ADDIS ABABA UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF MANAGEMENT

DETERMINANTS OF OILSEED EXPORT PERFORMANCE IN ETHIOPIA

IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF

THE DEGREE OF MASTER OF ART IN INTERNATIONAL BUSINESS
SPECIALIZING IN IMPORT AND EXPORT MANAGEMENT

BY:
MULUGETA FIKRU

ADVISOR:
ABERA LEGESSE (PhD)

JULY 2024
ADDIS ABABA, ETHIOPIA
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 ADDIS ABABA UNIVERSITY
COLLEGE OF BUSINESS AND ECONOMICS
DEPARTMENT OF MANAGEMENT

Declaration and Approval by the Advisor

I, Mulugeta Fikru, declare that the study entitled ―Determinants of Oilseed Export Performance
in Ethiopia‖ is the result of my effort in this research undertaking. It is submitted to the partial
fulfillment of the requirement of the Masters of Social Science (MSC) in International Business
specializing in Import and Export Management.

I, the advisor, hereby also certify that I supervised, read, and evaluated this thesis entitled
―Determinants of Oilseed Export Performance in Ethiopia‖ and that has been prepared under my
guidance. All the sources and materials used in the research have been well acknowledged. Thus,
I hereby recommend that the thesis be submitted for oral defense.

Declared by: Advisor Approval

Name: Mulugeta Fikru Name: Abera Legesse (PhD)

Signature: Signature:

Date: January 17, 2024 Date: January 17, 2024_

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 Acknowledgment

From the very beginning, it has been my great pleasure to deeply thank my almighty God, who
supported me from the verge of every aspect of the work done until the ultimate stage of the
study. Nothing could have been done without the potential care of my Lord God.

My appreciation and special thanks go to my advisor, Abera Legesse (PhD), for his ongoing
guidance and valuable and constructive comments throughout the preparation of the study.

I want to express my heartfelt gratitude towards my family, colleagues, and special friends who
extended their consistent support from every endeavor until the completion of the study.

Special thanks also go to the team of MoTRI, EPOSPEA, CSA, and all other concerned offices
for their utmost cooperation in sharing important resources and materials concerning the
requirements of the study. All of the respective organizations have provided the necessary data
for the study, and they were actively involved in each process of the study.

Last but not least, I would like to appreciate and thank all of the oilseed exporters for their
encouragement and genuine support in filling out and responding to the questions on a timely
basis.

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 Table of Contents
Approval of the Thesis.....................................................................................................................i
Declaration and Approval by the Advisor…...................................................................................ii
Acknowledgment............................................................................................................................iii
List of Figures................................................................................................................................vii
List of Tables................................................................................................................................viii
Acronyms and Abbreviations.........................................................................................................ix
Abstract............................................................................................................................................x
CHAPTER ONE..............................................................................................................................1
1. INTRODUCTION.......................................................................................................................1
1.1. Background of the Study..........................................................................................................2
1.2. Statement of the Problem......................................................................................................4
1.3. Basic Research Questions.....................................................................................................7
1.4. Objectives of the Study.........................................................................................................8
1.4.1. General Objective...........................................................................................................8
1.4.2. Specific Objectives.........................................................................................................8
1.5. Significance of the Study......................................................................................................8
1.6. Scope of the Study................................................................................................................8
1.7. Limitation of the Study.........................................................................................................9
1.8. Organization of the Study.....................................................................................................9
CHAPTER TWO...........................................................................................................................10
2. REVIEW OF RELATED LITERATURE.................................................................................10
2.1. International Trade Theories...............................................................................................10
2.1.1. The Different International Trade Theories.................................................................11
2.2. Overview of Determinants of Export Performance.............................................................15
2.2.1. Export Performance and Its Determinants in Developing Countries...........................17
2.2.2. Ethiopia‘s Oilseed Export Performance.......................................................................19
2.2.3. Internal and External Determinants for Export Performance.......................................20
2.2.3.1. Internal Factors....................................................................................................21
2.2.3.2. External Factors...................................................................................................23
2.3. Empirical Literature Review...............................................................................................25

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 2.4. Conceptual Framework of the Study..................................................................................30
2.5. Research Hypothesis...........................................................................................................33
2.6. Literature Gap.....................................................................................................................33
CHAPTER THREE.......................................................................................................................35
3. RESEARCH METHODOLOGY..............................................................................................35
3.1. Research Design..................................................................................................................35
3.2. Target Population................................................................................................................35
3.3. Sample Size and Sampling Technique................................................................................36
3.4. Data Collection Techniques................................................................................................37
3.5. Data Analysis Techniques...................................................................................................37
3.6. Model Specification............................................................................................................38
3.7. Reliability and Validity of the Research.............................................................................39
3.7.1. Research Validity.........................................................................................................39
3.7.2. Research Reliability......................................................................................................39
CHAPTER FOUR.........................................................................................................................41
4. PRESENTATION, ANALYSIS AND INTERPRETATION...................................................41
4.1 Demographic Profile of the Respondents............................................................................41
4.1.1 Gender of the Respondents............................................................................................41
4.1.2. Respondents Age Distribution......................................................................................42
4.1.3. Level of Education of the Respondents........................................................................42
4.1.4. Current Position of the Respondents............................................................................43
4.1.5. Working Experience of the Respondents.....................................................................43
4.2. Multiple Regression Analysis.............................................................................................44
4.2.1. Tests of Linear Regression Analysis Assumptions......................................................44
4.2.1.1. All the Variables are Continuous..........................................................................45
4.2.1.2. Linearity Test........................................................................................................45
4.2.1.3. Outliers Test..........................................................................................................46
4.2.1.4. Autocorrelation.....................................................................................................46
4.2.1.5. Homoscedasticity.................................................................................................47
4.2.1.6. Normality Test.....................................................................................................48
4.2.1.7. Multicollinearity Test...............................................................................................50

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 4.2.2. Multiple Linear Regression Analysis...........................................................................50
4.2.2.1. Model Summary.......................................................................................................51
4.2.2.2. ANOVA Analysis.....................................................................................................52
4.2.2.3. The Regression Coefficient......................................................................................53
4.2.2.4. Hypothesis Test........................................................................................................56
CHAPTER FIVE...........................................................................................................................60
5. SUMMARY, CONCLUSION AND RECOMMENDATION..............................................60
5.1. Summary of Major Findings...............................................................................................60
5.2. Conclusion...........................................................................................................................63
5.3. Recommendation.................................................................................................................64
5.4. Limitations and Direction for Future Research...................................................................66
References......................................................................................................................................67
Appendixes....................................................................................................................................74

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List of Figures
Page
Figure 1. Conceptual Framework…...............................................................................................32
Figure 2. Linearity Test..................................................................................................................45
Figure 3. Outliers Test…................................................................................................................46
Figure 4. Homoscedasticity Test....................................................................................................48
Figure 5. Normality Test…............................................................................................................49

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List of Tables
Page
Table 1. Reliability Statistics 40
Table 2. Gender of the Respondents 41
Table 3. Respondents Age Distribution 42
Table 4. Educational Level of Respondents 43
Table 5. Current Position of the Respondents 43
Table 6. Working Experiences of the Respondents 44
Table 7. Durban-Watson Result 47
Table 8. Normality Test 49
Table 9. Multicollinearity Test 50
Table 10. Model Summary Test 51
Table 11. ANOVA Test 52
Table 12. Summary of Coefficients 54
Table 13. Summary of Hypothesis Test 59

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Acronyms and Abbreviations

ADBG African Development Bank Group

GDP Gross Domestic Product
NBE National Bank of Ethiopia
CSA Central Statistical Agency
SSA Sub-Saharan Africa
SME Small and Medium Enterprise
FDI Foreign Direct Investment
FDRE Federal Democratic Republic of Ethiopia
E.C. Ethiopian Calendar
GAIN Global Agricultural Information Network Ethiopia
MLRM Multiple Linear Regression Model
ANOVA Analysis of Variance
ECX Ethiopia Commodity Exchange
EPOSPEA Ethiopian Pulses, Oilseeds and Spices Processors Exporters Association
FAO Food and Agriculture Organization
SNNP Southern Nations Nationalities and People
IMF International Monetary Fund
MoTRI Ministry of Trade and Regional Integration
SPSS Statistical Software Package for Social Sciences
MT Metric Tone
Ha Hectare
VIF Variance Inflation Factor
WDI World Development Indicator
P.A. Per Annum

