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

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,

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

Vi Dung Ngoa,1, Frank Janssenb,2, Leonidas C Leonidouc,⁎ , Paul Christodoulidesd,3

a

Hanoi School of Business, Vietnam National University, 144 Xuan Thuy, Cau Giay, Hanoi, Viet Nam

b Louvain School of Management, Université Catholique de Louvain, 1, Place des Doyens 1348, Louvain-La-Neuve, Belgium

c

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

a b s t r a c t

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

As the importance offirms 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

Keywords:

Exporting

Export performance

Transition and emerging economies

Institution-based view

1 Introduction

Firms from emerging and transition economies (ETEs) are increasing

their importance in the global economy through various

internationali-zation strategies, with exporting being the most common foreign

market entry mode employed (Aulakh, Kotabe, & Teegen, 2000) In an

era of globalization, the success of domesticfirms in international

mar-kets 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 offirms from ETEs The issue has attracted

the attention of managers, public policymakers, and researchers not

only from ETEs, but also from developed countries, because

nowa-days the various economies are caught in a web offinancial and

market interdependencies

Strategically, the export success offirms from ETEs, like their coun-terparts in advanced economies, depends not only on its controlled re-sources 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 de-veloped and improved (Hoskisson et al., 2000; Peng, 2003) This leads

us to posit that the institution-based view can provide a suitable theo-retical platform to explain and predict thefirm's performance in inter-national 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 indigenousfirms (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 orig-inating from ETEs, while the facilitating or inhibiting role of the home institutional environment in the indigenousfirms' export activities has been only superficially tackled Furthermore, only a few studies have tried to inject a theoretical perspective in researching institutional ef-fects on export performance, which has been endemic of empirical

Journal of Business Research xxx (2016) xxx–xxx

⁎ 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).

1

Tel.: +84 4 62924040; fax: +84 4 37548455.

2

Tel.: +32 10 47 84 28; fax: +32 10 47 83 24.

3

Tel.: +357 2500 2611; fax: +357 25002635.

http://dx.doi.org/10.1016/j.jbusres.2015.12.060

0148-2963/© 2016 Published by Elsevier Inc.

Contents lists available atScienceDirect

Journal of Business Research

research in the overall exportingfield (Leonidou & Katsikeas, 2010)

Fi-nally, 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 tofill three major gaps

in the international business literature: (a) to enrich our knowledge

on strategic and international dimensions offirms 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

re-search hypotheses connecting the domestic institutional environment

with export performance This is followed by a description of the

re-search methodology adopted Subsequently, we analyze the data and

present thefindings of the study The final section draws conclusions

from the studyfindings, provides practical and theoretical implications,

and offers directions for future research

2 Theoretical background

Our study is theoretically anchored on the institution-based view,

which states that whenfirms 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

in-formal 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

pres-sure on thefirm 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,

so-cial, 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

institution-al environment is centrinstitution-al because (a) it is the institutioninstitution-al environment

that determines the institutional arrangement (Pejovich, 1990;

Williamson, 1998) and (b) a failure in formal institutions will further

in-crease the role of informal institutions in their societies and economies

(Peng et al., 2009)

Among the elements of the formal institutional environment, prop-erty rights and contracting institutions are central because they deter-mine 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 reg-ulations that protect the citizens of a country against the power of gov-ernment 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 workabil-ity 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 effec-tive and efficient way If the property rights are not well defined and enforced by property rights institutions, the cost of establishing, main-taining, 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 unpre-dictable 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 un-willingness of economic actors to pursue productive and innovative strategies because they often do 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 tran-sitional nature, the formal institutional environment (i.e., property rights and contracting institutions) of ETEs can have a serious impact

on thefirm'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 af-fected by the home market institutional environment, no research has hitherto been conducted on the role that specific attributes of domes-tic institutions have on thefirm's export behavior However, this is crucial because these domestic institutional attributes are responsi-ble 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 thefirm's cost struc-ture 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 thefirm 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) in-fluences the export performance of firms from an ETE (i.e., Vietnam)

