Relationship between foreign agent operations and performance in SME exporters

Abstract

Purpose The purpose of this paper is to examine the effects of small and medium-sized enterprises’ (SMEs) foreign agent operations on their international performance. This study thus investigates a mechanism in which market information obtained through agents is interpreted, transformed and applied for decision making and presents outcomes. In particular, the study focuses on the mediating role of adaptive capability on the relationship between market information management and export performance. Design/methodology/approach Drawing upon the theories of knowledge-based view and contingency paradigm, a research model is developed for linking the key constructs of foreign agent operations, information management, adaptive capability and performance. Structural equation modeling is applied for testing the model using data collected from a sample of 152 Korean SME exporters. Findings The results indicate that a firm’s operation quality of foreign agents strongly affects the quality of market information management which consequently impacts export performance. In the relationship between market information management and export performance, in particular, adaptive capability is found to play a mediating role. This implies that export performance is, for the most part, achieved by the mediation of adaptive capability, although market information leads directly to export performance to some degree. The results also confirm the existence of reciprocal causation between a firm’s export performance and foreign agent operations. The finding suggests that the outcome of SME export performance continues to provide feedback to its operations of foreign agents and consistently influence each other. Originality/value This study makes an important contribution to the body of export literature by identifying the mediating effects of adaptive capability on the relationship between market information management and export performance. In addition, the results create a recursive model for SME export performance by verifying the reciprocal relationship between export performance and operating with agents. This study thus helps extend understanding of international operations through foreign agents in the SME context.