AN EXAMINATION OF EXPORT PERFORMANCE FOR SELECTED INNOVATING AND EXPORTING REGIONAL ... · 2014. 6....

AN EXAMINATION OF EXPORT PERFORMANCE FOR SELECTED INNOVATING AND

EXPORTING REGIONAL FIRMS OF NEW SOUTH WALES USING INNOVATION INDICATOR MATRICES WITHIN AN INPUT-OUTPUT FRAMEWORK

A report submitted to the Victorian State Government Parliamentary Committee of Enquiry into Regional Export Performance

From

FEDERATION UNIVERSITY – BALLARAT CAMPUS

FACULTY OF BUSINESS

by

PAUL JOHN MCPHEE

B.Ec (UNE), PGDipAppEc (University of Queensland)

M.Econ. (by Research, University of Queensland)

2014

ACKNOWLEDGEMENTS

Much of this work is derived from my Doctorate of Philosophy thesis. As such my sincerest thanks are extended

to Associate Professor Ann Hodgkinson and Associate Professor Nelson Perera for their supervision as principal

and associate supervisors respectively at the University of Wollongong. Special thanks also to Associate

Professor Guy West formerly of the Centre for Regional Analysis and Policy Modelling at the University of

Queensland for the use of the GRIMP Input-Output software.

Thanks also to the Australian Research Council, the New South Wales Department of State and Regional

Development and the Shoalhaven City Council for providing funding for the thesis and the much larger project to

which it was associated. A period of candidature at the University of Wollongong was funded by an Australian

Post Graduate Industry Award Scholarship associated with the larger project. Those personnel that I had some

discussions with regarding this research were Bob Jones and Peter Pond from the New South Wales Department

of State and Regional Development and Greg Pullen from the Shoalhaven City Council. So many thanks to all of

you.

Special thanks also to Professor Patricia Tiberi-Vipraio of the University of Udine in Italy, who is a long term

research colleague to Associate Professor Ann Hodgkinson. Together they initiated this project, and in

collaboration with the New South Wales Department of State and Regional Development they developed the

survey of small regional exporting firms known as the Survey of New South Wales Regional Exporters. This

survey provided what the thesis refers to as the TVH typology data, so thanks to all for the use of this data.

Thanks also to the administrative and academic staff at Federation University faculty of Business, Ballarat

campus where I now work.

EXECUTIVE SUMMARY

1. Introduction This report discusses the information sourcing behaviours for 146 innovating and exporting regional firms. Such behaviours are defined by the TVH innovation typology strategies hereafter referred to as strategies. Following a process of ranking and sorting to determine their importance for export performance, the strategies were categorised into the following five listings. (1) most supportive to export performance on the demand side; (2) most supportive to export performance on the supply side; (3) least supportive to export performance on the demand side; (4) least supportive to export performance on the supply side; (5) not-used by the exporting firms. Attachment E provides details of the ranking and sorting method including valuation of the export performance contribution, the TVH typology and the survey question that seeks data about export performance and related innovation activity according to the typology. All ranking and sorting details are shown on Table 1 with categorisation results shown on Table 1A which is provided within this executive summary. The final column in Table 1A shows whether the strategy adds to, deducts from, or has no affect on export performance. An analysis of these categories is discussed in Attachment ES, Section 3. Spatial (geographic) hypothesis tests found that these strategies had export effects that were not uniform or consistent across gepgraphical space and therefore their contribution to export performance varied at the network, region, sector and firm levels. An outline of this analysis is provided within sections 6 to 8 of this executive summary with a much broader description provided in Attachment A, Section 3. The important point here is that export performance is not necessarily dependent upon the economic qualities of its localtion or acativity proximity but the geographical spread of its knowledge and information supplying network. The TVH typology via the survey was able to identify geographical stimulats and constarints to obtaining the necessary information for regional exporting firms. The implications are that policy should be designed and implemented in a wasy that maximises the benefit of a stimulant whilst minimises the effect of a constraint without causing too much regional divergence in regional economic growth. Attachment E, section 9 recommends some policies that were simulated using the input-output software and found to acahieve exactly that. 2. Method, TVH typology and survey A modified input-output (IO) model containing information flows, and innovation-indicator matrices (IIMs) containing firm survey responses regarding TVH strategy usage; was used to calculate the innovation-information sourcing behaviour affects on export performance. The IO intermediate transaction quadrant was compliant with a basic National Accounts aggregated 35 sector model with the sectors listed in Appendix A. The information sourcing behaviours are obtained using the survey based TVH (Tiberi-Vipraio and Hodgkinson) typology. It measures both stimulants and constraints to export performance, and was developed by its namesakes following a full review of the export performance and performance measurement literature. The survey is referred to as the Survey of New South Wales Regional Exporters and its questions refer to specific innovation strategies. A copy of the survey form is provided at Appendix B. These survey responses were initially stored within an SPSS data base then mapped to specific information flow multipliers within the IIMs to measure their direct dollar-value contribution to export performance. Values are

derived for the individual firm, regional-sector aggregations, and for the demand and supply-networks in which the individual firms participate. The related documents include: Attachment A: Findings from the analysis; Attachment B: Information sector qualities; Attachment C: Theoretical foundations of innovation information transfer; Attachment D: TVH export performance typology – adavantages, origins and distinguishing features; Attachment E: Method and survey details. 3. Specific advantages of the modified input-output, TVH typology method Specific adavantages of the method are that it is the most comprehensive export innovation and export performance survey. The behaviour measured by the survey has a direct effect on export performance and the method measures a direct dollar value of this effect. Global influences are accounted for through the survey questionnaire and the export columns and inport rows within the input-output tables respectively. This is extremely emported given that the TVH typology identifies the interaction of globally sourced knowledge and information with regional context, that is, the cultural and scientific qualities of a region, in facilitating the flow of best practice information that helps develop export industries and export performance. Further details on this matter are provided in Attachment E. The method also accounted for the co-existence many export innovation and regional economic growth paths each being valid within their own regional context. The numerous survey questions provided with a suitable level of decomposition within the input-output framework allowed analysis to be of such details as to compare these phenomena. 4. General trends regarding innovation information flows Information flows to exports were found to be falling whilst those for domestically consumed goods was found to be increasing. This has caused export related employment to decrease more so than non-export related employment. Further analysis is provided in Attachment A, Section 1, and were sourced from McPhee (2010) PhD thesis sub-section 8.1.1. 5. Most-supportive, least-supportive and unused strategies - key points regarding export performance The first strategy set in Table 1A lists the most supportive demand-side strategies (behaviours) for export performance, and these strategies make the largest positive contribution to export performance and hence regional economic growth and development via the industry sectors that use them. These data emphasize the importance of supportive State and Australian Government attitudes; concentrating on developing ongoing relations with clients as well as developing production or manufacturing processes (as the main corporate or primary strategy). This emphasis on production processes is consistent with all four innovation strategy options and in order of support they are: (1) making existing product improvements, (2) making substantial production process changes, (3) making small continuous production process changes, and (4) making new product developments. Note that emphasis is first with making existing product improvements

rather than developing new products and that the most successful of export goods are those that are mass produced (as a production strategy) with such exporters perceiving themselves to be world product leaders. Even though these goods are mass produced the most supportive competitive advantage stems from providing clients with after sales service. Also from the demand-side strategies, the main (primary) reason for exporting was that the product was required overseas and that it was a higher quality product. The main ways that export success was achieved was by using overseas partnerships and overseas agencies. The more successful exporting firms obtained most of their information on the export process from the New South Wales Government and Austrade. The second strategy set in Table 1A lists the most supportive supply-side strategies. It shows the leading strategy was for this set was internally (from the company) sourcing information about new technologies, which seems rather unusual and unexpected considering that internet and e-mail facilities followed by trade and business magazines were used to source market development information from external networks. This latter source is consistent with using industry publications and newsletters for also sourcing market development information from external networks and complient with a priori expectations. These sources of information about market developments from external networks were followed closely by human contact in the form of attending capital city conferences and visits to and from external service providers. Also on the supply-side, it is interesting to note that most input and sales information was sourced from within the company followed by the capital city; and for transport related information, from the region. Information about new technologies was sourced mainly via market adaptations. Sourcing from overseas was noticeably absent from the most supportive supply-side strategies. The third strategy set in Table 1A lists the least-supportive demand-side strategies. It shows that the three least-supportive demand-side strategies were the perceived difficulties in expanding exports such as: trade protection overseas, the closely related unfair competition overseas, and exchange rate movements. This third least-supportive strategy would be effective when export prices rise with an increased value for the Australian dollar. In addition, it is surprising that technical innovation and concentrating on production process as competitive adavantages were in the least-supportive demand-side category considering that making small continuous production process changes was in the most-supportive demand-side category. The exporters within this category perceived themselves as mainly national product leaders in their product range which means that much of their production was for the domestic consumption market with smaller volumes being exported mainly to the Asia-pacific region rather than a whole world market. Many of the products exported by firms in this category contained some form of product diversification as indicated by flexible production A (FPA) and flexible production B (FPB) as production strategies and product differentiation as a competitive advantage. FPA uses small batch production runs to produce different varieties or versions of similar products that may be substitutes for each other. Alternatively, FPB produces a number of very different products. Firms exporting these goods cited new market opportunities, delivering a cheaper priced product and product design flexibility as their primary reasons for exporting with this latter reason being consistent and compatible with FPA and FPB as production strategies; and product differentiation as a competitive advantage. The exporters of these goods seemed not to perceive a supportive State Government attitude and supportive Australian Government attitude. The fourth strategy set in Table 1A lists the least supportive supply-side strategies. Within this category overseas sourcing was a main contributor; particularly for information regarding ancillary production, quality control methods, and other inputs. This is surprising considering the theoretical expectation that global sourcing contributed to world best practice being absorbed into export product and production process development via initial absorption into regional context. In addition, this finding is consistent with results of two types of hypothesis tests referred to in Attachment 1 section 1.3 as the Independent Group t-tests and Mann-Whitney U tests; as these tests found that there was no statistical significant difference in the mean export values for those firms that source information from overseas and those firms that do not. However, the percentages calculated from the IIMs for the strongest firm, group, region and sector, suggest a high level of information sourcing from overseas and this is discussed in PhD subsection 8.6.3.