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 Abstract
Exporting is the most important business endeavor for any country because it plays a vital role
in economic development and job creation for the nation as a whole. The fundamental objective
of the study was to identify those export performance factors in the case of oilseed export in
Ethiopia. To explain and analyze the data, the study used an explanatory research design. Both
quantitative and qualitative research approaches were applied. The study functionalized five
independent (explanatory) variables and one dependent variable. The data for the research was
collected via structured questionnaires based on the Likert scale measurement technique. The
questionnaire was broadly composed of three main parts, and a total of 194 questionnaires were
distributed to Ethiopian oilseed exporters, and all were filled out and returned. Since over two
variables were applied in the study as well and the data was continuous, the researcher applied
a multiple linear regression model for the analysis and assessment of the findings. The required
tests, including validity, reliability, tests of multiple regression assumptions, and tests of
projected hypotheses, were conducted in the study. Consequently, the research findings revealed
that five of the stated factors have a positive and significant effect on the performance of oilseed
exports performance at different levels of degree and magnitude. Among the factors associated,
marketing factors were potentially affecting the performance of oilseed exports followed by
macro- environmental factors, industry factors, company factors, and product factors,
respectively. Climate variability, high bureaucracy, expensive transportation costs, lack of
working capital, fluctuation of the exchange rate, the country's current political situation,
shortage of required fertilizer, and minimum government support are some of the additional
findings that hinder oilseed export performance. Accordingly, some of the recommended points
issued by the respondents are that government should create a conducive environment for the
exporters, increase the share of foreign currency to be allotted to exporters, increase the
competitiveness of the local price, work closely with exporters, and all concerned bodies should
work hand-in-hand to improve oilseed export performance and solve the problem amicably.

Key words: export performance, macro-environmental factors, marketing factors, industry

factors, company factors, and product factors, oilseeds export.

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 CHAPTER ONE

1. INTRODUCTION
Regarding the important variables that have been covered in the literature review, many
researchers make different claims about each of the elements that have been shown to be
important in determining Ethiopia's performance in exporting oilseed. As the below critical
analysis explains, it was noted that while some of the evaluated empirical research' outcomes
diverged, others converged despite taking distinct techniques. Both of the research results here
under explaining those factors influencing Ethiopian agricultural exports, however they
ultimately produced disparate findings regarding the factors influencing Ethiopian exports. It
makes holes in the literature more evident.

Fassil and Abule (2020) in their study examined the determinants of Ethiopian agricultural
exports using the imperfect substitutes‘ model as a theoretical framework and system GMM as
an analytical model for the period 1998–2018. The regression result showed that gross domestic
product, exchange rate, road network, corruption index of Ethiopia, lagged export value, indirect
tax revenue and domestic saving are the major determinants of agricultural exports in Ethiopia.
However, foreign direct investment and labor force are negatively and significantly related to
Ethiopian agricultural exports. But a study conducted by (Haitho, 2013) on the determinants of
Vietnam‘s exports found a negative and significant relationship between the exchange rate and
volume of export.

Specifically, the major determinants of Ethiopia‘s exports are: size of the economies (GDPs of
Ethiopia and that of partner), partner countries‘ openness of economies, economic similarity and
per capita gross domestic product differential of the countries. All these factors affected
Ethiopia's export positively except similarity indicator. The exchange rate, on the other hand, has
no effect on Ethiopia's export trade. The country specific effects show that Ethiopia could do
better by trading more with Comesa member countries and newly emerging economies of Asia
such as Hong Kong, Singapore and Yemen as well as European countries like Turkey and Russia
(Alekaw, 2016).

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Therefore, this research paper fills the gap observed in the literature review by analyzing the
different variables covered in the study.

Basically, this portion of the study further covered background of the study, statement of the
problem, research questions, objectives of the study, significance of the study, scope of the
study, limitations of the study and organization of the study.

1.1. Background of the Study

Exporting is simply connecting one country with that of the others and/or the rest of the world
through business trials. Hence, exporting gives numerous benefits to those countries that hitching
the business with the rest of the world. Consequently, numerous experimenters conducted a lot of
studies to show the significance of exporting to all concerned.

Several exploration labors caught on that the use of exportation would bring positive satisfaction
towards the given country's frugality development and the creation of huge job openings in the
nations. For example, the wide request share and competitive advantage attained from
transnational requests through exportation play a vital role in the growth and survival of
companies (Navarro et al., 2009; and Rabino, 2004).

Likewise, in our current global frugality, no nation is tone-sufficient. Each is involved in

different situations in trade to vend what it produces, acquire what it lacks, and produce more
efficiently in some profitable sectors than its trade mates. Trade promotes profitable
effectiveness by furnishing a wider variety of goods, frequently at lower costs, especially
because of specialization, agriculture scale, and the associated relative advantages. Transnational
trade is also subject to important contention since it can at times be a disruptive, profitable and
social force as it changes how wealth is distributed within a public frugality, particularly due to
changes in prices and stipends (Jean, Claude, and Brain, 2013).

From a general standpoint, Africa is the mainland, and numerous of its developments were
originally calculated based on agriculture productivity. As per the African Development Bank

2
Group‘s (ADBG) plan titled ―Africa Strategy for Agrarian Metamorphosis in Africa from 2016
to 2025‖, agriculture remains an integral part of African frugality and the diurnal lives of the
maturity of Africans, accounting for just over 60 jobs across the mainland. Despite its central
role, the hospitality sector represents only a quarter of the African gross domestic product.
Consequently, Africa has untapped farming potential but unfortunately, it isn't completely
employed as anticipated.

Gebrerufael (2017), in his exploration statement, addressed the fact that Ethiopia is one of the
countries in Africa that is experiencing agricultural productivity problems like the rest of other
African countries. In Ethiopia, farming is subsistence and dominated by about 11.7 million
smallholders, who cultivates 95 percent of the public agriculture products. Ethiopia has a
generally agricultural frugality and is depend upon farming, with over 80% of people residing in
pastoral areas (World Bank, 2021). Also, the NBE (2022) report addresses the fact that the
services sector is responsible for 40 percent of the gross domestic product, which was succeeded
by the agriculture sector (32.4%) and assiduity (28.9%). This sounds like farming is the alternate
implicitly profitable contributor to the country, and therefore its benefits are still set up to be
huge.

Approximately three million Ethiopian growers rely on the oilseeds industry as their primary
source of income, making it one of the country's fastest-growing and most significant
agricultural sectors in terms of foreign exchange revenues. After coffee, it is the second-largest
source of foreign exchange earnings (NBE, 2022). Ethiopia has a tempting assortment of
oilseeds that are available for export. Linseed makes up thirteen percent, and sesame seed makes
up one-third of Ethiopia's oilseed products. Ethiopia ranks fifth globally as a patron of sesame
seeds and sixth globally for linseed. One highly valuable oil seed is sesame. Ethiopia also
cultivates specialty seeds, such as castor sap and sunflower seeds. Ethiopia is a significant
exporter of noug (niger seed) and ranks third in the world's sesame seed export rankings, behind
Sudan and India. Ethiopia makes up very little of other oilseeds. With more than twice the value
of linseed, sesame seed has the highest value per ton among Ethiopian oilseeds. Import prices for
olive oil and sesame production are three to four times higher than those of almost all other

3
edible oil production worldwide. The two primary oilseed products traded internationally are
soybean and noncombustible (Wijnands, Biersteker, and Loo, 2009).

Although oilseeds are planted to flavor meals consumed at home and provide some income for
the nation's peasant holders, they are related to crops that are also categorized within the order of
grain crops. Every region produces different volumes of vibrant oil production crops. 4.28 (or
roughly 522,149.28 hectares) of the grain crop area and 1.65 (or roughly 5,415,064.82 quintals)
of the products were contributed by oil crop seeds to the public grain aggregate. In addition to
covering 1.47 (about 179,827.91 hectares), 1.68 (roughly 204,511.91 hectares), and 0.40
(roughly 48,285.56 hectares) of the grain crop area, noug, sesame, and linseed also covered 0.62
(roughly quintals), 0.42 (roughly quintals), and 0.14 (roughly 443,984.32 quintals) of the grain
products, separately (CSA,2021/22).

Viewed on the overall stated data as well as other research findings it's asserted that oilseed
productivity in Ethiopia has not reached its loftiest peak position. To limit the breaks, the
requirements for analyzing the most significant determinants of oilseed export performance in
Ethiopia are the crucial proceedings. Thus, study was focused on identifying the determinants of
oilseed export performance in Ethiopia.

1.2. Statement of the Problem

As it is stated and expressed by many researchers, export is among the fastest-growing
paramount elements influencing the economic development of any nation.

