Key results of the study

Based on the research questions of the study, the empirical data collection fol-lowed qualitative as well as quantitative research methodology. The aim of the qualitative analysis (the first research question) was to explore market knowledge competence as an intangible resource. In analyzing this research question, the study focused on identifying specific types of market knowledge that constituted the market knowledge competence of firms, the link between knowledge and ex-port expansion capabilities and the factors that facilitated and hindered market knowledge acquisition and internalization. Foreign market knowledge develop-ment was considered as the market knowledge competence of a firm because the complex process of acquiring and internalizing external knowledge and trans-forming it into export expansion capabilities resulted in intangible, inimitable and robust knowledge.

The aim of the quantitative analysis (the second research question) was to analyze to what extent market knowledge competence organized into export expansion capabilities influenced the speed and success of export expansion. The quantita-tive analysis considered export expansion from two dimensions: speed and suc-cess. Speed was perceived as relative time duration that managers expect for achieving the targeted sales. Speed was measured as the relative satisfaction of a firm in capturing a key export market, being ahead of its competitors in producing the right product when customers needed it and entering the export market when profit margin opportunities were still available. Thus, the speed of export expan-sion measured how timely export activities were performed compared to the stated objectives of the firm. Success on the other hand was perceived as achiev-ing continued lead sales in foreign markets. It was measured through the subjec-tive satisfaction of firms with financial indicators as well as with their current state of customer knowledge and experiential knowledge in the areas of product development, management of the time frame of the overall project for product development and the launch on the foreign market. Moreover success was also

assessed through the firm’s satisfaction with alliances in the foreign market and by the overall and specific performance of the firm relative to competition.

The main findings of the qualitative analysis revealed experiential knowledge and the knowledge of customers’ needs (customer knowledge) as the forms of knowl-edge particularly relevant to how firms expanded their exports. Both kinds of knowledge were found to impact on export expansion capabilities. In the context of software development firms, four export expansion capabilities were identified:

alliance management, alliance learning, new product development and marketing planning and implementation. Further, it was revealed that market knowledge acquisition and the transformation of knowledge into export expansion capabili-ties occurred simultaneously only when the knowledge acquisition and utilization mechanisms were in place. The complexity of the process in turn influenced the speed and success of export expansion, as the utilization of knowledge was attrib-uted to export-related capability development. Barriers to market knowledge were assumed to negatively influence export expansion capability development. Fur-thermore, through the analysis of the case studies the entrepreneurial orientation of the firm arose as an important facilitating factor in the development of export expansion capabilities. The findings of the preliminary qualitative empirical an-alysis served as a starting point for the quantitative part of the study.

First of all, the results and findings of the relationship between export expansion capabilities and the speed of export expansion are stated.

Although all the export expansion capabilities positively and significantly influ-enced the speed of export expansion, new product development (b=0.35) and alli-ance management capabilities (b=0.35) were found to have a more significant influence on the speed of export expansion than marketing planning and imple-mentation (b=0.31) and alliance learning (b=0.23) capabilities. One possible ex-planation could be that these two capabilities, new product development and alli-ance management, can only be said to influence the export expansion objectives when firms enter a foreign market. The software development firms would only go abroad when their software products had a clear competitive advantage and further when their products were more beneficial to the user than competitors’

products. By having a sound product the firms achieved their pre-planned export objective in the time period set in their export strategies. Thus, new product de-velopment and alliance management capabilities significantly supported foreign market entry, when profit margin opportunities were still available and the firms had a product with an obvious competitive advantage. However, to then sell the product in foreign markets the firms were dependent on their distributors. Due to this reason the alliance management capability can also be said to be significant

in supporting foreign market entry. By managing the problems and conflicts be-tween the firms and their partners, the firms in turn managed to capture the export market as planned. The mutual problem sharing between the firms and their part-ners also indicated the firms’ commitment to the solving of problems that arise and moreover the importance of the alliance management capability. It can also be concluded that alliance management and new product development capabilities were complementary to each other in influencing the speed of export expansion.

