Domestic institutional attributes as drivers of export performance in an emerging and transition economy

JBR-08796; No of Pages 12
Journal of Business Research xxx (2016) xxx–xxx

Contents lists available at ScienceDirect

Journal of Business Research

Domestic institutional attributes as drivers of export performance in an emerging and
transition economy
Vi Dung Ngo a,1, Frank Janssen b,2, Leonidas C. Leonidou c,⁎, Paul Christodoulides d,3
a

Hanoi School of Business, Vietnam National University, 144 Xuan Thuy, Cau Giay, Hanoi, Viet Nam
Louvain School of Management, Université Catholique de Louvain, 1, Place des Doyens 1348, Louvain-La-Neuve, Belgium
School of Economics and Management, University of Cyprus, Kallipoleos 75, Nicosia 1678, Cyprus
d
Faculty of Engineering and Technology, Cyprus University of Technology, PO Box 50329, Limassol 3603, Cyprus
b
c

a r t i c l e

i n f o

Article history:
Received 10 July 2014
Received in revised form 22 December 2015
Accepted 23 December 2015
Available online xxxx
Keywords:
Exporting

Export performance
Transition and emerging economies
Institution-based view

a b s t r a c t
As the importance of firms from emerging and transition economies (ETEs) increases in the global marketplace,
there is a growing interest in their exporting practices. In this study, we provide a conceptual model anchored on
the institution-based view (IBV) that reveals the impact of various domestic institutional attributes
(i.e., specificity, stability, predictability, and enforceability) on the firm's export performance. We empirically
test this model using SEM analysis with data collected from a sample of 109 Vietnamese exporters. Our results
show that all four institutional attributes positively influence export performance. This link between domestic
institutional attributes and export performance becomes stronger in the case of exporters characterized by larger
size, more experience, foreign market concentration, and direct exporting methods. The exporter's location had a
control effect on each of the four institutional attributes, while the principal foreign market and the type of
product exported had an effect on export performance.
© 2016 Published by Elsevier Inc.

1. Introduction
Firms from emerging and transition economies (ETEs) are increasing
their importance in the global economy through various internationalization strategies, with exporting being the most common foreign
market entry mode employed (Aulakh, Kotabe, & Teegen, 2000). In an
era of globalization, the success of domestic firms in international markets is a crucial source of multiple economic advantages (e.g., foreign
exchange reserves, employment opportunities, backward and forward
economic linkages), which explains, to a large extent, the high growth
rate achieved by many ETEs in the last few decades (Bruton, Ahlstrom,
& Obloj, 2008; Wright, Filatotchev, Hoskisson, & Peng, 2005). This raises
an important research issue that focuses on the factors that drive
the international success of firms from ETEs. The issue has attracted
the attention of managers, public policymakers, and researchers not
only from ETEs, but also from developed countries, because nowadays the various economies are caught in a web of financial and

market interdependencies.

⁎ Corresponding author. Tel.: +357 22893614; fax: +357 22895030.
E-mail addresses: (V.D. Ngo),
(F. Janssen), (L.C. Leonidou),
(P. Christodoulides).
1
Tel.: +84 4 62924040; fax: +84 4 37548455.
2
Tel.: +32 10 47 84 28; fax: +32 10 47 83 24.
3
Tel.: +357 2500 2611; fax: +357 25002635.

Strategically, the export success of firms from ETEs, like their counterparts in advanced economies, depends not only on its controlled resources and capabilities (Amit & Schoemaker, 1993; Barney, 1991) but
also on how the domestic institutional environment can configure its
behaviors through cognitive, normative, and regulative mechanisms
(Hoskisson, Eden, Chung, & Wright, 2000; Oliver, 1997; Peng, 2003;
Welter, 2011; Welter & Smallbone, 2011). This is particularly true in
ETEs where, due to the free-market system and liberalization policies
adopted, their formal market-supporting institutions are gradually developed and improved (Hoskisson et al., 2000; Peng, 2003). This leads
us to posit that the institution-based view can provide a suitable theoretical platform to explain and predict the firm's performance in international markets (Hoskisson et al., 2000; Peng, Sun, Pinkham, & Chen,
2009; Wright et al., 2005).
Prior research has demonstrated that the domestic institutional
environment of ETEs is a major factor that explains the international
strategic patterns of their indigenous firms (Gao, Murray, Kotabe, &
Lu, 2010; Nguyen, Le, & Bryant, 2012). However, the key attributes of
this environment were not adequately defined, while the role of these
attributes in influencing the firms' international performance is not
clearly explained. Moreover, most of the studies focused on MNEs originating from ETEs, while the facilitating or inhibiting role of the home
institutional environment in the indigenous firms' export activities has

been only superficially tackled. Furthermore, only a few studies have
tried to inject a theoretical perspective in researching institutional effects on export performance, which has been endemic of empirical

/>0148-2963/© 2016 Published by Elsevier Inc.

Please cite this article as: Ngo, V.D., et al., Domestic institutional attributes as drivers of export performance in an emerging and transition
economy, Journal of Business Research (2016), />

2

V.D. Ngo et al. / Journal of Business Research xxx (2016) xxx–xxx

research in the overall exporting field (Leonidou & Katsikeas, 2010). Finally, the moderating role of various organizational (e.g., company size)
and internationalization (e.g., export mode) factors on the association
between institutional forces and performance is virtually absent in the
pertinent literature.
In light of the above, our aim is to unveil the role of the domestic
institutional environment in influencing the exporter's performance.
By addressing this research question, we aim to fill three major gaps
in the international business literature: (a) to enrich our knowledge
on strategic and international dimensions of firms operating in ETEs,
particularly shedding light on an understudied region in Southeast
Asia, namely, that of Vietnam (Arnold & Quelch, 1998; Ellis, 2010);
(b) to identify and assess those attributes that can be used to
operationalize the quality of the domestic institutional environment in
these countries (e.g., Acemoglu & Johnson, 2005; Besley, 1995;
Brunetti & Weder, 1998; Djankov, La Porta, Lopez-de-Silanes, & Shleifer,
2002, 2003; Knack & Keefer, 1995; Svensson, 1998; Teisberg, 1993); and
(c) to explore the facilitating or inhibiting role of this environment on
export performance, an issue that has been largely ignored by extant

research (Hoskisson et al., 2000; Wright et al., 2005).
The remainder of this article is organized as follows: First, we explain
the theoretical background of the study, which is the institution-based
view (IBV). We then describe our conceptual model and develop research hypotheses connecting the domestic institutional environment
with export performance. This is followed by a description of the research methodology adopted. Subsequently, we analyze the data and
present the findings of the study. The final section draws conclusions
from the study findings, provides practical and theoretical implications,
and offers directions for future research.

2. Theoretical background
Our study is theoretically anchored on the institution-based view,
which states that when firms make strategic choices, they are guided
not only by industrial (e.g., competitive intensity) and/or organizational
(e.g., resources and capabilities) parameters but also by formal and informal constraints imposed by the specific institutional framework
within which they operate (Peng et al., 2009). Institutional factors can
influence the firm's strategic choices through cognitive, normative,
and regulative mechanisms that can have either a facilitating/enabling
or troubling/constraining role (Hoskisson et al., 2000; Scott, 1995;
Welter & Smallbone, 2011). However, the degree of institutional pressure on the firm will depend on its specific nature (e.g., new start-ups
versus mature) and the specific resources/capabilities (e.g., financial
versus technological) possessed (Peng, 2003).
The institution-based view distinguishes between an institutional
environment and an institutional arrangement. While the former sets
the ‘rules of the game’, because it comprises fundamental political, social, and legal regulations that set the basis for production, exchange,
and distribution, the latter refers to the ‘play of the game’, because it
governs the way in which economic units cooperate and/or compete
(Davis & North, 1971). Institutions can also be categorized as formal
(e.g., rules and regulations) and informal (e.g., codes of behavior)
(North, 1990). ETEs are characterized by governments that adopt the
free-market system and favor policies of economic liberalization, but

whose formal market-supporting institutions are gradually changing
(Hoskisson et al., 2000; McMillan, 1995, 2007; Peng, 2003). Because
ETEs are in a situation of lawlessness (Williamson, 2005), especially in
the early phases of their transition (Peng, 2003), between the two levels
and two dimensions of institutions, the formal dimension of institutional environment is central because (a) it is the institutional environment
that determines the institutional arrangement (Pejovich, 1990;
Williamson, 1998) and (b) a failure in formal institutions will further increase the role of informal institutions in their societies and economies
(Peng et al., 2009).

