ABSTRACT
The main aim of this study was to examine export barriers and their effect on export performance of leather products SMEs’ in Aba, Abia State, Nigeria. The specific objectives were to; examine the effect of foreign language on export sales growth of leather products SMEs in Aba, Abia State, Nigeria; ascertain the effect of export sanctions on export intensity of leather products SMEs in Aba, Abia State, Nigeria; determine the effect of export tariff on export sales growth of leather products SMEs in Aba, Abia State, Nigeria; examine the effect of foreign language on export intensity of leather products SMEs in Aba, Abia State, Nigeria; examine the effect of export sanctions on export sales growth of leather products SMEs in Aba, Abia State, Nigeria; and ascertain the effect of export tariff on export intensity of leather products SMEs in Aba, Abia State, Nigeria. The research design used for the study was the survey method. The population of this study comprised 8,620 operators of leather products SMEs in Aba, Abia State, Nigeria. Convenience sampling method was adopted for the study. Convenience sampling method offered the researcher the opportunity to select respondents for the study. The presentation of data from the field survey were according to the stated objectives of this study. All hypotheses were analyzed with simple regression model. All analyses were tested using the SPSS software version 20.0. Regression result showed that foreign language was negative and a significant factor that affects export sales growth of the studied leather products manufacturers in Aba, Abia State. This implies that export sales growth of the studied leather products manufacturers in Aba, Abia State is greatly affected by foreign language which they struggle with. It was revealed in the study that export sanction was a negative and significant factor affecting export intensity of leather products SMEs in Aba, Abia State, Nigeria. This indicates that the export intensity of leather products SMEs in Aba, Abia State, Nigeria is greatly affected by export sanctions faced by the leather products manufacturers. The study revealed that export tariff was a negative and significant factor affecting export sales growth of leather products SMEs in Aba, Abia State, Nigeria. This implies that export sales growth of leather products SMEs in Aba, Abia State, Nigeria is greatly affected by export tariff. The study made the recommendations that there is dare need by the Aba Chamber of Commerce, Industry, Mines and Agriculture (ACCIMA) and Nigerian Export Promotion Council (NEPC) to enlighten the SMEs on export marketing barriers.
TABLE OF CONTENTS
Title Page i
Declaration ii
Certification iii
Dedication iv
Acknowledgement v
Table of Contents vii
List of Tables xi
List of Figures xii
Abstract xiv
CHAPTER 1: INTRODUCTION 1
1.1 Background to the Study 1
1.2 Statement of the Problem 3
1.3 Objectives of the Study 4
1.4 Research Questions 5
1.5 Statement of Hypotheses 6
1.6 Significance of the Study 6
1.7 Scope of the Study 7
CHAPTER TWO: REVIEW OF RELATED LITERATURE 8
2.1 Conceptual Framework 8
2.1.1 Concept of SMEs 8
2.1.2 SMEs’ export development 9
2.1.3 Challenges faced in SMEs’ internationalization process 11
2.1.3.1 Language barrier 11
2.1.3.2 Export sanctions 13
2.1.3.3 Export tariffs 14
2.1.4 Other export barriers 15
2.1.5 Export performance 17
2.1.6 Measurement of export performance 18
2.1.6.1 Objective measures 19
2.1.6.2 Subjective measures 19
2.1.7 Determinants of export performance 20
2.1.7.1 Internal determinants 20
2.1.7.2 External determinants 21
2.1.8 Export performance and export intensity 21
2.1.9. Export barriers and export performance 23
2.1.10 The Aba leather SMEs 25
2.2 Theoretical Framework 28
2.2.1 The resource-based view - Barney, (1991) 28
2.2.2 Export performance models 32
2.3 Empirical review 35
2.4 Summary of and gap in literature review 38
CHAPTER 3: RESEARCH METHODOLOGY 40
3.1 Research Design 40
3.2 Population of the Study 40
3.3 Sample Size Determination 41
3.4 Sampling Technique 41
3.5 Sources of Data 42
3.6 Validity of the Instrument 42
3.7 Reliability of the Instrument 42
3.8 Method of Data Analysis 43
3.9 Model Specification 43
CHAPTER 4: RESULTS AND DISCUSSION 46
4.1 Presentation of data 46
4.1.1 Questionnaire administration 47
4.1.2. Gender of leather products manufacturers in Aba, Abia State 47
4.1.3. Age bracket of the leather products manufacturers in Aba, Abia State 47
4.1.4. Marital status of the leather products manufacturers in Aba, Abia State 48
4.1.5. Educational background of the leather products manufacturers in Aba,
Abia State 48
4.1.6. Number of years the leather products manufacturers in Aba, Abia State have
been in the business 49
4.1.7. Which of the following best describes the form of your leather business? 50
4.1.8. How many employees does your business have? 50
4.1.9. Have you ever sold your firm’s merchandise or services to a customer
outside Nigeria? 51
