Domestic institutional attributes as drivers of export performance in an emerging and transition economy

JBR-08796; No of Pages 12 Journal of Business Research xxx (2016) xxx–xxx Contents lists available at ScienceDirect Journal of Business Research Domestic institutional attributes as drivers of export performance in an emerging and transition economy Vi Dung Ngo a,1, Frank Janssen b,2, Leonidas C Leonidou c,⁎, Paul Christodoulides d,3 a Hanoi School of Business, Vietnam National University, 144 Xuan Thuy, Cau Giay, Hanoi, Viet Nam Louvain School of Management, Université Catholique de Louvain, 1, Place des Doyens 1348, Louvain-La-Neuve, Belgium School of Economics and Management, University of Cyprus, Kallipoleos 75, Nicosia 1678, Cyprus d Faculty of Engineering and Technology, Cyprus University of Technology, PO Box 50329, Limassol 3603, Cyprus b c a r t i c l e i n f o Article history: Received 10 July 2014 Received in revised form 22 December 2015 Accepted 23 December 2015 Available online xxxx Keywords: Exporting Export performance Transition and emerging economies Institution-based view a b s t r a c t As the importance of firms from emerging and transition economies (ETEs) increases in the global marketplace, there is a growing interest in their exporting practices In this study, we provide a conceptual model anchored on the institution-based view (IBV) that reveals the impact of various domestic institutional attributes (i.e., specificity, stability, predictability, and enforceability) on the firm's export performance We empirically test this model using SEM analysis with data collected from a sample of 109 Vietnamese exporters Our results show that all four institutional attributes positively influence export performance This link between domestic institutional attributes and export performance becomes stronger in the case of exporters characterized by larger size, more experience, foreign market concentration, and direct exporting methods The exporter's location had a control effect on each of the four institutional attributes, while the principal foreign market and the type of product exported had an effect on export performance © 2016 Published by Elsevier Inc Introduction Firms from emerging and transition economies (ETEs) are increasing their importance in the global economy through various internationalization strategies, with exporting being the most common foreign market entry mode employed (Aulakh, Kotabe, & Teegen, 2000) In an era of globalization, the success of domestic firms in international markets is a crucial source of multiple economic advantages (e.g., foreign exchange reserves, employment opportunities, backward and forward economic linkages), which explains, to a large extent, the high growth rate achieved by many ETEs in the last few decades (Bruton, Ahlstrom, & Obloj, 2008; Wright, Filatotchev, Hoskisson, & Peng, 2005) This raises an important research issue that focuses on the factors that drive the international success of firms from ETEs The issue has attracted the attention of managers, public policymakers, and researchers not only from ETEs, but also from developed countries, because nowadays the various economies are caught in a web of financial and market interdependencies ⁎ Corresponding author Tel.: +357 22893614; fax: +357 22895030 E-mail addresses: dungnv@hsb.edu.vn (V.D Ngo), frank.janssen@uclouvain.be (F Janssen), leonidas@ucy.ac.cy (L.C Leonidou), paul.christodoulides@cut.ac.cy (P Christodoulides) Tel.: +84 62924040; fax: +84 37548455 Tel.: +32 10 47 84 28; fax: +32 10 47 83 24 Tel.: +357 2500 2611; fax: +357 25002635 Strategically, the export success of firms from ETEs, like their counterparts in advanced economies, depends not only on its controlled resources and capabilities (Amit & Schoemaker, 1993; Barney, 1991) but also on how the domestic institutional environment can configure its behaviors through cognitive, normative, and regulative mechanisms (Hoskisson, Eden, Chung, & Wright, 2000; Oliver, 1997; Peng, 2003; Welter, 2011; Welter & Smallbone, 2011) This is particularly true in ETEs where, due to the free-market system and liberalization policies adopted, their formal market-supporting institutions are gradually developed and improved (Hoskisson et al., 2000; Peng, 2003) This leads us to posit that the institution-based view can provide a suitable theoretical platform to explain and predict the firm's performance in international markets (Hoskisson et al., 2000; Peng, Sun, Pinkham, & Chen, 2009; Wright et al., 2005) Prior research has demonstrated that the domestic institutional environment of ETEs is a major factor that explains the international strategic patterns of their indigenous firms (Gao, Murray, Kotabe, & Lu, 2010; Nguyen, Le, & Bryant, 2012) However, the key attributes of this environment were not adequately defined, while the role of these attributes in influencing the firms' international performance is not clearly explained Moreover, most of the studies focused on MNEs originating from ETEs, while the facilitating or inhibiting role of the home institutional environment in the indigenous firms' export activities has been only superficially tackled Furthermore, only a few studies have tried to inject a theoretical perspective in researching institutional effects on export performance, which has been endemic of empirical http://dx.doi.org/10.1016/j.jbusres.2015.12.060 0148-2963/© 2016 Published by Elsevier Inc Please cite this article as: Ngo, V.D., et al., Domestic institutional attributes as drivers of export performance in an emerging and transition economy, Journal of Business Research (2016), http://dx.doi.org/10.1016/j.jbusres.2015.12.060 V.D Ngo et al / Journal of Business Research xxx (2016) xxx–xxx research in the overall exporting field (Leonidou & Katsikeas, 2010) Finally, the moderating role of various organizational (e.g., company size) and internationalization (e.g., export mode) factors on the association between institutional forces and performance is virtually absent in the pertinent literature In light of the above, our aim is to unveil the role of the domestic institutional environment in influencing the exporter's performance By addressing this research question, we aim to fill three major gaps in the international business literature: (a) to enrich our knowledge on strategic and international dimensions of firms operating in ETEs, particularly shedding light on an understudied region in Southeast Asia, namely, that of Vietnam (Arnold & Quelch, 1998; Ellis, 2010); (b) to identify and assess those attributes that can be used to operationalize the quality of the domestic institutional environment in these countries (e.g., Acemoglu & Johnson, 2005; Besley, 1995; Brunetti & Weder, 1998; Djankov, La Porta, Lopez-de-Silanes, & Shleifer, 2002, 2003; Knack & Keefer, 1995; Svensson, 1998; Teisberg, 1993); and (c) to explore the facilitating or inhibiting role of this environment on export performance, an issue that has been largely ignored by extant research (Hoskisson et al., 2000; Wright et al., 2005) The remainder of this article is organized as follows: First, we explain the theoretical background of the study, which is the institution-based view (IBV) We then describe our conceptual model and develop research hypotheses connecting the domestic institutional environment with export performance This is followed by a description of the research methodology adopted Subsequently, we analyze the data and present the findings of the study The final section draws conclusions from the study findings, provides practical and theoretical implications, and offers directions for future research Theoretical background Our study is theoretically anchored on the institution-based view, which states that when firms make strategic choices, they are guided not only by industrial (e.g., competitive intensity) and/or organizational (e.g., resources and capabilities) parameters but also by formal and informal constraints imposed by the specific institutional framework within which they operate (Peng et al., 2009) Institutional factors can influence the firm's strategic choices through cognitive, normative, and regulative mechanisms that can have either a facilitating/enabling or troubling/constraining role (Hoskisson et al., 2000; Scott, 1995; Welter & Smallbone, 2011) However, the degree of institutional pressure on the firm will depend on its specific nature (e.g., new start-ups versus mature) and the specific resources/capabilities (e.g., financial versus technological) possessed (Peng, 2003) The institution-based view distinguishes between an institutional environment and an institutional arrangement While the former sets the ‘rules of the game’, because it comprises fundamental political, social, and legal regulations that set the basis for