Other least supportive supply-side strategies included sourcing: (1) transport related information from the capital city and the company; (2) quality control information and information on outsourcing main production from the company; (3) transport, capital equipment and other input information from elsewhere Australia. In addition to these were: (4) market development information from local network meetings which seems somewhat inconsistent with visits to and from external service providers as one of the most supportive supply-side strategies; and (5) market development information within external networks from other equipment suppliers compared to the internet, e-mail, trade and business magazines, industry publications and newsletters as with the most-supportive supply-side strategies. The fifth strategy set in Table 1A is the unused strategies. As they are unused they are considered irrelevant to the successful development of exporting and hence the design of supporting policies based on the TVH typology. 6. Network performance The geographic (spatial) analysis in Attachment A Section 3 identified that the 146 surveyed firms participated in eight (8) demand-side networks identified as D1 (the most supportive) to D8 (the least supportive); and fourteen (14) supply-side networks which were identified as S1 (the most-supportive) to S14 (the least supportive). The firm-sector flows for each network demonstrated the same or very similar multiplier responses to increases in innovation information. The firm sector-flows participating in each network and their multiplier responses are discussed in McPhee (2010) PhD section 8.2 and detailed in Appendix 7.2. 7. Geographic (spatial) variations in information sourcing The one-way analysis of variance and Chi-Squared tests of Independence determined that the network which spanned across the regions, rather than the regions were more important for information sourcing. Both sets of hypothesis tests are referred to in Attachment A section 3, and detailed in PhD thesis sub-sections 8.4.1 and 8.4.2 and Appendix 7.3, and summarised in PhD Tables 8.5 (a) and (b). The various one-way analysis of variance (ANOVA) tests showed that there were statistically significant variations in information sourcing for various strategies. This meant that the network as a source of information was more important than the region in which the form was located. The tests also showed that information and inputs took time to be absorbed into location specific production processes and production and innovation outputs rather than information inputs were regionally significant. In addition, various Chi-Squared tests of Independence found that the: Existence of the demand and supply networks was not dependent on member firms using exactly the same

TVH strategies;

Firms’choice of a region as an information source was not dependent on TVH strategy choice;

Supply-side networks were independent of using local and external networks to source information at both the region and sector level;

Supply-side networks, regions and sectors were also independent of all production inputs and therefore supply-side TVH strategies.

This meant that networks were transferring innovation information rather than sharing similar innovation behaviours.

Furthermore, the results of Independent group t-tests and Mann-Whitney U-tests suggest that there was no difference in the export performance of firms that sourced information from overseas compared to thoses that did not. This defied the theoretical expectation that overseas sourcing brought intternationa best practice into regional context. 8. Firm sourcing profiles In summary, firm sourcing profiles showed significant differences in TVH strategy use, effect and relevance for firms that sourced from the different proximities. That is internally (i.e from the company), from the capital city, region, and elsewhere Australia. Firm sourcing profiles were derived from further Chi-Squared tests of Independence and these are described in Attachment A section 4 and are also detailed in McPhee (2010) PhD thesis sub-section 8.4.3. It is suggested that capital city sourcing firms may draw on older information that had previously been sourced from elsewhere Australia and adapted to new applications. For firms that preferred to source information from overseas there were no specific dependencies or relationships identified. Several strategies were found to be common to all sourcing proximities and these were:

Changing production processes whilst sourcing capital equipment from elsewhere Australia (not regional or

globally significant);

Comparative advantage determination whilst sourcing quality control from company or region;

Determining comparative advantages whilst sourcing capital equipment from mainly capital city or company;

Outsource main production to the capital city, elsewhere Australia and overseas (mainly demand-side network firms);

Sales and client servicing sourced from capital city and region (mainly demand-side network firms);

Transport services and equipment sourced from elsewhere Australia and overseas (mainly supply-side network firms).

9. Network sourcing profiles In summary, there was considerable variation in strategy use by firms within both demand-side and supply-side network and discernable patterns seemed non-existent although some common usages were identified. Network sourcing profiles were derived from further Chi-Squared tests of Independence and these are described in Attachment A section 5 and also detailed in McPhee (2010) PhD thesis sub-section 8.4.4. Network strategies that were significant at the region, sector and firm level were identified in the Table 1 illustrated analysis. Some unexpected network sourcing profile findings were: D1 participants received advice on the export process solely from attending seminars despite their use of

overseas agency and overseas partnership arrangements to establish as a main exporting sales strategy;

D1 participants in the Central West’s basic metals and metal products, and beverages and tobacco sectors used

strategies that were more product and process focused than the Murrumbidgee’s agricultural sector;

D4 participants showed no discernable pattern to their strategy usage;

D5 participants shared several common strategies such as: product differentiation asa competitive adavantage, world product leadership, developing new products as an innovation strategy and these product and process focussed strategies caused export-induced regional economic growth;

D6 participants all shared developing new products as their sole innovation strategy, and technical innovations

asa a competitive adavantage with the exception of the Far North Coast’s meat and dairy products sector. Hence the importance of developing new products that were technically innovative, being focussed on client needs and altering production processes were the prime growth drivers;

D7 strategy usages were too numerous and random to identify a discernable pattern;

Absent from all supply networks were:

- quality control from the company,

- ancillary production from the company,

- quality control from the region,

- quality control from the capital city,

- ancillary production from the capital city,

- sales and marketing from elsewhere Australia,

- ancillary production from elsewhere Australia,

- quality control from overseas, and

- ancillary production from overseas.

Supply-network information provision was significantly varied: - S2 from the company; - S7 capital equipment information from elsewhere Australia; - S12 from the company, region and capital city; - S14 Western region’s wholesale trade sector all inputs and information sourced from the region

Information about new technologies was varied and provided from: - the company (internally) and then from the market for S2, S4, S7, S8 and S11

- the company, research institutions and universities for S12

Information abaout market developments within local networks was provided from: - local service provider for S4;

- local industry and commerce meetings for S7;

- local industrial development officers for S12.

Information about market developments within external networks was provided from:

- Industry publications and newsletters, internet and e-mail, travel to / from / with agents clinets and

partners, trade and business magazines, equipment and other suppliers for S4;

- Entrepreneurial visits to and from service providers, travel to / from / with agaents clients and partners and capital city conferences for S7;

General information was provided from: - Industry publications and newsletters, travel to / from / with agents clinets and partners, for S11 and S12;

- Solely travel to / from / with agaents clients and partners for S13 and S14;

10. Policy simulations Several policy scenarios were designed and simulated using the input-output software. The objective of these simulations was to find a policy that maximised export performance and associated export employment via its information multiplier, without causing divergence in regional economic growth paths.In analysing the results of these simulations. The chosen policy scenarios were a demand-side and supply-side increase in scientific knowledge referred to as D3 and S3 respectively. These policies were found to generate the largest value export and associated employment multipliers without generating diveregence in regional economic growth. This emphasisizes the need to have a policy that promotes the development of scientific and technical knowledge and facilitates its direct absorption or utilization in the development of export manufactured products and developments of associated manaufacturing processes. 11. Conclusion and recommendations The performed analysis makes unique and significant contributions. Specifically, it is the first attempt to analyse innovation spillover behaviour using the TVH typology variables within an input-output framework. This analysis provided a more specific spatial perspective on these impacts regarding the stimulants and constraints to information flows. Such specific identifications can then be used for a more direct design and application of export development policies intended to benefit economic growth, and recognition of these spatial qualities would help ensure that developed policies promote export driven economic growth across geographical space with minimum divergence. That is, structural and spatial stimulants can be better utilized whilst the effects of spatial impediments to spillover flows can be minimized. In the course of this work the TVH strategy combinations that maximized spillovers were identified for the various spatial units these being the innovation group, the sector, region and finally the firm. The method was able to place a monetary value on these spillovers although with some reservations that are discussed further on. The first was to determine whether innovation spillovers flows were increasing or decreasing over the study period from 1996/97 to 200-0 using two sets of input-output tables, and whether exports or goods produced for

domestic consumption were the beneficiaries. Using linkage and multiplier analysis in subsection 8.1.1, the input-output system successfully identified that information sourcing and applications were increasing. However, further analysis in section 8.1.1 and at the regional and sector level in section 8.1.2 found that the export share was decreasing while the share for domestic consumption goods was increasing. The results of this analysis satisfactorily demonstrated that information spillover flows to exports had fallen from 1996/97 to 2000/01, and that the information sourcing and application sector-flows had varied across the years. Regional and sector distributions of these changes were also satisfactorily determined and discussed in section 8.1.2. The input-output method makes a satisfactory contribution for this type of analysis. In addition, the input-output method provides a way of illustrating information flows stemming from an information sector. It also provides a satisfactory way by which the business strategy information flows can be calculated and this is performed by proportioning a sector’s information spillover across its strategic usages. Input-output whilst adequately transmitting a demand or supply shock through the correct channels of causation and expenditure may experience some minor lags before a full impact is felt and is able to be identified. More comprehensive studies require a time series of input-output data tables, with each table being regular snapshot over a longer time frame. This point is developed further in the section on further research within the concluding chapter. The method also allowed the identification of demand and supply networks in which the surveyed firms operated. In concluding, the input-output method provides a satisfactory method for identifying and comparing strategy usage and information sourcing behaviour across regions, component sectors and component firms. It also links the theoretical concepts of regional context with global markets and intermediate inputs. It ort ptoduction process development.

