The determinants affecting the internationalisation of ...

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Int. J. Globalisation and Small Business, Vol. 6, No. 2, 2014

The determinants affecting the internationalisation of the Italian SMEs producing sparkling wines: an empirical study on the RBV of the firms Antonino Galati* and Maria Crescimanno Department of Agricultural and Forest Sciences, Università degli Studi di Palermo, Viale delle Scienze 13, Building 4, 90128, Palermo, Italy Email: [email protected] Email: [email protected] *Corresponding author

Matteo Rossi Department of Analysis of Social and Economic System (DASES), Via delle Puglie, 82 – 82100 Benevento, Italy Email: [email protected]

Domenico Farruggia and Salvatore Tinervia Department of Agricultural and Forest Sciences, Università degli Studi di Palermo, Viale delle Scienze 13, Building 4, 90128, Palermo, Italy Email: [email protected] Email: [email protected] Abstract: In the last few years, wine industry has been characterised by profound changes that have determined an intensification of competition on a global scale. The aim of this study is to identify the firms’ internal factors that most influence the export intensity and the ability to fit into the international market of the Italian wineries producing sparkling wines through a resource-based view (RBV) approach. Results of our study supporting the findings of previous empirical researches presented in this paper. In particular, the main factors affecting export intensity are: innovation degree and intensity of investment in advertising and promotion, among firms’ characteristics, and abroad experience, proficiency of foreign languages, educational level, and perception barriers, among managers’ characteristics. Keywords: internationalisation; sparkling wineries; resource-based view theory; RBV; export intensity; Italy; SMEs. Reference to this paper should be made as follows: Galati, A., Crescimanno, M., Rossi, M., Farruggia, D. and Tinervia, S. (2014) ‘The determinants affecting the internationalisation of the Italian SMEs producing sparkling wines: an empirical study on the RBV of the firms’, Int. J. Globalisation and Small Business, Vol. 6, No. 2, pp.100–118.

Copyright © 2014 Inderscience Enterprises Ltd.

The determinants affecting the internationalisation of the Italian SMEs

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Biographical notes: Antonino Galati received his PhD in Agricultural Economic and Policy in 2007 from the University of Palermo, Italy. Currently, he is a Researcher in the Department of Agricultural and Forest Sciences, Università degli Studi di Palermo, Italy. His research interests include foreign agri-food trade, market competitiveness, agribusiness, marketing strategies, management, logistics and market analysis. He is also the co-Chair of the Research Interest Committee in Agribusiness of the EuroMed Research Business Institute (EMRBI). Maria Crescimanno is a Full Professor of International and EU Agricultural Policy in the Department of Agricultural and Forest Sciences, Università degli Studi di Palermo, Italy. She is a delegate of Chancellor of University of Palermo for the planning and organisation of the University Masters. Her research interests include international and European agricultural policy, foreign agri-food trade, market competitiveness, logistic, fishery policy and market analysis. Matteo Rossi is an Assistant Professor of Corporate Finance at the University of Sannio, Italy. He holds a PhD in Corporate Governance, and his prime research interests are corporate finance, financing innovation, wine marketing, and innovation systems. In all of these areas, he has published, contributed chapters to books, edited books and presented papers to national and international conferences. He is the Vice President for International Relations of the EuroMed Research Business Institute (EMRBI). In 2014, he won the Highly Commended Paper Award of the International Journal of Organizational Analysis (Emerald) for the paper “Mergers and Acquisitions in the Hightech Industry: A Literature Review”, and in 2012, he won the Outstanding Paper Award of the International Journal of Organizational Analysis (Emerald) for the paper “Italian Wine Firms: Strategic Branding and Wine Performance”. Domenico Farruggia is a PhD student in Agricultural Economic and Policy at the University of Palermo, Italy. His research interest includes the foreign agri-food trade. Salvatore Tinervia is a PhD student in Agricultural and Forest Sciences at the University of Palermo, Italy. His research interest includes the consumer behaviour and management.