Of the other two capabilities, the marketing planning and implementation capabil-ity (b=0.31) had a greater influence than the alliance learning capabilcapabil-ity (b= 0.23) on the speed of export expansion. In this study the marketing planning and im-plementation capability was related to the choice of the export marketing strategy, specifically the planning and implementation of this strategy in the foreign mar-ket. As it appeared non-significant for the success of export expansion, it can be concluded that the relevant skills and knowledge to plan and implement the mar-keting strategy would be critically needed for foreign market entry objectives.

Thus, firms possessing prior experience in the area of export marketing strategies may outperform those firms lacking such experience. Furthermore, firms which can utilize their previous experiences accumulated from export operations and the planning of export marketing strategies for their current markets may be at an advantage over their competitors in producing the right product for the market when customers needed it.

As the alliance learning capability had the least influence on the speed of export expansion as compared to the other three capabilities, it can be fairly concluded that speed was related to capturing the expected sales targets soon after entering a foreign market. At the early time of entering a market, the firms had to utilize previously generated knowledge rather than learning new knowledge of the mar-ket. Thus, capabilities which generated results based on the previous knowledge of the firm turned out to be more significant at the foreign market entry stage. The alliance learning capability was indeed important, but not as much as the other three capabilities when considering new market entry.

Now, the results and findings of the relationship between export expansion capa-bilities and the success of export expansion are stated.

Interestingly, among all of the capabilities, the alliance learning capability (b=0.63) was found to have the most significant influence on the success of ex-port expansion. The alliance management capability, on the other hand (b=0.28), was found to have the second most significant influence. However, the results for marketing planning and implementation and new product development capabili-ties were contradictory to the assumptions of the study. Of these two, the

market-ing plannmarket-ing and implementation capability had a positive but statistically non-significant influence on the success of export expansion, whereas the new product development capability was negatively related.

The significant relationship between the alliance learning capability and the suc-cess of export expansion emphasized the importance of learning the knowledge of customer needs through alliances (b=0.83) in foreign markets. In the theory of the study the alliance learning capability was considered as a combination of the learning ability of a firm and the extent to which local partners shared knowledge of customer needs for the product. Internal knowledge sharing mechanisms were also considered important for the utilization of knowledge acquired from partners in developing strategies for export markets. The positive and significant relation-ship between the alliance learning capability and success emphasized the impor-tance of establishing firm-level knowledge sharing mechanisms and learning through alliances. Moreover, the highest degree of total effect of the alliance learning capability ( f ²as 63 %) on the success of export expansion further con-firmed the assertion in the theory of the study regarding the importance of knowl-edge acquisition and internalization mechanisms. These efficient mechanisms may in turn be related to the utilization of knowledge within the firm for capabil-ity development.

Regarding the relationship between the alliance management capability and the success of export expansion, even though the effect was moderate (b=0.28), it indicated the dependency of the foreign firm on the local alliances for achieving continued lead sales in the market. As the marketing planning and implementation and new product development capabilities were not significant, it further empha-sized the need to develop alliance learning and alliance management capabilities in the export market in order to attain continued lead sales. Due to both of these capabilities relating significantly to the success of export expansion, it can be concluded that market learning and the management of alliances are two impor-tant areas where firms must focus on developing capabilities in order to expand exports after entering a market. Further, as can be seen in Figure 21, the signifi-cant relationship of capabilities arising from experiential knowledge and the cus-tomer knowledge may also lead to the conclusion that both kinds of knowledge are important for export expansion.

Figure 21. Comparison of market knowledge competence on export expansion dimensions.