11

Table 1A – Importance of TVH Behaviours for Export Performance Most supportive demand-side strategies (behaviours): Rank Contribution 5.2 New South Wales Government Attitude Supportive 15 Positive 2.5 Innovation, Research and development Existing product improvements 15 Positive 2.5 Innovation, Research and development Making substantial production process changes 15 Positive 2.2 Competitive advantage Providing after sales service 14 Positive 3.6 Exporting (overseas sales) strategy Using overseas partnerships 14 Positive 1.5 Perceived product leadership position World product leader 13 Positive 2.5 Innovation, Research and development Making small continuous production process changes 13 Positive 3.6 Exporting (overseas sales) strategy Using overseas agency arrangements 13 Positive 2.3 Production strategy Mass production 12 Positive 2.5 Innovation, Research and development New product development 12 Positive 3.4 Primary exporting reason Product required overseas 12 Positive 5.1 Australian Government attitude Supportive 12 Positive 3.4 Primary exporting reason Delivering a higher quality product 11 Positive 5.5 Supplier of advice on the export process New South Wales Government 10 Positive 5.5 Supplier of advice on the export process Austrade 9 Positive 2.1 Corporate (primary) strategy Combined client and production process focus 9 Positive Most supportive supply-side strategies (behaviours): 4.6 Sourcing information about new technologies Self-sourced and provided 17 Positive 4.9Sourcing information about market developments (external networks) Using internet and e-mail facilities 16 Positive 4.9 Sourcing information about market developments (external networks) Using trade and business magazines 16 Positive 4.4 Sourcing information related to inputs Inputs from the company 14 Positive 4.4 Sourcing information related to inputs Inputs from the capital city 14 Positive 4.9 Sourcing information about market developments (external networks) From capital city conference meetings 13 Positive 4.9 Sourcing information about market developments (local networks) Visits to and from external service providers 12 Positive 4.9 Sourcing information about market developments (external networks) From industry publications and newsletters 12 Positive 4.4 Sourcing information related to inputs Sales information from the company 11 Positive 4.6 Sourcing information about new technologies Market adaptations 11 Positive 4.4 Sourcing information related to inputs Transport related information from the region 10 Positive Least supportive demand-side strategies: 3.5 Difficulties expanding exports Trade protection overseas 12 Negative 3.5 Difficulties expanding exports Unfair competition overseas 11 Negative 3.5 Difficulties expanding exports Exchange rate movements 10 Negative 2.2 Competitive advantage Technical innovation 2 Positive 3.4 Primary exporting reason New market opportunities 2 Positive 5.1 Australian Government attitude Don’t know 2 Positive 2.3 Production strategy Flexible production A 3 Positive 1.5 Perceived leadership position Asia-pacific product leader 3 Positive 3.4 Primary exporting reason Product design flexibility 3 Positive 3.4 Primary exporting reason Delivering a cheaper priced product 3 Positive 2.1 Corporate strategy Being client focessed 4 Positive 1.5 Perceived leadership position National product leadership 4 Positive 2.2 Competitive advantage Production process 5 Positive 5.1 Australian Government attitude Indifferent 5 Positive 5.2 New South Wales Government attitude Indifferent 5 Positive 2.2 Competitive advantage Market development 6 Positive 2.3 Production strategy Flexible production B 7 Positive 2.2 Competitive advantage Product differentiation 9 Positive Least supportive supply-side strategies: 4.4 Sourcing information related to inputs Transport information from the capital city 9 Positive 4.4 Sourcing information related to inputs Transport information from the company 6 Positive Most supportive demand-side strategies (behaviours): Rank Contribution 4.4 Sourcing information related to inputs Quality control information from the company 6 Positive 4.4 Sourcing information related to inputs Ancillary production information from overseas 6 Positive 4.4 Sourcing information related to inputs Information on outsourcing main production from the company 8 Positive 4.4 Sourcing information related to inputs Input information from elsewhere Australia 10 Positive 4.4 Sourcing information related to inputs Input information from overseas 10 Positive 4.9 Sourcing information about market developments (local networks) Other network meetings 10 Positive 4.9 Sourcing information about market developments (external networks) Other equipment suppliers 10 Positive

12

Table 1A – Importance of TVH Behaviours for Export Performance (Cont.) Unused by Leading, Network, Region, Sector or Firm: 2.1 Corporsate (primary) strategy Production process No affect 2.2 Competitive advantage Other No affect 3.4 Primaryexporting reason Providing better quality service No affect 3.4 Primaryexporting reason Other No affect 3.4 Primaryexporting reason Followed other examples No affect 3.4 Primaryexporting reason Partners exporting No affect 3.6 Exporting (overseas sales) strategies Investments in new overseas facilities No affect 3.6 Exporting (overseas sales) strategies Internet commerce sales No affect 3.5 Difficulties in expanding exports Adaption from the market No affect 3.5 Difficulties in expanding exports Overseas costs of patents and innovation products No affect 3.5 Difficulties in expanding exports Overseas partnership problems No affect 5.1 Australian Government attitude Restrictive No affect 5.3 Local Government policies Don’t know No affect

Source: Input-output analysis

13

TABLE OF ATTACHMENTS, DATA-TABLES, DIAGRAMS AND APPENDICES

Page:

ATTACHMENT A: FINDINGS…………………………………………………………………………..................... 14

A1: General trands regarding innovation information flows……………………………………... 14

A2: Eight demand-side and fourteed supply-side networks were identified…………….............. 14

A3: Geographic (spatial) variations in information sourcing…………………………………….. 14

A4: Firm sourcing profiles……………………………………………………………….................. 16

A5: Network sourcing profiles…………………………………………………………..................... 17

A6: Policy simulation results………………………………………………………………………… 19

ATTACHMENT B: INFORMATION SECTOR QUALITIES……………………………………………………... 21

ATTACHMENT C: THEORETICAL FOUNDATIONS OF INNOVATION INFORMATION TRASFER……. 23

C1: Non-geographic theories……………………………………………………………………….... 23

C2: Geographic theories……………………………………………………………………………... 23

ATTACHMENT D: TVH EXPORT PERFORMANCE TYPOLOGY: ADVANTAGES, ORIGINS AND DISTINGUISHING FEATURES……………………………………………………………….

25

ATTACHMENT E: METHOD AND SURVEY DETAILS………………………………………………………….. 27

E1: Innovation indicator matrices (IIMs)…………………………………………………………... 27

E2: Intermediate transaction quadrant contents…………………………………………………... 27

E3: Survey of New South Wales Regional Exporters……………………………………………… 27

E4: TVH typology……………………………………………………………………………………. 28

E5: Ranking of TVH strategies……………………………………………………………………… 28

E6: Choice of surveyed regions and firms………………………………………………………….. 28

E7: Method justification……………………………………………………………………………... 29

E8: Other contributions and advantages…………………………………………………………… 29

E9: Policy simulations………………………………………………………………………………... 30

TABLE 1S: Ranking and sorting of TVH strategy information multipliers………………………………. 31

TABLE 2: Policy simulation details………………………………………………………………………… 35

TABLE 3: Classification of Major Factors Determining Export Performance………………………….. 37

DIAGRAM 1: The modified input-output framework………………………………………………………… 41

APPENDIX A: List of input-output sectors……………………………………………………………………... 41

APPENDIX B: Survey of New South Wales Regional Exporters……………………………………………… 42

14

ATTACHMENT A: FINDINGS

1. General trends regarding innovation information flows: (Refer PhD thesis sub-section 8.1.1 and Table 8.1)

Information flows to exports are falling whilst those to the production of goods produced for domestic consumption are

increasing as indicated by: - Decreasing backward input-output linkages and spread effects for exports.

Decline in information supply to exporting industries and information demand by exporting industries:

- Input-output forward linkage and spread effects falling by 99.6934 and 31.3467 per cent in columns 23 and 24 of Table 8.1 respectively;

- Decreasing demand flows to exports with backward linkages and spread effects falling by 54.1997 amd 18.3943 percent in columns 29 and 30 of Table 8.1 respectively;

- Despite increases for total sales as indicated by total sales backward linkage decrease and backward spread increase of 21.7380 and 39.4448 percent as shown in columns 21 and 22 of Table 8.1 respectively;

- Innovative milieu contributions: - To total sales broadened its sorces as demonstrated by its backward linkage decrease and backward spread

increase of 19.8321and 38.4627 per cent as shown in Table 8.1 column 21 and 22 respectively; - To exports broadened its sources as demonstrated by its backward linkage decrease and backward spread

increase of 31.0592and 19.0716 per cent as shown in Table 8.1 column 29 and 30 respectively;

Associated export employment has fallen: - Due to declines in primary information of 60.2630 per cent (Table 8.1 column 32);

- Due to declines in secondary information of 99.8828 per cent (Table 8.1 column 31)

Associated data is provided in McPhee PhD thesis Section 8.1.1 and associated Table 8.1.

2. Eight (8) demand-side and forteen (14) supply-side networks were identified:

(Refer PhD thesis section 8.2) Firms within each network demonstrated very similar, if not the same multiplier responses to an increase in innovation

information;

Details of firm-sector flow participation and multiplier responses is provided in Appendix 7.2.

No network completely satisfied the input-output innovation criteria;

Geographic (spatial) variations in sourcing behaviour needed to be identified. 3. Geographic (spatial) variations in information sourcing: (Refer PhD thesis sub-sections 8.4.1 to 8.4.2 and Appendix 7.3 and summarised in Tables 8.5 (a) and (b)) One-way analysis of variance (ANOVA) found:

- Significant variations in the geographic level of significance for all:

(1) TVH demand-side raw responses as a complete set;

15

(2) TVH supply-side raw responses as a complete set;

(3) Response sets for each question group (defined by Tables 1 and 1A);

(4) TVH variable complete export multipliers;

(5) TVH variable export multiplier information component (spillover);

- Means that: (1) Full multiplier effects were split within and across regions meaning that a spillover may be effective in one

locality and not elsewhere;

(2) There were stronger associations between such strategy sets and within TVH question groups at the network level (across the regions) rather than within the regions;

(3) Therefore, little regional significance was identified within strategy sets and therefore a spatial unit much larger than the region such as the network was responsible for spillover and input supply in response to demand.

- Main explanation:

(1) Spillovers and inputs were take time to be absorbed into location specific production processes;

(2) Production and innovation outputs rather than the input and spillover sourcing was regionally significant.

Chi-Square tests of Independence found:

- Existence of the demand and supply networks was not dependent on member firms using exactly the same TVH strategies;

- Firms’ choices of a region as a spillover source was not dependent on TVH strategy choice;

- Firms’ choices of export sector was not dependent on TVH strategies choice;

- Supply-side networks were independent of using local and external networks to source information at both the region and sector level;

- Supply-side networks, regions and sectors were also found independent of all production inputs and therefore supply-side TVH strategies.

Independent Group t-tests found: - No difference in mean (average) value of overseas and domestically sourced innovation information

Mann-Whitney U-tests:

- Confirmed Independent Group t-tests results.

Overal conclusion from the above listed hypothesis test results for supply and demand networks and participating firms were that: - All networks were transfering innovation information rather than sharing similar innovation behaviours;

- For these networks, there was no statistically significant variation in export performance between domestic and

overseas information sourcing firms.

4. Firm Sourcing Profiles:

16

(Refer PhD thesis sub-sections 8.4.3, derived from Chi-Squared test of Independence, refer PhD Appendix 7.3)

Company (internal) sourcing firms: - Outsourced elements of their main production to other branches of the company;

- Their perceived ledership positions was highly dependent on capacity to internally source their anacillary

production; Capital city sourcing firms:

- Then sourced from elsewhere Australia, then overseas;

- Made changes to production processesConfirmed Independent Group t-tests results.

Regional sourcing firms:

- Developed their comparative adavantages;

- Favoured new product development;

- Sector of activity did influence their strategy choice;

- Their information may first come then become regionally embedded and make a significant contribution to regional context;

Elsewhere Australia sourcing firms;

- Simultaneously changing their production processes and determining their strategic orientation; - Sector of acativity was strongly influenced by strategy choices and perceived leadership position; - Neither completely embedded or dissociated from their region or information source.

Overseas sourcing firms;

- No specific dependancies or relationships identified.

Common to all sourcing proximities were: - Changing production processes whilst sourcing capital equipment from elsewhere Australia (not regional or

globally significant);

- Comparative advantage determination whilst sourcing quality control from company or region;

- Determining comparative advantages whilst sourcing capital equipment from mainly capital city or company;

- Outsource main production to the capital city, elsewhere Australia and overseas (mainly demand-side network firms);

- Sales and client servicing sourced from capital city and region (mainly demand-side network firms);

- Transport services and equipment sourced from elsewhere Australia and overseas (mainly supply-side network firms).

