Baltic Journal of Management

Impact of export market orientation on export performance : A relational perspective

Ku-Ho Lin Kuo-Feng Huang Yao-Ping Peng
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Ku-Ho Lin Kuo-Feng Huang Yao-Ping Peng , (2014)," Impact of export market orientation on export
performance A relational perspective ", Baltic Journal of Management, Vol. 9 Iss 4 pp. 403 - 425
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Impact of EMO
Impact of export on export
market orientation on export performance
performance
A relational perspective 403
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Ku-Ho Lin Received 12 March 2012

Revised 12 March 2012
Department of Business Administration, National Chung Hsing University, 25 January 2013
Taiwan, China 29 September 2013
4 April 2014
Kuo-Feng Huang 6 June 2014
Department of Business Administration, National Chengchi University, 2 July 2014
Taiwan, China, and Accepted 3 July 2014

Yao-Ping Peng
Department of Business Administration, National Chung Hsing University,
Taiwan, China

Abstract
Purpose – The purpose of this paper is to explore the mediating role of export market orientation (EMO)
in the relationship between inter-organizational relationships and export performance, and the moderating
role of degree of internationalization in the relationship between EMO and export performance.
Design/methodology/approach – The authors sent questionnaires to the 1,000 largest
manufacturers listed in CommonWealth magazine (2009), and a random sample of 500 machinery
manufacturers listed in the Taiwan Association of Machinery Industry Directory. The authors received
244 completed questionnaires through which to examine the hypotheses.
Findings – The findings show that trust and social interaction positively influence EMO, which then
enhances export performance. However, the moderating effect of degree of internationalization has no
significant impact on the EMO and export performance relationship.
Research limitations/implications – Future studies should conduct two-way research on focal
firms (manufacturers) and overseas partners (agents or distributors) through common variables
including trust, commitment, satisfaction, etc. The results indicate that the content validity of the
present study is somewhat inadequate, possibly due to the cultural differences involved.
Practical implications – Overseas information exchange between exporters and partners fosters
firms’ export performance. Thus, closer relationships with channel partners or customers via trust
and social interactions may help firms to conduct appropriate EMO activities to access overseas
market information and improve export performance.
Originality/value – By investigating Taiwanese exporters, who tend to emphasize relational capital,
the authors determine that EMO is important in understanding how inter-organizational relationships
influence export performance. The authors also contribute a more comprehensive view to the literature.
Keywords Internationalization, Export market orientation, Inter-organizational relationships
Paper type Research paper

1. Introduction
Firms pursue internationalization in order to obtain the benefits of production at lower
costs, reduced risk and the exploration of new markets (Czinkota and Ronkainen, 2001). Baltic Journal of Management
Vol. 9 No. 4, 2014
Johanson and Wiedersheim-Paul (1975) cited lack of knowledge and resources as the pp. 403-425
most formidable obstacles to achieving internationalization (see also Luostarinen, 1979). r Emerald Group Publishing Limited
1746-5265
These obstacles can be reduced through incremental decision making and learning about DOI 10.1108/BJM-03-2012-0012
 BJM foreign markets and operations via exporting, which is the most common entry mode
9,4 favoured by firms when embarking on internationalization (Luostarinen, 1979), due to
advantages such as lower risks, flexibility of entry and withdrawal, lower demands on
human and financial resources, and the possibility of reaching foreign customers without
an actual physical presence, in contrast to foreign direct investment (Murray et al., 2007).
Currently, firms rely heavily on their export intermediaries, partners or network
404 members to gain rich and useful information about foreign markets (Morgan and Hunt,
1994; Elg, 2008). When studying international firms, export market orientation (EMO) is
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regarded as a key factor affecting export performance (Cadogan et al., 1999, 2001, 2003).
EMO requires that firms constantly monitor their customers, competitors and market
environments in order to develop and sell goods and services perceived as valuable by
customers in export markets. Cadogan et al. (2002) asserted that market-oriented activity
refers mainly to the collection, dissemination and application of market information.
Samiee and Walters (1990) suggested that successful exporters are motivated to initiate
export activities based on proactive reasons, since maintaining exports on a sustained
basis reflects a higher level of export involvement and monitoring of changes in the market
environment. Export-information-related management practices in firms are bound to lag
behind their domestic information-management practices (Johanson and Wiedersheim-
Paul, 1975; Albaum et al., 1994) due to local familiarity. Specifically, firms need a fresh
understanding of the factors that affect EMO and enhance export performance.
Prior research has indicated some of the benefits related to exporting, such as
lower risks, fewer demands on human and financial resources, flexibility of entry
and withdrawal, and the possibility of reaching foreign customers without having
a physical presence in the target country (Francis and Collins-Dodd, 2000). It is
also possible for exporters to utilize the services of various types of intermediaries
if they do not want to invest in establishing a subsidiary in the foreign market to
perform marketing activities (Brouthers et al., 2009). However, exporting has its own
drawbacks, such as sensitivity to import regulations and changes in the market
environment, including the behaviour of consumers and competitors. Among these
challenges, an exporter’s performance largely depends on the cooperation and
efficiency of the various actors providing vital support. These actors include providers
offering services such as logistics, banking, product-related services, etc. Other
participants include intermediaries including importers, export-management
companies, distributors and retailers. The most important challenge to exporters is
how to obtain vital customer feedback, the various types of target market data and
the information necessary for strategic decision making, in order to achieve a
satisfactory performance level.
Export performance is a multi-dimensional construct that is defined in terms of
degree of economic and non-economic achievement in export markets (Cadogan et al.,
2009). Earlier studies have focused on the market orientation – export performance
relationship (Hyvönen and Tuominen, 2007) and EMO – export performance
relationship (Cadogan et al., 1999, 2003; Murray et al., 2007), and suggested a positive
correlation between both. Yet few studies have explored the antecedents of EMO.
Cadogan et al. (2001) highlighted that while antecedents of market-oriented behaviour
are formed based on the domestic level, the formation of antecedents of export market-
oriented behaviour should be based on the export level. They also pointed out the
likelihood of domestic bias if antecedents of market orientation are constructed on the
basis of a non-exporting context. In the past, firms have largely focused on managing
domestic market intelligence, and have been less concerned with managing foreign
 market intelligence. However, the question of whether a firm’s market orientation Impact of EMO
has the same impact on both domestic and foreign markets deserves further study. on export
In addition to shifting the focus of orientation from domestic to foreign markets,
previous relevant studies on EMO attribute the antecedents of structure and performance
situations of enterprises as shaping and strengthening EMO (e.g. export experience,
dependence, coordination, systems or structure) (Cadogan et al., 2001, 2002). However,
the relational or behavioural perspective put forward by Styles et al. (2008) has not yet 405
been fully discussed. Inter-organizational relationships can enable all parties to bring
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their major strengths to the table and emerge with better products, services and ideas
than they can produce on their own (Czinkota and Ronkainen, 2001). Such a relational
network acts as a bridge connecting domestic and international markets (Zou and
Ghauri, 2010).
Based on the discussions of the abovementioned scholars, this paper adopts a
relational perspective on manufacturer EMO so as to offset shortcomings identified in
the extant literature. With EMO as a key channel for obtaining external information,
inter-organizational relationships must be characterized by stability and mutual trust
in order to ensure the close interactive relationships conducive to obtaining and
understanding shared information (Kohli and Jaworski, 1990). Prior studies have
emphasized the importance of inter-organizational relationships; although firms
can enhance performance through partnerships, little attention has been paid to
the relationship variables affecting firms’ market orientation (Elg, 2008). This
study explores how relationships between exporters and their partners influence
market-oriented behaviour.
A number of relevant studies have paid great attention to the impact of market
orientation on organizational performance. Many scholars maintain that the effective
use of market orientation is conducive to improving business performance or gaining
competitive advantage (e.g. Armario et al., 2008). Nevertheless, when it comes to the
relationship between market orientation and performance, some prior studies have
asserted a partially positive correlation (Jaworski and Kohli, 1993; Baker and Sinkula,
1999; Cadogan et al., 2002, 2009; Armario et al., 2008), while others have asserted no
correlation (Cadogan et al., 2003; Atuahene-Gima et al., 2005; Hyvönen and Tuominen,
2007) and still others have found a negative correlation (Grewal and Tansuhaj, 2001;
Zhou et al., 2009). These inconclusive findings indicate the possibility of other factors
that may moderate (Slater and Narver, 1994) or mediate (Zhou et al., 2009) the
relationship between market orientation and performance. Likewise, as pointed out by
Cadogan et al. (1999), several studies have discussed the effect of market orientation on
firms’ domestic operations; however, no study has explicitly dealt with the effect of
market orientation on the performances of multinationals. Similarly, few studies
have clarified whether EMO has a significant positive effect on export performance
(Cadogan et al., 2009), or whether mediation or moderation effects from other variables
exist. These are critical issues in developing a more realistic picture of market
orientation nomological networks, particularly in the context of international marketing
activities (Albaum et al., 1994). Incorporating this degree of internationalization into a
market orientation – export performance relationship model constitutes a pivotal step
because such a model is unique to the international marketing context (Murray et al.,
2007; Cadogan et al., 2009). Following the extant literature (Cadogan et al., 2002), we use
degree of internationalization as a moderating variable to ascertain whether it can
intensify the effect of EMO on export performance. The conceptual framework of this
study is shown in Figure 1.
 BJM
Inter-firm relationship EMO Export Performance
9,4 Commitment Export Intelligence Generation Strategic Performance
Trust Export Intelligence Dissemination Financial Performance
Social Interaction Export Intelligence Responsiveness Competitive Performance
Power
406
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Degree of
Internationalization
Scale
Figure 1.
Conceptual framework Scope

