Project description

Welcome to the website of the project PRG1418 “Export(ers’) Performance in VUCA and Non-VUCA Environments”!

A short description of the project. The project is financed by the Estonian Research Council. It aims to develop customized export(ers’) performance (EP) indicators depending on firm type and internationalization stage, establish their main determinants, and provide suggestions how to predict and improve such performance in VUCA (volatile, uncertain, complex, ambiguous) and non-VUCA environments. The results will fill important theoretical research gaps in International Business literature as consensus on measuring EP in VUCA and non-VUCA environments is still missing. Detecting main determinants of EP, predicting and improving EP also need more research attention. This project’s results are especially important for Estonian policymakers and managers, as the country is very export-oriented, and its export revenues from some product groups tend to drop considerably during economic crises. Thus, after crises, restoration of export activities is very important. It is also necessary to find out what should be done for achieving export success before or during future crises.

Project team: Tiia Vissak, Oliver Lukason and PhD students Art Andresson, Margus Kõomägi, Tairi Leis, Maksim Mõttus, Marcus Marmor and Karl Erik Õim

Official co-operation partners from outside the University of Tartu: Niina Nummela, Susan Freeman, Barbara Francioni

Project period: 01.01.2022−31.12.2026

You can find some additional information about the project from ETIS – Ekspordi(ga tegelejate) tulemuslikkus VUCA ja mitte-VUCA keskkondades

The list of publications:

Journal articles:

Lääts, K.; Lukason, O., 2022, Sustainability Initiatives and Failure Risk of a Firm: How Are They Linked?  Journal of Risk and Financial Management, 15(11), DOI: 10.3390/jrfm15110502.

This paper studies the link between corporate sustainability and failure risk. Using a sample of Estonian non-listed companies, it was found that more environmental and social sustainability initiatives are positively linked with firm failure risk in the short run. The latter relationship holds only in case of firms functional domestically, while it is insignificant in case of exporters.

Ashyrov, G.; Lukason, O., 2022. Political Connectedness and Financial Performance of SMEs, Journal of Risk and Financial Management, 15 (12). DOI: 10.3390/jrfm15120600.

This paper studies the link between the political connections of firms’ board members and financial performance in the Estonian SME population. Using a wide selection of financial performance (including exporting propensity) and political connectedness variables, the composed regressions indicated that firms with politically connected boards underperform compared to their unconnected counterparts. The findings remained robust not only through different measures of dependent and independent variables, but also studied periods.

Fernandez-Alles, M.; Vissak, T.; Lukason, O. (2023). Which variables predict the internationalization type of academic spin-offs? Heliyon, 9 (2), 1−15. DOI: 10.1016/j.heliyon.2023.e13172.

This paper found out which variables predict Spanish academic spin-offs’ internationalization type. It showed that innovative and networked firms with an international mindset internationalize fast. The study also demonstrated that predicting if an academic spin-off will become a less active internationalizer resulted in a higher accuracy than forecasting if it will become a born global. Moreover, predicting if a firm will internationalize later resulted in a higher accuracy than forecasting if this would happen during the first three years since the spin-off’s foundation.

Vissak, T. 2023. A literature review on CEE firms’ internationalization: success measurement, achievement and outcomes,  Review of International Business and Strategy. DOI: 10.1108/RIBS-06-2022-0061.

This paper concluded that CEE firms’ “success” is understood and measured differently, successful internationalizers can experience various internationalization paths, they are affected by a large number of external impact factors, internal motivators or actions and their internationalization outcomes vary considerably. Thus, there is no “ideal” type of successful internationalization: as different CEE firms can be called “successful”, they also follow different trajectories to achieve success.

Freeman, S., Vissak, T., Nummela, N., Trudgen, R. 2023. Do technology-focused fast internationalizers’ performance measures change as they mature? International Business Review, 102168. DOI: 10.1016/j.ibusrev.2023.102168.

We examine how technology-focused innovation-based fast internationalizers’ performance measures change as they mature. Based on 42 interviews with Australian entrepreneurs and industry experts, we show that young firms prefer using subjective measures for assessing their export performance. Later, they use additional objective, profit-based measures. The implications of destructive forces (e.g., COVID-19) to the performance of these firms were modest as their new-to-the-world solutions are developed to withhold ‘creative destruction’ over time.

