University of Southern California Dissertations and Theses

An enquiry into the effectiveness of export assistance organizations serving southern California SMEs

(USC Thesis Other)

An enquiry into the effectiveness of export assistance organizations serving southern California SMEs

PDF

Download a page range

Download transcript

Copy asset link

Request this asset

Transcript (if available)

Content INFORMATION TO USERS
This manuscript has been reproduced from the microfilm master. UMI
films the text directly from the original or copy submitted. Thus, some
thesis and dissertation copies are in typewriter face, while others may be
from any type of computer printer.
The quality of this reproduction is dependent upon the quality of the
copy submitted. Broken or indistinct print, colored or poor quality
illustrations and photographs, print bleedthrough, substandard margins,
and improper alignment can adversely affect reproduction.
In the unlikely event that the author did not send UMI a complete
manuscript and there are missing pages, these will be noted. Also, if
unauthorized copyright material had to be removed, a note will indicate
the deletion.
Oversize materials (e.g., maps, drawings, charts) are reproduced by
sectioning the original, beginning at the upper left-hand comer and
continuing from left to right in equal sections with small overlaps. Each
original is also photographed in one exposure and is included in reduced
form at the back of the book.
Photographs included in the original manuscript have been reproduced
xerographically in this copy. Higher quality 6” x 9” black and white
photographic prints are available for any photographs or illustrations
appearing in this copy for an additional charge. Contact UMI directly to
order.
UMI
A Bell & Howell Information Company
300 North Zeeb Road, Ann Arbor MI 48106-1346 USA
313/761-4700 800/521-0600
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
AN ENQUIRY INTO THE EFFECTIVENESS OF
EXPORT ASSISTANCE ORGANIZATIONS SERVING
SOUTHERN CALIFORNIA SMES
by
William H. J. Hubbard
A Thesis Presented to the
FACULTY OF THE GRADUATE SCHOOL
UNIVERSITY OF SOUTHERN CALIFORNIA
In Partial Fulfillment of the
Requirements for the Degree
MASTER OF ARTS
(Economics)
May 1997
Copyright 1997 William H. J. Hubbard
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
UMI N u m b e r: 1 3 8 4 8 9 6
UMI Microform 1384896
Copyright 1997, by UMI Company. All rights reserved.
This microform edition is protected against unauthorized
copying under Title 17, United States Code.
UMI
300 North Zeeb Road
Ann Arbor, MI 48103
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
UNIVERSITY O F SOUTHERN CALIFORNIA
TH E GRADUATE SCHOOL
UNIVERSITY PARK
LOS ANGELES. CALIFORNIA 8 0 0 0 7
This thesis, written by
WILLIAM HUBBARD
under the direction of hk§ Thesis Committee,
and approved by all its members, has been pre
sented to and accepted by the Dean of The
Graduate School, in partial fulfillment of the
requirements for the degree of
MASTER OF ARTS
Dean
3 1 , 1997
Date.
T H E S IS C O M M IT T E E
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
Acknowledgments
I would like to thank my committee for their participation and, in particular, for
their patience. Thanks to John Windier at the Business School for arranging financing
for this project, and a special thanks to Sheila in the Economics Department office for
stuffing 2000 envelopes with questionnaires. Thanks also to Marie Reyes, for assisting
with the process of thesis submission. I would also like to thank my committee chair,
Prof. Jeff Nugent for his guidance and for introducing me to Benjamin Chee, a diligent
collaborator and good friend. Finally, I am indebted to every participant in this survey
and every interviewee for their contributions of time and insight to this project.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
Table of Contents
Introduction...........................................................................................................1
Review of the Literature.........................................................................................9
The Export Trading Company (ETC) Act o f 1982 26
The Withdrawal of Banks From Export L e n d in g ........................................... 29
Export Assistance O rganizations...................................................................... 36
Interview s.............................................................................................................44
Methodology......................................................................................................... 56
R e s u lts ................................................................................................................. 73
Conclusions......................................................................................................... 103
Suggestions for Further R esearch....................................................................110
Appendix: Survey Q uestionnaire.....................................................................116
Appendix: Summary Description of Letters of C re d it.................................125
Works C i t e d ...................................................................................................... 128
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
List of Tables
Table II: Hypotheses............................................................................................. 6
Table Ml: Test for Representativeness.............................................................69
Table Rl: Means of Important V ariables....................................................73-77
Table R2: Hypothesis 1 ....................................................................................... 78
Table R3a: Hypothesis 3 (M eans).....................................................................82
Table R3b: Hypothesis 3 (Statistics)................................................................. 82
Table R4: Hypothesis 4 ....................................................................................... 83
Table R5: Hypothesis 5 ....................................................................................... 83
Table R6a: Hypothesis 6 (M eans).....................................................................84
Table R6b: Hypothesis 6 (Statistics)................................................................. 85
Table R7: Hypothesis 7 ....................................................................................... 85
Table R8: Means of Relative Importance of Initiative
Variables (Countries Segments)................................................. 86
Table R9: EXPSME S ta tistic s......................................................................... 89
Table RIO: Means of Firm Characteristics Variables
(Agencies Segments)..................................................................90
Table Rll: Hypothesis 1 1 ...................................................................................90
Table R12: “ 1st World” S tatistics..................................................................... 91
Table R13: Means of Export Destination Variables......................................91
Table R14: Means of Relative Importance of Initiative
Variables (Agencies Segments)................................................ 92
Table R15a: Ri 2 96 Statistics (Exim bank).................................................... 92
Table R15b: RI 2 96 Statistics (SBA)................................................................ 92
Table R16: Means of Financing Variables....................................................... 93
Table R17a: Financing Statistics (Eximbank)................................................... 94
Table R17b: Financing Statistics (LAACC)..................................................... 94
Table R18a: Means of EXPORTS-Relevant V a ria b les................................95
Table R18b: EXPORTS-Relevant S ta tistic s.................................................. 96
Table R19: Means of Firm Characteristics Variables
(EXPORTS Segments)................................................................ 96
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
1
Introduction
There exists a surprisingly large gap in the literature on export promotion. Few
studies in the United States have directly assessed the export assistance needs of
smaller firms, and fewer, if any, studies have taken a direct approach to discovering
the degree of success of export assistance programs at meeting those needs.1
Compounding this deficiency is the fact that what little literature on the needs of
exporters that does exist focuses on marketing, rather than financing, assistance. It is
in filling this gap that this study hopes to contribute to the body of economic literature
and, in some small way, benefit the US economy.
This study is a based on a survey of southern California small- and medium
sized enterprises (SMEs). It asks the CEOs of those firms to describe their firms,
assess their exporting success, and comment on the effectiveness of the various
agencies devoted to export assistance in the areas of both marketing and finance. It is
the first study to scrutinize individual government and non-government organizations
engaged in export promotion in this region, and it is one of the first studies to address
problems of export finance for SMEs.
1 By “direct approach” it is meant simply asking the relevant agents the question to be answered.
Indirect indicators, which are easier to compile, require a greater degree of interpretation, which makes
any conclusions drawn from them less reliable. A direct survey o f the subjects of a study will yield,
assuming honest responses, the most reliable data possible. In this study, for example, it is reasoned that
no one is more qualified to describe the export assistance needs o f a firm better than the officers of that
firm.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
2
The Importance of Export Assistance
Ever sirce the 1980s, the persistently weak world trade position of the US has
challenged policy-makers, businesspersons, and scholars to identify ways o f reducing
the overall trade and current account deficits. Alleviating the trade deficit is not simply
a national problem, but has also become a major issue at the state level (Kotabe and
Czinkota 1992). While one way to reduce the US trade deficit would be to impose and
legislate import-restrictive measures and policies, such measures could have harmful
consequences for long term efficiency. Also, import-restrictions have often resulted in
retaliatory responses from other countries (Krugman and Obstfeld 1994; World Bank
1993; Ford et al. 1987; Cavusgil 1984).
Another more positive way to reduce the US trade deficit would be through
export promotion. In addition to the direct effect of reducing the trade deficit, export
promotion and expansion can also have the effect of reducing unemployment,
stimulating technological and marketing innovations, and encouraging specialization
and efficiency (Cavusgil 1984; Jain 1989). It has been estimated that one billion
dollars worth of exports creates approximately 22,800 to 30,000 jobs (Kotabe and
Czinkota 1992; Perry 1992; Davis 1989; Martinoff 1988; Truell 1987; Robock 1993),
and also generates twice as much worth in GDP, together with 400 million in state and
federal tax revenues (Shaw 1977; Kotabe and Czinkota 1992). In sum, exports are key
to the growth of an economy (Cavusgil 1984; Root 1994; Jain 1989).
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
3
Despite the evidence that attests to the benefits of exporting, export data for the
United States reveal it to be a passive exporter. While other large exporting nations
export an average of 20% o f their GDP, the US lags far behind with exports
amounting to only 7% of GDP. Although US exports reached 400 billion dollars in
1990, they would exceed 1 trillion dollars if the US matched the export performance of
other major nations as a percentage to GDP (Perry 1992). Today, the “US has reached
a watershed in its economic history, and the nation must either export more or accept a
lower standard of living” (Kathawala, Judd, Monipallil and Weinrich 1989).
Traditionally, the focus of export promotion has been on large enterprises
(LEs), but there has been a shift in focus since the 1980s towards SMEs because of the
“diminishing effects of export promotion expenditures on the export behavior of LEs
as well as the underutilized potential of SMEs” (Ramaswami and Yang 1990), which
has only recently begun to be fulfilled. Indeed, some have estimated that 80% of US
exports come from the top 200 companies in the Fortune 500 (Perry 1992; Klien 1990;
Buckley and Brooke 1992; Jain 1989), and that among the SMEs who export, only 6 to
7 percent of their total sales are from foreign markets (Kathawala, Judd, Monipallil
and Weinrich 1989). As an additional indicator of export concentration, it is estimated
that 48% of all US exporters sell only to a single market and fewer than one-fifth sell
to more than five foreign markets (Rose 1991). Nevertheless thousands of smaller
firms are capable of exporting (Cavusgil 1984; Klien 1990; Perry 1992; Dichtl,
Leibold, Koglmayr and Muller 1984), and the penetration of domestic markets by new
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
4
foreign competitors, which has eroded the position of SMEs in domestic markets, has
led them to look for new markets, some of which arise from trade liberalization abroad
(Papadopoulos 1987).
Background of the Study
This study was inspired by a study of Korean SMEs by Nugent and Kim
(forthcoming). The very questions that have not been addressed in the United States
were covered in this study of South Korean exporters. Further, the Nugent and Kim
study used an approach not found in surveys of US firms (such as Czinkota and Ricks
1981, Rhee 1991, and others). It involved an extensive survey of firm characteristics
and export history in addition to feedback on the firm’s needs for export assistance and
the effectiveness of the assistance it had received. This thoroughness allowed for
segmentation of the sample into groups which could then be analyzed for patterns and
compared. This methodology formed the basis of the construction o f the survey
questionnaire for this study.
Objectives of the Study
Due to the relative novelty of the subject area, to a large extent this study is
exploratory; it tests its own methodology in practice and looks for unexpected patterns
and responses. These aspects will be discussed in the following sections of this study
where appropriate. Particularly with regard to specific agencies, there is little or no
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
5
information upon which to base assumptions about specific areas o f their performance.
Also, because the methodology is a unique adaptation of a technique not used before
in such studies in the US, many of the results depend on how well the methodology
suits the goals of the study.
Nonetheless, there were some important questions that the study could be
relied on to answer. These questioned prompted the creation of eleven hypotheses that
can be grouped into three major categories. The first major category covers
hypotheses that attempt to assess the perils of export finance. How risky is exporting?
is a question every firm preparing to export should ask; for a small firm, its solvency
may depend on the answer. The second major category covers hypotheses that intend
to judge the extent to which different types of firms have different needs for export
assistance. The sample was segmented by industry sector and destination of exports
(separately) to distinguish different types of firms. The third major category covers
hypotheses that determine what types of firms utilize the different export assistance
agencies. In addition to direct feedback about the agencies, inferences could be made
about the agencies’ effectiveness or behavior based on differences among the groups
of firms that they serve.
The hypotheses necessitate segmenting the sample three times in addition to
observing details about the sample as a whole. The eleven hypotheses are listed
below, numbered according to the type of segmenting they require.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
6
Table II: Hypotheses
Unsegmented
Sample:
Hypothesis 1: The rate of default on debt for foreign
customers will be higher than for domestic customers.
Segmented by Sector: Hypothesis 2: High tech firms export more than other firms.
Segmented by Export
Destination:
Hypothesis 3: “Debt” firms are younger and smaller than
“Other” firms.2
Hypothesis 4: “Debt” firms have lower growth, profits, and
exports than “ 1st World” and “Other” firms.
Hypothesis 5: “Debt” firms have a lower number of
shipments per year than “1st World” and “Other” firms.
Hypothesis 6: “1s t World” and “Debt” firms will give
different rates of use of marketing assistance.
Hypothesis 7: “Debt” firms will rate support systems^ more
important in the marketing process than “ 1st World” firms.
Hypothesis 8: “Debt” firms will report greater difficulty
with financing than “ Ist World” firms.
Hypothesis 9: “Debt” firms will report a higher rate of
default for their foreign buyers than “ 1st World” firms.
Segmented by
Agency Use:
Hypothesis 10: Compared to others, Eximbank4 users will
report a higher percentage of entrepreneurs with prior
experience in a large firm that exported.
Hypothesis 11: Firms that use CEFO will be smaller than
other firms.
2 Three segments were used: “Debt” describes firms that exported only to countries in regions with
recent debt crises; “ 1st World” describes firms that export only to countries with well-established credit;
“Other” refers to all other firms. These distinctions are elaborated in the Methodology section below.
3 In this study, each of the sets of words “assistance,” “promotion,” and “support”; “agencies,”
“organizations,” and “systems”; and “Respondent” and “Entrepreneur” are used interchangeably.
4 Eximbank is the Export-Import Bank of the United States; CEFO is the California Export Finance
Office. They each provide financing support for exporters.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
7
Hypotheses in the first category, which assess risks of exporting, include
Hypotheses 1,4, 8, and 9. The assumptions underlying all of these are that exporting
is inherently riskier than domestic business, and that exporting to countries with past
debt crises is even riskier. The second category, examining the extent to which
different types o f firms have different export assistance needs, is composed of
Hypotheses 2, 3, 5, 6, and 7. Hypotheses 2,3, and 5 assume that firms in different
industry categories have, on average, different firm characteristics. This suggests that
firms serving different markets (whether defined by product or geography) need to be
served differently by export support systems. Hypotheses 6 and 7 imply this
conclusion directly. Although this assertion has intuitive appeal, it was discovered in
the preliminary stages of this study that export assistance is not highly differentiated
among agencies;5 thus, establishing these hypotheses provides ground for policy
suggestions to export assistance organizations.
The final two hypotheses fall under the third category, differences among users
of different export assistance agencies. Since Eximbank historically has served larger
firms, it should be expected that entrepreneurs with experience working for large
exporters should be more familiar with Eximbank, and thus utilize its services with
5 Refer to the sections below on Export Assistance Organizations and Results.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
8
greater frequency than others. Likewise, CEFO explicitly serves smaller firms,6 so
this should be reflected in the data.
Beyond the confirmation or refutation of these hypotheses, this survey offers a
wealth of statistics on SME exporters in the southern California region, and provides
the first opportunity for their views on the effectiveness of export support to be
considered by the academic community in its analysis of export promotion. This study
is organized as follows: the next section, Review of the Literature, discusses important
background material. Two potential sources of financial support for SME exporters,
export trading companies and banks, are then discussed, with attention to their
shortcomings. Export assistance organizations are described, and then a section
summarizes the interviews conducted for this study. Finally, the pith of the study, the
Methodology, Results, Conclusions, and Suggestions for Further Research, follows.
Two appendices serve as useful references. The first is a copy of the questionnaire
used in the survey; the second describes briefly the role of the Letter of Credit in
export finance.
6 See the section on Export Assistance Organizations.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
9
Review Of The Literature
A large body of literature has been dedicated to explaining the difficulties that
SMEs face in penetrating and expanding exports in the international markets as well
as documenting the factors underlying export success. Past research has led to the
listing of numerous factors related to export success which can be summarized under
the following headings: product characteristics, organizational characteristics,
marketing factors, management factors, technological characteristics, and
environmental factors (Kammath, Rosson, Patton and Brooks 1987). Below some of
these factors are covered in greater depth, and in the internal and external factors that
ultimately determine the export decision of SMEs.
Miles’ Model and the Task Environment
According to Miles (1980) there are two types of models--the contingency
models and the process models. The contingency models emphasize the constraints
posed by the external environment (describe the fit between the organization and its
environment), while the process models focus on the process by which the
organization manage these constraints (stress the process by which those fits are
managed and engineered). Recognizing that both perspectives are needed for a
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
10
balanced view, Miles’ integrated model of the “process of organization to the
environment” warrants a better understanding (Perry 1992).
In Miles’ model, because of the existence o f personal filters and blind spots
which result in asymmetric view of any situation, the firm is confronted with an
environment divided into objective and perceived components.
The objective component corresponds to the general or international trade
environment which can be further broken down into (1) the economic environment, (2)
the political environment, (3) the legal environment, (4) socio-cultural environment,
and (5) the technological environment, and (Perry 1992).
The economic environment includes the persistent US trade deficit, the
intractable ballooning external debt of the LDC, the gyrations of foreign-exchange
rates, the decline of US competitiveness, and the entry of new international
competitors. The political environment encompasses the general international unrest,
which disrupts trade, as well as the political influences on commercial policies. The
legal environment refers to the government decisions that affect trade, such as the
imposition or the relaxation of export controls. The social-cultural environment
accounts for the changing attitudes of consumers towards foreign products, and lastly
the technological environment includes developments in communication,
transportation, data processing, and the like.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
11
Due to a lack of information about future events and the unpredictability of
alternatives of present decisions and their outcomes, the environment creates decision
making uncertainty (Hickson et al. 1971). When the firm cannot cope with increased
uncertainty, “decision makers have to make strategic choices involving either a change
in or alteration of internal structures or processes that will result in close alignments
with the perceived environment” (in the contingency approach), “and/or a change in or
manipulation of the external environment” (in the process approach) (Perry 1992). For
Miles, the “perceived environment has greater immediacy than the general or objective
environment,” since it is the level at which decision-makers react.
Perry (1992) argues that proper identification of the environment is essential,
since in Miles’ contingency perspective, a good fit between the firm and the
environment is needed for the firm to be successful. As was first developed by Dill
(1958), a more concrete notion that properly addresses this perspective is the concept
of the task environment. The task environment can be regarded as “those stimuli to
which the organization might respond,” which differ from the general (objective)
environment. What the firm perceives of the general environment is important
because, unless the effects of the environment is concretely felt at the firms’ task-
environment level, environment factors are of no value to the export decision
structures of SMEs.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
12
Exporting As a Learning Process
Studies that relate internal factors with export success often center around the
idea that export expansion is a learning process (Johanson and Vahlne 1977; Bilkey
1978; Reid 1981; Cavusgil 1982; Beliveau 1987; Cavusgil 1980; Gronhaug 1977;
Johanson and Wiedersheim-Paul 1975; Piercy 1981; Steinmann, Kumar and Wasner
1980; Welch and Wiedersheim-Paul 1980; Wiedersheim-Paul, Olson and Welch 1978;
Cavusgil 1984). They argue that SMEs approach international business involvement in
an experimental manner, committing resources for the newer management tasks
incrementally. As export experience grows, executives become more optimistic,
revising previous expectations of risk downwards and profits upwards (Denis and
Depelteau 1985; Cavusgil 1984).
The exceptions to this are Brooks and Rosson (1992) as well as Kotabe and
Czinkota (1992) who did not find a revaluation of profit perceptions among exporters
with an increase in experience. Cavusgil (1984), based on his study of 816 firms in
Wisconsin, argues that it is growth (not profits) that firms seek when they engage in
export activities, and that profits may be viewed as a secondary consideration.
Nevertheless, Kotabe and Czinkota, based on their study of 500 manufacturing firms
in mid-western states, comment that although the initial expectations of higher
profitability did not materialize, “exporters have become more flexible and resilient
competitors in the domestic market than non-exporters, thanks chiefly to economies of
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
13
scale in production, ease of weathering sales fluctuations at home, and prospects of
foreign sales increase in the near future.” Therefore any export stimulus to a firm will
still prove valuable, regardless of the perceptions of profitability. Based on this
paradigm, many studies o f a similar nature have tried to shed light on factors that
might impede the initial stages of exporting which will in turn be crucial to
determining whether an SME will continue to export or not.
Perceived Barriers
Ramaswami and Yang (1990) argue that common problems faced by firms are
“poor knowledge of the market, unknown market needs, a lack of awareness of
available export assistance programs, and a lack of appreciation of the potential value
of exporting.” Therefore, attention should be focused on stimulating SMEs to export,
studying market needs and assisting firms in fulfilling these needs.
Dichtl, Leibold, Koglmayr and Muller (1984) developed the concept of
“threshold fears,” which can be broadly defined as exporting barriers as perceived by
SMEs. They argue that the threshold fears of non-exporting SMEs “according to
objective criteria dispose o f unutilized export potential,” and that when these threshold
fears (as the first step) are conquered, then secondary problems such as “specific
marketing strategies pose no fundamental problems.”
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
14
The importance of considering perceived barriers in exporting is well
documented throughout the literature, and is perhaps a variable that has been
associated with exporting more than any other (Bilkey and Tesar 1977; Lee and Brash
1978; Czinkota and Ricks 1981; Huszagh 1981; Dichtl, Koglmayr, Leibold, and
Muller 1984; Bauerschmidt, Sullivan, and Gillespie 1985; Ramaswami and Yang
1990; Kotabe and Czinkota 1992).
Generally, SMEs tend to have very simple decision structures (Mintz 1967;
Miller and Friesen 1980), and hence the “perception of the decision maker will
inevitably dominate the mere existence of any barriers to exporting” (Ramaswami and
Yang 1990). Unlike large enterprises who generally possess adequate financial as well
as human resources to engage in sophisticated research before making an international
decision, several studies have revealed that SMEs generally make their first
international decision in a non-rational manner (Cavusgil 1980; Kothari 1978; Bilkey
1978; Bilkey and Tesar 1977; Cavusgil and Nevin 1981; Papadopoulos 1987).
Objective information is perceived differently by decision makers of SMEs
according to the stage and degree of exporting that the firm has engaged in; thus the
task environment is different for exporters and non-exporters. The implications for
policy makers thus becomes more profound and complex. Varying task environments
implies that the needs of SMEs vary greatly from one to another. Thus, unless policies
address these different needs, policy outcomes will inevitably be inefficient. Cavusgil
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
15
(1984) made it clear that “there are exporters with different make-ups and different
needs. Therefore, promotional assistance designed with a typical exporter in mind will
lead to a waste of resources as well as unsatisfactory results.”
Kedia and Chhokar (1986) argue that “exposure to or experience in exporting,
however small or limited, can make a crucial difference in the outlook of a company,”
and that the “programs needed to stimulate non-exporters to begin exporting will be
different than those needed to help exporters increase their exporting activities.”
Further, needs, perceptions and factors which inhibit exporting are different across
industries, thus “broad export promotion programs may not be effective in tapping the
export potential of SMEs as programs intended to meet the needs o f individual
industries.” Based on their study of ninety-six firms in Louisiana, Kedia and Chhokar
conclude that non-exporters consider the lack of exporting know-how (which includes
knowing how to market overseas, obtaining information on prospects and foreign
markets, knowing foreign business practices, and knowing export procedures) as the
major difficulties to exporting. On the other hand, for exporters, the important
inhibitors to exporting vary with the stage of export process in which the firm finds
itself, and that informational barriers tend to dominate the decisions of new and
inexperienced exporters (see also Ogram 1982; Alexandrides 1971; Pavord and Bogart
1975), while the financial and marketing barriers dominate the exporting decisions of
experienced firms (Kedia and Chhokar 1986).
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
1 6
Deliberation Councils
The transmission of information and the facilitation of communication between
the government and the private enterprises are integral to the constructs of a good
public support system. In the United States, while public agencies like the Department
of Commerce and the Eximbank have been integral in the formulation of policies and
legislation that pertain to SMEs’ well being, the SMEs, themselves, have not risen to
be active participants in the policy-making process. This suggests that existing policies