Laurel (2016) stated that exporting or transferring goods and services out of a country- increases
a company‘s deals and gains, enhances its prestige, creates jobs, and offers a precious way to
position seasonal oscillations. Exporting is also an important factor that contributes to profitable
growth, development, and substance in our world. Hence, exporting is a vital and implicit
resource of carries different kinds of benefits to all global nations in general and to Ethiopia in
particular. Belayneh and Wondaferahu (2012) further noticed that export is considered as one of
the very important accelerators of growth.

4
Various report concerning developing countries stated that the most exportable commodities are
non-processed agricultural products. Negash (2015) indicated that oilseeds are one of the most
important cash crops in Ethiopian. Certain researches have been conducted on determinant of
oilseed export performance in Ethiopia, but the final result summarized in differently. For
example, FAO (2015) noticed the problems of export are lack of facilities of financial and
market institutions. Tewodros (2012) on the other hand, defined some of the problems that
products are exported to other than the final destination because of its purification/quality
problems and merely raw seeds. Related to this market linkage problem most of raw products,
especially sesame, as one of the most types of oilseed product. Similarly, Negash (2015)
investigated that Japan is importing Ethiopian sesame seed through China, seeking the well
cleaned and sort. i.e., Ethiopia export sesame to China and China re-export to Japan after same
processing.

Most of the African nations are unfit to gain all the results as anticipated. Ethiopia is
substantially exporting agricultural products and among them coffee and oilseeds take the
majority of the country's export demand (NBE, 2022). Further, Ethiopian goods exports have
declined by 6 percent from a time ago, making the fourth time of periodic decline in the last five
times. As a result, the share of goods exported to gross domestic product has more than halved
since 2013/14 to slightly below 3 percent of gross domestic product. Ethiopia‘s goods export
gross domestic product rate is veritably low compared to the normal for Sub-Saharan Africa
(SSA) or low-income developing countries. It's added to the bank report that there's still a
negative trade balance in the country (NBE, 2020). Then it's caught on that there's a huge
opening in exporting performance throughout the country, and the country needs to meliorate
export productivity. The consequences on the other hand should have to spark all concerned to
know exactly what would be the main root causes or factors that impact the country's export
performance.

Besides, some of research findings shows different results on determinant of oilseed export
performance in Ethiopia. Thus, the consequences of the result create some inconsistencies and
controversial ideas each other. As pointed out by Haish (2017) technology is a significant or has

5
a positive correlation with oilseed export performance. Here technology is the introductory
determinant element for oilseed export performance. On the other hand, Yohannes Negussie's
(2022) research result revealed that technology isn't the most determinant variable on oilseed
export performance. As the situation explains, both of the researchers applied fairly analogous
independent variable in their separate research study processes, but they came up with different
results.

Other research findings reveal that certain inquiries about determinant of agriculture products in
Africa in general and in Ethiopia in particular have been carried out by outside researchers.
Consequently, the majority of these empirical investigations has been carried out in developed
nations and following this the findings that propel small and medium-sized businesses' (SME's)
international competitiveness in developing nations are yet unknown (Matanda et al., 2016). This
asserts that the study‘s results have not been reflects the true problems of determinant of
agriculture products in African as well as in Ethiopia. As a result, the export literature frequently
extrapolates conclusions drawn from established environments to guide policy. However, it is
debatable if similar findings apply to businesses that operate in African countries (Boso et al.,
2012). Due to the notable institutional and environmental disparities between the two
environments, African firms' internationalization is particularly likely to be influenced by a
unique combination of factors (Robson and Freel, 2008).

Based on the overall ideas of the above research output it is inferring that the determinant of
oilseed export variables stated differently. As observed that some of the argument on the
fundamental problems associated with determinant of oilseed export are undeveloped
infrastructure, lack of market cooperatives, poor harvesting system and/or traditional cultivation
system, lack of financial and market institutions, lack of store centers and quality problem. While
the others stressed on lack of market linkage, non-processed raw material, and unstable exchange
rate. Though a number of problems related to determinant of oilseed export in Ethiopia are
studied by different researchers, still there are research gaps that must be fulfilled to provide
fruitful feedback to exporters as well as other related bodies with better information. Hence, the
following is some of the identified gaps in the previous researches:

6
  The different researches mentioned above have lacks common points as well as similarity
on the results of determinant of oilseed export in Ethiopia.
 Most of the research focused on domestic market arrangement instead of the international
market situations and the study also excluded oilseed exporters as a center of study.
 Some of the study explaining that the Ethiopia export was declining, but failed to reflect
the true causes of the problems clearly.
 Certain research findings reveals that most of the studies pertaining determinants of
oilseed export in Africa as well as Ethiopia have been conducted by researchers from
developed nations, but it lacks to mention some of the most fundamental problems
existing in developing countries, since they are different from developed nations.
 Generally, the previous research findings lack consistencies on its outcome and as a result
it leads to certain controversy to the reader and experts.

It is coined out from the above discussion that there are many research gaps to be identified and
it demanding conduct continuous research to solve the problems of oilseed export performance
in Ethiopia. Actually, identifying the main problems helps to develop the solution to the existing
oilseed export performance in the country. However, the country shouldn‘t get the expected
benefits from the sector if it is failed to get the needed results out of the research. Accordingly,
further research is vital to solve the problems associated to oilseed export. Since oilseed is one of
the most marketed products in the international market, examining the most important problems
enables to improving oilseed export in Ethiopia. Therefore, the researcher initiated to conduct the
study by examining determinant of export performance that influencing oilseed export in
Ethiopia.

1.3. Basic Research Questions

The following research questions, which were derived from the issues, were addressed by the
study.
 What are the trends or practices of oilseeds export performance in Ethiopia?
 What are the major determinant factors of oilseeds export performance in Ethiopia?
 What is the nature of relationship between independent variables and dependent variable?

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1.4. Objectives of the Study
The general and specific objectives of the study were explained as follows.

1.4.1. General Objective

The main objective of this study is to identify the most determinant export performance factors
that influencing oilseed export in Ethiopia.

1.4.2. Specific Objectives

 To assess the practices of oilseeds export performance in Ethiopia.
 To identify those major determinant export performance factors in the case of Ethiopia‘s
oilseed export.
 To examine the nature of relationship between independent variables and dependent variable.

1.5. Significance of the Study

The study was conducted in partial fulfillment of requirements for the degree of Masters of
Social Science (MSC) in International Business, with a specialization in Import-Export
Management. Hence, the study should have the following contributions for all concerned parties:

 Information from this study could be useful for exporters and academicians, especially those
who are dealing in oilseeds.
 It gives some clues to other researchers who are intending to work on related subjects.
 It yields some support or information to organizations to develop various methods to
encourage the export of higher-quality oilseeds as well as to structure optional export rules.
 It gives researchers an overview of performing research in a practical setting, which will
assist the student researcher when they conduct additional research in the future.
 It could be useful as literature reference.

1.6. Scope of the Study

According to different reports, it has been learned that there are many agricultural and
manufacturing products, such as grains, oilseeds, coffee, leather, minerals, etc, that are to be

8
exported from Ethiopia to the rest of the world. However, the study only emphasized on the main
determinant export performance factors that affect oilseed exports in Ethiopia.

1.7. Limitation of the Study

Some of the limitations occurred to the study is there is lack of more available and/or reliable
data with regard to the study topic and that in turn create a significant obstacle in finding a trend
and a meaningful relationship among the variables or factors. Besides, to some extent it has been
identified that there is lack of prior research studies on the topic as citing prior research studies
forms the basis of your literature review and helps lay a foundation for understanding the
research problem you are investigating. However, due to such problem it makes the difficult to
the researcher to analysis the required tasks. The study has also faced shortage of time and some
language problems with the respondents while responding the questionnaire.

1.8. Organization of the Study

The study is structured or grouped into five chapters. The first chapter, which is the introduction
part, deals with the background of the study, statement of the problem, objective, significance of
the study, scope of the study, limitations of the study, and other related points. The second
chapter addressed a review of theoretical and empirical literature as well as the conceptual
framework of those determinant factors of oilseed export that could have been covered under the
study. The third chapter described the study's research approach in detail. The fourth section
included the main data presentation, analysis, regression, and interpretation. The data has been
analyzed using an explanatory research design. Finally, chapter five covered the summary,
conclusion, and recommendations of the study.

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 CHAPTER TWO

2. REVIEW OF RELATED LITERATURE

The review of related literature is divided into three major parts. It covered the theoretical
literature review, the empirical review, and the conceptual framework. The theoretical review
has dictated the discussion of the overview of export trade as well as international trade theories,
and the study's second section was the review of empirical literature, which discussed the trend
in oilseeds export, the main types and characteristics of Ethiopian oilseeds, and factors that affect
oilseeds export and examined the earlier research done on oilseeds export performance. The
conceptual framework was crafted in the third section of the review of literature. The conceptual
framework here is developed based on theoretical and empirical points of view.