Among the elements of the formal institutional environment, property rights and contracting institutions are central because they determine the incentive structure and transaction costs of an economy
(North, 1990). Property rights refer to the rights of ownership of either
tangible (e.g., land) or intangible (e.g., intellectual capital) assets and,
in a market-based economy, their structure is mainly based on private
property rights to use an asset, capture benefits derived from this
asset, and change its form and/or substance (Furubotn & Richter,
1991; Pejovich, 1990). Property rights institutions are the rules and regulations that protect the citizens of a country against the power of government and elites (Acemoglu & Johnson, 2005). On the other hand,
contracting rights are the rights to freely seek, identify, negotiate, and
contract with partners for exchange, while contracts are the means by
which people seek, identify, and negotiate opportunities for exchange
(Pejovich, 1990). Contracting institutions are the rules and regulations
governing contracting between ordinary citizens, as in the case between
a supplier and its customers (Acemoglu & Johnson, 2005). The workability of a market-based economy largely depends on the extent to which
its property rights and contracting institutions recognize, facilitate, and
protect private property rights and the freedom of contract in an effective and efficient way. If the property rights are not well defined and
enforced by property rights institutions, the cost of establishing, maintaining, and transferring the property rights is high (Allen, 2000). As a
consequence, it will be costly to prepare, conclude, monitor, and enforce
contracts that are the means by which the bundles of rights are
exchanged (Furubotn & Richter, 1991).
Because ETEs are in transition, their property rights and contracting
institutions are often incomplete, ineffective, and changing in an unpredictable way (Johnson, McMillan, & Woodruff, 2002a, 2002b; McMillan

& Woodruff, 2000). The transitional nature of these countries causes
two serious problems: (a) institutional uncertainty, that is, the economic
actors' perceived inability to predict institutional changes in an accurate
manner (Milliken, 1987); and (b) incentive difficulties, that is, the unwillingness of economic actors to pursue productive and innovative
strategies because they often do not have the full rights of ownership
and the freedom of contract, and are confronted with public and private
expropriation risks (Johnson et al., 2002b). In sum, because of their transitional nature, the formal institutional environment (i.e., property
rights and contracting institutions) of ETEs can have a serious impact
on the firm's motivation to achieve superior export performance.
Although some scholars (e.g., Gao et al., 2010; Hessels & Terjesen,
2010; Shinkle & Kriauciunas, 2012) have examined how exporting is affected by the home market institutional environment, no research has
hitherto been conducted on the role that specific attributes of domestic institutions have on the firm's export behavior. However, this is
crucial because these domestic institutional attributes are responsible for (a) shaping the overall mindset of indigenous managers that
will subsequently affect the way their export business is conducted;
(b) acting as facilitators or inhibitors of effectively carrying out the
procedures required to export; (c) determining the firm's cost structure and escalating the prices offered to foreign markets, thus
influencing its export competitiveness; (d) influencing the level of
risk and uncertainty surrounding business transactions with foreign
customers; and (e) motivating the firm about its engagement and
advancement in export operations (Duncan, 1972; North, 1990).
Hence, the purpose of our study is to clarify the mechanism by
which and the extent to which the formal home market institutional
environment (i.e., property rights and contracting institutions) influences the export performance of firms from an ETE (i.e., Vietnam).
3. Conceptual model and research hypotheses
Fig. 1 presents the conceptual model of the study, which consists of
two parts. The first part focuses on domestic institutional environmental dimensions (i.e., specificity, stability, predictability, enforceability)
and how these affect the firm's export performance. These four

Please cite this article as: Ngo, V.D., et al., Domestic institutional attributes as drivers of export performance in an emerging and transition
economy, Journal of Business Research (2016), />

V.D. Ngo et al. / Journal of Business Research xxx (2016) xxx–xxx

Institutional
Environment
Stability

H5

Institutional
Environment
Specificity

Foreign
Market
Expansion

(a)

H7

Exporter’s
Size

H1

H2

Export
Performance

(c)
H3

(d)
Type of
Product
Exported

H8

H4
H6

Institutional
Environment
Enforceability

Principal
Export
Market

(b)

Exporter’
s Location

Institutional
Environment
Predictability

3

Export
Entry
Mode

Export
Experience

Fig. 1. The conceptual model.

attributes were identified from previous institutional research
(e.g., Acemoglu & Johnson, 2005; Besley, 1995; Brunetti & Weder,
1998; Djankov et al., 2002, 2003; Knack & Keefer, 1995; Svensson,
1998; Teisberg, 1993). The second part focuses on the moderating
role of exporter size, export experience, foreign market expansion,
and export entry mode on the effect of each attribute of the institutional environment on export performance. Altogether, there are
four main hypothesized paths and four moderating hypotheses.

damages caused by potential fraud, bribery, disputes, and other malpractices; and (c) it reduces the possibility of penalties and/or extra
charges caused by violation of contracts, intellectual properties, and
rules and regulations (Chacar, Newburry, & Vissa, 2010). As a result,
the specificity of the institutional environment will help to enhance
the firm's competitive stance and enhance performance outcomes
when selling to foreign customers (Malesky & Taussig, 2009). Thus,
we may posit that:

3.1. Main hypotheses

H1. The higher the specificity of the domestic institutional environment in
an ETE, the more positive the effect on the indigenous firm's export
performance.

Institutional specificity is the extent to which the private property
rights of ownership and the freedom of contract are recognized or defined by prevailing rules and regulations (Acemoglu & Johnson, 2005;
Besley, 1995; Djankov et al., 2002; Furubotn & Richter, 1991; Kitching,
2006; Shleifer, 2005). As Zhu, Wittmann, and Peng (2012) demonstrate
in the context of China, firms from ETEs still face many institutional
barriers (e.g., competition fairness, access to financing, laws and regulations, tax burden and supports systems) that constrain their efforts
to pursue competitive strategies in foreign markets. There are several
ways in which the home country's institutional environment
(i.e., property rights and contracting institutions) can influence the
firm's strategic choices abroad and therefore its performance. For example, high specificity in home country institutions configures the firm's
competitive intensity by facilitating the types of exchanges, as well as
the size of the pool of actors involved in exchanges. In this way, the
specificity of the elements of the institutional environment (e.g., rules
of exchanges in the product, labor, and financial markets) will help to
reduce the firm's transaction costs in the foreign market because:
(a) it facilitates the process of effectively and efficiently handling all relevant export-related documentation and procedures; (b) it minimizes

Institutional stability is the extent to which the rules and regulations
concerning property rights and contracting institutions have changed in
the past (Acemoglu & Johnson, 2005; Besley, 1995; Djankov et al., 2002;
Furubotn & Richter, 1991; Jeong, 2002; Kitching, 2006; Shleifer, 2005;
Teisberg, 1993). The existence of relative stability in these rules and
regulations in the home country will enable the indigenous exporting
firm to effectively monitor its export operations and more efficiently
handle its export cost structure (Jeong, 2002; Teisberg, 1993). Such
institutional stability is crucial in reducing the level of uncertainty surrounding export operations, which is high due to the large physical

and psychological distance separating sellers from buyers in international markets (Johanson & Vahlne, 1977). It also acts as an important
facilitator in sustaining the firm's operations in foreign markets, through
a steady flow of investments in terms of money, time, and effort (Jeong,
2002; Teisberg, 1993). Further, the more the stability in the home institutional environment, the less the probability for the exporter to embark on an opportunistic behavior when reaping foreign market
opportunities, and the greater the chance to better exploit foreign

Please cite this article as: Ngo, V.D., et al., Domestic institutional attributes as drivers of export performance in an emerging and transition
economy, Journal of Business Research (2016), />

4

V.D. Ngo et al. / Journal of Business Research xxx (2016) xxx–xxx

market potential (World Bank, 2004). This leads us to the following
hypothesis:
H2. The higher the stability of the domestic institutional environment in
an ETE, the more positive the effect on the indigenous firm's export
performance.
While stability refers to the manager's perception of past changes in
the institutional environment, institutional predictability refers to the
degree to which future changes in rules and regulations concerning
property rights and contracting institutions in the home market are predictable (Acemoglu & Johnson, 2005). Knowing how the home institutional environment will change in the future is essential to carefully
plan the firm's export activities and reduce potential risks, particularly
those associated with international transactions, taxation and interest
rates, and contracts with foreign customers (Chacar et al., 2010). This
will help to cultivate a spirit of security among indigenous exporters
that the home country's institutions will not be obstructive in their
future export endeavors (Chacar et al., 2010). Also, the fact that the
international business environment is highly complex, multifarious,
and volatile, ensuring some degree of predictability in the home environment will facilitate the exporting firm to more successfully exploit

foreign market opportunities (Nguyen et al., 2012).
H3. The higher the predictability of the domestic institutional environment
in an ETE, the more positive the effect on the indigenous firm's export
performance.
Institutional enforceability is the extent to which the private property
rights of ownership and the freedom of contract is effectively and efficiently protected or guaranteed by regulatory authorities/agencies
through formal enforcement mechanisms (e.g., courts) (Acemoglu &
Johnson, 2005; Djankov et al., 2003; Williamson, 1991). This institutional attribute is also critical to enhancing the firm's export performance
because it provides safeguards to ensure that the home institutional
authorities will reliably protect its foreign operations through formal
enforcement mechanisms (Acemoglu & Johnson, 2005). An enforceable institutional environment is conducive toward boosting the
confidence of the exporter that its international business transactions will be adequately protected, at least within the home country
(Djankov et al., 2003; World Bank, 2004). Moreover, such protection
will help to reduce the high level of uncertainty surrounding international operations and facilitate in this way the exporter's efforts
to effectively implement its business strategy in foreign markets
(Meyer, 2001; Meyer & Nguyen, 2005). Furthermore, it will generate
a feeling of trust that the right of private property ownership and
freedom of contract will be judiciously handled by home country institutions in a cost-effective way (Nguyen & Rose, 2009). The
following hypothesis can therefore be made:
H4. The higher the enforceability of the domestic institutional environment
in an ETE, the more positive the effect on the indigenous firm's export
performance.