1

Introduction

Over the last few decades the wine market has experienced many deep structural transformations due to globalisation and mounting international competition (Rossi et al., 2012; Bernetti et al., 2006). This change have affected, primarily, the world productive scenario with the entrance of new producers countries, such as South Africa, California, Chile and New Zeeland, that have adopted aggressive supply strategies with the consequence of gaining market share (Santini and Rabino, 2012). Later, also the wine consumption has registered changes with a remarkable contraction of wine demand in the traditional market, also consequently to the global economic crises, and a general increasing orientation of consumers towards quality wines apt to satisfy more complex needs than purely gastronomic ones, the function of which is enriched with experiential,

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symbolic and hedonistic elements (Nosi, 2012). As suggested by Leonidou et al. (2002) intensification of competition on a global scale has led to an increasing number of firms seeking opportunities in international markets to achieve their objective, as well to safeguard their market position and survival. As asserted by Santini and Rabino (2012), internationalisation can be considered as an escape route for surviving to problematic and highly competitive domestic markets. Export activity represent, in fact, the simplest and quickest way to access in international markets (Majocchi et al., 2005; Zhao and Zou, 2002), as it provides the firms with high levels of flexibility and a cost-effective way of penetrating new foreign markets quickly (Leonidou, 1995). Firms’ survival, expansion and their success in export markets depends on a multiplicity of factors related both to the business characteristics and to the multiple, diverse, and idiosyncratic nature of foreign environments (Czinkota and Ronkainen, 1998; Samiee and Walters, 1990). Consequently to the globalisation process a considerable attention has been reserved to the understanding the behaviour of firms in foreign markets in order to identify the key factors (internal determinants and external factors) affecting their success in foreign markets. The role of Italy in the world wine sector is relevant, both in terms of supply increasingly oriented towards designation productions - and export - absorbing in 2011 about ¼ of world export (OIV, 2012). Wine is, in fact, one of the most representative products of the ‘Made in Italy’ food productions, that has contributed to the strengthening of the reputation of Italian products in the world as an offer of excellence, strongly tied to the territory (Carbone and Henke, 2012). In a recent study, Crescimanno and Galati (2014) found, an increasing Italian competitiveness in the international market both for still bottled wines and sparkling wines in particular, more and more appreciated by consumers who associate wine consumption to Italian lifestyle. Taking into account the increasing importance of Italian sparkling wines into international market, the aim of this study is to identify the main firms’ internal factors that mainly affect the export intensity of sparkling wines producers and their ability to insert into foreign market using the Resource-based view (RBV) theory as theoretical background. This approach has been used in numerous empirical studies in order to identify the main firms’ internal factors (physical and human resources) affecting firms’ performance in export markets. In particular, the paper reports the first results of an empirical investigation widest that is affecting Italian wine producers of sparkling wines. The paper is organised as follows. The second section presents a background of the Italian sparkling wines sector based on the trade data. Section 3 describes the theoretical framework and a literature review regarding the determinant of firms’ export success in foreign market. The methodological approach used to answer the aims of the research is reported in Section 4. The results of the analysis are described and discussed in Section 5. Concluding remarks and research limitations are presented in Section 6.

2

The context

Wine is one of the main products of Italian agri-food export (13.6% of the agri-food export). In the last decade (2003/04–2011/12) sales in foreign markets have registered a positive trend (Table 1), partly ascribable to a large spread of wine consumption also in those Countries not associated with viticulture traditions (Gerolimetto and Mauracher,


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2009). This performance has determined an increasing of trade specialisation, as emerges from the analysis of normalised trade balance. In particular, sparkling wines register the most favourable trend showing a remarkable trade specialisation in the international market. Table 1