3 Conceptual model and research hypotheses

Fig 1presents the conceptual model of the study, which consists of two parts Thefirst part focuses on domestic institutional environmen-tal dimensions (i.e., specificity, stability, predictability, enforceability) and how these affect the firm's export performance These four

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

institu-tional environment on export performance Altogether, there are

four main hypothesized paths and four moderating hypotheses

3.1 Main hypotheses

Institutional specificity is the extent to which the private property

rights of ownership and the freedom of contract are recognized or

de-fined by prevailing rules and regulations (Acemoglu & Johnson, 2005;

Besley, 1995; Djankov et al., 2002; Furubotn & Richter, 1991; Kitching,

2006; Shleifer, 2005) AsZhu, Wittmann, and Peng (2012)demonstrate

in the context of China,firms from ETEs still face many institutional

barriers (e.g., competition fairness, access tofinancing, laws and

regula-tions, 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

exam-ple, 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, andfinancial markets) will help to

reduce thefirm's transaction costs in the foreign market because:

(a) it facilitates the process of effectively and efficiently handling all

rel-evant export-related documentation and procedures; (b) it minimizes

damages caused by potential fraud, bribery, disputes, and other mal-practices; 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 thefirm's competitive stance and enhance performance outcomes when selling to foreign customers (Malesky & Taussig, 2009) Thus,

we may posit that:

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 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 sur-rounding export operations, which is high due to the large physical and psychological distance separating sellers from buyers in interna-tional markets (Johanson & Vahlne, 1977) It also acts as an important facilitator in sustaining thefirm's operations in foreign markets, through

a steadyflow of investments in terms of money, time, and effort (Jeong, 2002; Teisberg, 1993) Further, the more the stability in the home insti-tutional environment, the less the probability for the exporter to em-bark on an opportunistic behavior when reaping foreign market opportunities, and the greater the chance to better exploit foreign

H8

H7

H5

H2

H3

H4

H6

Export Experience

Institutional Environment Stability

Institutional Environment Predictability

Institutional Environment Enforceability

H1

Institutional Environment Specificity

Export Performance

Foreign Market Expansion

Exporter’s Size

Export Entry Mode

Exporter’

s Location

Principal Export Market

Type of Product Exported

(a)

(b)

(c)

(d)

Fig 1 The conceptual model.

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 indigenousfirm'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

pre-dictable (Acemoglu & Johnson, 2005) Knowing how the home

institu-tional environment will change in the future is essential to carefully

plan thefirm'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

envi-ronment will facilitate the exportingfirm 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 indigenousfirm's export

performance

Institutional enforceability is the extent to which the private property

rights of ownership and the freedom of contract is effectively and ef

fi-ciently protected or guaranteed by regulatory authorities/agencies

through formal enforcement mechanisms (e.g., courts) (Acemoglu &

Johnson, 2005; Djankov et al., 2003; Williamson, 1991) This

institution-al attribute is institution-also criticinstitution-al to enhancing thefirm'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

enforce-able institutional environment is conducive toward boosting the

confidence of the exporter that its international business

transac-tions 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

inter-national 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

in-stitutions 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 indigenousfirm's export

performance

3.2 Moderating hypotheses

Certain organizational and internationalization characteristics may be

responsible forfirms to respond differently to institutional forces (Peng,

2003) For example, in the context of developed countries (where the

in-stitutional 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

difficul-ty in dealing with external pressures, such as those exerted by the

domes-tic institutional environment (Leonidou, 2004; Leonidou, Palihawadana,

& Theodosiou, 2011) In an ETE context, where the institutional

environ-ment 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 smallerfirms, mainly be-cause of their greater ability to cope with and take advantage of this (Peng & Luo, 2000) In addition, largefirms 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 ef-fective 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) en-forceability 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 environ-ment, experienced exporters can reap more benefits.4This is because experienced exporters are more able than their inexperienced counter-parts 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, experi-enced exporters are more endowed with the necessary experiential knowledge and competences to enhance their competitive position, caused by gradual improvements in the domestic institutional environ-ment, 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) en-forceability of the domestic institutional environment in an ETE on export performance will be stronger for experienced than for inexperienced indig-enous exporters

Compared tofirms that only concentrate on a few foreign markets, export market spreaders normally need more resources and compe-tences 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 require-ments 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) en-forceability 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

4

Inexperienced exporters: (a) possess fewer resources and capabilities to cope with the institutional environment and advance their strategies; (b) do 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 ).