3.2. Moderating hypotheses
Certain organizational and internationalization characteristics may be
responsible for firms to respond differently to institutional forces (Peng,
2003). For example, in the context of developed countries (where the institutional environment is more transparent and stable), prior studies
show that, compared with their larger counterparts, small exporting
firms have fewer resources and capabilities and therefore greater difficulty in dealing with external pressures, such as those exerted by the domestic institutional environment (Leonidou, 2004; Leonidou, Palihawadana,
& Theodosiou, 2011). In an ETE context, where the institutional environment is becoming gradually more market oriented, it is reasonable to

argue that this will have a stronger positive effect on the export

performance in the case of larger as opposed to smaller firms, mainly because of their greater ability to cope with and take advantage of this
(Peng & Luo, 2000). In addition, large firms have greater expertise and
knowledge, as well as more personnel and funds, to deal with domestic
institutional forces in a way that this will help them to become more effective and efficient when dealing with foreign markets (Hessels &
Terjesen, 2010). Hence, we can hypothesize that:
H5. The effect of (a) specificity, (b) stability, (c) predictability, and (d) enforceability of the domestic institutional environment in an ETE on export
performance will be stronger for large than for small indigenous exporters.
In similar vein, although both experienced and less-experienced
exporters can take advantages of the improved institutional environment, experienced exporters can reap more benefits.4 This is because
experienced exporters are more able than their inexperienced counterparts to cope with the nuances of the home institutional factors, which
will in turn help to strengthen their performance in foreign markets
(Dow & Larimo, 2009; Hessels & Terjesen, 2010). Moreover, experienced exporters are more endowed with the necessary experiential
knowledge and competences to enhance their competitive position,
caused by gradual improvements in the domestic institutional environment, as is the case of ETEs (Leonidou & Theodosiou, 2004). Being
involved in international markets for a long period of time helps the
exporter to (a) benefit from a lengthy exposure to the way the domestic
institutional forces interact with foreign operations, thus avoiding any
past mistakes; (b) improve organizational learning ability to effectively
deal with the idiosyncrasies of the domestic institutional environment;
and (c) gain extensive and diverse knowledge from foreign institutional
environment(s) that can be used to successfully cope with the domestic
environment (Shinkle & Kriauciunas, 2010). Thus, we may posit that:
H6. The effect of (a) specificity, (b) stability, (c) predictability, and (d) enforceability of the domestic institutional environment in an ETE on export
performance will be stronger for experienced than for inexperienced indigenous exporters.
Compared to firms that only concentrate on a few foreign markets,
export market spreaders normally need more resources and competences to cope with exporting problems, such as currency volatility,
idiosyncratic customer preferences, and different rules and regulations.
This is because exporters operating in a large number of countries are

more likely to confront greater ‘institutional distances’ (e.g., cultural,
market, political) between their home and foreign markets, that in
turn can increase their coordinating and managing costs in carrying
out their international business operations (Aulakh et al., 2000;
Johanson & Vahlne, 1977). In addition, operating in multiple countries
will make it more difficult for the firm to effectively match the requirements of the institutional environment to the specific nuances of each
foreign market and fully exploit its business potential. Further, a foreign
market diversification strategy increases the firm's complexity in
exporting (because of the greater diversity, volatility, and multiplicity
of foreign business environments), which will make the impact of
domestic institutional forces on export performance problematic
(Chakrabarti, Singh, & Ishtiaq, 2007; Katsikeas & Leonidou, 1996).
Hence, the following hypothesis can be made:
H7. The effect of (a) specificity, (b) stability, (c) predictability, and (d) enforceability of the domestic institutional environment in an ETE on export
performance will be stronger for indigenous exporters adopting a market
concentration rather than a spreading strategy.

4
Inexperienced exporters: (a) possess fewer resources and capabilities to cope with the
institutional environment and advance their strategies; (b) do not have a clear vision
about how to handle issues and solve specific problems associated with this environment;
(c) hold less knowledge about the developments taking place in this environment; and
(d) engage in inefficient business practices until they gain more experience (Ramswami,
Srivastava, & Bhargava, 2009).

Please cite this article as: Ngo, V.D., et al., Domestic institutional attributes as drivers of export performance in an emerging and transition
economy, Journal of Business Research (2016), />

V.D. Ngo et al. / Journal of Business Research xxx (2016) xxx–xxx

Finally, as opposed to indirect exporters, firms adopting direct
export methods usually possess more resources and capabilities to
cope with the domestic institutional environment, as well as establish, maintain, and control their exporting activities (Hessels &
Terjesen, 2010). Moreover, direct exporters are in a better position
to assess the peculiarities of foreign markets through their day-today interactions with foreign buyers, as well as make more effective
use of the domestic institutional forces to better satisfy their needs
(Peng & Ilinitch, 1998). They can also more quickly grasp and act
upon any favorable effects offered by institutions in their home
country, which will help them to take a proactive competitive
stance in exploiting foreign market opportunities (Hessels &
Terjesen, 2010). In addition, direct exporters usually have a more
formalized export organization structure than indirect exporters,
which helps them to devote more time and effort to effectively
handle domestic institutional forces (Hessels & Terjesen, 2010).
Based on the above, we may propose that:
H8. The effect of (a) specificity, (b) stability, (c) predictability, and (d) enforceability of the domestic institutional environment in an ETE on export
performance will be stronger for indigenous exporters following a direct
rather than an indirect approach.

4. Research methodology
Our study was conducted within the context of an ETE in Southeast
Asia, namely, Vietnam (Arnold & Quelch, 1998; Ellis, 2010). Vietnam is a
transition economy because since 1986 it has experienced a formal
transition from a centrally planned to a market-based economy. As in
the case of China, Vietnam has chosen a gradualist policy, rather than
a shock therapy approach, in its economic transition process (Peng,
2003). Vietnam is also an emerging economy, although smaller in size
and less advanced in its phase of development than countries such as
China, Brazil, and Russia. Nevertheless, Vietnam has achieved a high
rate of economic growth (on average of 7.2%) during the last decade,

and has recently been classified as a middle-income country. Exports
play an important role in the Vietnamese economy, with their value accounting for about 83.9% of its GDP in 2014 (World Bank, 2015). The
most important export products of Vietnam come from the agricultural
sector (e.g., rice, coffee, rubber) and the light manufacturing industry
(e.g., textiles, footwear, furniture).
Although Vietnam is politically homogeneous because its governance is based on a single party regime, this is not the case with the
country's institutional environment. After more than 20 years of reforms toward a market-based economy, there are significant differences
in terms of the level of socio-economic and political–legal development
between provinces (e.g., between North and South) and between regions (e.g., between mountainous and delta regions) in the country,
which is the major cause of heterogeneity of market-supporting institutions (Acemoglu, Johnson, & Robinson, 2005). Some other reasons for
this institutional heterogeneity in Vietnam are: (a) the different degree
to which local authorities adopt the market mechanism, especially as
regards land and capital transactions; (b) the decentralization of the
regulatory framework, which gives more authority to provincial officials
to act in a way that is more effective for their province; and (c) the existence of unclear central laws and regulations, which are interpreted
and implemented differently by local governments (Malesky, 2004;
Meyer & Nguyen, 2005; Nguyen, Pham, Bui, & Dapice, 2004).
Like many ETEs, business information in Vietnam is underdeveloped.
Hence, in our study, we used two directories to identify Vietnamese
exporters. The first was the directory of Vietnamese exporters, published by the Ministry of Industry and Trade. However, as this directory
only lists exporters that satisfy certain criteria, such as reaching at least a
threshold level of export sales, additional information was obtained
from another directory provided by Vietnam Customs Authorities.

5

From the two directories, we were able to compile a list of 650 exporting
firms. Our research instrument was a structured questionnaire consisting
of questions related to the four institutional attributes (i.e., the specificity,
stability, predictability, and enforceability) and export performance (see

Appendix A).
The ‘specificity’ of property rights and contracting institutions was
indirectly measured by asking export managers about the extent to
which certain phenomena concerning the appropriation of intellectual
assets and land, and the disputes between firms and within firms,
exist in their operational field. The ‘enforceability’ of property rights
and contracting institutions was directly measured by asking managers
about the extent to which the above phenomena are effectively
enforced by the formal institutions. Although some changes have
occurred in the laws and regulations relating to property rights in
Vietnam, the country's property rights institutions have been very
stable since 1975. For this reason, we only evaluated the ‘stability’
and ‘predictability’ of contracting institutions, by asking managers
to state the extent to which some major export-related rules and
regulations (i.e., customs procedures, quality controls, business taxation) have changed in the past and can be predicted in the future.
Finally, ‘export performance’ was measured with five items derived
from Leonidou et al. (2011) and Morgan, Kaleka, and Katsikeas
(2004).
In the first round of the survey, we combined the two methods of
post-mail and internet to contact firms in the sample. We first
approached all firms by telephone in order to introduce the study and
to ask them to participate, with 554 being positive. To each of them,
we sent the questionnaire, accompanied by a covering letter and a
guide explaining how to fill in and return the questionnaire. One week
after sending the questionnaire, we contacted all firms by telephone
to know whether all documents had been received and whether they
needed any clarifications concerning completion of the questionnaire.
Three weeks later, we re-contacted all firms that did not respond, to remind them about filling in and returning the questionnaire. The outcome was the receipt of 29 completed questionnaires. Because of the
small number of responses, we proceeded with personally contacting
all remaining exporters in the list compiled, which yielded an additional

