marketing literature (for example, Lado et al, 2004; Leonidou et al, 1998). Although past research has established the relationship between marketing strategy and performance in the domestic marketing context, empirical work in the context of export marketing has been scanty and fragmented (Zou and Cavusgil 2002). Leonidou et al (2002) observe that while this stream of research has identified marketing strategy elements that influence export performance, the findings reported in the literature are characterised by fragmentation and diversity, limiting theory development, as well as making improvements in management practice. Nevertheless, most of the studies on marketing strategy determinants of export performance have focused on developed or western country settings. For example, Katsikeas, et al (1996) use empirical research to find the determinants of export performance of exporters from Greece. Other International Journal of Entrepreneurship, Volume 13, Special Issue, 2009
studies in other western countries are numerous (for example, Chetty & Hamilton, 1993; Slater & Narver, 1993; Bodur, 1994; Couto, et al, 2006) with little empirical evidence obtained from Middle East. Within the Middle Eastern region, Saudi Arabia is a key member of the Gulf Cooperation Council (GCC), which is the most powerful trade group in the Middle East. In the trade arena, GCC's objective is to achieve free trade arrangements with the European and Asian nations besides unification of trade policies and importation systems.
That Saudi Arabia is world’s largest exporter of crude oil is well known. However, the Kingdom has been making concerted efforts at diversifying its export base. The non-oil exports amounted to $20 billion in 2007, up from $16 billion in 2006 and $12.8 billion the previous year. In the non-oil exports, sectors such as metal products, electrical goods, machinery and industrial equipment, construction materials, wood products, textiles and garments as well as food and beverages have been growing in importance. Accession to the World Trade Organization (WTO) has given the Kingdom's export efforts a huge boost to strengthen its position in the fast growing markets in the Middle East as well as in Asia. Membership of WTO has given a competitive advantage to exporting SMEs operating within the petrochemical industry, which enjoys several comparative advantages. Further,...
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