Italian wine and sparkling trade (millions of $) Wine

Sparkling

Export

2003–2004

2,759.18

238.86

2011–2012

4,513.96

586.80

Var.%

6.4

14.6

Import

Trade balance

Normalised trade balance

2003–2004

243.78

132.34

2011–2012

292.87

137.25

Var.%

2.0

0.4

2003–2004

2,515.40

106.52

2011–2012

4,221.09

449.55

Var.%

6.8

32.2

2003–2004

52.3

14.7

2011–2012

87.8

62.1

Source: Our elaboration on ISTAT data

Three markets absorbs almost half of value of Italian sparkling wine export, particularly USA (18.5%), Germany (16.8%) and UK (12.8%), in the biennium 2011–2012; among these countries, Germany is the biggest wine importing market in the World (Nosi, 2012). Others important end markets for Italy are Russia and Switzerland. The presence of sparkling wines in Russia (+5.0%), UK (+2.6%), where this products are more appreciated in spite of the financial crisis that in the last few years has led to a reshaping of purchase (Yiannaki, 2012; Baccaglio, 2011), in Austria (+2.4%) and in China (+0.9%), registers an increasing in the considered period. Regarding this last market, the positive trend of the demand is due to a change in the Chinese consumers’ behaviour towards foreign products. As asserted by Mitry et al. (2009) wine as a convincing substitute of the traditional alcoholic drinks such as rice wine or sorghum and maize drinks. Furthermore, increase in wine consumption and to the culture of wine in the Asiatic Country is mainly due to their benefits to health (Corsi et al., 2013). France is, traditionally, the main supplier market (95.1%) for Italy, although in the reference period the evolution of import market share shows a contraction of 1.4%. To analyse the Italian competitive advantage or disadvantage for sparkling wines respect to its main partners and its relative evolution during the reference period we have determined the relative trade advantage (RTA) proposed by Vollrath (1991). The RTA index is expressed as: RTAij = RXAij – RMPij. Where RXA is the Relative Export Advantage Index and RMP is the Relative Import Penetration Index The index RTAij takes positive (negative) if the country has an advantage (disadvantage) in the sector studied. Taking into account the multitude of information, and in order to make the reading of the results and of the trend registered easier, the countries were classified into 8 groups in relation to the evolution of the index value between the two biennium of reference: I = Increase of the competitive advantage; II = Decrease of the competitive advantage; III and IV = Transition from competitive advantage to competitive

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disadvantage; V = Increase of the competitive disadvantage; VI = Decrease of the competitive disadvantage; VII and VIII = Transition from competitive disadvantage to competitive advantage. Italy shows, as emerge in Figure 1, a strong competitive advantage with Russia, considering that 6.9% of the Italian agri-food export value in this market is made up of sparkling wine; high and positive values of RTA emerge also with USA, UK, Germany and Canada. With this countries, Italy strengthens its competitive advantage between the two biennium studied. Values above the unit were revealed with Japan, Brazil, Switzerland, Australia and Belgium, with which, data show a decrease of competitive advantage. There are negative index values only with France, considering that it is the main if not the only supplier market, being the undisputable leader in the world market of the product at issue (Carbone and Henke, 2010), disadvantage which has increased as a consequence of an growing dependence of Italy (from –5.5 to –6.3 in the reference period). Figure 1

RTA of sparkling wine (2003/04 and 2011/12) (see online version for colours) RTA 2003/04

8,0 VIII

I

VII

6,0

II

Russia

4,0

USA

-6,0

-4,0

-2,0

Brazil RTA 2011/12

-8,0

UK Japan 2,0 Germany Switzerland Canada Australia Belgium 0,0 Spain 0,0 2,0 4,0

6,0

8,0

-2,0 -4,0

VI

France

-6,0

III IV

V -8,0

Source: Own calculation on ISTAT data

3

Literature review and research hypotheses

Theoretical approaches to the study of the determinants of a firm’s export behaviour include, on the one hand, the RBV theory (Barney, 1991; Wernerfelt, 1984), focused on the study of the keys driving forces of the internationalisation process, and, on the other hand, the contingency theory (Mintzberg, 1979; Lawrence and Lorsch, 1967) and the Industrial organisation theory (Scherer and Ross, 1990; Bain, 1951, 1956), suggest that environmental factors influence the firms’ strategies and their export performance. While


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the RBV theory focus on the internal determinant, that include structural and behavioural aspects that have a potential effect on exporting (resources and capabilities), Contingency theory and Industrial organisation theory support the external factors, linked to the environment in which the firm operates and the industry in which the same firm belongs. A plethora of studies have been conducted in the last few decades on the determinants that influence firms’ behaviour in export markets. Some of these studies analyse the difference between exporters and non-exporters firms with the aim to develop a profile and characteristics of the two categories and assist non-exporters companies into entering the global market may undertaken (Javalgi et al., 2000), other Authors have measured the success of exporting firms and studied the relation between this measures and the factors influencing this success in exporters markets. Another possible distinction has focused on the study of the effects of internal and external factors on the propensity to export (Serra et al., 2012; Fernandez Olmos, 2011; Parish and Freeman, 2011; Duarte Alonso, 2009–2010; Suárez-Ortega and Álamo-Vera, 2005; Vermeulen, 2004; Roper and Love, 2002; Javalgi et al., 2000), on the export intention, on the export intensity (López Rodríguez and García Rodríguez, 2005; Suárez-Ortega and Álamo-Vera, 2005), and on the export performance (Carneiro Zen et al., 2012; Fernandez Olmos, 2011; Maurel, 2009; Calantone et al., 2006; Leonidou et al., 2002). Figure 2