5. Network Sourcing Profiles:

17

(Refer PhD thesis sub-sections 8.4.4, derived from Chi-Squared test of Independence, refer PhD Appendix 7.3) For D1 network strategy usage:

- Overseas partnerships and overseas agency arrangements for all firms;

- Attending seminars as their sole source of advice on the export process for all firms;

- Strategy usage differed with:

- Basic metals and metal products (Central West), Beverages and tobacco (Central West), Agriculture (Murrumbidgee);

- Central West sectors concentrated on:

- New product developments;

- Existing product improvements;

- Technical innovation;

- Flexible specialization A;

- Customization of products (some);

- Product design flexibility and product uniqueness – important reasons for exporting;

- Central West growth was more product and process innovation driven with seminars as the main information source.

For D2 network strategy usage:

- Far North Coast’s, other food sector used 33 strategies, whereas the Murrumbidgee’s basic metals and metal products used only world product leadership and other leadership


- Far North Coast’s, other food sector indicated a nil strategy use;

- Far North Coast’s, clothing and footwear used several such as:

- developing a higher quality product (main exporting reason);

- developing a unique product (main exporting reason).


- Extremely randon strategy use with no discernible patterns across the flows;


- strategies used by all firms were:

- Product differentiation (as a competitive advantage);

- World product leadership (perceived leadership position);

- Developing new products (as an innovation strategy);

- Technical changes in product and production process were unused for Northern region’s, wood and wood products);

For D6 network strategy usage (shared by all firms):

- Developing new products (as sole innovation strategy);

- Combined client, production focus (as a primary strategy);

- Technical innovation and altering production processes (as a competitive advantage):

18

- Except for Far North Coast’s meat and dairy products sector.

For D7 network strategy usage (shared by all firms): - Completely randon with no discernible pattern identified;

- Most strategies used by Wingecarribee’s beverages and tobacco sector;

For D8 network strategy usage (shared by all firms):

- All based on the Shoalhaven’s finance and insurance sector which indicated nil usages;

- Remaining 13 participantsall used:

- Existing product improvements (sole innovation choice)

All supply-firms except S9 and S10 used (shared by all firms):

- Quality control from the company;

- Ancillary production from the company;

- Quality control from the region;

- Quality control from the capital city;

- Ancillary production from the capaital city;

- Sales and marketing from elsewhere Australia;

- Quality control from elsewhere Australia;

- Ancillary production from elsewhere Australia.

- Quality control from overseas;

- Ancillary production from overseas;

Intermediate supply-sourcing variations were:

- S2 firms mainly from the company;

- S7 firms naibly from capital city then elsewhere Australia;

- S9 firms indicated nil information sourcing;

- S10 firms indicated nil information sourcing;

- S11 firms sourced from:

- Industry publications and newsletters from elsewhere Australia;

- Travel to / from / with clients, agents or partners from elsewhere Australia.

- S12 firms sourced mainly from:

- Industry publications and newsletters from the company, region then capital city;

- Travel to / from / with clients, agents or partners from the company, region then capital city.

- S13 firms sorced mainly from travel to / from / with agents, clients and partners;

- S14 firms sorced mainly from travel to / from / with agents, clients and partners;

- S14 firms in the Western region’s wholesale trade sector sourced all inputs, input services and related information from the region;

- For information abaout new technologies (survey question 9.4):

19

- S2, S4, S7, S8 and S11 firms all sourced from the company and from the market;

- Whereas S12 firms sourced from the company, research institutions and universities;

- For information about market developments from local networks:

- S4 firms sourced from local service providers;

- S7 firms sourced from local industry and commerce meetings;

- S12 firms sourced from local industrial development officers.

- For information about market developments from external networks:


- Industry publications and newsletters;

- Internet and e-mail facilities;

- Travel to / from / clients, agents or partners;

- Travel to / from clients, agaents or partners;

- Trade and business magazines;

- Equipment and other suppliers;


- Visits to and from service providers; - Travel to and from clients, agents and partners; - Capital city conferences.

- S12 firms sourced from local industryial development officers.

6. Policy simulation results:

A comprehensive description of this work is provided in:

- McPhee (2010) PhD thesis chapter 9, and

- McPhee (2012) Export driven regional development: A comparison of policies based on Tiberi-Vipraio-Hodgkinson innovation strategies and networked information flows, Australlasian Journal of Regional Studies, 18(1)

Several policy simulation were performed with the input-output framework in attempt to:

- Maximise the export related multiplier and associated employment multiplier;

- Without causing further regional / locational economic growth divergence.

They were applied to the network in which the firm participated:

- As a firm’s export performance was found dependent on the workings of their demand and supplynetworks, and

- their networks extended far beyond the region of a firm’s location or economic activity, and - their networks contained a spatial distribution of stimulants and constraints as measured by the geographical

distribution of the TVH strategy activity and subsequent multiplier effects.

20

Table 2 provides policy simulation details:

- Maximise the export related multiplier and associated employment multiplier.

D3 (demand-side) and S11 (supply-side) both of the innovative milieu group (see Table 2) achieved the best outcomes: - increased the flow of scientific knowledge and technical information to innovating exporting firms;

- achieved the highest value export and associated employment multiplier outcomes;

Best policy outcomes of D3 and S11 strongly suggest that:

- successful export performance requires access to scientific and technical knowledge flows;

- this needs to be encouraged (and cultivated) by governments and research institutions.

21

ATTACHMENT B: INFORMATION SECTOR QUALITIES The information sector has been defined as:

- “A measure of all knowledge collection, transmission, processing, storage, retrieval and analysis activities”, (Neuberger (1966);

- “Data imbued with purpose”, Mackay (1969); - “A reduction in uncertainty”, (Arrow, 1979); - “The value of all the tasks related to the managing, organizing, coordinating and developing of projects”,

Jonscher (1983);

The OECD (1981) proposed intermediate input-output sector-flows be decomposed into categories such as:

- Knowledge production;

- Inventive industries;

- Information in markets;

- Information infrastructure;

- Information commodities be identified and their contribution to each sector’s output be estimated.

Information sector now represented as: - Sector 51 within the US system of national Accounts (US Census Bureau 2010);

- Based on North American Industry Classification System (NAICS);

- Has a primary and secondary component.

- Results in innovative milieu.

Primary information sector: - Traded information [Karunaratne (1988, ch5 of Jussawalla)];

- Information goods, commodities and services that are produced, exchanged or sold by firms to each other within a

traditional market system, and therefore,

- Provides all informational inputs into all other economic production.

Secondary information sector: - Non-traded in-firm communiucations [Karunaratne (1988, ch5 of Jussawalla)];

- All internal planning, coordinating, managerial and organizational functions of public and private bureaucracies,

and therefore,

- Not reflected within National Accounting identities.

22

Innovative Milieu (GREMI, 1994):

- flow of scientific and industrial knowledge;

- deliberately and collectively by entrepreneurs, directed towards scientific development and manufacturing processes;

- has regional specific qualities.

NAICS information sector:

- developed from 34 industries that involved production, transportation, transference, sitribution of knowledge and

cultural products;

- provided a transmission or distribution method for these products, as well as

- communicating and processing data (US Census Bureau, 2002);

- included traditional print, software, internet publishing of newspapers, books and periodicals; motion picture, sound recording, other broadcasting industries, exclusive internet; internet service providers, web search portals, telecommunications; and other service industries (US Census Bureua, 2002; Kelton, Pasquale and Rebelein, 2008).

- Most of these were previously classified elsewhere.

Information sector components distinguished from their physical goods and services counterparts by: - absence of tangible qualities;

- deliverable in many forms not requiring direct supplier-consumer contact

Important Note: Further details regarding information transference are provided in McPhee (PhD thesis, ch 1, 2010).

23

ATTACHMENT C: THEORETICAL FOUNDATIONS OF INNOVATION INFORMATION TRANSFER

The following points provide a summary-outline of the main theories regarding innovation information transfer and are relevant to export performance. The theories are grouped as non-gepgraphic and geographic with the later group relating more to locallized economic behaviour. For the interested reader, a more comprehensive review of the literature is provided in McPhee (2010) doctoral thesis chapter2.

1. Non-geographic theories

Technology push theories of the 1950s (non-geographic from neoclassical school)

- Assumed perfect knowledge and emphasized market transactions rather than spatial proximity;

- Assumed that production and marketing of new technology followed a well defined time sequence, which began with basic and applied research, included a product development phase which led to production and possibly commercialisation of the product.

Need pull linear models of the 1960s (non-geographic from neoclassical school)

- Assumed perfect knowledge and emphasized market transactions rather than spatial proximity;

- Emphasized demand and markets as the source of research ideas and development acativities Schumpeter I – non-geographic (1939)

- Attempted to explain the small to medium sized enterprise (SME) influence on innovation behaviour and

endogenous research within the business cycle time frame.

Schumpeter II – non-geographic (1942)

- Emphasized endogenous research but placed more emphasis on the market influence of large olipopolies;

- Relaxed the ne-classical assumptions of perfect knowledge in recognition of innovation uncertainty attributable to market behaviours (Simmie, 1997);

- Continuing investment and development in new ideas produces a stream of innovations and their commercial successes further stimulates research and capital investment (Freeman et al., 1982)

2. Geographic theories Industrial Clusters:

- Emphasises the importance of technological spillovers (information flows) and different forms of learning that

arise from cluster network membership; (Cooke and Morgan, 1998; Capello and Faggian, 2005; Steiner and Hartmann, 2006);

- Clusters coordinate information sharing and provide a framework for conversion to useable knowledge (Steiner and Ploder, 2008);

- Firms have strong vertical input-output and subcontracting relations with suppliers (Piore and Sabel);

24

- Associated with with Product Life-Cycle theory (Hoover and Vernon, 1959): - Upswings in business cycles increase local firm interactions and create new input combinations (Simmie,

1997)

- Associated with Flexible Specialization thesis (Piore and Sabel, 1984): - Emphasized increased production of differentiated products by highly specialised production units within a

more flexible production regime. Industrial districts:

- Indormation transfer is a result of quantitative growth in factor endownments and qualitative eveolution of a given territorial context which provides a further productive ‘asset’ (Brusco, 1982; Dei Ottati, 1995); Granovetter et al., 1985);

- Several versions of the theory have evolved (see McPhee, PhD thesis ch2, 2010). Innovative milieu (GREMI, 1994):

- Milieu network facilitates cooperative learning and transfers information regarding new product and production processe designs within the scientific and industrial community;

- Cooperative process is facilitated by: increased employee mobility, stronger relationships between regional suppliers and purchases;

- Face-to-face contact is stimulated by spatial proximity;

- Cohesion of inter-relationships is governed by a set of coordinating rules, codes and routines (Maillat et al., 1994, 1997)

Territorial Production Systems (Porter, 1991):

- Posits that firms distribute and integrate their various production stages (i.e. design, manufacture, sales) and consequently the employment of factors of production across the geography (a region) to reduce their costs;

- Various types of territorial production system have been identified (see McPhee, PhD thesis ch2, 2010).