80 questionnaires.
Altogether, we managed to receive 109 fully completed questionnaires, a response rate of 16.4%, which is comparable to that of prior
exporting studies (Leonidou & Katsikeas, 2010). To check for the possibility of non-response bias, we used Mentzer and Flint's (1997)
method. For this purpose, we first selected five items belonging to
each of the key constructs contained in the conceptual model.
Then, we contacted by telephone 25 of the firms from those that
did not reply and asked them to give us answers to each of these
items. The answers of these firms were subsequently compared to
those of the 109 respondents in the main survey. A t-test analysis between the answers given by non-respondents and those obtained by
respondents revealed no statistical significant differences, indicating
the absence of non-response bias.
On average, the firms that answered our questionnaire had been in
business for 15.4 years, employed 243.4 people, and had a working capital of 6.7 billion VND (an equivalent to about 320,000 USD). The two
major forms of company ownership were 100% local private enterprise
(68.8%) and private firms but with capital mainly from public partners
(26.6%). The majority (58.7%) of these firms exported agriculturalprocessed products, while the remainder (41.3%) focused on light
manufactured exports. With regard to their location, 57.8% of the respondents were located in the northern provinces (mainly in the region
of Ha Noi), while the remainder (42.2%) were situated in the southern
provinces (mainly in the region of Ho Chi Minh). On average, firms
in the sample had 12.3 years of export experience, exported to
10.9 foreign markets, and 77.9% of their export sales came from direct exports. Our key informants were general/deputy directors
(27.5%), commercial/marketing/sales managers (39.4%), or export

Please cite this article as: Ngo, V.D., et al., Domestic institutional attributes as drivers of export performance in an emerging and transition
economy, Journal of Business Research (2016), />

6

V.D. Ngo et al. / Journal of Business Research xxx (2016) xxx–xxx

managers/officers (33.1%). Among informants, 56.9% were female,
85.3% had a university education, and 68.8% had been abroad at
least once.

Table 2
Correlation matrix.

5. Analysis and results
In this section, we first explain the results of the measurement
model. We then discuss the results of the structural model with regard to each of the direct effects hypotheses. Subsequently, we analyze the findings of the moderation analysis undertaken. Finally, we
present the results of various variables with a potential control
effect.

Constructs

1.

1. Institutional environmental specificity
2. Institutional environmental stability
3. Institutional environmental predictability
4. Institutional environmental enforceability
5. Export performance

1
.13
.07
.13
−.17

2.

3.

4.

1
−.34
−.20

1

5.

1
.28
−.19
.07

.22

1

Note: Correlations greater than | ± 0.24| are significant at the .01 level.
Correlations greater than | ± 0.19| are significant at the .05 level.

5.1. Measurement model
To assess the validity of our measures, we employed structural equation modeling, using the EQS program. Using confirmatory factor analysis (CFA), where each item was restricted to load on its a priori specified
factor, while allowing the underlying factors to correlate, we found that
all factors loaded highly on their assigned constructs (Anderson &
Gerbing, 1988). As shown in Table 1, the CFA results suggested an acceptable fit, as demonstrated by the goodness-of-fit diagnostics

(χ 2 = 366.25, p = .000, df = 242; NFI = .93; NNFI = .94; CFI = .95;
RMSEA = .07).
The data collected underwent a purification process comprising four
steps: first, we checked the convergent validity, which was met, as the tvalue for each item was always high and significant, all standard errors
of the estimated coefficients were very low, and the average variance
extracted for each construct was equal or above the threshold of .50
(Hair, Black, Babin, Anderson, & Tatham, 2011); second, we checked
for discriminant validity, which was evident because the confidence
interval around the correlation estimate for each pair of constructs
examined never included 1.00 (Anderson & Gerbing, 1988), while the
squared correlation for each pair of constructs never exceeded the average variance extracted (Fornell & Larcker, 1981) (see Table 2); third, we
checked for construct reliability, which was satisfactory because all constructs in our conceptual model exhibited Cronbach's alphas greater

than .80, while composite reliability was also satisfactory with all coefficients being greater than .70; and fourth, we assessed the possibility
of common method bias. We first employed the Harman's singlefactor test (Podsakoff & Organ, 1986), where all questionnaire items
were included in a principal component analysis with varimax rotation.
Five separate factors with eigenvalues greater than 1.0 emerged from
the unrotated factor solution, while these factors explained 77.5% of
the total variance (with 27.6% thereof being explained by the first factor). We also used a confirmatory factor approach, in which all items included in the measurement model were restricted to load on a single
factor (Venkatraman & Prescott, 1990). The model fit indices revealed
very poor values, well below the commonly acceptable cut-off points
(i.e., χ 2 = 1539.59, p = .000; df = 252; NFI = .39; NNFI = .38;
CFI = .43; RMSEA = .22). Collectively, the results from both tests indicate that common method bias does not constitute a problem in this
study.
5.2. Structural model
We ran a structural model to test both the main effects links hypothesized in our study. The results suggest a statistically significant
chi-square (χ 2 = 371.35, p = .000, df = 247), which can be attributed to the test statistic's sensitivity to sample size (Kline, 2005).

Table 1
Measurement model and summary statistics.

Constructs
Institutional environment specificity

Scale items Standardized loadings t-value Α

IES6
IES7
IES8
IES9
Institutional environment stability
IET2
IET3
IET6
IET7
Institutional environment predictability IEP1
IEP3
IEP4
IEP5
IEP6
Institutional environment enforceability IEE2
IEE5
IEE6
IEE7
IEE8
IEE9
Export performance
EXP1
EXP2
EXP3
EXP4

EXP5

.68
.71
.98
.98
.67
.76
.70
.83
.73
.73
.94
.91
.70
.82
.76
.90
.91
.92
.95
.94
.87
.84
.87
.79

ρ

AVE Mean score Standard deviation Item mean Standard deviation

⁎

.91

.86 .72

1.97

1.17

6.16
8.27
8.27
⁎

.83

.77 .55

4.02

1.12

5.74
5.40
6.04
⁎

.90

.85 .65

4.63

1.22

6.54
8.48
8.30
6.27
⁎

.95

.91 .78

3.23

1.42

8.06
10.56
10.75
10.76
11.56
⁎

.94

.88 .75

4.02

1.23

12.66
11.76
12.56
10.24

2.41
1.97
1.75
1.75
3.84
3.86
4.28
4.11
4.61
4.60
4.66
4.68
4.59
2.95
3.03
3.30
3.32
3.46
3.32

3.97
4.14
3.91
4.07
.40

1.54
1.25
1.19
1.24
1.33
1.34
1.49
1.34
1.44
1.25
1.55
1.51
1.42
1.52
1.57
1.56
1.62
1.62
1.58
1.38
1.43
1.38
1.38
1.31

Fit statistics of model: χ2 = 366.25, p = .000, df = 242; NFI = .93; NNFI = .94; CFI = .95; RMSEA = .07.
⁎ Item fixed to set the scale.

Please cite this article as: Ngo, V.D., et al., Domestic institutional attributes as drivers of export performance in an emerging and transition
economy, Journal of Business Research (2016), />

V.D. Ngo et al. / Journal of Business Research xxx (2016) xxx–xxx

However, all other fit indices (i.e., NFI = .93; NNFI = .94; CFI = .95;
RMSEA = .07) were acceptable. Table 3 presents the standardized
path coefficients and corresponding t-values for the main hypothesized links.
The results suggest eight out of the ten hypothesized paths were
found significant and with the expected sign. Specifically, the first hypothesis (H1) connecting institutional environment specificity with export performance was verified (β = .22, t = 2.08, p = .04). With regard
to institutional environment stability (H2), this also had a significant
positive effect on export performance (β = .22, t = 1.89, p = .06). Similar to the previous results were those obtained for institutional environmental predictability (H3): the more predictable the rules and
regulations concerning property rights and contracting institutions,
the higher the firm's export performance (β = .19, t = 1.76, p = .08).
With regard to hypothesis H4, the enforceability of the institutional environment (i.e., the effectiveness and efficiency of protecting private
property rights of ownership and the freedom of contract by regulatory
authorities/agencies) was found to also significantly affect export performance (β = .26, t = 2.33, p = .02).

5.3. Moderation analysis
Moderating effects were tested through multi-group analysis, where
the initial sample was split into two groups (see Table 4).5 Specifically,
for each moderator, we ran two different models: while in the first
model all parameter estimates were free to vary between the two
sub-samples, in the second model an equality constraint was set on
the hypothesized moderated link between the two groups. With reference to H5, our results indicate that in general the effect of specificity
and enforceability of the institutional environment on export performance was stronger in the case of large than in that of small exporters

(Δχ 2 = 8.08, p b .01 and Δχ 2 = 2.77, p b .01 respectively), although
the moderating effect of firm size on the effect of either institutional
stability or institutional predictability on export performance was not
statistically significant (p N .10). In the case of H6, with the exception
of institutional stability (Δχ 2(1) = .66, p N .10), the effect of all remaining institutional environment attributes (i.e., specificity, predictability,
and enforceability) on export performance was significantly stronger
among experienced, as opposed to non-experienced, exporters
(p b .10). Also, with the exception of the path between institutional environment stability and export performance (Δχ 2(1) = .51, p N .10), the
remaining associations between institutional attributes and export
performance were significantly moderated by the exporter's foreign market expansion strategy (H7). The final moderator, namely,
export mode (i.e., H8), was found to have a significant effect on
all hypothesized paths between institutional environment attributes (i.e., specificity, stability, predictability, and enforceability)
and export performance, with this link becoming stronger in the
case of firms exporting on a direct, rather than an indirect, basis
(p b .05).