Adopted model

Firms’ characteristics

Managerial characteristics or objective characteristics

Management attitude and perception or subjective characteristics

Firms’ size Firms’ experience Technological orientation and innovation Advertising

Managers’ age Education level Professional experience Proficiency in foreign languages

Perceived export advantage Perceived internal resources barriers

EXPORT INTENSITY

According to Rialp et al. (2005), RBV theory has been one of the most recently developed theoretical framework to explain firm international behaviour. In the last few decades, same empirical analysis have been conducted to explain firms’ export behaviour based on the RBV approach that consider that the endowment of human and material resources as determinants of the firms’ competitive advantage. As asserted by Barney and Arikan (2001), RBV has emerged as one of several important explanations of persistent firm performance differences in the field of strategic management. The RBV theory asserts that the capacity of the firm to gain and sustain competitive advantage is dependent by the unique bundle of resources at the core of the firm that are inelastic in supply (Conner and Prahalad, 1996; Barney, 1991; Wernerfelt, 1984). This resources can be tangible and intangible, the latter include a wide range such as technological capital, human capital, reputational capital and organisational capital (Grant, 1991), that are used by firms to conceive of and implement their strategy. The RBV theory is based both on traditional assumption adopted in other strategic managerial theories, such as that firms

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are profit-maximising entities and that the managers in firms are boundedly rational, and introduce two additional assumption: resource heterogeneity, that incorporate two attributes of the firms resources linked to the scarcity and non-substitutability, and resource immobility (Barney, 1991). From the analysis of the literature, it is possible to identify three main categories of internal resources able to influence the propensity to export related to both the firms characteristics and the objective or subjective factors related to the manager depending on whether they refer to personal and cultural, or behavioural and attitudinal, traits of the decision maker (Leonidou et al., 2002) (Figure 2).

3.1 Firms’ characteristics The role played by firms’ structural factors is that of background forces facilitating or inhibiting the effective activation of the latent export stimuli (Leonidou and Katsikeas, 1996). •

Firms’ size is one of the most important factors affecting export performance. As asserted by Erramilli and Rao (1993) larger firms have a greater ability to expand resource and absorb risk than smaller one and may have greater bargaining power. Moreover, as suggested by Calof (1994) smaller firms may be more risk averse due to a lack of information, and, the relatively greater impact of an international mistake versus what it would be for larger firms. Numerous studies have measured firms’ size in terms of the total sales and the number of employees. In both cases, results indicate that the firms with a high number of employees and a higher sales are more likely to export activity (Serra et al., 2012; Maurel, 2009; Suárez-Ortega and Álamo-Vera, 2005; Vermeulen, 2004; Javalgi et al., 1998).

•

Firms’ experience is another determinant of export performance; it is valued in terms of age of the companies and in number of years of export activity. As assert Majocchi et al. (2005) experience is seen as influencing export performance because it gives the company more maturity in terms of management, international transaction, business partnership. Suárez-Ortega and Álamo-Vera (2005) in their study on the Spanish wine industry suggest, indeed, that firms’ experience in geographic market development can be considered a potent explanatory variables for both propensity to engage in exporting and intensity of export activity. On the opposite site, Maurel (2009) find, in French wine SMEs, that the firms’ experience is not a strong determinant to explain the export performance.

•

Technological orientation and innovation are the main determinants that have e positive influence on export performance. According to López Rodríguez and García Rodríguez (2005), technological resources are one the key factors for the generation of competitive advantage for firms. Technological resources, in particular, confer to the firms a competitive advantage in terms both of costs, due to the development of new and more efficient process, and the differentiation, by means of innovation (Di Vita et al., 2013; Tudisca et al., 2011). Roper and Love (2002) shows, in their study in which compare UK and Germany companies, that the product innovation has an effect on both probability and propensity to export. Also, López Rodríguez and García Rodríguez (2005) in their article on the Spanish manufacturing firms find that innovation in both products and processes have a


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positive and significant impact on the likelihood that a firm will start to export and on its export intensity. On the contrary, Fernandez Olmos (2011) in his study on 177 firms in the qualified appellation of origin (DOC) Rioja wine sector shows that also the product innovation is a driver of firm-level export propensity, while process innovations are not a determinant of internationalisation. •

Advertising is another strategic factor to explain firms’ competitive advantage in the markets. According to Kotabe et al. (2002) firms that invest in advertising will generate more sales in foreign markets than those that do not. Concerning the expenditure in advertising, Fernandez Olmos (2011) in your investigation find a positive and significant relationship with the degree of internationalisation due to the DOC Rioja wineries spend heavily on advertising with the intention of increasing export sales.