Other identified influences:

- Global and educational and research institutions such as universities (see McPhee, PhD thesis ch2, 2010)

Important Note: A very comprehensive review of the theories and literature is provided in McPhee (2010) doctoral thesis chapter2.

25

ATTACHMENT D:

TVH EXPORT PERFORMANCE TYPOLOGY - ADVANTAGES, ORIGINS AND DISTINGUISHING FEATURES

Developed by Associate Professors Tiberi-Vipraio and Hodgkinson (2000) following:

- Literature review of main influences on export performance and export performance measures (McPhee, PhD

thesis Chapter 3, 2010, 2011);

- The attached Table 3 summarises: - main influences that determine export performance; - main measures of export performance.

TVH typology includes essential concepts:

- Global economic environment, and

- Regional context;

Regional context is defined as:

- The qualities of a sub-national local economic environment that incorporates the residing community’s culture and values (Tiberi-Vipraio and Hodgkinson, 2000);

- Includes the way that historical developments have affected the decision making of regional entrepreneurs in matters such as:

- risk adversity, trust, cooperation, level of openness in social relations with internal and external agaents

TVH typology is more comprehensive than other methods: - draws more from established networking theory (see theoretical framework):

- asserts that information exchange is evolving and a two-way process between global environment and regional

context;

- identifies a wider range of innovation information sources and strategies (behaviours) (see Tables 1 and 1A);

- identifies a wider range of resulting products and production processes;

- can explain whether the chosen production processes and resultant product diversifications are a dominant or diminishing feature of a firm’s reaction to the globalisation process;

- TVH typology survey responses can be nested within the framework of innovation indicator matrices that are linked to multi-regional multi-sector input-output system (see method).

Global economic environment and regional context continually interact to deliver innovation information to regional

exporting firms; Survey of New South Wales regional exporters is used to identify sources of this information and the strategies to

acquire it:

26

- Resulting competeitiveness is measured by level of export performance.

This innovation information contains:

- developments or improvements in product and associated production process; and is

- referred to as leading edge or best proactice production techniques or product design qualities.

This innovation information involves:

- interaction between global information and knowledge networks;

- regional and national product markets;

- global input and global product markets;

- demand and supply networks;

This innovation information may prevent:

- Any particular best practice from becoming permanently embedded within the region. Leading firms with leading TVH strategy combinations result from interaction of global economic environment with

regional context as:

- Those with strongest linkages with external agents and therefore can absorb leading edge information;

- Those with weakest linkages become less globally competitive:

- Their entrepreneurs may seek innovation information from suppliers in other regions that are already globally linked.

TVH typology considers whether a regional firm is directing resources towards: - Developing new export product or new production processes;

- Changing its products or production processes, or a

- Combination of both.

Important Note: A comprehensive review of the associated literature is provided in McPhee (2010) doctoral thesis chapter 1.

27

ATTACHMENT E: METHOD AND SURVEY DETAILS

Model and Method Diagram 1 illustrates the modified input-output (IO) framework for New South Wales, Australia which features Innovation Indicator Matrices (IIMs) and a modified intermediate transactions quadrant. 1. Iinnovation-indicator matrices (IIMs): Calculated the information induced export promoting value-added industry-support multiplier shares for each TVH

strategy variable for each of the 146 surveyed firms within their respective sectors (McPhee, 2010): - Positive (negative) values indicate the addition (subtraction) of innovation information to increases in the economic

value of the export product or export production process;

- TVH strategies such as perceived restrictions and impediments to exporting and innovation information access were considered constraints for innovating exporters so were allocated negative signs in the final balancing (McPhee; PhD, 2010).

- A simultaneous positive increase in the related employment multiplier indicates employment creating innovation;

- The industry-support component indicates an industry supporting capital expenditure inducement rather than a consumption induced affect caused by wage spending;

- The value-added component indicates an addition to economic value;

These multiplier shares were calculated by proportioning the matrix of sector-flow information-induced, export-related, value-added, industry-support multipliers across the matrix of TVH strategy usages.

2. The intermediate transactions quadrant contents: Thirty-five (35) aggregated sector-flows as per the condensed Australian System of National (and State) Accounts and

shown in Appendix A;

Regional sector flows for seven (7) regions as chosen by the New South Wales Department of State and Regional Development being:

- Wingecarribee, Far North Coast, Shoalhaven, Northern, Murrumbidgee, Hunter and Western regions; and

- De-composed to firm-flow level using the survey sourced output and export values for 146 regional firms.

Information sectors (flows):

- The total Information Sector - Primary and secondary components were defined and derived using methods described by Karunaratne [cited in

Jussawalla, 1988) and McPhee (2010)] ;

- The innovative milieu was defined, identified and measured as per GREMI (1994), Mailatt (1997, 1998) and Mailatt et al., (2000).

3. The survey of New South Wales Regional Exporters: A copy is provided at Appendix B;

28

Contains questions on the information sourcing of innovating regional exporting firms referred to collectively as the TVH typology;

Initially postal, with telephone follow-up to achieve a one-hundred per cent response rate;

Table 1A presents the TVH strategies in their categories.

4. The TVH Typology: A series of survey questions designed to measure the innovation and information sourcing behaviours of regional

exporting firms;

Devised by Associate Professors Ann Hodgkinson and Patricia Tiberi-Vipario following an extensive review of the innovation literature;

The questions are listed on the survey form provided at Appendix B;

Attachment E, Section 4 provides further details.

5. Ranking of TVH strategies: Multiplier values of strategy combinations were determined and examined at the network, region, sector and firm

levels: - Due to differences in geographic statistical significance and hence geographic variations in their influence (see

section DD). Combinations were ranked from most-supportive to least-supportive of export performance by highest total to lowest

total value respectively;

Table 1 shows individual TVH variable contributions are then allocated rank scores as follows:

- Most (least) supportive were identified M1, M2 or M3 (L1, L2 and L3) for first, second and third preferences at the network, region and sector levels and allocated 3, 2 and 1 rank-points respectively (columns 1, 2, 3, 8, 9, 10 respectively);

- A rank-point was allocated each time a strategy was used by the most supportive firm within each region, hence a maximum of 7 rank-points were possible (column 4);

- Those identified earlier by Hodgkinson were allocated 1 rank-point (column 5);

- Spatial significance and influence is identified (column 6);

- Indices of most and least supportive are measured out of 17 and 9 (columns 7 and 11 respectively);

- Unused TVH strategies, by the most supportive combinations were considered irrelevant for export performance leadership and listed (column 12).

Table 1A presents the TVH strategies in their categories. 6. Choice of survey regions and firms: Wingecarribee, Far North Coast, Shoalhaven, Northern, Murrumbidgee, Hunter and Western regions chosen by:

- Associate Professors Ann Hodgkinson;

29

- New South Wales Department of State and Regional Development representatives, and

- Shoalhaven City Council representatives. Firms within these regions were chosen by:

- Same as above.

7. Method justification: Earlier analysis identified and discussed possible significant region-level cross-tabs and correlations of raw survey

responses for many TVH innovation strategy usages. - (Hodgkinson 2004, 2008; Hodgkinson and Iredale, 2003; Hodgkinson et al., 2003) and several region-specific

reports (Hodgkinson, 2003 to 2004) These results seemed unconfirmed and possibly inconsistent using One-way analysis of variance (ANOVA) and Chi-

Squared tests of independence (McPhee, PHD thesis, 2010-11): - Applied to raw survey responses stored in SPSS data base, TVH response full export multipliers and their related

innovation-induced information spillovers as defined earlier.

Tests also identified 8 and 14 possible demand and supply side networks respectively:

- Each network contained several regional firm sector-flows from different regions that demonstrated same or similar

multiplier responses to information increases; - A full description of these networks is provided in McPhee (PhD thesis, Appendix 7.2)

(see section 6 below).

- Supply-side and demand-side networks, regions and sectors were statistically independent: - of firms’ choice of TVH supply-side strategies and their corresponding spillovers with and at the region level

(ANOVA and Chi-Squared Independence tests; McPhee, PhD thesis, 2010 );

- This confirmed that information was sourced across a broader geography than the firms’ region of location or production activity (ANOVA and Chi-Squared Independence tests; McPhee, PhD thesis, 2010).

Hence the design and use of modified input-output with IIMs in which multipliers were calculated across regional boundaries using the identified networks;

8. Other contributions and advantages

Spatial analysis enrichment achieved by incorporating information sector-flows;

Includes global influences via the import rows and export columns;

Allows for illustrative decompositions down to firm-level within the sector-flows within each region;

Allows for multiple directions of causation and response;

Reconcilable to the Australian Systems of National and Regional Accounts; IIMs provides a facility by which the export enhancing multiplier effects of spatial stimulants and constraints can be

located, measured and then used for the design of export-promoting policies;

30

Identifies, illustrates and measures the presence of many co-existing innovation development paths, each having their

own regional context and evolving according to varying or combinations of varying innovation theories;

Classifies firm’s behaviour and profiles according to TVH typology including Matrix of Spatial Context and Matrix of Business Formula (see Attachement 3);

Can produce forecasts and simulated policy scenarios (see Attachment A, Section 9).