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

estab-lish, 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-to-day 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)

en-forceability 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

4 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

ac-counting 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

gover-nance is based on a single party regime, this is not the case with the

country's institutional environment After more than 20 years of

re-forms 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

re-gions (e.g., between mountainous and delta rere-gions) in the country,

which is the major cause of heterogeneity of market-supporting

institu-tions (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

ex-istence 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 Thefirst was the directory of Vietnamese exporters,

pub-lished 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 betweenfirms and within firms, exist in their operationalfield 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 tax-ation) have changed in the past and can be predicted in the future Finally,‘export performance’ was measured with five items derived

(2004)

In thefirst round of the survey, we combined the two methods of post-mail and internet to contact firms in the sample We first approached allfirms 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 tofill in and return the questionnaire One week after sending the questionnaire, we contacted allfirms 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 allfirms that did not respond, to re-mind them aboutfilling in and returning the questionnaire The out-come 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 question-naires, a response rate of 16.4%, which is comparable to that of prior exporting studies (Leonidou & Katsikeas, 2010) To check for the pos-sibility of non-response bias, we usedMentzer and Flint's (1997)

method For this purpose, wefirst selected five items belonging to each of the key constructs contained in the conceptual model Then, we contacted by telephone 25 of thefirms from those that did not reply and asked them to give us answers to each of these items The answers of thesefirms were subsequently compared to those of the 109 respondents in the main survey A t-test analysis be-tween 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, thefirms that answered our questionnaire had been in business for 15.4 years, employed 243.4 people, and had a working cap-ital 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 privatefirms but with capital mainly from public partners (26.6%) The majority (58.7%) of thesefirms exported agricultural-processed products, while the remainder (41.3%) focused on light manufactured exports With regard to their location, 57.8% of the re-spondents 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 di-rect exports Our key informants were general/deputy didi-rectors (27.5%), commercial/marketing/sales managers (39.4%), or export

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

5 Analysis and results

In this section, wefirst explain the results of the measurement

model We then discuss the results of the structural model with

re-gard to each of the direct effects hypotheses Subsequently, we

ana-lyze thefindings of the moderation analysis undertaken Finally, we

present the results of various variables with a potential control

effect

5.1 Measurement model

To assess the validity of our measures, we employed structural

equa-tion modeling, using the EQS program Using confirmatory factor

analy-sis (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 inTable 1, the CFA results suggested an

ac-ceptable fit, as demonstrated by the goodness-of-fit diagnostics

(χ2= 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

t-value 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

aver-age variance extracted (Fornell & Larcker, 1981) (seeTable 2); third, we

checked for construct reliability, which was satisfactory because all

con-structs in our conceptual model exhibited Cronbach's alphas greater

than 80, while composite reliability was also satisfactory with all coef-ficients being greater than 70; and fourth, we assessed the possibility

of common method bias Wefirst employed the Harman's single-factor 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 thefirst fac-tor) We also used a confirmatory factor approach, in which all items in-cluded in the measurement model were restricted to load on a single factor (Venkatraman & Prescott, 1990) The modelfit indices revealed very poor values, well below the commonly acceptable cut-off points (i.e.,χ2= 1539.59, p = 000; df = 252; NFI = 39; NNFI = 38; CFI = 43; RMSEA = 22) Collectively, the results from both tests indi-cate 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 hy-pothesized in our study The results suggest a statistically significant chi-square (χ2= 371.35, p = 000, df = 247), which can be

attribut-ed to the test statistic's sensitivity to sample size (Kline, 2005)

Table 1

Measurement model and summary statistics.