production, exchange, and distribution, the latter refers to the ‘play of the game’, because it governs the way in which economic units cooperate and/or compete (Davis & North, 1971) Institutions can also be categorized as formal (e.g., rules and regulations) and informal (e.g., codes of behavior) (North, 1990) ETEs are characterized by governments that adopt the free-market system and favor policies of economic liberalization, but whose formal market-supporting institutions are gradually changing (Hoskisson et al., 2000; McMillan, 1995, 2007; Peng, 2003) Because ETEs are in a situation of lawlessness (Williamson, 2005), especially in the early phases of their transition (Peng, 2003), between the two levels and two dimensions of institutions, the formal dimension of institutional environment is central because (a) it is the institutional environment that determines the institutional arrangement (Pejovich, 1990; Williamson, 1998) and (b) a failure in formal institutions will further increase the role of informal institutions in their societies and economies (Peng et al., 2009) Among the elements of the formal institutional environment, property rights and contracting institutions are central because they determine the incentive structure and transaction costs of an economy (North, 1990) Property rights refer to the rights of ownership of either tangible (e.g., land) or intangible (e.g., intellectual capital) assets and, in a market-based economy, their structure is mainly based on private property rights to use an asset, capture benefits derived from this asset, and change its form and/or substance (Furubotn & Richter, 1991; Pejovich, 1990) Property rights institutions are the rules and regulations that protect the citizens of a country against the power of government and elites (Acemoglu & Johnson, 2005) On the other hand, contracting rights are the rights to freely seek, identify, negotiate, and contract with partners for exchange, while contracts are the means by which people seek, identify, and negotiate opportunities for exchange (Pejovich, 1990) Contracting institutions are the rules and regulations governing contracting between ordinary citizens, as in the case between a supplier and its customers (Acemoglu & Johnson, 2005) The workability of a market-based economy largely depends on the extent to which its property rights and contracting institutions recognize, facilitate, and protect private property rights and the freedom of contract in an effective and efficient way If the property rights are not well defined and enforced by property rights institutions, the cost of establishing, maintaining, and transferring the property rights is high (Allen, 2000) As a consequence, it will be costly to prepare, conclude, monitor, and enforce contracts that are the means by which the bundles of rights are exchanged (Furubotn & Richter, 1991) Because ETEs are in transition, their property rights and contracting institutions are often incomplete, ineffective, and changing in an unpredictable way (Johnson, McMillan, & Woodruff, 2002a, 2002b; McMillan & Woodruff, 2000) The transitional nature of these countries causes two serious problems: (a) institutional uncertainty, that is, the economic actors' perceived inability to predict institutional changes in an accurate manner (Milliken, 1987); and (b) incentive difficulties, that is, the unwillingness of economic actors to pursue productive and innovative strategies because they often not have the full rights of ownership and the freedom of contract, and are confronted with public and private expropriation risks (Johnson et al., 2002b) In sum, because of their transitional nature, the formal institutional environment (i.e., property rights and contracting institutions) of ETEs can have a serious impact on the firm's motivation to achieve superior export performance Although some scholars (e.g., Gao et al., 2010; Hessels & Terjesen, 2010; Shinkle & Kriauciunas, 2012) have examined how exporting is affected by the home market institutional environment, no research has hitherto been conducted on the role that specific attributes of domestic institutions have on the firm's export behavior However, this is crucial because these domestic institutional attributes are responsible for (a) shaping the overall mindset of indigenous managers that will subsequently affect the way their export business is conducted; (b) acting as facilitators or inhibitors of effectively carrying out the procedures required to export; (c) determining the firm's cost structure and escalating the prices offered to foreign markets, thus influencing its export competitiveness; (d) influencing the level of risk and uncertainty surrounding business transactions with foreign customers; and (e) motivating the firm about its engagement and advancement in export operations (Duncan, 1972; North, 1990) Hence, the purpose of our study is to clarify the mechanism by which and the extent to which the formal home market institutional environment (i.e., property rights and contracting institutions) influences the export performance of firms from an ETE (i.e., Vietnam) Conceptual model and research hypotheses Fig presents the conceptual model of the study, which consists of two parts The first part focuses on domestic institutional environmental dimensions (i.e., specificity, stability, predictability, enforceability) and how these affect the firm's export performance These four Please cite this article as: Ngo, V.D., et al., Domestic institutional attributes as drivers of export performance in an emerging and transition economy, Journal of Business Research (2016), http://dx.doi.org/10.1016/j.jbusres.2015.12.060 V.D Ngo et al / Journal of Business Research xxx (2016) xxx–xxx Institutional Environment Stability H5 Institutional Environment Specificity Foreign Market Expansion (a) H7 Exporter’s Size H1 H2 Export Performance (c) H3 (d) Type of Product Exported H8 H4 H6 Institutional Environment Enforceability Principal Export Market (b) Exporter’ s Location Institutional Environment Predictability Export Entry Mode Export Experience Fig The conceptual model attributes were identified from previous institutional research (e.g., Acemoglu & Johnson, 2005; Besley, 1995; Brunetti & Weder, 1998; Djankov et al., 2002, 2003; Knack & Keefer, 1995; Svensson, 1998; Teisberg, 1993) The second part focuses on the moderating role of exporter size, export experience, foreign market expansion, and export entry mode on the effect of each attribute of the institutional environment on export performance Altogether, there are four main hypothesized paths and four moderating hypotheses damages caused by potential fraud, bribery, disputes, and other malpractices; and (c) it reduces the possibility of penalties and/or extra charges caused by violation of contracts, intellectual properties, and rules and regulations (Chacar, Newburry, & Vissa, 2010) As a result, the specificity of the institutional environment will help to enhance the firm's competitive stance and enhance performance outcomes when selling to foreign customers (Malesky & Taussig, 2009) Thus, we may posit that: 3.1 Main hypotheses H1 The higher the specificity of the domestic institutional environment in an ETE, the more positive the effect on the indigenous firm's export performance Institutional specificity is the extent to which the private property rights of ownership and the freedom of contract are recognized or defined by prevailing rules and regulations (Acemoglu & Johnson, 2005; Besley, 1995; Djankov et al., 2002; Furubotn & Richter, 1991; Kitching, 2006; Shleifer, 2005) As Zhu, Wittmann, and Peng (2012) demonstrate in the context of China, firms from ETEs still face many institutional barriers (e.g., competition fairness, access to financing, laws and regulations, tax burden and supports systems) that constrain their efforts to pursue competitive strategies in foreign markets There are several ways in which the home country's institutional environment (i.e., property rights and contracting institutions) can influence the firm's strategic choices abroad and therefore its performance For example, high specificity in home country institutions configures the firm's competitive intensity by facilitating the types of exchanges, as well as the size of the pool of actors involved in exchanges In this way, the specificity of the elements of the institutional environment (e.g., rules of exchanges in the product, labor, and financial markets) will help to reduce the firm's transaction costs in the foreign market because: (a) it facilitates the process of effectively and efficiently handling all relevant export-related documentation and procedures; (b) it minimizes Institutional stability is the extent to which the rules and regulations concerning property rights and contracting institutions