2.1. International Trade Theories

International trade theories are simply the different theories explaining international trade. Trade
is the concept of exchanging goods and services between two people or entities. International
trade is then the concept of this exchange between people or entities in two different countries.

The scale of international commerce has grown to unknown situations, serving the whole
population as well as its actors. Still, there are pitfalls associated with global trade that stem from
exporting of goods to other nations. The issue of opting for a development strategy at the public
frugality and establishment situations is getting more and more significant in the setting of
globalization and rising competition. To do this, it's necessary to pinpoint the reasons behind
global commerce and consider them in the process of formulating strategic plans.

In order to reap the necessary benefits, international trade primarily emphasizes the exchange of
products and services between two or more nations. According to Bowen (2013), the allocation
of natural resources unevenly among countries is what drives the negotiation of international
trade agreements. According to Seyoum (2009), free trade in goods began as early as 2500 BC,
and the events of World War I affected the nascent growth of trade and the emergence of global
frugality. He further defined international trade as the exchange of goods and services across
national borders.

10
Kelly (2009) emphasized that international trade encompasses more than just the influx of
commodities and services across nations, as investors also transact business internationally.
Foreign direct investment, is made possible by transnational business. Associations take over
foreign direct investment for a number of reasons, including the establishment of manufacturing,
distribution, and service facilities as well as operations and manufacturing facilities for the
expansion of transnational business.

Reuvid (2008) went on to clarify that there are two basic categories of international trade. The
first is whether or not the nation is able to create the good or service on its own. The alternative
is true, even though different nations may manufacture the commodities and/or services they
import for various uses and rationales. Similar to how imported items may be of higher quality,
have superior designs, have specialized features, etc., if their price is lower than that of
domestically made goods.

2.1.1. The Different International Trade Theories

Mercantilism is developed in the sixteenth century; mercantilism was one of the earliest efforts
to develop an economic theory. This theory stated that a country‘s wealth was determined by the
amount of its gold and silver holdings. In its simplest sense, mercantilists believed that a country
should increase its holdings of gold and silver by promoting exports and discouraging imports. In
other words, if people in other countries buy more from you (exports) than they sell to you
(imports), then they have to pay you the difference in gold and silver. The objective of each
country was to have a trade surplus, or a situation where the value of exports is greater than the
value of imports, and to avoid a trade deficit, or a situation where the value of imports is greater
than the value of exports (Ridley, 2010).

The absolute advantage trade theory was developed by Adam Smith inn 1776 and questioned the
leading mercantile theory of the time in The Wealth of Nations. Smith offered a new trade theory
called absolute advantage, which focused on the ability of a country to produce a good more
efficiently than another nation. Smith reasoned that trade between countries shouldn‘t be

11
regulated or restricted by government policy or intervention. He stated that trade should flow
naturally according to market forces. In a hypothetical two-country world, if Country A could
produce a good cheaper or faster (or both) than Country B, then Country A had the advantage
and could focus on specializing on producing that good. Similarly, if Country B was better at
producing another good, it could focus on specialization as well. By specialization, countries
would generate efficiencies, because their labor force would become more skilled by doing the
same tasks. Production would also become more efficient, because there would be an incentive
to create faster and better production methods to increase the specialization. Smith‘s theory
reasoned that with increased efficiencies, people in both countries would benefit and trade should
be encouraged. His theory stated that a nation‘s wealth shouldn‘t be judged by how much gold
and silver it had but rather by the living standards of its people (Ridley, 2010).

The comparative advantage theory stated that the challenge to the absolute advantage theory was
that some countries may be better at producing both goods and, therefore, have an advantage
in many areas. In contrast, another country may not have any useful absolute advantages. To
answer this challenge, David Ricardo, an English economist, introduced the theory of
comparative advantage in 1817. Ricardo reasoned that even if Country A had the absolute
advantage in the production of both products, specialization and trade could still occur between
two countries (Ridley, 2010).

Comparative advantage occurs when a country cannot produce a product more efficiently than
the other country; however, it can produce that product better and more efficiently than it does
other goods. The difference between these two theories is subtle. Comparative advantage focuses
on the relative productivity differences, whereas absolute advantage looks at the absolute
productivity (Ridley, 2010).

The theories of Smith and Ricardo didn‘t help countries determine which products would give a
country an advantage. Both theories assumed that free and open markets would lead countries
and producers to determine which goods they could produce more efficiently. In the early 1900s,
two Swedish economists, Eli Heckscher and Bertil Ohlin, focused their attention on how a

12
country could gain comparative advantage by producing products that utilized factors that were
in abundance in the country. Their theory is based on a country‘s production factors—land,
labor, and capital, which provide the funds for investment in plants and equipment. They
determined that the cost of any factor or resource was a function of supply and demand. Factors
that were in great supply relative to demand would be cheaper; factors in great demand relative
to supply would be more expensive. Their theory, also called the factor proportions theory, stated
that countries would produce and export goods that required resources or factors that were in
great supply and, therefore, cheaper production factors. In contrast, countries would import
goods that required resources that were in short supply, but higher demand (Ridley, 2010).

In contrast to classical, country-based trade theories, the category of modern, firm-based theories
emerged after World War II and was developed in large part by business school professors, not
economists. The firm-based theories evolved with the growth of the multinational company
(MNC). The country-based theories couldn‘t adequately address the expansion of either MNCs
or intraindustry trade, which refers to trade between two countries of goods produced in the same
industry. For example, Japan exports Toyota vehicles to Germany and imports Mercedes-Benz
automobiles from Germany (Ridley, 2010).

Unlike the country-based theories, firm-based theories incorporate other product and service
factors, including brand and customer loyalty, technology, and quality, into the understanding of
trade flows (Ridley, 2010).

Swedish economist Steffan Linder developed the country similarity theory in 1961, as he tried to
explain the concept of intra-industry trade. Linder‘s theory proposed that consumers in countries
that are in the same or similar stage of development would have similar preferences. In this firm-
based theory, Linder suggested that companies first produce for domestic consumption. When
they explore exporting, the companies often find that markets that look similar to their domestic
one, in terms of customer preferences, offer the most potential for success. Linder‘s country
similarity theory then states that most trade in manufactured goods will be between countries
with similar per capita incomes, and intra-industry trade will be common. This theory is often

13
most useful in understanding trade in goods where brand names and product reputations are
important factors in the buyers‘ decision-making and purchasing processes (Ridley, 2010).

Raymond Vernon, a Harvard Business School professor, developed the product life cycle
theory in the 1960s. The theory, originating in the field of marketing, stated that a product life
cycle has three distinct stages. These are new product, maturing product, and standardized
product. The theory assumed that production of the new product will occur completely in the
home country of its innovation (Ridley, 2010).

Global strategic rivalry theory emerged in the 1980s and was based on the work of economists
Paul Krugman and Kelvin Lancaster. Their theory focused on MNCs and their efforts to gain a
competitive advantage against other global firms in their industry. Firms will encounter global
competition in their industries and in order to prosper, they must develop competitive
advantages. The critical ways that firms can obtain a sustainable competitive advantage are
called the barriers to entry for that industry (Ridley, 2010).

In the continuing evolution of international trade theories, Michael Porter of Harvard Business
School developed a new model to explain national competitive advantage in 1990. Porter‘s
theory stated that a nation‘s competitiveness in an industry depends on the capacity of the
industry to innovate and upgrade. His theory focused on explaining why some nations are more
competitive in certain industries. To explain his theory, Porter identified four determinants that
he linked together. The four determinants are local market resources and capabilities, local
market demand conditions, local suppliers and complementary industries, and local firm
characteristics. Porter‘s theory, along with the other modern, firm-based theories, offers an
interesting interpretation of international trade trends. Nevertheless, they remain relatively new
and minimally tested theories (Ridley, 2010).

According to the above points, it is observed that there has been no single theory that fully
explains the international trade in general and growth in export particular. It has also evolved
over long period of time and empirically tested in different region by many scholars. There is no

14
common concept on international trade, but the general point of the concept has been developing
since the verge of the theory till today.

2.2. Overview of Determinants of Export Performance

Export performance measures a company's capability to successfully or unsuccessfully export
goods or services to a foreign request through strategic planning and prosecution. A company's
contribution to the import assiduity is conceded in addition to its import performance.

