TOWARDS A SINGLE INDUSTRY MODEL FOR GOVERNMENT EXPORT ASSISTANCE PROGRAMS Richard Castaldi, Murray Silverman, and Sanjit Sengupta

Abstract This empirical study focuses on export assistance needs in the environmental technology (EnviroTech) industry. The objectives of this study are (1) to explore the extent to which the export assistance needs in the environmental technology industry are consistent or inconsistent with findings from previous studies regarding assistance needs among broad categories of exporters and (2) to provide public sector assistance providers serving the environmental technology industry a research based agenda for effectively assisting those firms. The evidence indicates that the nature and relative priority of specific export assistance needs may vary significantly across industries, Also, the study concludes that service providers to the environmental technology industry have an important value added role to play in relation to fostering effective host country alliances. Exporting by American firms continues to be an economic priority supported by Federal, State and local governments. This is especially true in the environmental technology industry -- the focus of this study -- as assistance programs to facilitate exporting by EnviroTech firms are found at all levels of government. A number of empirical studies (Moini 1998, Kotabe and Czinkota 1992, Howard and Herremans 1988, Kedia and Chhokar 1986) have explored the efficacy of export assistance programs, implicitly offering guidance to export assistance providers regarding the allocation of their resources and the content of their programs. These studies have invariably focused on the manufacturing sector, their samples typically including firms representing a wide variety of manufacturing firms. As a result, the applicability of the findings to a single manufacturing industry is unclear. The relevance of the findings may be further limited in a service industry context. As stated by Dess, Ireland and Hitt (1990): "...strategic management researchers do not control consistently for possible industry effects on their results" (p.7). Their meta-analysis of the 40 most frequently cited strategic management studies published during 1980-1988 provided the support for their conclusion. In fact, Dess, Ireland and Hitt (1990) recommend single industry studies as one of three methods available to obviate the potentially confounding effects of multiple industry studies. This approach is also favored by Cavusgil (1984) particularly when investigating export behavior. In a recent article, Moini (1998) points out that "Unfortunately, small and medium sized manufacturing firms do not constitute a single homogenous group. Therefore, it is essential that policy makers fully understand the kinds of differences that occur among them if they are to provide programs that effectively move these firms into successful exporting" (p. 1). Although single industry studies are high in internal validity, care must still be exercised to account for heterogeneity within the industry. Moreover, single industry studies lack the generalizability found in multiple industry studies. This study focuses on the export assistance needs of firms in the EnviroTech industry. The objectives of this study are:

1. To explore the extent to which the export assistance needs in the EnviroTech industry are consistent or inconsistent with findings from previous studies regarding assistance needs among broad industrial categories of exporters. 2. To explore the advantages of a single industry study as the basis for providing public sector export assistance. 3. To provide public sector assistance providers serving the export needs of the EnviroTech industry a research based agenda for effectively assisting those firms. The Environmental Technology Industry The global environmental market is huge, totaling $408 billion in 1994 (Environmental Business International Inc. 1996). In absolute terms, the US is the largest exporter with $10 billion in exports. However, in percentage terms, the US only exports 6% of its environmental products and services compared to Japan and Germany which both export on the order of 20% of their environmental products and services. The US, Western Europe, and Japan have the largest environmental markets while Asia and Latin America have the highest projected growth rates. The types of products or services being demanded in developing countries tend to be those that help to build the environmental infrastructure as compared to the developed countries which are looking to the next generation technologies that will meet increasingly more stringent air, water, and toxins standards. The US EnviroTech industry is a relatively new industry, evolving over the past 25 years in response to the emergence of strict environmental regulation in this country. Government at the federal, state, and local levels promulgated a complex web of regulations governing air, water, waste, and toxins. These regulations created opportunities for specialized firms to offer services and equipment that mitigate, control, monitor, or prevent detrimental impacts on the natural environment. The size of the U.S. EnviroTech industry in 1994 was $170 billion, however growth is maturing (Environmental Business International Inc. 1996). Some domestic growth, however, is expected to continue because new technologies are required continuously to meet increased regulatory standards, or self-imposed standards, reduce compliance costs, or incorporate environmental technologies into integrated production systems. As a result of the diversity of markets and technologies, the US. EnviroTech industry is comprised primarily of small and medium sized enterprises (SME's) engaged in a broad range of activities. Barriers to entry are relatively low. It is estimated that there are 45,000 to 60,000 companies (not including water utilities) comprising the US EnviroTech industry. Strategic Alliances Strategic alliances such as joint ventures, technology alliances, partnerships, marketing, and licensing agreements between domestic and host country partners reflect a portfolio of collaborative relationships being used by US EnviroTech firms in their exporting endeavors. In this industry, the formation of such host country alliances is virtually a necessary condition for US firms to compete in foreign markets. This is due to many factors. First, the customer of EnviroTech products and services is often a local or national government agency that requires local participation. Second, environmental firms' customers are typically buying systems rather than just a single product or service. Thus, environmental firms, frequently work in some partnership arrangement with other local and home based firms in bidding on and implementing projects. Moreover, the differences in legal, political and social environments in most foreign countries also necessitates the knowledge and connections of host country partners. Such alliances provide immediate local presence, local know-how and add value to customers as part of the localization desired of globalization.