Consequently, we present the following hypotheses related to firms’ characteristics: Hypothesis 1

Firms with a higher number of employees have a higher intensity of export.

Hypothesis 2

Firms with a higher experience have a higher intensity of export.

Hypothesis 3

Firms with the highest rate of investment in advertising are the ones that have the greatest intensity to export.

Hypothesis 4

Innovative firms, both in the process and product fields’, have the greatest export intensity.

3.2 Managerial characteristics or objective characteristics Several empirical researches emphasise the importance of human capital in the firms’ internationalisation process. As asserted by Leonidou et al. (1998), Westhead et al. (2001), Fernandez-Ortiz and Lombardo (2009) personal entrepreneurial characteristics can influence entrepreneurial orientation towards internationalisation, and, consequently, the international diversification of a certain business. In particular, between the objective characteristics several studies analyse the managers’ age. In many studies, this variable is negatively associated to the export propensity (Serra et al., 2012; Suárez-Ortega and Álamo-Vera, 2005). As asserted by, Child (1975) younger managers tend to be more risk oriented and more associated with policies of corporate growth, compared to the older managers. Also the level of education of the manager and the people involved in management international activities has a relevant influence on the firms’ export performance. A higher education level can create the opportunity of exploring new context and tend to favour greater access into new international markets (Tihanyi et al., 2000; Wieserma and Bantel, 1992). Testing of this hypothesis shows different results. While, i.e., Fernandez Olmos (2011) suggest that there is a positive relation’ between export propensity and educational level, Serra et al. (2012) and Suárez-Ortega and Álamo-Vera (2005) indicate that there is no stronger association between the educational level and exporting propensity. Also a professional experience in particular in foreign markets has been linked to export performance, because, as reported by Suárez-Ortega and Álamo-Vera (2005), it involves managers’ exposure to foreign culture, which allows accumulation of greater

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experiential knowledge about international markets. Managers with international experience can be a hugely beneficial resource to a firm as they not only bring exporting experience, but also bring with them existing international networks and contacts (Cavusgil and Zou, 1994; Katsikeas and Piercy, 1993). Finally, the proficiency in foreign languages of the managers have a positive influence on propensity of export (Serra et al., 2012; Suárez-Ortega and Álamo-Vera, 2005), because it facilitates social contacts, assist in understanding the business practices of a market, improve communication to e from markets (Turnbull and Welham, 1985). Consequently, we present the following hypotheses related to managerial and objective characteristics: Hypothesis 5

Managers’ age is negatively associated with the export performance.

Hypothesis 6

Higher educational level of the manager is positively associate to the export performance.

Hypothesis 7

International experience of manager is positively associated with export intensity.

Hypothesis 8

Firms where the managers have a higher proficiency in foreign languages have a higher intensity to export.

3.3 Management attitude and perception or subjective characteristics The entrepreneurial perception of the benefits or barriers of export activity plays a key role among the factors that influence the firms’ intensity to export. However, from the empirical researches emerge contradictory results. i.e., Suárez-Ortega and Álamo-Vera (2005) shows, on the one hand, a positive influence of the perceived export advantage on export intention, on the other hand, a negative effect of the perceived internal resources barriers on the export development. Serra et al. (2012), on the other hand, show in their study on UK and Portuguese firms in the textile and clothing industry that propensity to export is not generally affected by perception of barriers or export benefits. According to this results, we present following hypothesis: Hypothesis 9

4

Wineries managed by entrepreneurs who perceive negatively the export activities have low export intensity.

Methodological approach

To be able to identify the main determinants of export intensity of the Italian wineries producing sparkling wines, was conducted a survey that has involved 20 wineries, in 2013. This firms, that represent about 7% of the total number of Italian sparkling wineries reported in the guide ‘Bollicine d’Italia 2012’ (Gambero Rosso, 2011), are the sparkling wine companies in the most important Italian productive regions (Lombardia, Piemonte, Veneto, Trentino Alto Adige, Valle d’Aosta and Sicilia). Despite, our sample hasn’t statistical significance, it is a set of case studies that can highlight the organisational and managerial factors contributing to the export performance. Managers of the wineries have been interviewed using a questionnaire prepared in order to answer the research objectives. The questionnaire administered to entrepreneurs was previously tested


