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Analysis of the Global Competitiveness of Northeastern Food Firms: Experience and Interest in Foreign Activity

Listed author(s):
  • Hagen, James M.
  • Santos, Carlos A.
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    The objective of this study was to gain a better understanding of the characteristics of small to medium sized food firms in the Northeast (New York and Pennsylvania) that influence their decision to be involved or interested in foreign markets. The study involved the use of a survey, and we used a series of logistic regression models as well as correlation and cross-tabulations. Of the 116 food-manufacturing firms of New York and Pennsylvania that we successfully contacted in the survey, 55 are involved in foreign activity or were in the past, and 73 firms were interested in starting or expanding their foreign activity. We grouped the determinants that influence a firm's decision to enter or be interested in entering foreign markets ~n seven categories: size, product type, diversification/specialization, marketing knowledge advantage, R&D intensity, seller concentration and competitive nature of the firm. The results indicated that the characteristics found in firms that have experience in foreign activity are large size, high diversification, less marketing knowledge, high R&D intensity, low local competition and high domestic competition. The characteristics associated with an interest in starting or expanding foreign activity were the type of product (perishable), high amount of own brands, high R&D expenses as a percentage of total sales, low local competition, and a high percent of domestic and foreign competition. Size was not significantly associated with any entry mode. Canada, Mexico, Europe, South America and Asia were the preferred foreign markets entered. Firms with experience in foreign markets were associated with an interest in direct exports. Firms producing non-perishable products tended to be more interested in establishing warehouses abroad. Small and more specialized firms tended to be more interested in copacking and licensing as entry modes. Europe was the market most firms were interested in entering, for every entry mode. Firms without experience in foreign activity described lack of information as a barrier to enter foreign markets. Firms with experience in foreign markets considered price competition, tariff barriers and other government regulations as obstacles to enter foreign markets. Lack of time was perceived as a barrier by firms that were specialized and had interest in foreign activity. Tariff barriers were a concern for firms that were large and diversified. Firms with no experience in foreign activity perceived their small size as a barrier. Almost all firms believed that their size is too small before entering foreign markets. When firms actually decide to go abroad, they realize that size is not that important. Firms that feel threatened by foreign competition tended to have experience or interest in foreign activity.

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    Paper provided by Cornell University, Department of Applied Economics and Management in its series Research Bulletins with number 122678.

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    Date of creation: Jul 1999
    Handle: RePEc:ags:cudarb:122678
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    1. John H Dunning, 1988. "The Eclectic Paradigm of International Production: A Restatement and Some Possible Extensions," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 19(1), pages 1-31, March.
    2. Erin Anderson & Hubert Gatignon, 1986. "Modes of Foreign Entry: A Transaction Cost Analysis and Propositions," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 17(3), pages 1-26, September.
    3. Finn Wiedersheim-Paul & Hans C Olson & Lawrence S Welch, 1978. "Pre-Export Activity: The First step in Internationalization," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 9(1), pages 47-58, March.
    4. Sterns, James A. & Peterson, H. Christopher, 1996. "The Propensity To Enter And Exit Export Markets: A Mail Survey Of Smaller Agri-Food Firms In Michigan," Staff Papers 11755, Michigan State University, Department of Agricultural, Food, and Resource Economics.
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    6. S Tamer Cavusgil & Warren J Bilkey & George Tesar, 1979. "A Note on the Export Behavior of Firms: Exporter Profiles," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 10(1), pages 91-104, March.
    7. Don West & Odette Vaughan, 1995. "Globalization and the Food and Beverage Processing Industry," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 43(4), pages 565-578, December.
    8. John M. Connor, 1983. "Determinants of Foreign Direct Investment by Food and Tobacco Manufacturers," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 65(2), pages 395-404.
    9. Otto Andersen, 1993. "On the Internationalization Process of Firms: A Critical Analysis," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 24(2), pages 209-231, June.
    10. Peter Kennedy, 2003. "A Guide to Econometrics, 5th Edition," MIT Press Books, The MIT Press, edition 5, volume 1, number 026261183x, July.
    11. Handy, Charles R. & Henderson, Dennis R., 1991. "Industry Organization and Global Competitiveness in Food Manufacturing," Occasional Papers 233067, Regional Research Project NC-194: Organization and Performance of World Food Systems.
    12. Jean-Fran├žois Hennart, 1991. "The Transaction Costs Theory of Joint Ventures: An Empirical Study of Japanese Subsidiaries in the United States," Management Science, INFORMS, vol. 37(4), pages 483-497, April.
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