Examining the Influence of ‘Competitive- Location-Cooperation Advantages’ on the Export Performance of Korean Small and Medium-Sized Firms

This paper assesses the influence of ‘competitive-location-cooperation advantages’ on the export performance of small and medium-sized Korean manufacturing firms. Among these three types of advantages, we specially focus on the role of the cooperation advantages under conditions of close ties with foreign buyers. Due to the recent rapid decreases in the technology gap among firms and countries on one hand and the increases in access to any foreign markets with economic liberalization on the other hand, firms should seek cooperation advantages in order to secure export performance. On the basis of our analysis of 114 Korean exporting companies, it was found that close cooperation between Korean exporters and their foreign buyers exerts a significant positive effect not only on export profits but also on export sales growth. It was also noted that as a key component of competitive advantage, the price advantage exerts a significant positive effect on both export profits and sales growth, whereas the differentiation advantage(i.e., product quality and design) does not have any significant effect on export performance. In addition, as a location advantage, the competitive intensity of local foreign market was determined to exert a significant negative effect on both export profits and sales growth, whereas local market size exerts a significant positive effect only on export profits. In general, our findings bolster the notion that both competitive advantages and location advantages are prerequisites for successful exporting. Finally, the findings of no significant effect of control variables, such as firm size, export experience, product and industry types, on export performance suggest that firms must maintain an aggressive involvement in exporting, regardless of their size, previous export experience, and product and industry types. Indeed, the majority of exporters face resource constraints with tense global competition. In this regard, small and medium-sized exporters should take into account the generation of cooperation advantages under conditions in which close ties exist with the firm’s foreign buyers in addition to competitive and location advantages. This argument is strongly bolstered by the finding that a close cooperation with foreign buyers plays important roles in both export profits and sales growth. This finding also implies that exporters should deal with foreign buyers from the standpoint of a long-term partnership rather than a short-term transaction. In this process, it is necessary for exporters to develop various cooperation activities with foreign buyers across dimensions including market research, product planning and development, marketing and distribution, promotion, cost reduction, and quality improvement