Constructs Scale items Standardized loadings t-value Α ρ AVE Mean score Standard deviation Item mean Standard deviation Institutional environment specificity IES6 68 ⁎ .91 .86 72 1.97 1.17 2.41 1.54

Institutional environment stability IET2 67 ⁎ .83 .77 55 4.02 1.12 3.84 1.33

Institutional environment predictability IEP1 73 ⁎ .90 .85 65 4.63 1.22 4.61 1.44

Institutional environment enforceability IEE2 82 ⁎ .95 .91 78 3.23 1.42 2.95 1.52

Export performance EXP1 94 ⁎ .94 .88 75 4.02 1.23 3.97 1.38

Fit statistics of model: χ 2

= 366.25, p = 000, df = 242; NFI = 93; NNFI = 94; CFI = 95; RMSEA = 07.

⁎ Item fixed to set the scale.

Table 2 Correlation matrix.

Constructs 1 2 3 4 5.

1 Institutional environmental specificity 1

2 Institutional environmental stability 13 1

3 Institutional environmental predictability 07 28 1

4 Institutional environmental enforceability 13 −.19 −.34 1

5 Export performance −.17 07 −.20 22 1 Note: Correlations greater than | ± 0.24| are significant at the 01 level.

Correlations greater than | ± 0.19| are significant at the 05 level.

However, all otherfit indices (i.e., NFI = 93; NNFI = 94; CFI = 95;

RMSEA = 07) were acceptable.Table 3presents the standardized

path coefficients and corresponding t-values for the main

hypothe-sized links

The results suggest eight out of the ten hypothesized paths were

found significant and with the expected sign Specifically, the first

hy-pothesis (H1) connecting institutional environment specificity with

ex-port 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)

Sim-ilar to the previous results were those obtained for institutional

envi-ronmental predictability (H3): the more predictable the rules and

regulations concerning property rights and contracting institutions,

the higher thefirm's export performance (β = 19, t = 1.76, p = 08)

With regard to hypothesisH4, the enforceability of the institutional

en-vironment (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

per-formance (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 (seeTable 4).5Specifically,

for each moderator, we ran two different models: while in thefirst

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

refer-ence toH5, our results indicate that in general the effect of specificity

and enforceability of the institutional environment on export

perfor-mance was stronger in the case of large than in that of small exporters

(Δχ2= 8.08, pb 01 and Δχ2= 2.77, pb 01 respectively), although

the moderating effect offirm size on the effect of either institutional

stability or institutional predictability on export performance was not

statistically significant (p N 10) In the case ofH6, with the exception

of institutional stability (Δχ2

(1)= 66, pN 10), the effect of all remain-ing institutional environment attributes (i.e., specificity, predictability,

and enforceability) on export performance was significantly stronger

among experienced, as opposed to non-experienced, exporters

(pb 10) Also, with the exception of the path between institutional

en-vironment stability and export performance (Δχ2

(1)= 51, pN 10), the remaining associations between institutional attributes and export

performance were significantly moderated by the exporter's

for-eign market expansion strategy (H7) Thefinal moderator, namely,

export mode (i.e.,H8), was found to have a significant effect on

all hypothesized paths between institutional environment

attri-butes (i.e., specificity, stability, predictability, and enforceability)

and export performance, with this link becoming stronger in the

case offirms exporting on a direct, rather than an indirect, basis

(pb 05)

5.4 Control effects

We have also used three control variables in our model Thefirst is the location of the exporter,6which had a significant effect on each of the four dimensions of the institutional environment, namely, speci

fici-ty (β = 3.85, t = 38, p = 00), stability (β = 5.10, t = 45, p = 00), pre-dictability (β = 5.45, t = 47, p = 00), and enforceability (β = 3.96, t = 41, p = 00).7The second control variable is‘principal export market’, whether developed or emerging/developing country, which had a

sig-nificant 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)

6 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

Table 3 Structural model results—main effects.

