The Rationale for Export Promotion : Part 1

Exports are important. Yet, why should firms be enticed into exporting through the use
of public funds? Profit opportunities for exporters should be enough of an
incentive for firms to export. To explore this issue, I will use our Georgetown University research, which was  initially published in the AMA  Journal of  International Marketing.  First off, it is helpful to understand the export process within the firm. Typically, firms evolve along different stages to become experienced exporters. They start out being uninterested in things international. Management frequently will not even fill an unsolicited export order. Should  international market stimuli continue over time, however, a firm may move to the stage of export awareness, or even export interest. Management will begin to accumulate information about international markets and may consider the feasibility of exporting. At the export trial stage, the firm will fill selected export orders, serve a few customers, and expand into countries that are geographically close or culturally similar to the home country. At the export
evaluation stage, firms consider the impact of exporting on overall corporate
activities. Unless initial expectations are met, the firm is likely to discontinue its export efforts, seek alternative international growth opportunities or restrict itself to the domestic market. Success will lead the firm over time, to become an export adapter, make frequent shipments to many customers in more countries, and incorporate international considerations into its planning.

By: Michael R. Czinkota

 

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