2. Literature review and hypotheses development

2.1 Inter-organizational relationship
The relationship between inter-organizational relationships and market orientation is
often embedded in a paradoxical situation. Do the inter-organizational relationships
of a firm affect its market-oriented behaviours, or does the market orientation improve
its inter-organizational relationships? Previous studies have pointed out that firms’
market-oriented behaviour contributes to the improvement of their long-term customer
relationships (Helfert et al., 2002), as well as commitment and relational closeness
to other firms (Taylor et al., 2008). The potential utility of inter-organizational relationships
is that these relationships help to obtain market intelligence (Kohli and Jaworski, 1990),
provide superior customer value (Narver and Slater, 1990) and yield relational quasi-rents
(Dyer and Singh, 1998). In addition to direct relationships, Chung (2012) proposed that a
firm’s managerial ties with its foreign stakeholders may potentially play an important
moderating role in shaping EMO – performance linkage. We hold that managerial ties are
a platform and supporting mechanism for increasing firms’ internal resources and testing
the quality and authenticity of information. As the development process of market-
oriented behaviour is characterized by path dependency (van Raaij and Stoelhorst, 2008),
the formation and implementation of market orientation depends on stimulation from
antecedents. These antecedents are also particularly interesting from an implementation
perspective, as they may provide clues on how to develop the market orientation of an
organization (Kennedy et al., 2003). Therefore, we regard inter-organizational relationships
as the key antecedents of EMO. In other words, inter-organizational relationships should
contain high relational attributes such as commitment (Morgan and Hunt, 1994; Cadogan
et al., 2001, 2006), trust (Morgan and Hunt, 1994; Elg, 2008), social interaction (Nahapiet
and Ghoshal, 1998; Yli-Renko et al., 2001) and power (Elg, 2008; Madlberger, 2009).
Commitment. Commitment can be defined as the degree to which an organization
intends to maintain long-term relationships with its exchange partners. It is divided
into two types (Morgan and Hunt, 1994; Bello et al., 2003):
(1) commitment formed as a result of sharing value via the process of first
regarding oneself as a member of the organization and then incorporating the
organizational values into one’s own; and
(2) a rational assessment and organization that continuously maintains the values
embedded in the relationships.
 This study focuses on the effect of affective commitment on organizational information Impact of EMO
processing. Commitment plays a vital role in developing inter-firm relationships on export
(Morgan and Hunt, 1994). Madlberger (2009) pointed out that information sharing
relies heavily on inter-firm agreements and their shared commitments. In other words, performance
higher inter-firm commitment indicates a greater willingness on the part of the
involved parties to invest in and share information (Uzzi, 1997). Inter-organizational
commitment implies that firms and their partners are more willing to cooperate and 407
jointly devote efforts to the sharing of derivative market data and inside information
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so as to disseminate that information within their respective organizations. The intent

is that this will be effectively reflected in their export markets (Elg, 2007).
Therefore, we propose the following hypothesis:

H1. There is a positive correlation between inter-firm commitment and firm EMO.