4.1.10. How many years have you been selling to overseas customers? 52
4.1.11. In the last 5 years, how much has your export sales volume changed? 52
4.1.12 Gross sales or revenues for leather products manufacturers in the last
financial year 54
4.1.13 Export barriers 54
4.1.14 Language barrier 55
4.1.15 Export sanctions 56
4.1.16 Export tariffs 57
4.1.17 Export sales growth 58
4.1.18 Export intensity 59
4.2 Analyses of Data 60
4.2.1 Effect of foreign language on export sales growth of leather products
SMEs in Aba, Abia State, Nigeria 60
4.2.2 Effect of export sanctions on export intensity of leather products SMEs in
Aba, Abia State, Nigeria 61
4.2.3 Effect of export tariffs on export sales growth of leather products SMEs
in Aba, Abia State, Nigeria 62
4.2.4 Effect of foreign language on export intensity of leather products SMEs
in Aba, Abia State, Nigeria 63
4.2.5 Effect of export sanctions on export sales growth of leather products SMEs in
Aba, Abia State, Nigeria 64
4.2.6 Effect of export tariffs on export intensity of leather products SMEs in Aba,
Abia State, Nigeria 65
4.3 Discussion of Findings 66
CHAPTER 5: CONCLUSION AND RECOMMENDATIONS 67
5.1 Summary of Findings 67
5.2 Conclusion 68
5.3 Recommendations 68
5.4 Contribution to knowledge 70
5.5 Area of further Research 70
References 71
Appendices
LIST OF TABLES
Page
3.1 Population distribution of leather products SMEs in Aba, Abia State of
Nigeria 41
3.2 Reliability analysis of the variables 43
4.1 Distribution and return of questionnaire 47
4.2. Frequency distribution showing the gender of leather products
manufacturers in Aba, Abia State 48
4.3. Frequency distribution showing the age bracket of the leather products
manufacturers in Aba, Abia State 48
4.4. Frequency distribution showing the Marital Status of the leather products
manufacturers in Aba, Abia State 49
4.5. Frequency distribution showing the educational background of the
leather products manufacturers in Aba, Abia State 49
4.6. Frequency distribution showing the number of years the leather
products manufacturers in Aba, Abia State have been in the business 50
4.7. Frequency distribution showing the forms of leather businesses by
the leather products manufacturers in Aba, Abia State 50
4.8. Frequency distribution showing the number of employees by each
leather product SME in Aba, Abia State 51
4.9. Frequency distribution showing sales of leather products to overseas
customers 51
4.10. Frequency distribution showing the number of years the leather products
manufacturers in Aba, Abia State have been selling to overseas customers 52
4.11. Frequency distribution showing changes in export sales volume for the
leather products manufacturers in Aba, Abia State 52
4.12. Frequency distribution showing the gross sales or revenues for
leather products manufacturers in the last financial year 54
4.13. Frequency distribution showing responses on the export barriers that
have high effect on the internationalization of the leather products
manufacturers in Aba, Abia State 54
4.14. Frequency distribution showing responses on language barrier 55
4.15. Frequency distribution showing responses on export sanctions 56
4.16. Frequency distribution showing responses on export tariffs 57
4.17. Frequency distribution showing responses on export sales growth 58
4.18. Frequency distribution showing responses on export intensity 59
4.19 Simple regression on the effect of foreign language on export sales growth of
leather products SMEs in Aba, Abia State, Nigeria 60
4.20 Simple regression on the effect of export sanctions on export intensity of
leather products SMEs in Aba, Abia State, Nigeria 61
4.21 Simple regression on the effect of export tariffs on export sales growth
of leather products SMEs in Aba, Abia State, Nigeria 62
4.22 Regression on the effect of foreign language on export intensity of leather
products SMEs in Aba, Abia State, Nigeria 63
4.23 Regression on the effect of export sanctions on export sales growth of
leather products SMEs in Aba, Abia State, Nigeria 64
4.24 Regression on the effect of export tariffs on export intensity of leather
products SMEs in Aba, Abia State, Nigeria 65
LIST OF FIGURES
Page
1. Conceptual framework of the effect of export barriers on SMEs’ export
performance in Aba, Abia State, Nigeria. 27
2. Drivers of venture level export performance 33
3. Heuristic model of the effect of export barriers on SMEs’ export
performance in Aba, Abia State, Nigeria. 70
CHAPTER 1
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
Every nation depends on the success of its export trade for strong economic development. The benefits of export to a firm and a nation in general cannot be overemphasized. Advances in technology and communications globally have also contributed to the growth of export in developing countries like Nigeria. The benefits that accrue from such technological advances have led to the involvement of small and medium scale enterprises (SMEs) in export marketing even among developing countries (Mehmet and Onur, 2015).
