What new exporters think about U.S. government sponsored export promotion services and publications

What new exporters think about U.S. government sponsored export promotion services and publications

Vanderleest, Henry W

The purpose of this research is to investigate new exporter awareness and use of various U.S. government export assistance services and publications. A total of SS exporting firms responded to a questionnaire. The study reveals that many of the firms surveyed were, in fact, aware of and have successfully used various government assistance programs in starting their export operations. Findings in this study contradict other known studies on this topic which conclude that export assistance services and publications sponsored by the U.S. government are generally underutilized and not very helpful. Ways to make government assistance programs even more beneficial to new exporters are also discussed.

INTRODUCTION

The U.S. Department of Commerce through its International Trade Administration (ITA) sponsors many activities and publications designed to assist new exporters sell their products in overseas markets. Types of assistance range from organizing trade fairs and trade missions abroad to offering local “how to export” seminars and providing extensive published information about foreign marketing opportunities and business practices.

There are numerous studies in the literature in the past fifteen years which have investigated the awareness and usefulness of ITA sponsored export assistance programs. The best formal academic studies on the subject include those by Brady and Gill 1981, Czinkota and Ricks 1981, Czinkota 1982, Walters 1983, Kedia and Chokes 1986, Seringhaus 1986, and Kessing 1992. All of these studies are very comprehensive and reveal significant insight about government assistance programs for exporters.

Prior studies generally conclude that ITA programs are underutilized and, when used, not very helpful. This conclusion applies to exporters of all sizes, selling a wide variety of merchandise for varying lengths of time. Unfortunately, none of these studies focused exclusively on new exporters and their awareness and use of ITA programs. Any reference to new exporters at all was usually minor with most new exporter information hidden in the big picture analysis which was not broken down by “length of time” a firm has exported.

The purpose of this study is to re-examine exporter awareness and perceived usefulness of current ITA export promotion services and publications. This study differs from earlier attempts in that it is limited to an investigation of new exporters only. This is a key differentiation because government assistance programs have always been designed to specifically help new-to-export firms but yet no known studies exist which exclusively investigate new exporters’ reactions to ITA programs. Based upon thirty years of “real world” experience developing and implementing export programs for numerous companies, the author believes that new exporters do, in fact, depend heavily upon U.S. government sponsored services and publications when designing their export plans. The intent of this study was to determine whether this “gut feel” is true via an objective formal study examining this issue. Unique to this study is that for analysis purposes, ITA publications are separated from other ITA export promotional services such as trade missions, export consulting, etc., and are evaluated separately. Prior studies lump publications with all other services under the general heading “ITA programs.”

METHOD AND DATA

To obtain information required for the study, mail questionnaires were sent to presidents or owners at 152 Indiana manufacturing firms. The mailing list was compiled from data provided by the ITA district office located in Indianapolis and includes all known new-toexport firms within the state that received their first export order in the past year. Current company addresses, SIC code numbers, and names of persons to whom the survey forms were sent were obtained from the 1994 edition of the Indiana Manufacturers Guide. Each company surveyed was sent a three page questionnaire, a cover letter identifying the nature of the project and a postage paid return envelope.

The first section of the survey form asked questions about the demographic characteristics of the respondents. The remainder of the questionnaire included various Likert scale and open-ended questions asking firms to respond to a total of 18 statements or questions about their awareness and beliefs concerning the usefulness of government export promotion services and publications. Statements and questions on the survey form were designed to determine (1) how respondents first learned about specific sales leads; (2) how they were made aware of ITA services and publications; (3) the usefulness of services and publications and (4) additional information wanted. Questionnaires were pretested on four local new-to-export companies resulting in several adjustments being made before the mass mailing.

The original mailing of 152 questionnaires generated 38 (24.8 percent) usable survey forms. A second request from the 114 firms that had not returned the first usable survey forms within one month generated another 17 usable responses. From the two combined requests for assistance, 55 usable questionnaires were returned. Nine nonusable questionnaires were returned because the firm was out of business or moved from its original location and left no forwarding address. The overall return rate of 36.1 percent was surprising considering the complexity of the questionnaire and the lack of personal contact. The acceptable return rate suggests that responding firms have an interest in this topic and were interested in receiving a summary of the research findings in return for their cooperation. Data from the returned questionnaires were coded and tabulated and measures of central tendency and dispersion were derived.