reflect largely the issues as viewed from the standpoint of the agencies, rather than the
views of SMEs themselves. This lack of SMEs’ voice in the deliberation of policies
has proven to be costly.
De Nobel, Castaldi and Moliver (1989) note that exporters are generally
skeptical of any government sponsored programs. Based on a study on 129 SMEs in
the states of Oregon, Washington and Idaho, Albaum (1983) indicates that
“government export assistance programs are generally viewed unfavorably by small
business exporters, and that most of the firms in the sample (80 percent) began
exporting as a result of company sales efforts or an unsolicited inquiry.” These
attitudes stems from the generally distrust in the US government to address the issues
as faced by SMEs seriously, indicating a lack of credible commitment in the part of the
US government.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
17
Czinkota and Crick (1995; see also Czinkota and Rick 1981) reveal in their
study that the issues that SMEs view as pertinent to export promotion have not always
been consistent with the types of assistance that they have requested for from the
public agencies. This mismatch between SMEs’ needs and the assistance rendered by
the public agencies suggests that the programs offered by the various public support
organizations have been utilized inefficiently, and that the cost of these different
programs may have outweighed the benefits from the increase in exports. Czinkota
and Crick point out that “although the government appears to be providing what firms
request,” this often does not register fulfillment of SMEs’ needs, and that the
assistance often do not translate to improvements for SMEs, since “firms may simply
be requesting what the government currently has to offer.” This clearly suggests that
exporters must be more willing to let government policy makers know exactly what
support is required to enhance export performance. A formal quasi public-private
institution established for the purpose of policy making, whereby more SME voice is
incorporated, can mitigate this information asymmetry and increase the credibility
government programs.
Deliberation councils are formal institutions that facilitate communication and
cooperation between the private and public sectors, and they have been integral to
contribute to the rapid growth in many High-Performing Asian Economies1 (HPAEs;
1 The countries considered HPAEs are Japan, Indonesia, Thailand, Rep. of Korea, Taiwan, Malaysia,
Hong Kong and Singapore.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
18
World Bank, 1993). In these different countries, deliberation councils are generally
represented by government officials as well as representatives from the private sector—
specifically, from business, labor, the consumer bloc, and academia.
In Japan, the deliberative councils are organized along two distinct lines--by
function (themes) and by industry. Deliberation councils are always included in the
process of policy formulation, and unless approved by the council, any policy
formulated by the Ministry of Trade and Industry (MITI) “stands little chance of
success” (World Bank 1993).
While the purpose of deliberation councils is clearly to promote
communication and private-public cooperation, the structure of the council often
raises questions concerning opportunistic and rent-seeking behaviors on the parties
involved. However, as observed in the cases of the HPAEs, and specifically Japan and
Korea, rent seeking behaviors are reduced by the mechanism of contest that was
established among firms.
Management: Commitment to Exporting
A major predictor of the export behavior is the strength of the commitment of
managers to export, rather than any factor external to the firm (Tesar 1974; Cavusgil
andNevin 1981; Bauerschmidt, Sullivan, Gillespie 1985; Kotabe and Czinkota 1992;
Perry 1992). The management’s interest in pursing fundamental goals such as profits,
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
19
growth and diversification can be crucial to export market performance. Tesar (1975)
maintains that positive perception of profit and growth is a motivator for exporting,
while negative attitudes tend to inhibit exporting. Cavusgil (1984) asserts that
managerial aspirations and expectations appear to be the best predictors of export
activity within a firm, and that “stepping up of export market involvement is primarily
dependent on how desirable managers view the effects of this activity on growth and
market development.” Simmonds and Smith (1968) contends that “innovative
exporters exhibit the characteristics of enterprise,” and this entails a high degree of
risk tolerance, aggressive drive and profit motivation (Cavusgil 1984).
Conversely, lack of commitment to consistently explore the conditions for
successful foreign market operations often result in SMEs being indifferent towards
exporting (Cavusgil and Nevin 1984). This indifference will in turn lead to a half
hearted attitude toward export sales and failure to adapt to foreign market
requirements. Those firms that lack commitment to exporting usually regard export
sales as a way of utilizing surplus capacity, which implies that a low priority is placed
on allocating adequate resources to the appropriate markets, thus resulting in
inefficiencies and lost opportunities (Jain 1989).
In view of the fact that the task environment of SMEs differs across industries
and is dependent also on the stage of export process of the firm, Cavusgil (1984)
argues that “to accomplish substantial improvements in exports, government action is
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
20
more likely to be more effective where it is designed to make an impact on basic
management attitudes and expectations concerning the contributions export marketing
can make on firms’ goals”; and from a firm’s perspective, “since exporting seems to
be closely related to management’s growth expectations and the strength of their
aspiration for growth, achievement and growth should be emphasized in training
managers.”
Management: Experience with Exporting
Managerial background and experience has been cited as a contributing cause
to the success or failure o f SMEs. Since most of the decisions of SMEs are dictated by
a single manager/owner, or a few partners, the experience of the manager in related
business will be crucial in the overall well-being o f the firm. Based on a study of 30
SMEs located in northwest Wisconsin, Steiner and Solem (1988) found that all the
managers of successful firms have prior experience in a related business, whereby only
75% of the managers of the less successful firms have similar experiences in a related
business.
Management: Age and Education
Given the paradigm that views exporting as a learning experience, one would
think that the age and education of the management will be crucial in the success of
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
21
the firm. This logic stems from the fact that experience increases with the age of the
management and the assumption that the more education the management receives, the
more able is the management to make decisions on a rational basis, and the more open
is the management’s perspective on global issues, as well as new marketing
techniques. Hitherto, the relation of age and education to the success of a firm in
exporting has remain inconclusive. While some have found age and education to be a
variable significant in explaining the export behaviors of SMEs, others did not find
them to be significant (Steiner and Solem 1988).
Ability to Adopt New Technologies
Steiner and Solem (1988) maintain that “the ability of a company to adapt its
production operations to changes in markets, products, raw material and labor costs,
labor availability and technology is critical to successful operations over time.” In their
study, Steiner and Solem divided their sample into “successful” and “less successful”
firms, and then comparatively look at the different managerial and operation
characteristics with respect to the two classifications. As noted in their study, SMEs
generally understand the importance of the above-mentioned factors, but SMEs are
often slow and reluctant to implement changes in their production operations. Among
the successful firms in their study, half have indicated a change in their production
technology, while only 13 percent of the less successful firms have done so. In the
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
same sample, 77 percent have acknowledged that technology within the industry has
changed, suggesting “widespread awareness of the need for such changes.” This
failure to adopt new technologies, the authors suggest, “may be related to financial
constraints.” They argue that although both the successful and less successful firms’
managers “complained of less than adequate financial resources or access to financial
resources overall, most of the successful firms had adopted new technologies,” and
that this is because most successful firms’ managers perceive that successful
operations will be able to “attract or to locate additional financial resources.”
International Market Selection (IMS)
Difficulty in locating foreign opportunities and markets is perceived to be a
major barrier in exporting (Alexandrides 1971; Pavord and Bogard 1975; Ogram 1982;
Bilkey and Tesar 1977).
Papadopoulos (1987) argues that taking the appropriate steps towards foreign
expansion can be a “major determinant of the SMEs’ well being in the future,” and
that the selection of target markets is an important step in this direction. Suboptimal
market selection can be costly, especially for SMEs. In addition to the immediate costs
involved in attempting to enter low potential markets of intense competition, selecting
an unsuitable market can lead to outright failure to penetrate a given market and may
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
23
result in dampening the firm’s export enthusiasm (Welch and Wiedersheim-Paul
1980).
On the other hand, “systematic International Market Selection (IMS) can help
the firm build upon the experience gained in certain markets by applying them to other
countries that are characterized by similar conditions,” and consistent with the learning
process paradigm, successful IMS can enhance the efficiency of the task of
international activity coordination once the company has expanded beyond its first few
foreign markets.
Based on sophisticated manipulation of sets of secondary indicators o f market
potential, numerous IMS techniques have been suggested in related literature (Bames
1980; Papadopoulos 1983; Conners 1960; Bartels 1963; Sethi and Holton 1969; Sethi
1971; Etemad 1981; Dole and Gidengil 1977). Indicators that were used typically
include measures of economic growth, industrial development, infrastructure and
political stability. However, apart from the theoretical limitations of these techniques,
and in light of the fact that SMEs rarely possess adequate temporal, financial and
human resources for IMS tasks (Rabino 1980; Beliveau and Billardon 1984; Denis et
al. 1984; Beliveau 1987), the complexity, costs and information requirements of these
IMS techniques are simply too high for SMEs to use.
In light of the obvious weaknesses of the SMEs, Beliveau (1987) argues for
active government participation by undertaking research at the macro-level by
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
24
identifying industries and product classes that represent attractive long-term
opportunities. However, it should be noted that the general performance of
governments in areas of marketing information gathering and export promotion is
often unsatisfactory, even in developed countries (Ford et al. 1987).
Papadopoulos (1987) identified two factors that are generally operative in the
market selection decision of SMEs: (1) the potential influence of government policies,
as “manifested in the recommendations given to SMEs by public agencies,” and (2)
the ethnic affinities of the SME’s decision makers. While, in principle, public agencies
can be of great help in advising SMEs on market selection, their advice is often found
to be excessively general, and does not necessarily account for the unique needs of
each specific firm or even sector. The “ethnic affinity” factor in determining export
targets by SMEs is quite understandable, SMEs want to deal with potential markets
which are perceived to be “psychologically near.” A lack of exposure to other cultures
can cause communication barriers (Robino 1979), and the failure to understand the
cultures and practices of potential foreign markets will result in psychological distance
(Kedia and Chhokar 1986), yet the fact remains that understanding foreign cultures
and practices may not be easy (Bilkey 1978; Tesar and Tarleton 1982).
It has been estimated that over 70% of Canada’s exports to Japan are made by
nine Japanese trading companies located in Canada, much of Canadian-Italian trade is
conducted by Canadian managers of Italian origin, and that a similar exporting pattern
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
25
can be seen for Swedish SMEs in Canada (Wright 1984). The effects of ethnic affinity
is also evident in Indonesia among the non-Pribumi (Chinese) exporters, as
documented by Levi and Berry (forthcoming). In their study, Levi and Berry note that
in the rattan furniture industry, 63 percent of initial export contacts of non-Pribumi
Indonesian firms were made outside the country, primarily with people sharing their
Chinese heritage; the figure is only 15% for their Pribumi counterparts. And in the
garment industry, 53 percent o f initial export contacts of the non-Pribumi firms were
made from pre-existing ethnic Chinese networks outside the country, while none were
recorded for the Pribumi firms.
Complementary to this finding on the impact of the ethnic affinities of SMEs’
decision makers on IMS is the issue of management’s education and executive
commitment as explained by Kotabe and Czinkota (1992). The authors argue that
while the growth of a firm appears to be a necessary condition for increased export
involvement (see also Cavusgil 1984), it is the executives’ commitment to exporting
as “demonstrated by cultural awareness manifested in their foreign travel experience
and interest in foreign cultures” that appears to be an “underlying force to get their
firms involved in export businesses.”
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
26
The Export Trading Company (ETC) Act of 1982
The ETC Act of 1982 was designed in light of the fact that SMEs were often
not capable of exploiting foreign markets on their own, and with the help of trading
companies, businesses without international knowledge would be able to enter global
markets. An ETC is defined as a “US company organized and operated principally for
the purpose of exporting goods and services produced in the US” (US Congress 1982).
The emergence of the ETC Act of 1982 was largely due to the fact that the existing US
intermediaries prior to 1982 had failed to meet the needs o f those clients they were set
up to serve (Perry 1992). However, with the entry of the ETC Act, the general
exporting behavior of SMEs has not significantly changed.
It has been pointed out by many researchers that the assistance to SMEs by the
ETCs remains inadequate (Martinoff 1988; Czinkota 1984; Czinkota and Johnston
1981; Perry 1992; De Nobel, Castaldi and Moliver 1989; De Nobel and Belch 1988).
Since the inception of the Act, the “positive results envisioned by its proponents have
failed to materialize” (De Nobel, Castaldi and Moliver 1989). By the end of 1985, the
Department of Commerce has issued export trading certificates of review to only 57
trading companies nationwide, out of which 40 have been formed by bank holding
companies (bank ETCs). Yet even with the establishment o f ETCs, De Nobel et al.
(1989) noted that “many smaller firms capable of producing exportable products have
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
27
not widely embraced ETCs as vehicles to assist in entering international markets.”
They argue that the problems that surround the failure of the ETC Act stem largely
from the SMEs’ attitude towards ETCs.
The authors identified two major factors that seem to explain the failure of the
ETC Act. The first major factor that inhibited the success of ETCs lies in the “various
attitudes that tend to preclude smaller domestic firms from exporting in the first
place.” These attitudes may stem from the “complexity small firm owners/managers
believe is involved in planning, organizing, and adjusting products for foreign
markets, along with their belief that implementing export strategies is expensive, and
their general lack of awareness about or trust in government-sponsored export
programs.” The second major factor “relates directly to the range and type of services
that ETCs typically provide their export clients,” and in particular, the possibility that
“services currently offered by ETCs are not perceived as germane or helpful to small
firms that desire to export their products to foreign markets.”
Two identical studies done on samples located in southern California (De
Nobel and Belch 1988) and New Jersey (De Nobel, Castaldi and Moliver 1989)
conclude that exporters primarily seek transaction-creating services, while ETCs seem
to be more proficient at providing physical-fulfillment services. The results of their
study reveals that the most important services SMEs desire from ETCs are (1) the
ability to discover or open new foreign markets, (2) the establishments of personal
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
28
contacts with potential foreign buyers, and (3) knowledge of the foreign markets’
competitive conditions (all of which are considered transaction-creating activities).
While the least important services desired by SMEs are: (1) consolidation of orders
from overseas customers, (2) consolidation of orders from overseas shipments with
products of other exporters to lower freight costs, and (3) advice about the
arrangement for export packaging (all are considered physical-fulfillment activities).
On the other hand, the services provided by ETCs with the highest performance ratings
are (I) assistance with export documentation requirements, (2) arrangements for cost,
insurance, and freight quotes, (3) advice about arrangements for export packaging and
marketing, and (4) the assumption of responsibility for physical delivery of products to
foreign buyers (all of which are considered physical-fulfillment activities). This lack
of congruence between what services SMEs desire from ETCs and the services ETCs
perform well suggests an explanation to why SMEs who are interested in starting or
expanding exporting endeavors may not employ the services of export intermediaries.
In addition, transaction-creating types of activities are not performed by ETCs at an
acceptable level. Thus it follows that if the original mission of the 1982 ETC Act is to
be fulfilled, export intermediaries must adapt to the needs of current and potential
exporters.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
Withdrawal of Commercial Banks From Export Financing
The impact of the less-developed country (LDC) debt crisis on financial
institutions has been well documented. In the late 1970s and early 1980s, commercial
banks, along with the government, were among major holders of LDC debt, much of
which was questionable or bad debt (Nugent 1996). The rise in default on loans to
LDCs made it difficult for firms to attain working capital from banks and other public
institutions to finance operations to these countries. As increasing numbers of LDCs
became incapable of servicing their external debt, US commercial banks grew “very
reluctant to offer export financing to the buyers in these highly indebted countries,” in
addition, many banks have “reached their limits for these countries and are wary of
extending new loans” (US Congress 1988).
Based on the study by the Subcommittee on International Finance, Trade and
Monetary Policy (US Congress 1988), out of a sample of 98 firms surveyed, only 4%
of the responding companies experienced difficulties in obtaining financing for sales
to Europe, Canada and Japan; only 13.4% experienced this difficulty for sales to the
Newly Industrialized Countries (NICs). In contrast, 53.1% experienced difficulties in
obtaining financing for sales in Latin America; 43% in South East Asia, 42% in
Africa, and 30% in Eastern Europe.
A major factor the study cited for the rising withdrawal of banks from
international trade is the lack of profitability in export financing. Due to an increased
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
30
number of bank mergers and acquisitions, advancements in automation, and an
increase in the amount of deregulation of interstate banking (Nugent 1996), US
commercial banks are now faced with a “greater level o f competition than ever
before,” and this has caused banks to “concentrate more on short term profit oriented
services and less on traditional international lending, including export financing” (US
Congress 1988).
Reasons for the lack of profitability in export financing are due to (1) the fact
that export financing is labor intensive, and therefore more costly, (2) the allegedly
“low success ratio” of most export transactions, (3) a high level of “overhead cost for
providing export financing” relative to the size of transactions, and (4) changes in the
“regulatory environment and tax policies.”
Changes in the regulatory environment, such as the increase in the minimum
capital-to-asset requirements in 1981 and again in 1985, have particularly discouraged
banks from international lending and export financing. Measures taken to ensure the
soundness of the banking industry, such as the International Lending Supervision Act
(ILSA)1 of 1983 and the Basle Agreement of 1992, have effectively “increased the
administrative burden of international lending,” thus discouraging banks from
assuming foreign risks, and thereby reducing export financing to SMEs.
' The International Lending Supervision Act (ILSA) mandates additional reporting and disclosure
requirements of US bank lending to foreign countries and directed federal banking agencies to ensure
that US banks maintain adequate reserves against foreign country risks (see Houpt 1988).
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
31
Changes in the Banking Environment and Their Effects on SMEs
It is an established fact that commercial banks are among the leading source of
SME financing, as is confirmed in this study as well as numerous others (Stanley,
Roger and McManisl993, Rose 1986, Eisemann and Andrews 1981, Watro 1982,
Glassman and Struck 1982, Whitehead 1982, Dunkleberg and Scott 1985). Also
established is the fact that the major bulk of SME finance from commercial banks is
from small- and medium-sized banks rather than large banks (Rose 1985, Glassman
and Struck 1982, Frieze 1996).
In an interview, Jill Frieze (1996), Vice President of Imperial Bank, explained
that Imperial Bank, the eighth largest bank in California, generally does not consider
any transaction under a million. She further noted that larger banks like Bank of
America usually work only with a customer requesting a minimum of 3 million dollars
credit. Any customer requesting an amount of credit below the range the bank prefers
is usually referred to a smaller bank or public agency. As noted earlier, a major reason
for this discriminating behavior is the fact that export transactions are usually viewed
as unprofitable, especially for smaller transactions where the process is time
consuming, the high overhead cost is fixed and the returns are low. It has been
estimated that 40 percent of the total volume of SME loans are accounted for by
smaller banks and 37 percent o f those loans are accounted for by medium-sized firms,
while only 23 percent of the loans are accounted for by large banks (Glassman and
Struck 1982).
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
32
Public and Non-Profit Export Financing Support Agencies
There has been much dispute in the literature over the competitive
disadvantage that domestic SMEs face with regard to the export assistance rendered
by domestic Export Credit Agencies (ECAs) and those of foreign competitors. The
literature (as well as several interviewees in our study) has voiced sentiments that
domestic agencies are inefficient due to the lack of experience that the United States
has in exporting as opposed to foreign competing economies which are largely
dependent on exports. However, the literature has lacked specificity in identifying
which areas are deficient and little work (if any) has been done to show why these
deficiencies arise and how they can be removed. Thus a closer look at the policies and
practices of domestic agencies and that of their foreign counterparts is warranted for a
more objective view of the allegations. Due to limited studies available, the
inconsequential role some agencies play in assisting exporters, and the overlap in
programs offered by the myriad of agencies, we shall focus our attention on the well-
documented case of the Export-Import Bank o f the United States (Eximbank).
Eximbank versus Export Credit Agencies (ECAs) of the European Union (EU)
Eximbank has counterparts in the five EU member states of France, Germany,
Italy, Netherlands, and the United Kingdom (UK) that provide a useful comparison
export credit agencies. The comparison based on these EU member states are relevant
because they are major competitors of the United States, and collectively, they
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
33
represent an economy about 83% of the size o f US GDP (for 1993); moreover, these
EU member states are more dependent on export markets that the United States (GAO
1995).
Budgeting Practices of the various ECAs differ in that while Eximbank’s
budget is determined by prior estimates of its loans and guarantees for the year, the EU
ECAs’ budgets for their export financing operations are determined on a cash-flow
basis (the exception to this is the UK ECA). The Federal Credit Reform Act of 1990
requires Eximbank to estimate the total long term costs of its direct loans and
guarantees in the year they are authorized; therefore under this act Eximbank may not
incur new obligations or commitments unless Congress specifically appropriates the
budget authority for these transactions in advance. On the other hand, the ECAs of the
four EU member states (excluding the UK ECA) record receipts when received and
expenditures when paid regardless of the accounting period in which receipts are
earned or the costs incurred. Unique to UK is that it requires its ECA to be self
funding on any new cover business undertaken after 1991, thus implying that UK ECA
should financially break even. This is achieved by establishing sufficient reserves and
charging higher risk-based fees and premiums for an export transaction to high risk
markets.
In general, Eximbank assumes more of the risks of an export transaction than
do ECAs in the five EU member states reviewed. (1) Eximbank gives exporters 100
percent political and commercial risk protection on most medium and long term covers
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
34
it issues, while most ECAs of the EU member states require exporters and banks to
share about 5 to 15 percent of an export transaction risk. (2) Eximbank’s medium and
long term business is unconditional,2 while four of the five ECAs3 in the EU reimburse
claims only if specified conditions are met. It should also be noted that despite offering
unconditional and greater risks coverage, Eximbank generally charges lower premiums
than their EU counterparts.4
Although Eximbank’s unconditional risk coverage attracts exporters, it reduces
the incentives for cautious lending behavior among banks that obtain these guarantees,
thus implying that Eximbank assumes more responsibility and the associated
administrative costs of reviewing applications for financial assistance. This difference
in the risk-sharing proportion also translates into differences in time spent in reviewing
applications. Because ECAs in the EU member states require some minimum level of
private-sector risk sharing in most transactions, they need to spend less time
scrutinizing applications— believing that exporters will make more responsible
judgments since they stand to lose money in bad deals. On the average, the ECAs in
the EU member states take one to two days to review an application, while
Eximbank’s processing time takes weeks.
’ In the event of a default due to political or commercial risks, the exporters or participating banks are
unconditionally reimbursed.
3 The exception to this is the Export Credit Guarantee Department in the UK, which offers an
unconditional 100 percent risk coverage.
4 The exception to this being premium charged for medium-term financing to low-risk countries (GAO
1995).
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
On the other hand, it should also be noted that while Eximbank takes more
time reviewing applications, they spent a significantly shorter time reimbursing claims
(within a week for loan guarantees), while their EU counterparts can be expected to
take months for the same operation. A Dutch banking official noted that the waiting
period for claims reimbursements is typically 3 to 6 months from when losses occur,
and a French official noted that small claims of $3000 or less are reimbursed in two
months and all other claims take approximately 5 months from when they are
submitted.
Long processing times and excess paperwork performed in the United States
are often perceived as major obstacles to exporting. This perception is due largely to
the asymmetric view of the environment by SMEs because the tradeoff between the
time reviewing applications and the time for claims to be reimbursed are not usually
factored into the SMEs’ consideration. This tradeoff needs to be addressed seriously
by SMEs and policy makers alike if reform of US export assistance is to be effective.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
36
Export Assistance Organizations
There are a number of organizations and government agencies whose aim, in
whole or in part, is assistance with small business exporting and specifically the
provision of export loans and loan guarantees. Among these are the California Export
Finance Office (CEFO) and Los Angeles Area Chamber of Commerce (LAACC)
serving this region, and the Export-Import Bank of the United States (Eximbank), the
Small Business Administration (SBA), the Overseas Private Investment Corporation
(OPIC), and the Private Export Funding Corporation (PEFCO), all of which operate on
the national level.
Also providing assistance are local world trade centers and chambers of
commerce. Counseling and marketing-related services are provided by the
Department of Commerce International Trade Administration (DOC ITA) and the
Service Corps of Retired Executives (SCORE), an SBA program. Recently, US
Export Assistance Centers (USEACs) have been formed, which bring together several
support organizations, such as those above, into one office. The SBA has organized
numerous Small Business Development Centers (SBDCs) throughout the country.
Below is a brief description of each of the relevant agencies serving California
exporters, including an assessment, based on the literature, of the degree to which each
is used. These summaries draw heavily from similar summaries in Wells and Dulat
(1996) and Martinoff (1988) and are supplemented by information from personal
interviews and updated where necessary. These other sources will be documented
individually.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
37
CEFO
Probably the most highly acclaimed export finance entity is CEFO, a small but
successful office created in 1985 that operates under the California Trade and
Commerce Agency (CEFO 1994). It provides only loan guarantees, not direct loans.
It presently has a fund balance of about $11.4 million which can be leveraged 4 times