9. Policy simulations

A comprehensive description of this work is provided in:

- McPhee (2010) PhD thesis chapter 9, and

- McPhee (2012) Export driven regional development: A comparison of policies based on Tiberi-Vipraio-Hodgkinson innovation strategies and networked information flows, Australlasian Journal of Regional Studies, V18(1)

Several demand and supply policy simulations (information transfers) were performed for the period 1996-97 to 2000-01 to 2006-07:

- To determine the information induced industry support value added export supporting multiplier and associated

employment multiplier with the largest value;

- Using forward-projected input-output tables;

- With the simulation spread over the whole time period;

- Table 9.2 in PhD provides simulation scenarios details, sector targeted and allocation (simulation) method;

- Table 9.3 in PhD provides the policy simulation multiplier totals for each time period;

- Table 9.4 in PhD provides the changes in multiplier values over the time period;

- Table 9.5 in PhD provides relative multiplier movements for leading simulations S10 and D3 Simulations D3 and S11 emerged as the leading policies and therefore the best ones to be employed by government:

31

Table 1S – Ranking and Sorting of TVH Strategy Information Multipliers

TVH Demand-Side Strategy Category TVH Demand-Side Strategy

Most Supportive Within: Least Supportive Within: Unused:

(1)D1

(2)

Murrumbidgee

(3)

Meat & DairyProducts

(4)

Lead Firm of Each Region (Out of 17)

(5)

Hodgkinson Identified

(6)

Statistical Spatial Significance

(7)

Support Index (Out of 17)

(8) D6

(9)

Hunter

(10)

Beverages & Tobacco Products

(11)

Least-Support Index

(Out of 9)

(12)

Not Needed For Leading Export

Performance

2.1 Corporate (Primary) Strategies Clients M2 M2 Network, Region 4 L2 2

Production process L2 2 U

Both M1 M1 M1 Network, Region, Sector 9 L1 L1 L1 9

2.2 Competitive Advantage Technical innovation M2 Region 2 L2 2

Product differentiation L1 L1 L1 9

After sales service M2 M1 M1 5 Y Network, Region, Sector, RLF 14

Market developer M1 M1 Region, Sector 6 L1 3

Production process M1 M2 Network, Sector 5 L2 L2 4

Price competitiveness

Other U

2.3 Production Strategy Mass production M1 M2 M2 5 Network, Region, Sector, RLF 12 L1 L2 5

Flexible production A M1 Sector 3 L1 3

Flexible production B M2 M1 M2 Network, Region, Sector, RLF 7 L2 2

Customisation

1.5 Perceived Position World product leader M1 M1 M2 5 Network, Region, Sector, RLF 13 L2 L1 L1 8

Asia-pacific leader M1 Sector 3 L1 3

National product leader M2 M2 Network, Region 4 L2 2

Other leadership

2.5 Research and Development or Innovation

New product development M2 M1 M2 5 Network, Region, Sector, RLF 12 L2 L1 5

Substantial production process changes M1 M1 M1 6 Network, Region, Sector, RLF 15 L2 L1 5

Existing product improvements M1 M1 M1 6 Network, Region, Sector, RLF 15 L1 L1 6

Small continuous production process changes

M1 M1 M2 5 Network, Region, Sector, RLF 13 L2 L1 L2 7

3.4 Primary Reason For Exporting 1990s Product required overseas M1 M2 M2 5 Network, Region, Sector, RLF 12 L1 L2 5

Delivering a higher quality product M2 M2 M2 5 Network, Region, Sector, RLF 11 L2 2

Product design flexibility M1 Region 3

Saturated local markets

Unique product

Better quality service U

Delivering a cheaper priced product M1 Sector 3 L1 L1 6

Other U

Followed other examples U

New market opportunities M2 Region 2 L1 3

Partners exporting U

Favourable exchange rates L2 2

3.6 Export (overseas sales) Strategies Overseas partnerships M2 M1 M2 6 Y Network, Region, Sector, RLF 14 L2 L1 L2 7

Investment in new overseas facilities U

Overseas agency arrangements M1 M2 M3 4 Y Network, Region, Sector, RLF 13 L2 L3 3

Direct exporting M2 M1 M1 5 1 Network, Region, Sector, RLF 14 L1 L1 L1 9

Internet commerce sales U

Introduction of equity capital

32




(1)D1

(2)

Murrumbidgee

(3)


(4)


(5)


(6)


(7)


(8) D6

(9)

Hunter

(10)


(11)

Least-Support Index

(Out of 9)

(12)


Performance

Other

3.5 Difficulties in Expanding Exports Adaptation from the market U

Rising labour costs

Exchange rate movements M2 M2 M2 4 Network, Region, Sector, RLF 10

Remaining technically competitive

Matching cost reductions

Organisational difficulties

Lack investment funds

Small trade volumes

Unfair competition (overseas) M2 M2 M2 5 Network, Region, Sector, RLF 11

Trade protection overseas M2 M2 M2 6 Network, Region, Sector, RLF 12

Overseas costs of patents & innovation products

U

Lack of information on overseas opportunities

Overseas partnership problems U

Government regulation problems

Other problems

5.1 Australian Government Attitude Supportive M2 M1 M1 4 Network, Region, Sector, RLF 12 L1 L1 6

Restrictive U

Indifferent M1 M2 Network, Region 5 L1 L2 5

Don't know M2 Sector 2 L2 2

5.2 NSW Government Attitude Supportive M1 M1 M1 6 Network, Region, Sector, RLF 15 L1 L1 6

Restrictive

Indifferent M2 M1 Network, Region 5 L1 L2 5

Don't know

5.2 Local Government Policies Supportive

Restrictive

Indifferent

Don't know U

5.4 Information on Entering Overseas Markets

Austrade

NSW Government

Other sources

Self developed (no one)

5.5 Advice on the Export Process Austrade M2 M2 5 Network, Region, RLF 9

NSW Government M2 M2 M2 4 Network, Region, Sector, RLF 10

Accountants

Legal advisors U

Financial advisors U

Industry organisations

Other U

Self developed (no one)

33




(1)D1

(2)

Murrumbidgee

(3)


(4)


(5)


(6)


(7)


(8) D6

(9)

Hunter

(10)


(11)

Least-Support Index

(Out of 9)

(12)


Performance

Attending seminars

4.4 Sourcing of Inputs (transport information)

Transport from company L1 L1 6

Transport from region M2 M2 M2 4 Network, Region, Sector, RLF 10

Transport from capital city L1 L1 L1 9

Transport from elsewhere Australia M1 M2 4 Network, Sector, RLF 9 L1 3

Transport from overseas U

4.4 Sourcing of Inputs (outsource main infor.)

Outsourcing main production from company

M2 M2 4 Region, Sector, RLF 8

Outsourcing main production from region

U

Outsourcing main production from capital city

U

Outsourcing main production from elsewhere Australia

U

Outsourcing main production from overseas

U

4.4 Sourcing of Inputs (main inputs inform.)

Inputs from company M1 M1 M1 5 Network, Region, Sector, RLF 14 L1 3

Inputs from region

Inputs from capital city M1 M1 M1 4 Y Network, Region, Sector, RLF 14

Inputs from elsewhere Australia M2 M2 M2 4 Network, Region, Sector, RLF 10

Inputs from overseas M2 M2 M2 4 Network, Region, Sector, RLF 10

4.4 Sourcing of Inputs (sales information) Sales from company M2 M2 M2 5 Network, Region, Sector, RLF 11

Sales from region

Sales from capital city

Sales from elsewhere Australia U

Sales from overseas U

4.4 Sourcing of Inputs (quality control inform.)

Quality control from company 6 RLF 6

Quality control from region U

Quality control from capital city U

Quality control from elsewhere Australia

U

Quality control from overseas M1 M1 M1 Network, Region, Sector 9 L1 L1 L1 9

4.4 Sourcing of Inputs (ancillary product. Inform.)

Ancillary production from company U

Ancillary production from region U

Ancillary production from capital city U

Ancillary production from elsewhere Australia

U

Ancillary production from overseas M2 M2 M2 Network, Region, Sector 6 L2 L2 L2 6

34




(1)D1

(2)

Murrumbidgee

(3)


(4)


(5)


(6)


(7)


(8) D6

(9)

Hunter

(10)


(11)

Least-Support Index

(Out of 9)

(12)


Performance

4.4 Sourcing of Inputs (cap, equip. Inform.)

Capital equipment from company

Capital equipment from region

Capital equipment from capital city

Capital equipment from elsewhere Australia

M1 M1 M1 Network, Region, Sector 9

Capital equipment from overseas

4.6 Cost of information about new technologies

Self developed (no one) M1 M1 M1 7 Y Network, Region, Sector, RLF 17

Market adaptation M2 M2 M2 5 Network, Region, Sector, RLF 11

Developed with partner

Through licensing arrangements U

From parent company U

Research institution / university U

4.9 Cost of information about market development (local networks)

Local industrial development officer

Local industry & commerce meetings

Other network meetings M2 M2 M2 4 Network, Region, Sector, RLF 10

Local service providers U

Informal & recreational networks U

4.9 Cost of information about market development (external networks)

Visits to & from external service providers

M2 M2 M2 5 Y Network, Region, Sector, RLF 12

Industry publications & newsletters M2 M2 M2 6 Network, Region, Sector, RLF 12

Internet & e-mail facilities M1 M1 M1 6 Y Network, Region, Sector, RLF 16

Travel to / with clients, agents & partners

Capital city conference meetings M2 M2 M2 6 Y Network, Region, Sector, RLF 13

Trade & business magazines M1 M1 M1 7 Network, Region, Sector, RLF 16

Other equipment suppliers M2 M2 M2 4 Network, Region, Sector, RLF 10

Source: Input-output analysis

35

Table 2 – Policy Simulation Details, 2000/01 and 2006/07

Simulation Identification Code

IO Table Used

Shock Direction

Simulation Scenario

Sector Targeted Allocation / Stimulation Method 2001

2007

D1 D1(7) 6R

Demand

Equity

The 3 weakest non-zero balance sector-flows, chosen from the 3 weakest regions respectively According to and in reverse proportion to the demand-induced relative sector-flow

output totals D2 D2(7) 6R

The 5 sector-flows with a zero balance

S1 S1(7) 6R Supply The 3 weakest sector-flows, chosen from the 3 weakest regions respectively According to and in reverse proportion to the supply-induced relative sector-flow output totals

S2 S2(7) 6R

Supply Sector Specific

The 5 weakest non-zero balance supplying sector-flows chosen from the 5 weakest regions respectively according to relative output multiplier values

According to and in direct proportion to the supply-induced relative output multiplier values

S3 S3(7) 6R The 7 strongest supplying whole system sector-flows according to relative output values

According to and in direct proportion to the supply-induced relative output values

S4 S4(7) 6R The 7 strongest supplying whole system sector-flows according to relative output multiplier values


S5 S5(7) 6R The 7 strongest supplying whole system sector-flows according to relative export values

According to and in direct proportion to the supply-induced relative export values

S6 S6(7) 6R The 7 strongest supplying whole system sector-flows according to relative export multiplier values

According to and in direct proportion to the supply-induced relative export multiplier values

S7 S7(7) 6R To the strongest sector-flow in each region according to relative output multiplier values


S8 S8(7) 6R To the strongest sector-flow in each region according to relative output values

According to and in direct proportion to the supply-induced relative output values

S9 S9(7) 6R To the strongest sector-flow in each region according to relative export multiplier values

According to and in direct proportion to the supply-induced relative export multiplier values

S10 S10(7) 6R To the strongest sector-flow in each region according to relative export values According to and in direct proportion to the supply-induced relative export values

D3 D3(7) 6M Demand Innovative Milieu

Innovative Milieu All to the Innovative Milieu S11 S11(7) 6M Supply

D4 D4(7) 6S Demand Information Split

Primary and Secondary Information Sectors According to and in direct proportion to relative sector balances

S12 S12(7) 6S Supply

D5 D5(7) 6I Demand Information Combined

Combined Information Sectors All to the Combined Information Sector

S13 S13(7) 6I Supply

36

Table 2 – Policy Simulation Details, 2000/01 and 2006/07 (Cont.)