Andresson, A.; Lukason, O. (2024). Corporate default prediction with payment disturbances in managers’ earlier entrepreneurial practices. Cogent Business & Management, 11 (1), 2302203 . DOI: 10.1080/23311975.2024.2302203 Full article: Corporate default prediction with payment disturbances in managers’ earlier entrepreneurial practices (tandfonline.com)

This study aims to determine how payment disturbances in managers’ earlier entrepreneurial practices (PDMs) predict corporate default. The results indicate that PDMs lead to more accurate predictions of corporate defaults than financial ratios do. Among the specific variables, the average tendency of earlier disturbances was the most accurate, followed by the maximum and frequency tendencies. The average marginal effects of these variables are larger in the case of non-exporters, while in turn, higher prediction accuracies are achieved in the case of exporting firms. The paper is the first to systematically substantiate the usefulness of PDMs in predicting the failure of firms (including (non-)exporters), which is especially valuable when classical measures (e.g. financial ratios) are absent or incapable for the respective purpose.

Lukason, Oliver; Vissak, Tiia (2024). Exporters’ failure predictors and processes: a multi-country analysis based on the theoretical concept of firms’ financial crisis types. Cogent Economics & Finance, 12 (1), 1−23. ETIS Full article: Exporters’ failure predictors and processes: a multi-country analysis based on the theoretical concept of firms’ financial crisis types (tandfonline.com)

This study aims to identify the financial predictors and processes of (non-)bankrupt exporters’ failure in five European countries. A novel theoretical concept of financial processes based on the dynamic evolution of different types of financial crises was created. Relying on gaps in the literature, the study answers five research questions (RQs) by using financial data of 15,551 (non-)bankrupted firms. First, the empirical analysis suggests that from the four crisis types, solvency and profitability crises are the most important failure predictors generally, and second, also in different stages for the majority of studied financial processes. Among the eight financial processes detected based on the failure probability evolvement during 3 years, survived firms are mainly subject to persistent absence of failure risk, while exactly the opposite occurs for half of the bankrupt firms. Concerning firm-level characteristics, firm age mainly determines the prevalence of these processes, while export intensity plays a modest role. The empirical section is finalized with the development of high-accuracy failure prediction models for exporting firms, enabling the extension of the scientific findings to financial practice. As the main contribution to the extant literature, the article presents a holistic analysis of the financial dynamics of (non-)bankrupting exporting firms.

Lukason, Oliver; Kantšukov, Mark (2024). Earlier reporting misconducts by serial entrepreneurs as predictors of misconduct‐triggered forced firm closures. Global Policy, x−x. DOI: 10.1111/1758-5899.13424. Earlier reporting misconducts by serial entrepreneurs as predictors of misconduct‐triggered forced firm closures – Lukason – Global Policy – Wiley Online Library  ETIS

This paper investigates the factors determining forced closures of firms, which occur when entrepreneurs fail to submit annual reports for their businesses. Analysis of Estonian micro firms run by serial entrepreneurs reveals that recent reporting misconducts, particularly those of a severe nature, significantly determine a firm’s forced closure. Additionally, factors such as firm size, age, and certain aspects of corporate governance play significant roles in this regard. In turn, firm’s exporting status and financial performance largely fail to signal future forced closure, the former being the least useful predictor in machine learning models created. Therefore, the fact of earlier international engagement through exporting does not play a role whether a serial entrepreneur will opt for law violations by not submitting annual reports, which will finally lead to a forced closure of a firm.

Marmor, Marcus; Lukason, Oliver (2024). Financial performance persistence in serial entrepreneurship. Cogent Business & Management, 11 (1). DOI: 10.1080/23311975.2024.2423895. ETIS

This study aims to determine whether financial performance is persistent in serial entrepreneurship and, if so, whether good performance is more persistent than bad. This is achieved by studying whether firm size, export intensity, financial risk level, and payment defaults repeat from one firm to another, by using a sample of 1599 Estonian serial entrepreneurs. The study indicates that all these financial measures are persistent among old and new firms, while better performance is more persistent than worse.