to guarantee a total of $45.7 million in loans at any given time (CEFO 1996). CEFO
caters specifically to small exporters, and has a maximum guarantee of $750,000 on a
loan; as the guarantee is for 90% of the total amount of the loan, CEFO can finance
transactions of size up to $833,000.
CEFO offers three basic loan guarantee plans:
• Pre-Shipment Working Capital Guarantee covers loans used to allow a firm to fill
an order and continue operation before payment.
• Post-Shipment Accounts Receivable Guarantee allows firms to offer terms of
payment to foreign buyers by covering risk of default, inconvertibility, or political
risk. This is done in conjunction with Eximbank's Umbrella Policy.
• Combination Guarantee combines both Pre- and Post-Shipment guarantees.
Besides the appropriateness of its guarantees to SMEs, CEFO has relatively
loose requirements for their guarantees which qualifies many more SMEs for
assistance from CEFO than from other agencies. In contrast to Eximbank, "CEFO
takes big risks" (Snow 1996). CEFO has nevertheless been effective in maintaining a
low default rate, paying only $3.6 million on 19 claims since its creation (CEFO
1996).
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
38
The demand for CEFO services has risen faster than its budget, allowing it to
become more selective in choosing financing projects. While this reduces the risk of
future defaults, very new and very small exporters are no longer receiving the
assistance that CEFO previously provided (Brown 1996).
LAACC
The LAACC is the largest of over 240 Chambers of Commerce in the five
counties comprising the Los Angeles area. Its assistance to exporters is limited to
counseling. A $2.6 million grant from the DOC Export Development Administration
has allowed the LAACC to create LA Trade, an entity designed to help LA area
exporters through technical assistance and counseling (Murat 1996). LA Trade has
established a number of local Trade Centers which offer assistance to businesses in the
Los Angeles area. LA Trade provides service in 4 main areas:
• Export counseling.
• Market support, including trade shows and "International matchmaker missions."
• Export finance assistance limited to loan counseling and referencing to financing
agencies and programs.
• On-line export assistance and trade data, provided through TradePort.
The most innovative project of LA Trade is TradePort, a virtual library of
export advice, trade and export assistance directories, and general information on
exporting and preparation for export. The huge, award-winning web site is generally
easy to use and comprehensive. Its directory information is the most extensive the
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
39
researchers have encountered, but unfortunately it is spread over several pages, with a
considerable amount of repetition.
Eximbank
Eximbank's express mission is to support US exports and the competitiveness
of U.S. exporters by providing financing where private sources are insufficient. To
this end, the Eximbank offers direct loans and loan guarantees to both US exporters
and foreign buyers of US exports. Most support is in the form of guarantees and
insurance rather than direct financing (Snow 1996). Eximbank does not compete with
the private sector, and will not offer assistance without a "reasonable assurance of
payment." Because it has traditionally financed large projects and demands
"reasonable assurance of payment," Eximbank has historically provided very little
assistance to small business, who rarely have the required assets or cash flow.
In the last decade, however, it has taken steps to offer assistance specifically to
small businesses and to become more accessible to SMEs in general. These changes
have met mixed results. Eximbank's monetary commitment to SMEs has grown: it
provided $1.7 billion in support to small businesses in fiscal 1994 including $181
million in Working Capital Guarantee financing, which is specifically aimed at small
business (Eximbank 1994a). Nonetheless, Eximbank continues to have relatively
strict conditions on firm creditworthiness. It is an asset-based lender, which means a
letter of credit, which guarantees payment, will not be considered collateral; rather, at
least one year of export experience and a positive net worth are required for assistance
(Snow 1996). Both of these requirements can be substantial impediments to small
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
40
firms, especially those intending to break into exporting. This issue we will take up
later in our results and conclusions.
Eximbank offers the following policies aimed at small business (Eximbank
1994b):
• Small Business Insurance is a short term (180 days or less) policy for small, less-
experienced exporters. It covers 95% of the commercial risk and 100% of the
political risk. This is a multi-buyer policy.
• Umbrella Policy is administered by a private intermediary between Eximbank and
the exporter.
• Short-term Single Buyer Policy is short-term insurance for an exporter who does
not want to insure all short-term credit sales, as under a multi-buyer policy.
• Working Capital Guarantee Program guarantees 90% of the principle and interest
on working capital loans from commercial lenders to small business, up to a limit
of $2 million.
In support of Eximbank's loan guarantees, PEFCO acts as a lender of last resort
if commercial banks are unwilling to finance a qualified firm. Eximbank also
discounts its loan guarantee arrangements through PEFCO in order to maintain
liquidity to provide additional financing. Beyond these functions, however, PEFCO
plays little part in the financing of the exports of SMEs.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
41
SBA
The SBA serves businesses that qualify as small businesses by its standards,
which vary by industry, but generally describe small- or medium-sized enterprises as
defined in this paper. It offers both counseling and financing. Although the focus of
the SBA is solely small business, it has no specific export emphasis. Because of this,
its effectiveness to small exporters is not certain.
The SBA does have several programs which cater to exporters. It has offices
offering export assistance in all the USEACs. Counseling is provided at SBDCs as
well as at the larger offices of the SBA. The most highly regarded program of the
SBA is SCORE, composed of retired executives with export experience and expertise
who offer their consultative services to new exporters.
A number of loan and loan guarantee programs are offered as well. The Export
Working Capital Program is essentially identical to Eximbank's working Capital
Guarantee and the two organizations have coordinated their programs, so that the SBA
provides guarantees to small firms with needs for loans under $833,000, and
Eximbank provides guarantees for larger loans. The SBA's Regular Business Loan
Program guarantees medium- and long-term loans of similar size, but covers only 85%
of the loan for loans greater than $155,000. The SBA has recently added the Low-
Documentation Loan Program to its list of offerings, which should ease the
requirements on very small firms and the traditionally considerable paperwork they
face.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
42
OPIC and AID
OPIC is a self-financing quasi-govemmental organization committed to
assisting projects of American businesses in developing nations. Most of financing
offered by OPIC is devoted to direct investment projects. Although it does offer
exporter insurance, this is limited to contracts with foreign governments or, for other
contracts, is limited to losses incurred due solely to political violence. Its usefulness to
the southern California SME is further limited by the fact that OPIC generally deals
with larger contracts and in all cases covers dealings only with developing countries.
China and Mexico are excluded from the list of OPIC-eligible countries. Nonetheless,
firms exporting to particularly unstable areas may find OPIC indispensable.
The US AID provides export financing for trade with developing countries as
well, but is generally restricted to contracts with foreign governments that are
additionally deemed beneficial and important to the county's development. Although
both of these organizations are available to small exporters, they are not likely to be
major suppliers of loans and guarantees.
DOC ITA
The DOC is a large agency offering a great number of services, export-related
and otherwise. The vast majority of export services are provided by the ITA, and thus
any discussion of the DOC's role in export assistance will revolve around the ITA.
The ITA is composed of four basic units which each provide services to the exporter.
The division can be summarized as follows:
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
43
• US and Foreign Commercial Service (US&FCS) offers the greatest breadth of
service. It is outlined in more detail below.
• International Economic Policy Unit provides information on market and political
characteristics and marketing strategies for all of the US's trading partners. It gives
country-specific information.
• Trade Development Unit provides counseling and offers programs to assist firms
based on their industry affiliation, rather than their geographic objectives.
Programs include trade fairs, seminars, and trade missions.
• Import Administration Unit assists firms who may be victims of unfair trade
practices of firms exporting to the US.
The US&FCS has two primary objectives: to counsel new exporters or
exporters wishing to expand their export involvement; and to provide access to useful
databases that the US&FCS compiles. The largest and most useful such database is
the National Trade Data Bank. Also, the extensive overseas network of US&FCS
offices is in itself a considerable resource.
The US&FCS attempts to meet its objectives through a number of activities.
In addition to basic export counseling, it organizes trade fairs and missions, promotes
technology sharing, establishes contact between exporters and US&FCS offices in
other countries, and acts as an advocate for US firms in foreign countries (Kanlian and
Morrison 1996). The US&FCS, nor any other unit of the DOC ITA, does not provide
export financing or loan guarantees.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
44
Interview Summaries and Commentary
A number of face-to-face interviews with officers from support organizations
supplemented the literature on those agencies, and interviews with concerned
exporters added to the feedback garnered from the returned questionnaires. An initial
interview provided an overview of export finance from the perspective of a successful
businessperson and an expert in the field. All the interviews with the support
organizations were conducted in the spring of 1996. The interviews with firm
entrepreneurs were held in response to replies to the questionnaire mailed in July.
Finally, two interviews were held with bankers was held in November and December
1996. The interviews are handled below in chronological order. The summaries and
commentary cover content of the interviews that is not redundant with information
found in the literature.
Systems Integrated, Inc.
Susan Corrales-Diaz, President and CEO of Systems Integrated, Inc., a small
and successful exporter, hosted an interview with herself and Irene Fisher, a consultant
for SCORE. Ms. Fisher pointed out that many SMEs stumble upon export
opportunities but are unprepared for the risks. SMEs are particularly vulnerable
because they do not have the resources for absorbing any losses. While firms tend to
concentrate on reaching the market and selling the product, they often overlook the
need for financing and are ultimately stymied by financial limitations.
Ms. Corrales-Diaz elaborated on Ms. Fisher's comments. Cash flow is a major
problem SMEs face, since deliveries and payments may be few and irregularly timed.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
45
To fulfill an order with delivery and payment often a year or more in the future, a
small firm needs extensive financing to cover operating costs. Banks will only provide
a letter of credit, guaranteeing payment to the seller, if the firms puts up 100% of its
value in collateral. The greater sense of risk leads banks to require much greater
amounts of collateral when lending to finance exporting than to finance domestic
business. Difficulty in judging creditworthiness of the buyer is a major factor in the
conservative approach most banks take to export finance.
Ms. Fisher offered another thought: virtually every other country's economy
relies on exporting, and so their government are effectively and extensively involved
in export assistance. In the US there is no sense of urgency or priority in government
or even private banks. This in turn generates a widespread lack of expertise in export
assistance and financing.
These comments are particularly relevant in light of the fact that in both
academic and governmental circles, the primary focus o f export assistance is
marketing support. This is the area where inexperienced firms are most likely to seek
help, as indicated by Ms. Fisher's comments. However, given the lack of resources
and expertise devoted to export support, this focus on marketing implies that what
little assistance is being given is largely misdirected.
Eximbank
Tricia Snow, Business Development Officer for Eximbank, discussed
Eximbank's role in financing SMEs. She began by acknowledging Eximbank's
reputation as a big business bank. Eximbank does not work with businesses just
beginning to export; it requires a year of export experience and demonstrated net
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
46
worth. This limits the numbers o f firms it can serve. Nonetheless, within these
restrictions, Eximbank has greatly expanded its efforts to reach SMEs that it can serve.
She claimed the turnaround time for an application for a loan guarantee is about six to
eight weeks.
Eximbank does offer Export Credit Insurance to small firms, something private
insurance providers tend to offer only to large firms. In her experience it has been
successful and has not ever been abused in the ten years of her experience. Although
Eximbank's Working Capital Guarantee to small exporters covers 90% of the amount
of the loan, banks still feel uncomfortable with the 10% that remains a risk. Ms. Snow
did not perceive there to be a secondary market for such loans.1
This interview raised three major points of concern: first, whether there is an
agency that is willing to finance firms that are new-to-export; second, the extent to
which a turnaround time o f six to eight weeks handicaps firms attempting to arrange
export transactions; and third, the reasons behind banks' seemingly excessive aversion
to export finance risk. To some extent all three of these points were illuminated in
later interviews.
CEFO
Caroline Brown, Senior Loan Officer, offered a very different view of export
finance from Ms. Snow. She said that most banks do not mind the 10% unguaranteed
portion of their working capital loans. Only at a lower rate of coverage, say 75%,
would banks withdraw financing. She described CEFO guarantees as providing an
"added comfort level" to banks. Also, CEFO is an economic development agency, and
1 There is such a secondary market; this fact came to light in later interviews.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
47
it recognizes and does not shy away from the risk inherent in developing export
markets. Nonetheless, CEFO has experienced few defaults.
In spite of the fact that CEFO has been so successful, Ms. Brown notes that
banks remain wary of financing small firms. They are concerned about the solvency of
a firm for which one shipment may represent 10% of its budget. CEFO is necessary to
establish the relationship between the bank and firm, which, once solidified, can
continue without CEFO involvement.
The success o f CEFO has allowed it to become more selective among firms,
which has had the unfortunate effect of reducing the likelihood of very small, riskier
firms from gaining access to guarantees and thus financing. This is an gap in export
finance support that needs to be filled.
Reflection on these comments yields the following question: if CEFO only
provides an "added comfort level" to banks, why are banks which are aware of the low
default rate CEFO experiences so unwilling to provide financing on their own to
firms?
DOC
An interview at the DOC office in the USEAC in Long Beach with Joan
Kanlian and Steve Morrison, International Trade Specialists, was composed of an
outline of DOC administrative units and programs and an extensive review and
revision of the questionnaire. A number of new support organizations were added to
the questionnaire.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
48
LAACC
Corinne Murat, Program Director, talked about the relationship between the
LAACC and other chambers of commerce. Within the five county Los Angeles area,
there are over 240 chambers of commerce, she pointed out, which each lobby for the
needs and pool the resources of their constituent firms. All chambers of commerce
engage in legislative advocacy, lobbying to further the interests of their member firms.
The LAACC has partnerships with World Trade Centers in Long Beach, Orange
County, Oxnard, and with the Inland Empire Economic Partnership. With these
partners LAACC provides counseling for firms interested in or presently exporting.
LAACC is also working with the DOC to provide counseling through LA Trade, a
special program to provide free export counseling. LA Trade offers TradePort, the
web site for export assistance.
Pioneer International Group
The first of the three interviews with firms was held with John Alikani,
President of Pioneer International Group. Pioneer is a subsidiary of All-Grain
International Export Group; Alikani founded Pioneer in 1987 to do research and
investment for All-Grain. Since All-Grain withdrew a promising project from Russia
in 1994, however, Alikani has attempted to create his own export trade, particularly
with leads in Russia. He is also marketing the product Allvita, a food and animal feed
preservative.
In this last year he has received a couple of large orders for Allvita, and needed
financing for the shipments. He filled out a large amount of paperwork, which he
exhibited during the interview, but was turned down even after demonstrating the
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
49
quality of his product and documenting his buyer’ s 20% down payment. He has had to
settle for a shipment one-fifth the size o f the order, where the original down payment
became the entire cash payment.
Mr. Alikani sees the bureaucracy of the export finance assistance as his
undoing. He argued that paperwork intended to prevent fraud actually invites it.
Instead of detailed paperwork, export finance offices should be staffed by three experts
who would give a guarantee after a face-to-face meeting. European countries, he
stated, with their traditional reliance on trade, provide fast and liberal guarantees to
earnest exporters. They also provide credit to buyers, which is a critical edge over
small American firms that European firms enjoy.
The case of Pioneer is a clear example of the necessity of export financing
assistance to small firms. It is not surprising that a firm so small and with few assets
would be rejected by Eximbank for financing. What was not clear was whether this
had been made clear to Mr. Alikani. What is more clear is that he would be doing a lot
better business if he had received financing. He is understandably reticent about
approaching other agencies now. Like most firms in this study's sample, he is
preoccupied with security of his firm's information, and is loathe to deal with more
agencies and additional paperwork.
This case highlights the importance of financing to the small business export
process. Pioneer is an export trading company, a subsidiary of a larger exporter, and
Mr. Alikani has extensive experience in exporting. It is evident in this case that the
sole limiting factor in the failure of this transaction was financing. Difficulties in
marketing the product or lack of familiarity with export transactions played no part. If
Alikani's experience is at all typical, the lack of resources devoted to finance (first
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
50
considered under "Systems Integrated, Inc." above) is serious problem that should be
remedied.
Concord Enterprises
Originally an importer, Concord now does most of its business exporting.
Mike Shayan, a buyer for Concord, now spends much of his time as a seller of
Concord's exports traveling to various consumer markets. Concord is a medium-sized
importer/exporter that is able to sell smaller batches to small markets that larger firms
ignore. Serving smaller buyers, however, means that financing is harder come by,
since banks prefer to finance only shipments between large firms.
Mr. Shayan sees problems of collection as important as problems of financing.
Since Concord is an established medium-sized firm, this is not surprising. But
measures to promote or ensure collection from buyers overseas would indirectly
benefit seekers of financing if providers of financing saw collection as more likely.
One way to achieve this end, he believes, is for support organizations to provide
information on the various customs and instruments in different countries and on their
reliability. He also describes how overseas chambers of commerce, such as Hong
Kong's, are fast acting and aggressive, while American services are slow and less
effectual.
Mr. Shayan recommends a free zone as the best thing Los Angeles could offer
importer/exporters.2 Large quantities of goods flow through LA; in his case, he
2 There do exist, in fact, free zones (called Foreign Trade Zones; they are areas where goods can be
imported without customs duties being assessed until they are shipped out of the Foreign Trade Zone
and into the rest of the United States) in the Los Angeles area. There is a Foreign Trade Zone in the
Port of Los Angeles and one in the Port of Long Beach, as well as numerous smaller zones throughout
the Los Angeles. Apparently they are not as well publicized as they ought to be.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
51
handles goods from East Asia bound for Latin America. It would bring a lot of
businesses in Los Angeles from South America in his opinion, and will help American
firms take advantage of the tremendous but under-appreciated potential of the Mexican
market that he sees.
The emphasis of Mr. Shayan's points betrayed a concern with special services
to exporters over a need for financing. It would seem reasonable to assume this
attitude distinguishes more established, medium-sized firms from newer and smaller
firms. With the exception of the perhaps DOC, none of the export support
organizations included in this study would have the resources to implement a program
to increase collections in foreign markets. A focus on the more modest, transaction-
oriented needs of smaller firms seems to be a sensible priority for support systems
given these circumstances.
C-Shore International
C-Shore is a small export trading company owned by Jacques Isaac. He has
been in business for the past eight years, and presently exports various agricultural
commodities to countries in east Asia and the Middle East. Like Pioneer, C-Shore
buys products from domestic suppliers and exports them under its own brand name.
Because Mr. Isaac has established a reputation and developed relationships
with suppliers, he usually does not need working capital, since his suppliers trust he
will pay on time. When there is a very large order, or an unfamiliar supplier, he needs
to provide cash up front and must appeal to a government agency for assistance. He
says he used to have a line of credit with CEFO, but now CEFO offers only
transactional credit. This is a handicap because it takes about two to three weeks to
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
52
gain approval for the working capital loan, in which time the relevant letter o f credit
has expired. Mr. Isaac says that although CEFO has been flexible in the past, it has
reduced its services recently, and denied his $750,000 Pre-Shipment Working Capital
Loan Guarantee request on the grounds that he did not have sufficient assets for
collateral. He also approached a Small Business Development Center and completed
their paperwork, but did not receive any financing.
He believes that the government needs to provide financing with lines o f credit.
This speeds up the filling of orders and gives more flexibility to firms; for example, it
would allow Mr. Isaac to offer his buyers open accounts rather than letters o f credit,
which are costly. Without government lines of credit, small firms such as his have to
turn to private finance companies, which charge prodigious amounts of interest. He
expressed some pessimism about the prospect of improvements in export finance
assistance, saying that new regulations and budget cuts are forcing agencies to become
more conservative.
Imperial Bank
An interview with Jill Frieze, Vice President of the International Division of
Imperial Bank, provides a banker's perspective on export finance. Ms. Frieze explains
the role of Imperial Bank in exporting and provides a perspective on the involvement
of banks in general in export finance for small business. Imperial Bank is a southern
California-based bank which serves "middle market" firms, with sales from
approximately $5-50 million. It is very involved in export finance.
Ms. Frieze says agencies such as CEFO and Eximbank do not often refer firms
to banks, but rather banks refer their clients to such agencies when they are
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
53
considering an export financing loan. Additionally, banks frequently refer firms to
other banks which are more willing to provide loans for exporters. Although Imperial
does serve more small firms than larger banks such as Bank of America, it serves
fewer than small community banks. Imperial Bank does not even consider very new
or very small firms for loans; if such a firm approach Imperial for a loan, she would
refer it to a smaller bank. Imperial generally does not consider small loans because
they do not generate the required profit margins, since their fixed costs— paperwork
and monitoring—are as high as for larger loans.
Often times small firms encounter an export opportunity far larger than
anything they have done before. Banks tend to be hesitant to finance such transactions
because the exporter's ability to perform has not be established for a shipment of such
a magnitude. Banks do not lend much weight to letters of credit, as they do not
guarantee payment, but are contingent upon conditions on both the buyer and exporter.
Rather, Imperial (and most banks) is an asset-based lender, requiring three years of
financial statements and often a record of exporting for firms without a relationship of
standing with the bank.
Since the Latin debt crisis in the 1980s, banks have been loathe to provide
loans for exporting to Mexico and other countries in Central and South America. In
the last few years they have begun to service the Mexican market, but not without
government guarantees. This fact, however, can be generalized to all export
transactions: without a guarantee, only exporters with a spotless export history and
exceptionally safe circumstances for exporting would have a chance to receive an
unguaranteed export loan. Even guaranteed loans, since they are rarely 100%
guaranteed, banks sell on the secondary market.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
54
In response to the question of whether banks would finance exports in the
absence of guarantees by the government, Ms. Frieze said they would, but only in the
complete absence of any government guarantees—not before then. As long as there
are guarantees, banks will be unwilling to provide financing without the security
government finance provides. In defense of this stance, she points out that guarantees
provide banks with more funds available for borrowing and allows banks to provide
more cash up front to the exporter for a foreign receivable.
National Bank of Southern California
Peter Hofmann, Vice President and Manager of the International Division,
explains the alternatives that banks can offer small start-up firms without the capital or
track record to qualify for export finance loans. As National Bank of Southern
California serves primarily small- and medium-sized businesses, Mr. Hofmann is
heavily involved in export finance for SME exporters. Like other banks, he says, his
bank requires collateral and at least a year of export experience before it will provide a
loan. A small firm in need of working capital which lacks sufficient collateral for the
loan it needs may be able to get a loan guarantee from an agency, but a firm without
the export experience will not qualify for such guarantees. Thus, in order to finance a
small start-up firm, a bank would have to "go out on a limb," an d , given the high
degree of regulation banks face, such a bank would be "relatively squeezed."
What Mr. Hofmann does for such firms is to suggest alternative ways of paying
their suppliers (payments for raw materials, or, in the case of export trading
companies, finished products create some or even all of the need for working capital).
He suggests arranging for payment through a transferable letter of credit, which allows
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
55
the exporter to transfer a portion of the value of the letter of credit to its supplier, thus
guaranteeing payment to the supplier (contingent upon satisfactory delivery) rather
than paying the supplier up front. For many exporters, a transferable letter o f credit
sidesteps the entire problem of working capital. Mr. Hofmann emphasized the fact
that back-to-back letters of credit do not serve this end, and that only a transferable LC
can circumvent the need for collateral on the part of the exporter.
Mr. Hofmann is optimistic about the recent attention government has been
paying to exporting and the easing of the export process for smaller firms, saying, "A
different wind is blowing." Nonetheless, most firms, with the exception of very large
ones, are ignorant of exporting. He outlined "four pillars" of exporting: marketing,
insurance and transportation, legal, and finance. Although most firms are very aware
of the marketing needs they have, they do not understand export finance at all.
Finally, Mr. Hofmann points out some things that firms can do to give
themselves an edge. Beyond the general need to develop an export culture in the
United States, a couple of specific things exporters can do to expand their circle of
buyers is to offer terms in the buyers' currency and to work with foreign-based
international banks that have stronger ties to the regions to which one export than
American ones. For example, a firm may need to contact a British bank in order to
confirm a letter of credit with a buyer in a former British colony who uses a local
bank.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
56
Methodology
Underlying this study is the belief that no inferences can better be drawn than
from the words of the subjects themselves. In the case of this study, the subjects were
SME exporters and their support organizations. The objective was thus to collect as
many accounts of the present state of export finance as possible, while maintaining a
standard of statistically quantifiable data and working within the limitations of time
and personnel. If possible, qualitatively descriptive feedback would be collected as
well. This objective motivated the methodology of this study.
The description of the methodology of this project is divided into the following
logical steps, which are roughly sequential as well: choice of survey procedure,
