Export Assistance Needs of San Francisco Bay Area Environmental Technology Firms April 2000 Article from Environmental Business Journal Vol.XII No.9/10 More articles from this issue     With nearly 2,000 environmental firms in the United States pursuing overseas business and export activities and efforts of industry-specific export promotion in the federal government and almost all of the 50 states, researchers at San Francisco State University sought to assess levels of export activity, critical success factors and barriers to exports. The following is a summary of their survey results and findings from a study of environmental firms in California.   The profile of the 55 exporting firms in the survey sample shows them to be small and medium sized firms (66% under $10 million revenue) which have been in business a long time (67% over 10 years). They have a good deal of export experience (60% exported for 4 or more years; 56% exported to 4 or more countries). While their level of export activity is higher than the national average (58% earn more than 5% of their annual revenue from exports), the export opportunities available to this industry suggest there is much room for increasing Bay Area exports from California. Asia was the largest market for San Francisco Bay Area environmental firms in 1997.   Characterization of Environmental Exporters in the Survey Set Source: San Francisco State University, College of Business Survey Column total exceeds 100% because some firms use more than one type of alliance.   What do environmental firms believe to be the key success factors in exporting? In order to explore this question, firms were asked to rate the relative importance of 13 items in relation to export success. These items were factor analyzed to see if any themes emerged reflecting a consistent viewpoint among firms in the industry. In priority order these are alliances, understanding country markets, in-house staff and financing. Having alliances and working effectively with partners in export countries is considered to be the most critical success factor for exporters. Understanding country markets, or becoming familiar with a specific country, its culture, work habits, and language is also considered to be very important for export success. Having experienced in-house staff dedicated to exports was rated the third most important factor. Access to financing for export activities was the final important success factor. A wide range of strategic alliances were used in exporting by firms in our survey, as shown in the table below. Joint ventures with small companies in export markets was the most common form of alliance followed by long-term marketing agreements. This may be due to the fact that the customer of environmental technology products and services is often a local or national government agency that requires local participation. Moreover, the differences in legal, political and social environments in most foreign countries also necessitates the knowledge and connections of host country partners. Such alliances provide immediate local presence and knowledge of the local market. How satisfied exporting firms were with their host country partner relationships? Companies were asked to rate their satisfaction with their host country partner as well as the financial returns associated with the relationship (see table on the facing page). The good news is that there are relatively low levels of dissatisfaction-only 4% were dissatisfied with the relationship in general and only 2% were dissatisfied with the financial returns. A concern is that only about 44% of the firms were satisfied or extremely satisfied. We need to better understand why satisfaction levels were not higher, and help firms better manage strategic alliances with host country partners. Finally, results included the overall satisfaction of export firms with their export experience. The final table shows only about half the exporting firms in our sample were satisfied or extremely satisfied with their export experience and with the financial return from exports. This may be due to the previous finding that satisfaction with host country partner alliances for exports is low. Low satisfaction with host country partner alliances can adversely affect satisfaction levels with the overall export experience.   Level of Satisfaction with In-Country Partners and Exports   IMPLICATIONS FOR COMPANIES AND GOVERNMENT SUPPORT AGENCIES The results of this study have implications for three groups: environmental technology firms that have no export experience, experienced exporters, and public sector service organizations with an interest in providing export assistance to environmental technology firms. Firms without export experience have a wide range of information needs in order to overcome the barriers to exporting. Non-exporting firms want information about the "ropes and procedures" associated with selling in foreign markets, they are unsure as to where to find the best export market opportunities, and they want to know more about the types of export assistance that are available. For these firms, obtaining relevant information can involve many blind alleys, and it can be time consuming and costly. Many of these firms may not realize that there is a well equipped, broad based infrastructure of public sector service organizations that can assist them in accessing the information and resources they need. These barriers can be directly addressed through informational sessions and programs. Service providers to the environmental technology industry can play a significant role here in moving these firms to export readiness and to becoming exporters. For experienced exporters a concern was that close to 50% of the exporting firms felt either neutral or dissatisfied about their export experience and associated financial returns. These firms need to recognize from the outset that effective host country partner alliances are critical to their success and ultimate satisfaction with their export endeavors. A number of visits over a period of time will probably have to be made to a target country market to understand local markets, customs and business practices, and especially to meet prospective partners. Partner selection and the management of the alliance relationship over time will play a major role in achieving success. In new markets, exporting firms should seek assistance from public sector service providers to assist them in networking and establishing relationships with potential partners. Assessment of potential partners should include an exploration of mutual expectations regarding the working relationship. Effort and skill will have to be put into building trust in these relationships. This study indicates that public sector service providers have a major role in assisting environmental technology firms through their programs and activities. An important but potentially overlooked service that can be provided by public sector organizations is assisting firms in assessing their export readiness. Public sector agencies can assess, diagnose and advise firms accordingly. Such firms need to be screened out from taking up further resources that need to be focused on export-ready firms. Public sector service providers should help export-ready firms overcome external barriers such as a lack of information about the 'ropes and procedures' associated with selling in foreign markets, the types of export assistance that are available, and where to find the best export market opportunities. Valued information is available, but firms may not know it is available or how to access it. It would be helpful if there was a central location where firms could go with their questions and information needs, and be directed to the appropriate service providers or resources. Another area where service providers can play an important value added role relates to host country alliances. Service providers can facilitate increased understanding of the important role of these alliances, what it takes to make them work effectively, and they can assist firms in the process of finding appropriate partners. They can develop and maintain current databases of potential partners in export markets and provide training to export-ready firms to better select partners and manage such alliances.   Research performed by Richard Castaldi, Murray Silverman and Sanjit Sengupta, College of Business, San Francisco State University, sengupta@sfsu.edu   [Main] [Profile] [Publications] [Services] [Data] [News] [Perspective] [Surveys] [Links] [Free Sample] [Contact] ~~~~~~~~ Copyright ©2002 Environmental Business International, Inc. (San Diego, CA) Phone: (619)295-7685, Fax: (619)295-5743 All rights reserved. This website, or any part, may not be duplicated, stored in a retrieval system or transmitted in any form without prior written permission of the publisher. Unauthorized use of this information is illegal. Disclaimer: Although EBI has made every effort to be accurate errors may appear and are unintentional.