Trust. Trust may be regarded as the governance mechanism of an embedded

relationship, and the shared belief between exchange partners that there is no self-
interest between them (Uzzi, 1997). In previous studies, inter-organizational trust has
been defined as both parties assuming their counterpart to be reliable and acting in
good faith, and with each party believing that an exchange of resources arising
from mutual recognition will pose no threat to the other party. The belief is that both
parties are dedicated to solving any problem through concerted communication
and adherence to the principle of reciprocity and fair dealing (Langerak, 2001).
If two parties build a relationship based on mutual trust, they develop common
goals, norms and reciprocal expectations (Nahapiet and Ghoshal, 1998). This trust
could be regarded as a governance mechanism (Uzzi, 1997) that remedies the
inadequacies of a formal governance mechanism; given the high cost of sharing
“know-how” in inter-organizational relationships, an effective mechanism is needed to
prevent free-riding behaviours (Dyer and Singh, 1998). Firms and their partners should
have more incentives, such as trust, to share information. This will mean more effort
to assimilate and utilize knowledge (Yli-Renko et al., 2001). Therefore, we propose the
following hypothesis:

H2. There is a positive correlation between inter-firm trust and firm EMO.

Social interaction. Interaction is a key element in most inter-organizational activities.

Howcroft et al. (2003) suggested that interaction is composed of two parts: content and
process. The content of interaction can be classified as economic and information
exchange, while the process of interaction includes frequency and duration, which
have a trade-off relationship. This study focuses more on information exchange and
frequency of interactions. Lin (2005) pointed out that not all interactions promote
effective knowledge acquisition. High-quality interactions have four characteristics:
frequent, adequate, amiable and constructive.
The information channels comprising social relationships and other ties reduce the
time and investment required for information collection (Nahapiet and Ghoshal, 1998).
Intense and repeated interactions not only contribute to knowledge acquisition,
but also enhance the capability of firms to confirm and assess external knowledge
from key customers. Yli-Renko et al. (2001) pointed out that through repeated social
interactions, network firms effectively assimilate knowledge and information
exchanged and have more incentive to invest in regular knowledge sharing. In other
 BJM words, more social interactions result in more intensive, more frequent and broader
9,4 information exchanges. Therefore, we hypothesize that:

H3. Inter-firm social interactions are positively related to firm EMO.

Power. French and Raven (1959) pinpointed reasons why A can have power and influence
408 over B. From B’s viewpoint: A has the ability to reward B; A has ability to punish B; A has
the legal power to instruct B to do certain things; B agrees with A; and A is equipped with
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special knowledge or expertise. Kamann and Dtrijker (1992) stated that any long-term
interaction belongs to the network relationship, where asymmetry of power among
network members may encourage current network members in disadvantageous positions
to use all feasible means by which to change the power relationships they face.
Madlberger (2009) argued that the promotion and cultivation of information sharing
is a process in which firms with greater power influence decision making on
information sharing with other firms. The extension of an inter-firm power structure
creates dependence. In other words, due to the demand for professional knowledge,
resources and market information (Styles et al., 2008), some parties with relatively
weak power will rely on other parties with more power (Atuahene-Gima et al., 2005).
Strong inter-dependence between parties renders them more willing to invest in market
adjustment (Elg, 2008). In the network tie, firms with stronger power will have a higher
status in a network with an important structural hole. This will enable them to connect
with more partners and gain access to more information (Burt, 1992). In other words, if
an important structural hole exists in the relationship between firms, more powerful
firms will be able to provide information with greater accuracy and better quality, and
thus become more credible. This will cause the members to build up reciprocity and
share information. Exporters could also interpret the information or attribute
meanings to it so as to efficiently respond to customers and competitors in the export
market (Elg, 2007, 2008). Therefore, we hypothesize that:

H4. The relative power of any exporting firm positively correlates with its EMO.

2.2 EMO
Some of the literature indicates that a firm with intensive orientation towards the domestic
market cannot have a high orientation towards export operations (Cadogan et al., 2001).
Rose and Shoham (2002) conceptualized market orientation at the organizational level and
confirmed a significant difference, in terms of market orientation, between a firm’s home
market and its export activities. Specifically, studies on market orientation for
multinationals remain at the primary stage. Cadogan and Diamantopoulos (1995)
pioneered the study of EMO. After integrating views regarding two main kinds of market
orientation (Narver and Slater, 1990; Jaworski and Kohli, 1993), they applied these views to
export markets. Cadogan et al. (1999) subsequently devised scales to measure export
market-oriented behaviour and conceptualized dimensions in terms of variables such as
export-intelligence generation, export-intelligence dissemination and export-intelligence
responsiveness. Taking into consideration Cadogan et al. (1999, 2001, 2009) on measures of
EMO, this study defines EMO as an organizational process whereby the organization
collects information regarding customers and competitors in export markets, spreads the
information to all departments within an organization and responds to its export markets.
Firms with export market-oriented behaviour gather information regarding export
customer needs and requirements, and provide products and services in accordance
 with the requirements of the export markets to augment export performance. In other Impact of EMO
words, in order to achieve sustainable competitiveness in overseas markets, firms on export
make greater efforts to develop export market-oriented behaviours (Cadogan et al.,
2002, 2003). According to the resource-based view, firms effectively utilize resources to performance
gain competitive advantage (Barney, 1991). Export market-oriented behaviours are
intangible assets of exporters that cannot be purchased in any market or otherwise
exchanged for other resources. Export market-oriented behaviour is related to culture, 409
and is deeply rooted in the values and norms of organizational members. It can never
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be represented in words or documents, and it has a characteristic ambiguity (Hunt and

Morgan, 1995). High-level export market-oriented behaviour enables firms to generate
export market information; this information is used to understand and satisfy
customer preferences and requirements, to consolidate the firm’s position in export
markets, and to gain continuous competitive advantages, which will contribute to long-
term export performance (Cadogan et al., 2009). In other words, export market-oriented
behaviours are very valuable. It can therefore be concluded that in fiercely competitive
foreign markets, firms with strong export market-oriented behaviour are more
competitive and gain better export performance compared to those with weak EMO.
The corresponding hypothesis is therefore proposed as follows:

H5. Export market-oriented behaviour positively correlates with export

performance.