construction of the survey, initial interviews and the mailing list, mailing process and
the effective sample size, further interviews, test for representativeness of the sample,
preparation of the data, and data analysis.
Choice of survey procedure
The chosen method of data collection was a mailed questionnaire. This is in
contrast to the technique of the survey of Korean SMEs by Nugent and Kim
(forthcoming), composed solely of personal interviews to fill out each questionnaire.
Although such a methodology is more thorough, such an effort would have been a
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
57
logistical impossibility for this study. A possible alternative to a mailing is a
telephone survey. Given the sample size, this was also impractical. A further
weakness is the lack of credibility a telephone researcher has. A mailed survey was
feasible, and presented the advantage of reaching the largest number o f potential
subjects with the credibility of a letterhead for the researchers and the anonymity of the
postal service for those so desiring it. Mailed surveys are used extensively for
research, and several studies on export assistance have used mailed surveys with
considerable efficacy (Czinkota and Ricks 1981, Czinkota 1984, Martinoff 1988, Rhee
1991, and Kotabe and Czinkota 1992).
Two limitations of this method of surveying are of particular interest. First,
questionnaires may be returned with answers to certain questions withheld or filled in
inappropriately. Second, the representativeness of the data is uncertain. In fairness to
this method of surveying, it is doubtful that any other survey approach would eliminate
these uncertainties. Regarding the first point, firms (at least in the relevant business
environment) are known to be extremely jealous of their company-specific
information, particularly financial data. The fact that export finance has been a
relatively neglected area of survey research is no doubt a product of this widespread
reluctance to disclose detailed information. As far as questions receiving
inappropriate answers, a survey conducted with personal interviews would have been
remedial to a great extent. The mailed survey was simplified to prevent such
problems, and few occurred.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
58
Regarding the second point, a low response rate to a mailed surveys raises the
question of representativeness. The representativeness of the replies will be covered in
greater detail below; note here that other survey methods would have required an
initial limitation of the sample by the researchers, which would have been a possible
source of further bias. In any survey, the subjects are ultimately self-selecting, and a
mailing which contacts as many firms as possible is likely to yield the most
representative sample.
Construction of the survey
Nugent and Kim's questionnaire is a comprehensive forty-two page survey
which took a three-hour personal interview to complete. Finding willing subjects for
such a questionnaire, even if personal interviews were feasible, would have been
difficult among southern California SMEs. Their questionnaire formed the basis for
this study’s questionnaire. It was pared down to be as short as possible and, naturally,
specifically relevant to the SME exporter of southern California. This process was
made difficult by the trade-off between brevity and the desire to maintain the general
structure of the original questionnaire, which collected general vital statistics o f the
firm and a background of the firm's exporting to frame the feedback on the export
assistance services. The vital statistics are useful for assessing the character o f the
respondents to the survey, and specifically for creating profiles of the types o f firms
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
59
which most need help from export assistance agencies. This could then be compared
to the types of firms on which the agencies focus their efforts.
The questionnaire was organized into five broad types of questions. It began
with a request for basic background information on the entrepreneur filling out the
survey and the name of the firm. This information was labeled "optional," in order to
maintain the confidentiality of those who wished to preserve it. Next were general
questions about the products, size, and export history of the firm (these two sections
were listed under the heading "I. Overview"). The next two sections were devoted to
evaluation of difficulties present and assistance available in the areas of marketing
(under the heading "II. Marketing Support System") and finance ("HI. Financial
Support System"). The final section was a completely open-ended request for
commentary on the firm, its experience, exporting, or support organizations ('TV.
Additional Comments/Recommendations"). The entrepreneur was offered a copy of a
report of the findings as an incentive for participating in the survey. A respondent who
wished to maintain confidentiality of information needed not enclose a business card
or reply address, but could simply mail a request for the report separately.
The inclusion of a separate section on finance and requests for estimates of
important financial data represented a break with the traditional thrust of surveys on
export assistance. A review o f the literature on this subject conducted as the survey
was constructed revealed the area of finance to be underrepresented in the body of
literature. The field of export assistance gained impetus from the large merchandise
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
60
trade deficits of the 1980s, but research in that area centered around marketing
support.
Several drafts were written, evaluated first by the project advisor, then by
personnel at the export support agencies who would ultimately use the data collected.
These revisions culminated in a final draft which included a checklist of all major
export assistance programs available to the subjects of the survey, which would
provide an overview of program use. The questionnaire was designed to be completed
in about 20 to 25 minutes. In order to facilitate rapid completion, wherever possible
questions were posed as a choice among designated alternatives or a selection of a
number on a scale. Those questions which could not be completed in such a manner
were constructed to be answerable with a very brief written reply. Thus, most of the
questionnaire required only checking blanks or boxes and circling numbers. As most
of the questions requested only estimates, this procedure did not significantly affect the
exactness of the question. Since exact data is often considered confidential and was
unlikely to be available for past periods relevant to the research, the questionnaire
asked only for estimates.
Initial Interviews and the Mailing List
In preparation for the mailing of the questionnaire several interviews were held
with experts from government agencies as well as a prominent small exporter. These
interviews sought to clarify the exporting process, to scrutinize the drafts of the
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
61
questionnaire, and to offer a southern Californian perspective on export assistance that
cannot be gained from the literature. Interviews were conducted with Susan Corrales-
Diaz, President of Systems, Inc. and Irene Fisher, a SCORE consultant and former
CEFO head; with Tricia Snow, Eximbank Business Development Officer, Caroline
Brown, Senior Loan Officer at CEFO, and Joan Kanlian and Steve Morrison,
International Trade Specialists from the DOC, and Corinne Murat, Program Director
of the LAACC. The interviewees not only provided first-hand accounts o f their roles
in the exporting process but a wealth of literature published by the various export
support organizations.
Each of these experts reviewed the questionnaire and pointed out possible
ambiguities and questions they felt were not relevant to this region's business
environment. One of the major differences between the original questionnaire for
Korean firms and the final draft of this survey was the omission of subcontracting
material from the latter, due to its minor importance to southern Californian SMEs as a
route to developing exports. Also, OPIC, PEFCO, and USAID, which appear often in
the literature, had their presence in the survey reduced to reflect their limited
applicability to SMEs.
Crucial to this study were the lists of exporting or intemational-trade-oriented
firms which the export assistance agencies provided. Mailing lists from Eximbank,
DOC, CEFO, and LAACC were combined to form the master list of firms which
would form the sample population of the study. Together, these lists formed a quite
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
62
comprehensive list of firms which are using, had used, or had tried to use export
assistance programs in this region. The total number of entries on this master list was
more than 3000; the Eximbank list had almost 2000 entries, the DOC had 1216, CEFO
had 215, and LAACC had 74.
Unfortunately, the Eximbank list, by far the longest of the four, was not
composed solely of exporters nor of SMEs. Partly for reasons of information
confidentiality, and partly due to the unwieldy size of the list, Eximbank was unable to
edit the list for the purposes of this survey. Further, a considerable number of entries
on the DOC and Eximbank lists were duplicates. A few firms on every list were
service firms, and a small percentage of firms appeared on more than one list. Some
telephone sampling was conducted in order to create a feel for the proportion of
importers and service firms on the Eximbank list. Although this required some
judgment on the parts of the researchers, considerable editing of the DOC and
Eximbank lists yielded a final list with around 2000 entries. Duplicates, firms outside
the geographical region under study, and service firms were eliminated without much
difficulty. The geographical limits of this survey were defined as the city of
Bakersfield and all points south in California. Beyond those discovered by a limited
telephone survey, however, importers could not be eliminated with regularity from the
list. The presence of firms which imported but did not export likely had a small effect
on the effective sample size of firms. This, and other determinants of the effective
sample size are discussed below.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
63
Previous surveys on export assistance (such as those listed above) have not
relied on agency-provided lists to create their samples of firms for their study. The
exception is Martinoff (1988), who combined an SB A list with a random sample of
firms and banks to form a master list. The break in methodological practice that this
study represents is not coincidental and is of methodological importance. The primary
concern of this study is the evaluation of export assistance programs (with a focus on
finance). Thus, only firms with exposure to such programs need be included in the
study. A random sample which included firms without experience with export
assistance would be of little use. It should be clear that the master list of firms is in no
way a random sample of the population of SME manufacturers in southern California,
nor even of those interested in exporting. It is however an extensive list o f those
which have had contact with export assistance programs, and thus is not a sample
burdened by any selection bias for the purposes of this study.
The Mailing Process and the Effective Sample Size
Once the master list was acceptably lean, a cover letter was written introducing
the researchers and explaining the purpose of the survey. It introduced the researchers,
summarized the objectives of the survey, expressed the importance of each firm
responding and stressed that responses would be kept in strict confidentiality. A
summary of the study's results and further information on export assistance programs
were offered as incentive to those who completed the questionnaire and wished to
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
64
receive them. Firms were reminded that the results of this survey— in the aggregate
only— would be given to local export assistance agencies. The cover letter was revised
after review by export assistance agency personnel.
Martinoff (1988) explains in his methodology that the inclusion of
endorsements from the US Senate and SBA gave credibility to his survey and yielded a
very high response rate from subjects. Although the endorsement of Eximbank,
CEFO, DOC, and LAACC was offered, the potential benefits of those endorsements
were outweighed by a potential drawback. By tacitly affiliating the survey with certain
export support organizations, the cover letter could prompt respondents to feel less
free in replying candidly about the support organizations in question. The possibility
of an inherent bias in the surveying process made any agency endorsement
undesirable.
Before the initial mailing of questionnaires, a sample of Eximbank firms was
chosen for address verification and telephone contact. The Eximbank list was chosen
because it was the largest and contained the largest proportion of non-SME, non
exporter firms which, if found in the sample, could be eliminated. Thirty-four firms in
the 213 area code were looked up in the Los Angeles 213 area code telephone
directory (White Pages). The addresses of twenty firms were confirmed, but ten firms
had different addresses, one had a different contact person, and three numbers were
disconnected. Another sample of Eximbank firms from outside the 213 area code was
taken from the 11 Million Businesses Phone Book (1995) and the addresses found
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
65
were compared with the addresses on the list. Of the 33 firms in the sample, 5 were
not listed or were listed but the phone had been disconnected when contact with them
was attempted. A further 9 were listed but the contact person listed was no longer
with the firm. These samples indicated that a good number of addresses on the list
were no longer good, or the contact persons listed may no longer be with the firm in
question. In either case, a response would be unlikely. This small sample indicated
that a good number of surveys may be either undeliverable or, if delivered, unopened.
Two thousand questionnaires were mailed out during July 1996. A follow-up
letter was sent to all firms in the CEFO, LAACC, and DOC lists during August 1996,
except those who had returned their questionnaires and identified themselves and
undeliverable addresses (see below). Ninety-one, or about five percent, of the initial
mailing and follow-up letters were returned as undeliverable. As none of the addresses
returned as undeliverable during the initial mailing were sent a follow-up letter, it grew
apparent that a great deal of the initial mailing was neither delivered nor returned as
undeliverable mail. It became obvious that the nominal sample size of 2000 was not
indicative of the actual number of firms reached. An estimate of the effective sample
size was thus constructed.
A computer generated random sample of 100 firms from the master list was
looked up on the 11 Million Businesses Phone Book (1995). Of the 100 firm sample,
39 firms could not be found at all, and 10 were found, but at different addresses than
those given. Forty-nine firms, or virtually half, of the sample was by this measure
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
66
undeliverable. The sample included 3 firms whose questionnaires had been returned
as undeliverable. Interestingly, all of these firms were listed in the directory. This
indicated that being listed in the directory, which was current for 1995, was not
sufficient to guarantee delivery. The sample also included 8 firms who returned
questionnaires; 2 of those firms were not listed. This suggests that a significant
number of unlisted firms had deliverable addresses—a liberal induction from the data
suggest perhaps a third.1
This sample would then suggest that perhaps 5% of listed and 67% o f unlisted
addresses are undeliverable. This translates to 65 out of 100 firms in the sample being
deliverable. This is consistent with the fact that 58% of the smaller Eximbank sample
was able to be reached. To say that 60-65% of the letters mailed were delivered
implies a response rate of around 8%. This is a lower rate than most of the surveys
listed above, but a response rate of 5-10% was the predicted rate. This prediction of a
lower response rate than other surveys reflects the greater length of the survey, the fact
that a portion of the Eximbank list was importers, and the predictions of interviewees
at the export support organizations. To summarize, of about 2000 questionnaires,
maybe 1300 were delivered, and 111 or 8.5% were returned. 104 were sufficiently
complete to enter into a spreadsheet to form the data set for the study's analysis. This
1 Given virtually equal numbers of listed and unlisted addresses and 2 responses from the former and 6
from the latter, one can infer the above proportion by assuming a constant rate of response from both
groups. An estimate of the proportion of deliverable unlisted addresses based on a comprehensive
examination of the master list would be preferable, but not a justifiable expenditure of time to gain what
would in any case be a rough estimate.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
67
data set included three questionnaires that were completed in personal interviews by
the researchers after receiving requests for face-to-face interviews.
Further Interviews
Three firms which received the survey replied with requests to meet face-to-
face to discuss their opinions on their present exporting situation. These interviews,
which lasted between one and three hours in length, yielded a considerable amount of
anecdotal evidence as well as an opportunity to complete the questionnaires for the
three firms. By coincidence, all three firms that requested interviews were not
themselves manufacturers, but exporters of manufactured products (and in one case of
agricultural goods also). These interviews offered the kind of depth of inquiry that
unfortunately could not be attained for the entire sample, but provides the researcher
with responses detailed enough to aid in the interpretation of more general,
quantitative results.
Also, to complete the picture o f export finance, an interview was conducted
with Jill Frieze, VP of the International Division of Imperial Bank. Imperial Bank
caters to medium-sized firms, and is representative of medium-sized and larger-banks
interested in export finance but generally unwilling to finance small businesses. Peter
Hofmann, Vice President and Manger of the International Division of National Bank
of Southern California, was also interviewed. He lent the perspective of a banker
interested in export finance who caters specifically to SMEs.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
68
Test for Representativeness of the Sample
Because the survey is an attempt to estimate unknown population parameters,
it is impossible to determine the representativeness of the sample, given that the
sample is not random, but, rather, respondents are self-selecting. Nonetheless, to some
extent one can infer a sense of the representativeness (or at the very least internal
consistency) of the sample from a comparison of respondents to the initial mailing of
questionnaires and later responses (either to the follow-up letter or to personal
contact). If no systematic difference between the two groups can be found, then the
responses from various methods of contact can be pooled into a single data set
(Martino ff 1988).
Furthermore, firms in the latter (late response) group did not fill out the
questionnaire sent in the initial mailing. If there is no systematic difference between
the group that did fill out the initial questionnaire and a group which did not, this is an
indication that no significant differences exist between respondents and non
respondents. This inference should not be drawn too far, but if there is no significant
difference between the groups, one can be reasonably confident of the
representativeness of the sample under the circumstances which inevitably surround
such a survey procedure.
To compare the initial responses with the follow-up responses, the sample was
segmented into two groups along those lines. Seven individual question responses
were chosen for the testing procedure. Four represented quantitative firm data; of
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
these two gauged export experience (EXPSME and EMPXMKT) and two estimated
firm size (EMP95 and SALES95). Two were qualitative assessments of the firm's
performance (GROWTH and RDCE EX), and one was an assessment of the firm's
efforts to obtain additional information on exporting (INTERNET; see the table for
details). For each, a difference-of-means t test was done for a null hypothesis of no
difference between the two segments. The alternate hypothesis of inequality implied a
two-tailed test. The results are given below:
Table Ml: Test for Representativeness
Variable EXPSME EXPXMKT EMP95 SALES95
Prior
experience of
entrepreneur
in an SME
(dummy
variable)
Other employee
experience in
exporting or
export mar
keting (dummy
variable)
Number of
employees in
1995
Amount of
Sales in 1995
(estimated; in
dollars)
t statistic .6749 .0353 -.3200 -.9355
Degrees of
freedom
14 14 13 10
Critical value for
p=.05 (approx.)
2.145 2.145 2.160 2.228
Hq: |ii-|a.2= 0
Not Rejected. Not Rejected. Not Rejected. Not Rejected.
Variable GROWTH RDCE EX INTERNET
Self-assessment of
firm growth (five-
point scale)
Percentage by which
exports would fall
without the help of
the export assistance
the firm received
(estimated)
Whether the
entrepreneur has
used the Internet to
find information
on exporting
(dummy variable)
t statistic .2836 -.3582 .0519
Degrees of freedom 14 14 14
Critical value for
p=.05 (approx.)
2.145 2.145 2.145
H0: Pi-P2=0
Not Rejected. Not Rejected. Not Rejected.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
70
None o f the null hypotheses are rejected; in fact, the t statistics indicate some
of the subsample means are remarkably close. These results provide a safe indication
that the sample is internally consistent and likely to be representative of the
population.
Preparation of the Data
Information from completed questionnaires was entered into a spreadsheet, and
from the spreadsheet summary statistics were generated. T-statistics for comparisons
between different segments of the sample were also generated. The questionnaire
responses were divided in to form several segmented versions of the sample.
First, firms were divided by industry sector. Five sectors covered the entire
sample. Each firm's list of primary products for 1996 (PROD 1-96, PROD2-96,
PROD3-96) determined its sector. High-tech firms were defined as firms engaged in
production o f new technology, exporting products such as scientific instruments,
medical equipment, optical materials, pharmaceuticals, testing equipment and sensors,
and so forth. Heavy industry was defined as firms producing heavy machinery,
specifically large machinery and machine parts used as intermediate goods. This
would include vehicles, lifting equipment, and most intermediate machinery and
components. Light industry was defined as consumer and non-mechanical
manufacturing, including items as diverse as toys, clothing, tools, and computers.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
71
Agricultural and food firms were those few firms which exported food or food
products. Finally, service firms were defined as firms whose primary product was a
service of any sort. These five segments comprised a single segmented sample.
Next, the countries to which firms exported provided another way to divide the
sample. For ease and clarity of analysis, firms were divided into three groups based on
the historical reliability of debt repayment. The questionnaire categories of
CANADA, EUROPE, JAPAN, and entries under OTHER which named Australia
were condensed into a single category representing countries with high credit ratings
and reliable reputations. The areas of the Middle East, Africa, and Latin America
(coded under MID EST, AFRICA, MEX, and OTH L.AMER.) were grouped into
countries which have in the past experienced debt crises and which banks tend to
hesitate exporting to (Frieze 1996). Firms which exported solely to the first group
were placed in the segment labeled "1st World." Firms which exported solely to the
second group of nations were placed in the segment labeled "Debt." All other firms
were placed in the category "Other." Note that the three segments of this sample do
not overlap and thus form disjoint sets.
Firms were lastly divided by support system use. The five primary providers of
export assistance to firms in this sample, CEFO, Eximbank, DOC, SBA, and LAACC,
defined the categories into which firms went. All firms which have utilized a support
organization, either in the past or presently, were included in the segment for that
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
72
organization. Thus, segments in this segmented set were not disjoint and thus not
independent of each other.
Data Analysis
Once the sample had been divided into the appropriate segmented sets, t tests
of the differences of means between segments were performed. In all cases the null
hypothesis was of no difference between means, and the tests were performed to
determine differences in export performance, difficulties, or circumstances between
groups. Finally, beyond the results of the statistical approach, the researchers
reviewed, summarized, and interpreted comments and other non-quantifiable feedback
from questionnaire as objectively as possible.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
73
Results
In order to provide a context in which to view the tests of this study's
hypotheses, this section begins with a summary of the data. Important questions and
the means of the responses to those questions are listed below in table form.
Following this summary, each hypothesis and point of interest within the data set is
addressed in turn.
Table RI: Means o f Important Variables
Question No. and Code
Explanation Scale or units Mean
2C EDUC Education of the
entrepreneur
0-3 (3: graduate degree,
2: college degree, 1: high
school diploma, 0: less
than high school)
2.380
2D 1 EXPSME Entrepreneur
experience in SME
other than present
firm.
1/0 (dummy variable) .3333
2D 2 EXPLE Entrepreneur
experience in a
large enterprise.
1/0 (dummy variable) .2941
2D 3 EXPSUB Entrepreneur
experience in a
firm that
subcontracted to
exporters.
1/0 (dummy variable) .0294
2E EXPXMKT Other employee
prior experience in
exporting or export
marketing.
1/0 (dummy variable) .4216
3
YRSTART Year of start-up Year 1978.34
YRFX Year of first export Year 1985
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
74
Table Rl: Means o f Important Variables (continued)
Question No. and Code
Explanation Scale or units Mean
4
EMP95 Employees, 1995 Number 62.267
EMPFX
EMPSTUP
Employees, year of
first export
Employees, year of
start-up
Number
Number
23.637
10.909
5
SOLEP
CORP
Ownership: sole
proprietorship or
corporation.
1/0 (dummy variable)
1/0 (dummy variable)
.194
.755
7
SALES95 Total sales, 1995 Dollars 8310795
SALESFX
SALESTUP
Total sales, year of
first export
Total sales, year of
start-up
Dollars
Dollars
2116792
841710
XSHARE95
XSHAREFX
Export share, 1995
Export share, year
of first export
1-5 (1:0-5%
2: 6-15%
3: 16-30%
4:31-50%
5:51+%)
3.385
2.707
8
GROWTH
PROFITS
EXPORTS
Subjective self-
assessment of
firm's growth,
profits, and export
performance
1-5 (1: worst, 5: best)
1-5 (1: worst, 5: best)
1-5 (1: worst, 5: best)
3.495
3.388
3.408
12
EUROPE
CANADA
MEX
Destination of
exports by region:
Europe
Canada
Mexico
1/0 (dummy variable)
1/0 (dummy variable)
1/0 (dummy variable)
.440
.330
.230
OTH L AMRC
other Latin
America
1/0 (dummy variable) .330
JAPAN
CHINA
Japan
China
1/0 (dummy variable)
1/0 (dummy variable)
.330
.240
OTH ASIA
AFRICA
MID EAST
other Asia
Africa
Middle East
1/0 (dummy variable)
1/0 (dummy variable)
1/0 (dummy variable)
.640
.130
.300
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
75
Table RI: Means o f Important Variables (continued)
Question No. and Code
Explanation
Scale or units Mean
MKT
1.1
MKTINFO Of all firms,
whether export
assistance organi
zations gave the
following forms of
assistance:
providing
information on
export marketing
opportunities;
1/0 (dummy variable) .582
1.2 INTRODUCE introducing the
firm to foreign
buyers or export
agents;
1/0 (dummy variable) .367
1.3 TDE FAIR helping the firm
participate in trade
fairs;
1/0 (dummy variable) .398
1.4 FN LAWS familiarizing firm
with foreign laws;
1/0 (dummy variable) .255
1.5 STDY conducting
feasibility studies
for the firm.
1/0 (dummy variable) .031
MKT
2.1
R I 1 -96
R I1 -FX
Relative
importance of the
following in
facilitating access
to foreign markets:
Direct efforts by
firm to contact
foreign buyers
1-5 (1: least, 5: most)
1-5 (1: least, 5: most)
4.204
3.789
2.2
RI 2 - 96
RI 2 - FX
Initiatives by
foreign buyers or
export agents
1-5 (1: least, 5: most)
1-5 (1: least, 5: most)
3.271
2.828
2.3
RI 3 - 96
RI 3 - FX
Initiatives by
subcontractors or
domestic export
trading or factor
ing companies.
1-5 (I: least, 5: most)
1-5 (1: least, 5: most)
1.910
1.716
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
76
Table RI: Means o f Important Variables (continued)
Question No. and Code
Explanation
Scale or units Mean
2.4
RI 4 - 96
RI 4 - FX
Support by export
assistance agencies
1-5 (1: least, 5: most)
1-5 (1: least, 5: most)
1.989
1.881
FIN
1.1
YES/NO
AMOUNT
USEFULNESS
Venture Capital or
Investment
Association
1/0 (dummy variable)
1-5 (see footnote1 )
1-5 (1: least, 5: most)
.064
3.667
4.000
FIN
1.2a
YES/NO
AMOUNT
USEFULNESS
Bank Loans
1/0 (dummy variable)
1-5 (see footnote 1)
1-5 (1: least, 5: most)
.351
4.410
4.450
FIN
1.2b
YES/NO
AMOUNT
USEFULNESS
Loan Guarantees
1/0 (dummy variable)
1-5 (see footnote 1)
1-5 (1: least, 5: most)
.191
4.470
4.667
FIN
1.3
YES/NO
AMOUNT
USEFULNESS
Self Finance
1/0 (dummy variable)
1-5 (see footnote 1)
1-5 (1: least, 5: most)
.852
4.030
4.684
FIN
1.4
YES/NO
AMOUNT
USEFULNESS
Corporate Bonds/
Issuance of
Commercial Paper
1/0 (dummy variable)
1-5 (see footnote 1)
1-5 (1: least, 5: most)
.011
5.000
5.000
FIN
1.5
YES/NO
AMOUNT
USEFULNESS
Other Private
Loans
1/0 (dummy variable)
1-5 (see footnote 1)
1-5 (1: least, 5: most)
.096
4.000
4.111
FIN
1.6
YES/NO
AMOUNT
USEFULNESS
Relatives/Friends
1/0 (dummy variable)
1-5 (see footnote 1)
1-5 (1: least, 5: most)
.160
3.222
4.076
FIN
1.7
YES/NO
AMOUNT
USEFULNESS
Parent Firm
1/0 (dummy variable)
1-5 (see footnote 1)
1-5 (1: least, 5: most)
.053
3.750
4.600
FIN
1.8
YES/NO
AMOUNT
USEFULNESS
Support
Organization
1/0 (dummy variable)
1-5 (see footnote 1)
1-5 (I: least, 5: most)
.074
4.667
4.000
1 Finance questions 1.1 through 1.10 used a five-point scale for respondents to provide an estimate of
the amount of financing from each source. A “ 1 ” represents $1-5000, a “2” represents $5001-10,000, a
“3” represents $10,001-25,000, a “4” represents $25,001-50,000, and a “5” represents $50,000 or more.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
77
Table RI: Means o f Important Variables (continued)
Question No. and Code
Explanation
Scale or units Mean
FIN
1.9
YES/NO
AMOUNT
USEFULNESS
Forfaiting House
1/0 (dummy variable)
1-5 (see footnote 1)
1-5 (1: least, 5: most)
0
N/A
N/A
FIN
1.10
YES/NO
AMOUNT
USEFULNESS
Factoring House
1/0 (dummy variable)
1-5 (see footnote 1)
1-5 (1: least, 5: most)
.011
N/A
N/A
FIN
6.1
DIFF 1 - 96
DIFF 1 - FX
Export finance
problems: Lack of
information on
possible sources of
financing
1-5 (1: not a problem,
5: a serious problem)
1 -5 (1: not a problem,
5: a serious problem)
2.976
3.270
FIN
6.2
DIFF 2 - 96
DIFF 2 - FX
Limited
availability of
financing
1-5 (1: not a problem,
5: a serious problem)
1-5 (1: not a problem,
5: a serious problem)
3.363
3.471
FIN
6.3
DIFF 3 - 96
DIFF 3 - FX
Complexity of
financing