Vissak, Tiia (2024). A literature review on CEE firms’ outward internationalization failures: definitions, processes, causes and consequences. Review of International Business and Strategy, 34 (5), 632−658. DOI: 10.1108/RIBS-12-2023-0145. ETIS

This paper aims to summarize the literature (journal articles and book chapters) on Central and Eastern European (CEE) firms’ outward internationalization failures: definitions and understandings of “failure”, “failed” firms’ internationalization processes, causes of “failed” initial and subsequent foreign activities and consequences of “failed” internationalization. The paper demonstrates that different objective and subjective measures were used for defining and measuring “failure”. Consensus regarding which firms (from slow internationalizers to born globals) can be considered “failed” is lacking. In different studies, internal and external causes of CEE firms’ outward internationalization “failure” and internationalization-related and other consequences of “failed” internationalization also vary considerably. Due to the complexity of the “failure” phenomenon, it is impossible to identify the most characteristic type of “failed” internationalization or offer “optimal” advice for avoiding failures.

Book chapters:

Vissak, T. (2022). Serial nonlinear internationalization before and during the Covid-19 pandemic: case study evidence from Estonia. In: R. van Tulder; A. Verbeke; L. Piscitello; J. Puck (Ed.). International Business in Times of Crisis. Tribute Volume to Geoffrey Jones (273−288). Bingley: Emerald. (Progress in International Business Research 16). DOI: 10.1108/S1745-886220220000016014.

This chapter aimed to find out which factors affected three Estonian case firms’ serial nonlinear internationalization (multiple partial or full foreign market exits and re-entries) before and during the Covid-19 pandemic. It shows that such internationalization was also common before the pandemic (for instance, due to currency fluctuations and lacking a stable customer base). During the pandemic, demand fluctuations and travel restrictions affected some firms considerably. At the same time, the pandemic created some good business opportunities: for example, by creating demand for additional products. As a result, the studied firms’ turnover increased.

Vissak, T. (2022). The impacts of Covid-19 on Estonian firms’ internationalization: foreign market entries, exits and re-entries. In: Larimo, J.; Arte, P.; Sousa, C.M.P.; Ghauri, P.N.; Mata, J. (Ed.). Research Handbook on Foreign Exit, Relocation and Re-entry. Theoretical Perspectives and Empirical Evidence (36−56). Cheltenham: Edward Elgar. DOI: 10.4337/9781800887145.00009.

This chapter focuses on how Covid-19 affected Estonian firms’ internationalization: which new foreign market entry and re-entry opportunities emerged, and why exits occurred. It shows that some firms managed to cope with the pandemic successfully, while some others experienced considerable failures. The outcome depended on firms’ activities, and also on the extent their industry was affected by Covid-19. It also explains that most firms experienced foreign market exits and re-entries also during more stable times. Thus, fluctuations in foreign activities are normal.

Leis, T. (2024). The influence of decision-making logic on the internationalisation of Born Globals: Bolt. In: Erik S. Rasmussen (Ed.). Cases on Born Globals. (112−129). Cheltenham: Edward Elgar. DOI: 10.4337/9781803924410.00017. ETIS

This chapter focuses on the impact of decision-making logics on the internationalisation of born global companies, using the example of Bolt. it demonstrates different approaches to managerial decision-making logic, explains the causes and consequences of selecting a particular decision-making logic and helps to understand how VUCA influences managerial decision-making and business performance.

Encyclopedia articles:

Vissak, T. (2023). Discovering business opportunities emerging from financial crises. In: Hsu, S. (Ed.).  Elgar Encyclopedia of Financial Crises. (105−107).  Cheltenham: Edward Elgar. ETIS

Vissak, T. (2023). A financial crisis as a form of VUCA (volatile, uncertain, complex, and ambiguous situation). In: Hsu, S. (Ed.).  Elgar Encyclopedia of Financial Crises. (17−20). Cheltenham: Edward Elgar. ETIS

Vissak, T. (2023). Firms’ ways to deal with financial crises. In: Hsu, S. (Ed.).  Elgar Encyclopedia of Financial Crises. (162−164).  Cheltenham: Edward Elgar. ETIS

Vissak, T. (2023). The impacts of financial crises on firms’ exports. In: Hsu, S. (Ed.).  Elgar Encyclopedia of Financial Crises. (417−419).  Cheltenham: Edward Elgar. ETIS

All these articles focus on various aspects related to VUCA situations (including financial crises): they explain challenges firms face but also opportunities that emerge during such situations. They state that during crises, many changes happen: firms that are resilient, flexible and can react quickly can find new business opportunities; on the other hand, some other firms may mainly experience negative impacts: e.g., they may have to exit from (some) export markets.