Export Assistance and the EnviroTech Industry The U.S. government has made the EnviroTech industry a priority area for export assistance with the creation of the Environmental Technologies Export (ETE) office in 1994 within the Department of Commerce. ETE's purpose is "to help US firms compete and win in the fast growing and very competitive international environmental technologies market". ETE assists with market analysis, business counseling and trade promotion activities. There is a central office in Washington, D.C. and there are environmental trade specialists in US Department of Commerce offices throughout the country. Furthermore, there are Foreign Commercial Service Officers with specialization in EnviroTech located in export market locations who can aid EnviroTech firms by providing information, trade leads and helping find and evaluate prospective partners. There are also many federal export programs that are not industry specific, such as the Small Business Administration, the Export-Import Bank and the Agency for International Development, that can assist EnviroTech firms in areas such as financing and providing market leads and information. In California, at the state level, the California Department of Trade and Commerce's Environmental Export Program has full time staff devoted strictly to promoting exporting by the state's EnviroTech firms. The Environmental Export Program conducts and sponsors workshops and information sessions, works directly with individual firms, provides market information and organizes trade missions. They attempt to generate market opportunities through their California Environmental Partnership by sending technical assistance teams to Asia to evaluate pre-identified problems and develop alternative solutions appropriate to a requesting country's situation. At the local level, for example in Northern California, some public sector organizations providing export assistance have targeted the EnviroTech industry. BayTrade, a nine county consortium of Bay Area governments, promotes export activity with EnviroTech as a priority. Methodology Under the auspices of a grant from the US Department of Education, the San Francisco State University College of Business initiated, in the of Fall 1996, an action-research project intended to assist small and medium sized California EnviroTech companies in their export activities. The study was designed to obtain the following information about the targeted EnviroTech firms: (a) their current level of export activity, (b) barriers to exporting, (c) the factors that lead to export success, (d) the importance they place on strategic alliances to enhance export opportunities, and (e) the perceived assistance needs of both exporting and non-exporting firms. We used three sources of data to generate the sampling frame for our study. Starting with the California Environmental Technologies and Services Directory, published by California EPA, we first identified all the EnviroTech firms in the San Francisco Bay Area, numbering 451. This was supplemented by a list of 80 EnviroTech firms in the Los Angeles area from the California Business Register database maintained by the World Trade Center Association. Finally, an environmental consultant provided us fax access to approximately 100 EnviroTech companies in the San Diego area. Firms on the San Francisco and Los Angeles lists were contacted by phone in order to update address and contact person information. Our total sampling frame was thus made up of 631 firms. Based on field interviews with EnviroTech company executives, industry consultants, government assistance industry experts, and a review of the relevant literature, we designed, developed, and pretested a six page survey questionnaire. This survey was mailed to senior executives in 531 firms in San Francisco and Los Angeles, and

faxed to the 100 firms in San Diego. Forty-four surveys were returned as undeliverable, resulting in a reduced sampling frame of 587 firms. The number of usable returned surveys was 115, giving us an effective response rate of approximately 20%. Data from the surveys was coded and entered into an Excel spreadsheet. Of the 115 sample firms, 75 were exporters and 40 were non-exporters. Sample Profile and Levels of Satisfaction with Exporting Table 1 shows the variety of products and services offered by EnviroTech firms. A higher proportion of firms offer services rather than equipment. There is a large concentration of environmental consulting and engineering firms. Table 1 -- Environmental Technology Industry Sectors in Sample Firm Representation from each Sector¹ Services Analytic Services