arrangements
1-5 (1: not a problem,
5: a serious problem)
1-5 (1: not a problem,
5: a serious problem)
3.317
3.486
FIN
6.4
DIFF 4 - 96
DIFF 4 - FX
Time delays in
receiving payment
from abroad
1-5 (1: not a problem,
5: a serious problem)
1-5 (1: not a problem,
5: a serious problem)
2.873
2.676
FIN
6.5
DIFF 5 - 96
DIFF 5 - FX
Uncertainty of
payment from
abroad
1-5 (1: not a problem,
5: a serious problem)
1-5 (1: not a problem,
5: a serious problem)
2.753
2.829
FIN
6.6
DIFF 6 - 96
DIFF 6 - FX
Size of collateral
requirements
1-5 (1: not a problem,
5: a serious problem)
1-5 (1: not a problem,
5: a serious problem)
3.038
3.129
FIN 9 INTERNET Whether the firm
has ever used the
Internet to obtain
information on
export promotion.
1/0 (dummy variable) .340
One should note that the means of the responses to Finance questions 6.1
through 6.6 are somewhat misleading, since the vast majority of the responses either
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
78
clearly indicated that the obstacle in question was a problem (4 or 5) or clearly
indicated that it was not a problem (1 or 2). The degree to which financing was a
problem varied greatly from firm to firm. Thus, to supplement the means, the modes
of the responses to these questions are informative. Questions 6.1 through 6.3 and 6.6
had modes of 5 for each variable. Question 6.5 had a mode of 1 for both variables.
Only 6.4 did not receive a consistently polar rating; the mode of DIFF 4 - 96 is 3, and
the mode of DIFF 4 - FX is 1.
Foreign and Domestic Rates of Default
One of the recurring assumptions underlying the behavior of agents involved in
export finance is that exporting is riskier than engaging in domestic business. The
aversion to export finance that banks demonstrate is deep and universal. Thus, it is
reasonable to begin any discussion on export finance with the question of how much
riskier export finance is. This question is a multifaceted one and cannot be answered
completely within the parameters of a study such as this, but a strong indication of the
risk of exporting relative to shipping domestically is the relative rates at which foreign
and domestic buyers default on their debts.
Thus, Hypothesis 1 states that the rate of foreign default on debt (DFLT-F) will
be greater than the rate of domestic default on debt (DFLT-D). The following
hypothesis is tested:
Ho: PFor."M’ Dom.—0 VS. H[. PFor."PDom.-> 0
The difference-of-means test yielded the following:
Table R2: Hypothesis 1
DFLT-F DFLT-D
Mean 3.028022 4.393344
Variance 119.8487 177.005
Observations 91 90
Degrees o f freedom 172
t statistic -0.75344
t critical 1.653762
H is not rejected.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
79
Ho is not rejected. It is noteworthy that the mean rate of default for foreign
buyers is lower than for domestic buyers. While not a significant difference, it
suggests that one or both of the following factors are at play: the risk aversion of
financial institutions and guarantors leads them to finance only transactions with the
most reliable of buyers, or the risks of exporting are simply overestimated by financing
parties.
Segmented Samples— Sectors
First, the sample segmented by sector was considered. As the firms in the
fourth and fifth categories (agricultural/food and service) were in sectors not of
particular interest to this study nor or statistically useful size, they were ignored. The
primary differentiation of concern is that of high tech firm from other manufacturing
firms.
As background it is necessary to look for systematic differences among sectors
in firm characteristics. One meaningful difference is export involvement. Hypothesis
2 states that high tech firms, taking advantage of the United States' comparative
advantage in high technology will export a greater proportion of their sales than other
firms. A difference-of-means test addresses these hypotheses for the variable
XSHARE95 (exports as percent of sales in 1995):
^ ° * h r ig h tech'l^Hvy. Ind _ ® VS‘ H l : M^igh tech'^H lvy I n d . ^
: ^High t e c h '^ t . Ind.- ^ VS' ' h d ig h t e c h 'h x Ind> ^
The mean for the high tech segment was 4; for the heavy industry segment, 2.75; and
for the light industry segment, 3.097. Hq was rejected at the 1% level (t
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
80
statistic=3.201, d.f.=42) and Hq' was rejected at the 5% level (t statistic=2.207,
d.f =53). High tech exporters export a significantly greater share of their production
than other manufacturers.
The three key sections of the questionnaire are marketing questions 1
(assessment of marketing support systems; see MKT 1.1 through 1.5 in table above)
and 2 (relative importance of agents’ initiatives in gaining access to foreign markets;
see MKT 2.1 though 2.4) and financing question 6 (problems in export finance; see
FIN 6.1 through 6.6). In all the segmented samples, these questions are examined.
With regard to marketing question 1, high tech firms consistently responded
that they use support agencies more for all types of marketing assistance, with the
exception of MKT 1.5 (whose population proportions were too close to zero to be
statistically meaningful). It should be noted, however, that these higher rates of usage
are not statistically significant, except for high tech vs. light industry in MKT 1.2 (t
statistic=l .8913, d.f.=45), which is significant at the 10% level. High tech firms also
rated all the services they use higher than the other sectors. None of these differences,
however, are significant. There are no significant differences between sectors for
marketing question 2.
There are no significant differences in high tech and other manufacturing
responses to financing question 6, with the exception o f FIN 6.3 (for year 1996), where
high tech firms have a significantly (10% level) lower rating than light industry firms.
Little can be drawn from this one exception. High tech firms, interestingly, show a
consistent trend of greater improvement (ratings of seriousness of problem fall from
first export to present) than other sectors. These relationships are not significant.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
81
Segmented Samples— Countries
An examination of the data yields an unexpectedly clear result: firms exporting
to only "1st World" or only "Debt" are smaller (in terms of both employees and sales)
that firms in the "Other" category. This result follows if one assumes that larger firms
would likely export to more markets. But what these results indicate is not that larger
firms service more markets, but that they tend to serve a greater variety of markets.
This result, that smaller firms export to a narrower range of markets, should only be
indirectly related to the size of the firms. From this, then, it can be deduced that the
likely source of this relationship is that firms which export only to one group of
nations are younger firms, who have had less time to expand their export operations
beyond a regional base. Size, naturally, is highly correlated with age of the firm. This
leads to Hypothesis 3, which states that “Debt” firms are younger and smaller than
“Other” firms. The basis of this hypothesis is twofold: first, firms with a undiversified
set o f buyer countries are likely to be newer to export, and secondly, while trade
relationships with the “1st World” countries are more likely to be of long standing,
many “Debt” country markets are only recently being penetrated by US exporters.
These two facts together would suggest that “Debt” firms are younger than “Other”
firms, though not necessarily “1st World” firms.
To test this alleged relationship, and the apparent fact that “1st World” firms are
smaller and younger as well, the groups "1st World" and "Debt" were each compared
to "Other"; their means of year of start-up (YRSTART), number of employees in 1995
(EMP95), and sales in 1995 (SALES95) were tested for equality, using a two-tailed t
test.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
82
Table R3a: Hypothesis 3 (Means)
1st World Debt Other
YRSTART 1981.3 1986.5 1975.9
EMP95 45.7 17.1 74.5
SALES95 2,603,911 3,200,000 10,198,175
Table R3b: Hypothesis 3 (Statistics>
1st World vs. Other Debt vs. Other
YRSTART t statistic 1.572 3.784
Degrees of freedom 23 47
Ho not rejected. Ho rejected at 1% level.
EMP95 t statistic 1.090 3.358
Degrees of freedom 29 86
Ho not rejected. Ho rejected at 1% level.
SALES95 t statistic 2.450 2.110
Degrees of freedom 63 59
H rejected at 5% level. H rejected at 5% level.
One can see that the explanation for the pattern is very convincing for "Debt"
country exporters. As year of start-up is not significantly different for "1st World"
exporters, less can be said about them.
Turning to self-assessment of firms, Hypothesis 4 suggests that exporters to
"Debt" countries will have lower ratings of growth, profits, and exports than "1st
World" or "Other." Exporters in the "Debt" group did have the consistent lowest
ratings of all three groups in all three categories. The means of the ratings of the
"Debt" group were compared with the means of "1st World" and "Other" (separately).
In two cases the null hypothesis was rejected. Note that this is a one-tailed test (for
each variable, H0: p u r PDebt = 0 , Hi: p ut - P D e b t > 0 ,, H0’: pother - PDebt = 0 , Hi’: pother -
PD ebt > 0 ) .
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
83
Table R4: Hypothesis 4
Debt vs. Is* World Debt vs. Other
GROWTH t statistic 1.544 2.032
Degrees of freedom 22 27
Ho not rejected. Ho rejected at 5% level.
PROFITS t statistic .7583 1.761
Degrees of freedom 23 24
Ho not rejected. Ho rejected at 5% level.
EXPORTS t statistic .687 1.194
Degrees of freedom 26 18
Ho not rejected. Ho not rejected.
Hypothesis 5 states that exporters in the "Debt" group may face a further
difficulty of less regular shipments. Looking at averages of the variable NSHIP,
"Debt" firms ship 11.67 times per year, "1st World" firms ship 51.42 times per year,
and "Other" firms ship 108 times per year. These striking differences are undermined
by the fact that there is high variance in each subsample. Below are the results of a
two-tailed difference-of-means test (although it was expected that "Debt" firms would
have fewer shipments, it is less justifiable before the fact to do a one-tailed test here
than above).
Table 5: Hypothesis 5
Debt vs. 1st World Debt vs. Other
t statistic 1.661 3.016
Degrees of
freedom
12 62
Ho not rejected. Ho rejected at 1% level.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
84
It is clear that "Debt" firms do make fewer shipments than other firms.
Unfortunately, due to the small size of the subsamples, it cannot be shown to be
significantly different from the "1st World" group in terms of shipments per year.
Thus, it cannot be determined conclusively whether or not the difference with the
"Other" group is due to the credit status of the "Debt" countries as a whole or to simply
the smaller size of the "Debt" firms. It should be noted, though, that a test comparing
shipments of the "1st World" group and the "Other" group could not reject the null
hypothesis of equality of means (t statistic=l .431, d.f.=56). This undermines the
position that the fewer shipments the "Debt" group makes are accounted for by their
firm size.
Hypothesis 6 suggests that exporters in different country groups tend to utilize
the marketing services described in marketing question 1 at different rates. A two-
tailed, difference-of-means test of the proportions of the "1st World" and "Debt"
groups which utilize each service was conducted, with one null hypothesis rejected.
Note that a t test could not be conducted for MKT 1.5 because the variance of the
proportion (use of studies by support agencies) for the "1st World" subsample was
equal to zero.
Table R6a: Hypothesis 6 (Means)
Means MKT 1.1 MKT 1.2 MKT 1.3 MKT 1.4 MKT 1.5
"1st World” .2308 .3077 .1538 .2308 0
"Debt" .6875 .2500 .3750 .3125 .0625
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
85
Table R6b: Hypothesis 6 (Statistics)
MKT 1.1 MKT 1.2 MKT 1.3 MKT 1.4
t statistic 2.677 .332 1.359 .479
Degrees of freedom 27 27 27 27
Ho rejected
at 5% level.
Ho not
rejected.
Ho not
rejected.
Ho not
rejected.
It would be hard before the fact to predict in what areas export marketing
assistance agencies lack expertise with respect to the needs of less traditional (i.e.
"Debt" group) markets. That a significant difference exists for MKT 1.1 is not
surprising because it covers "market information," which may not be provided to as
many exporters to less established export markets.
Of most keen interest in marketing question 2 is the rating of the relative
importance of support organizations in gaining access to export markets (MKT 2.4, for
years 1996 and first export). Hypothesis 7 states that exporters to "Debt" countries
will rely on support systems more than exporters to "1st World" countries. MKT 2.4
(1996) and MKT 2.4 (FX) were separately tested for equality of means between the
“1st World” and “Debt” groups. A two-tailed test was used.
Table 7 ; Hypothesis 7
1996 First Export
t statistic 1.942 2.898
Degrees of freedom 23 22
Ho rejected at 10% level. Ho rejected at 1% level.
In both time periods, most strongly at first export, which is intuitive, the null
hypothesis is rejected, and hypothesis 7 is upheld. Nonetheless, export assistance
agencies are rated generally lowly compared to the firm's own initiative or the
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
86
initiative of buyers, as shown below. MKT 2.3, which concerns the importance of
subcontracting for export, did not yield a meaningful number of responses.
Table R8: Means o f Relative Importance o f Initiative Variables (Countries Segments)
MKT 2.1 (firm’ s
initiative)
MKT 2.2 (buyer's
initiative)
MKT 2.4 (support
organizations)
1996 First
Export
1996 First
Export
1996 First
Export
1st World 4.385 4.000 3.385 2.833 1.250 1.091
Debt 4.286 3.933 3.857 2.933 1.846 2.154
With regard to export finance difficulties, Hypothesis 8 that "Debt" group
exporters will perceive greater difficulty in questions FIN 6.2, 6.4, and 6.5 (limited
availability of financing, uncertainty o f payment from abroad, and time delays in
payment from abroad) was not supported at all by the data. There are no significant
results of the difference-of-means test for all the parts of question 6.
Finally, Hypothesis 9 makes the natural suggestion that firms exporting to
countries with recent debt crises should experience higher rates of default on debt than
firms exporting to historically more secure markets. In this case a one-tailed
difference-of-means test is appropriate. The hypotheses are as follows:
H o : P D e b r P ls t World= 0 VS. |iD c b r P ls t World > 0
The null hypothesis cannot be rejected (t statistic= 1.186, d.f.=22), although the mean
default rate is somewhat higher for "Debt" group exporters (1.75%) than for "1st
World" group exporters (.54%).
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
87
Segmented Samples—Agencies
Differences of firm characteristics and firm assessments of exporting among
users of different support systems shed meaningful light on the extent to which
different support organizations reach SMEs and provided a clue as to their
effectiveness. In order to determine the differences among firms which use CEFO,
Eximbank, DOC, SBA, and LAACC, difference-of-means (two-tailed t) tests of
seventeen key variables were conducted. Since there are five segments, a total of ten
tests, each of a single pairing of two organizations, must be run for each variable to
account for all the combinations of agencies. The ten sets of results can then be
analyzed for patterns which indicate a systematic difference of the means of the
variable for users of a particular agency.
Of the seventeen variables addressed the following topics: eight covered firm
characteristics, three covered marketing, and six addressed financing. Entrepreneurial
experience in an SME (EXPSME), large enterprise (EXPLE), or other employee prior
export experience (EMPXMKT) measured the amount of prior export experience the
firm has to draw from. The number of employees (EMP95), a more reliable variable
than sales (EMP95 has a lower variance and higher number of responses than
SALES95), estimated firm size.
Three new dummy variables indicated the geographic destinations of each
firm's shipments: 1st WORLD took on the value "1" when a firm indicated it exported
to Canada, Europe, Japan, or Australia, and "0" otherwise; DEBT took on the value
"1" when a firm indicated it exported to Africa, the Middle East, or Latin America, and
"0" otherwise; ASIA took on the value " 1" when a firm indicated it exported to Asia,
outside of the Middle East or Japan (CHINA or OTH ASIA), and "0" otherwise. Note
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
88
that although the geographical distinctions resemble the division of the sample by
countries ("1st World," "Debt," and "Other" segments), the dummy variables do not
define disjoint sets, as Ist WORLD does not exclude firms which export to both
countries in the "first world" and other countries, and so forth. These three variables,
if their values are significantly different for different agencies, may indicate the
relative facilities of the agencies in providing assistance to regions with particular
needs.
Three marketing variables measured the extent of firms' beliefs about the
importance of various agents' initiative in the export process. Ratings of MKT 2.1,
MKT 2.2, and MKT 2.4 formed this set (MKT 2.3 was again excluded for reasons of
unreliability). These questions rated the relative importance of the exporter's initiative,
the buyer's initiative, and the assistance of export support organizations, respectively,
in the process of gaining access to foreign markets. These were taken directly from the
coded responses RI I 96, RI 2 96, and RI 4 96.
The six financial assistance questions were taken from FIN 6.1 through 6.6 for
the year 1996 (coded DIFF 1 96 through DIFF 6 96). These provided ratings of six
major sources of difficulty in export finance for firms at the present time. As their
assessments are more likely to be accurate for the present time, these assessments,
rather than the assessments for the year o f first export, were used. The assumption that
the 1996 assessments would be more accurate and consistent is corroborated by the
fact that the year of first export ratings had a higher variance and a lower number of
responses. In any case, the relative ratings in 1996 and year of first export were not
substantially different.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
89
Not all the sets of tests on the variables returned significant results. Those that
were and the results for all the hypotheses are catalogued below.
EXPSME: As all the agencies into which this sample was divided serve and
make a concerted effort to serve SMEs, no significant differences were expected in
subsample means for the proportion of firms with SME experience. Surprisingly,
three t tests on the EXPSME variable returned significant values.
Table 9: EXPSME Statistics
Eximbank-DOC Eximbank-SBA Eximbank-LAACC
t statistic 1.895 2.066 2.578
Degrees of
freedom
28 32 32
Ho rejected at 10%
level.
Ho rejected at 5%
level.
Ho rejected at 5%
level.
Eximbank, when compared to three of the four other agencies, has a
significantly higher proportion of clients with prior SME experience. This is
somewhat surprising, given Eximbank's historical role and reputation as a bank for
large firms ("Boeing's Bank"; Frieze 1996).
EXPLE: Related to this is the fact that no significant differences were found
across agencies in prior large enterprise experience o f their clients. Hypothesis 10
suggested that the Eximbank segment would report a significantly higher EXPLE
mean than the other segments. This was not the case. The Eximbank segment was in
fact the median segment for EXPLE.
EMPXMKT: Also, as expected, no significant differences were found across
segments in other employee export experience. Means of this proportion and other
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
90
firm characteristics for the segments are given below. On this chart and all other
means charts in this section, the highest and lowest means are highlighted for clarity.
Table RIO: Means o f Firm Characteristics Variables (Agencies Segmentsj
CEFO Eximbank DOC SBA LAACC
EXPSME .476 .647 .383 .344 .235
EXPLE .143 .176 .277 .313 .118
EMPXMKT .429 .412 .426 375 .588
EMP95 20.75 125.44 81.53 60.30 40.94
GROWTH 3316 3.846 3.556 3.467 3.438
EMP95: Hypothesis 1 1 stated that the CEFO segment should be composed of
significantly smaller firms than the other segments. This was expected to be true even
though all the firms in the sample were SMEs, because CEFO is known to serve
smaller, riskier firms than Eximbank, for example, and the DOC and LAACC are not
specifically geared towards small rather than medium-sized firms. The t tests on the
segmented sample backed up this hypothesis. The mean firm size (EMP95) for CEFO
is easily the lowest of the segments. It is, however, significantly lower (for a two-
tailed test) than only Eximbank and DOC. This is still reasonably strong support for
Hypothesis 11.
Table II: Hypothesis 11
CEFO-Eximbank CEFO-DOC
t statistic -1.8201 -2.575
Degrees of
freedom
15 48
Ho rejected at 10% level. Ho rejected at 5% level.
GROWTH: No hypotheses could be made about perceptions of growth across
segments, and no significant trends were found.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
91
1ST WORLD, DEBT, and ASIA: No assumptions about patterns of export
destination could be formed. The results yield no trends across sectors for any of the
export destination variables, with one exception: it is apparent that CEFO exporters do
less business with countries in the "1st World" group than other firms, and
significantly so when compared with DOC and LAACC. Below are those results and
the means for the export destination variables.
Table R12: “ T‘ World" Statistics
CEFO-DOC CEFO-LAACC
t statistic -2.070 -1.911
Degrees of
freedom
34 35
Ho rejected at 5% level. Ho rejected at 10%
level.
Table RI 3: Means o f Export Destination Variables
CEFO Eximbank DOC SBA LAACC
1 st WORLD .400 .500 .674 .548 .706
DEBT .600 .688 .696 .677 .647
ASIA .700 .688 .607 .742 .529
RI 1 96, RI 2 96, RI 4 96: No hypotheses could be formed regarding the nature
of differences in responses to the marketing questions. Some consistent differences
were observed for MKT 2.2 and MKT 2.4 (RI 2 96 and RI 4 96). Against all four
other agencies, Eximbank group firms rated the importance of initiatives by buyers (RI
2 96) lower. This difference was significant for three of the four. The SBA group
firms rated buyer initiatives higher by a significant margin in two of four comparisons.
It would be difficult to explain these differences.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
92
Table R14: Means o f Relative Importance o f Initiative Variables (Agencies Segments)
CEFO Eximbank DOC SBA LAACC
RI 1 96 4.300 3.867 4.391 4.469 4.625
RI 2 96 3.350 2.467 3.067 3.656 3.333
RI 4 96 1.667 1.667 2.222 2J55 2.125
Table R15a: RI 2 96 Statistics (Eximbank)
Eximbank-CEFO Eximbank-SBA Eximbank-LAACC
t statistic -2.142 -3.299 -1.871
Degrees of
freedom
32 29 27
Ho rejected at 5%
level.
Ho rejected at 1%
level.
Ho rejected at 10%
level.
Table RI5b: RI 2 96 Statistics (SBA)
RI 2 96 SBA-Eximbank SBA-DOC
t statistic 3.299 1.972
Degrees of
freedom
29 72
Ho rejected at 1% level. Ho rejected at 10%
level.
Differences in MKT 2.4 responses would be somewhat easier to interpret. A
higher rating of the importance of export support systems in facilitating access to
export markets could be seen as an indication of the value of the export assistance
agency. An alternative explanation would be that firms which give higher ratings to
the importance of export marketing assistance lack the firm resources and overseas
contacts to see firm or buyer initiative as relatively more important. In this case, a
difference across segments would only be an indication of a difference in firm
characteristics across agencies. The results of the tests are thus ambiguous: two null
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
93
hypotheses were rejected, but only at the 10% level. CEFO group firms rated export
support organization initiative significantly lower than the DOC and SBA groups of
firms. This should not be surprising, however, since CEFO does not provide
marketing support, and thus would not be considered useful in the firm marketing
process.
FIN 1 96 to FIN 6 96: A startlingly clear pattern emerged across the tests for
these six variables. In FIN 6.1 through 6.6 (1996), firms in the Eximbank group rated
each problem as less serious than every other segment. In five out of the six questions
(FIN 6.2 through 6.6), LAACC group exporters rated the problem most seriously of all
the segments. In the one exception, FIN 1 96, the LAACC group's mean was close to
the highest (the mean of the CEFO segment). See below for a summary of the means.
Table 16: Means of Financing Variables
CEFO Eximbank DOC SBA LAACC
FIN 1 96 3.105 2.182 2.658 3.103 3.000
FIN 2 96 3.368 2.455 2.917 3.333 3.615
FIN 3 96 3.000 2.583 3.077 3.429 3.692
FIN 4 96 2.778 2.200 2.868 2.926 3.167
FIN 5 96 2.389 2300 2.806 2.885 3.231
FIN 6 96 3.118 2.182 2.789 3.115 4.000
This observed pattern is supported by the t tests. In FIN 1 96 (lack of
information on export finance), the evidence is weakest. Only the hypothesis that the
Eximbank mean is lower than the others, and not that the LAACC mean is higher than
the others, is supported. In all the others, there is at least one significant (at the 10%
level) difference of means supporting both hypotheses. Below is a list of the
hypotheses tested and the number o f times (out of the six variables) each was
supported.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
94
Table Rl7a: Financing Statistics (Eximbank)
Hypothesis: Eximbank segment has lower means than other segments
Sub-hypothesis Times Rejected (<10% level) Times Rejected (<5% level)
Ho1 : gExim-hCEFO
3 0
2
Ho : PExim "P-DOC
1 0
Ho : PExim "PSBA
5 0
Ho : liExim -PLAACC
5 4
Table R17b: Financing Statistics (LAACC)
Hypothesis: LAACC segment has higher means than other segments
Sub-hypothesis Times Rejected ( < 1 0 % level) Times Rejected ( < 5 % level)
Ho': PLAACC - PCEFO
2 0
Ho : PLAACC - UExim
5 4
Ho3: M - laacc - M - doc
1 1
Ho : M ’ L a a c c - M sba
1 0
This raised the question of why this pattern exists. Firm size would seem to be
a plausible cause, but the differences in firm size across segments were not significant
with respect to Eximbank or LAACC. Presumably, the larger, more established firms
that Eximbank tends to serve will not perceive obstacles to exporting to be as great. It
is questionable the extent to which LAACC group firms represent small firms,
however. Also, CEFO firms reported close to average ratings of difficulty. It is likely
that size is a factor, as one would predict, but perhaps the effectiveness of the agencies
plays a role as well. It ought to be noted that the average year of start-up for LAACC
firms is later than all the other segments, but not significantly (there are no significant
differences in firm age across segments). The most sensible explanation for the high
ratings of difficulty given by LAACC firms is that since the LAACC does not provide
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
95
export financing or loan guarantees, users of LAACC do receive as much assistance,
all other factors held equal, as users of Eximbank, CEFO, or the SBA.
An Assessment of the Internal Consistency of Questionnaire Responses:
Segmented Samples—Exports
Two points of interest are raised by analysis of the sample divided by
EXPORTS. First of all, it is prudent to test whether a subjective assessment such as
EXPORTS (or PROFITS or GROWTH) actually represents or is at least consistent
with the quantitative firm data. Given that the questionnaire centered around
questions of exports, the EXPORTS subjective assessment variable is the most
appropriate variable to test for consistency with firm data. In fact, a rating of "high"
export performance (EPXORTS=4 or 5) is a good predictor of significantly higher
export share of sales (XSHARE95), number of foreign buyers (NFXBUYERS), and
number of export shipments per year (NSHIP) than firms with a "low" export
performance rating. Note, however, that firms with a "high" export rating do not have
a significantly higher number of countries with which they do business (NCOUNTRY)
nor a significantly lower rate o f default on debt owed them by foreign buyers (DFLT-
F). A summary is given below of means and the results of the one-tailed difference-
of-means tests.
Table R18a: Means of EXPORTS-Relevant Variables
XSHARE NCOUNTRY NFXBUYERS NSHIP DFLT-F
High 4.179 15.488 47.732 148.868 .0208
Low 2.575 11.864 15.156 42.568 .0437
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
96
Table R18b: EXPORTS-Relevant Statistics
Variable XSHARE NCOUNTRY NFXBUYERS
t statistic 4.984 .905 2.728
Degrees of freedom 76 73 61
Ho rejected at 1%
level.
Ho not rejected. Ho rejected at 1%
level.
Variable NSHIP DFLT-F
t statistic 1.901 -1.128
Degrees of freedom 90 68
Ho rejected at 5%
level.
Ho not rejected.
Secondly, firms giving a "high" export rating tend to be smaller, with a lower
mean number of employees (EMP95) and mean sales (SALES95). These differences
are not significant, however. These apparent differences may be accounted for the fact
that firms with a "high" export rating are significantly younger than "low" export
rating firms. The t statistic for the difference in age is 1.983; it has 86 degrees of
freedom. This is significant at the 10% level for a two-tailed test. They also, on
average, begin exporting sooner after start-up, although this difference is just shy of
significance at the 10% level. It is possible that in recent years, entrepreneurs starting
new firms may be more keenly aware of the possibilities of exporting, and their greater
commitment to exporting leads to greater success in that area.
Table R19: Means o f Firm Characteristics Variables (EXPORTS Segments)
YSTUP EMP95 SALES95 YRFX-YRSTUP
High 1982.0 57.732 6,247,349 3.911
Low 1975.2 76.958 11,801,719 7.568
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
97
Qualitative feedback
In addition to the codable questionnaire responses, many survey respondents
filled out section IV o f the questionnaire ("Additional Comments/Recommendations").
Their comments provided specific and vivid accounts of the shortcomings and,
occasionally, the strengths of the export support programs. Only insofar as different
respondents corroborated each other's stories can estimates of representativeness be
established; nonetheless, these statements, made by the exporters themselves, are the
most direct criticism o f the export support systems possible. Firms whose comments
appear more than once will be designated by a code letter for ease of reference. This
information is noted in footnotes.
CEFO received mixed but mostly favorable reviews. One respondent, a highly
export-oriented technology firm,2 referred to CEFO as "superb"; another (a medium
sized appliance manufacturer) singled it and the OED as export support organizations
of "specific, unique value." Yet another respondent (a manufacturer of bicycle parts)
indicated that the firm was lucky to find out CEFO existed, and it was friendly—
friendlier than the SBA. Three responses criticized CEFO: one, from a very small
manufacturer,3 for paperwork, "wasted time," and lack of results; the second, from
another very small manufacturer,4 for complexity and lack of attention, and the third,
from an older manufacturing firm,5 for moving too slowly.
2 Firm A.
3 Firm B.
4 Firm C.
5 Firm D.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
98
Three responses specifically mentioned Eximbank. One6 claimed that its
programs were too complex and that there was "no one to talk to." The second7 stated
that "[c]onnecting with EXIM is near impossible." The third® criticized Eximbank's