Agricultural export performance is the value of all agrarian goods handed to the rest of the
world. It's defined as the capability of a nation to produce and distribute agrarian goods that can
contend with transnational requests. It has the ability to achieve income growth and ameliorate
the welfare of the nation. Data on agrarian trade import performance were attained from WDI
(Braha, 2017) and (Sun and Li, 2018).

Export performance is defined as: (i) the success or failure of the efforts of a nation to sell
domestically produced goods and services in other nations markets (Zou and Stan, 1998); (ii) the
export effectiveness, export efficiency and continuous engagement in exporting (Shoham, 1991);
(iii) the composite outcome a nation‘s international sales (Shoham, 1996); and (iv) the three sub-
dimensions which encompasses sales, profit and growth (Madsen, 1987).

Many researchers investigating about how firms perform in exporting have identified a lot of
factors as determinants of export performance (Aaby and Slater 1989; Zuo and Stan, 1998).
These determinants have been classified differently; however, a major classification has been as
controllable and uncontrollable. The controllable determinants are internal firm-level and
uncontrollable are external environmental determinants (Aaby and Slater, 1989). Siringoringo
(2009) identified four groups: external, operational, internal and informational barriers, whereas
Leonidou et.al. (2002) moved from the basic distinction between internal barriers associated with
organizational resources/capabilities and the company‘s export strategy and external barriers
related to the home and host environment within which the firm operates.

15
Classifying the determinants of export performance into internal and external factors is
theoretically justified as the two categories correspond to different theoretical bases. Specifically,
internal determinants are justified by the resource-based theory, while external determinants are
supported by the industrial organization theory.

The resource-based theory conceives a firm as a unique bundle of tangible and intangible
―resources‖ (assets, capabilities, processes, managerial attributes, information, and knowledge)
that are controlled by a firm and that enable it to conceive and implement strategies aimed at
improving its efficiency and effectiveness. The resource-based theory contends that the principal
determinants of a firm‘s export performance and strategy are the internal organization resources.
In contrast, the industrial organization (IO) theory argues that the external factors determine the
firm‘s strategy, which in turn determines economic performance. The logic is that the external
environment imposes pressures to which a firm must adapt in order to survive and prosper
(Julian and O‟cass,2002). Therefore, discussing the findings of this review along the internal
versus external and controllable versus uncontrollable dimensions is theoretically sound and
practically significant. Hence, in this study, those determinants of export performance relevant to
the topic identified from different kinds of literature including both internal factors of exporters
and external conditions more specifically government support services and export related
facilities are reviewed as follows:

According to the World Bank, exports of goods and services represent the value of all goods and
other market services provided to the rest of the world. It includes the value of merchandise,
freight, insurance, transport, travel, royalties, license fees, and other services, such as
communication, construction, financial, information, business, personal, and government
services.

Alemayehu (2006) has clearly stated different trade theories that answer the question why trade
between countries exist. For mercantilist the desire to accumulate precious metal (gold bullion)
was an important matter. Against this background the principal of the classical school, absolute
and comparative advantages have emerged. The rigidity of the classical school‘s assumptions

16
about the structure of costs, among others, led to the evolution of the neoclassical (or orthodox)
trade theories. This theory was followed by trade theories based on technological gaps and
imperfect competition models.

2.2.1. Export Performance and Its Determinants in Developing Countries

Different experts defined the concept of export performance based on their perspective and deep
understanding. The concept proposed by various researchers and academicians pin points on the
how to measure the export performance using different measuring techniques.

Export performance is the relative success or failure of the efforts of a firm or nation to sell
domestically produced goods and services in other nations and it can be described in objective
terms such as sales, profits, or marketing measures or by objective measures such as distributor
or customer satisfaction (Allaro, 2010).

A more comprehensive study on African countries Mold and Prizzon (2008) used a dynamic
panel data set for 48 African countries over the period 1987 – 2006 to identify the key
determinants of export performance. The results from the pooled regression reveal that unit price
of exports, real
effective exchange rate, taxes on trade and diversification index to affect export volumes
negatively and significantly while income per capita, and share of manufacturing in gross
domestic product and foreign direct investment inflows as a percentage of gross domestic
product to affect export volumes positively and insignificantly during the period 1987 – 2006. A
periodic analysis of the same data shows that elasticity of unit price of exports was significant
(126%) and negative during 1987 – 2001 while positive and insignificant during 2002- 2006.

Another wide-ranging study by Fugazza (2004) used data for 84 countries from 1980 – 1999.
The researcher used real exports as dependent variable while real gross domestic product,
population, foreign market access, internal transport access and export sector competitiveness,
depicted by real exchange rate and institutional quality as independent variables. Among the
factors showing supply capacity, gross domestic product was found to have a positive and

17
significant impact on export performance though less the elasticity is less than 1. Population was
found to be insignificant. Internal transport access proxied by % of paved roads was found to
have varied impact through time to time and also through period. It was found to have a
significant positive impact on export performance over 1988-1991 for the weakest export
performers while it becomes significant for all quantiles after 1991 but more significant for weak
export performers.

Recent studies on export have concentrated on the impacts of trade facilitation reforms on export
performance. A study made by Poutugal-Perez and S.Wilson (2010) analyzed the impact of hard
infrastructure (roads, ports, airports, rail infrastructure and information communications
technology) and soft infrastructure (efficiency of customs and domestic transport and business
regulatory measures and transparency) on export performance of 101 countries during 2004 -07.
The results from the study reveal that an improvement in hard and soft infrastructure leads to
more exports. Investments on physical infrastructure were found to have a positive impact on
exports, but declining as per capita income increases, on the contrary investments in information
communication technology were found to have more impact on richer countries. Soft
infrastructures were also found to affect exports positively.

Another study made on the impact of inland transit delays, documentation, and customs and port
delays on Sub-Saharan Africa export performance made by Freud and Rocha (2010) founds that
inland transit time delay to have a significant negative impact on exports while customs and
ports time and documents time were found to have a smaller impact. The researchers conclude
―Our results imply that while inland transit delays have a robust negative impact on
export values, higher times in other areas have much smaller effects in reducing Africa‘s exports.
A one-day increase in inland transit time reduces exports by 7 percent on average. Put another
way, a one-day reduction in inland travel times translates into nearly a 1.5 percentage point
decrease in all importing-country tariffs. In addition, this effect is higher for time-sensitive goods
compared to time-insensitive goods. We show that long times are associated with high
uncertainty in road transport, which jeopardizes exporters' delivery targets.‖

18
 2.2.2. Ethiopia’s Oilseed Export Performance
Ethiopian merchandise export structure still remains undiversified. On average five
commodities; coffee, flower, oilseed, hide skins and chat account for 78% of export revenue. The
dependence of export revenues on few commodities has made Ethiopia‘s export performance
highly volatile depending on the performance of the major commodities. These products are
mainly primary products with fewer linkages in the economy and also declining prices
internationally, though there are up swings.

Haile (2011) stress that oilseeds are high value export products standing as the second foreign
exchange earner products of Ethiopia. Growth and improvement of the oilseed sector can
substantially contribute to the economic development at national, regional and family levels.
Among oil seeds, sesame is by far the major export product in terms of both export quantity and
value following coffee. Ethiopia has high quality sesame seed varieties that are suitable for a
wide range of applications, the Humera, Gondar and Wellega types being the major ones.

Hailegiorgis (2011) examined the determinants of oil seeds export over the period of 1974-2009.
His classical linear regression result has shown that export performance is positively influenced
by only real output and nominal exchange rate whereas both domestic and foreign price of oil
seeds have no influence on oil seed exports. As indicated in the paper, the accuracy of data that
he used in his studies was mentioned as a problem but the way that how it was managed was not
clear hence the result may not be genuinely showing the reality. Unlike Hailegiorgis; Belayneh
and Wondaferaw (2013) conducted the research on determinants of an aggregate export
performance in Ethiopia by using data over 1970/71-2010/11 through Johahanson co-integration
and Vector Error Correction approaches. Their result indicates that real effective exchange rate,
openness of trade, real gross domestic product of the home country, infrastructure development
and private credit-to-gross domestic product ratio have positive and significant effect on export
performance in the long-run period of time. While the impact of the real gross domestic product
of trading partner on export performance is statistically insignificant. Only last year openness of
trade is directly affected export performance of current in short-run period. It is more relatively
comprehensive to make generalization about Ethiopian export performance.