Simulation Identification Code

IO Table Used

Shock Direction

Simulation Scenario

Sector Targeted Allocation / Stimulation Method 2001

2007

D6 D6(7) 6R Demand Regional Information Combined

The demand (supply) induced sector-flow of each region with the weakest information component according to the relative information coefficient values1

According to and In direct proportion to the demand / supply-induced relative sector-flow export values S14 S14(7) 6R Supply

D7 D7(7) 6R Demand Sector Information Combined

The 11 most demand (supply) induced information deficient sector-flows regardless of their region, according to the relative information coefficient values2

According to and in direct proportion to the demand / supply-induced relative total output values

S15 S15(7) 6R Supply

D8 D8(7) 6R Demand

Small Business

To every demand (supply) induced sector-flow’s small business component

According to and in direct proportion to the demand / supply-induced small business export contributions (assuming the proportions remain unchanged from 2000/01 to 2006/07 S16 S16(7) 6R

Supply

Source: McPhee 2012 PhD thesis.

37

Table 3 – Classification of Major Factors Determining Export Performance

SIGNIFICANT AND POSITIVE

1. Marketing research utilization (export marketing strategy, controllable-internal) 1,2 Exporting (o’seas sales) strategies (SQ 3.6, IIM2), Research and development (SQ 2.5, IIM1) A firm’s utilization of international marketing research positively affects export sales, growth, and composite measures of export performance and this is consistent with the findings of Madsen (1987). The Sousa (et al. 2008) finds this factor to have a significant positive effect. Knowledge, its acquisition and use were found to have a significant positive effect in creating competitive advantages (Nahapiet and Ghosal, 1998; Tsai and Ghoshal, 1998). Larsson (et al. 1998) argues that firms are considered successful because they are able to learn and use the learning more effectively than others, rather than exercise control over scarce resources (Inkpen, 1998), and Cavusgil (1980). Further, Walters and Samiee (1990) and Souchon and Diamantopoulos (1997) argue that information acquisition is the primary means of minimizing negative consequences in the international marketplace. However, Hart and Tzokas (1999), Yeoh (2000), and Ling-yee (2004) reported insignificant effects. 2. Marketing research utilization (export marketing strategy, controllable-internal) 1,2 Exporting (o’seas sales) strategies (SQ 3.6, IIM2), Research and development (SQ 2.5, IIM1) A firm’s utilization of international marketing research positively affects export sales, growth, and composite measures of export performance and this is consistent with the findings of Madsen (1987). The Sousa (et al. 2008) finds this factor to have a significant positive effect. Knowledge, its acquisition and use were found to have a significant positive effect in creating competitive advantages (Nahapiet and Ghosal, 1998; Tsai and Ghoshal, 1998). Larsson (et al. 1998) argues that firms are considered successful because they are able to learn and use the learning more effectively than others, rather than exercise control over scarce resources (Inkpen, 1998), and Cavusgil (1980). Further, Walters and Samiee (1990) and Souchon and Diamantopoulos (1997) argue that information acquisition is the primary means of minimizing negative consequences in the international marketplace. However, Hart and Tzokas (1999), Yeoh (2000), and Ling-yee (2004) reported insignificant effects. 3. Export planning (export marketing strategy, controllable-internal) 1,2

Exporting (o’seas sales) strategies (SQ 3.6, IIM2) Found to be a consistent determinant of export sales and the composite measure of export performance, and a predictor of export profits and export growth planning (Katsikeas et al., 1997). This is consistent with the findings of Aaby and Slater (1989) and underscores the importance of systematic planning in export operations. Found to be significant and positive by the Sousa (et al., 2008) review. 4. Product adaption (export marketing strategy, controllable-internal) 1,2

Higher quality product, product design flexibility, unique product, better service (SQ 3.4, IIM4) A strong determinant of export sales, profits and growth as an adapted product can satisfy the needs of foreign customer’s and a strong product will allow a firm to transfer it more easily to the foreign markets. Other studies found insignificant effects, while a few studies reported negative effects. The presence of negative correlations may be explained by the cost of adaptation such as localized after sales service (Kaynak and Kuan, 1993). Hence their overall effects seem positive, more research is required. 5. Product strengths (export marketing strategy, controllable-internal) 1,2 Higher quality product, product design flexibility, unique product, better service (SQ 3.4, IIM4) A strong determinant of export sales, profits and growth as an adapted product can satisfy the needs of foreign customer’s and a strong product will allow a firm to transfer it more easily to the foreign markets. Other studies found insignificant effects, while a few studies reported negative effects. The presence of negative correlations may be explained by the cost of adaptation such as localized after sales service (Kaynak and Kuan, 1993). Hence, although their overall effects seem positive, more research is required. 6. Price adaptation/strategy (export marketing strategy, controllable-internal) 1,2

Cheaper price (SQ 3.4, IIM4) Found to affects export sales, export profits, and export growth in some studies, but is insignificant in others (not further explained). 7. Promotion intensity/strategy (export marketing strategy, controllable-internal) 1,2 Overseas sales (exporting) strategies (SQ 3.6, IIM2) It is found to affect export sales, export profits, and satisfaction with exports. 8. Channel relationships (export marketing strategy, controllable-internal) 1,2 Overseas sales (exporting) strategies (SQ 3.6, IIM2) A key determinant of export sales, profits and growth when expressed as dealer / distributor support, motivation and involvement; which is consistent with Madsen’s (1987) findings. 9. Management’s export commitment (management’s attitudes and perceptions/characteristics, controllable-internal) 1,2

Regardless of the performance dimension, and this is consistent with the findings of the reviews performed by Aaby and Slater (1989), Chetty and Hamilton (1993), Cavusgil and Zou (1994), Madsen (1994) and Sousa (et al., 2008) and reinforces Cavusgil and Zou’s (1994) conclusion that a high management commitment allows a firm to seek export market opportunities and pusue effective marketing strategies. This factor, attitude or perception appears to be a very strong determinant of the financial measures of export performance such as export sales, export profits and export growth. Also, this factor was found to influence the non-financial measures of export performance, including perceived export success, export satisfaction and goal achievement. 10. International orientation (management’s attitudes and perceptions, controllable-internal) 1

Asia-pacific, world and national product leaders (SQ1.5 IIM1) Found to be a very consistent predictor of good export performance when measured in financial terms or as a composite. Presumably such firms can avoid threats by better identification of global opportunities and utilize them.

38

Table 3 – Classification of Major Factors Determining Export Performance (Cont.)


11. Export motivation (proactive) (management’s attitudes and perceptions, controllable-internal) 1 Regardless of the performance dimension, and this is consistent with the findings of the reviews performed by Aaby and Slater (1989), Chetty and Hamilton (1993), Cavusgil and Zou (1994), Madsen (1994) and Sousa (et al., 2008) and reinforces Cavusgil and Zou’s (1994) conclusion that a high management commitment allows a firm to aggressively seek the export market opportunities and pusue effective marketing strategies that improve export performance and that factors related to management’s attitudes and perceptions seem to be very strong determinants of the financial measures of export performance such as export sales, export profits and export growth. Also, this factor was found to influence the non-financial measures of export performance, including perceived export success, export satisfaction and goal achievement. 12.. Management’s perceived export advantages (management’s attitudes and perceptions, controllable-internal)1 A good predictor of export sales, export profits, and export growth when viewed as the profit contribution which brings exporting to the firm. 13. Management international experience (management characteristics, uncontrollable-internal) 1,2

Found to have a positive effect on export sales, export profits, export growth and the composite measure of export performance. Possibly because management’s international experience helps a firm to identify and leverage on the international opportunities while avoiding international threats (Zou and Stan, 1989). Only the Das (1994) study found that managers of successful exporting firms have less past experience in exporting and less foreign experience than managers of unsuccessful firms. However, the Das (1994) study was performed on firms that were operating in turbulent environments and this may have biased the findings. Furthermore, some studies found that this factor was insignificant but explanations were not provided. This factor was identified as having a positive significant effect in the The Sousa (et al 2008) review. Lages and Montgomery (2005) identified a positive significant relationship, due to management’s better understanding of international markets which helps them identify opportunities while avoiding threats. In contrast, Contractor identified an insignificant relationship (et al., 2005) which may be explained by the characteristics of the software industries that they studied (Sousa et al., 2008) and they suggested that management within these industries communicated with potential foreign buyers through the internet and a combination of other formal and informal means. 14. Management education/general business experience (managment characteristics, uncontrollable-internal) 1,2 Only one-third of the studies found this to be the case, and recorded a positive effect on export sales, growth and profits. However, some other studies found it to be insignificant and other’s found it to have a negative effect. Overall, this factor is considered beneficial and was found to have a positive significant effect in the Sousa (et al., 2008) review. 15. Firm’s technology (firm characteristics and competencies, uncontrollable-internal) 1,2 On export sales (examined by only five studies, hence more research is required) 16. Firm characteristics (firm characteristics and competencies, uncontrollable-internal) 1,2 Manufacture versus intermediary, life cycle and product nature (consumer v industrial) affected export sales but was examined only by five studies, hence more research is required. 17. Firm capabilities/competencies (firm characteristics and competencies, uncontrollable-internal) 1.2 Competitive advantage (SQ 2.2, IIM1) From the Sousa (et al., 2008) review Prasad (et al., 2001) reported that competencies such as product development skills, product quality, technical support / after sales service, product line breadth cost, price competitiveness, customer relationship skills; enables a firm to enjoy above average export performance. These findings are consistent with those of Piercy (et al., 1998). The Sousa (et al 2008) review identified product uniqueness, quality and flexibility as having a significant positive effect which was consistent with the findings of Aaby and Slater (1989) and Zou and Stan (1998). 18. Industry technology intensity (manufacturing complexity), (industry characteristics, uncontrollable-external) 1,2 This is consistent with the findings of Cavusgil and Zou (1994), Holzmuller and Kasper (1991); Ito and Pueik (1993), Holzmuller and Stottinger (1996). While it seems that firms in more technologically advanced industries have better export performance, the some number of firms where this factor was examined suggests that more research is needed before drawing define conclusions (Zou and Stan, 1998). 19. Industry instability (industry characteristics, uncontrollable-external) 1,2 This is consistent with the findings of Das (1994) and Lim et al. (1996). Again, caution should be exercised in interpreting this result as only two studies examined this factor. 20. Export market attractiveness (export market characteristics, uncontrollable-external) 1

This finding is contradictory to the significant negative effect determined by Kaynak and Kuan (1993) and other researchers who found an insignificant effect for this factor (Zou and Stan, 1998). This inconclusiveness was also observed in Madsen’s (1987) review (Zou and Stan, 1998). 21. Legal and political (foreign market characteristics, external) 1 Difficulties in expanding exports (SQ 3.5, IIM2) Recognized in the Sousa (et al., 2008) review and these factors were the legal and political environment which refers to the extent of government intervention in the market which can affect a firm’s operations (overlaps with export market barriers to entry). For example, exchange rate controls imposed by a foreign government may have a severe impact on re-investment, financing and repatriation decisions (Beamish, 1993; Cavusgil and Zou, 1994). This is contradictory to the findings of Baldauf (et al., 2000) which indicates that export performance is associated with the lesser perceived political influences. 22. Environmental turbulence (foreign market characteristics, external) 1

Organizational difficulties, Unfair competition, Government regulation problems, Other problems (SQ3.3 IIM2) Recognized in the Sousa (et al., 2008) review and these factors were the legal and political environment which refers to the extent of government intervention in the market which can affect a firm’s operations (overlaps with export market barriers to entry). For example, exchange rate controls imposed by a foreign government may have a severe impact on re-investment, financing and repatriation decisions (Beamish, 1993; Cavusgil and Zou, 1994). This is contradictory to the findings of Baldauf (et al., 2000) which indicates that export performance is associated with the lesser perceived political influences.