slow turnaround and the fact that it only finances exports to certain countries.
Comments on the DOC were varied. One respondent (a computer components
firm) said DOC experts in overseas offices were "extremely knowledgeable, helpful,
and capable" while claiming the DOC staff in Washington, DC were quite the
opposite. Another respondent (a high tech firm) said that DOC catalogue shows were
a good idea, but they need to be expanded to reach large regional blocs of foreign
countries. The OED, as mentioned above, was praised; a second respondent, another
high tech firm, agreed with this assessment, making a particular note of OED overseas
offices. One criticism of the DOC was it provision of an intimidating amount of
information and substantial duplication of effort within its structure, as well as with
other agencies. Finally, one respondent9 noted that the DOC has "improved
spectacularly" in the last two years.
One very small software firm1 0 referred to the SBA and its SBDCs as "more
successful" export support organizations and recommended a reallocation of funds to
them. It did, however, call the SBA-sponsored SCORE program "useless," especially
for high tech firms, since the information provided is too general. Other firms' reviews
5 Firm C.
7 Firm A.
8 Firm D.
9 Firm A.
1 0 Firm E.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
99
were not so ambiguous. One1 1 criticized it (along with CEFO) for having "too much
paperwork," wasting time, and providing "no money." Another firm, a producer of
plastic bags, more subtlely suggested that the "government create another entity (NOT
SBA). . Yet another1 2 claimed it acted too slowly to be useful. A fourth1 3 stated
that SBA financing is "inappropriate" for exporters. A fifth (a very small producer of
musical products) reiterated this point, saying,"[I]t basically sucks! Underwriters do
not understand how export transactions work." Finally, one response from a high tech
firm read, "SBA is a JOKE. Give me your house and I'll give you an 80% loan, like a
bank won't already do that."
LAACC received only one comment,1 4 that its staff were "not very friendly."
TradePort, administered by LAACC and supported by the DOC through LA Trade,
was harshly criticized by one respondent from a light manufacturing firm: "TradePort
is a joke.... [They] forgot to include the DOC trade leads, agricultural leads, and the
California trade office leads. But... the politicians can put their names on the back..
.. They made TradePort cute instead of a site that works for the California
exporters."1 5
Banks were also mentioned with some frequency, and as expected, none of the
comments were favorable. One exporter, a toy maker, observed, "Banks are notorious
1 1 Firm B.
1 2 Firm D.
1 3 Firm A.
1 4 Firm E.
1 5 The researchers were not able to find the deficiencies this respondent found in TradePort. It does
contain leads to the DOC, California Trade offices, and agricultural programs. Because of the fact that
the directory information is spread over several pages, however, it may be difficult to find particular
leads without a good deal of searching.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
100
for providing very little loan assistance." Another respondent, a machinery
manufacturer, said that the firm's "bank seems reluctant to issue working capital loans
for foreign projects, even when payment is by irrevocable LC, unless some form of
loan guarantee is in place." These comments, of course, only reiterate what Imperial
Bank Officer Jill Frieze observed. One respondent, a technology firm, went into
detail: "The banks are not interested in helping exporters, especially vis a vis western
Europe, Japan and Korea, etc." Unlike in America, in these countries if an exporter
"walks in with a clean LC from a major bank" the bank will allow the exporter to
discount a percentage of the letter of credit for working capital purposes. "In the USA,
however, if we want to make a loan for a car or a house, these can be arranged over the
phone. This does not make sense!"
In addition to the reluctance among banks to assist exporters, a few
respondents acknowledged that many exporters themselves were afraid to seek out
export opportunities. One respondent, from a medium-sized manufacturer, noted that
domestic success gave the company little incentive to export, and management was so
averse to the risks of exporting that they discount all export sales; this "narrow
attitude" is unfortunately prevalent among US firms, the respondent added. Another
respondent, from a manufacturing firm, said, "Most people have many fears regarding
exporting. It is very tragic, but it's real."
Summary
The results of this study provided a large quantity of data which proved to be
useful. In addition to eleven ex ante hypotheses, unexpected patterns emerged in the
data. Also, the reliability o f the subjective self-assessment of firms was supported by
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
101
analysis, indicating internal consistency within questionnaires. Written comments and
recommendations provided insight and ideas supplementing the quantitative feedback.
A summary o f the results of the eleven hypotheses lies below.
Hypothesis 1: Rate of default on debt for foreign customers is higher than for
domestic customers. The null hypothesis Ho: (iF o r. - P D o m . = 0 is not rejected by the
one- tailed test.
Hypothesis 2: High tech firms export more than other firms (heavy industry and light
industry firms). The null hypotheses H0: le c h - ^ In d =0 and H0': pH ig h tcch -pL t
in d were rejected (at the 1 and 5 percent levels, respectively) in one tailed tests.
Hypothesis 3: “Debt” firms are younger and smaller than “Other” firms. The null
hypotheses o f no difference in age, size in employees, and size in sales were all
rejected at the 5 percent level or better in two-tailed tests.
Hypothesis 4: “Debt” firms have lower GROWTH, PROFITS, and EXPORTS than
“1st World” and “Other” firms. Only the null hypotheses of lower GROWTH and
PROFITS versus “Other” firms were rejected.
Hypothesis 5: “Debt” firms have a lower number of shipments per year than “ 1s t
World” and “Other” firms. The null hypothesis Ho: Poem'Pother^ was re-iectec*at *he 1
percent level in a one tailed test.
Hypothesis 6: “ 1st World” and “Debt” firms will give different rates of use of
marketing support. This hypothesis was supported in only one category of marketing
support, “Market Information.” The null hypothesis was rejected at the 5 percent
level; “Debt” firms used support systems to obtain market information significantly
more than “1st World” firms.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
102
Hypothesis 7: “Debt” firms will rate support systems more important in the marketing
process than “1st World” firms. The null hypothesis Ho: was rejected for
both year of first export (1 percent level) and 1996 (10 percent level) in a one-tailed
test.
Hypothesis 8: “Debt” firms will report greater difficulty with financing (availability o f
financing, uncertainty of payment from abroad, and time delay in receiving payment
from abroad) than “1 st World” firms. None of the null hypotheses were rejected by a
two-tailed test.
Hypothesis 9: “Debt” firms will report a higher rate of default for their foreign buyers
than “ 1st World” firms. The null hypothesis Ho: was not rejected in a one
tailed test.
Hypothesis 10: Compared to users of other agencies, Eximbank users will report a
higher percentage of entrepreneurs with prior experience in a large firm that exported.
None of the null hypotheses comparing Eximbank users to users of other agencies
were rejected in two-tailed tests, and Eximbank users had only an average percentage
of respondents with such experience when compared to other firms.
Hypothesis 11: Firms that use CEFO will be smaller than other firms. The average
size (measured by number of employees) of CEFO users was lower than users of any
other agency, and the null hypothesis of no difference in size was rejected in two
pairwise tests: CEFO vs. Eximbank (at the 10 percent level), and CEFO vs. DOC (at
the 5 percent level).
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
103
Conclusions
In many ways this study was largely exploratory, developing a methodology
that had not been used in studies of firms in the United States before. To some extent,
then, the descriptive nature of the results themselves is valuable. From its results can
be drawn a number of important points. The results highlight four major problems
which must be corrected to maximize the export potential of small firms and this
region's economy as a whole. These problems are (1) a widespread diffidence towards
exporting and export finance among firms and banks, (2) a need for export expertise in
firms and support systems, (3) the need for specialized assistance to different types of
firms, particularly high-tech, and (4) an absence of help for small, new-to-export firms.
Fear of Exporting
Survey comments and interviews corroborated each other: US firms are not
comfortable exporting. Banks are afraid to finance exporting without government loan
guarantees. Because the United States' growth has historically been inward-oriented,
exporting is an unknown, which many agents feel uncomfortable dealing with. If
nothing else, however, this study indicates that the perils of exporting are exaggerated.
The success of CEFO demonstrates how many small firms can export reliably
without having the considerable assets most lenders require. And the fact that the rate
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
104
of default by foreign buyers was reported to be lower than (and, at the very least, not
statistically different from) the rate of default by domestic buyers should reassure any
firm with concerns about the relative risks of exporting and shipping domestically. As
one respondent said, "[I]n today's age, exporting is no more than crossing over your
yard to greet your neighbor."
Beyond the perceived risks of exporting in general, the risks of exporting to
countries outside o f Western Europe, Canada, and Japan may also be misapprehended.
The hypotheses comparing firm characteristics and agency needs of exporters to
“Debt” countries and exporters to “ 1st World” and “Other” countries (hypotheses 3, 5,
6, and 7) were almost all confirmed; this suggests the different groups of exporters
may each benefit from specialized assistance. But the hypotheses attempting to
demonstrate that exporters to “Debt” countries have significantly greater difficulty
exporting and financing their exports (hypotheses 4, 8, and 9) could not be supported
convincingly. Given the sample in this study, it cannot be said that exporting to less
developed countries poses serious additional risk to the exporter.
What can then be done to remedy these misconceptions? There is no policy
that government can implement to alleviate an ignorance of exporting. But the
continued trend toward increased export promotion by government can do a lot to
encourage would-be exporters. Also, a less pessimistic approach to export lending by
banks would greatly ease the burdens of export finance that firms face. As more and
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
105
more firms begin to export, a sense of an export culture, as it were, may develop,
drawing more firms into export involvement.
Need for Expertise
Closely related to the fear of exporting is a lack of expertise in exporting.
Because of the relatively low degree of export involvement of the US economy when
compared to almost any other, a lack of expertise accompanies the unease with
exporting. Virtually every interview raised the issue of the need for well-qualified
export experts in export assistance organizations who are capable of offering
guarantees and other assistance without delay and extensive paperwork. The speed
with which guarantees are presently approved is a serious obstacle to some firms.
Experience helps within the firm, as well. Firms which acknowledged prior
export experience reported higher self-assessments of firm performance.1 This should
not be surprising, but it highlights the importance of skilled personnel to small firms
who wish to export. Having an employee who is familiar with the process of
exporting could be the difference between success and failure for a new-to-export
firm.
As with the above problem, this problem will begin to solve itself as more
firms gain export experience. If government agencies begin to specialize their services
'As this survey result does not bear on the performance of export assistance organizations, it has been
omitted from the analysis. This result is worth mentioning here, however.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
106
to reduce duplication of effort, their personnel will be able to specialize their skills.
And once banks and firms realize the value o f export expertise, they will draw
personnel with export experience, from overseas if necessary, with higher wages.
Specialized Assistance
A common complaint about almost all bureaucracies is the duplication of effort
among branches and entities. This is very true for the plethora of organizations which
provide export assistance. Redundancy of effort leads to confusion, prevents
specialization of services, wastes resources, and frustrates those whom the programs
intend to help. All of these complaints were raised by firms.
It should be apparent that in an increasingly diversified and complex economy
that a single agency facing a tight budget cannot adequately serve all the various needs
of different types of firms. What the literature indicates, and this study generally
confirms, is the success of CEFO. What is unique about CEFO is that it serves a
defined and highly limited subset of firms (small ones) and provides only one type of
service (loan guarantees). It should seem obvious that this is no coincidence. The
"shotgun approach" that one respondent bemoaned is the product of government
agencies being given a mandate that is too large for their resources.
The various agencies would thus be able to live within tight budgets and reduce
waste while better serving firms by each carving out a niche to provide service. It
would go far beyond the scope of this paper to propose a specific solution to the
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
107
challenge of restructuring the programs of export assistance to increase specialization
and effectiveness, but some lines along which niches can be defined are apparent.
First, new technology may have peculiar needs, which a generalized approach to
export assistance cannot meet. Thus, high tech firms may need an agency suited to
their needs. This study demonstrated that high tech firms have significantly different
exporting behavior than firms in other sectors.
Second, division of labor by size of firm already exists to some extent, between
Eximbank on one hand, and CEFO and SBA on the other. This coarse division may
need to be developed further, with the creation of an entity to assist very small and
new-to-export firms, who have special needs (see below). Finally, geographic region
may be a useful way to divide firms between export assistance organizations. CEFO,
in effect, serves a regional niche. This is useful insofar as a region will tend to have
geographic or commercial ties to certain buyer countries, may have concentrations of
certain types of industries or natural resources, and so forth.
A second type of geographical niche is defined by location of the buyer rather
than the exporter. This would likely be a fruitful division of labor. This study
confirms the intuitive notion that exporters to specific regions have differing needs and
face different challenges. Firms exporting to “Debt” countries face greater, but by no
means prohibitive, difficulty in exporting and in particular export finance; also, firms
exporting to “Debt” countries give significantly different assessments of certain
aspects of financing and marketing support.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
108
The need for greater specialization of services is buttressed by the results from
the analysis of the sample segmented by agencies. Virtually no patterns emerged
indicating that any agency was serving a well-defined group of firms, the only
exception being the above mentioned case of CEFO serving smaller firms, which is
relatively well supported. Surprisingly, even the SBA and Eximbank, which have
defined niches in terms of firm size, show little indication of serving groups of firms
that are differentiable from the population as a whole.
New-to-Export Firms
Because young, new-to-export firms lack both assets and export experience,
few if any agencies or financial institutions are willing to offer them financial
assistance they can afford, if any at all. Peter Hofmann (1996) outlined a method
whereby transferable letters of credit can help a small, new-to-export firm avoid the
need for a working capital loan. This procedure, however, is not widely used, and can
only help certain types of firms (especially export trading companies). There remains
a need for financial assistance at the most critical hour for an exporter—its entry into
exporting. An agency, equipped with sufficient resources, both financial and
personnel, to support such firms, must be created. It must be able to offer financing
without demanding an export history or assets as collateral, while at the same time,
judging wisely enough which firms to assist to remain solvent. Such an agency would
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
109
provide the key to rapid and sustained export growth and dynamism in the United
States.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
110
Suggestions for Further Research
A study such as this one offers to the business and government community
concrete recommendations, whose soundness is based upon economic analysis but
whose content is the voice of those who are both experts in the field in question—the
effectiveness of export assistance—and who have a stake in the outcome of the study.
Such an approach is not only appropriate for the subject, but is useful and can have an
immediate impact on policy.
It should be clear that SMEs require certain types of assistance to overcome
obstacles that are due to apparent market failures. Such assistance to SME exporters
and would-be exporters that various export support systems provide is thus easily
justifiable to a broad ideological spectrum. That these support organizations face
constrained budgets and limitations of personnel is obvious. Thus, it is desirable that
agencies and firms are able to continually reassess each other's capabilities and
objectives, in order to maximize the value of these programs, most of which taxpayers
pay for.
To some extent this dialogue is very much a continuing interchange between
agency and firm. Evidently, this process is not perfect, and part of this is due to an
inability or unwillingness for the agents to speak candidly to each other, and in part to
a slow or lacking response to firms' needs by agencies. It is these problems that a
study such as this addresses. One point emphasized to the firms in this study was that
the researchers were independent, unaffiliated with any commercial or governmental
organization, but who would be taken very seriously by the organizations in question.
The anonymity and remove from (at least some) bias provided to firms a chance to be,
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
I l l
and a reason to be, frank in their appraisals of the support systems. Likewise, the view
of both users and non-users of their programs offered to export assistance agencies a
chance to see why they were not reaching certain firms. It would be very hard for an
agency to discover what it is failing to do by asking only those firms who currently use
its services.
In serving as a bridge between firms and support systems, this study is
valuable. It is thus desirable that this sort of independent, systematic, and analytically
rigorous feedback be updated on a regular basis. The lack of literature on export
finance alone is a serious impediment to policy improvements. That there is virtually
no literature on specific agencies that is up to date essentially guarantees that no
program improvements can be brought about by the small body of literature that does
exist on the subject. Studies such as these should be regularly conducted in order to
reassess and critique the progress of export assistance programs in providing well-
tailored, cost-effective counseling and financing.
Unfortunately, the nature of an extensive mailed survey is that it involves
considerable expenditure of effort and expense to complete the correspondence stage
of the study. This will be reduced over time if research is revised continually, with
respect to previous surveys. Several suggestions for improving both the content and
effectiveness of the survey not only help remedy this problem, but also improve the
usefulness of any individual study.
One of the difficulties that arose as the study came to completion was the
difficulty of reconciling the dual objectives of the study: to replicate the thorough
overview that Nugent and Kim’s study (forthcoming) gave with the needs of brevity in
a mailed questionnaire targeting southern California businesses. The desire to reach
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
112
firms across various manufacturing sectors in this study made a limited sample of
personal contacts impossible, and thus future research in this area will have to sacrifice
the ends that Nugent and Kim’s paper sought. Such detailed, sectoral analysis
becomes useful at a later stage of export assistance refinement, and this will be
discussed below.
Questionnaire
Given the utility of the continued use of surveys of export-oriented firms, the
results of this study point to a desirable methodology for such future studies. The key
element of this methodology is the construction of the questionnaire. It is likely that
the length of this study’ s questionnaire and its content (questions on financial history
and assessments of firm characteristics and export difficulties at time of first export)
had a deterrent effect on firms who would otherwise have completed the survey of
filled it out more completely. Although effort was made on the part of the researchers
to limit the length o f the questionnaire, the desire for a sensible overview of the firm's
history and characteristics prevented a survey that was both easy to fill out and not
bulky in size. The use of check-boxes and scales, which is virtually necessary to
facilitate rapid completion of a questionnaire, also contributes to its length; in spite of
the assurance that the survey could be completed in 20-25 minutes, its nine pages may
have been an intimidating length to some recipients of the questionnaire.
Additionally, some portions of the survey's contents were not adequately filled
out by a large percentage of firms, and so contributed little to the study. The portions
were questions relating to the history of the firm: sources of financing during the year
of start-up, difficulties in export financing in year of first export, the usefulness of
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
113
various marketing programs and initiatives in the year o f first export. As answers to
these questions were often missing or incomplete, such questions relating to past
periods should be dropped. As comparisons between periods are useful, they need not
be avoided. However, they would be better attained by comparing sequential studies
of identical firms, a process that should naturally arise out o f the continuation of this
research.
Thus, the questionnaire should be limited to requesting essential firm
characteristics that can be reliably gathered (size, measured in employees; age; sector)
and should focus on an explicit assessment of agencies and rating o f areas of greatest
need in export finance assistance. Sections on marketing can be eliminated if the
focus of the study is narrowed to finance. Such a questionnaire would take less than
ten minutes to complete and would comprise a shorter document. A study using such
a questionnaire would only be able to test very specific hypotheses, but could still
make important recommendations. The lack of general information to put in context
any results would be more than made up for by the increased rate of response and
completeness and reliability of the responses.
Mailing Process
Future studies should seek an even larger pool of firms to contact. A study
should be conducted every perhaps three years to update the information and assess
any progress that has been made in areas of need, as well as new challenges or
opportunities for the export support organizations. These studies should use the same
questionnaire, which should be updated only to accommodate changes in assistance
programs or recent developments in the exporting environment.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
114
The fact that the mailing lists tend to include a great number of undeliverable
addresses is a problem that cannot be overcome without a tremendous expenditure of
effort.1 This problem will be mitigated to the extent that support organizations update
their own files; in spite o f the unreliability of their lists, those lists are the most
appropriate source of firm addresses for studies of this scope. The problem will also
be reduced over time as a body o f firms becomes a reliable subset of the responses in
each study and more and more addresses of firms that are unreachable are expunged
from the lists. It is likely that firms which return the questionnaire for a survey one
year will be willing to do so for the next study. Over time, a sample of firms for
longitudinal study could be constructed.
Sector-Specific Surveys
One of the complaints that arose in the replies to this study's questionnaire was
the lack of sector-specific expertise among export support organizations, especially in
the area of high-tech. Once more general problems in the provision of export finance
assistance are clarified, it would be beneficial to focus on the needs of individual
sectors and the assistance programs tailored to them. Ideally suited to this line of
inquiry is, of course, the methodology of Nugent and Kim’s study and its
questionnaire design.
1 One relatively easy way to improve the number of delivered questionnaires was suggested by Hofmann
(1996). Since a number of addresses bore the correct street address but an out of date name of the
contact person, he suggested that names be supplemented by the words "or current chief executive
officer."
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
115
Feasibility
To actually implement suggestions for future research like these requires
significant expenditure for the survey process. This expense, given the immediate
applicability of the results to activity of significant economic benefit, is justifiable, and
should decrease over time. If sponsorship of the affected agencies could be obtained,
independence of the research could likely be maintained while allowing the primary
beneficiaries of the studies, the agencies whose task it is to assist exporters, to
internalize the costs.
Remarks
This study observed the importance of direct appraisal of export support
organizations in the quest to improve the export involvement of US firms. To do so
effectively, it focused on firms in a geographically defined region with substantial
export orientation. It recognized the importance to exporting and special needs of
SMEs, and it discovered that finance was largely omitted from the literature. The
seriousness of this gap cannot be overstated, as the requirements for capital are
disproportionate for exporting and SMEs more often than not lack the collateral or
established good standing to acquire sufficient financing on the market.
The results of this survey thus are an important first step in the study of export
finance assistance for SMEs by practical, result-oriented means. A new data set,
constructed solely for the study, is compiled directly from those entities involved, and
the results of the survey are specific and usable recommendations to those who offer
the export assistance. This straightforward approach is useful, and should be
continued, to the benefit of the region and the national economy.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
Appendix: Survey Questionnaire
116
List of Export Support Organizations
IMPORTANT: This information will be held confidential. All the information you provide in
this questionnaire will be used for the sole purpose of economic research and any names given
will be held in strict c o n fid e n c e ._________________________________________________
In several places in this questionnaire, we ask about support organizations which may have assisted your
firm. Below is a list of some organizations which you can use as a reference. Please indicate which
programs you have heard of, used, or are using in the spaces below.
Support Organization name (Bold)
and Program name
Heard
of?
Ever
used?
Using 1
now? 1
State of California:
01 California Export Finance Office (CEFO)
02 Pre-Shipment Working Capital Guarantee
03 Post-Shipment Accounts Receivable Guarantee
04 Combination Guarantee
05 Office of Export Development
06 Trade fairs and missions
07 California State Foreign Trade and Investment Offices
(Tokyo, Frankfurt, Mexico City, etc.)
1 1 Export-Import Bank (Ex-Im Bank)
12 Working Capital Guarantee Program
13 Short Term Multibuyer Credit Insurance
14 Medium Term Insurance or Guarantee
15 Small Business Export Credit Insurance
16 Umbrella Export Credit Insurance
21 Department of Commerce/International Trade
Administration (ITA)
22 ITA International Economic Policy
23 ITA Trade Development
24 ITA US and Foreign Commercial Service (USFCS) Trade fairs
and exhibitions
25 ITA USFCS Export counseling
26 ITA USFCS Overseas offices
27 National Trade Data Bank
31 Small Business Administration (SBA)
32 7(a) Business Loan Guarantee Program
33 Export Working Capital Guarantee Program
34 Small Business Investment Company
35 Service Corps, of Retired Executives (SCORE)
36 Small Business Development Center
(continued on next page)
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
117
Support Organization name (Bold)
and Program name
Heard
of?
Ever
used?
Using 1
now? |
41 Trade and Development Agency (TDA)
42 Technical Assistance
43 Grants
44 Feasibility studies
45 Orientation visits
51 Overseas Private Investment Corporation (OPIC)
52 Direct Loan Program
53 Loan guarantees
54 Insurance
61 Agency for International Development (USAID)
62 USAID financed project contracts
62 Forfait Guarantee Program
71 LA Trade
72 TradePort
73 Technical assistance and export counseling
81 LA Area Cham ber of Commerce
82 Legislative advocacy
83 Export counseling
91 O ther Cham bers of Commerce
Domestic:
Foreign:
92 US Export Assistance Center
Location:
93 World Trade Center
Location:
94 Center for International Trade Counseling
Location:
95 O ther organization
Name:
96 O ther organization
Name:
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
118
Questionnaire Date: / /
IMPORTANT: This information will be held confidential. All the information you provide in
this questionnaire will be used for the sole purpose of economic research and any names given
will be held in strict confidence.
1 . Overview
1. [OPTIONAL] Name of business:__________________________________ Phone:
2. Information on the Entrepreneur:
a) [OPTIONAL] Name:_______________________________________ Age:____
b) Position/Job Title:_______________________________________
c) Education: Years:_____ Major, if attended college:_____________
d) What is your export experience prior to joining/starting this firm?
(1) Worked in a small firm that exported
(2) Worked in a large firm that exported
(3) Worked for a subcontractor for exporters
(4) Other:_________________________________
e) Are there any other employees with specific experience in exports or export marketing?
Yes No
