Firm-specific and institutional factors as export performance catalysts: Insights from a developing economy

This study advances a resource-based theory and institutional based view integrative theoretical model which contends that the export performance of firms will depend upon both firm-specific factors and their home institutional environments. Specifically, the study hypothesizes that firm capital structure (CS), competition from informal sector (IC), and political instability (PI) in home countries will directly and negatively affect their export performance (EXP). Furthermore, we hypothesizes that availability of cash (CA) will have direct and positive effect on EXP. Using partial least square structural equation model (PLS-SEM), the researchers test the hypotheses based on a dataset of 161 firms from Ethiopian manufacturing sector (i.e., Leather industry, textile industry, and Food & Beverage industry). The study confirms that CS, IC in home countries, and PI in home countries have significant negative effects on the EXP of the firms’. On the other hand, there is no statistically significant direct relation exists between CA and firm’s EXP as measured by sales volume and sales revenue. Nonetheless, aside from the insignificant relation between CA and EXP, we can conclude that CS has negative impact on firm’s EXP.