5

In conducting our moderation analysis, we opted for the split group, rather than the
interaction method, because of the multiple moderation tests required to be made in relation to the total number of cases. According to this method, the data were divided using
the median split into two groups for each moderating construct (e.g., larger exporters versus smaller exporters, experienced exporters versus inexperienced exporters, foreign
market concentrators versus foreign market spreaders, and direct exporters versus indirect exporters). Subsequently, two models were tested; a constrained model, in which
an equality restraint was imposed on the moderated relationship for the two groups,
and a freely estimated model, in which no particular constraints were forced. A significant
chi-square difference (Δχ2(1) N 3.84; p b .05) indicates the existence of a moderation effect. The split group method has been extensively used in the business literature, both domestic and international, with some examples of studies using this method being those of
Menon, Jaworski, and Kohli (1997), Lai, Bao, and Li (2008), Sharma, Borna, and Stearns
(2009); Bello, Katsikeas, and Robson (2010), and Wong, Boon-Itt, and Wong (2011).

7

Table 3
Structural model results—main effects.
Hypo-thesis Hypothesized path

Standardized t-value p-Value
path
coefficients

H1

.22

2.08

.04

.22

1.89

.06

.19

1.76

.08

.26

2.33

.02

.48

3.85

.00

.55

5.10

.00

.57

5.45

.00

.51

3.96

.00

.50

3.88

.00

.49

3.70

.00

H2

H3

H4

Institutional environment
specificity
→ Export performance
Institutional environment
stability
→ Export performance
Institutional environment
predictability
→ Export performance
Institutional environment
enforceability
→ Export performance

Control effects:

Exporter's location
→ Institutional environment
specificity
Exporter's location
→ Institutional environment
stability
Exporter's location
→ Institutional environment
predictability
Exporter's location
→ Institutional environment
enforceability
Principal export market
→ Export performance
Types of goods exported
→ Export performance

Fit statistics: χ2 = 371.35, p = .000, df = 247; NFI = .93; NNFI = .94; CFI = .95; RMSEA =
.07.

5.4. Control effects
We have also used three control variables in our model. The first is
the location of the exporter,6 which had a significant effect on each of
the four dimensions of the institutional environment, namely, specificity (β = 3.85, t = .38, p = .00), stability (β = 5.10, t = .45, p = .00), predictability (β = 5.45, t = .47, p = .00), and enforceability (β = 3.96, t =
.41, p = .00).7 The second control variable is ‘principal export market’,
whether developed or emerging/developing country, which had a significant impact on export performance (β = 3.88, t = .40, p = .00).
The nature of the products exported was also used as a control variable,
indicating that this also had a significant effect on export performance
(β = 3.70, t = .39, p = .00).

6. Conclusions, implications, and future directions
A central goal of this study was to understand how home institutions
matter in influencing the export performance of firms coming from
ETEs. Anchored on the institution-based view, we have established a
6
In the mid-1950s, Vietnam was divided into two countries, North Vietnam and South
Vietnam, which were governed by different political systems. While the Northen part
(comprising 32 provinces) was governed by a centrally planned economy, the Southern
part (comprising 31 provinces) had a market driven economy. This has resulted in creating two different institutional environments, which still holds today, despite the unification of the country in the mid-1970s. The difference between Northern and Southern
provinces has been clearly shown in prior studies, such as in the work of Nguyen et al.
(2004).
7
In Vietnam, the most comprehensive database about the institutional environment at
the provincial/sub-national level is the Provincial Competitiveness Index (PCI), developed
by the Vietnam Chamber of Commerce and Industry (VCCI). This database has been used
by some scholars to examine the link between the firm's export involvement intensity and
export performance, revealing that the existence of an institutional heterogeneity at the
provincial level in Vietnam had indeed a significant impact on the export behavior of indigenous firms (Nguyen et al., 2012).

Please cite this article as: Ngo, V.D., et al., Domestic institutional attributes as drivers of export performance in an emerging and transition
economy, Journal of Business Research (2016), />

8

V.D. Ngo et al. / Journal of Business Research xxx (2016) xxx–xxx

Table 4
Results of individual moderating effects.
Exporter size as a moderatora
Larger exporter group

Smaller exporter group

Δχ2 (Δdf = 1)

β = .11, t = 0.84

8.08
(p b .01)
0.52
(p N .10)
0.53
(p N .10)
2.77
(p b .10)

Main effect

Hypothesized moderating effect

IES → EXP

H5a: Effect is stronger among larger than smaller exporting firms

IET → EXP

H5b: Effect is stronger among larger than smaller exporting firms

β = .19, t = 1.88

β = .19, t = 1.53

IEP → EXP

H5c: Effect is stronger among larger than smaller exporting firms

β = .25, t = 2.06⁎

β = .21, t = 1.68

IEE → EXP

H5d: Effect is stronger among larger than smaller exporting firms

β = .36, t = 3.38⁎⁎

β = .29, t = 1.98⁎

β = .71, t = 5.18⁎⁎

Export experience as a moderatora
Main effect

Hypothesized moderating effect

Experienced exporter group

Inexperienced exporter group

Δχ2 (Δdf = 1)

IES → EXP

H6a: Effect is stronger among experienced than inexperienced exporters

β = .40, t = 3.79⁎⁎

β = .16, t = 1.37

IET → EXP

H6b: Effect is stronger among experienced than inexperienced exporters

β = .19, t = 1.90

β = .14, t = 1.27

IEP → EXP

H6c: Effect is stronger among experienced than inexperienced exporters

β = .36, t = 3.69⁎⁎

β = .20, t = 1.63

IEE → EXP

H6d: Effect is stronger among experienced than inexperienced exporters

β = .26, t = 2.62⁎⁎

β = .13, t = 1.09

8.69
(p b .01)
0.66
(p N .10)
4.06
(p b .05)
2.90
(p b .10)

Foreign market expansion as a moderatora
Main effect Hypothesized moderating effect

Foreign market concentrator group Foreign market expansion group Δχ2 (Δdf = 1)

IES → EXP

H7a: Effect is stronger among export market concentrators than spreaders β = .23, t = 2.79⁎⁎

β = .24, t = 1.62

IET → EXP

H7b: Effect is stronger among export market concentrators than spreaders β = .15, t = 2.04⁎

β = .27, t = 1.79

IEP → EXP

H7c: Effect is stronger among export market concentrators than spreaders β = .26, t = 2.99⁎⁎

β = .26, t = 1.69

IEE → EXP

H7d: Effect is stronger among export market concentrators than spreaders β = .18, t = 2.34⁎

β = .09, t = 0.76

2.75
(p b .10)
0.51
(p N .10)
2.97
(p b .10)
2.79
(p b .10)

Export entry mode as a moderatora
Hypothesized moderating effect

Direct exporter group

Indirect exporter group

Δχ2 (Δdf = 1)

IES → EXP

H8a: Effect is stronger among direct exporters than indirect exporters

β = .27, t = 3.89⁎⁎

β = .19, t = 1.09

IET → EXP

H8b: Effect is stronger among direct exporters than indirect exporters

β = .26, t = 3.68⁎⁎

β = .24, t = 1.62

IEP → EXP

H8b: Effect is stronger among direct exporters than indirect exporters

β = .50, t = 5.96⁎⁎

β = .18, t = 1.04

IEE → EXP

H8b: Effect is stronger among direct exporters than indirect exporters

β = .20, t = 3.17⁎⁎

β = .09, t = 0.64

7.76
(p b .01)
6.92
(p b .01)
19.40
(p b .01)
4.02
(p b .05)

Main effect

a
Groups were divided using a median split.
⁎⁎ p b .01.
⁎ p b .05.

link between the institutional environment's attributes prevailing in the
domestic setting of exporters from Vietnam and their performance outcomes. Our study contributes to the international business knowledge
in a number of ways: first, we have focused on ETEs, and particularly
on Vietnam, which has experienced a phenomenal impact and success
in international trade in the last few decades; second, as opposed to
other studies that have concentrated their attention on the international
activities of MNEs, our emphasis has been on indigenous exporters who
form the backbone of the export activity of ETEs; third, we have developed a set of conceptual tools (i.e., specificity, stability, predictability,
enforceability), focusing on the institutional-based view to capture the
impact of domestic institutional environment on indigenous firms' export performance; finally, we have revealed the role of certain key organizational and internationalization characteristics in moderating the
association between home country institutional attributes and export
performance.
Our results demonstrate that domestic institutional specificity, stability, predictability, and enforceability positively affect export performance. With regard to institutional specificity, the study underscores

the crucial role of having clear private property rights and freedom of
contract to enhance performance outcomes in foreign markets. Indeed,

our personal discussions with Vietnamese managers revealed that the
growing specificity of the home institutional environment has helped
to more clearly define and understand various export-related issues
(e.g., export documentation/procedures, tax relief, legal restrictions),
as well as to encourage the adoption of more innovative strategies in international markets. Moreover, our findings relating to institutional stability and predictability underline the importance of having stable and
predictable rules and regulations concerning property rights and
contracting institutions in the home market in achieving significant
export-related cost reductions. In fact, some managers stated that
such institutional stability and predictability is essential in reducing
the uncertainty surrounding their international business dealings,
while at the same time reducing unnecessary costs relating to changing
rules, procedures, documentation, and so on. Notably, some of the respondents explained that working in an institutional environment,
where future changes can be easily predicted, helps them to take precautionary measures well in advance to avoid unnecessary costs
(e.g., taxes, penalties), as well as plan their export operations more effectively and efficiently. Finally, our findings confirmed that an enforceable institutional setting will generate a feeling of trust and confidence
that home country institutions will properly perform their role and