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through the administration to a few wine managers to verify the correct understanding of the questions and detect errors in their formulation, subsequently it was changed on the basis of the answers. The questionnaire includes three main sections concerning characteristics of the wineries, managerial profile and manager’s perceptions of the advantage or disadvantage of the export activity. More in detail, first section include general information regarding wineries’ activity, starting year of activity, of export, processing capacity, number of employees, presence of qualified figures, production of sparkling wines and end market, sales channels, investments in advertising and promotion, participation to national and international fairs, presence in the web, product (new bottles, new varieties and bland, new clones) and process (fermentation, storage, refining, bottling, etc..) innovations introduced in the last three years. The second section includes information about the managers regarding the age, years of experience in the wine sector, education level, proficiency foreign languages, work experience abroad. Finally, in the third section a Likert scale has been used to measure managers’ perception of the benefits (increase in the profit of the firm, more opportunities for firms’ growth, increased competitiveness in the market, etc.) and barriers (difficult access to credit, limited financial resources to support export activities, complex export documentation, different languages and cultures, limited information on foreign markets, shipping costs, trade barrier, etc.) of exports. In particular, we have used a 5-point Likert scale (1 = strongly agree/5 = strongly disagree). A list and a short description of variables collected through the questionnaire are reported in Table 2. Table 2

Main variables used in this study

Variables

Modality

Firms’ characteristics: • Age firm • Export activity • Employees • Exp. employees • H.F. employees • Advertising • Fairs Managers’ characteristics:

Number of year of firm Number of years of export business Number of total employees Number of employees dedicated in export business Number of employees with high formation Investment in advertising Participation in abroad trade fairs

• Age manager • Educational level • Experience • Language • Abroad Management attitude and perception or subjective characteristics:

Number of years of entrepreneur Level of education of entrepreneur Number of year of manager in wine sector Proficiency in foreign languages Number of years of experience abroad

•

Perceived internal resources barriers

Barriers of trade

Considering the limited number of cases studied database, to identify the main determinants of export intensity we have determined the relationship between Export

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A. Galati et al.

intensity (foreign sales of sparkling wines on total sales) and the main variables studied through the analysis of Pearson correlation coefficient.

5

Results and discussion

5.1 Sample description The survey results can help to identify the main factors affecting the internationalisation degree of the 20 Italian wineries producing sparkling wines. The main firms’ characteristics are reported in Table 3. Results show that the sparkling wine production is, for more than half of the wineries the core business of their activity. Among the wineries there is a prevalence of Associations and Corporations, followed by small family businesses and cooperative, characterised by a limited number of employees. Sparkling wine is marketed primarily through the Ho.Re.Ca. and winehouse and wine bar channels, both in domestic and foreign markets (Table 4); Germany, USA, Japan, and UK, are the main end markets. Table 3

Firms characteristics Legal form

Year of foundation

Year of start export

Total employees

Wine bottles sold

Sparkling bottles sold

1

A/C

1970

1999

7

117,000

63,000

2

Family business

1992

2008

1

-

70,000

3 4 5 6 7 8 9 10

A/C A/C A/C A/C A/C A/C A/C Cooperative

1968 1890 1985 1972 2005 1964 1985 1983

1980 1980 1995 1990 2010 1980 1990 1993

12 10 5 4 4 2 4 4

50,000 80,000 130,000 10,000 130,000

200,000 120,000 500,000 70,000 60,000 50,000 60,000 20,000

11

Family business

1994

2007

3

135,000

15,000

12

Family business

1970

1980

5

288,000

12,000

13

Family business

1974

1980

2

56,000

14,000

14 15 16 17 18 19 20

Cooperative A/C A/C A/C A/C A/C A/C

1975 1982 1958 1936 1945 1974 1990

1977 1982 1980 2007 1983 1984 1993

5 7 4 0 4 1 17

110,000 5,000 130,000 300,000

20,000 495,000 50,000 500,000 10,000 50,000 100,000

Winery

Note: A/C= Association or Corporation

The determinants affecting the internationalisation of the Italian SMEs Table 4

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Distribution channels and end markets

Distribution channels

Bottles marketed

No. wineries

International market

Domestic market

No.

%

No.

%

No.

%

Large-scale retail trade

2

68,000

2.7

60,000

88.2

8,000

11.8

Ho.Re.Ca.