have changed in the past (Acemoglu & Johnson, 2005; Besley, 1995; Djankov et al., 2002; Furubotn & Richter, 1991; Jeong, 2002; Kitching, 2006; Shleifer, 2005; Teisberg, 1993) The existence of relative stability in these rules and regulations in the home country will enable the indigenous exporting firm to effectively monitor its export operations and more efficiently handle its export cost structure (Jeong, 2002; Teisberg, 1993) Such institutional stability is crucial in reducing the level of uncertainty surrounding export operations, which is high due to the large physical and psychological distance separating sellers from buyers in international markets (Johanson & Vahlne, 1977) It also acts as an important facilitator in sustaining the firm's operations in foreign markets, through a steady flow of investments in terms of money, time, and effort (Jeong, 2002; Teisberg, 1993) Further, the more the stability in the home institutional environment, the less the probability for the exporter to embark on an opportunistic behavior when reaping foreign market opportunities, and the greater the chance to better exploit foreign Please cite this article as: Ngo, V.D., et al., Domestic institutional attributes as drivers of export performance in an emerging and transition economy, Journal of Business Research (2016), http://dx.doi.org/10.1016/j.jbusres.2015.12.060 V.D Ngo et al / Journal of Business Research xxx (2016) xxx–xxx market potential (World Bank, 2004) This leads us to the following hypothesis: H2 The higher the stability of the domestic institutional environment in an ETE, the more positive the effect on the indigenous firm's export performance While stability refers to the manager's perception of past changes in the institutional environment, institutional predictability refers to the degree to which future changes in rules and regulations concerning property rights and contracting institutions in the home market are predictable (Acemoglu & Johnson, 2005) Knowing how the home institutional environment will change in the future is essential to carefully plan the firm's export activities and reduce potential risks, particularly those associated with international transactions, taxation and interest rates, and contracts with foreign customers (Chacar et al., 2010) This will help to cultivate a spirit of security among indigenous exporters that the home country's institutions will not be obstructive in their future export endeavors (Chacar et al., 2010) Also, the fact that the international business environment is highly complex, multifarious, and volatile, ensuring some degree of predictability in the home environment will facilitate the exporting firm to more successfully exploit foreign market opportunities (Nguyen et al., 2012) H3 The higher the predictability of the domestic institutional environment in an ETE, the more positive the effect on the indigenous firm's export performance Institutional enforceability is the extent to which the private property rights of ownership and the freedom of contract is effectively and efficiently protected or guaranteed by regulatory authorities/agencies through formal enforcement mechanisms (e.g., courts) (Acemoglu & Johnson, 2005; Djankov et al., 2003; Williamson, 1991) This institutional attribute is also critical to enhancing the firm's export performance because it provides safeguards to ensure that the home institutional authorities will reliably protect its foreign operations through formal enforcement mechanisms (Acemoglu & Johnson, 2005) An enforceable institutional environment is conducive toward boosting the confidence of the exporter that its international business transactions will be adequately protected, at least within the home country (Djankov et al., 2003; World Bank, 2004) Moreover, such protection will help to reduce the high level of uncertainty surrounding international operations and facilitate in this way the exporter's efforts to effectively implement its business strategy in foreign markets (Meyer, 2001; Meyer & Nguyen, 2005) Furthermore, it will generate a feeling of trust that the right of private property ownership and freedom of contract will be judiciously handled by home country institutions in a cost-effective way (Nguyen & Rose, 2009) The following hypothesis can therefore be made: H4 The higher the enforceability of the domestic institutional environment in an ETE, the more positive the effect on the indigenous firm's export performance 3.2 Moderating hypotheses Certain organizational and internationalization characteristics may be responsible for firms to respond differently to institutional forces (Peng, 2003) For example, in the context of developed countries (where the institutional environment is more transparent and stable), prior studies show that, compared with their larger counterparts, small exporting firms have fewer resources and capabilities and therefore greater difficulty in dealing with external pressures, such as those exerted by the domestic institutional environment (Leonidou, 2004; Leonidou, Palihawadana, & Theodosiou, 2011) In an ETE context, where the institutional environment is becoming gradually more market oriented, it is reasonable to argue that this will have a stronger positive effect on the export performance in the case of larger as opposed to smaller firms, mainly because of their greater ability to cope with and take advantage of this (Peng & Luo, 2000) In addition, large firms have greater expertise and knowledge, as well as more personnel and funds, to deal with domestic institutional forces in a way that this will help them to become more effective and efficient when dealing with foreign markets (Hessels & Terjesen, 2010) Hence, we can hypothesize that: H5 The effect of (a) specificity, (b) stability, (c) predictability, and (d) enforceability of the domestic institutional environment in an ETE on export performance will be stronger for large than for small indigenous exporters In similar vein, although both experienced and less-experienced exporters can take advantages of the improved institutional environment, experienced exporters can reap more benefits.4 This is because experienced exporters are more able than their inexperienced counterparts to cope with the nuances of the home institutional factors, which will in turn help to strengthen their performance in foreign markets (Dow & Larimo, 2009; Hessels & Terjesen, 2010) Moreover, experienced exporters are more endowed with the necessary experiential knowledge and competences to enhance their competitive position, caused by gradual improvements in the domestic institutional environment, as is the case of ETEs (Leonidou & Theodosiou, 2004) Being involved in international markets for a long period of time helps the exporter to (a) benefit from a lengthy exposure to the way the domestic institutional forces interact with foreign operations, thus avoiding any past mistakes; (b) improve organizational learning ability to effectively deal with the idiosyncrasies of the domestic institutional environment; and (c) gain extensive and diverse knowledge from foreign institutional environment(s) that can be used to successfully cope with the domestic environment (Shinkle & Kriauciunas, 2010) Thus, we may posit that: H6 The effect of (a) specificity, (b) stability, (c) predictability, and (d) enforceability of the domestic institutional environment in an ETE on export performance will be stronger for experienced than for inexperienced indigenous exporters Compared to firms that only concentrate on a few foreign markets, export market spreaders normally need more resources and competences to cope with exporting problems, such as currency volatility, idiosyncratic customer preferences, and different rules and regulations This is because exporters operating in a large number of countries are more likely to confront greater ‘institutional distances’ (e.g., cultural, market, political) between their home and foreign markets, that in turn can increase their coordinating and managing costs in carrying out their international business operations (Aulakh et al., 2000; Johanson & Vahlne, 1977) In addition, operating in multiple countries will make it more difficult for the firm to effectively match the requirements of the institutional environment to the specific nuances of each foreign market and fully exploit its business potential Further, a foreign market diversification strategy increases the firm's complexity in exporting (because of the greater diversity, volatility, and multiplicity of foreign business environments), which will make the impact of domestic institutional forces on export performance problematic (Chakrabarti, Singh, & Ishtiaq, 2007; Katsikeas & Leonidou, 1996) Hence, the following hypothesis can be made: H7 The effect of (a) specificity, (b) stability, (c) predictability, and (d) enforceability of the domestic institutional environment in an ETE on export performance will be stronger for indigenous exporters adopting a market concentration rather than a spreading strategy Inexperienced exporters: (a) possess fewer resources and capabilities to cope with the institutional environment and advance their strategies; (b) not have a clear vision about how to handle issues and solve specific problems associated with this environment; (c) hold less knowledge about the developments taking place in this environment; and (d) engage in inefficient business practices until they gain more experience (Ramswami, Srivastava, & Bhargava, 2009) Please cite this article as: Ngo, V.D., et al., Domestic institutional attributes as drivers of export performance in an emerging and transition economy, Journal of Business Research (2016), http://dx.doi.org/10.1016/j.jbusres.2015.12.060 V.D Ngo et al / Journal of Business Research xxx (2016) xxx–xxx Finally, as opposed to indirect exporters, firms adopting direct export methods usually possess more resources and capabilities to cope with the domestic institutional environment, as well as establish, maintain, and control their exporting activities (Hessels & Terjesen, 2010) Moreover, direct exporters are in a better position to assess the peculiarities of foreign markets through their day-today interactions with foreign buyers, as well as make more effective use of the domestic institutional forces to better satisfy their needs (Peng & Ilinitch, 1998) They can also more quickly grasp and act upon any favorable effects offered by institutions in their home country, which will help them to take a proactive competitive stance in exploiting foreign market opportunities (Hessels & Terjesen, 2010) In addition, direct exporters usually have a more formalized export organization structure than indirect exporters, which helps them to devote more time and effort to effectively handle domestic institutional forces (Hessels & Terjesen, 2010) Based on the above, we may propose that: H8 The effect of (a) specificity, (b) stability, (c) predictability, and (d) enforceability of the domestic institutional environment in an ETE on export performance will be stronger for indigenous exporters following a direct rather than an indirect approach Research methodology Our study was conducted within the context of an ETE in Southeast Asia, namely, Vietnam (Arnold & Quelch, 1998; Ellis, 2010) Vietnam is a transition economy because since 1986 it has experienced a formal transition from a centrally planned to a market-based economy As in the case of China, Vietnam has chosen a gradualist policy, rather than a shock therapy approach, in its economic transition process (Peng, 2003) Vietnam is also an emerging economy, although smaller in size and less advanced in its phase of development than countries such as China, Brazil, and Russia Nevertheless, Vietnam has achieved a high rate of economic growth (on average of 7.2%) during the last decade, and has recently been classified as a middle-income country Exports play an important role in the Vietnamese economy, with their value accounting for about 83.9% of its GDP in 2014 (World Bank, 2015) The most important export products of Vietnam come from the agricultural sector (e.g., rice, coffee, rubber) and the light manufacturing industry (e.g., textiles, footwear, furniture) Although Vietnam is politically homogeneous because its governance is based on a single party regime, this is not the case with the country's institutional environment After more than 20 years of reforms toward a market-based economy, there are significant differences in terms of the level of socio-economic and political–legal development between provinces (e.g., between North and South) and between regions (e.g., between mountainous and delta regions) in the country, which is the major cause of heterogeneity of market-supporting institutions (Acemoglu, Johnson, & Robinson, 2005) Some other reasons for this institutional heterogeneity in Vietnam are: (a) the different degree to which local authorities adopt the market mechanism, especially as regards land and capital transactions; (b) the decentralization of the regulatory framework, which gives more authority to provincial officials to act in a way that is more effective for their province; and (c) the existence of unclear central laws and regulations, which are interpreted and implemented differently by local governments (Malesky, 2004; Meyer & Nguyen, 2005; Nguyen, Pham, Bui, & Dapice, 2004) Like many ETEs, business information in Vietnam is underdeveloped Hence, in our study, we used two directories to identify Vietnamese exporters The first was the directory of Vietnamese exporters, published by the Ministry of Industry and Trade However, as this directory only lists exporters that satisfy certain criteria, such as reaching at least a threshold level of export sales, additional information was obtained from another directory provided by Vietnam Customs Authorities From the two directories, we were able to compile a list of 650 exporting firms Our research instrument was a structured questionnaire consisting of questions related to the four institutional attributes (i.e., the specificity, stability, predictability, and enforceability) and export performance (see Appendix A) The ‘specificity’ of property rights and contracting institutions was indirectly measured by asking export managers about the extent to which certain phenomena concerning the appropriation of intellectual assets and land, and the disputes between firms and within firms, exist in their operational field The ‘enforceability’ of property rights and contracting institutions was directly measured by asking managers about the extent to which the above phenomena are effectively enforced by the formal institutions Although some changes have occurred in the laws and regulations relating to property rights in Vietnam, the country's property rights institutions have been very stable since 1975 For this reason, we only evaluated the ‘stability’ and ‘predictability’ of contracting institutions, by asking managers to state the extent to which some major export-related rules and regulations (i.e., customs procedures, quality controls, business taxation) have changed in the past and can be predicted in the future Finally, ‘export performance’ was measured with five items derived from Leonidou et al (2011) and Morgan, Kaleka, and Katsikeas (2004) In the first round of the survey, we combined the two methods of post-mail and internet to contact firms in the sample We first approached all firms by telephone in order to introduce the study and to ask them to participate, with 554 being positive To each of them, we sent the questionnaire, accompanied by a covering letter and a guide explaining how to fill in and return the questionnaire One week after sending the questionnaire, we contacted all firms by telephone to know whether all documents had been received and whether they needed any clarifications concerning completion of the questionnaire Three weeks later, we re-contacted all firms that did not respond, to remind them about filling in and returning the questionnaire The outcome was the receipt of 29 completed questionnaires Because of the small number of responses, we proceeded with personally contacting all remaining exporters in the list compiled, which yielded an additional 80 questionnaires Altogether, we managed to receive 109 fully completed questionnaires, a response rate of 16.4%, which is comparable to that of prior exporting studies (Leonidou & Katsikeas, 2010) To check for the possibility of non-response bias, we used Mentzer and Flint's (1997) method For this purpose, we first selected five items belonging to each of the key constructs contained in the conceptual model Then, we contacted by telephone 25 of the firms from those that did not reply and asked them to give us answers to each of these items The answers of these firms were subsequently compared to those of the 109 respondents in the main survey A t-test analysis between the answers given by non-respondents and those obtained by respondents revealed no statistical significant differences, indicating the absence of non-response bias On average, the firms that answered our questionnaire had been in business for 15.4 years, employed 243.4 people, and had a working capital of 6.7 billion VND (an equivalent to about 320,000 USD) The two major forms of company ownership were 100% local private enterprise (68.8%) and private firms but with capital mainly from public partners (26.6%) The majority (58.7%) of these firms exported agriculturalprocessed products, while the remainder (41.3%) focused on light manufactured exports With regard to their location, 57.8% of the