2.3 Degree of internationalization as moderator

The internationalization of firms is based on the concept of continuous development.
Firms gradually internationalize along with the evolution of their product lifecycles. Some
scholars define internationalization as the degree and style of commitment adopted by
firm management with regard to overseas sources of income (Piercy, 1981). Reactive
small- and medium-sized enterprises are likely to view internationalization as a necessary
response to unfavourable conditions in current markets, and as a means of coping with
internal problems (Albaum et al., 1994). Owing to lack of knowledge about foreign
countries, and a propensity for avoiding uncertainty, firms usually start with a low-risk
indirect exporting mode, where the first intermediary is located in the domestic market of
the exporter. They then move to direct exporting, within which the first intermediary is
located in the target foreign market, or to their own exporting, where the exporting firm
establishes a sales subsidiary located in the export market (Luostarinen, 1979). After
reviewing the various conceptualizations of internationalization in the literature, Cadogan
et al. (2009) posited that the degree of internationalization of export-oriented firms should
include scale of export operation and scope of export activities. Scale of export operation
refers to the ratio of its volume of exports to its overall operations, while scope of export
activities refers to the scope in terms of geographic locations and countries in which the
firms operate (Luostarinen, 1979; Tallman and Li, 1996).
Cadogan et al. (2009) pointed out that internationalization of a firm emanates not only
from a change of internal strategies, but also from the complexity of the environments.
After engaging in internationalization, a firm must both increase logistical costs and
learn the laws, language and culture of competitors in the relevant overseas markets
(McDougall and Oviatt, 1996). Through the process of internationalization, firms
improve their management, marketing competence and skills, thereby leading to
competitive advantages. The degree of internationalization explicitly demonstrates
an exporter’s state of development in overseas markets on the one hand, and the effects of
 BJM export market-oriented behaviour on export performance on the other. Exporters with a
9,4 low degree of internationalization have fewer markets to manage and monitor, which
leads to lower demand for export market-oriented behaviour, and results in their inability
to fully meet the demands and preferences of their overseas customers. In the long term,
increasing familiarity with international markets, and the benefits of serving diversified
markets, will decrease a firm’s risk below the previous “domestic-only” market level, and
410 increase profitability (Czinkota and Ronkainen, 2001). We hold that the degree of a firm’s
internationalization intensifies the impact of EMO on its export performance. Therefore,
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we propose the following hypothesis:

H6. The degree of internationalization strengthens the relationship between firm

export market-oriented behaviour and export performance.

3. Research methodology
3.1 Questionnaire sampling and design
Since most empirical studies correlate EMO with the performance of large firms in
developed and emerging countries such as Canada (Francis and Collins-Dodd, 2000),
Finland (Cadogan et al., 2002, 2009), Hong Kong (Cadogan et al., 2003), Turkey (Akyol
and Akehurst, 2003), China (Murray et al., 2007), Australia and Thailand (Styles et al.,
2008) and the USA (Cadogan et al., 2002), this study uses the Taiwanese manufacturing
sector as the object of empirical study. In emerging economies, firms typically
grow both domestically and internationally in order to accommodate institutional
peculiarities. This also applies to Taiwan, where exporters are major players in the
economy. The Taiwanese manufacturing sector thus provides a suitable setting for
research on EMO behaviour and export performance.
Due to constraints of time and space, we selected a convenience sampling method.
Questionnaires were sent to the top 1,000 manufacturers listed in CommonWealth
(2009) magazine. This was complemented by a random sampling of 500 machinery
manufacturers selected from the Taiwan Association of Machinery Industry Directory.
In addition, we randomly selected 100 firms from Taichung Industrial Park
and Changhua County, and polled business leaders or supervisors familiar with
export business. In the survey instructions, we reminded respondents to fill out
questionnaires using their most important partners in overseas markets as study units.
The respondents were asked to choose their primary partners on the basis of
cooperation, experience and duration. We sent out 1,600 questionnaires in total, and
received 244 completed ones, yielding a response rate of 15.25 per cent. After 12 invalid
questionnaires were eliminated, the remaining 232 represented an effective response
rate of 14.5 per cent. In order to confirm the representativeness of the sample adopted,
we tested the samples based on collection time in two rounds. An extrapolation
procedure was used to assess non-response bias. Several t-tests were conducted to test
the null hypothesis that the means of the answers across the two groups were the same.
No significant differences were found in the number of characteristics between early
and late respondents.
Machinery products account for most (21.6 per cent) of the industrial distribution,
followed by metallurgy and non-metal mineral products (15.9 per cent), textile and
leather products (8.2 per cent), petrifaction materials, heavy chemicals and chemical
fertilizers (6.5 per cent), photoelectricity (6.0 per cent), and semiconductors (5.2
per cent). The 232 valid questionnaires represent companies with 10-20 years of export
trade experience (29.3 per cent), 20-30 years (22.4 per cent), 5-10 years (19.4 per cent),
 30 or more years (18.1 per cent) and 1-5 years (10.8 per cent). Overall, 66 manufacturers Impact of EMO
have capital of o80 million TWD dollars (28.8 per cent) while 163 (71.2 per cent) have on export
capital of more than 80 million TWD.
performance
3.2 Measurement
Most factors in the questionnaire were self-developed to suit practices in the
industry. All variables were measured on a seven-point Likert scale and assessed 411
using multiple measures. Inter-organizational relationships were factored into
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the broad concepts of trust, relationship commitment, social interaction and

