This study explores the impact of the baseofthepyramid orientation (BOPO) on export performance (EP) through the mediating mechanism of environmental sustainability practices (ESPs). In addition, it examines the moderating role of social innovation (SocInnno) on the relationship between BOPO and ESPs. The proposed model and its hypotheses were tested, using covariance-based structural equation modeling (CB-SEM) on the data from 163 internationalized Vietnamese small and medium enterprises collected through a survey. The following were the study’s conclusions: (1) BOPO positively affects ESPs; (2) the impact of BOPO on ESPs is amplified when SocInno is high; and (3) ESPs mediate the relationship between BOPO and EP. These findings reveal how BOPO contributes to the export success of small and medium enterprises in emerging markets through ESPs. Additionally, the present study elucidates the mechanism by which BOPO influences EP even as it adds to the current understanding of BOPO by introducing SocInno as a boundary condition.
The internationalization of emerging market multinational enterprises (MNEs) has attracted much scholarly attention over the past two decades (Aulakh et al., 2000; Ciravegna et al., 2016; Gaur et al., 2014; Ramamurti & Singh, 2009). The burgeoning literature provides valuable insights into the factors that enable emerging market MNEs to enter foreign markets and attain success (Filatotchev et al., 2009; Gaur et al., 2014). Interestingly, scholars have noted that despite the challenges experienced by emerging market MNEs, they have an advantage over MNEs from developed economies when entering other emerging markets in the Global South (Cuervo-Cazurra & Genc, 2008). That said, although emerging market MNEs could have a comparative advantage when operating in other emerging markets, not all of them are likely to be equally successful. In particular, small and medium enterprises among them face unique barriers in dealing with internationalization (Bertrand et al., 2022; Chandra et al., 2020; Paul et al., 2017). These barriers are may get exacerbated in emerging foreign markets, for consumers in these markets have significantly less money to spend on goods and services than consumers in developed countries (Cavusgil et al., 2012; Cuervo-Cazurra & Ramamurti, 2017). Further, these emerging markets are generally characterized by corruption, illiteracy, inflation, poor infrastructure, and red tapism (Adomako, Ahsan, et al., 2021; Ahsan et al., 2021; Kistruck et al., 2011).
Building on the market orientation literature, Zhu et al. (2019) identify a distinct firm capability, i.e., their base of the pyramid orientation (BOPO) that allows firms to create and capture opportunities in emerging markets. They argue that BOPO enables firms to better serve the needs of consumers as well as mitigate the risks and costs associated with emerging markets, consequently enhancing firm performance. All in all, this literature suggests that firms operating in emerging markets are more likely to succeed when they understand the needs of the consumers in emerging markets and the challenges associated with these markets and take appropriate actions to address them. However, despite the theorized and observed importance of BOPO in improving firm success (Adomako et al., 2022; Zhu et al., 2019), we have a limited understanding of how BOPO affects firm outcomes. In particular, we have little knowledge of the potential mechanisms through which firms’ BOPO affects firm outcomes.
6. Limitations and future research directions
Despite the valuable contributions our study makes, it has several limitations that present interesting opportunities for future research. First, this study was cross-sectional and was conducted during the lockdown period in Vietnam and other countries, and these reduced inferences concerning causal relationships between BOPO, ESPs, SocInno, and EP. Therefore, a subsequent longitudinal study is needed to confirm such relationships in the post-COVID-19 pandemic era. Second, although Vietnamese small and medium enterprises export to several emerging markets, researchers should be cautious about generalizing the findings of our study to small and medium enterprises from other countries. Additional studies should be conducted in other developing and emerging countries so that researchers can examine the effects of unique contextual elements (e.g., culture, institutions, politics, foreign relations, and trade policy) on the relationship between BOPO and EP to glean additional insights. Third, because acquiring objective data on EP from small and medium enterprises in Vietnam is difficult due to privacy concerns, this study relied on self-reported information collected only from managers. As a result, future studies should obtain objective data to measure EP. Although our measure for EP was based on prior literature (Boso, Story, et al., 2013) and appropriate for our study, future scholars could consider including other EP measures to better capture the success of exporting firms (Carneiro et al., 2016; Chen et al., 2016). Fourth, we do not examine which market segment the small and medium enterprises are specifically targeting in the emerging markets. In particular, we do not examine what percentage of sales are from BOP consumers and non-BOP consumers. Future research could extend the insights of our study by examining these nuances. Finally, our study examined EP using only three control variables: ownership structure, firm size and firm age. Future research could incorporate additional control variables (e.g., resource availability, international networks, and competitive intensity) that may affect EP.