17

1,105,850

44.6

858,625

77.6

247,225

22.4

Winehouse/wine bar

14

903,000

36.5

702,965

77.9

200,035

22.1

Direct sell

12

392,150

15.8

389,150

99.2

3,000

0.8

Other channels

1

10,000

0.4

9,500

95.0

500

5.0

2,479,000

100.0

2,020,240

81.49

458,760

18.51

Total

Source: Own elaboration on collected data

An interesting aspect that emerges from the survey is the high attention towards advertising and promotion; the investment of the wineries investigated reach almost 6% of the total sales. This expenditures concern the promotional activity linked to the fairs participation to both in Italy and international events (more mentioned are ProWein in Germany and Vinexpo in France). Product and process innovation were introduced by the 50% of the wineries in the last three years. The main innovation concerns, in the first case, the form of the bottle and the creation of new blends, while, in the second, the wine making process, wine storage, ageing and bottling. Table 5

Managers’ characteristics (no. 20)

Age (average value)

51 (11.066)

Experience in the wine sector (average years)

29 (11.818)

Educational level (no.) Lower secondary school Upper secondary school University and master’s degree

1 11 8

Proficiency foreign language (no.) None 1 foreign language 2 foreign language 3 or more foreign language

3 6 6 5

Abroad experience (no.) None < 1 years ≥ 1 years

12 3 5

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A. Galati et al. Source: Own elaboration on collected data

As we can see from the literature review presented above, manager characteristics have a relevant impact on firms’ performance in export market. Table 5 shows that the wineries are managed by entrepreneurs who have a long experience in the wine sector, with a high education level and with a strong inclination towards the internationalisation process, as emerge from the proficiency of foreign languages and experience abroad. Almost all of the managers interviewed (18 of 20) consider the export activity a very useful way to improve the competitiveness of the company and its position into market, providing, moreover, more opportunities for business growth. Although some authors (Serra et al., 2012), found that the perception of the benefits is considered a lower priorities for exporting. Concerning the barriers to export, numerous managers assert that among the main constraints to the export activity there are: the complex regulation and the complex language of the documentation for exports, factors highlighted also by Duarte Alonso (2009–2010), the lack of financial resources to undertake and support exporting activities (e.g., licenses), the lack of employees with specific skills for the management of foreign relations, lack of financial resources to carry out market research, low production capacity of the winery, trade barriers, and the strong competition into international market (in particular with the more popular Champagne). Managers interviewed assert that one of the main constraints to the competitiveness of the Italian sparkling wines is the lack information of the consumers on the quality and value of these wines. Some entrepreneurs assert that is strategic for the firms’ success to adopt marketing strategies that emphasise the aspects related to the passion, the role of family and the wine making tradition of the wineries and the territory in which they operate (Begalli et al., 2014; Vrontis et al., 2011). Different language and cultures, and shipping costs are not considered important barriers to the export activity. With regard to the shipping costs, all of the entrepreneurs interviewed assert that in the contract is included a clause called ‘free at work’, whereby the buyers bears all costs and risks of the transport of the goods. Finally, managers do not consider among the barriers to export, the difficulty to credit access and the limited existence in the territory of trade society, although the small number of companies contacted may be a limiting factor for a deep analysis of the latter problems.

5.2 Analysis and discussion Data analysis was carried out using SPSS 17 statistical software. In particular, through a Pearson’ correlation matrix we have analysed the relationship between the dependent variable considered (foreign sparkling sales on total sales) and each other’s explanatory variables. Table 3 shows that export intensity is positively correlated with the each variables related to the firms’ characteristics with the exception of Number of employees. In particular, emerges a positive and significant correlation with the innovation degree. Therefore, Hypothesis 4 is strongly supported by data. According to the study of López Rodríguez and García Rodríguez (2005) and Roper and Love (2002) product and process innovations have a positive effect on export intensity. As emerge in other empirical studies (Fernandez Olmos, 2011; Serra et al., 2012), our findings show that expenditure in advertising have a positive effect on the wineries’ internationalisation.


