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Abstract
The objective of this study was to gain a better understanding of the characteristics
of small to medium sized food firms in the Northeast (New York and Pennsylvania) that
influence their decision to be involved or interested in foreign markets. The study involved
the use of a survey, and we used a series of logistic regression models as well as
correlation and cross-tabulations.
Of the 116 food-manufacturing firms of New York and Pennsylvania that we
successfully contacted in the survey, 55 are involved in foreign activity or were in the past,
and 73 firms were interested in starting or expanding their foreign activity. We grouped the
determinants that influence a firm's decision to enter or be interested in entering foreign
markets ~n seven categories: size, product type, diversification/specialization, marketing
knowledge advantage, R&D intensity, seller concentration and competitive nature of the
firm. The results indicated that the characteristics found in firms that have experience in
foreign activity are large size, high diversification, less marketing knowledge, high R&D
intensity, low local competition and high domestic competition. The characteristics
associated with an interest in starting or expanding foreign activity were the type of
product (perishable), high amount of own brands, high R&D expenses as a percentage of
total sales, low local competition, and a high percent of domestic and foreign competition.
Size was not significantly associated with any entry mode. Canada, Mexico, Europe, South
America and Asia were the preferred foreign markets entered. Firms with experience in foreign
markets were associated with an interest in direct exports. Firms producing non-perishable
products tended to be more interested in establishing warehouses abroad. Small and more
specialized firms tended to be more interested in copacking and licensing as entry modes. Europe
was the market most firms were interested in entering, for every entry mode.
Firms without experience in foreign activity described lack of information as a
barrier to enter foreign markets. Firms with experience in foreign markets considered price
competition, tariff barriers and other government regulations as obstacles to enter foreign
markets. Lack of time was perceived as a barrier by firms that were specialized and had
interest in foreign activity. Tariff barriers were a concern for firms that were large and
diversified. Firms with no experience in foreign activity perceived their small size as a
barrier. Almost all firms believed that their size is too small before entering foreign
markets. When firms actually decide to go abroad, they realize that size is not that
important. Firms that feel threatened by foreign competition tended to have experience or
interest in foreign activity.