Conference presentations:

Vissak, T. (2022). CEE companies’ successful outward internationalization: how is “success” understood and achieved? Conference Booklet: The 8th Annual International Academic AIB-CEE Chapter Conference on KNOWLEDGE AND SUSTAINABILITY IN INTERNATIONAL BUSINESS, Zagreb, September 14-16. University of Zagreb, 18−21.

This paper aims to give an overview of the literature on Central and Eastern European (CEE)  companies’ successful outward internationalization. It shows that “success” can be understood and measured differently (as indicators and understandings of success vary, then some scholars might consider the same firm “successful” while others would regard it “unsuccessful”), successful internationalizers can experience various internationalization paths (e.g., slow or fast internationalization), CEE firms’ initial and subsequent foreign entries are affected by a large number of impact factors, motivating forces and companies’ actions, and companies’ internationalization outcomes can vary considerably; moreover, various objective and subjective indicators can be used to measure such outcomes. Consequently, it is not possible to identify an “ideal” type of successful internationalization.

Vissak, T. (2022). CEE companies’ successful internationalization: success measurement, achievement and outcomes. Conference Presentations: 48th EIBA Annual Conference 2022 “Walking the talk? Transitioning towards a sustainable world”, Oslo, December 8-10. 2022. Oslo: BI Norwegian Business School.

This paper is basically identical to the previous (AIB CEE) paper.

Nummela, N.; Vissak, T.; Ahamed, J. (2022). Building entrepreneurial resilience – A case study of Bangladeshi exporters and the COVID-19 pandemic. Conference Presentations: AIB 2022 Annual Meeting “Beyond Diversity and Inclusion: Equity and Fairness in International Business”, Miami, July 5-9, 2022. Miami: Florida International University.

This study examines on how five textile exporters from Bangladesh built organisational resilience in order to respond to the Covid-19 pandemic. It shows that the studied firms were not prepared to external shocks, such as the pandemic. Therefore, the immediate impact of the pandemic on their business operations was negative. However, all the case companies were resilient in terms of adaptability. This helped them to improve their preparedness to future crises as they were active in increasing efficiency and productivity, strengthening customer relationships and advancing digitalisation.

Vissak, T. (2022). Foreign market entries, exits and re-entries: ideas for studying firms’ export performance in the VUCA world. Proceedings: 4th Nordic International Business, Export Marketing, International Entrepreneurship, Entrepreneurship, Brand Management, Consumer Behaviour and Tourism Conference 2022, 5th-6th November, Nicosia (via Zoom). Ed. Coudounaris, D. Nicosia: Hanken School of Economics, 1−14.

This work aims to contribute to the internationalization literature by discussing the problems of current export performance measures taking the VUCA conditions and firms ’ serial nonlinear internationalization into account. It shows that there is still no consensus regarding which measures indicate that an exporter is “successful“ and which combination of objective and subjective measures to use for measuring export performance. A “successful” exporter in terms of export measures is not necessarily “successful” financially and vice versa. Nonlinearities in internationalization are common but rarely measured. Moreover, due to VUCA, understanding of “success“ may change.

Leis, T.; Õim, K. E. (2022). The Influence of Network Relationships on Internationalization Failure During VUCA . Conference presentation: ESU 2022, Spain, Seville 11.09-17.09. Seville: University of Seville.

It aims to identify the factors that cause internationalization failure of the Estonian companies from the perspective of network relationships. Based on analyzing interview data from Estonian companies, it shows that companies depend on each other and information flows through networks. Networking  supports the success of internationalization, but the lack of effective networks significantly increases the probability of failure.

Leis, T. (2023). Decision-making logics: effectuation and causation in VUCA and non-VUCA environments Eesti Majandusteaduse Seltsi aastakonverents 26.-27.01.2023, Rakvere: Tartu Ülikool.