19
Israel (2020) study identified the determinants of export supply in Ethiopia over 1977-2016 by
using autoregression distributed lag model. According his autoregression distributed lag model
output, in the long run, economic variables such as real gross domestic product, terms of trade,
trade openness, trade partners gross domestic product and investments are important
determinants to promote export while real exchange rate has divesting effect on it. His study has
been more recent, comprehensive and well organized compared to all others studies those
presented in this article but some of his data was collected from here and there with different
measurement units may be taken as a major limitation of his study.

Murad and Beyan (2020) held study on determinants of sesame export performance in Ethiopia
by using 13 years panel date from 13 Ethiopian Sesame importer countries during 2002 to 2014.
The random effect panel gravity model result indicates that the domestic and partners real gross
domestic product have positive and strong effect on Ethiopia‘s Sesame export supply. On the
other hand, real exchange rate and weighted distance between Ethiopia and its partners have
significant and negative effect on Sesame export. This study, just like Alelign study‘s, has fixed
to a single commodity and some limited Sesame importing countries without mentioning their
total share in Ethiopia‘s Sesame export.

2.2.3. Internal and External Determinants for Export Performance

Leonidou (1995) defined export barriers as: ―The attitudinal, structural, operational, and
other constraints that hinder the firm‘s ability to imitate, develop, or sustain international
operations.‖ Export problems or barriers are defined as those constraints that hinder the ability of
firm to initiate, develop or maintain export marketing activities of the firm (Ahmed, Julian,
Baalbaki and Hadidian, 2004).

Different researchers categorized export marketing problems into different categories. Some of
them grouped export problems in to ―internal‖ and ―external‖ barriers (Tesfom and Lutz,
2006). Delgado (2006) identified export problems as: production related; processing/marketing
related; and economic and political environment. Clarke (2013) generated list of export
impediments and grouped them into ―generic‖, ―product specific‖ and ―market specific‖.
Karelakis (2008)

20
classified export problems into four groups: ―internal-domestic‖;―internal-foreign‖;
―external- domestic‖; and ―external-foreign‖ (Karelakis, Mattas and Chryssochoidis, 2008).

Bezabih and Hadera (2007) identified the major constraints of marketing slick of markets to
absorb the production, low price for the products, large number of middlemen in the marketing
system, lack of marketing institutions safeguarding farmers‘ interest and rights over their
marketable produces (e.g., cooperatives), lack of coordination among producers to increase their
bargaining power, poor product handling and packaging, imperfect pricing system, lack of
transparency in market information system mainly in the export market (O‘Cass and Julian,
2003).

World Bank (2004) identified the major constraints in the Ethiopian high value export products
as; high freight cost and insufficient cargo space, lack of railway transport system, insufficient
airport facilities, existence of illegal traders, poor packaging systems, lack of skilled manpower,
insufficient pre and post-harvest infrastructure facilities, access to bank loan, and lack of
comprehensive market study (World Bank, 2004).

Severe production seasonality, seasonal price fluctuations, poor pre- and post-harvest handling,
prevalence of pest and diseases, lack of storage are some of the critical problems encountered
oilseed production in Ethiopia (Ahmed et al., 2004).

2.2.3.1. Internal Factors

As Leonidou (2004) ―The constraints associated with organizational resources/capabilities
and company approach to export business‖ (Vohra, 2008).

These problems are categorized as those which are directly related to the controllable issues
within the firm itself (Vohra, 2008). Tesfom and Lutz (2006) classified internal barriers further
in to ―company barriers‖ and ―product barriers‖. Company barriers influence their choice
of marketing strategy and ability to execute that marketing strategy (Porter, 1985), cited in
Tesfom and Lutz (2006); O‘Cass and Julian 2003). Key assets and skills of a company
constitute its

21
source of competitive advantage. Company barriers categorized under marketing knowledge and
information, financial resources and human resources (Delgado, 2006).

Marketing knowledge and information problems are about lack of knowledge of foreign markets,
business practices, and competition; and lack of management to generate foreign sales. Lack of
knowledge to locate foreign opportunities and promising markets is perceived to be a major
barrier to export from developing countries (Siringoringo, Prihandoko and Kowanda, 2009).
According to Lumpkin et al. (2005), expanding the scale of horticulture production is often
hindered by lack of market access and market information. Distribution is a major problem area
in exporting. Many exporters in developing countries lack information about marketing channels
and fail to establish marketing networks (Tesfom and Lutz, 2006). Deficient advertising and
promotion programs are also mentioned as other factors that constrain export activities
(Siringoringo, Prihandoko and Kowanda, 2009).

Financial problem is one of the company barriers. Many exporting companies in developing
countries cannot operate for lack of adequate working capital, which endanger the entire
production operation and adds cost (Reardon, Codron and Busch, 2001).

Human resource barrier is the key problem which holds back the success of the company. Export
marketing activities depend on the attitudes and characteristics of the managers. Export
marketing knowledge problems can be attributed to a large extent to the lack of trained and
experienced human resources. A company that takes into account the requirements for
international activities in its human resource management practices, particularly for its
managerial and professional employees is more likely to do better in its export attempts
(Karelakis, Mattas and Chryssochoidis, 2008).

―Product problems are related to quality and technical requirements of the targeted export
market segment, such as export product design, style, quality packaging and labeling
requirements and product adaptation or modification‖ (Siringoringo, Prihandoko and Kowanda,
2009). Cook (1983), cited in Tesfom and Lutz (2006), put that product characteristics affect
the competitive

22
advantage and influence the choice between an offensive and a defensive export strategy. The
product barriers that influence the export marketing strategy of the firm could be grouped into
quality and technical adaptability.
Quality barriers are related with packaging, meeting importers quality standards and establishing
the suitable design and image for export markets. There are different quality standards in
developing countries. Therefore, fulfilling those standards is mandatory for any exporting
company in order to be competitive in the market (Reardon, Codron and Busch, 2001). In
addition, Bharti (2014) identified the challenges for the quality of perishable export products in
developing countries as: viability of cold chain; existing facilities are outdated and poorly
maintained; and low awareness and demand for cold chain services. Cold chain plays the very
vital role in reserving the quality of perishable products like vegetable and fruit export.

Technical/adaptation barrier is another important barrier. Successful firms adapt their products to
foreign markets. Most of the problems related to technical adaptability are due to a lack of
knowledge of market requirements or a lack of resources to meet the requirements: poor quality
control techniques, poor quality of raw material, packaging and labeling requirements, product
design and specification. In addition, product diversification is a barrier to internationalization
(Tesfom and Lutz, 2006).

2.2.3.2. External Factors

External problems are those barriers which are rooted in the external environment and the firm
itself has no control over the consequences of such problems. These problems are also referred to
as macro environment barriers or industrial barriers (Tesfom and Lutz, 2006). They further
classified external barriers in to ―industry barriers‖, ―market barriers‖ and ―macro
environmental barriers‖.

Industry barrier is the first category of external problems. The intensity of exporting activities
and the nature of export marketing strategies differ considerably across industries. Porter (1985)
and Kerin et al. (1990), cited in Tesfom and Lutz (2006), noted that the difference among
industries is due to the varying nature of industries. In order to develop a proper export

23
marketing strategy, the differences between market systems, firm sizes and presence of foreign
competitors across markets should be taken into account (Tesfom and Lutz, 2006). Industry
structure is one of the industry barriers which consists of firm size/economies of scale; lack of
new technology; unprepared to face large MNCs; unreliability in raw material supply. The size
of the firm is a key determinant of the propensity to export. The larger the firm, the greater the
size advantage over the smaller firms; and this will usually have a positive impact on the export
activity. Another important factor for exporting firms in developing countries is the supply of
raw materials and inputs. They face unreliability in their supplies either from other domestic
firms or from abroad (Tesfom and Lutz, 2006).

Competition barrier is another category of industry barriers. Competition should not be

considered as a barrier if there is equal information exists among competitors in the market.
However, in practice information on export opportunities is costly and not easily available.
Therefore, lack of such information demotivates the firm to go for export and to withstand the
existing competition with different exporters around the world (Reardon, Codron and Busch,
2001). The competition barrier includes meeting foreign competitor prices; withstanding with
aggressive competitors in the foreign market; lack of competitive prices; and fierce competition
in export markets. Especially firms with limited financial and human resources are affected with
it (Tesfom and Lutz, 2006).

―Export market barriers are factors that affect the export marketing strategy related to
customer barriers and procedural barriers‖ (Tesfom and Lutz, 2006). Customer barriers stem
from the customer‘s perception of product characteristics. An important issue here is that in
addition to specific quality problems, exporters from developing countries face the poor
image/goodwill of their country. In addition, bad image of products in the foreign market and
insufficient foreign demand; language and culture differences; and country of origin effect are
the major problems faced with the customers‘ preferences (Ahmed, Julian, Baalbaki and
Hadidian, 2004).