7.8%

Water Treatment Works

6.1%

Solid Waste Management

2.6%

Hazardous Waste Management

11.3%

Remediation/Industrial Services

11.3%

Environment Consulting & Engineering

58.3%

Resource Recovery

3.5%

Other services

1.7% Equipment

Instruments & Information

7.8%

Water Equipment & Chemicals

17.4%

Air Pollution Control Equipment

8.7%

Waste Management Equipment

7.0%

Process & Prevention Technology

4.3%

Other Equipment

7.8%

¹Column total exceeds 100% because some firms classify themselves in more than one sector. Sample size=115 firms.

Table 2 -- Profile of Sample Environmental Technology Firms No. of Firms

Percentage of Firms

Less than $1 Million

35

30.4%

$1-$5 Million

38

33.0%

$5-$10 Million

11

9.6%

$10-$25 Million

10

8.7%

$25-$100 Million

10

8.7%

Greater than $100 Million

11

9.6%

Total

115

100%

Less than 5 Years

4

3.5%

5-10 Years

38

33.0%

Greater than 10 Years

73

63.5%

Total

115

100%

Never Exported

40

34.8%

Exported in past, not in 1996

7

6.1%

Exported in 1996

68

59.1%

Total

115

100%

Sales Revenue

Years in Business

Export Experience

Table 3 -- Profile Of Exporting Environment Technology Firms No. of Firms

Pct. of Firms

Less than $1 Million

17

22.7%

$1-$5 Million

25

33.3%

$5-$10 Million

7

9.3%

$10-$25 Million

9

12.0%

$25-$100 Million

6

8.0%

Greater than $100 Million

11

14.7%

Total

75

100%

Less than 5 Years

1

1.3%

5-10 Years

21

28.0%

Greater than 10 Years

52

69.3%

No response

1

1.3%

Total

75

100%

3 Years or less

24

32.0%

4-5 Years

2

2.7%

6-10 Years

16

21.3%

Greater than 10 Years

21

28.0%

No Response

12

16.0%

Total

75

100%

7

9.3%

Sales Revenue

Years in Business

Number of Years Exporting

Percentage of Revenue from Exports in 1996 Did not export in 1996

Less than 1%

11

14.7%

1-5%

13

17.3%

5-10%

11

14.7%

10-20%

8

10.7%

Greater than 20%

24

32.0%

No response

1

1.3%

Total

75

100%

1

8

10.7%

2-3

24

32.0%

4 or More

42

56.0%

No response

1

1.3%

Total

75

100%

Asia

27

36.0%

Europe

17

22.7%

Mexico and Latin America

16

21.3%

Canada

7

9.3%

Australia

3

4.0%

Russia

1

1.3%

No Response

4

5.3%

Total

75

100%

Number of Countries to Which Exported

Primary Export Market

Table 2 shows that our sample of California EnviroTech firms is characterized by small firms (63% under $5 million revenue) who have been in business a number of years (96% over 5 years). Approximately 65% of our sample firms had a history of export activities.

The profile of the 75 exporting firms in our sample (Table 3) shows them to be small and medium-sized firms (65% under $10 million revenue) which have been in business a long time (70% over 10 years). They have a good deal of export experience (61% exported for 4 or more years; 56% exported to 4 or more countries). Asia was the largest market for EnviroTech firms in the sample. Firms were asked to rate their satisfaction levels in relation to their export experience and the financial returns associated with exporting. Table 4 shows that only 55% to 60% of the firms in our sample were satisfied or extremely satisfied with their export experience and with the financial return from exports. This finding indicates that there is significant opportunity for assistance providers to add value to the export experience of EnviroTech firms. Table 4 -- Satisfaction with Exports No. of firms