Hypo-thesis Hypothesized path Standardized

path coefficients

t-value p-Value

H1 Institutional environment

specificity

.22 2.08 04

→ Export performance

H2 Institutional environment

stability

.22 1.89 06

→ Export performance

H3 Institutional environment

predictability

.19 1.76 08

→ Export performance

H4 Institutional environment

enforceability

.26 2.33 02

→ Export performance Control effects:

Exporter's location 48 3.85 00

→ Institutional environment specificity

Exporter's location 55 5.10 00

→ Institutional environment stability

Exporter's location 57 5.45 00

→ Institutional environment predictability

Exporter's location 51 3.96 00

→ Institutional environment enforceability

Principal export market 50 3.88 00

→ Export performance Types of goods exported 49 3.70 00

→ Export performance Fit statistics: χ 2

= 371.35, p = 000, df = 247; NFI = 93; NNFI = 94; CFI = 95; RMSEA = 07.

5

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

rela-tion 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

ver-sus smaller exporters, experienced exporters verver-sus inexperienced exporters, foreign

market concentrators versus foreign market spreaders, and direct exporters versus

indi-rect 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 (Δχ 2 (1) N 3.84; p b 05) indicates the existence of a moderation

ef-fect The split group method has been extensively used in the business literature, both

do-mestic 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)

6

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 creat-ing two different institutional environments, which still holds today, despite the unifica-tion 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)

7

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 in-digenous firms ( Nguyen et al., 2012 ).

link between the institutional environment's attributes prevailing in the

domestic setting of exporters from Vietnam and their performance

out-comes 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

devel-oped 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 indigenousfirms'

ex-port performance;finally, we have revealed the role of certain key

orga-nizational and internationalization characteristics in moderating the

association between home country institutional attributes and export

performance

Our results demonstrate that domestic institutional specificity,

sta-bility, predictasta-bility, and enforceability positively affect export

perfor-mance 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 in-ternational markets Moreover, ourfindings relating to institutional sta-bility and predictasta-bility 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 re-spondents explained that working in an institutional environment, where future changes can be easily predicted, helps them to take pre-cautionary measures well in advance to avoid unnecessary costs (e.g., taxes, penalties), as well as plan their export operations more ef-fectively and efficiently Finally, our findings confirmed that an enforce-able institutional setting will generate a feeling of trust and confidence that home country institutions will properly perform their role and

Table 4

Results of individual moderating effects.

Exporter size as a moderator a

Main effect Hypothesized moderating effect Larger exporter group Smaller exporter group Δχ 2 (Δdf = 1) IES → EXP H 5a : Effect is stronger among larger than smaller exporting firms β = 71, t = 5.18⁎⁎ β = 11, t = 0.84 8.08

(p b 01) IET → EXP H 5b : Effect is stronger among larger than smaller exporting firms β = 19, t = 1.88 β = 19, t = 1.53 0.52

(p N 10) IEP → EXP H 5c : Effect is stronger among larger than smaller exporting firms β = 25, t = 2.06⁎ β = 21, t = 1.68 0.53

(p N 10) IEE → EXP H 5d : Effect is stronger among larger than smaller exporting firms β = 36, t = 3.38⁎⁎ β = 29, t = 1.98⁎ 2.77

(p b 10) Export experience as a moderator a

Main effect Hypothesized moderating effect Experienced exporter group Inexperienced exporter group Δχ 2 (Δdf = 1) IES → EXP H 6a : Effect is stronger among experienced than inexperienced exporters β = 40, t = 3.79⁎⁎ β = 16, t = 1.37 8.69

(p b 01) IET → EXP H 6b : Effect is stronger among experienced than inexperienced exporters β = 19, t = 1.90 β = 14, t = 1.27 0.66

(p N 10) IEP → EXP H 6c : Effect is stronger among experienced than inexperienced exporters β = 36, t = 3.69⁎⁎ β = 20, t = 1.63 4.06

(p b 05) IEE → EXP H 6d : Effect is stronger among experienced than inexperienced exporters β = 26, t = 2.62⁎⁎ β = 13, t = 1.09 2.90

(p b 10) Foreign market expansion as a moderator a

Main effect Hypothesized moderating effect Foreign market concentrator group Foreign market expansion group Δχ 2 (Δdf = 1) IES → EXP H 7a : Effect is stronger among export market concentrators than spreaders β = 23, t = 2.79 ⁎⁎ β = 24, t = 1.62 2.75