power. We used goodwill trust to evaluate the trust of a manufacturer in its
partners in the export markets, and developed six items in this regard (Ganesan,
1994; Kumar et al., 1995). Four measures of relationship commitment were gleaned
from Allen and Meyer (1990), Verhoef et al. (2002) and Styles et al. (2008). Social
interaction was defined as frequent, proper and amicable contact, and/or links between
the firm and other members, which facilitate information exchange. A three-item scale
was adopted from Tasi and Ghoshal (1998) and Yli-Renko et al. (2001) for this
dimension. Coercive power was the source of power most commonly used by firms to
control partner behaviour; a four-item scale was adopted from Matanda and Freeman
(2009) in this regard.
EMO has been widely studied (e.g. Cadogan et al., 2002, 2006; Murray et al.,
2007). We adopted Cadogan and Diamantopoulos’ (1995) measures of EMO: export
market-intelligence generation, dissemination and responsiveness. EMO was plotted
on an 18-item scale. Following Akyol and Akehurst (2003) and Cadogan et al. (2002,
2003, 2009), we employed the following multi-dimensional methods to measure export
performance: financial, strategic and competitive indicators (comparisons with
competitors), along with an overall performance indicator. In relation to degree of
internationalization, we applied Tallman and Li (1996) measures, including two key
factors of firms’ strategic export activities: scale and scope. Export scale was rated
according to share of exports, while export scope was evaluated with reference to the
number of countries or regions to which the firm exports. Measures from Cadogan et al.
(2009) were adopted to standardize the scores of the three measurement indicators, and
to calculate overall internationalization. All of the scales used for model testing are
listed in the Appendix.

3.3 Measurement assessment and construction

To gauge the reliability and validity of the scale, we employed confirmatory
factor analysis and LISREL 8.54 (Jöreskog and Sörbom, 1993) to verify both the
convergent and discriminant validity. Fornell and Larcker (1981) designated
the standards of convergent validity criteria as follows: standardized factor loading
higher than 0.5; average variance extracted (AVE) higher than 0.5; and composite
reliability (CR) higher than 0.7. The evaluation standard for discriminant validity is
the square root of AVE for one dimension being greater than its correlation coefficient
with any other dimension(s).
Table I shows that the AVE for all dimensions was above the threshold value of 0.5,
except for the dimension of power, which was slightly lower (0.487). The CR values of
all dimensions exceeded 0.7. As suggested above, all items in the measures of
exogenous variables were significantly explained, suggesting that the items converged
to this factor, and hence to their corresponding dimensions. Therefore, the scale had
convergent validity to some extent. Finally, as also shown in Table I, the correlation
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412

Table I.

and correlation matrix

Measurement information
Variables 1 2 3 4 5 6 7 8 9 10 11

Com. (0.713)
Trust 0.590** (0.728)
SI 0.508** 0.502** (0.807)
Power 0.013 0.082 0.074 (0.698)
EIG 0.538** 0.458** 0.520** 0.007 (0.782)
EID 0.549** 0.534** 0.525** 0.037 0.667** (0.778)
EIR 0.532** 0.576** 0.491** 0.038 0.583** 0.722** (0.742)
FEP 0.292** 0.260** 0.318** 0.004 0.311** 0.256** 0.256** (0.898)
SEP 0.267** 0.255** 0.268** 0.043 0.319** 0.196 0.223** 0.722** (0.787)
CEP 0.270** 0.314** 0.218** 0.054 0.267** 0.221** 0.287** 0.632** 0.732** (0.918)
DOI 0.137 0.076 0.178* 0.009 0.277** 0.262** 0.145* 0.168* 0.218** 0.223** 1.000
Mean 5.357 5.554 5.718 3.445 5.560 5.614 5.553 4.200 4.142 4.155 0.008
SD 0.845 0.658 0.834 1.163 0.849 0.827 0.873 1.316 1.106 1.22 0.785
a 0.799 0.856 0.841 0.732 0.885 0.884 0.901 0.925 0.868 0.939 na
AVE 0.508 0.530 0.651 0.487 0.612 0.606 0.550 0.807 0.620 0.842 na
CR 0.800 0.850 0.850 0.740 0.890 0.860 0.790 0.930 0.870 0.940 na
Notes: SI, social interaction; EIG, export intelligence generation; EID, export intelligence dissemination; EIR, export intelligence responsiveness;
FEP, financial export performance; SEP, strategic export performance; CEP, competitive export performance; DOI, degree of internationalization. w2 ¼ 179.7;
df ¼ 84; w2/df ¼ 2.14; GFI ¼ 0.908; AGFI ¼ 0.869; CFI ¼ 0.933; RMR ¼ 0.069; RMSEA ¼ 0.067. * po0.1; ** po0.05; *** po0.01
 coefficients of the dimensions were all less than the square root of AVE, suggesting that Impact of EMO
each dimension in this study had good discriminant validity. on export
4. Results performance
Statistical analysis with structural equation modelling (SEM) and multiple regression
models proceeded in two phases. First, to verify the main effect, SEM analysed the
causality between the dimensions in H1-H5. Second, multiple regression models 413
further explored the moderating effect of internationalization on the relationship
between export market-oriented behaviour and performance.
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4.1 Main effect analysis of the structural model

Path analysis attested that the standardized path coefficient of inter-organizational
commitment to EMO reached statistical significance (g ¼ 0.382, po0.001), thus
supporting H1. Similarly, the standardized path coefficient of inter-organizational trust
in EMO also attained statistical significance (g ¼ 0.216, po0.05), thereby supporting
H2. The standardized path coefficient of inter-organizational social interaction for
EMO reached statistical significance (g ¼ 0.340, po0.001), which supported H3.
However, the standardized path coefficient of inter-organizational relative power for
EMO failed to reach statistical significance (g ¼ 0.006, p40.001), suggesting that H4
was not supported. The results of the SEM path analysis show the standardized path
coefficient of EMO to export performance also reached statistical significance
(g ¼ 0.370, po0.001), which supported H5 (Figure 2).
4.2 Degree of internationalization as a moderating variable
The empirical results (Table II) indicate that the effects of EMO on competitive,
financial and strategic export performance were positive and statistically significant.
The effect of the moderating variable’s dependence on the interaction of EMO and
internationalization was not significant. Model 4 showed that the effects of the
interactions on financial (b ¼ 0.058, p40.01), strategic (b ¼ 0.044, p40.01) and
competitive export performance (b ¼ 0.062, p40.01) failed to reach significance.
This implies that internationalization does not moderate the positive effect of EMO on
overall performance. In general, the moderating effect of internationalization on the
hierarchical regression models did not reach a level of significance, suggesting that H6
was not empirically supported.