Percentage of Firms

Question: In general, how would you rate your company's experiences with exporting? Extremely satisfied

9

12.0%

Satisfied

36

48.0%

Neutral

24

32.0%

Dissatisfied

5

6.7%

Extremely dissatisfied

1

1.3%

Total

75

100%

Question: In general, how would you characterize the financial returns associated with your exporting endeavors? Extremely satisfied

9

12.0%

Satisfied

32

42.7%

Neutral

20

26.7%

Dissatisfied

12

16.0%

Extremely dissatisfied

2

2.7%

Total

75

100%

Results Firms were asked to rate the extent to which they would value ten types of export assistance. For each type of assistance they responded on a Likert scale going from 5 (high level of value) to 1 (low level of value). Table 5 shows the results for exporters and non-exporters. In all cases, non-exporters valued assistance more than experienced exporters and significantly different values were obtained for nine out of the 10 types of assistance.

Moini's 1998 study showed more of a mixed result in relation to exporters' vs. non-exporters' received or expected benefits from 16 program categories. Specifically, in seven categories, nonexporters mean values exceeded those of exporters. Other studies showed a similarly mixed result (Kedia and Chhokar 1986, Kotabe and Czinkota 1992). Table 5 seems to indicate that in the EnviroTech industry, non-exporters are consistently more enthused than exporters about assistance programs. Table 5 -- Value Placed on Various Forms of Export Assistance: Exporters vs. Non-Exporters Non-Exporter¹ n=40

Exporters¹ n=75

F Value²

Assistance in finding domestic country partners

3.42

2.94

3.37*

Assistance in finding partners in export country

4.00

3.80

0.65

Opportunities to participate in trade missions or delegations

3.13

2.61

5.18**

Information about market opportunities in various countries

4.08

3.65

3.82**

Providing opportunities to learn about export experiences of other envirotech firms

3.66

3.06

8.53***

Assistance in assessing readiness to export

3.30

2.56

10.92***

Training in the basics of exporting

3.42

2.61

11.57***

Assistance in developing an export strategy and plan

3.58

2.97

6.63***

Workshops on how to understand country markets, culture, business practices

3.68

3.20

4.71**

Assistance in finding financing for export activities

3.65

3.04

5.39**

Types of Assistance

1. 1=Low Value, 5=High Value 2. F value for difference of means test: ***Significant at p<.01 **Significant at p<.05 *Significant at p<.10 A principal component factor analysis was conducted on the 10 types of assistance for exporters and it yielded a two factor solution. One factor included the first four types of assistance listed in Table 5, the second factor the remaining six types of assistance. We labeled the first factor as 'advanced' assistance programs and the second as 'basic' assistance programs. These factors were labeled as such because the advanced assistance factor concerned activities that would be of greater interest to exporting firms (e.g. assistance in finding host country partners). The factor labeled as 'basic' involved activities that would be greater interest to non-exporters (e.g. training in the basics of exporting). The advanced programs had a mean of 3.25, compared to 2.88 for basic programs (t-value=3.86, p=.000). Since a rating below 3.0 indicates a level of disinterest, exporters are not generally interested in basic programs, but rather in programs relating to finding strategic partners, both domestic and in the host country and

obtaining information about market opportunities and trade missions. This is consistent with the extant literature on the subject. Both exporters and non-exporters rated 'assistance in finding partners in export country' the highest. This seems to indicate that both groups recognize the importance of establishing these alliances. Previous studies have demonstrated that firms in different stages of export development, as measured by export intensity, have different needs and decision considerations (Bilkey and Tesar 1977, Czinkota and Johnson 1981). As a result, the export assistance needs of firms varied across stages (Moini 1998, Kotabe and Czinkota 1992). We divided exporting EnviroTech firms into three stages based on whether their level of export intensity was 'Marginal' (less than 1% of revenues from exports or exported in past but not in current year), 'Moderate' (1-10% of revenues from exports), and 'Heavy' (greater than 10% of revenues from exports) to explore whether assistance needs varied across stages for these exporters (see Table 6). A number of assistance needs seem to clearly differ across stages which is consistent with the findings of Moini (1998) and Kotabe and Czinkota (1992). Moderate exporters in the EnviroTech industry have the least interest in assistance programs as only two of the 10 programs generated positive values with scores above 3.0. Conversely, marginal and heavy exporters, respectively, rated nine and seven assistance programs in a positive light. Four of the 10 assistance programs had a significant (probability less than 0.10) relationship across the export stages (see Table 6). Table 6 -- Value Placed On Various Forms of Export Assistance By Export Stage Export Stage (or intensity) Marginal Exporter n=16