(p b 10) IET → EXP H 7b : Effect is stronger among export market concentrators than spreaders β = 15, t = 2.04⁎ β = 27, t = 1.79 0.51

(p N 10) IEP → EXP H 7c : Effect is stronger among export market concentrators than spreaders β = 26, t = 2.99⁎⁎ β = 26, t = 1.69 2.97

(p b 10) IEE → EXP H 7d : Effect is stronger among export market concentrators than spreaders β = 18, t = 2.34⁎ β = 09, t = 0.76 2.79

(p b 10) Export entry mode as a moderator a

Main effect Hypothesized moderating effect Direct exporter group Indirect exporter group Δχ 2 (Δdf = 1) IES → EXP H 8a : Effect is stronger among direct exporters than indirect exporters β = 27, t = 3.89 ⁎⁎ β = 19, t = 1.09 7.76

(p b 01) IET → EXP H 8b : Effect is stronger among direct exporters than indirect exporters β = 26, t = 3.68⁎⁎ β = 24, t = 1.62 6.92

(p b 01) IEP → EXP H 8b : Effect is stronger among direct exporters than indirect exporters β = 50, t = 5.96⁎⁎ β = 18, t = 1.04 19.40

(p b 01) IEE → EXP H 8b : Effect is stronger among direct exporters than indirect exporters β = 20, t = 3.17 ⁎⁎ β = 09, t = 0.64 4.02

(p b 05)

a Groups were divided using a median split.

⁎⁎ p b 01.

⁎ p b 05.

protect the exporter from possible problems that could harm its foreign

business operations

Most of the links between each attribute of the domestic

institution-al 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 Speci

fical-ly, ourfindings 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

oppor-tunities and accommodate challenges derived from them Moreover,

the fact that experienced exportingfirms 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 exportingfield, indicating that experience is an

im-portant factor in overcoming barriers to exporting (Leonidou, 2004)

Furthermore, the fact that the effect of institutional stability,

predictabil-ity, 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

opportu-nities derived from foreign markets (to which they have more

immedi-ate 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

re-sponsible for the development of different institutional forces that are

changing at a different pace The fact that the nature of the principal

for-eign market of the exporter had a strong influence on its export

perfor-mance 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/devel-oping countries increases the chances of success, as opposed to selling

to developed countries Finally, thefinding that the type of product

exported had a strong control effect on export performance can be

ex-plained by the fact that agricultural-processed products are less

vulner-able to institutional forces, as opposed to light manufactured goods

6.1 Practical implications

Public policymakers in Vietnam (as well as in other ETEs) are

ad-vised to take advantage of thefindings 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 exportingfirms 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,

there-fore 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 exportingfirms located in Vietnam (and in other ETEs)

could also capitalize on thefindings of this study First, they should

clearly understand the facilitating (or inhibiting) role of the domestic

institutional environment in improving their competitive position in

foreign markets, and take collective action toward seeking the ameliora-tion of its quality from government and other parastatal organizaameliora-tions This will also help to improve the effective exploitation of various gov-ernment 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 appreci-ation of institutional environment quality is expected to yield better fi-nancial 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 institu-tional explanation of thefirm's export behavior is crucial in broadening our understanding of the factors driving export performance This

theo-ry is particularly useful in studying the internationalization aspects of firms from ETEs due to the unique and evolving nature of their institu-tional environment The regional variations in the domestic instituinstitu-tional 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 mar-ket dimensions) that influence the firm's export behavior Specifically, the studyfindings show that the domestic institutional environment plays a pivotal role in determining thefirm's export performance and this should be taken into consideration in future conceptualizations of thefirm'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 thefirm's export per-formance (such as the regulatory framework, economic conditions, and competitive intensity) Our study has also revealed that the impact of domestic institutional forces on thefirm's export performance is mod-erated by various organizational and internationalization characteris-tics, which underscores the importance of internal contingent factors

in understanding export phenomena Such contingencies may also emerge from thefirm's targeted foreign markets and products exported 6.3 Limitations and future directions