Small and medium scale enterprises (SMEs) create opportunities to boost Nigeria’s economy through exports. The effectiveness of SMEs in this regard depends on their ability to overcome barriers to their success through the effective combination of strategy, planning and diligent execution of projects (Maduforo, 2016). Abubakar (2012), and Ibeh, (2004) have all identified the significant roles played by SMEs in domestic development. Today, SMEs in Nigeria are contributing to the growth and development of the country through their involvement in export marketing, but their export performance is however, dependent on whether they operate in an export environment that has little or no barriers to their export operations.
Abia State of Nigeria has one of the largest concentrations of SMEs in the country and a bulk of this number are engaged in leather works, steel fabrication and garment making, which could be attributed to the popularity of the State in Nigeria. The State has key SMEs in finished leather and garment production in Aba its commercial hub. The Aba shoe and leather products SMEs are believed to have products that their quality is comparable to those of Italy (Nwaoguji, 2014). SMEs in Aba, Abia State according to statistics export over one million pairs of shoes and all kinds of leather products to other parts of Africa on weekly basis, although unofficially through indirect exports (Offurum, 2017). Their major export destinations are neigbouring African countries like Cameroon, Ghana, Ivory Coast, Gabon, and others. However, despite leading the African textile and leather products market, these export-minded SMEs are yet to have a presence outside the African continent, blaming it to many limiting export barriers. SMEs in developing countries are encountering strong hassles on exports to other countries. Those in Nigeria are not free from such hassles (Mehmet and Onur, 2015).
The key role of exporting in national economies has resulted in export performance attracting considerable interest in many studies. Most researches have focused on understanding the factors that affect exporting activities (Mehmet and Onur, 2015; Thangavelu, 2010) with some others as it concerns SMES (Abdolvand et al., 2016; Tran et al., 2015). However, most of these studies were done outside Nigeria. Only a few of such studies on the factors that affect exporting activities of SMEs have been done in Nigeria (Abubakar, 2012; Ibe, 2004; 2003).
Export barriers are impediments to the free movement of goods and services across national boundaries. They are the attitudinal, structural and operational and other restrictions that hamper a firms’ capability to develop or maintain its presence in the international business arena (Leondiou, 1995). Leonidou (2004) classified export barriers into internal organizational barriers and external organizational barriers that affect a firm’s export activities. In a bid to become a major force in the international market, the Nigerian government has tried to encourage SMEs export participation through the provision of various export stimulation schemes. The Bank of Industry (BOI) and the NEXIM Bank have at one point or the other provided Export Stimulation Facility (ESF) and Export Development Funds and encouraged export-oriented SMES within the Country particularly those from the South-East and Delta States to access the funds to boost their export businesses (Kolawole, 2018). Other forms of incentives have also been provided by the government in the past to boost SMEs export performance. However, there are still some internal and external barriers to their active participation and performance on the international scene. Oji (2017) noted that about 96% of Nigerian businesses are SMEs, but the sector only contributes barely 7% to the nation’s total export, thus the need to further enhance their export performance.
Enhancement of export performance is crucial for SMEs in developing countries who view the global marketplace as a means to ensure growth, survival, or competitiveness (Matanda and Freeman, 2009). This is because export performance is regarded as one of the key indicators of success of a firm’s operations (Tran et al., 2015). Muhammed and Hassan (2009) quoting Leonidou et al. (2002) identified that the mostly used measures of export performance are export proportion of sales or export intensity, export sales growth, export profit level, export sales volume, export, market share, and export profit contribution. It is against this backdrop that this study is undertaken to examine these export performance barriers as they concern SMEs in Aba, Abia State of Nigeria.
1.2 STATEMENT OF THE PROBLEM
There is no doubt that SMEs play a great role in the economic development of an economy through their participation in export Marketing. In Aba, Abia State of Nigeria, many SMEs are indirectly involved in export marketing but through informal channels. Their active participation in export marketing is being hindered due to numerous export barriers which are either directly or indirectly beyond their control. Some of these export barriers which affect the export performance of SMEs in Aba, Abia State include; inadequate capital which incapacitates the SMEs desire to export, poor infrastructure especially power/energy which increases SMEs manufacturing cost and limits their production capacities, lack of access to international markets considering their sizes and export knowledge, inadequate government incentives to motivate them into getting involved in export activities, lack of technological knowhow and the use of obsolete machines which affects the quality of their outputs, poor quality products that do not meet international standards, etc. Consequent upon the above, SMEs in Abia State cannot compete in global marketing with others from the rest of the world. This situation thus leads to poor sales, profits and minimal size of market share of the available export market.