3. What was your year of start-up (firm established)?___________ of first export?__________
(NOTE: questions below will refer to “year of 1st export” and “year of start-up” or “year est’d.”when
asking for information from those years.)
4. What was the number of employees in 1995? in your year of 1st export?__________
and in your year of start-up?__________
5. What is the form of your firm’s ownership?
(1) Sole Proprietorship or Partnership
(2) Corporation
(3) Joint venture with foreign firm
Equity share: your firm _______ % foreign firm_______ %
(4) Subsidiary of larger corporation.
[OPTIONAL] Name of corporation:___________________________
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
119
6. List your three leading products or services in order of their importance and their share in total sales.
1996 Leading Items Share: 1-20% 21-50% 51-80% 80-100%
1) _____
2 ) _____
3 )______________________ _____ _____ _____ _____
Start-up Year Leading Items Share: 1-20% 21-50% 51-80% 80-100%
1) _____
2 ) _____
3 )______________________ _____ _____ _____ _____
7. Please provide estimates of your sales and exports.
Estimated Sales Exports as % of Sales
(Sthousand)
1995 _________ ___0-5% 6-15% 16-30% 31-50% 50+%
Year of 1st _________ ___0-5% 6-15% 16-30% 31-50% 50+%
Export
YearEst’d. _________ ___0-5% 6-15% 16-30% 31-50% 50+%
8. Assess your performance using the following scoring system.
Very Poor Poor Fair Good Very Good
1 2 3 4 5
(1) Growth _____ _____ _____ _____ _____
(2) Profitability _____ _____ _____ _____ _____
(3) Exports _____ _____ _____ _____ _____
9. With how many foreign countries do you do business?__________
10. With how many foreign buyers do you do business?__________
11. How regularly do you export (approximate number of times per year)?____________
12. To what regions do most of your exports go? Circle one or more.
Europe Canada Mexico Other Latin America
Japan China Other Asia Africa Middle East
O ther:____ _______ ______
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
120
II. Marketing Support System
1. In which of the following ways have government or non-profit agencies helped your firm to penetrate
export markets? If you benefited from it, how useful was it?
Yes/
No
Name of
Supporting
Institution
(Use Acronyms
provided below)
Usefulness
not very
useful useful
( I) Providing information on export market
opportunities
1 2 3 4 5
(2) Introducing buyers or export agents to
your firm
1 2 3 4 5
(3) Helping you participate in trade fairs in
the U. S. or overseas
1 2 3 4 5
(4) Helping your firm become familiar with
relevant foreign laws (e.g. foreign quality
standards or import regulations)
I 2 3 4 5
(5) Doing feasibility studies I 2 3 4 5
(6) other: 1 2 3 4 5
List of Supporting Institutions.
CEFO (California Export Finance Office)
OED (Office of Export Development)
EXIM (Export-Import Bank)
SBA (Small Business Administration)
TDA (Trade Development Agency)
DOC (Department of Commerce / International
Trade Administration)
OPIC (Overseas Private Investment Corporation)
USAID (Agency for International Development)
LAT (L.A. Trade)
LAACC (L.A. Area Chamber of Commerce)
OCC (Other Chambers o f Commerce)
OTHER (Name of Institudon that is not listed
above)
2. On a scale from 1 (lowest) to 5 (highest), rate the relative importance of each o f the following in
facilitating access to export markets:
1996 Year of 1 st Export
(1) Direct efforts by firm to contact foreign 1 2 3 4 5 1 2 3 4 5
buyers or export agents
(2) Initiatives by foreign buyers or export 1 2 3 4 5 1 2 3 4 5
agents
(3) Initiatives by subcontractors,
domestic export trading or 1 2 3 4 5 1 2 3 4 5
factoring companies
(4) Support by public or non-profit agency for 1 2 3 4 5 1 2 3 4 5
your firm to penetrate export market
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
121
III. Financial Support System
1. Identify the financial source, amount, and usefulness of each o f the following when your firm first
exported and in 1995.
1995
Yes
/No
Amount (in $000)
0- 5- 10-
5 10 50
50-
100
100
+
Usefulness
not very
useful useful
(1) Venture capital
firm or investment
associations
1 2 3 4 5
(2a) Bank loans 1 2 3 4 5
(2b) Loan guarantees 1 2 3 4 5
(3) Self Finance I 2 3 4 5
(4) Corporate bonds
and issue of
Commercial Paper
1 2 3 4 5
(5) Other private
loans
1 2 3 4 5
(6) Relatives, friends I 2 3 4 5
(7) Parent firm I 2 3 4 5
(8) Support
organization
Acronym:
1 2 3 4 5
(9) Forfaiting house 1 2 3 4 5
(10) Factoring house 1 2 3 4 5
Year of first Export
Yes
/No
Amount (in $000)
0- 5- 10- 50- 100
5 10 50 100 +
Usefulness
not very
useful useful
(1) Venture capital
firm or investment
associations
1 2 3 4 5
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
122
(2a) Bank loans 1 2 3 4 5
(2b) Loan guarantees 1 2 3 4 5
(3) Self Finance 1 2 3 4 5
(4) Corporate bonds
and issue of
Commercial Paper
1 2 3 4 5
(5) Other private
loans
1 2 3 4 5
(6) Relatives, friends 1 2 3 4 5
(7) Parent firm 1 2 3 4 5
(8) Support
organization
Acronym:
1 2 3 4 5
(9) Forfaiting house
1 2 3 4 5
(10) Factoring house
1 2 3 4 5
2. What terms of sales do you offer to your foreign buyer? (ie. how are you paid)
Yes/No Percentage
(1) Cash %
(2) Letter of Credit %
(3) Open Accounts %
(4) Other:________________________________ %
3. What percentage of domestic customers to whom you provide credit fail to pay their
debts?_______% What percentage of foreign customers?_______ %
4. Are you able to discount (rediscount) any Account Receivables (A/R) ? Yes No
If yes, to which of the following?
(1 )Bank
(2) Other Firm
(3) Individual
(4) Other:______________________
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
123
5a. Are there any business advantages to exporting (eg. Foreign Sales Corporations)? Yes No
If yes, please describe.
5b. If you have answered “yes”, but you are not making use of the advantages, what is the reason?
6. Please rate the following statements pertaining to difficulties in obtaining financing for exports.
Not
A
Problem
Now
A
Serious
Problem
Year of First
Not
A
Problem
Export
A
Serious
Problem
(1) Lack of information on possible sources
of financing
1 2 3 4 5 1 2 3 4 5
(2) Limited availability of financing 1 2 3 4 5 1 2 3 4 5
(3) Complexity of financing arrangements I 2 3 4 5 1 2 3 4 5
(4) Time delays in receiving payments from
abroad
1 2 3 4 5 1 2 3 4 5
(5) Uncertainty o f payment from abroad 1 2 3 4 5 I 2 3 4 5
(6) Size of collateral requirements 1 2 3 4 5 I 2 4 5
7. Did any of the agencies (mentioned on page 5) help you in identifying an appropriate financial
institution (e.g., banks)? Yes No______
If yes, how helpful was this agency in guiding you on how to be successful in obtaining financing?
Now Year of First Export
Not Very Not Very
Helpful Helpful Helpful Helpful
1 2 3 4 5 1 2 3 4 5
8. In your opinion, if you had not been able to use any of the external sources of support from the
government or non-profit agencies, by what percent would your realized 1995 exports have been
reduced. (Please circle one)
1-20% 21-40% 41-60% 61-80% 81-100%
9. Have you ever used the internet to obtain information that pertains to export promotion? Y N
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
IV. Additional Comments/Recommendations
124
THANK YOU VERY MUCH FOR COMPLETING THIS QUESTIONNAIRE.
Would you like a copy of the results of this survey? Y es No
If yes, please enclose your business card.
Alternatively, you may also request for the results by sending us your business card separately.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
125
Appendix: Summary Description
of Letters of Credit
The Letter of Credit (LC) is a crucial instrument in export finance, virtually
necessary for a firm to do business with buyers in other countries. There are a number
of different types of LCs, but they all operate under the same principle. Wells and
Dulat (1996) give a thorough overview of important terminology used in LCs as well
as the various types of LCs and their uses. Below, the basic procedure for drawing up
and utilizing a LC is covered, with specific reference to the value of a transferable LC.
The basis for this description is Wells and Dulat (1996) and Hofmann (1996).
Both exporters and buyers reduce their risks by negotiating letters of credit as
means of payment. A LC guarantees payment to the seller (exporter) contingent on
delivery of the product under specific conditions to the buyer. The buyer's bank makes
the guarantee, and by offering its own credit makes the guarantee more reliable. Thus,
the seller needs not be concerned with the financial strength of the buyer, but can be
confident that payment will be made. Likewise, the buyer does not have to pay for the
merchandise until it is delivered.
A letter of credit is issued as follows: the buyer approaches its bank, with
which it presumably has a line of credit or an account, to open the LC. The buyer's
bank (the opening bank) issues the letter of credit. In so doing, the opening bank
agrees to pay the seller's bank (the paying bank) the amount specified once the seller
has provided the paying bank proper documentation proving shipment of the goods.
The paying bank then pays the seller, while the opening bank debits the buyer.
The letter of credit is often the best way to provide both buyer and seller with
security that they will not be cheated. The letter of credit does, however, involve some
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
126
expense and a considerable attention to detail and paperwork. If the exporter fails to
meet the specifications of the LC, the opening bank is not required to pay upon
shipment. Wells and Dulat (1996) cover important aspects of the contract as well as
various discrepancies that may arise and ways to resolve them.
Finally, the transferable letter of credit is an instrument that may be
indispensable to a small firm that is new to export. Most banks and export assistance
agencies do not provide export financing without a sufficiently strong financial
statement. Further, virtually every bank and export assistance agency requires
exporting experience. Thus, a new, small firm will not be able to get the working
capital it needs for exporting. If the firm needs working capital primarily to pay
suppliers, then, as Hofmann (1996) points out, a transferable LC may be the solution
to its problem.
A transferable LC is a LC with an additional clause stipulating that a portion of
the value of the LC may be transferred to another party, such as the exporter’s
supplier, who then has the same duties as the seller (i.e. providing documentation
proving timely shipment to the paying bank), and who receives the same guarantee of
payment. The exporter, when shipping its product, simply substitutes its documents
for the ones its supplier provided to the paying bank, and the paying bank pays both
the exporter and its supplier. The transferable LC is no different with respect to the
buyer or the opening bank. Thus, an exporter may transfer a portion of a transferable
LC to its supplier. Although the supplier has not been paid, it has a guarantee that it
will be paid, and the transferable LC acts as a way of circumventing the exporter's
need for working capital.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
127
This technique will not always work. Because the guarantee of payment that
the LC provides is contingent upon the timely and proper shipment by the exporter, the
supplier must have some confidence in the exporter's ability to perform to accept the
transferable LC in lieu of payment in advance. Also, a request for a transferable LC by
the exporter indicates to the buyer a degree of financial weakness. Nonetheless, when
affordable financing is not available, a transferable LC may be the best alternative.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
REFERENCES
128
Articles
Albaum, G. (1983). Effectiveness of Government Export Assistance for U.S. Smaller-
Sized Manufacturers: Some Further Evidence. International Marketing Review, 68-75.
Alexandrides, C.G. (1971). How the Major Obstacles to Expansion Can Be Overcome.
Atlanta Economic Review, 21, 12-15.
Barnes, W.N. (1980). International Marketing Indicators. European Journal o f
Marketing, 14(2), 88-136.
Bauerschmidt, A., Sullivan, D. and Gillespie, K. (1985). Common Factors Underlying
Barriers to Export: Studies in the U.S. Paper Industry. Journal o f International
Business Studies, Fall, 111-123.
Beliveau, D. and Billardon, J. (1984). La decision d’implication intemationale au sein
de l’entreprise privee. Etudes Internationales, 15(1), 7-60.
Bilkey, W. and Tesar, G. (1977). The Export Behavior of Smaller Sized Wisconsin
Manufacturing Firms. Journal o f International Business Studies, Spring/Summer, 93-
98.
Bilkey, W. J. (1978). An Attempted Integration of the Literature on the Export
Behavior of Firms. Journal o f International Business Studies, Spring/Summer, 33-46.
Bolger, T.F. (1981) The McFadden Study: An Unsound Proposal For Community
Banks. Journal o f Retail Banking, 3, 41-44.
Business Week (1978) ‘The Reluctant Exporter’ April 10.
Business Week (1980) ‘Revitalizing the U.S. Economy’ June 30.
Cavusgil, T. (1980). On the Internationalization Process of Firms. European Research,
8(6), 273-281.
Cavusgil, T. (1984). Organization Characteristics Associated With Export Activity.
Journal o f Management Studies, 2/(1), 3-22.
Cavusgil, T. and Nevin J.R. (1981). International Determinants of Export Marketing
Behavior: An Empirical Investigation. Journal o f Marketing Research, 8, 141-149.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
129
Crick, D. and Czinkota, M. (1995). Export Assistance: Another Look At Whether
We Are Supporting the Best Programmes? International Management Review, 12(3),
61-728.
Czinkota, M. and Ricks, D. (1981). Export Assistance: Are We Supporting the Best
Programs? Columbia Journal o f World Business, Summer, 73-78.
Czinkota, M. and Johnston, W.J. (1981). Segmenting U.S. Firms for Export
Development. Journal o f Business Research, 353-365.
Czinkota, M. (1984). The Business Response to the Export Trading Company Act of
1982. Columbia Journal o f World Business, Fall, 105-111.
Denis, J.E. and Depelteau, D. (1985). Market Knowledge, Diversification, and Export
Expansion. Journal o f International Business Studies, Fall, 77-89.
De Nobel, A., Castaldi, R. and Moliver, M. (1989). Export Intermediaries: Small
Business Perceptions of Services and Performance. Journal o f Small Business
Management, April, 33-41.
De Nobel, A. and Belch M. (1988). The Intermediary Needs of Domestic Exporters:
An Empirical Analysis. Paper Presented at the 1988 Western Academy o f
Management.
Dichtl, E., Leibold, M., Koglmayr, G., and Muller, S. (1984). The Export Decision of
Small and Medium Sized Firms: A Review. Management International Review, 24(2),
49-60.
Dill, W. (1958). Environment as an Influence on Managerial Autonomy.
Administrative Science Quarterly, 2, 409-443.
Dunham, C.R. (1986). Interstate Banking and the Outflow of Local Funds. New
England Economic Review, March-April, 7-19.
Drucker, P. (1985). Business In Japan Isn’t Just Done. Wall Street Journal, 18, July
24.
Eisemann, P and Andrews, V. (1981). The Financing of Small Business. Economic
Review, Federal Reserve Bank o f Atlanta, August, 16-20.
En-Ansary, A and Robicheaux, R. (1974). A Theory of Channel Control: Revisited.
Journal o f Marketing, 38, 2-7.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
130
Etemad, H. (1981). International Market Segmentation: The Issue of Longitudinal
Stability. Paper Presented at the Conference of the Academy ofInternational
Business, Montreal, October.
Gronhaug, K. (1977). Water to Spain: An Export Decision Analyzed In the Context of
Organizational Learning, Journal o f Management Studies, 14(1), 26-33.
Guttentag, J.M. and Herman, E.S. (1966). Do Large Banks Neglect Small Businesses?
Journal o f Finance, 21, 535-538.
Hickson, D.J., Hinings, C.R., Lee, C.A., Schneck, R.E. and Pennings, J.M. (1971). A
Strategic Contingencies Theory of Interorganizational Power. Administrative Science
Quarterly, 16, 216-227.
Houpt, J. (1988). International Trends for U.S. Banks and Banking Markets. Federal
Reserve Bank Staff Stucfy, September (1).
Huszagh, S. (1981). Export Perceptions of the U.S. Regulatory Environment.
Columbia Journal o f World Business, Fall, 22-31.
Johanson, J. and Vahlne, B. (1977). The Internationalization Process of Firms: A
Model of Knowledge and Development and Increasing Foreign Market Commitments.
Journal o f International Business Studies, Spring/Summer, 23-32.
Johanson, J. and Wiedersheim-Paul, F. (1975). The Internationalization of the Firm:
Four Swedish Case Studies. Journal o f Management Studies, 12(3), 305-322.
Kedia, B. L. and Chhokar, J. (1986). Factors Inhibiting Export Performance of Firms:
An Empirical Investigation. Management International Review, 26 (4), 32-42.
Klein E. (1990). Exporting with Elan. North American International Business, April:
54.
Kathawala, Y., Judd, R ., Monipallil, M. and Weinrich, M. (1989). Exporting
Practices and Problems of Illinois Firms. Journal o f Small Business Management,
January, 53-59.
Kotabe, M. and Czinkota, M. (1992). State Government Promotion of Manufacturing
Exports: A Gap Analysis. Journal o f International Business Studies, forth quarter,
637-657.
Kothari, V. (1978). Strategic Approaches to Small U.S. Manufacturers in International
Markets. Proceedings o f the Academy o f Management. San Francisco, August, 362-
366.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
131
LDC Debt (1987), Washington International Business Report, 16, March 17.
Lee, W. and Brasch, J. (1978). The Adoption of Exports as an Innovative Strategy.
Journal o f International Business Studies, Spring/Summer, 85-93.
Little, J.S. (1986). Intra-firm Trade and U.S. Protectionism: Thoughts Based on A
Small Survey. New England Economic Review, May/June, 40-49.
Lynch, M. (1980). Loans and Groans: Banks Face Shakeout With Costs Going Up,
Competition Rising. Wall Street Journal, 72, July 14, Iff.
Madden, B. (1973). Functional Spin-off: A Key to Anticipating Change in
Distribution Structure. Journal o f Marketing, 37, July, 18-25.
Martin, E.G. (1984). Latin Debt Crunch Hurting U.S. Firms. Wall Street Journal, 8
May, 38.
Miller, D. and Friesen, P. (1980). Momentum and Revolution In Organizational
Adaptation. Academy o f Management Journal, 23(4), 591-614.
Miller, L. (198 la) To Unlock New Export Markets, Consider the “EMC” Key.
American Import Export Management, August, 80-105.
Miller, L. (1981b) Taking the EMC Gamble? Figure the Financial Odds First.
American Import Export Management, September, 49-73
Miller, L. (1982) Pricing EMCs. American Import Export Management, 97, July, 16-
19.
Mote, L.R. (1974). The Perennial Issue: Branch Banking. Business Conditions,
Federal Reserve Bank o f Chicago, February, 3-23.
Ouchi, W.G. (1980). Markets, Bureaucracies and Clans. Administrative Science
Quarterly, 25, 129-141.
Pavord, W. and Bogart, R. (1975). The Dynamic of the Decision to Export, Akron
Business and Economic Review, 6( 1), 6-11.
Piercy, N. (1981). British Export Market Selection and Pricing. International
Marketing Management, 10(4), 287-297.
Rabino, S. (1980). An Examination of Barriers to Exporting Encountered By Smaller
Manufacturing Firms. Management International Review, 20(1), 67-73.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
132
Rabino, S. (1980). An Attitudinal Evaluation of An Export Incentive Program: The
Case ofDISC. Columbia Journal o f World Business, 5, Spring, 61-65.
Reid, S. (1981). The Decision Maker and Export Entry and Expansion. Journal o f
International Business Studies, Fall, 101-112.
Rhoades, S.A. and Savage, D.T. (1981) Can Small Banks Compete? Bankers
Magazine, 164, January-Febmary, 59-65.
Rhoades, S. A. and Savage, D.T. (1985) The Viability o f Small Banks. Bankers
Magazine, 164, July-August, 59-65.
Rhoades, S. A. (1985). Interstate Banking and Product Deregulation: Implications
From Available Evidence. Loyola Law Review, 18, 1115-1164.
Robock, S. (1993). The Export Myopia of U.S. Multinationals: An Overlooked
Opportunity For Creating U.S. Manufacturing Jobs. Columbia Journal o f World
Business, Summer, 25-32.
Rose, J. (1986). Interstate Banking and Small Business Finance: Implications From
Available Evidence. American Journal o f Small Business. Fall, 23-39.
Rose, R (1991). Success Abroad: How 3M By Tiptoeing Into Foreign Markets
Become A Big Exporter. Wall Street Journal, 29 March, A5.
Rudolph, B. (1986). A Baffling Trade Imbalance. TIME, 11 August, 40-42.
Sease, D. (1987). Dollar’s Decline Fails to Narrow Trade Gap as 1985 Pact Intended.
Wall Street Journal, 7 January, 1 and 18.
Sethi, S.P. (1971). Comparative Cluster Analysis For World Markets. Journal o f
Marketing Research, 8, 348-354.
Sethi, S.P. and Holton, R.H. (1969). Review of B. Liander et al., Comparative
Analysis For International Marketing. Journal o f Marketing Research, 6, 502-503.
Simmonds, K. and Smith, H. (1968). The First Export Order: A Marketing Innovation.
British Journal o f marketing, 2, Summer, 93-100.
Stanley, T., Roger, C. and McManis, B. (1993). The Effects of Foreign Ownership of
U.S. Banks on The Availability of Loanable Funds to Small Business. Journal o f
Small Business Management, April, 50-65.
Steiner, M. and Solem, O. (1988). Factors For Success In Small Manufacturing Firms.
Journal o f Small Business, January, 51-56.
R eproduced with perm ission o f the copyright owner. Further reproduction prohibited without perm ission.
133
Steinmann, S. Kumar, B. And Wasner, A. (1980). Conceptualizing The
Internationalization Process of Medium Sized Firms: Some Preliminary
Considerations For A Research Design. Management International Review, 20, 1, 50-
66.
Stigler, G. (1951). The Division O f Labor Is Limited By The Extent Of The Market.
Journal o f Political Economy, June, 185-193.
Thomas (1978). Strategy Is Different In Service Industries. Harvard Business Review,
July-August, 158-165.
Truell, P. (1987). Financing For Exports Grows Harder To Find. Wall Street Journal,
15 May, p.l.
U.S. Congress, House (1982). Export Trading Company A ct o f 1982: A conference
Report. 97th Congress, Second Session.
U.S. Congress, House (1988). Export Financing in the United States: Problems and
Options. A Staff Report. 100th Congress, Second Session.
Welch, L. and Wiedersheim-Paul, F. (1980). Initial Exports: A Marketing Failure.
Journal o f Management Studies, 17(4), 333-344.
Wiedersheim-Paul, F., Olson, H.C., and Welch, L. (1978). Pre-export Activity: The
First Step in Internationalization. Journal o f International Business Studies,
Spring/Summer, 47-58.
Whitehead, D. (1982). The Sixth District Survey of Small Business Credit. Economic
Review, Federal Reserve Bank o f Atlanta, August, 42-48.
Articles in Books
Beliveau, D. Export Market Decisions for Small Firms: A Role For Government.
(1987). In Philip Rosson and Stanley Reid (Ed.), Managing Export Entry and
Expansion (pp. 159-185). New York: Praeger.
Bartels, R. Outline For Comparative Marketing Analysis. (1963). In R. Bartels (Ed.),
Comparative Marketing Analysis (pp. 229-308). Illinois: Irwin.
Cavusgil, T. Some Observations on the Relevance of Critical Variables for
Internationalization Stages. (1982). In Michael Czinkota and George Tesar (Ed.),
Export Management (pp. 276-286). New York: Praeger.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
134
Cavusgil, T. and Nevin, J.R. State-of the-Art in International Marketing: An
Assessment. (1981). In B.M. Enis and KJ.Roering (Ed.), Review o f Marketing (pp.
195-216). Chicago: American Marketing Association.
Chadwin, M.L. State Development Programs: Assessment and Recommendations.
(1990). In Tamer Cavusgil and Michael Czinkota (Ed.), International Perspective on
Trade Promotion and Assistance (pp. 39-51). Connecticut: Quorum Books.
Conners, R.J. World Market Potential as Developed for 3M Overseas Operation.
(1960). In AMA, Dynamic Marketing fo r a Changing World (pp. 461-466). Chicago:
American Marketing Association.
Curry, T.J. The Performance of Bank Holding Companies. (1978). In FRS, The Bank
Holding Company Movement to 1978: A Compendium, (pp. 95-120).
Washington.D.C.: Board of Governors of the Federal Reserve System.
Dichtl, E. and Koglmayr, H. Country Risk Evaluations and Export Market Entry.
(1987). In Philip Rosson and Stanley Reid (Ed.), Managing Export Entry and
Expansion (pp. 111-127). New York: Praeger.
Doyle, P. and Gidengil, Z.B. (1977). A Strategic Approach to International Market
Selection. In AMA, Proceedings o f the American Marketing Association (pp.230-
234). Chicago: American Marketing Association.
Ford, D. et al. Managing Export Development between Industrialized and Developing
Countries. (1987). In Philip Rosson and Stanley Reid (Ed.), Managing Export Entry
and Expansion (pp. 71-90). New York: Praeger.
Glassman, C. and Struck. Survey o f Commercial Bank Lending to Small Business
(1982). In Studies o f Small Business Finance (January). Washington D.C.: The
Interagency Task Force on Small Business Finance.
Humphrey, D. Costs and Scale Economies in Bank Intermediation. (1985). In
Aspinwall, R. and Eisenbeis R. (Ed.), Handbook For Banking Strategy (pp. 617-645).
New York: John Wiley.
Kamath, S., Rosson, P., Patton, D. and Brooks, M. Research on Success in Exporting:
Past, Present and Future. (1987). In Philip Rosson and Stanley Reid (Ed.), Managing
Export Entry and Expansion (pp. 398-422). New York: Praeger.
Kvasnicka, J. The Dollar-Trade Puzzle. (1986) In FRS, International Letter (p. 560).
Chicago: The Federal Reserve Bank of Chicago.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
135
Mintz, I. Cyclical Fluctuations in the Exports in the United States since 1879.
(1967). In NBER, A Longitudinal Analysis o f Total U.S. Exports. New York: National
Bureau o f Economic Research.
Nugent, J. B. (1996). Capital Flows to and From the United States: Past Trends and
Future Prospects. In PECC, Capital Flows in the Pacific Region: Past Trends and
Future Prospects (pp. 489-544). Osaka: Japan Committee for Pacific Economic
Outlook.
Nugent, J.B. and Kim, L. (forthcoming). Korean SMEs and Their Support
Mechanisms. In Levy, B. et al., Can Intervention Work? Successful Small and Medium
Enterprises and their Support Systems. World Bank.
Ogram, E. W. Exporters and Non-exporters. (1982). In Michael Czinkota and George
Tesar (Ed.), Export Management: An International Context (pp. 70-84). New York:
Praeger.
Papadopoulos, N. Approaches to International Market Selection for Small and
Medium Sized Enterprises. (1987). In Philip Rosson and Stanley Reid (Ed.),
Managing Export Entry and Expansion (pp. 128-158). New York: Praeger.
Papadopoulos, N. Assessing New Product Opportunities in International Marketing.
(1983). In ESOMAR, New Product Development (pp. 69-89). Amsterdam:
ESOMAR.
Ramaswami, S. and Yang, Y. Perceived Barriers to Exporting and Export Assistance
Requirements. (1990). In Tamer Cavusgil and Michael Czinkota (Ed.), International
Perspective on Trade Promotion and Assistance, (pp. 187-206). Connecticut: Quorum
Books.
Savage, D.T. (1981). American Commercail banking Structure and Small Business
Lending. In Studies o f Small Business Finance (December). Washington D.C.: The
Interagency Task Force on Small Business Finance.
Shull, B. (1981). Changes in Commercial Banking Structure and Small Business
Lending. In Studies o f Small Business Finance. Washington D.C.: The Interagency
Task Force on Small Business Finance.
Tesar, G. and Tarleton, J. Comparison of Wisconsin and Virginia Small and Medium
Sized Exporters. (1982). In Michael Czinkota and George Tesar (Ed.), Export
Management (pp. 85-112). New York: Praeger.
Watro, P. Financial Services and Small Business (1982). In FRS, Economic
Commentary, (January), Ohio: The Federal Reserve Bank of Cleveland.
R eproduced with perm ission o f the copyright owner. Further reproduction prohibited without perm ission.
136
Books
Buckley, P. and Casson, M. (1976). The Future o f the Multinational Enterprise.
London: Macmillan Inc.
Buckley, P. and Brooke, M. (1992). International Business Studies: An Overview.
Blackwell Publishers.
Davis, L.A. (1989). Contribution o f Exports to U.S. Employment: 1980-87.
Washington D.C.: U.S. Government Printing Office.
Dunkleberg, W.C. and Scott, J.A. (1985) Credit, Banks and Small Business: 1980-
1984. Washington D.C.: National Federation of Independent Business.
GAO (1983). SBA’s Certified Lenders Program Falls Short of Expectation.
Washington D.C.: United States General Accounting Office.
GAO (1995). Export Finance: Comparative Analysis o f U.S. and European Union
Export Credit Agencies. Washington D.C.: United States General Accounting Office.
Jain, S. (1989). Export Strategy. Connecticut: Quorum Books.
Levy, B., Berry, A., Itoh, M., Kim, L., Nugent, B., Urata, S. and Escandon, J.
(forthcoming). Can Intervention work? Successful Small and Medium Enterprises and
Their Support Systems. Washington D.C.: World Bank.
Martinoff, J. (1988). A Survey of Export Financial Services Required By Small and
Medium Sized Businesses to Increase Their Participation in International Trade, Ph.D.
Dissertation, The Claremont Graduate School.
Miles, R. (1980). Macro Organizational Behavior. California: Good Year.
Perry, AC. (1992). The Evolution o f U.S. Trade Intermediaries: The Changing
International Environment. Connecticut: Quorum Books.
Rhyne, E. (1988). Small Business, banks and SBA Loan Guarantees. New York:
Quorum Books.
Root, F. (1994). Entry Strategies For International Markets. New York: Macmillan
Inc.
Shaw, R. (1977). Commerce and State Department’ s Export Promotion Programs.
Washington D.C.: U.S. Government Printing Office.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
137
Stem, L. and En-Ansary, A. (1982). Marketing Channels. Englewood Cliffs, New
Jersey: Prentice-Hall.
Tesar, G. (1975). Empirical Study of Export Operations Among Small and Medium-
Sized Firms, Ph.D. Dissertation, University of Wisconsin.
Wright, R.W. (1984). Japanese Business in Canada: The Elusive Alliance. Essays in
International Economics. Montreal: The Institute for Research on Public Policy.
World Bank (1993). The East Asian Miracle. Washington D.C.: Oxford University
Press.
Interviews
Alikani, John M, President of Pioneer International Group. September 1996. At
Pioneer International Group, Los Angeles, California.
Brown, Caroline V, CEFO Senior Loan Officer. March 29, 1996. At California
Export finance Office, La Palma, California.
Corrales-Diaz, Susan, President and CEO of Systems Integrated, Inc., and Irene
Fisher, SCORE consultant. February 2, 1996. At Systems Integrated, Inc., Los
Angeles, California.
Frieze, Jill, Vice President of the International Division of Imperial Bank. November
12, 1996. At Imperial Bank, Los Angeles, California.
Hofmann, Peter, Vice President and Manager of the International Division of National
Bank of Southern California. December 5, 1996. At University of Southern
California, Los Angeles, California.
Isaac, Jacques, Owner of C-Shore International. September 24, 1996. AtC-Shore
International, Los Angeles, California.
Kanlian, Joan, and Steve Morrison, DOC International Trade Specialists. April 1 ,
1996. At Department of Commerce, USEAC, Long Beach, California.
Murat, Corinne, LAACC Program Director. April 26, 1996. At Los Angeles Area
Chamber of Commerce, Los Angeles, California.
Shayan, Mike, Buyer, Concord Enterprises. September 5, 1996. At Concord
Enterprises, Los Angeles, California.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.
138
Snow, Tricia L., Eximbank Development Officer. March 1, 1996. At Eximbank,
USEAC, Long Beach, California.
Other Works Cited
CEFO(1994). Export Loan Guarantee Program. La Palma, California: CEFO.
CEFO (1996). CEFO Update January, 1996. La Palma, California: CEFO.
Eximbank (1994a). Annual Report. Export-Import Bank of the United States.
Eximbank (1994b). Small Business: A “ M ain” Focus. Export-Import Bank o f the
United States.
LA Trade (1995). LA Trade. Los Angeles: LA Trade.
11 Million Businesses Phone Book (1995). Computer software (CD-ROM).
American Business Information.
R eproduced with perm ission of the copyright owner. Further reproduction prohibited without perm ission.