Additional data were developed from telephone conversations and personal visits with executives of respondent firms in order to verify responses and, when possible, to develop additional information suggested by comments on the survey forms. Personal interviews with local ITA officials were also conducted to gather information about specific programs and publications. Because of time, money and data availability considerations, the scope of the investigation was limited to only new-to-export firms located in Indiana. Despite the focus on only one state, it is expected that generalizations can be made from data obtained from Indiana firms that will apply equally well to new exporters in other states.

PROFILE OF RESPONDING FIRMS

Of the 55 usable returned survey forms, 18 included company names. Eleven of the 18 also included business cards and encouraged further inquiries. Demographic data indicate that in terms of employment, all but five of the 55 responding firms are relatively small with less than 100 employees, with the largest firm having almost 700 employees. The number of employees ranged from 5 to 700 with a mean of 128 and a median of 48, indicating that, with several exceptions, the respondents in this survey are small companies. Dollar sales volume for surveyed firms ranged from $125,000 to nearly 400 million, with a median gross sales volume of $3.4 million and a mean of $38.7 million. As with the number of employees reported by respondent firms, the several larger respondents in the sample probably carried a substantial upward bias in the calculated mean value of the dollar sales.’

Although all respondent firms had been exporting less than one year, the number of years the firms have been in business ranged from 6 to 90 years. As expected, none of the firms at the time of the study had a formal export department. In most cases, the president or another senior executive was responsible for exporting along with his/her other duties. It is interesting that in no case had the export operations been turned over to an EMC or trading company. All export operations were handled “in house.”

Company demographic data also show that firms produced a wide variety of products with 14 two-digit SIC classes being represented. Firms producing fabricated metal products, electrical and nonelectrical machinery and transportation equipment accounted for the greatest number of surveyed new-to-export companies. It is notable that despite the wide variety of export products produced by respondent companies, the four leading SIC classes produced by these firms are also the four leading classes of goods produced by all Indiana firms regardless of whether they export.

STUDY FINDINGS

Awareness of Services and Publications

Data show that no respondents were aware of all ITA sponsored services and before starting their export programs (Table 1). On the other hand, no respondents stated that they had heard of no ITA services before exporting. Local conferences and workshops on “how to get started in exporting,” trade shows abroad and trade missions were the three services the majority of respondents were most aware of.

Other high awareness services include international market research and export counseling. Conversely, those services that respondents were least aware of include the trade complaints and inquiry service, comparison shopping service and the worldwide service programs. ITA’s joint venture/foreign program and new product information service also rank relatively low on the awareness scale. Additional low-ranking assistance programs include the export license program and videocatalog exhibitions. The low awareness of the latter is especially surprising since this activity is generally one of the most cost effective programs that new-to-export firms can participate in.

The ITA also publishes a myriad of export related publications for use by new-to-export firms. Survey participants were asked to indicate their awareness of the existence of twelve key ITA publications. Data revealed that all publications were known to at least some respondents. Publications that respondents are most aware of are A Basic Guide to Exporting and Business America (Table 1). A possible explanation for the high degree of awareness for later publication is that it is distributed as a periodical, heavy on “newsy” items and light on specific exporting strategies, and considered by many to merely be a promotion piece for the ITA. A Basic Guide to Exporting is widely known because it is considered to be the first publication exporters need to be aware of and consequently is “pushed” heavily by ITA staff members and private consultants. Unfortunately, too few firms go beyond these two publications as references in developing their export programs.

Publications that respondents were least aware of are Top Bulletin Trade Opportunities and World Traders Data Report with only 38.8 and 43.4 percent of the firms indicating that they were aware of these publications, respectively. Although showing average awareness, it was surprising that Overseas Business Reports and Country Market Plans did not rank higher in awareness. This is because ITA officials view these two publications along with Business America to be among the best that ITA offers, particularly for firms new to exporting. This situation may result from the fact that the former two publications are generally found in the government depository collection in large libraries or on computer driven compact disks thus preventing many new exporters from knowing about and/or having access to them. In general, the degree of awareness of ITA services and publications appears relatively high among new exporters. This contradicts conclusions drawn in previous studies.

How Made Aware of Services and Publications

A related question asked of surveyed firms was, “how did your firm become aware of ITA services and programs?” Data show that the largest percentage of surveyed exporters became aware of ITA export assistance program via direct mail correspondence. The popularity of this method is logical in view of coverage versus cost considerations. Personal contact by ITA staff members was the second most frequently used method of communicating with exporters. “Information obtained from other exporters,” “information from trade publications and general business magazines” and information provided by private consultants were methods used least often to make exporters aware of what types of assistance ITA offers.