Additionally, an extensive amount of work has been conducted to investigate issues relating to export barriers and how they affect export performance (Karelakis et al., 2008; Katsikeas and Morgan, 1994) and some of the findings seem to indicate that some export barriers are country-specific (Tesfom and Lutz, 2006; Leonidou, 2004). Even though such findings have been reported, yet most of the research into the effects of export barriers on export performance has been conducted in developed countries with very little emphasis on developing countries like Nigeria (Okpara and Koumbiadis, 2009; Ibeh, 2004). This gap creates the need for research to be conducted in order to identify and determine the factors that are affecting export performance of SMEs in the Nigerian leather industry. This study filled the gap in literature by examining the barriers to export marketing and their impact on leather products SMEs’ export performance in Aba, Abia State of Nigeria.
1.3 OBJECTIVE OF THE STUDY
The main objective of this study was to examine the effect of export barriers on export performance of leather products’ SMEs in Aba, Abia State, Nigeria. However, the specific objectives were to;
i. examine the effect of language barrier on export sales growth of leather products SMEs in Aba, Abia State, Nigeria;
ii. ascertain the effect of export sanctions on export intensity of leather products SMEs in Aba, Abia State, Nigeria;
iii. determine the effect of export tariff on export sales growth of leather products SMEs in Aba, Abia State, Nigeria;
iv. examine the effect of language barrier on export intensity of leather products SMEs in Aba, Abia State, Nigeria;
v. examine the effect of export sanctions on export sales growth of leather products SMEs in Aba, Abia State, Nigeria; and
vi. ascertain the effect of export tariff on export intensity of leather products SMEs in Aba, Abia State, Nigeria.
1.4 RESEARCH QUESTIONS
The key research questions for this study were;
i. what is the effect of language barrier on export sales growth of leather products SMEs in Aba, Abia State, Nigeria?
ii. does export sanction have any effect on export intensity of leather products SMEs in Aba, Abia State, Nigeria?
iii. what effect does export tariff have on export sales growth of leather products SMEs in Aba, Abia State, Nigeria?
iv. is there any effect of language barrier on export intensity of leather products SMEs in Aba, Abia State, Nigeria?
v. does export sanction have any effect on export sales growth of leather products SMEs in Aba, Abia State, Nigeria?
vi. what is the effect of export tariff on export intensity of leather products SMEs in Aba, Abia State, Nigeria?
1.5 STATEMENT OF HYPOTHESES
The following hypotheses were formulated and tested in the course of the study.
HO1: there is no significant effect of language barrier on export sales growth of leather products SMEs in Aba, Abia State, Nigeria.
HO2: export sanction does not have any significant effect on export intensity of leather products SMEs in Aba, Abia State, Nigeria State, Nigeria.
HO3: there is no significant effect of export tariff on export sales growth of leather products SMEs in Aba, Abia State, Nigeria.
HO4: language barrier does not have any significant effect on export intensity of leather products SMEs in Aba, Abia State, Nigeria.
HO5: there is no significant effect of export sanctions on export sales growth of leather products SMEs in Aba, Abia State, Nigeria.
HO6: export tariff does not have any significant effect on export intensity of leather products SMEs in Aba, Abia State, Nigeria.
1.6 SIGNIFICANCE OF THE STUDY
This study will be of great significance in terms of people it will benefit and how it will benefit them. It will be significant to local industrialist, SME owners, export managers, policy makers, as well as researchers and academics.
Local industrialists: the study will explicitly reveal some of the best strategies that can be employed by industrialists and export-oriented SMEs in Nigeria to develop the Nigerian non-oil export sector and help it gain strong competitive advantage and favourable presence internationally.
SMEs Operators in Nigeria: many SMEs in Nigeria which are desirous of participating in export marketing will also through this study know the most challenging barriers which they will encounter on the international export marketing scene. The study will reveal basic export marketing strategies that will be of immense assistance to such SMEs.
Export Managers. Many export managers are yet to come to terms with the right ways to handle export marketing pressures. Export managers will find the result of the study useful as it will make visible to them the basic barriers that can hinder their export involvement dreams and the possible ways to combat such barriers.
Policy makers on export marketing: They will through the result of the study develop a guide on the right policies that will help promote export participation and performance for Nigerian exporters, particularly for the SMEs.
Researchers/Academics and Students: The study will serve as a good reference point for future researchers and students in this interesting and challenging area of study.
1.7 SCOPE OF THE STUDY
The study focused on export barriers and export performance of leather products SMEs in Aba, Abia State, Nigeria. Geographically, the study made attempt to cover as many export-minded SMEs as possible in Aba, Abia State.
Abia State is in the South Eastern part of Nigeria. The Capital is Umuahia and the major commercial city/industrial center of the state is in Aba, with leather products manufacturing, textile manufacturing, pharmaceuticals, soap, plastics, cement, and cosmetics. Thus the city of Aba houses many export-oriented SMEs which were studied in this work. Leather products manufacturers in Aba were the unit of analysis.
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