Commitment
0.382***

Trust 0.216**
0.370***
Export
EMO
0.340*** Performance
Social
Interaction
0.006

Power
Figure 2.
Path analysis
Notes: *p < 0.1; **p < 0.05; ***p < 0.01
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414

Table II.
Examination of
moderating variable
Model 1 Model 2 Model 3 Model 4
FEP SEP CEP FEP SEP CEP FEP SEP CEP FEP SEP CEP

Export
experience 0.049 0.015 0.053 0.042 0.009 0.059 0.076 0.057 0.009 0.080 0.060 0.005
Firm size 0.028 0.175 0.11 0.027 0.176 0.010 0.044 0.152 0.034 0.040 0.155 0.031
Capital 0.317*** 0.150 0.217* 0.248** 0.086 0.150 0.263** 0.107 0.173 0.255** 0.101 0.164
EMO 0.306*** 0.290*** 0.300*** 0.283*** 0.258*** 0.266*** 0.269*** 0.247*** 0.251***
DOI 0.092 0.132* 0.137* 0.103 0.140* 0.149*
EMO  DOI 0.058 0.044 0.062
F-value 5.47*** 6.38*** 3.65** 9.58*** 9.81*** 7.72*** 7.99*** 8.56*** 6.91*** 6.76*** 7.18*** 5.88***
Adj. R2 0.065 0.077 0.040 0.151 0.154 0.122 0.153 0.164 0.133 0.152 0.161 0.132
Notes: *po0.1; **po0.05; ***po0.0
 4.3 Mediating role of EMO Impact of EMO
Following Baron and Kenny (1986), we used the regression equations of the following on export
three models to determine the existence of the mediating effect. Based on the results,
we argue that if a variable is to be considered a mediator, three conditions must be performance
fulfilled. It can be seen from Model 1a of the regression analysis results in Table III that
inter-organizational commitment (b ¼ 0.201, po0.01), inter-organizational trust
(b ¼ 0.147, po0.05) and inter-organizational social interaction (b ¼ 0.4501, po0.01) 415
had significant positive effects on EMO. However, in Model 2, only inter-organizational
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trust (b ¼ 0.145, po0.1) and inter-organizational social interaction (b ¼ 0.194, po0.05)

had significant positive effects on export performance. In Model 3, which added EMO,
the results show that EMO exerted a significant positive effect (b ¼ 0.169, po0.05) on
export performance. However, the previous significant positive effects of inter-
organizational trust and inter-organizational social interaction on export performance
were insignificant. Moreover, the b values of inter-organizational commitment and
power also decreased from 0.085 and 0.030 to 0.045 and 0.023, respectively. To sum
up, for the individual variables, EMO satisfies the verification conditions provided by
Baron and Kenny (1986) for the full mediating role between trust export performance
and social interaction. Our hypotheses regarding the mediating effect of EMO on the
relationship between inter-organizational relationship (including commitment, trust,
social interactions and power) and export performance were partially supported.

5. Discussion
According to the empirical results of this study, while commitment, trust and social
interactions between an exporter and its export partners have positive effects on EMO,
the relative power between exporters has no significant effect. Since inter-
organizational commitment, trust and social interactions constitute the capital and
structural dimensions of social capital, our results suggest that the establishment of
organizational social capital helps to generate export market-oriented behaviour. This
study verifies that the relationship with external partners is an important resource for
organizations in developing their market orientation (Elg, 2007). Such external
relationships are the driving forces for market-oriented behaviour and cultural
awareness. In contrast, the relative power in inter-organizational relationships does not
affect the generation of export market-oriented behaviour. When the relative power
between organizations becomes overly unbalanced, maintenance of their cooperative
relationships is determined based on the benefits arising from their transactions. Once

Dependent variables
EMO Export performance
Model 1 Model 2 Model 3

Commitment 0.201*** 0.085 0.045

Trust 0.147** 0.145* 0.116
Social interaction 0.450*** 0.194** 0.106
Power 0.036 0.030 0.023
EMO 0.195**
F-value 45.45*** 7.923*** 7.516*** Table III.
Adj. R2 0.445 0.127 0.128 Examination of the
mediating role of export
Notes: *po0.1; **po0.05; ***po0.01 market orientation
 BJM a better cooperative partner appears, their partnership is likely to end. When the
9,4 relative power between organizations is unbalanced, it can prevent the two parties
from integrating overseas market intelligence, and from making an effective response.
According to the empirical results of this study, export market-oriented behaviours
have a significantly positive effect on financial, strategic and competitive export
performances; these results are in line with Akyol and Akehurst’s (2003) study. Export
416 market-oriented behaviours cannot only increase export sales and improve
competitiveness of products, but also help firms to build strategic layouts in
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overseas markets. Furthermore, degree of internationalization does not exert a

