Significant factors impacting export decisions of small- and medium-sized softwood sawmill firms in North America

An augmented internationalization process (AIP) model is developed to explain important factors influencing decisions of small- and medium-sized softwood sawmill firms in the United States (US) and Canada. The decision to participate in exporting (i.e., export orientation) and the decision to intensify exporting activities (i.e., export involvement) are analyzed using ordinal probit hurdle regression model. Production capacity, geographical location, and the degree of differentiation strategies are factors playing important roles in determining the level of internationalization of the firm (i.e., export orientation + export involvement). Larger US firms are more likely to participate in exporting activities, whereas Canadian firms of all sizes are exporters. Also, firms in the US South are unlikely to participate in international business activities unless they adopt a product differentiation strategy, and even then they are more likely to use intermediary firms rather than undertake export activities directly. Firms adopting a differentiation strategy rather than a cost-leadership strategy are more likely to have a higher degree of internationalization. A major conclusion of the analysis is that developing a product differentiation strategy is a key to participation in international markets.