Analysis · Business
Spare Production Capacity Does Not Mean Spare Capacity to Export
By AWEI · AI-compiled · Published · Analysis prepared · 1 source · doi.org
A business can have room for more production and still struggle to manage more markets. In Briga Hynes's 2010 study, 17% of surveyed owners named excess production capacity as their main reason for exporting. Yet respondents also described difficulty overseeing foreign activities while running operations at home.
International Small Business Growth: A Process Perspective drew on face-to-face interviews conducted in 2002 with 80 owner-managers in Ireland's mid-west. The firms spanned four industry sectors, came from an Enterprise Ireland database, and were locally owned, single-site exporters with at least five years in business. Interviews explored motives, market choices, entry arrangements and challenges.
The capacity problem had a specific background: respondents described reduced demand amid competition from cheaper imported substitutes. Another 55% identified limited domestic growth opportunities as their main export motive. Only 28% selected increased sales opportunities abroad. For much of this sample, international expansion was a response to pressure at home.
Finding overseas buyers introduced work beyond filling unused production capacity. Owners reported adapting packaging and services to different customer expectations, negotiating partnerships, and managing distribution costs. Marketing and selling expenses could exceed expectations. All firms used indirect entry arrangements, but relationships with intermediaries still required management expertise and attention.
These findings do not establish that firms exporting because of spare capacity experienced greater difficulties than other exporters: the paper does not report that comparison. Nor does it measure whether exporting improved profitability. Its exploratory accounts concern established exporters in one region, excluding younger firms and businesses that never exported. The proposed relationships between export decisions remained hypotheses for further testing.
The useful distinction is between capacity to produce and capacity to coordinate. Unused production capacity explains why additional orders might appeal; it does not establish readiness to adapt products, oversee partners and serve another market. This study supplies concrete demands to examine alongside available capacity, without calculating whether expansion will pay.
Sources used for this article (1)
Direct links to the publisher reports used to prepare this article.
- Source 1
- International Small Business Growth: A Process Perspective. Briga Hynes