Usefulness of Services and Publications

Data revealed that a large percentage of services and publications were found to be useful to many survey respondents in their early exporting efforts. This also contradicts what earlier studies have shown. Although most types of ITA assistance were “very” or “somewhat” useful, several services or publications were either “not useful” or “never used” by firms despite being aware of them.

Highly regarded promotion services include export counseling and export seminars and conferences which are considered to be very useful by 41.4 and 39.4 percent of surveyed exporters, respectively (Table 2). The top two activities in the “somewhat useful” category are the same as the top two “very useful” activities.

It also appears from data shown in Table 2 that nonusefulness of services was not a significant factor. This is a good indication that once new exporters become aware of ITA services and try them, relatively few are disappointed enough to consider, with several exceptions, any of the services not to be useful to some degree. Although some non-use is expected because not all firms need all services, there is concern that several programs and services show such a high rate of non-use. International market search, comparison shopping service and video/catalog exhibitions are the services showing the highest percentage of non-use by respondents. Followup discussions with ITA officials revealed that relative non-use of these programs and services may be due to their newness. In the cases of the comparison shopping and international market search services there is a relatively high fee involved which may deter potential users. Trade missions, trade shows and commercial exhibitions, although known by many new exporters, also are relatively expensive thus promoting non-use. The joint venture/foreign licensee program is also a likely candidate for non-use by repondents because as exporting firms they are not normally involved with joint ventures and/or licensing their products abroad.

Survey data indicated that of all publications, A Basic Guide to Exporting was “very useful” to the greatest number of exporting firms (Table 3). It was at least “somewhat useful” to nearly 36 percent of the reporting firms. Other high ranking “very useful” publications included Country Market Plans and Overseas Business Reports. Although earlier studies reveal that these publications are not well known, this study shows that not only are they well known but a large majority of the firms using them find them very or somewhat useful. It is notable that no more than 10 percent of the responding firms found any of the publications to be “not useful,” although some firms indicated that they had never used some publications. When comparing data in Tables 1 and 3, it is clear that, with some exceptions, respondents are not aware of the publications they “never used.” It is also interesting that the two highest awareness publications, A Basic Guide to Exporting and Business America, are also considered to be the most useful among respondent firms.

Overall, only a small percentage surveyed firms found any ITA services or publications that they used to be less than “somewhat useful.” This supports the author’s contention that ITA generally does provide meaningful assistance to exporters although recognizing that some forms of assistance are considered more useful than others.

Learning About Specific Sales Leads

Surveyed exporters were asked to indicate the way that they first learned about foreign sales leads that led to their first export sale. Of the 55 firms that responded to this question, 36 or 65.4 percent indicated that they learned about foreign marketing opportunities from ITA assistance programs and publications. “Pulled into foreign markets by unsolicited inquiries” was listed by 6 or 10.9 percent of the firms surveyed as the way they usually learned about new exporting opportunities. It is also notable that only 9 firms, representing just 16.3 percent of the valid responses to this question said they learned about new foreign markets by individual investigation. This clearly indicates the large majority of surveyed Indiana exporters do look to the International Trade Administration for initial assistance in learning about foreign sales opportunities and international business conditions. Personal discussions with selected respondents indicated that many continue to use ITA services and publications on a continuing basis.

Additional Information Wanted

Respondents were also asked to indicate subjects on which they believed ITA should provide more/better information and assistance for new exporters. “Handling documentation” and “learning more about U.S. export regulations and procedures” were the two highest ranking areas in which exporters want additional help (Table 4). Other subjects which rank high include “protecting patents in foreign countries” and export pricing. These topical concerns appear to be valid as the author’s own experience suggests that coverage of these areas in various ITA services and services tends to be weak.

CONCLUSIONS AND RECOMMENDATIONS

With some exceptions, findings of the study generally refute widely accepted conclusions in the literature that U.S. government sponsored export promotion services and publications are frequently unknown, and when known, are generally underutilized or not useful. To the extent that this study only represents the thoughts of 55 surveyed firms in Indiana, it appears that new-to-export firms of all sizes, producing a variety of products and shipping their merchandise to a myriad of worldwide destinations, are aware of and benefit from the wide selection of ITA promotion services and publications. Thus it can be concluded that ITA is doing a good job of exposing new exporters to what it has to offer. Likewise, new exporters seem to like what they are being offered. If there is a downside, it is that new exporters must somehow be encouraged to use more of the services and publications that they have been made aware of.