Moderate Exporter n=22

Heavy Exporter n=33

F Value (ANOVA)

Assistance in finding domestic country parters

3.31

2.62

3.00

1.31

Assistance in finding partners in export country

3.94

3.68

3.82

0.19

Opportunities to participate in trade missions or delegations

2.69

2.18

2.90

2.51*

Information about market opportunities in various countries

3.81

3.41

3.73

0.82

Providing opportunities to learn about export experiences of other envirotech firms

3.38

2.59

3.21

3.79**

Type of Assistance

Table 6 Cont. Assistance in assessing readiness to export

3.31

2.23

2.42

5.77***

Training in the basics of exporting

3.13

2.64

2.36

2.08

Assistance in developing an export strategy and plan

3.19

2.59

3.15

1.88

Workshops on how to understand country markets, culture, business practices

3.38

2.64

3.52

5.45***

Assistance in finding financing for exporting activities

3.33

2.64

3.26

1.81

1. 1=Low Value, 5=High Value 2. F value for difference of means test: ***Significant at p<.01 **Significant at p<.05 *Significant at p<.10 Non-exporters Assistance Needs: Non-exporting firms were asked 10 questions about the reasons they did not export. A principal component factor analysis on these 10 items yielded a two factor solution. We labeled these 'External' and 'Internal' barriers to exporting. Table 7 shows the external barriers to exporting were rated higher in importance than the internal barriers. The major barriers non-exporters face are a lack of knowledge of export procedures, export opportunities and risks, and export assistance including access to capital. Table 7 -- Barriers To Exporting For Non-Exporters Mean Factor Score¹ External Do not know the ropes/procedures associated with selling foreign markets Unsure as to where are the best export opportunities Perceive that the risks of exporting are too great Unsure about the types of export assistance that are available Not enough capital to export

3.43

Table 7 Cont. 3.09

Internal Exporting is not consistent with our strategic objectives Top managers just not interested in exporting Exporting not appropriate for a business of our size Exporting not appropriate for a business of our type Have more than adequate opportunities adequately

¹Mean factor score is computed from a 5 point Likert scale going from 1=Strongly disagree to 5=Strongly agree. Sample size=40 non-exporting firms. Exporter Assistance Needs: One of the advantages of a single industry study is that it involves a homogeneous sample with high internal validity. In regard to exporting in the EnviroTech industry, we would postulate that the key success factors would parallel the desired export assistance needs of firms in this industry. Since the key factors for success vary from industry to industry, finding such a parallel would support the efficacy of single industry studies as the basis for designing export assistance programs. Firms were asked to rate the relative importance of 13 items in relation to export success. These items were factor analyzed to see if any themes emerged reflecting a consistent viewpoint among firms in the industry regarding the key success factors. Table 8 shows that five factors emerged as themes in the analysis. These factors in priority order are alliances, understanding country markets, in-house staff, financing, and participation in trade missions. Having alliances and working effectively with partners in export countries are considered to be the most critical success factor for exporters. Understanding country markets, or becoming familiar with a specific country, its culture, work habits, and language are also considered to be very important for export success. Table 8 -- Perception Of Extent To Which Various Factors Are Critical To Export Success Mean Factor Score¹ Alliances

3.81

Alliances with firms in export countries Ability to work effectively with alliance partners Understanding Country Markets Focusing on a specific country or region Ability to understand country work habits, cultures, procedures Market research skills

3.72

Language proficiency in relation to targeted export market 3.39

In-House Staff In-House staff with export experience and skills In-House staff fully dedicated to export markets

3.29

Financing Ability to generate internal financing for export activities Ability to access external financing for export activities

