The export behaviour of small and medium-sized manufacturing firms: Evidence from the garment and textile industry of Ghana

Abstract

The aim of this thesis is to examine why the majority of SMEs from the garment and textile sub-sector decide to remain focused on the domestic market, while few choose to sell a proportion of their goods abroad, even though they face similar market conditions and operate in the same location. A variety of explanations to this problem exist in the literature examining the export behaviour of small businesses. However, these explanations are inconclusive and restricted in geographic scope (e.g. studies from the USA, Europe, and the United Kingdom). Because geographic contexts are different it is uncertain whether or not the recommendations based on studies from western countries can be implemented within the Ghanaian economy. As a result, a research gap exists with regard to understanding the export behaviour of SMEs from Ghana. Following the recognition of a gap in the literature, this thesis seeks to shed light on the issue from the Ghanaian context. The thesis proposes an integrated theoretical framework, developed from an analysis of the extant literature review, to address an explanation why some SMEs export and others do not. The proposed framework consists of a synthesised integration of the following theoretical perspectives: the resource-based view of the firm; stage theory; network theory, international entrepreneurship theory; and contingency theory. The key assumption underlying the integrated framework is that SME export behaviour represents a complex event, and therefore no single theoretical framework is robust enough to explain the phenomenon in detail. In addition, as none of the theoretical frameworks are without weakness it is argued their integration offsets the weaknesses of each, thereby offering a deeper explanation of the factors underlying export behaviour. Empirically, the thesis drawing on a set of quantitative data and more qualitative interviews concerns the behaviour of both small and medium-sized exporting and non-exporting firms from the garment and textile manufacturing sector in Ghana. An analysis of this data is undertaken to empirically validate the proposed theoretical integrated framework. The quantitative methods involve regression analysis, and the qualitative analysis is based on a systematic content review of the data emanating from the interview data. The results from the empirical analysis suggest that the proposed integrated framework matches well with the empirical data. Overall, firm size, sector, workforce education levels, and participation in international and domestic business networks are found to be the key drivers explaining why some SMEs from Ghana choose to export, while majority of others remained focused on the domestic market. Based on the findings it is concluded that SME owner-managers in Ghana seeking to export should invest in the development of both domestic and international networks as a means of improving their access to international markets. From a policy perspective it is recommended that the government of Ghana should provide further support to facilitate the activities of industrial associations in Ghana, since their interaction and network development with indigenous firms has been shown to be of importance in helping SMEs achieve export success.