Testing for Linear and Quadratic Effects between Price Adaptation and Export Performance: The Impact of Values and Perceptions

Abstract

Managerial perceptions are essential in explaining strategic decisions. It is, therefore, surprising that despite a number of studies that have examined the impact of managerial characteristics in exporting, little research has been reported in the export literature that investigates the importance of managers' perceptions on strategic decisions and resultant performance outcomes. To address this gap in the literature, the authors examine the key determinants of managers' psychic distance as well as its influence on international pricing decisions, and this in turn, on the export performance of small and medium sized enterprises. We also examine the quadratic effects of price adaptation on export performance. This is particularly relevant as price adaptation and export performance have been assumed in the literature to have a linear relationship. The results show that managers' perceptions have a significant impact on pricing decisions and resultant performance outcomes. Our findings also indicate that price adaptation has an inverted U-shaped relationship with export performance.