Linked assets

University of Southern California Dissertations and Theses

Conceptually similar

PDF

An analysis of SME export assistance needs

PDF

An evaluation of the conventional wisdom on capital flow volatility: FDI inter-flow correlation and financial account volatility

PDF

Decentralizing of public finance: Centralizing forces in developing countries

PDF

How financial statements in Mexican firms reflect changes in the financial/economic environment from 1978 to 1996

PDF

Economic analysis of ground lease-based land use system

PDF

Cost analysis of three pharmacy counseling programs for diabetics in a health maintenance organization

PDF

Digital money

PDF

Debt reduction by way of inflation: The case of Lebanon

PDF

A study concerning the relevance of using quality measures of education in economic growth models of sub-Saharan African nations

PDF

Business group affiliation in India

PDF

An inquiry into trade liberalization of the Asia-Pacific Economic Cooperation (APEC)

PDF

Growth, human capital, and technological change in a centrally planned economy: Evidence from Cuba

PDF

Does intense probation monitoring of truants work? An empirical econometric analysis of its effect on school and individual attendance, grades, and behavior

PDF

Insurance mechanisms, forest clearance, and the effect of government policies in rural economies

PDF

Belize pegged exchange rate: Heading towards devaluation or maintaining credibility

PDF

Big business concentration and its effect on labor market reform policies in Egypt and Mexico

PDF

A model of student performance in principles of macroeconomics

PDF

The reorientation of Japanese trade patterns: Selected prewar and postwar periods

PDF

Irrigation projects in Peru: Economic evaluation and planning recommendations

PDF

Infrastructure investment and regional productivity of the manufacturing industries in Mexico

Asset Metadata

Creator Hubbard, William H. J. (author)

Core Title An enquiry into the effectiveness of export assistance organizations serving southern California SMEs

School Graduate School

Degree Master of Arts

Degree Program Economics

Publisher University of Southern California (original), University of Southern California. Libraries (digital)

Tag Economics, Commerce-Business,Economics, Finance,economics, general,OAI-PMH Harvest

Language English

Contributor Digitized by ProQuest (provenance)

Advisor Nugent, Jeffrey B. (committee chair), [illegible] (committee member), Rosendorff, Peter (committee member)

Permanent Link (DOI) https://doi.org/10.25549/usctheses-c16-11871

Unique identifier UC11341019

Identifier 1384896.pdf (filename),usctheses-c16-11871 (legacy record id)

Legacy Identifier 1384896.pdf

Dmrecord 11871

Document Type Thesis

Rights Hubbard, William H. J.

Type texts

Source University of Southern California (contributing entity), University of Southern California Dissertations and Theses (collection)

Access Conditions The author retains rights to his/her dissertation, thesis or other graduate work according to U.S. copyright law. Electronic access is being provided by the USC Libraries in agreement with the au...

Repository Name University of Southern California Digital Library

Repository Location USC Digital Library, University of Southern California, University Park Campus, Los Angeles, California 90089, USA