39

Table 3 – Classification of Major Factors Determining Export Performance (Cont.)


23. Cultural similarity (foreign market characteristics, external) 1

Overseas partner problems (SQ3.5 IIM2) Recognized in the Sousa (et al., 2008) review and these factors were the legal and political environment which refers to the extent of government intervention in the market which can affect a firm’s operations (overlaps with export market barriers to entry). For example, exchange rate controls imposed by a foreign government may have a severe impact on re-investment, financing and repatriation decisions (Beamish, 1993; Cavusgil and Zou, 1994). This is contradictory to the findings of Baldauf (et al., 2000) which indicates that export performance is associated with the lesser perceived political influences. 24. Market competitiveness (foreign market characteristics, external) 1

Unfair competition (SQ3.3 IIM2) The Sousa (et al., 2008) review recognized such factors as the legal and political environment, within the papers of Erramilli and Rao, (1993), and Styles and Ambler (1994) which refers to the extent of government intervention in the market which can affect a firm’s operations (overlaps with export market barriers to entry). For example, exchange rate controls imposed by a foreign government may have a severe impact on re-investment, financing and repatriation decisions (Beamish, 1993; Cavusgil and Zou, 1994). These findings are consistent with the findings of Cateora (1996) that socio-cultural and political factors comprise the main dimensions of the external environment, but contradictory to the findings of Baldauf (et al., 2000) who found the lesser perceived political issues to be influential. 25. Channel accessibility (foreign market characteristics, external) 1

Trade protection o’seas (SQ3.5 IIM2) Recognized in the Sousa (et al., 2008) review studies of O’Cass and Juulian (2001), and the identified factors were the legal and political environment which refers to the extent of government intervention in the market which can affect a firm’s operations (overlaps with export market barriers to entry). For example, exchange rate controls imposed by a foreign government may have a severe impact on re-investment, financing and repatriation decisions (Beamish, 1993; Cavusgil and Zou, 1994). This is contradictory to the findings of Baldauf (et al., 2000) which indicates that export performance is associated with the lesser perceived political influences. 26. Customer exposure (foreign market characteristics, external) 1

Recognized in the Sousa (et al., 2008) studies by O’Cass and Juulian (2001), and review and the identified factors were the legal and political environment which refers to the extent of government intervention in the market which can affect a firm’s operations (overlaps with export market barriers to entry). For example, exchange rate controls imposed by a foreign government may have a severe impact on re-investment, financing and repatriation decisions (Beamish, 1993; Cavusgil and Zou, 1994). This is contradictory to the findings of Baldauf (et al., 2000) which indicates that export performance is associated with the lesser perceived political influences. 27. Export assistance (domestic market characteristics, external) 1

Supportive Australian, New South Wales, and Local Government Attitude (SQ5.3 IIM4) For six out of fifty-two studies only, suggesting that further research is required. 28. Cultural similarity (foreign market characteristics, external) 1 Erramilli and Rao, (1993), and Styles and Ambler (1994) found that export performance was conditioned by foreign environmental characteristics. These findings are consistent with the findings of Cateora (1996) that socio-cultural and political factors comprise the main dimensions of the external environment. 29. Cutural similarity (external, foreign market characteristics) 1 Identified by the Sousa (et al., 2008) review within the studies of Lee (1998), Shoham (et al., 1995) suggesting that such similarities are considered easier to manage than cultural differences making it more likely for the firm’s to be successful. These findings are consistent with those of Lado (et al., 2004) who reported that culturally similar markets reduce the perceived failure risk, and provides an incentive for those companies with limited exposure, to start trading within a specific culturally sensitive market. Boyacigiller (1990) found that cultural differences increased the difficulty in obtaining and interpreting information about foreign market conditions. However, the studies by Baldauf (et al., 2000) identified an insignificant effect for this factor, and explain this finding by considering the scale developed to capture the effects of this factor (the socio-cultural dimension) to be inappropriate for an export context. 30. Economic similarity (external, foreign market characteristics) 1 Identified by the Sousa (et al., 2008) review studies of Balabanis and Katsikea (2003) and Brouthers and Xu (2002); 31. Market (strategic) orientation (internal, firm characteristics) 1

Competitive advantage – technical innovation, product differentiation, after sales service, market development, production process, price competitiveness, other (SQ2.2 IIM1) This factor is consistent with the findings of several researchers such as Moen (1999), Francis and Collins-Dodd (2000), Cadogan et al. (2002a) Lado et al., (2004) and the use of the pro-active/reactive options indicates further choice by the firm management. The pro-active response is one where firms are more aware of internal and external conditions, thereby exhibiting informational advantages’ that might lead to higher performance levels (Lee and Yang, 1990). 32. Export Assistance (Government and non-government) (external, domestic market characteristics) 1

Advice on entering overseas markets, Advice on the export process –from Austrade, New South Wales Government, accountants, legal advisors, industrial organisations, other sources, self, seminars )SQ5.5 IIM4) Identified by the Sousa (et al., 2008) review studies of Alvarez (2004), Gencturk and Kotabe (2001), Lages and Montgomery (2005), Stottinger and Holzmuller (2001).

40

Table 3.1 – Classification of Major Factors Determining Export Performance (Cont.) SIGNIFICANT AND NEGATIVE: 1.Management’s perceived export barriers (management attitude and perceptions, controllable-internal) 1,2

Difficulties in expanding exports (SQ 3.5, IIM2) When export barriers are perceived as risks and costs. 2. Environmental hostility (foreign market characteristics, external) 1 Recognized in the Sousa (et al., 2008) review within the papers of Robertson and Chetty (2000), Brouthers and Xu (2002), and Balabanis and Katsikea (2003). The recognized factors were the legal and political environment which refers to the extent of government intervention in the market which can affect a firm’s operations (overlaps with export market barriers to entry). For example, exchange rate controls imposed by a foreign government may have a severe impact on re-investment, financing and repatriation decisions (Beamish, 1993; Cavusgil and Zou, 1994). This is contradictory to the findings of Baldauf (et al., 2000) which indicates that export performance is associated with the lesser perceived political influences. 3. Environmental hostility (domestic market characteristics, external) 1,2

Identified within six out of fifty-two studies in the Zou and Stan (1998) review and within the Sousa (et al., 2008) review studies of Balabanis and Katsikea (2003) and Brouthers and Xu (2002), Robertson and Chetty (2000)

INSIGNIFICANT:

1. Export organization (export marketing strategy, controllable-internal) 1,2 Some studies found that export organization was an insignificant determinant and hence did not reflect or affect export sales, profits and satisfaction. 2. Price competitiveness (export marketing strategy, controllable-internal) 1,2 With the exception of three studies that reported a significant positive effect, and this finding is inconsistent with the medium significant effect of Chetty and Hamilton (1993). Given the importance of the only marketing mix variable that generates revenue, more research is required regard the effects of price related factors. 3. Price determination (export marketing strategy, controllable-internal) 1 With the exception of three studies that reported a significant positive effect, and this finding is inconsistent with the medium significant effect of Chetty and Hamilton (1993). Given the importance of the only marketing mix variable that generates revenue, more research is required regard the effects of price related factors.

Source: McPhee (2010), PhD thesis

41

Diagram 1 – The Modified Input-Output Framework Intermediate Transactions Quadrants Contains: - 35 basic sector aggregations as per the Australian National Accounts;

- Primary information flow,

- Secondary information;

- Innovative Milieu flows;

- Specified regional sector flows where total output and export data is survey sourced.

Final Demand Quadrant - Usual components

(columns) as desired

Demand-Side Innovation Indicator Matrix - Shows frequency usage of

TVH demand-side strategies;

- For each firm within each sector within each region.

Demand-side Production Spillover Matrices - One for each of the ten

identified production spillover types (TVH strategy by regional-firm sector-flow)

- One for TVH strategy total percent contribution by spillover type total percent contribution

- One for TVH strategy

average percent contribution by spillover type average contribution

Primary Inputs Quadrant - Usual components (columns) as desired

Primary Inputs to Final Demand Quadrant

Supply-Side Innovation Indicator Matrix - Shows frequency usage of TVH supply-side strategies;

- For each firm within each sector within each region.

Supply-side Production Spillover Matrices - One for each of the ten identified production spillover types

(TVH strategy by regional-firm sector-flow)

- One for TVH strategy total percent contribution by spillover type total percent contribution - One for TVH strategy average percent contribution by spillover type average contribution

42

APPENDIX A: List of Input-Output Sectors

1. Agriculture

2. Forestry & fishing

3. Mining

4. Meat and dairy products

5. Other food

6. Beverages and tobacco products

7. Textiles

8. Clothing & footwear

9. Wood & wood products

10. Paper, printing & paper products

11. Petroleum & coal products

12. Chemicals

13. Rubber & plastic products

14. Non-metallic mineral products

15. Basic metals & metal products

16. Fabricated metal products

17. Transport equipment

18. Other machinery & equipment

19. Miscellaneous manufacturing

20. Electricity, gas & water

21. Construction

22. Wholesale trade

23. Retail trade

24. Repairs

26. Transport & storage

27. Communication services

28. Finance & insurance

29. Ownership of dwellings

30. Property & business services

31. Government admin. & defence

32. Education

33. Health & community services

34. Cultural & recreational services

43

35. Personal & other services

AN EXAMINATION OF EXPORT PERFORMANCE FOR SELECTED INNOVATING AND EXPORTING REGIONAL ... · 2014. 6....

Documents

Transcript of AN EXAMINATION OF EXPORT PERFORMANCE FOR SELECTED INNOVATING AND EXPORTING REGIONAL ... · 2014. 6....