respondents were located in the northern provinces (mainly in the region of Ha Noi), while the remainder (42.2%) were situated in the southern provinces (mainly in the region of Ho Chi Minh) On average, firms in the sample had 12.3 years of export experience, exported to 10.9 foreign markets, and 77.9% of their export sales came from direct exports Our key informants were general/deputy directors (27.5%), commercial/marketing/sales managers (39.4%), or export Please cite this article as: Ngo, V.D., et al., Domestic institutional attributes as drivers of export performance in an emerging and transition economy, Journal of Business Research (2016), http://dx.doi.org/10.1016/j.jbusres.2015.12.060 V.D Ngo et al / Journal of Business Research xxx (2016) xxx–xxx managers/officers (33.1%) Among informants, 56.9% were female, 85.3% had a university education, and 68.8% had been abroad at least once Table Correlation matrix Analysis and results In this section, we first explain the results of the measurement model We then discuss the results of the structural model with regard to each of the direct effects hypotheses Subsequently, we analyze the findings of the moderation analysis undertaken Finally, we present the results of various variables with a potential control effect Constructs 1 Institutional environmental specificity Institutional environmental stability Institutional environmental predictability Institutional environmental enforceability Export performance 13 07 13 −.17 −.34 −.20 28 −.19 07 22 Note: Correlations greater than | ± 0.24| are significant at the 01 level Correlations greater than | ± 0.19| are significant at the 05 level 5.1 Measurement model To assess the validity of our measures, we employed structural equation modeling, using the EQS program Using confirmatory factor analysis (CFA), where each item was restricted to load on its a priori specified factor, while allowing the underlying factors to correlate, we found that all factors loaded highly on their assigned constructs (Anderson & Gerbing, 1988) As shown in Table 1, the CFA results suggested an acceptable fit, as demonstrated by the goodness-of-fit diagnostics (χ = 366.25, p = 000, df = 242; NFI = 93; NNFI = 94; CFI = 95; RMSEA = 07) The data collected underwent a purification process comprising four steps: first, we checked the convergent validity, which was met, as the tvalue for each item was always high and significant, all standard errors of the estimated coefficients were very low, and the average variance extracted for each construct was equal or above the threshold of 50 (Hair, Black, Babin, Anderson, & Tatham, 2011); second, we checked for discriminant validity, which was evident because the confidence interval around the correlation estimate for each pair of constructs examined never included 1.00 (Anderson & Gerbing, 1988), while the squared correlation for each pair of constructs never exceeded the average variance extracted (Fornell & Larcker, 1981) (see Table 2); third, we checked for construct reliability, which was satisfactory because all constructs in our conceptual model exhibited Cronbach's alphas greater than 80, while composite reliability was also satisfactory with all coefficients being greater than 70; and fourth, we assessed the possibility of common method bias We first employed the Harman's singlefactor test (Podsakoff & Organ, 1986), where all questionnaire items were included in a principal component analysis with varimax rotation Five separate factors with eigenvalues greater than 1.0 emerged from the unrotated factor solution, while these factors explained 77.5% of the total variance (with 27.6% thereof being explained by the first factor) We also used a confirmatory factor approach, in which all items included in the measurement model were restricted to load on a single factor (Venkatraman & Prescott, 1990) The model fit indices revealed very poor values, well below the commonly acceptable cut-off points (i.e., χ = 1539.59, p = 000; df = 252; NFI = 39; NNFI = 38; CFI = 43; RMSEA = 22) Collectively, the results from both tests indicate that common method bias does not constitute a problem in this study 5.2 Structural model We ran a structural model to test both the main effects links hypothesized in our study The results suggest a statistically significant chi-square (χ = 371.35, p = 000, df = 247), which can be attributed to the test statistic's sensitivity to sample size (Kline, 2005) Table Measurement model and summary statistics Constructs Institutional environment specificity Scale items Standardized loadings t-value Α IES6 IES7 IES8 IES9 Institutional environment stability IET2 IET3 IET6 IET7 Institutional environment predictability IEP1 IEP3 IEP4 IEP5 IEP6 Institutional environment enforceability IEE2 IEE5 IEE6 IEE7 IEE8 IEE9 Export performance EXP1 EXP2 EXP3 EXP4 EXP5 68 71 98 98 67 76 70 83 73 73 94 91 70 82 76 90 91 92 95 94 87 84 87 79 ρ AVE Mean score Standard deviation Item mean Standard deviation ⁎ 91 86 72 1.97 1.17 6.16 8.27 8.27 ⁎ 83 77 55 4.02 1.12 5.74 5.40 6.04 ⁎ 90 85 65 4.63 1.22 6.54 8.48 8.30 6.27 ⁎ 95 91 78 3.23 1.42 8.06 10.56 10.75 10.76 11.56 ⁎ 94 88 75 4.02 1.23 12.66 11.76 12.56 10.24 2.41 1.97 1.75 1.75 3.84 3.86 4.28 4.11 4.61 4.60 4.66 4.68 4.59 2.95 3.03 3.30 3.32 3.46 3.32 3.97 4.14 3.91 4.07 40 1.54 1.25 1.19 1.24 1.33 1.34 1.49 1.34 1.44 1.25 1.55 1.51 1.42 1.52 1.57 1.56 1.62 1.62 1.58 1.38 1.43 1.38 1.38 1.31 Fit statistics of model: χ2 = 366.25, p = 000, df = 242; NFI = 93; NNFI = 94; CFI = 95; RMSEA = 07 ⁎ Item fixed to set the scale Please cite this article as: Ngo, V.D., et al., Domestic institutional attributes as drivers of export performance in an emerging and transition economy, Journal of Business Research (2016), http://dx.doi.org/10.1016/j.jbusres.2015.12.060 V.D Ngo et al / Journal of Business Research xxx (2016) xxx–xxx However, all other fit indices (i.e., NFI = 93; NNFI = 94; CFI = 95; RMSEA = 07) were acceptable Table presents the standardized path coefficients and corresponding t-values for the main hypothesized links The results suggest eight out of the ten hypothesized paths were found significant and with the expected sign Specifically, the first hypothesis (H1) connecting institutional environment specificity with export performance was verified (β = 22, t = 2.08, p = 04) With regard to institutional environment stability (H2), this also had a significant positive effect on export performance (β = 22, t = 1.89, p = 06) Similar to the previous results were those obtained for institutional environmental predictability (H3): the more predictable the rules and regulations concerning property rights and contracting institutions, the higher the firm's export performance (β = 19, t = 1.76, p = 08) With regard to hypothesis H4, the enforceability of the institutional environment (i.e., the effectiveness and efficiency of protecting private property rights of ownership and the freedom of contract by regulatory authorities/agencies) was found to also significantly affect export performance (β = 26, t = 2.33, p = 02) 5.3 Moderation analysis Moderating effects were tested through multi-group analysis, where the initial sample was split into two groups (see Table 4).5 Specifically, for each moderator, we ran two different models: while in the first model all parameter estimates were free to vary between the two sub-samples, in the second model an equality constraint was set on the hypothesized moderated link between the two groups With reference to H5, our results indicate that in general the effect of specificity and enforceability of the institutional environment on export performance was stronger in the case of large than in that of small exporters (Δχ = 8.08, p b 01 and Δχ = 2.77, p b 01 respectively), although the moderating effect of firm size on the effect of either institutional stability or institutional predictability on export performance was not statistically significant (p N 10) In the case of H6, with the exception of institutional stability (Δχ 2(1) = 66, p N 10), the effect of all remaining institutional environment attributes (i.e., specificity, predictability, and enforceability) on export performance was significantly stronger among experienced, as opposed to non-experienced, exporters (p b 10) Also, with the exception of the path between institutional environment stability and export performance (Δχ 2(1) = 51, p N 10), the remaining associations between institutional attributes and export performance were significantly moderated by the exporter's foreign market expansion strategy (H7) The final moderator, namely, export mode (i.e., H8), was found to have a significant effect on all hypothesized paths between institutional environment attributes (i.e., specificity, stability, predictability, and enforceability) and export performance, with this