Please cite this article as: Ngo, V.D., et al., Domestic institutional attributes as drivers of export performance in an emerging and transition
economy, Journal of Business Research (2016), />

V.D. Ngo et al. / Journal of Business Research xxx (2016) xxx–xxx

protect the exporter from possible problems that could harm its foreign
business operations.
Most of the links between each attribute of the domestic institutional environment and export performance were found to become stronger
in the case of exporters characterized by larger size, more experience,
foreign market concentration, and direct exporting methods. Specifically, our findings indicate that larger exporting firms will obtain more
benefits from domestic institutional forces than smaller ones, mainly

because they possess more resources and capabilities to exploit opportunities and accommodate challenges derived from them. Moreover,
the fact that experienced exporting firms are more knowledgeable
and skillful compared to inexperienced exporters makes them more
competent to deal with issues created by domestic institutional forces
in an effective and efficient way. This is in harmony with the results of
other studies in the exporting field, indicating that experience is an important factor in overcoming barriers to exporting (Leonidou, 2004).
Furthermore, the fact that the effect of institutional stability, predictability, and enforceability on export performance were becoming stronger
in the case of exporters adopting a market concentration rather than a
market spreading strategy, stresses the complexity involved in coping
with institutional distances when operating in multiple foreign markets
(Dow & Larimo, 2009). Finally, our study has shown that compared to
indirect exporters, direct exporters are in a better position to capitalize
on domestic institutional factors to help them to better exploit opportunities derived from foreign markets (to which they have more immediate access and understanding).
Our control analysis also revealed that even in smaller ETEs, as in the
case of Vietnam, the institutional environment may differ according to
the region in which the exporter is located. Indeed, the influence of
the various regions by different political, economic, and other factors
(as is the case of Northern and Southern provinces of Vietnam) is responsible for the development of different institutional forces that are
changing at a different pace. The fact that the nature of the principal foreign market of the exporter had a strong influence on its export performance stresses the instrumental role of institutional distance between
home and host markets in achieving success. A closer look at the
firms' export destination indicated that selling to other emerging/developing countries increases the chances of success, as opposed to selling
to developed countries. Finally, the finding that the type of product
exported had a strong control effect on export performance can be explained by the fact that agricultural-processed products are less vulnerable to institutional forces, as opposed to light manufactured goods.

9

foreign markets, and take collective action toward seeking the amelioration of its quality from government and other parastatal organizations.
This will also help to improve the effective exploitation of various government export assistance programs, such as the provision of foreign
market information, low interest export loans, and education on
export-related issues (Leonidou et al., 2011). Although such an appreciation of institutional environment quality is expected to yield better financial results among larger, experienced, concentrated, and direct

exporters, other exporters should also realize that its role is critical.
6.2. Theoretical implications
Our study also has important theoretical implications. First, it has
highlighted the critical role of the institution-based view in studying
exporting phenomena. Although this theoretical paradigm has been
rarely used in exporting research, our study has shown that an institutional explanation of the firm's export behavior is crucial in broadening
our understanding of the factors driving export performance. This theory is particularly useful in studying the internationalization aspects of
firms from ETEs due to the unique and evolving nature of their institutional environment. The regional variations in the domestic institutional
environment observed in Vietnam imply that further applications of the
institutional-based view should take into consideration the role of the
firm's location. Our study has also identified from scattered sources
the four dimensions comprising the institutional environment
(i.e., specificity, stability, predictability, and enforceability) and offered
operationalizations that could be useful in future research.
Another theoretical implication refers to the neglected role of home
country characteristics (as opposed to the over-researched foreign market dimensions) that influence the firm's export behavior. Specifically,
the study findings show that the domestic institutional environment
plays a pivotal role in determining the firm's export performance and
this should be taken into consideration in future conceptualizations of
the firm's export activities. This provides hints to expand the conceptual
framework of exporting research to include additional domestic factors
with a potentially facilitating or inhibiting role on the firm's export performance (such as the regulatory framework, economic conditions, and
competitive intensity). Our study has also revealed that the impact of
domestic institutional forces on the firm's export performance is moderated by various organizational and internationalization characteristics, which underscores the importance of internal contingent factors
in understanding export phenomena. Such contingencies may also
emerge from the firm's targeted foreign markets and products exported.

6.1. Practical implications
6.3. Limitations and future directions
Public policymakers in Vietnam (as well as in other ETEs) are advised to take advantage of the findings of this study and adopt measures

toward improving the quality of their institutional environment in
order to boost their nation's export performance. This is because,
being in a stage of transition and emergence, their property rights and
contracting institutions need to become more complete, predictable,
and functional to offer proper assistance to exporting firms. In fact,
this could constitute a serious barrier toward initiating, developing,
and sustaining successful export operations, which are so important
for the economic growth and prosperity of these countries (Leonidou,
2004). Appropriate rules and regulations and monitoring mechanisms
that will safeguard a healthy institutional environment, characterized
by greater specificity, stability, predictability, and enforceability, therefore need to be set. On the one hand, this will improve confidence and
reduce uncertainty among both neophyte and mature exporters, and
on the other hand, it will provide an impetus for boosting performance
in international markets.
Managers of exporting firms located in Vietnam (and in other ETEs)
could also capitalize on the findings of this study. First, they should
clearly understand the facilitating (or inhibiting) role of the domestic
institutional environment in improving their competitive position in

Our findings should be seen within the context of certain limitations,
which, however, could provide input for future research on the subject.
First, the assessment of the quality of the institutional environment relied solely on managerial perceptions, while information obtained
from government officials and informants from other independent
agencies (e.g., chambers of commerce, industry associations, labor
unions) could yield a more rounded perspective of the facilitating (or
inhibiting) role of domestic institutions in exporting. Moreover, the
use of more objective data provided by independent international organizations (such as the WTO or OECD), regarding the level of institutional
quality in Vietnam (as well as in other ETEs), could produce a more reliable picture of the specificity, stability, predictability, and enforceability attributes of the domestic institutional environment.
Second, the effect of institutional factors on achieving superior export performance, takes some time to develop, and therefore, a longitudinal, as opposed to a cross-sectional, study would be more appropriate.
Since the institutional environment quality of ETEs is rapidly changing,

it will be useful to monitor changes in each of its four institutional pillars
(i.e., specificity, stability, predictability, and enforceability) at regular
time intervals, using, if possible, the same panel of exporting firms.

Please cite this article as: Ngo, V.D., et al., Domestic institutional attributes as drivers of export performance in an emerging and transition
economy, Journal of Business Research (2016), />

10

V.D. Ngo et al. / Journal of Business Research xxx (2016) xxx–xxx

difference between the home and host country and its effect on standardizing/adapting the firm's export business strategies using fit analysis (Katsikeas, Samiee, Theodosiou, 2006).
Finally, since the focus of our study was on exporting firms, the issues that we have addressed here could equally be applied in the case
of MNEs from ETEs in order to have a more complete view of the impact
of institutional factors on the firm's international performance. In addition, the external validity of our findings could be verified through replication studies in other ETEs (e.g., China, India, Russia) since they are
relatively more heterogeneous in terms of both their institutional context and the stage of their institutional transition (Peng, 2003; Wright
et al., 2005). Such cross-country comparisons could also take into consideration other macro-environmental parameters with a potential
link to institutional development, such as cultural traits, economic
structure, and political conditions.

