Modeling Small Locally-Owned Firms Export Behaviour: The Role of Language

ABSTRACT This study reports on the findings of an investigation into the impact of entrepreneurs' language competence on the decision for their small firms to engage in exporting. While the literature on language and exporting in small firms is extensive, very little attention is paid to the issue of context in explaining the role of language on that export decision. Using data from a survey of exporter and non-exporters in the Jamaican economy, this study utilised the logit model to examine the impact that language has on the decision to initiate exporting. The results revealed that firm size and industry sector were the most significant factors and not the language skills of the entrepreneur. The contribution to the literature is the explanation of the role that context plays in explaining these results. INTRODUCTION The literature on the international operation of the small firms is quite extensive (e.g. see Rueber & Fischer, 2002; Brouthers & Nakos, 2004; Oviatt & McDougall, 2005; Miesenbock, 1988; Leonidou & Katsikeas, 1996; Williams; 2009; Lautanen; 2000 etc). There is no doubt that the increased attention given to the international operation of these smaller firms is driven by the increasingly globalised nature of the world economy. Economic integration, the revolution in information and communication technologies, the reduction in tariff barriers, among other things have all contributed to an increased level of competition in national markets. This competition has forced more firms to start looking to the international market place for customers in order to ensure their future survival (Cavusgil, 1994). A big portion of this literature however, focuses on the factors that motivate these smaller firms to seek business opportunities abroad. The environment dictates that these smaller firms will have to change strategic direction in order to ensure their survival. However, because of their limited resource capacity, many see themselves as not having the capabilities to take on the complexities of doing international business transactions. How those who do it managed to accomplish the achievement and why they do it are questions at the heart of the research stream looking into the area of international entrepreneurship. The plethora of empirical work that has evolved on the subject looked at a number of firm characteristics (Reid, 1981), managers' characteristics (Leonidou et al., 1998), the external environment (Zou & Stan, 1998) and recently, a number of works started looking at the role of networks (Bhagavatula et al., 2010; Oviatt & McDougall, 2005). Still, it appears that managerial characteristics have been the most studied. Managerial characteristics are an important resource that small firms possess and which is critical for them to launch an international base (Reid, 1983). An area of managerial resource that has received much attention in the literature but with mixed results is that of the language competency of the entrepreneur. Indeed, Leonidou et al., (1998) in a review of 46 studies on managerial characteristics and the firm's export performance found that over 50 percent of those studies accounted for this variable in their empirical analysis. The results however is mixed as some studies claim that it has an important impact on export decision (e.g. Lautanen, 2000) while others did not find it to be that significant (Ursic & Czinkota, 1989). The seemingly contradictory findings however, can possibly be explained by context. We believe that since English is the internationally accepted language of international commerce, language would not be a barrier to exports for entrepreneurs who master the art of speaking the language. We believe this is true even if they are exporting to Non-English speaking markets. As such, this study aims to test the hypothesis that language as a managerial resource is not a significant factor in influencing exporting decision in firms where the principals have a mastery of the English language. …