significant effect on the positive relationship between EMO and export performance.
Consistent with Cadogan et al. (2009), this study further proves that the relationship
between EMO and export performance is not affected by the degree of
internationalization. There are two reasons why there is no moderating effect from
the degree of internationalization on the positive relationship between EMO and
export performance. First, a large proportion of our sample firms account are older
exporters; they have rich export experience and a large export scale, but are likely to be
less flexible in their efforts to enter international markets. Younger export firms may
be more malleable in adapting their operations and resources to meet the requirements
of international expansion (Carr et al., 2010); they tend to acquire relevant experience of
internationalization from successful competitors, and use this knowledge to configure
their resources into capabilities that lead to growth and survival (Autio et al., 2000;
Brouthers et al., 2009). We suspect that the degree of internationalization reflected by
the older sample firms reduced the overall impact on the relationship between EMO
and export performance. Second, over-internationalization may constrain other
strategic opportunities, thereby hindering firms’ overall performance. Although EMO
is the most effective weapon in improving export performance, it has its own
drawbacks. Exporters intensively focusing on EMO will be more competitive, and will
easily achieve superior export performance (Cadogan et al., 2002, 2003, 2009) in areas
such as sales volume, profits, market share and customer satisfaction. With the
expansion of international markets, exporters need more resources to invest in the
maintenance and development of EMO. Such investment in export expansion may
reduce their opportunities to implement other strategic behaviour orientations, which
would result in financial expenditures, resource investments and opportunity costs
being much higher than the relevant benefits, thus inhibiting firm growth. Therefore, a
balance of strategic behaviours should be maintained by firms in order to keep the
development of various strategic behaviour orientations open so that they are able to
adopt different strategies to respond to different situations, competitors and customers
(Cadogan et al., 2003).
This study partially supports the idea that EMO has a mediating effect on the
relationship between inter-organizational relationship (trust and social interaction) and
export performance. In conclusion, instead of directly improving an organization’s
performance, inter-organizational relationships may gradually increase performance
through knowledge assimilation, as well as the integration of certain characteristics
and situations as mediators (Rothaermel and Deeds, 2004). Our results suggest that
trust and social interaction can improve export performance through EMO behaviours;
however, we also show that neither commitment nor power are significant predictors of
export performance, which means that there is no mediating effect of EMO on
commitment or power, and export performance. From the resource-dependence
perspective, exporters who commit to developing overseas export markets will rely on
 information provided by distributors or importers, which will result in decreasing Impact of EMO
relative power. Thus, it has no significant impact on export performance (Gulati and on export
Sytch, 2007). Moreover, high commitment indicates a high relationship-specific
investment. A change of partners will lead to economic and non-economic restrictions performance
and costs (Styles et al., 2008), namely switching costs (Patterson, 2004; Patterson and
Smith, 2003). This is likely to have a negative effect on export performance. Thus, the
positive effect of commitment or power may be offset by the negative effect, which 417
would negate the impact on export performance.
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5.1 Managerial implications

This study suggests that exporters should establish good relationships with their
channel partners or customers in overseas markets. More specifically, they should
establish trusting relationships with these partners based on close interactions. Trust
is capital accumulated over time in a long-term relationship. When constructing a trust
mechanism, firms should thus consider long-term interests and avoid conflicts with
short-term interests. Firms and their partners should achieve a win-win situation
based on an attitude of mutual support and co-development. In terms of interactions,
firms can utilize technological and electronic equipment, such as video phones, video
conferences and so on, to overcome the limitations of time and space and enhance
mutual communication and knowledge exchange. They should also send relevant
business personnel to local markets on a regular basis in order to communicate with
their partners face to face and gain an understanding of the local markets. In other
words, firms should coordinate common interests and resolve conflicts with their
channel partners via close interactions in formal and informal ways. Trust and close
interactions with partners may enhance firms’ EMO, which in turn may improve
their performance.
Furthermore, our results verify the positive relationship between EMO and export
performance. This implies that cultivating managers’ abilities to generate, disseminate
and respond effectively to export intelligence is the most critical task for exporters.
In order to generate export intelligence, exporters should allocate resources equally
across markets, based on their scale and potential; establish local offices or strategic
business units to facilitate market research and analysis; promote communication with
customers, distributors and suppliers; and expand direct channels in order to get
access to, and make effective use of, valuable market intelligence. In order to collect
export intelligence from the external environment and share this intelligence more
effectively throughout the organization, exporters must have sufficient knowledge
for interpreting it. The process of interpretation relies on the knowledge base
of the organization. Moreover, formal (such as the integrated information system,
electronic communication system and internet computer system) and informal
(inter-departmental private relationships, banquets and hall talks designed to integrate
internal activities) information-sharing channels should be established within the
organization. This helps all members to understand the connotations of the export
market intelligence and increase their willingness to share this intelligence with others
(Armario et al., 2008). Export-intelligence responsiveness can be divided into formal
and informal processes (Song et al., 2010). It has been pointed out that when customer
preferences and segment composition are relatively stable, the informal process,
combined with the existing market knowledge base, can help in the development of
marketing strategy. Moreover, when customer demand is formed, formal market-
information processing will facilitate firms to quickly identify new trends of customers,
 BJM and to employ this information in developing new products and marketing activities
9,4 (Armario et al., 2008). To sum up, the greater a firm’s ability to generate, disseminate and
respond to export intelligence, the better its export performance will be.
Although our study reveals that degree of internationalization has no positive
moderating effect on the relationship between EMO and export performance, the
development of international export markets has inevitable trends (Murray et al., 2007).
418 In the technology-intensive and export-intensive Taiwanese manufacturing sector,
market competition has shifted from scant competition to strong competition, and from
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single-market competition to multi-market competition. Taiwan’s exporters must

painstakingly learn, adapt and develop new capabilities such as branding, innovation,
distribution, human capital and social capital (Wu and Chen, 2013). According to
Baker and Sinkula (1999) and Slater and Narver (1995), exporters should maximize
performance by: identifying the necessary values to create a learning organization;
focusing on customers’ existing and potential demands; and striking a balance
between adaptive and creative learning. However, export market-oriented behaviour
gained from diversified information due to a high degree of internationalization may
not be enough to process, disseminate and use this information completely. Firms
should thus build learning organizations that enable members to interpret diversified
information systematically, as well as to perfectly match products to the demands of
overseas market customers. In other words, if a firm’s EMO focuses too much on the
interests of overseas markets, it may neglect short-term customer demand. In this case,
a high degree of internationalization may not further improve the impacts of EMO
on export performance.