The aim of the paper is to highlight the main features of the two most commonly used decision-making logics and to demonstrate their applications in VUCA and non-VUCA environments, explaining the reasons for the success and failure of companies. The success or failure of any business is based on previous actions. Actions are based on previous decisions, and these, in turn, depend on decision-making logics. The most commonly used decision-making logics are effectuation and causation. In business, there are always various risks that multiply in a volatile, uncertain, complex, and ambiguous (VUCA) environment. Every company must deal with its own VUCA environment, and in order to survive, organizations should be flexible, make the necessary changes and focus on their strengths.

Newspaper articles:

Vissak, T. (2021). 2022 | Tiia Vissak: algab VUCA aasta, kuidas see üle elada, “kuldaega” pole mõtet igatseda. Eesti Päevaleht, 31.12.2021.

It explains that VUCA means volatility, uncertainty, complexity and ambiguity and characterizes the year 2022 very well. It suggests that to survive VUCA situations, people and firms should become entrepreneurial, adaptable and resilient. Moreover, they should understand that “golden times” may never return. On the other hand, even VUCA situations can help to discover new business opportunities, so it is important to stay open for them.

Vissak, T. (2022). Tiia Vissak: praeguses olukorras ei tohi kõiki sama puuga mõõta. Äripäev, 23.03.2022.

The article explains that in VUCA situations, old “action templates” might not work so well; on the other hand, there are no guarantees that new methods would be better. In such situations, decision-makers may feel that they should do something fast; on the other hand, reacting too fast may result in under-achievement as it is not possible to foresee all potenial problems. It is also dangerous to assume that all situations, firms, people etc. are similar and can be measured with the same yardstick, and to hope that any measure will provide a 100% perfect solution.

Vissak, T. (2022). Tiia Vissak: keskenduks edu asemel ebaedule. Äripäev, 13.04.2022.

The article states that there is no such person who succeeds in absolutely everything; moreover, unsuccessful persons have not always caused their failures although bystanders may think so. The press publishes lots of success stories but it seems that failures get less attention (if they publish something, then rather in a negative way). Thus, it might be useful to share stories of failures that lead to success. Such stories might inspire people who have experienced lots of failures. It would be also interesting to find out how successful people measure their success rate (if they do that at all).

Vissak, T. (2023). Tiia Vissak: mentaliteet, mis hävitab Eesti edu. Äripäev, 17.01.2023.

The article explains that different types of bullying (school, workplace, customer etc.) is relatively common in Estonia, but this damages the economy as it causes stress and through that, several other problems. Instead, it would be more beneficial to co-operate and support others as this increases life satisfaction, improves productivity and supports economic growth.

Vissak, T. (2023). Tiia Vissak: vabaneme Eesti (majandus)edule ohtlikust keskpärasuse lõksust. Äripäev, 22.03.2023.

This article explains that too many wish to be similar to others, as this seems more safe; however, in a VUCA environment, this can be dangerous: being different from others can lead to success. Thus, firms should encourage their employees to propose original ideas.

Vissak, T. (2024). Tiia Vissak: eksportöörid, olge muutustele avatud! Äripäev, 25.01.2024. Tiia Vissak: eksportöörid, olge muutustele avatud! (aripaev.ee)

This article states that exporters should be open to making changes: they should try to enter additional export markets, update their products, seek for opportunities emerging from digital and green transformation etc.

Leis, T. (2024). Otsustusloogika võib viia nii taevatrepina kõrgustesse kui ka kiirteena põrgu. ERR Novaator (Tartu Ülikooli ja Eesti Rahvusringhäälingu teadusportaal), 01.02.2024. ETIS

The article states that conscious use of decision-making logics helps enterprises survive in difficult times. However, the logic that may have been successful in one situation can lead to a failure in another. The focus is on the two main decision logics in use – causation (systematisation) and effectuation (experimentation).

Vissak, T. (2024). Tiia Vissak: teeme tasuta videod ja arendame ettevõtlust. Äripäev, 06.04.2024. ETIS

This article states that free videos about how to become and operate as an entrepreneur (e.g., how to export) could increase the number of successful enterprises in Estonia.

Leis, Tairi; Õim, Karl Erik (2024). Tairi Leis, Karl Erik Õim: tõstame digitaliseerituse taset. Äripäev, 08.04.2024.

Digitalization is important for the competitive advantage, innovation, and internationalization of Estonian SMEs, but the baseline level of it is lower than the EU average. Estonia would benefit from developing digitalization as the modern business environment has become increasingly digital.