This will help to identify any improvement or deterioration in the domestic institutional environment and examine its effect on the individual firm's export performance.
Third, since, apart from the foreign market (whether developing or
developed countries) Vietnamese exporters can also sell to the domestic
market, it would be interesting to examine their selling activities in various regions of Vietnam characterized by different institutional environments, and how these activities are affected by these environments.
Moreover, since institutional development in ETEs usually differs between urban and rural areas, it would be enlightening to consider this
urban/rural institutional dichotomy as a possible control factor. Furthermore, just as domestic institutional quality influences the firm's export
performance, one would also expect the institutional environment of
host markets to play an important influential role. In this context, it
would be interesting to explore the impact of institutional similarity/
Appendix A. Operationalization of constructs

Constructs

Item
code

Item description

Mean
score

Standard
deviation

Measurement scale

Source

Institutional environment
specificity

IES1
IES2

Counterfeit goods
Violation of intellectual
property rights
Illegal breaking of signed
contract
Commercial fraud

Monopoly in
production/commerce
Unofficial charges/bribery
Economic and commercial
disputes between enterprises
Disputes between enterprises
and their employees
Enterprise's land
expropriation by local/central
government
Customs procedures
Quality control of export
product
Business tax laws and
regulations
Exchange rates related policies
Interest rates related policies
Labor-related regulations
(e.g., wage, social security,
etc.)
Environment related
regulations
Customs procedures
Quality control of export
product
Business tax laws and
regulations
Exchange rates related policies
Interest rates related policies
Labor-related regulations

(e.g., wage, social security,
etc.)
Environment related
regulations
Counterfeit goods
Violation of intellectual
property rights
Illegal breaking of signed
contract
Commercial fraud
Monopoly in
production/commerce
Unofficial charges/bribery
Economic and commercial
disputes between enterprises
Disputes between enterprises
and their employees

2.46
2.30

1.65
1.53

2.75

1.58

Seven-point scale, anchored on
“none existing” and “prevalent”,

concerning different phenomena
related to property rights and
contracting rights

2.50
2.67

1.60
1.64

Acemoglu and Johnson (2005), Besley
(1995), Brunetti and Weder (1998),
Djankov et al. (2002), Djankov et al.
(2003), Feder and Onchan (1987),
Hayes, Roth, and Zepeda (1997),
Malesky and Taussig (2009)

2.41
1.97

1.54
1.25

1.75

1.19

1.75

1.24

4.28
3.84

1.46
1.33

3.86

1.34

Seven-point scale, anchored on
“very stable” and “very unstable”,
concerning the stability in the
past of laws and regulations relative to export activities.

4.78
5.09
4.28

1.46
1.37
1.49

Acemoglu and Johnson (2005), Besley
(1995), Brunetti and Weder (1998),
Djankov et al. (2002), Djankov et al.
(2003), Feder and Onchan (1987),
Hayes et al. (1997), Malesky and
Taussig (2009)

4.11

1.34

4.61
4.38

1.44
1.38

4.60

1.25

4.66
4.68
4.59

1.55
1.51
1.42

Seven-point scale, anchored on
“very easy” and “very difficult”,
concerning the predictability of
changes in the future of laws and
regulations relative to export
activities.

Acemoglu and Johnson (2005), Besley
(1995), Brunetti and Weder (1998),
Djankov et al. (2002), Djankov et al.
(2003), Feder and Onchan (1987),
Hayes et al. (1997), Malesky and
Taussig (2009)

4.57

1.41

2.91
2.95

1.55
1.52

3.34

1.55

3.17
3.03

1.50
1.57

Seven-point scale, anchored on
“very weak” and “very strong”,
concerning the effectiveness of legal enforcement on different phenomena related to property rights

and contracting rights

Acemoglu and Johnson (2005), Besley
(1995), Brunetti and Weder (1998),
Djankov et al. (2002), Djankov et al.
(2003), Feder and Onchan (1987),
Hayes et al. (1997), Malesky and
Taussig (2009)

3.30
3.32

1.56
1.62

3.46

1.62

IES3
IES4
IES5
IES6
IES7
IES8
IES9

Institutional environment
stability

IET1
IET2
IET3
IET4
IET5
IET6

IET7
Institutional environment
predictability

IET1
IET2
IET3
IET4
IET5
IET6

IET7
Institutional environment
enforceability

IEE1
IEE2
IEE3
IEE4
IEE5
IEE6
IEE7
IEE8

Please cite this article as: Ngo, V.D., et al., Domestic institutional attributes as drivers of export performance in an emerging and transition
economy, Journal of Business Research (2016), />

V.D. Ngo et al. / Journal of Business Research xxx (2016) xxx–xxx

11

Appendix
A (continued)
(continued)
Constructs

Export performance

Item
code

Item description

Mean
score

Standard
deviation

IEE9

Enterprise's land
expropriation by local/central

government
Export sales volume
Percentage of export sales in
total sales
Export market share
Export profitability
Firm's reputation in foreign
market

3.32

1.58

3.97
4.14

1.38
1.43

3.91
4.07
4.40

1.38
1.38
1.31

EXP1
EXP2
EXP3

EXP4
EXP5

References
Acemoglu, D., Johnson, S., & Robinson, J. (2005). Institutions as a fundamental cause of
long-run growth. In P. Aghion, & S. N. Durlauf (Eds.), Handbook of economic growth
(pp. 385–472). Elsevier B.V.
Acemoglu, D., & Johnson, S. (2005). Unbundling institutions. Journal of Political Economy,
113(51), 949-945.
Allen, D. W. (2000). Transaction costs. In B. Bouckaert, & G. De Geest (Eds.), Encyclopedia
of law and economics. The history and methodology of law and economics, Vol. I, . Cheltenham: Edward Elgar.
Amit, R., & Schoemaker, P. J. H. (1993). Strategic assets and organizational rent. Strategic
Management Journal, 14(1), 33–46.
Anderson, J. C., & Gerbing, D. W. (1988). Structural equation modeling in practice: A review and recommended two-step approach. Psychological Bulletin, 103(3), 411–423.
Arnold, D. J., & Quelch, J. A. (1998). New strategies in emerging markets. Sloan
Management Review, 40(1), 7–20.
Aulakh, P. S., Kotabe, M., & Teegen, H. (2000). Export strategies and performance of firms
from emerging economies: Evidence from Brazil, Chile, and Mexico,". The Academy of
Management Journal, 43(4), 342–361.
Barney, J. B. (1991). Firm resources and sustained competitive advantage. Journal of
Management, 17(1), 99–120.
Bello, D. C., Katsikeas, C. S., & Robson, M. J. (2010). Does ccommodating a self-serving
partner in an international marketing alliance pay off? Journal of Marketing, 74(6),
77–93.
Besley, T. (1995). Property rights and investment incentives: Theory and evidence from
Ghana. Journal of Political Economy, 103(5), 903–937.
Brunetti, A., & Weder, B. (1998). Investment and institutional uncertainty: A comparative study of different uncertainty measures. Weltwirtschaftliches Archiv, 134(3),
513–533.
Bruton, G. D., Ahlstrom, D., & Obloj, K. (2008). Entrepreneurship in emerging economies: Where are we today and where should the research go in the future.
Entrepreneurship: Theory and Practice, 32(1), 1–14.

Chakrabarti, A., Singh, K., & Ishtiaq, M. (2007). Diversification and performance: Evidence
from east Asian firms. Strategic Management Journal, 28(2), 101–120.
Chacar, A. S., Newburry, W., & Vissa, B. (2010). Bringing institutions into performance persistence research: Exploring the impact of product, financial, and labor market institutions. Journal of International Business Studies, 41(7), 1119–1140.
Davis, L. E., & North, D. C. (1971). Institutional change and American economic growth.
London: Cambridge University Press.
Djankov, S., La Porta, R., Lopez-de-Silanes, F., & Shleifer, A. (2002). The regulation of entry.
The Quarterly Journal of Economics, 117(1), 1–37.
Djankov, S., La Porta, R., Lopez-de-Silanes, F., & Shleifer, A. (2003). Courts. The Quarterly
Journal of Economics, 118(2), 453–517.
Dow, D., & Larimo, J. (2009). Challenging the conceptualization and measurement of distance and international experience in entry mode choice research. Journal of
International Marketing, 17(2), 74–98.
Duncan, R. B. (1972). Characteristics of organizational environments and perceived environmental uncertainty. Administrative Science Quarterly, 17(3), 313–327.
Ellis, P. D. (2010). International trade intermediaries and the transfer of marketing knowledge in transition economies. International Business Review, 19, 16–33.
Feder, G., & Onchan, T. (1987). Land ownership security and farm investment in Thailand.
American Journal of Agricultural Economics, 69(2), 311–320.
Fornell, C., & Larcker, D. F. (1981). Evaluating structural equation models with unobservable variables and measurement error. Journal of Marketing Research, 18(1),
39–50.
Furubotn, E. G., & Richter, R. (1991). The new institutional economics: An assessment. In
E. G. Furubotn, & R. Richter (Eds.), The New institutional economics: A collection of articles from the journal of institutional and theoretical economics. Tubingen: Texas A&M
University Press.
Gao, G. Y., Murray, J. Y., Kotabe, M., & Lu, J. (2010). A “strategy tripod” perspective on export behaviors: Evidence from domestic and foreign firms based in an emerging
economy. Journal of International Business Studies, 41(3), 377–396.
Hair, J. F., Black, W. C., Babin, B. J., Anderson, R. E., & Tatham, R. L. (2011). Multivariate data
analysis. Upper Saddles River, NJ: Pearson Education.
Hayes, J., Roth, M., & Zepeda, L. (1997). Tenure security, investment and productivity in
Gambian agriculture: A generalized probit analysis. American Journal of Agricultural
Economics, 79(2), 369–382.