2.64

Trade Missions Participating in overseas trade missions Participation in reverse trade missions Participating in technical demonstrations

Mean factor score is computed from a 5 point Likert scale going from 1=Strongly disagree to 5=Strongly agree. Sample size=75 exporting firms. The highest rated factor was 'Alliances', which includes both having alliances and being able to work effectively with alliance partners. Both exporters and non-exporters rated 'assistance in finding partners in export countries' among the top two valued types of assistance. We also found (see Table 9) a significant correlation between satisfaction with the export experience and its associated financial returns and satisfaction with the alliance experience and its financial returns. This result demonstrates an empirical relation between alliances and export satisfaction in the EnviroTech industry. Table 9 -- Correlations between Export Satisfaction with Alliance Relationships

Satisfaction with exporting experience

Satisfaction with alliance experience

Satisfaction with alliance financial returns

.3982

.4015

(n=56)

p=.002

(n=55)

.3033

Satisfaction with exporting returns (n=56)

p=.002 .6813

p=.023

(n=55)

p=.000

Alliances play a primary role in this industry, suggesting that export assistance providers need to emphasize programs relating to this area. However, previous studies do not emphasize alliance related assistance to the extent that it seems critical in the EnviroTech industry. In Moini's study (1998) of manufacturers, one of the assistance

programs rated by respondents was 'A program which locates potential agents or distributors in foreign countries'. Among non-exporters, partially interested exporters and growing exporters, a number of banking services relating to guaranteeing payment or handling financial aspects of export transactions were as important or more important than locating potential agents. For regular exporters, locating potential agents was rated lower in expected benefits than a number of other assistance areas. In our study, finding financing for export activities was consistently rated lower than other assistance areas (see Tables 5 and 6). These differences between our results and Moini's, we believe is due to the differences in export assistance needs across industries. Kotabe and Czinkota (1992) explored the extent to which export assistance was desired in relation to five factors, and the role of alliances is not really addressed in their typology. Howard and Herremans (1988) establish that 'selecting agents/distributors' and 'maintaining agent/distributor relationships' are the two most important business activities among small successful manufacturing exporters. Kedia and Chhokar (1986) have an item, 'location of potential agents or distributors in foreign countries' that is ranked sixth in relation to benefit expectations among 17 export programs. The differences and mixed results between these studies pertaining to the importance of assistance programs relating to alliances also are probably associated with across industry differences in what it takes to be a successful exporter and the concomitant export assistance needs. Discussion The results of this study have implications first, for researchers exploring export assistance needs and second, for export assistance providers to the EnviroTech industry. In relation to research on export assistance, this industry demonstrated a similarity to other industries regarding export needs in that export needs varied across stages of export development. In other regards, the evidence indicates that the nature and relative priority of specific export assistance needs may vary significantly across industries. This was demonstrated by the high value Envirotech firms, exporters and non-exporters, accorded to export assistance relating to finding and maintaining effective alliance relationships with host country partners, while other studies accorded typically lower priority to this area. The differences in priority could be because the role of alliances in the manufacturing firms surveyed is of a different nature than in EnviroTech. Also, none of the previous studies focused on a single industry, so the relative importance of alliances would be averaged out over a number of industries. It should not be surprising that export assistance needs would vary across industries. Cavusgil (1997) points out that, "globalization of industries exhibit differences in terms of initial motives for going international, modes of foreign market entry, and special challenges faced by companies" (page 3). Thus, studies of industries or of highly interrelated industries should be undertaken if the goal is to provide effective guidance to export assistance providers. And perhaps the corollary point is that export assistance providers should focus their resources on the unique needs of specific industries in order to provide greater value in their programs. The results of this study have additional implications for public sector service organizations with an interest in providing export assistance to EnviroTech firms. Firms without export experience have a wide range of information needs in order to overcome external barriers. External barriers to exports have been discovered by researchers in other industries as well (Bauerschmidt, Sullivan and Gillespie 1985). Non-exporting firms want information about the 'ropes and procedures' associated with selling in foreign markets, they are unsure as to where to find the best export market opportunities, and they want to know more about the types of export assistance that are available. For these firms, obtaining relevant information can involve many blind alleys, and it can be time consuming and costly. Many of these firms may not realize that there is a well equipped, broad based infrastructure of public sector service organizations that can assist them in accessing the information they need. These barriers can be directly addressed through informational sessions and programs. Service providers to the EnviroTech industry can play a significant role here in moving these firms to export readiness and to becoming exporters. Also, non-exporters in our study were interested in learning about the role of alliances and the assistance that might be available in