The author contends that no other governmental agency in the world provides as much assistance to any firm desiring help to start exporting as does the U.S. Department of Commerce through its extensive network of International Trade Administration field offices located in each of the fifty states. It is especially notable that ITA has done an amazingly good job assisting exporters in view of continued budget cuts and the political vulnerability of its staff and physical facilities.

Despite the fact that the majority of firms participating in the study are aware of most ITA export assistance services and publications and that many firms successfully use what is offered, additional improvements can be made. Openended comments from survey firms and the author’s “feel” for what steps can be taken by ITA officials to make their programs even more widely known and used by start-up exporters include the following:

Update the content of services and publications to include more information on topics listed in Table 4. Available ITA information on these subjects is often nonexistent, outdated, contradictory or redundant.

Publish an up-to-date listing of all ITA services and publications on a regular basis. Many new exporters expressed concern that they frequently do not have current and complete information about what ITA provides in the way of help.

3. Eliminate the confusion experienced by new exporters between similar services offered by ITA and local and state agencies. This can be rectified by merging some federal and state activities and facilities in order to provide “one-stop” shopping for export assistance.

4. Seek out potential users of ITA services and publications in a more aggressive and systematic manner. The ITA currently depends heavily on direct mail to make exporters aware of its activities. But personal follow-up contact is often needed by many new-to-export firms if they are going to obtain the confidence and skills required to be successful.

5. Overcome the perception held by many new exporters that some ITA staffers lack the proper training and background to be effective export advisors. This is a difficult problem because of budget restrictions which often prevent hiring field reps with the “highest” credentials. However, the problem could be somewhat alleviated if top ITA staff members were to assume responsibility for dealing with “sensitive” new exporters on a personal basis. Another approach would be to link new exporting firms needing assistance with university faculty members who would accept such assignments as part of their regular teaching and research duties. Participating professors could view such assignments as an opportunity to collect fresh, “real world” information for future books and articles.

6. Communicate more effectively with new exporters that ITA services are designed only to help establish the foundation for exporting activities, not to provide a complete export marketing plan. New exporters who think they’re getting more than “starter” programs and services often feel disappointed and frustrated when they later learn the truth.

7. Publicize success stories of local firms that have been aided by ITA services and publications. This would reassure skeptical potential exporters about the usefulness of certain services and publications and possibly serve as a network through which new exporters could talk among themselves about common problems and solutions. Experience suggests that many new exporters, especially small firms, are uncomfortable dealing directly with government agencies and would be more apt to get involved in an ITA sponsored exporters’ network.

Since most new exporting firms seek simple, uncomplicated, free or minimal-cost assistance and become easily discouraged when export start-up problems occur, it’s critical that these suggested improvements be seriously considered by ITA officials in order to make it easier for firms to begin exporting. Although some of the recommendations will be more difficult to implement than others, none should involve major expenditures of time or money, particularly at the state field-office level. Additional research could also be done to ascertain how firms of differing sizes respond to the various types of export assistance sponsored by the ITA.

ENDNOTE

1 For interesting background information on response bias, see Armstrong and Overton 1977.

REFERENCES

Armstrong, J. Scott and Terry S. Overton. “Estimating Nonresponse Bias in Mail Services” Journal of Marketing Research, August 1977, 396-402.

Brady, Donald L. and Robert W.T. Gill. “Executive Attitudes Toward the Department of Commerce as an Information Source to Assist Small Business Develop Export Capabilities,” Proceedings, 26th Annual Conference for Small Business, June 19T11, 13-17.

Czinkota, Michael R. and David A. Ricks. “Export Assistance: Are We Supporting the Best Programs?” Columbia Journal of World Business, Summer 1981, 73-78.

Czinkota, Michael R. “An Evaluation of the Effectiveness of U.S. Export Promotional Efforts.” In Export Policy: A Global Assessment, ed. Michael R. Czinkota and George Tesar,

New York: Praeger, 1980, 63-71.

Kedia, Ben L. and Jagdeep S. Chhokar. “An Empirical Investigation of Export Promotion Programs,” Columbia Journal of World Business, Winter 1986, 13-20.

Kessing, Donald B. “Why Official Export Promotion Fails: A Survey of Experience and Interviews with Experts,” Finance and Development, March 1992, 52-54.

Seringhaus, F.H. Rolf. “The Impact of Government Export Marketing Assistance,” International Marketing Review, Spring 1986, 55-66.

Walters, Peter G.P. “Export Information Sources – A Study of Their Usage and Utility,” International Marketing Review, Winter 1983, 34-43.

Copyright College of Business Administration. University of Detroit Mercy Fall 1996

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