Measurement scale

Source

Leonidou et al. (2011), Morgan et al.
Seven-point scale, anchored on
“much lower” and “much higher”, (2004)
compared with other firms that
export similar goods

Hessels, J., & Terjesen, S. (2010). Resource dependency and institutional theory perspectives on direct and indirect export choices. Small Business Economics, 34(2),
203–220.
Hoskisson, R. E., Eden, L., Chung, M. L., & Wright, M. (2000). Strategy in emerging economies. The Academy of Management Journal, 43(3), 249–267.
Jeong, B. (2002). Policy uncertainty and long-run investment and output across countries.
International Economic Review, 43(2), 363–392.
Johanson, J., & Vahlne, J. -E. (1977). The internationalization process of the firm—a model
of knowledge development and increasing foreign market commitment. Journal of
International Business Studies, 8(1), 23–32.
Johnson, S., McMillan, J., & Woodruff, C. (2002a). Courts and relational contracts. Journal of
Law, Economics, and Organization, 18(1), 221–277.
Johnson, S., McMillan, J., & Woodruff, C. (2002b). Property rights and finance. The
American Economic Review, 92(5), 1335–1356.
Katsikeas, C. S., & Leonidou, L. C. (1996). Export market expansion strategy: Differences
between market concentration and market spreading. Journal of Marketing
Management, 12(1–3), 113–134.
Katsikeas, C. S., Samiee, S., & Theodosiou, M. (2006). Strategy fit and performance consequences of international marketing standardization. Strategic Management Journal,
27(9), 867–890.
Kitching, J. (2006). A burden on business? Reviewing the evidence base on regulation and
small-business performance, Environment and Planning C: Government and Policy,
24(6), 799–814.
Kline, R. B. (2005). Principles and practice of structural equation modeling. New York:
Guilford Press.

Knack, S., & Keefer, P. (1995). Institutions and economic performance: Cross-country test
using alternative institutional measures. Economics and Politics, 7(3), 207–228.
Lai, K. H., Bao, Y., & Li, X. (2008). Channel relationship and business uncertainty: Evidence
from the Hong Kong market. Industrial Marketing Management, 37(6), 713–724.
Leonidou, L. C. (2004). An analysis of the barriers hindering small business export development. Journal of Small Business Management, 42(3), 279–302.
Leonidou, L. C., & Katsikeas, C. S. (2010). Integrative assessment of exporting research articles in business journals during the period 1960–2007. Journal of Business Research,
63, 879–887.
Leonidou, L. C., & Theodosiou, M. (2004). The export marketing information system: An
integration of the extant knowledge. Journal of World Business, 39, 12–36.
Leonidou, L. C., Palihawadana, D., & Theodosiou, M. (2011). National export-promotion
programs as drivers of organizational resources and capabilities: Effects on strategy,
competitive advantage, and performance. Journal of International Marketing, 19(2),
1–29.
Malesky, E. (2004). Leveled mountains and broken fences: Measuring and analyzing de
facto decentralization in Vietnam. European Journal of South East Asian Studies, 3(2),
307–337.
Malesky, E., & Taussig, M. (2009). Out of the gray: The impact of provincial institutions on
business formalization in Vietnam. Journal of East Asian Studies, 9(2), 249–290.
McMillan, J. (1995). Markets in transition. In D. M. Kreps, & K. F. Wallis (Eds.), Advances in
Economics and Econometrics: Theory and Applications, Vol. 12, Cambridge: Cambridge
University Press.
McMillan, J. (2007). Market institutions. In S. N. Durlauf, & L. E. Blume (Eds.), The new Palgrave dictionary of economics (2nd ed.). London: Palgrave.
McMillan, J., & Woodruff, C. (2000). Private order under dysfunctional public order.
Michigan Law Review, 98(8), 2421–2458.
Menon, A., Jaworski, B. J., & Kohli, A. K. (1997). Product quality: Impact of interdepartmental interactions. Journal of the Academy of Marketing Science, 25(3), 187–200.
Mentzer, J. T., & Flint, D. J. (1997). Validity in logistics research. Journal of Business Logistics,
18(1), 199–216.
Meyer, K. E. (2001). Institutions, transaction costs, and entry mode choice in eastern
Europe. Journal of International Business Studies, 32(2), 357–367.
Meyer, K. E., & Nguyen, H. V. (2005). Foreign Investment Strategies and Sub-national Institutions in Emerging Markets: Evidence from Vietnam. Journal of Management

Studies, 42(1), 63–93.
Milliken, F. J. (1987). Three types of perceived uncertainty about the environment:
State, effect, and response uncertainty. Academy of Management Review, 12(1),
133–143.
Morgan, N. A., Kaleka, A., & Katsikeas, C. S. (2004). Antecedents of export venture performance: A theoretical model and empirical assessment. The Journal of Marketing,
68(1), 98–108.

Please cite this article as: Ngo, V.D., et al., Domestic institutional attributes as drivers of export performance in an emerging and transition
economy, Journal of Business Research (2016), />

12

V.D. Ngo et al. / Journal of Business Research xxx (2016) xxx–xxx

Nguyen, D. C., Pham, A. T., Bui, V., & Dapice, D. (2004). History or policy: Why don't northern
provinces grow faster? Hanoi: United Nations Development Program.
Nguyen, T. V., & Rose, J. (2009). Building trust—Evidence from Vietnamese entrepreneurs.
Journal of Business Venturing, 24(2), 165.
Nguyen, T. V., Le, N. T. B., & Bryant, S. E. (2012). Sub-national institutions, firm strategies,
and firm performance: A multilevel study of private manufacturing firms in Vietnam.
Journal of World Business, 48(1), 68–76.
North, D. C. (1990). Institutions, institutional change and economic performance. Cambridge: Cambridge University Press.
Oliver, C. (1997). Sustainable competitive advantage: Combining institutional and
resource-based views. Strategic Management Journal, 18(9), 697–713.
Pejovich, S. (1990). The economics of property rights: Toward a theory of comparative systems. Netherland: Kluwer Academic Publishers.
Peng, M. W., Sun, S. L., Pinkham, B., & Chen, H. (2009). The institution-based view as a
third leg for a strategy tripod. Academy of Management Perspectives, 22(3), 63–81.
Peng, M. W. (2003). Institutional transitions and strategic choices. The Academy of
Management Review, 28(2), 275–296.
Peng, M. W., & Ilinitch, A. Y. (1998). Export intermediary firms: A note on export development research. Journal of International Business Studies, 29(3), 609–620.

Peng, M. W., & Luo, Y. (2000). Managerial ties and firm performance in a transition economy: The nature of a micro–macro link. The Academy of Management Journal, 43(3),
486–501.
Podsakoff, P. M., & Organ, D. W. (1986). Self-reports in organizational research: Problems
and prospects. Journal of Management, 12(Winter), 531–544.
Ramswami, S. N., Srivastava, R. K., & Bhargava, M. (2009). Market-based capabilities and
financial performance of firms: Insights into marketing's contribution to firm value.
Journal of the Academy of Marketing Science, 37(2), 97–116.
Scott, W. R. (1995). Institutions and organizations. Thousand Oaks, CA: Sage.
Sharma, D., Borna, S., & Stearns, J. M. (2009). An investigation of the effects of corporate
ethical values on employee commitment and performance: Examining the moderating role of perceived fairness,". Journal of Business Ethics, 89(2), 251–260.
Shinkle, G. A., & Kriauciunas, A. P. (2010). Institutions, size and age in transition economies: Implications for export growth. Journal of International Business Studies, 41(2),
448–458.

Shleifer, A. (2005). Understanding Regulation. European Financial Management, 11(4),
439–451.
Svensson, J. (1998). Investment, property rights and political instability: Theory and evidence. European Economic Review, 42(7), 1317–1341.
Teisberg, E. O. (1993). Capital investment strategies under uncertain regulation. The Rand
Journal of Economics, 24(4), 591–604.
Venkatraman, N., & Prescott, J. E. (1990). Environment-strategy coalignment: An empirical test of its performance implications. Strategic Management Journal, 11(1), 1–23.
Welter, F. (2011). Contextualizing entrepreneurship—conceptual challenges and ways
forward. Entrepreneurship: Theory and Practice, 35(1), 165–184.
Welter, F., & Smallbone, D. (2011). Institutional perspectives on entrepreneurial behavior
in challenging environments. Journal of Small Business Management, 49(1), 107–125.
Williamson, O. E. (1998). The institutions of governance. The American Economic Review,
88(2), 75–79.
Williamson, O. E. (2005). The economics of governance. The American Economic Review,
95(2), 1–18.
Wong, C. Y., Boon-Itt, S., & Wong, C. W. (2011). The contingency effects of environmental
uncertainty on the relationship between supply chain integration and operational
performance. Journal of Operations Management, 29(6), 604–615.

Williamson, O. E. (1991). Comparative Economic Organization: The Analysis of Discrete
Structural Alternatives. Administrative Science Quarterly, 36(2), 269–296.
World Bank (2004). Doing business 2004: Understanding regulations. Washington: Oxford
University Press.
World Bank (2015). The World Bank DataBank. on
November 2015).
Wright, M., Filatotchev, I., Hoskisson, R. E., & Peng, M. W. (2005). Strategy research in
emerging economies: Challenging the conventional wisdom. Journal of Management
Studies, 42(1), 1–33.
Zhu, Y., Wittmann, X., & Peng, M. W. (2012). Institution-based barriers to innovation in
SMEs in China. Asia Pacific Journal of Management, 29(4), 1131–1142.

Please cite this article as: Ngo, V.D., et al., Domestic institutional attributes as drivers of export performance in an emerging and transition
economy, Journal of Business Research (2016), />