link becoming stronger in the case of firms exporting on a direct, rather than an indirect, basis (p b 05) In conducting our moderation analysis, we opted for the split group, rather than the interaction method, because of the multiple moderation tests required to be made in relation to the total number of cases According to this method, the data were divided using the median split into two groups for each moderating construct (e.g., larger exporters versus smaller exporters, experienced exporters versus inexperienced exporters, foreign market concentrators versus foreign market spreaders, and direct exporters versus indirect exporters) Subsequently, two models were tested; a constrained model, in which an equality restraint was imposed on the moderated relationship for the two groups, and a freely estimated model, in which no particular constraints were forced A significant chi-square difference (Δχ2(1) N 3.84; p b 05) indicates the existence of a moderation effect The split group method has been extensively used in the business literature, both domestic and international, with some examples of studies using this method being those of Menon, Jaworski, and Kohli (1997), Lai, Bao, and Li (2008), Sharma, Borna, and Stearns (2009); Bello, Katsikeas, and Robson (2010), and Wong, Boon-Itt, and Wong (2011) Table Structural model results—main effects Hypo-thesis Hypothesized path Standardized t-value p-Value path coefficients H1 22 2.08 04 22 1.89 06 19 1.76 08 26 2.33 02 48 3.85 00 55 5.10 00 57 5.45 00 51 3.96 00 50 3.88 00 49 3.70 00 H2 H3 H4 Institutional environment specificity → Export performance Institutional environment stability → Export performance Institutional environment predictability → Export performance Institutional environment enforceability → Export performance Control effects: Exporter's location → Institutional environment specificity Exporter's location → Institutional environment stability Exporter's location → Institutional environment predictability Exporter's location → Institutional environment enforceability Principal export market → Export performance Types of goods exported → Export performance Fit statistics: χ2 = 371.35, p = 000, df = 247; NFI = 93; NNFI = 94; CFI = 95; RMSEA = 07 5.4 Control effects We have also used three control variables in our model The first is the location of the exporter,6 which had a significant effect on each of the four dimensions of the institutional environment, namely, specificity (β = 3.85, t = 38, p = 00), stability (β = 5.10, t = 45, p = 00), predictability (β = 5.45, t = 47, p = 00), and enforceability (β = 3.96, t = 41, p = 00).7 The second control variable is ‘principal export market’, whether developed or emerging/developing country, which had a significant impact on export performance (β = 3.88, t = 40, p = 00) The nature of the products exported was also used as a control variable, indicating that this also had a significant effect on export performance (β = 3.70, t = 39, p = 00) Conclusions, implications, and future directions A central goal of this study was to understand how home institutions matter in influencing the export performance of firms coming from ETEs Anchored on the institution-based view, we have established a In the mid-1950s, Vietnam was divided into two countries, North Vietnam and South Vietnam, which were governed by different political systems While the Northen part (comprising 32 provinces) was governed by a centrally planned economy, the Southern part (comprising 31 provinces) had a market driven economy This has resulted in creating two different institutional environments, which still holds today, despite the unification of the country in the mid-1970s The difference between Northern and Southern provinces has been clearly shown in prior studies, such as in the work of Nguyen et al (2004) In Vietnam, the most comprehensive database about the institutional environment at the provincial/sub-national level is the Provincial Competitiveness Index (PCI), developed by the Vietnam Chamber of Commerce and Industry (VCCI) This database has been used by some scholars to examine the link between the firm's export involvement intensity and export performance, revealing that the existence of an institutional heterogeneity at the provincial level in Vietnam had indeed a significant impact on the export behavior of indigenous firms (Nguyen et al., 2012) Please cite this article as: Ngo, V.D., et al., Domestic institutional attributes as drivers of export performance in an emerging and transition economy, Journal of Business Research (2016), http://dx.doi.org/10.1016/j.jbusres.2015.12.060 V.D Ngo et al / Journal of Business Research xxx (2016) xxx–xxx Table Results of individual moderating effects Exporter size as a moderatora Larger exporter group Smaller exporter group Δχ2 (Δdf = 1) β = 11, t = 0.84 8.08 (p b 01) 0.52 (p N 10) 0.53 (p N 10) 2.77 (p b 10) Main effect Hypothesized moderating effect IES → EXP H5a: Effect is stronger among larger than smaller exporting firms IET → EXP H5b: Effect is stronger among larger than smaller exporting firms β = 19, t = 1.88 β = 19, t = 1.53 IEP → EXP H5c: Effect is stronger among larger than smaller exporting firms β = 25, t = 2.06⁎ β = 21, t = 1.68 IEE → EXP H5d: Effect is stronger among larger than smaller exporting firms β = 36, t = 3.38⁎⁎ β = 29, t = 1.98⁎ β = 71, t = 5.18⁎⁎ Export experience as a moderatora Main effect Hypothesized moderating effect Experienced exporter group Inexperienced exporter group Δχ2 (Δdf = 1) IES → EXP H6a: Effect is stronger among experienced than inexperienced exporters β = 40, t = 3.79⁎⁎ β = 16, t = 1.37 IET → EXP H6b: Effect is stronger among experienced than inexperienced exporters β = 19, t = 1.90 β = 14, t = 1.27 IEP → EXP H6c: Effect is stronger among experienced than inexperienced exporters β = 36, t = 3.69⁎⁎ β = 20, t = 1.63 IEE → EXP H6d: Effect is stronger among experienced than inexperienced exporters β = 26, t = 2.62⁎⁎ β = 13, t = 1.09 8.69 (p b 01) 0.66 (p N 10) 4.06 (p b 05) 2.90 (p b 10) Foreign market expansion as a moderatora Main effect Hypothesized moderating effect Foreign market concentrator group Foreign market expansion group Δχ2 (Δdf = 1) IES → EXP H7a: Effect is stronger among export market concentrators than spreaders β = 23, t = 2.79⁎⁎ β = 24, t = 1.62 IET → EXP H7b: Effect is stronger among export market concentrators than spreaders β = 15, t = 2.04⁎ β = 27, t = 1.79 IEP → EXP H7c: Effect is stronger among export market concentrators than spreaders β = 26, t = 2.99⁎⁎ β = 26, t = 1.69 IEE → EXP H7d: Effect is stronger among export market concentrators than spreaders β = 18, t = 2.34⁎ β = 09, t = 0.76 2.75 (p b 10) 0.51 (p N 10) 2.97 (p b 10) 2.79 (p b 10) Export entry mode as a moderatora Hypothesized moderating effect Direct exporter group Indirect exporter group Δχ2 (Δdf = 1) IES → EXP H8a: Effect is stronger among direct exporters than indirect exporters β = 27, t = 3.89⁎⁎ β = 19, t = 1.09 IET → EXP H8b: Effect is stronger among direct exporters than indirect exporters β = 26, t = 3.68⁎⁎ β = 24, t = 1.62 IEP → EXP H8b: Effect is stronger among direct exporters than indirect exporters β = 50, t = 5.96⁎⁎ β = 18, t = 1.04 IEE → EXP H8b: Effect is stronger among direct exporters than indirect exporters β = 20, t = 3.17⁎⁎ β = 09, t = 0.64 7.76 (p b 01) 6.92 (p b 01) 19.40 (p b 01) 4.02 (p b 05) Main effect a Groups were divided using a median split ⁎⁎ p b 01 ⁎ p b 05 link between the institutional environment's attributes prevailing in the domestic setting of exporters from Vietnam and their performance outcomes Our study contributes to the international business knowledge in a number of ways: first, we have focused on ETEs, and particularly on Vietnam, which has experienced a phenomenal impact and success in international trade in the last few decades; second, as opposed to other studies that have concentrated their attention on the international activities of MNEs, our emphasis has been on indigenous exporters who form the backbone of the export activity of ETEs; third, we have developed a set of conceptual tools (i.e., specificity, stability, predictability, enforceability), focusing on the institutional-based view to capture the impact of domestic institutional environment on indigenous firms' export performance; finally, we have revealed the role of certain key organizational and internationalization characteristics in moderating the association between home country institutional attributes and export performance Our results demonstrate that domestic institutional specificity, stability, predictability, and enforceability positively affect export performance With regard to institutional specificity, the study underscores the crucial role of having clear private property rights and freedom of contract to enhance performance outcomes in