Financial and marketing approach to export performance: the mediation role of promotion and research and development

The current study investigates the direct and indirect effects of firm-specific and environmental factors on export performance. Specifically, the study investigates the direct and indirect (mediation role of promotion (PR) and research & development (RD) activities) effect of capital structure (CS), availability of cash (CA), competition from informal sector (CI), and political instability in home countries (PI) on export performance (EXP). Partial least square structural equation model (PLS-SEM) is used to analyze a year data (2022) from sample of 161 firms in Ethiopian manufacturing industry (i.e. Leather industry, textile industry, and Food & Beverage industry), to find the relation between independent (CS, CA, CI, and PI), mediating (PR and RD), and dependent (EXP) variables after controlling for factors like firm size, and industry category. The result indicates that CS has robust direct and indirect effects on EXP while PI has only direct effect. However, CA needs the intermediation of other variables (i.e. RD) to affect EXP. This finding supports the argument that assessments of direct relationships should not be the primary concern in marketing studies; rather, the sum of the direct and indirect effects of a particular variable must be evaluated for more interpretation.