Procedural barriers are among the export market barriers. Exporting requires knowledge about
export procedures. The time and paperwork required to comply with foreign and domestic

24
market regulations is mostly lengthy. Not only government organizations but also other private
organizations such as banks, shipping organizations and insurance companies, have their own
procedures. Lack of information about export procedures and in particular for inexperienced
managers foreign documentation and paper work may is very difficult to cope with. In addition,
delay of payments; procedural complexity of paperwork; and delay in duty drawbacks are among
the major procedural barriers that affect the exporting process (Tesfom and Lutz, 2006).

―Macro environment barriers are one of the external barriers. These are factors beyond the
firm‘s control; which further classified in to direct and indirect export barriers‖ (Tesfom and
Lutz, 2006). Direct export barriers include tariff and non-tariff barriers; cost of transportation;
inadequate diplomatic support; lack of export promotion and assistance from the government;
complex government bureaucracies; infrastructure; and special customs requirements (Morgan,
Katsikeas and Vorhies, 2011). Naidu et al. (1997), cited in Tesfom and Lutz (2006), described
that exporting companies suffer because of the inadequacy of government export promotion
policies. This includes lack of gathering and provision of information on available export
opportunities and ineffective promotion of the country‘s exports to abroad. Indirect export
barriers are rooted in the macro-economic policy of the country and international trade
agreements. They include: exchange and interest rate uncertainties; international trade
agreements; foreign exchange rate policy (Reardon, Codron and Busch, 2001). International
trade agreements are good for the exporter but they can also discriminate against third party
traders (Tesfom and Lutz, 2006).

2.3. Empirical Literature Review

Developing nations pursue growth strategies driven by exports; export diversification is the
process of moving from traditional to non-traditional exports. By offering a more varied base of
exports, which helps to reduce volatility in export revenue and achieve greater growth through
enhanced technological capabilities through extensive scientific and technical training, hands-on
learning, forwarding facilitation, and backward linkages. For an extended period, developing
nations have faced difficulties in broadening and varying their export portfolios. Concentrating
exports into a small number of main commodities can pose significant hazards to the economy

25
and politics as it reduces foreign exchange earnings. This is especially important for emerging
nations that have a shortage of machinery. Because of rising unemployment and the potential for
political unrest in the nation, diversification aims at mitigating these economic and political
risks. Numerous researchers used the same approach, putting their own findings as stated below.
The true impact of the currency rate, infrastructure/rural road feeders, productivity, foreign price
level, and product quality have all been identified by Gebrehiwot (2017) as independent
variables influencing oilseed and pulse export performance.

Lages et, al. (2004) reported Export performances are the relative success or failure of the efforts
of a firm or nation to sell domestically produced goods and services in other nations. Export
performance can be described in objective terms such as sales, profits, or marketing measures or
by subjective measures such as distributor or customer satisfaction. Determinants of export
performance can be split into external and internal components. External components include
market access/entry conditions and a country‘s location which include international markets.
Internal components are related to supply-side conditions. Foreign demand is influenced by
various elements. Firstly, it is strongly linked to geography (the structural component).
Typically, countries at the center of a fast-growing region are more likely to benefit than
countries situated outside that region. Second, it is likely to be related to competition and trade
policy (the market access/entry component), which could have, in principle, a similar impact on
trade than geography. Finally, both the quantity and quality of physical infrastructures (the
development component) are expected to play important roles.

Agasha (2006) used VEC model to analyze the determinants of export growth rate in Uganda
using quarterly data from 1987- 2006. The researcher estimated export growth rate as a function
of gross domestic product, terms of trade, real effective exchange rate, foreign price level and
foreign direct Investment. The results from the long run co-integrating regression show that gross
domestic product, real exchange rate and term of trade to affect export growth rate positively and
significantly while foreign Price level were found to affect export growth rate negatively and
significantly. Foreign direct investment was found to be insignificant.

26
A more comprehensive study on African countries employed a dynamic panel data set for 48
African countries over the period 1987 to 2006 to identify the key determinants of export
performance. The results from the pooled regression reveal that unit price of exports, real
effective exchange rate, taxes on trade and diversification index to affect export volumes
negatively and significantly while income per capita, and share of manufacturing in gross
domestic product and foreign direct investment inflows as a percentage of gross domestic
product to affect export volumes positively and insignificantly during the period 1987 to 2006. A
periodic analysis of the same data shows that elasticity of unit price of exports was significant
(126%) and negative during 1987 to 2001 while positive and insignificant during 2002 to 2006,
Mold and Prizzon (2008).
Edwards and Alves (2005) analyzed the determinants of manufacturing export supply in South
Africa used a panel data set of 28 manufacturing sectors using import substitution model. The
researchers used dynamic fixed effects and generalized method of moments.

The outcome from the equation estimated on export supply determinants reveal that South
African total manufacturing export volume is positively and significantly influenced by relative
prices or real effective exchange rate, real foreign income, skilled to unskilled labor ratio and
import penetration and rail capacity. On the other hand, output deviation from the trend was
found to have a negative significant impact, supporting the vent for the surplus hypothesis for
South Africa. Unit labor costs and output trend were found to have insignificant influence on
agricultural export performance. On a study made on the factors affecting export performance in
three different export categories; total merchandise exports, manufacturing exports and exports
of machinery and equipment on nine East and South East Asian countries; China, Hong Kong,
Korea Republic, Malaysia, Philippines, Singapore, Taipei, Thailand and Indonesia, Jongwanich
(2007) used quarterly data from 1990 to 2006. The researcher used Imperfect Substitutions
Model and estimated the model using general to specific modeling procedure due to variables
being stationary in different orders. Results from the long run equation reveal that real exchange
rate to have different elasticity in the three export categories, it was found to have the highest
elasticity for merchandise export while lowest elasticity for exports of machinery and transport
equipment‘s. Real exchange rate impact also varies among the nine countries, it was found to

27
have the lowest elasticity for the Philippines while the largest elasticity for Indonesia. Contrary
to real exchange rate influences, world demand was found to have the highest impact on exports
of machinery and transport equipment and lowest impact for merchandise export.

Though the impact of world demand on other countries, export has been significant, it was found
to be insignificant for Indonesia‘s export in all the three categories. The coefficient of world
demand was highly elastic for China, more than one, but less than one for the other countries in
the group. Production capacity was found to affect positively and significantly all countries
exports.

Menji (2010) investigated export performance and determinants in Ethiopia using imperfect
substitution model from the period 1981to 2008. The author used an export function, which
estimated by using the export demand and export supply equations. Export - demand equation
was collectively expressed as a function of domestic price of exports, nominal exchange rate,
foreign price level, real foreign income whereas export- supply function is expressed as a
function of domestic price of exports, domestic price level, and a set of other variables which
affect export supply such as production cost, trade liberalization, production capacity and others.

The results of the two-model showed that merchandise export volumes are significantly
influenced by gross capital formation and share of trade in gross domestic product while other
variables; terms of trade, real effective exchange rate, foreign income, and foreign direct
investment were found to be insignificant. Manufacturing exports equation revealed the foreign
income negatively and significantly affected manufacturing exports supply, while the effect of
gross capital formation manufacturing export supply was However, the effect of terms of trade,
real effective exchange rate, the share of trade in gross domestic product, and foreign direct
investment on manufacturing export supply found to be insignificant. The study concludes with
recommendations to increase the share of manufactured exports and diversify export base of the
country.

28
Tekeste (2012) in his study using co-integration and error correlation models identified some of
the main determinants of agricultural export in Ethiopia for the period 1980 to 2010. Empirically
tested the relationship between agricultural export performance and its major selected
determinants such as terms of trade, gross domestic product, domestic price, world price,
kilometers paved roads, and fertilizer input import, and found that all the explanatory variables
significantly affect agricultural export performance.
Muhabaw (2013) has investigated determinants of export performance in Ethiopia using a time
series analysis from the period 1974-2011. The author used export equation as a function of trade
openness, terms of trade, real effective exchange rate, capital expenditure, real gross domestic
product, and domestic credit. His result shows that trade openness, real effective exchange rate,
capital expenditure and domestic credit were the significant determinants of the country‘s
exports.

Similarly, Ngouhouo and Makolle (2013) analyzed empirically the determinants of export trade
in Cameroon from 1970 to 2008. The author employed the two stage east square methods to
show that exchange rate, trade openness and export lag one period are the main determinants of
export in Cameroon. However, their findings as common in most developing countries are in
contradiction with former studies, mostly because the foreign direct investment was found to be
not significant in determining the export performance in the country.