foreign markets Indeed, our personal discussions with Vietnamese managers revealed that the growing specificity of the home institutional environment has helped to more clearly define and understand various export-related issues (e.g., export documentation/procedures, tax relief, legal restrictions), as well as to encourage the adoption of more innovative strategies in international markets Moreover, our findings relating to institutional stability and predictability underline the importance of having stable and predictable rules and regulations concerning property rights and contracting institutions in the home market in achieving significant export-related cost reductions In fact, some managers stated that such institutional stability and predictability is essential in reducing the uncertainty surrounding their international business dealings, while at the same time reducing unnecessary costs relating to changing rules, procedures, documentation, and so on Notably, some of the respondents explained that working in an institutional environment, where future changes can be easily predicted, helps them to take precautionary measures well in advance to avoid unnecessary costs (e.g., taxes, penalties), as well as plan their export operations more effectively and efficiently Finally, our findings confirmed that an enforceable institutional setting will generate a feeling of trust and confidence that home country institutions will properly perform their role and Please cite this article as: Ngo, V.D., et al., Domestic institutional attributes as drivers of export performance in an emerging and transition economy, Journal of Business Research (2016), http://dx.doi.org/10.1016/j.jbusres.2015.12.060 V.D Ngo et al / Journal of Business Research xxx (2016) xxx–xxx protect the exporter from possible problems that could harm its foreign business operations Most of the links between each attribute of the domestic institutional environment and export performance were found to become stronger in the case of exporters characterized by larger size, more experience, foreign market concentration, and direct exporting methods Specifically, our findings indicate that larger exporting firms will obtain more benefits from domestic institutional forces than smaller ones, mainly because they possess more resources and capabilities to exploit opportunities and accommodate challenges derived from them Moreover, the fact that experienced exporting firms are more knowledgeable and skillful compared to inexperienced exporters makes them more competent to deal with issues created by domestic institutional forces in an effective and efficient way This is in harmony with the results of other studies in the exporting field, indicating that experience is an important factor in overcoming barriers to exporting (Leonidou, 2004) Furthermore, the fact that the effect of institutional stability, predictability, and enforceability on export performance were becoming stronger in the case of exporters adopting a market concentration rather than a market spreading strategy, stresses the complexity involved in coping with institutional distances when operating in multiple foreign markets (Dow & Larimo, 2009) Finally, our study has shown that compared to indirect exporters, direct exporters are in a better position to capitalize on domestic institutional factors to help them to better exploit opportunities derived from foreign markets (to which they have more immediate access and understanding) Our control analysis also revealed that even in smaller ETEs, as in the case of Vietnam, the institutional environment may differ according to the region in which the exporter is located Indeed, the influence of the various regions by different political, economic, and other factors (as is the case of Northern and Southern provinces of Vietnam) is responsible for the development of different institutional forces that are changing at a different pace The fact that the nature of the principal foreign market of the exporter had a strong influence on its export performance stresses the instrumental role of institutional distance between home and host markets in achieving success A closer look at the firms' export destination indicated that selling to other emerging/developing countries increases the chances of success, as opposed to selling to developed countries Finally, the finding that the type of product exported had a strong control effect on export performance can be explained by the fact that agricultural-processed products are less vulnerable to institutional forces, as opposed to light manufactured goods foreign markets, and take collective action toward seeking the amelioration of its quality from government and other parastatal organizations This will also help to improve the effective exploitation of various government export assistance programs, such as the provision of foreign market information, low interest export loans, and education on export-related issues (Leonidou et al., 2011) Although such an appreciation of institutional environment quality is expected to yield better financial results among larger, experienced, concentrated, and direct exporters, other exporters should also realize that its role is critical 6.2 Theoretical implications Our study also has important theoretical implications First, it has highlighted the critical role of the institution-based view in studying exporting phenomena Although this theoretical paradigm has been rarely used in exporting research, our study has shown that an institutional explanation of the firm's export behavior is crucial in broadening our understanding of the factors driving export performance This theory is particularly useful in studying the internationalization aspects of firms from ETEs due to the unique and evolving nature of their institutional environment The regional variations in the domestic institutional environment observed in Vietnam imply that further applications of the institutional-based view should take into consideration the role of the firm's location Our study has also identified from scattered sources the four dimensions comprising the institutional environment (i.e., specificity, stability, predictability, and enforceability) and offered operationalizations that could be useful in future research Another theoretical implication refers to the neglected role of home country characteristics (as opposed to the over-researched foreign market dimensions) that influence the firm's export behavior Specifically, the study findings show that the domestic institutional environment plays a pivotal role in determining the firm's export performance and this should be taken into consideration in future conceptualizations of the firm's export activities This provides hints to expand the conceptual framework of exporting research to include additional domestic factors with a potentially facilitating or inhibiting role on the firm's export performance (such as the regulatory framework, economic conditions, and competitive intensity) Our study has also revealed that the impact of domestic institutional forces on the firm's export performance is moderated by various organizational and internationalization characteristics, which underscores the importance of internal contingent factors in understanding export phenomena Such contingencies may also emerge from the firm's targeted foreign markets and products exported 6.1 Practical implications 6.3 Limitations and future directions Public policymakers in Vietnam (as well as in other ETEs) are advised to take advantage of the findings of this study and adopt measures toward improving the quality of their institutional environment in order to boost their nation's export performance This is because, being in a stage of transition and emergence, their property rights and contracting institutions need to become more complete, predictable, and functional to offer proper assistance to exporting firms In fact, this could constitute a serious barrier toward initiating, developing, and sustaining successful export operations, which are so important for the economic growth and prosperity of these countries (Leonidou, 2004) Appropriate rules and regulations and monitoring mechanisms that will safeguard a healthy institutional environment, characterized by greater specificity, stability, predictability, and enforceability, therefore need to be set On the one hand, this will improve confidence and reduce uncertainty among both neophyte and mature exporters, and on the other hand, it will provide an impetus for boosting performance in international markets Managers of exporting firms located in Vietnam (and in other ETEs) could also capitalize on the findings of this study First, they should clearly understand the facilitating (or inhibiting) role of the domestic