Ourfindings 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 re-lied 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 orga-nizations (such as the WTO or OECD), regarding the level of institutional quality in Vietnam (as well as in other ETEs), could produce a more re-liable picture of the specificity, stability, predictability, and enforceabil-ity attributes of the domestic institutional environment

Second, the effect of institutional factors on achieving superior ex-port performance, takes some time to develop, and therefore, a longitu-dinal, 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 exportingfirms

This will help to identify any improvement or deterioration in the

do-mestic institutional environment and examine its effect on the

individ-ualfirm'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

var-ious regions of Vietnam characterized by different institutional

environ-ments, and how these activities are affected by these environments

Moreover, since institutional development in ETEs usually differs

be-tween urban and rural areas, it would be enlightening to consider this

urban/rural institutional dichotomy as a possible control factor

Further-more, 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/

difference between the home and host country and its effect on stan-dardizing/adapting thefirm's export business strategies using fit analy-sis (Katsikeas, Samiee, Theodosiou, 2006)

Finally, since the focus of our study was on exportingfirms, the is-sues 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 thefirm's international performance In addi-tion, the external validity of ourfindings could be verified through rep-lication studies in other ETEs (e.g., China, India, Russia) since they are relatively more heterogeneous in terms of both their institutional con-text and the stage of their institutional transition (Peng, 2003; Wright

et al., 2005) Such cross-country comparisons could also take into con-sideration other macro-environmental parameters with a potential link to institutional development, such as cultural traits, economic structure, and political conditions

Appendix A Operationalization of constructs

Constructs Item

code Item description Mean

score Standard deviation

Measurement scale Source

Institutional environment

specificity

IES1 Counterfeit goods 2.46 1.65 Seven-point scale, anchored on

“none existing” and “prevalent”, concerning 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, Roth, and Zepeda (1997) ,

Malesky and Taussig (2009)

IES2 Violation of intellectual property rights

2.30 1.53 IES3 Illegal breaking of signed

contract

2.75 1.58 IES4 Commercial fraud 2.50 1.60 IES5 Monopoly in

production/commerce

2.67 1.64 IES6 Unofficial charges/bribery 2.41 1.54 IES7 Economic and commercial

disputes between enterprises

1.97 1.25 IES8 Disputes between enterprises

and their employees

1.75 1.19 IES9 Enterprise's land

expropriation by local/central government

1.75 1.24

Institutional environment

stability

IET1 Customs procedures 4.28 1.46 Seven-point scale, anchored on

“very stable” and “very unstable”, concerning the stability in the past of laws and regulations rela-tive 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)

IET2 Quality control of export product

3.84 1.33 IET3 Business tax laws and

regulations

3.86 1.34 IET4 Exchange rates related policies 4.78 1.46 IET5 Interest rates related policies 5.09 1.37 IET6 Labor-related regulations

(e.g., wage, social security, etc.)

4.28 1.49

IET7 Environment related regulations

4.11 1.34 Institutional environment

predictability

IET1 Customs procedures 4.61 1.44 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)

IET2 Quality control of export product

4.38 1.38 IET3 Business tax laws and

regulations

4.60 1.25 IET4 Exchange rates related policies 4.66 1.55 IET5 Interest rates related policies 4.68 1.51 IET6 Labor-related regulations

(e.g., wage, social security, etc.)

4.59 1.42

IET7 Environment related regulations

4.57 1.41 Institutional environment

enforceability

IEE1 Counterfeit goods 2.91 1.55 Seven-point scale, anchored on

“very weak” and “very strong”, concerning the effectiveness of le-gal enforcement on different phe-nomena 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)

IEE2 Violation of intellectual property rights

2.95 1.52 IEE3 Illegal breaking of signed

contract

3.34 1.55 IEE4 Commercial fraud 3.17 1.50 IEE5 Monopoly in

production/commerce

3.03 1.57 IEE6 Unofficial charges/bribery 3.30 1.56 IEE7 Economic and commercial

disputes between enterprises

3.32 1.62 IEE8 Disputes between enterprises

and their employees

3.46 1.62