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This result confirm our Hypothesis 3 and suggests that wineries’ investments for advertising and promotion, such as wine fairs participation, contribute to improve their performance in foreign markets. Concerning the variables linked to the employees emerge a negative, but not statistically significant, correlation between export intensity and the number of employees (H1 not supported). This result is in contrast with previous studies (Duarte Alonso, 2009–2010; Maurel, 2009; Serra et al., 2012). Finally, is positive but very weak and not statistically significant the correlation between export intensity and firm age and number of years of exports (H2 partially supported). Accordingly with results of Maurel (2009), Almeida Couto et al. (2008), Lee and Yang (1990), older firm are more likely to export than younger. Furthermore, as asserted by Maurel (2009) in the French wine industry experience provide the company with a stronger network as well as a better knowledge of the industry which does constitute a driver for a better export performance. Concerning the presence of the firms in foreign markets, our results, support the finding of Suárez-Ortega and Álamo-Vera (2005) which assert that the firms’ experience in geographical market can be considered a potent explanatory factor for export intensity. Table 6

Correlation coefficient – main firms’ characteristics

Export intensity

Firm age

Firm age export activity

No. employees

Innovation degree

Advertising intensity

0.051

0.128

-0.124

0.563*

0.316***

Notes: *Significant correlation at 0.01 (bilateral); ***Significant correlation at 0,1 (bilateral)

Regarding managers’ characteristics, Table 4 shows a high positive coefficient between the export intensity and the managers’ experience in foreign countries and the proficiency of foreign language. Therefore, Hypothesis 7 and Hypothesis 9 are strongly supported by data. This results support the findings of Suárez-Ortega and Álamo-Vera (2005) that in your study on the Spanish wine industry find that this two characteristics lead to a greater involvement of the company in export business. Indeed, as suggested by Parish and Freeman (2011), managers who have international business experience are more likely to engage in export activities, because they have previously developed international networks and contacts as well as an understanding of export standards and documentation requirements. Positive, but not statistically significant, is also the coefficient linked to the correlation between export intensity and education level (H5 supported). As emerge in previous studies (Fernandez Olmos, 2011) managers’ education level increase with the level of export development, despite other authors, i.e., Suárez-Ortega and Álamo-Vera (2005), suggests a lack of association between this variables and export intention, propensity and intensity. Table 7

Correlation coefficient – main managers’ characteristics

Export intensity

Age manager

Educational level

Proficiency foreign language

Abroad experience

Barrier perception

–0.127

0.214

0.377**

0.576*

-0.305***

Notes: *Significant correlation at 0.01 (bilateral); **Significant correlation at 0.05 (bilateral); ***Significant correlation at 0,1 (bilateral).

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On the other hand, emerges a negative correlation, as expected, with the age of managers and their experience in the wine sector (H4 supported). As demonstrate by Obben and Magagula (2003) a higher export propensity is associated with a low to medium age profile, this could be due to the greater reactivity of the younger managers to the externals stimulus and to the risk assumption. Finally, concerning the managers’ perception of export barriers, results show that exist a negative and significant correlation between export intensity and negative perception of barriers of trade. In other words, the higher is the negative perception of export activity, the lower is the export intensity. Therefore, Hypothesis 9, according to other studies, is strongly supported by data.

6

Concluding remarks and research limitations

This study contributes to the literature on the determinants of firms’ exports, testing, through the RBV approach, the influence of firms’ characteristics and managerial characteristics on the export performance. Italian sparkling wines sector has received a modest attention in the economic literature although it is one of the Italian agri-food sectors that have registered an increasing international competitiveness, as emerge from the analysis carried out. Furthermore, this study fits in a scenario characterised by deep structural transformation, consequently to the globalisation process, that impose to the firms the adoption of efficient strategies necessary to safeguard their market position and survival. Results of our study supporting the findings of previous empirical researches presented in this paper. In particular, concerning the firms’ characteristics, emerge that the innovation degree and investments in advertising and promotion, are the main factors affecting the intensity of export of Italian sparkling wines. In particular, firms’ investment in innovation and advertising and promotion are strategic to ensure the survival of firms into markets and their success. For the wineries and for the firms in general, are moreover important recruiting highly qualified staffs in particular to build and maintain relations not only with domestic partners but in particular with foreign partners, considering the growing wine demand of new consumers countries. While, with regard to the managers’ characteristics, have a relevant influence the entrepreneurial abroad experience, the proficiency of foreign languages and the educational level. This factor positively correlated to the export intensity highlight the importance of investments in the educational sector, this latter are included in the strategy Horizon 2020 relating to the innovation in SMEs. According to this finding, investment in entrepreneur training and education will ensure the competitiveness and survival of the firms into domestic and international markets. Our results, although not generalised, could provide useful information especially for the manager of the wineries, in order to improvement their performances. The main limitations of this work are related both to its mainly conceptual nature and to the small size of the sample. For this raison, an empirical research on a wider number of wineries producing sparkling wine in Italy is essential to generalise the results.


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