5.2 Limitations and future research

Prior studies on the antecedents of EMO have mainly focused on the internal mechanisms
of organizations; very few have explored firms’ relationships with external partners.
Although inter-organizational relationships have been discussed here, there are many
other important inter-organizational factors, such as coordination, relationship tension
and long-term relationships. Most prior research has considered the understanding of
only one party in the mutual relationship; therefore, the cognitive differences between the
two parties have been ignored. Future studies should conduct two-way research on both
focal firms (manufacturers) and overseas partners (agents or distributors) through
additional variables such as trust, commitment, satisfaction and so on.
Moreover, the results show that the content validity of this study is somewhat
inadequate, possibly because it was affected by cultural differences. The study also
used a sample from exporting companies based in Taiwan (the manufacturing
industry). When convenience sampling is adopted as the sampling method, the
representativeness of the samples may be a problem. In order to explore whether
industry and country-of-origin effects have played a significant role in determining the
results observed in this study, multi-country or -industry studies are also warranted.
Since quantitative research also has its shortcomings, it is recommended that future
researchers conduct in-depth interviews or case studies to correlate between inter-
organizational relationships and manufacturer market-oriented behaviour.
Furthermore, this study adopted a scale developed by previous scholars to measure
the power dimension. In this measurement, the relative power between the other party
(cooperative partner) and the focal party (sample manufacturer) serves as a measure.
This study considers the content validity of this dimension as inadequate, possibly due
to cultural differences. Styles et al. (2008, p. 892) argue that, “In certain cultures, such as
 in the East, the emphasis on relationships may typically be more explicit”. Influenced by Impact of EMO
subjective factors, such as culture, some respondents may glamorize their relative power. on export
Therefore, it is suggested that future research investigate the effects of power-related
dimensions, such as relationship tension, power asymmetry and dependence, or take performance
advantage of multiple informants using a qualitative methodology in order to avoid
subjective bias. Finally, exporters can offer competitive products to overseas markets only
by meeting customer needs, predicting technological trends, understanding government 419
regulations and sensing the actions of competitors in each individual market. In order to
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carry out export market-oriented activities, firms may have to allocate large amounts of
resources and expenditures, which could impair their overall performance if the costs of
export market-oriented activities outstrip the benefits generated (Cadogan et al., 2003).
Firms should also consider other moderating factors, such as market maturity, market
turbulence and competitive intensity, in deciding to carry out export market-oriented
activities. For example, firms should make greater efforts to build good relationships with
their channel partners or customers, and carry out more export market-oriented activities
so as to stabilize their presence in overseas markets. Future studies are also encouraged to
investigate the moderating effects of these factors.

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Appendix. Measurement items used for model testing

EMO behaviour (seven-point scales, 1 ¼ “very strongly disagree”, and 7 ¼ “very strongly agree”)

Export market-intelligence generation:

(1) We generate a lot of information concerning trends (e.g. regulation, technological
developments, politics and economy) in our export markets.
(2) We constantly monitor our level of commitment and orientation to serving export
customer needs.
(3) We are quick to detect fundamental shifts in our export environment (e.g. technology,
regulatory, economy).
(4) We periodically review the likely effect of changes in our export environment
(e.g. technology, regulation).
(5) We generate a lot of information in order to understand the forces which influence our
overseas customers’ needs and preferences.
Export-intelligence dissemination:
(1) Too much information concerning our export competitors is discarded before it reaches
decision makers.R
(2) Information which can influence the way we serve our export customers takes forever to
reach export personnel.
(3) Important information about our export customers is often “lost in the system”.R
(4) Information about our export competitors’ activities often reaches relevant personnel too
late to be of any use.R
(5) Important information concerning export market trends (regulation and technology) is
often discarded as it makes its way along the communication chain.R
Export-intelligence responsiveness:
(1) Our export business strategies are driven by our beliefs on how we can create greater
value for export customers.
(2) Our export strategy for competitive advantage is based on our understanding of export
customer needs.
(3) Our export business objectives are driven primarily by ensuring customer satisfaction.
(4) We pay close attention to after-sales service in our export markets.
(5) If a major competitor were to launch an intensive campaign targeted at our foreign
customers, we would immediately implement a response.
(6) We are quick to respond to significant changes in our competitors’ price structures in
foreign markets.
 BJM (7) We are quick to respond to important changes in our export business environment
(e.g. regulation, technology and economy).
9,4
(8) We rapidly respond to competitive actions that threaten us in our export markets.
Inter-organizational relationship (seven-point scales, 1 ¼ “very strongly
disagree”, and 7 ¼ “very strongly agree”)
424
Relationship commitment:
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(1) It is pleasant working with this partner; that is why we continue the relationship.
(2) Strong social bonds exist between this partner and us.
(3) We have a strong sense of loyalty with this partner.
(4) We are patient with this partner when they make mistakes that cause us problems.
Trust:
(1) This partner has made sacrifices for us in the past.
(2) This partner is like a friend.
(3) This partner does not make false claims.
(4) When making important decisions, the partner is concerned about our welfare.
(5) Though circumstances change, we believe that the partner will be ready and willing to
offer us assistance and support.
(6) When we share our problems with the partner, we know that they will respond with
understanding.
Social interaction:
(1) We maintain close social relationships with this partner.
(2) We know this partner’s people on a personal level.
(3) We are willing to discuss items of cooperation with our partners.
Coercive power:
(1) Even if we disagree with this partner we have to comply with their request.R
(2) In case of disagreement, our partner could penalize us.R
(3) This partner is able to make decisions that can alter our profit levels.R
(4) This partner can adversely influence the way we operate.R

Export performance (seven-point scales, 1 ¼ “very strongly dissatisfied”, and

7 ¼ “very strongly satisfied”)
How satisfied are you with your performance?

Financial performance:
(1) Export sales volume for the company over the three years.
(2) Export profit for the company over the three years.
(3) Export sales growth for the company over the three years.
 Strategic performance: Impact of EMO
(1) Satisfaction with export market share. on export
(2) Satisfaction with export market entry. performance
(3) The competitiveness of products in the international market.
(4) Overall arrangement of the foreign market.
425
Competitiveness performance:
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(1) Compared to our major competitors, satisfaction with export sales volume.
(2) Compared to our major competitors, satisfaction with export market share.
(3) Compared to our major competitors, satisfaction with rate of new export market entry.
Degree of internationalization:
(1) Percentage of total sales turnover derived from exports.
(2) Number of export destination countries.
(3) The regions to which the firm exports: Western Europe (including Scandinavia), Russia
and Baltic countries, Asia, Eastern Europe, North America, Africa and Middle East,
South/Central America.
Note: RReverse coded.

Corresponding author
Dr Yao-Ping Peng can be contacted at: [email protected]

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