Furthermore, as shown in Figure 21, marketing planning implementation and new product development capabilities were significant only for the speed of export expansion and had no effect on the success of export expansion. However, both alliance management and learning capabilities were found to have significant ef-fects on the speed as well as success of export expansion. This seems logical, as the speed of export expansion in real practice may indicate how sooner firms can capture the targeted number of lead sales in export markets. In situations when foreign market entry is through alliance (distributor) capabilities in the area of managing a distributor, a sound product for the international market and previous knowledge of export marketing strategies had a significant effect. However, to maintain and continuously expand the number of lead sales, the capabilities of alliance learning and alliance management were significant.

In sum, the findings of the study supported the construct of market knowledge competence and its component forms of knowledge on the basis of the conceptu-alization of export expansion as a result of a dynamic capability of a firm. The findings also provided insights into the importance of market knowledge compe-tence, specifically linking it with the speed and success of export expansion. The positive relationship between market knowledge competence and export sion supported the assumption of the study that in order to achieve export expan-sion objectives firms must emphasize the acquisition, utilization and integration of acquired market knowledge for the development of specific capabilities.

Fur-Experiential knowledge

ther, to develop export expansion capabilities knowledge acquisition and inter-nalization and mechanisms must be in place. Literature on the knowledge-based view and market orientation specifically emphasizes coordination and knowledge transfer mechanisms in the firm for the elimination of knowledge sharing barriers.

The establishment of such mechanisms was not only found essential for the de-velopment of export expansion capabilities, but also for the integration of newly acquired knowledge from the markets as export expansion capabilities could vary from market to market. Thus, the sooner acquired knowledge was utilized and integrated into capabilities by using established mechanisms of knowledge shar-ing and transfer, the earlier firms achieved export targets after entershar-ing a foreign market and consequently the more successful they were in expanding exports.

Interestingly, the effects of entrepreneurial orientation on the development of ex-port expansion capabilities were only positive on the alliance learning capability.

Furthermore, entrepreneurial orientation had non-significant and negative rela-tionships with alliance management, marketing planning and implementation and new product development capabilities. The significant relationship can again be attributed to the link between knowledge sharing and coordination mechanisms.

This importance can further be accredited to the orientation of the top manage-ment team in emphasizing the significance of knowledge sharing in the firm’s risk-taking behaviour, experimentation with products and giving employees the authority to make decisions. All these factors contributed positively towards the learning ability of the firm and further asserted the importance of firm- and mar-ket-level knowledge sharing. For this reason, the relationship between the alliance learning capability and success of export expansion was found to be positive with a significant influence on the overall model.

Of further interest, it was found that entrepreneurial orientation did not signifi-cantly influence alliance management, marketing planning and implementation and new product development capabilities. One potential explanation for this could be that these capabilities were not influenced by knowledge sharing mecha-nisms and were most likely based on the experiential knowledge and previous skills of the firm in these areas.

The above explanation, however, for the non-significant link between knowledge sharing mechanisms and export expansion capabilities was confirmed by the negative relationships between knowledge sharing barriers and export expansion capabilities development. Of all the barriers to knowledge sharing negatively in-fluencing export expansion capabilities, the barriers to sharing market information within the firm was found to be most significant. Moreover, a firm’s relatively little know-how in dealing with foreign operations, and to some extent its

satis-faction with local markets, were other barriers to knowledge sharing influencing export expansion capabilities.

Consistent with the findings of the study, the barriers to knowledge sharing most significantly influenced the alliance learning capability (b=-0.26), the alliance management capability (b= -0.28), the new product development capability (b=-0.32) and lastly the marketing planning and implementation capability (b=-0.36).

In terms of the degrees of influence of the barriers to knowledge sharing with export expansion capabilities mentioned above, it can also be concluded that the alliance learning capability required the highest degree of knowledge sharing, the alliance management capability required the second highest and so on. As only the alliance learning and alliance management capabilities were positively related to the success of export expansion, this finding further emphasized that the dy-namic influence of knowledge acquisition and utilization mechanisms are not only important for the development of export expansion capabilities, but also for further expansion into the foreign market.