institutional environment in improving their competitive position in Our findings should be seen within the context of certain limitations, which, however, could provide input for future research on the subject First, the assessment of the quality of the institutional environment relied solely on managerial perceptions, while information obtained from government officials and informants from other independent agencies (e.g., chambers of commerce, industry associations, labor unions) could yield a more rounded perspective of the facilitating (or inhibiting) role of domestic institutions in exporting Moreover, the use of more objective data provided by independent international organizations (such as the WTO or OECD), regarding the level of institutional quality in Vietnam (as well as in other ETEs), could produce a more reliable picture of the specificity, stability, predictability, and enforceability attributes of the domestic institutional environment Second, the effect of institutional factors on achieving superior export performance, takes some time to develop, and therefore, a longitudinal, as opposed to a cross-sectional, study would be more appropriate Since the institutional environment quality of ETEs is rapidly changing, it will be useful to monitor changes in each of its four institutional pillars (i.e., specificity, stability, predictability, and enforceability) at regular time intervals, using, if possible, the same panel of exporting firms Please cite this article as: Ngo, V.D., et al., Domestic institutional attributes as drivers of export performance in an emerging and transition economy, Journal of Business Research (2016), http://dx.doi.org/10.1016/j.jbusres.2015.12.060 10 V.D Ngo et al / Journal of Business Research xxx (2016) xxx–xxx difference between the home and host country and its effect on standardizing/adapting the firm's export business strategies using fit analysis (Katsikeas, Samiee, Theodosiou, 2006) Finally, since the focus of our study was on exporting firms, the issues that we have addressed here could equally be applied in the case of MNEs from ETEs in order to have a more complete view of the impact of institutional factors on the firm's international performance In addition, the external validity of our findings could be verified through replication studies in other ETEs (e.g., China, India, Russia) since they are relatively more heterogeneous in terms of both their institutional context and the stage of their institutional transition (Peng, 2003; Wright et al., 2005) Such cross-country comparisons could also take into consideration other macro-environmental parameters with a potential link to institutional development, such as cultural traits, economic structure, and political conditions This will help to identify any improvement or deterioration in the domestic institutional environment and examine its effect on the individual firm's export performance Third, since, apart from the foreign market (whether developing or developed countries) Vietnamese exporters can also sell to the domestic market, it would be interesting to examine their selling activities in various regions of Vietnam characterized by different institutional environments, and how these activities are affected by these environments Moreover, since institutional development in ETEs usually differs between urban and rural areas, it would be enlightening to consider this urban/rural institutional dichotomy as a possible control factor Furthermore, just as domestic institutional quality influences the firm's export performance, one would also expect the institutional environment of host markets to play an important influential role In this context, it would be interesting to explore the impact of institutional similarity/ Appendix A Operationalization of constructs Constructs Item code Item description Mean score Standard deviation Measurement scale Source Institutional environment specificity IES1 IES2 Counterfeit goods Violation of intellectual property rights Illegal breaking of signed contract Commercial fraud Monopoly in production/commerce Unofficial charges/bribery Economic and commercial disputes between enterprises Disputes between enterprises and their employees Enterprise's land expropriation by local/central government Customs procedures Quality control of export product Business tax laws and regulations Exchange rates related policies Interest rates related policies Labor-related regulations (e.g., wage, social security, etc.) Environment related regulations Customs procedures Quality control of export product Business tax laws and regulations Exchange rates related policies Interest rates related policies Labor-related regulations (e.g., wage, social security, etc.) Environment related regulations Counterfeit goods Violation of intellectual property rights Illegal breaking of signed contract Commercial fraud Monopoly in production/commerce Unofficial charges/bribery Economic and commercial disputes between enterprises Disputes between enterprises and their employees 2.46 2.30 1.65 1.53 2.75 1.58 Seven-point scale, anchored on “none existing” and “prevalent”, concerning different phenomena related to property rights and contracting rights 2.50 2.67 1.60 1.64 Acemoglu and Johnson (2005), Besley (1995), Brunetti and Weder (1998), Djankov et al (2002), Djankov et al (2003), Feder and Onchan (1987), Hayes, Roth, and Zepeda (1997), Malesky and Taussig (2009) 2.41 1.97 1.54 1.25 1.75 1.19 1.75 1.24 4.28 3.84 1.46 1.33 3.86 1.34 Seven-point scale, anchored on “very stable” and “very unstable”, concerning the stability in the past of laws and regulations relative to export activities 4.78 5.09 4.28 1.46 1.37 1.49 Acemoglu and Johnson (2005), Besley (1995), Brunetti and Weder (1998), Djankov et al (2002), Djankov et al (2003), Feder and Onchan (1987), Hayes et al (1997), Malesky and Taussig (2009) 4.11 1.34 4.61 4.38 1.44 1.38 4.60 1.25 4.66 4.68 4.59 1.55 1.51 1.42 Seven-point scale, anchored on “very easy” and “very difficult”, concerning the predictability of changes in the future of laws and regulations relative to export activities Acemoglu and Johnson (2005), Besley (1995), Brunetti and Weder (1998), Djankov et al (2002), Djankov et al (2003), Feder and Onchan (1987), Hayes et al (1997), Malesky and Taussig (2009) 4.57 1.41 2.91 2.95 1.55 1.52 3.34 1.55 3.17 3.03 1.50 1.57 Seven-point scale, anchored on “very weak” and “very strong”, concerning the effectiveness of legal enforcement on different phenomena related to property rights and contracting rights Acemoglu and Johnson (2005), Besley (1995), Brunetti and Weder (1998), Djankov et al (2002), Djankov et al (2003), Feder and Onchan (1987), Hayes et al (1997), Malesky and Taussig (2009) 3.30 3.32 1.56 1.62 3.46 1.62 IES3 IES4 IES5 IES6 IES7 IES8 IES9 Institutional environment stability IET1 IET2 IET3 IET4 IET5 IET6 IET7 Institutional environment predictability IET1 IET2 IET3 IET4 IET5 IET6 IET7 Institutional environment enforceability IEE1 IEE2 IEE3 IEE4 IEE5 IEE6 IEE7 IEE8 Please cite this article as: Ngo, V.D., et al., Domestic institutional attributes as drivers of export performance in an emerging and transition economy, Journal of Business Research (2016), http://dx.doi.org/10.1016/j.jbusres.2015.12.060 V.D Ngo et al / Journal of Business Research xxx (2016) xxx–xxx 11 Appendix A (continued) (continued) Constructs Export performance Item code Item description Mean score Standard deviation IEE9 Enterprise's land expropriation by local/central government Export sales volume Percentage of export sales in total sales Export market share Export profitability Firm's reputation in foreign market 3.32 1.58 3.97 4.14 1.38 1.43 3.91 4.07 4.40 1.38 1.38 1.31 EXP1 EXP2 EXP3 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conventional wisdom Journal of Management Studies, 42(1), 1–33 Zhu, Y., Wittmann, X., & Peng, M W (2012) Institution-based barriers to innovation in SMEs in China Asia Pacific Journal of Management, 29(4), 1131–1142 Please cite this article as: Ngo, V.D., et al., Domestic institutional attributes as drivers of export performance in an emerging and transition economy, Journal of Business Research (2016), http://dx.doi.org/10.1016/j.jbusres.2015.12.060 ... the firm's export performance These four Please cite this article as: Ngo, V.D., et al., Domestic institutional attributes as drivers of export performance in an emerging and transition economy, ... managers (39.4%), or export Please cite this article as: Ngo, V.D., et al., Domestic institutional attributes as drivers of export performance in an emerging and transition economy, Journal of. .. country institutions will properly perform their role and Please cite this article as: Ngo, V.D., et al., Domestic institutional attributes as drivers of export performance in an emerging and transition