establishing such alliances. This implies that assistance providers should go beyond the topic of export basics and procedures and introduce EnviroTech industry topics of a more advanced nature to non-exporters. For experienced exporters our concern was that only 55% to 60% of the exporting firms felt either neutral or dissatisfied about their export experience and associated financial returns. These firms need to recognize from the outset that effective host country partner alliances are critical to their success and ultimate satisfaction with their export endeavors. The importance of strategic alliances for exports has been documented by others (Lorinc 1990). A number of visits over a period of time will probably have to be made to a target country market to understand local markets, customs and business practices, and especially to meet prospective partners. Partner selection and the management of the alliance relationship over time will play a major role in achieving success. In new markets, exporting firms should seek assistance from public sector service providers to assist them in networking and establishing relationships with potential partners. Assessment of potential partners should include an exploration of mutual expectations regarding the working relationship. Effort and skill will have to be put into building trust in these relationships. Service providers can play an important value added role relating to host country alliances. Service providers can facilitate increased understanding of the important role of these alliances, what it takes to make them work effectively, and they can assist firms in the process of finding appropriate partners. They can develop and maintain current databases of potential partners in export markets and provide training to export-ready firms to better select partners and manage such alliances. References Bauerschmidt, Alan, Daniel Sullivan, and Kate Gillespie (1985), "Common Factors Underlying Barriers to Export: Studies in the US Paper Industry," Journal of International Business Strategies, Fall, 111-122. Bilkey, Warren, J., and George Tesar (1977). "The Export Behavior of Smaller Sized Wisconsin Firms," Journal of International Business Studies (Spring/Summer), 93-98. Cavusgil, S. Tamer (1984), "Differences Among Exporting Firms Based on their Degree of Internationalization", Journal of Business Research 12, 195-208. Cavusgil, S. Tamer (1997), "From the Editor in Chief -- Globalization of Industries", Journal of International Marketing, 5(1), 3-4. Czinkota, Michael R. and Wesley J. Johnston (1983), "Exporting: Does Sales Volume Make a Difference?", Journal of International Business Studies, (Spring/Summer), 147-153. Dess, Gregory G., Duane Ireland and Michael A. Hitt, 1990, "Industry Effects and Strategic Management Research", Journal of Management 16(1), 7-27. Environmental Business International Inc., 1996, "The Global Environmental Industry: A Market and Needs Assessment", San Diego: Environmental Business International Inc. Howard, D.G. and Irene M. Herremans, 1988, "Sources of Assistance for Small Business Exporters", Journal of Small Business Management July, 48-54.

Kedia, B.L. and Jagdeep S. Chhokar, 1986, 'An Empirical Investigation of Export Promotion Programs', Columbia Journal of World Business 21(4), 13-20. Kotabe, M. and Michael R. Czinkota, 1992, "State Government Promotion of Manufacturing Exports: A Gap Analysis", Journal of International Business Studies Fourth Quarter, 637-657. Lorinc, John (1990), "Selling to the world strategically: Strategic alliances can magnify your export clout-and you don't even have to leave home," Canadian Business, 63 (11), 126. Moini, A.H., 1998, "Small Firms Exporting: How Effective Are Government Export Assistance Programs?", Journal of Small Business Management, (January), 1-15. About the Authors Richard Castaldi, Professor, Management Department, San Francisco State University Murray Silverman, Professor, Management Department, San Francisco State University Sanjit Sengupta, Associate Professor, Marketing Department, San Francisco State University Contact details Richard Castaldi College of Business San Francisco State University 1600 Holloway Avenue San Francisco, CA 94132 Phone: 415 338-2829 Fax: 415 338-0501 Email: [email protected]