Lakew (2003) assess the prospects for export diversification in Ethiopia by empirically
investigating the main determinants of the country‘s exports, on the one hand, and by
highlighting the opportunities that are available both at home and abroad including the
challenges that the country‘s export sector is facing in today‘s globalizing and integrated world,
on the other. The study revealed that real exchange rate, real private sector credit and real private
consumption are the significant determinants of the country‘s exports in the long-run. In the
short-run, the main export determinants include real gross domestic product, real private sector
credit and real private consumption.

29
Kiros (2012) has logically examined the export growth rate and its major factors in the Ethiopian
context using time series data for the period 1980-2010. The author has adopted co-integration
and error correction model and found significantly positive as well as negative relationship
between foreign price level, and terms of trade with the export growth rate respectively. The
gross domestic product also positive and significant but it is not strong. So, the foreign price
level, terms of trade and gross domestic product appear to be major determinants, whereas the
real exchange rate and foreign direct investment have no significant effect on Ethiopia's export
growth rate.

Moreover, some of the prominent figures in this field of study include Kurabachew (2019),
Allaro (2010), Menji (2010), Ayalew (2016), Muhabaw (2013), and others. A country's location,
supply-side conditions, infrastructure, trade policy, transport costs, exchange rate, productivity,
foreign demand, terms of trade, fertilizer input, road, domestic price, trade openness, domestic
credit, quality, poor incentives for farmers, weak bargaining power and skills of exporters, poor
market information and dissemination, and poor marketing infrastructure were identified as
major determinants of Ethiopian export performance. Other factors included company factors,
product factors, industry factors, marketing and macroenvironmental factors, and marketing
accessibility.

2.4. Conceptual Framework of the Study

Regarding the important variables that have been covered in the literature review, many authors
make different claims about each of the aspects that have been found to affect export
performance. In order to connect with the study's conceptual framework, an attempt has been
made to summarize these arguments based on those factors. Further, it is noted from the various
research findings, observations, and reviews of the above literature that several factors affecting
export performance in general and oilseed export in particular. Among them, infrastructure,
technology, marketing information, government policy, exchange rate, interest rate, bureaucracy,
and efficiency are the most important elements reflecting in the studies output which in turn
affect Ethiopia's oilseed export-related performance.

30
Though there are many factors affecting oilseed export performance, the study is focused on
company, product, marketing, industry, and macro-environment factors as independent variables
and oilseed export performance as dependent variable. The researcher believes that these
variables hold the majority of the factors stated in various research studies.

The company factors covered in the study include key assets and competitive skills of a
company, financial and human resources, company working capital, negotiation power, and so
on. The product factors constitute of quality and quantities of the product, and technical
requirements of the targeted export market segment, such as export product design, style, quality,
packaging and labeling requirements and product adaptation or modification. Quality of the
export products is one determinant of products export competitiveness. Quality is often indicated
as one of the most important conditions for entering and remaining in foreign markets. There are
different quality standards in developing countries (Christensen et. al., 1987).

The industry factors stress on the technology applied in the industry, the industry process, the
buyers and sellers negotiating power, relationships among different parties in the industry, the
competition of the industry, firms‘ size and presence of foreign competitors across the market or
industry, unreliability in raw material supply and input.

The marketing factors associated with about knowledge of foreign markets, business practices,
competition; and lack of management to generate foreign sales, knowledge to locate foreign
opportunities and promising markets. Furthermore, the marketing factors addresses marketing
mix elements the product, price, promotion and placement. Finally, the macro-environmental
factors involve in the research entail the tariff and non-tariff barriers; cost of transportation;
inadequate diplomatic support; lack of export promotion and assistance from the government,
complex government bureaucracies, infrastructure, special customs requirements, macro-
economic policy of the country and international trade agreements, exchange and interest rate,
international trade agreements and foreign exchange rate policy.

31
The study interconnect and interrelates how those independent variables affect the dependent
variable. Basically, the oilseed export performance explains in terms of profit, income and
revenue. In general, the determinant variables take into account in the study are believed to
influence oilseeds export performance either directly or indirectly and the diagram shows that the
interaction of those variables affect export performance.

Figure 1. Conceptual Framework

Independent Variables Dependent Variable

Company

Product

Export Performance
Marketing (Sales, Profit, Margin, …)

Industry

Macro-Environment

(Source: Reuvid, 2008)

32
2.5. Research Hypothesis
Based on the literature review as well as the relationships between the independent and
dependent variables as represented in the above conceptual model, the following hypotheses
were tested:

H1: The company has a significant influence on oilseed export performance.

H2: The product has a significant influence on oilseed export performance.
H3: Marketing has a significant influence on oilseed export performance.
H4: The industry has a significant influence on oilseed export performance.
H5: The macroenvironment has a significant influence on oilseed export performance.

2.6. Literature Gap

Certain researchers had carried out research on determinants of export performance in line with
different topics. However, the results obtained from the studies reflecting differently. The
researcher identified some of this limitation or gaps as it has been explained below shortly.

Despite employing various methodologies, it has been noted that some of the evaluated empirical
research' conclusions converge while others contradict one another. For example, the majority of
the results lend credence to the idea that export performance benefits from foreign direct
investment. Menji (2010) and Agasha (2006), however, refute this claim.

Further investigation into the study's findings reveals that opinions on the sign, importance, and
long-term impacts of the variables influencing Ethiopia's export performance are divided.
Second, single export commodities like coffee and oil seeds have been the focus of the bulk of
studies, including those by Hailegiorigis (2011), Hassen (2015), Tadese (2015), Zekarias and
Degye (2019), Fassil and Degye (2019), and Murad and Beyan (2020). Third, a number of
authors have attempted to determine the factors that influence overall export performance,
including Belayneh and Wondaferaw (2013), Ashenafi and Gataneh (2014), Alelign (2014),
Abebe (2016), and Israel (2020). However, some of these authors, like Ashenafi and Getaneh
(2014) and Alelign (2014), are limited to discussing financial incentives or the relationship
between trade partners.

33
Tekeste, (2012) show the relationship between export performance and the determinants, foreign
price level and gross domestic product affect export significantly. Kiros, (2012) in the other way
reviewed gross domestic product affect export performance positively and significant but not
strong. Moreover, Lakew, (2003) showed in his study proved that real effect exchange rate is
significant determinants of export. But Mold and Prizzon (2008) on their studies found the
insignificant relationship with real effect exchange rate and export performance.

Thus, in order to evaluate the performance of oilseed export in Ethiopia from the perspectives of
the actual exporters, the researcher used primary data rather than secondary data and a multiple
linear regression model of data analysis. The study is thought to eliminate a large number of lags
and overparameterization. Additionally, the study aimed to close the holes in the researcher's
above argument by critically examining the relevance of the relationship between the
determinants and export performance factors as indicated in the conceptual framework.

34
 CHAPTER THREE

3. RESEARCH METHODOLOGY
Chapter three detailed out the contents of the research design and type, the technique used to
determine the population and sample size, sampling techniques, types and sources of data, data
collection techniques, methods of data analysis, and presentation.

3.1. Research Design

It is indicated that explanatory research is a technique used to gain a deeper understanding of the
underlying reasons for, causes of, and relationships behind a particular phenomenon that has yet
to be extensively studied. Researchers use this method to understand why and how a particular
phenomenon occurs the way it does. Since there is limited information regarding the
phenomenon being studied, it‘s up to the researcher to develop fresh ideas and collect more data.
Explanatory research tests new theories and establishes cause-and-effect relationships between
different study variables. Basically, this research method can used when the cause-and-effect
relationships between study variables and determine which variable influences the predicted
outcome most. Explanatory research explores all the factors that lead to a certain outcome or
phenomenon. Hence, all the data and observations on the stated topics were examined and
explained based on explanatory research design.

Besides, the study applied both a quantitative and qualitative approaches, as the mixed method is
preferred for a better understanding of a research problem by uniting both quantitative and
qualitative data to acquire the expected findings. Based on the time dimension, it is cross-
sectional since it allows the researcher to measure independent and dependent variables at the
same point in time using a single questionnaire (Anol, 2012).

3.2. Target Population

The study intended population covered those active exporters of oilseed who exist in Ethiopia
right now. A report from the Ministry of Trade and Regional Integration (MoTRI) revealed that
there were 398 active oilseed exporters recorded in the current fiscal year of 2023. The
corresponding sample size has been selected on the basis of the proportional equation to reach

35
the target sample from the specified population. Nevertheless, considering the current situation
of the country, such as insecurity and instability issues, the researcher is strongly focused on
those oilseed exporters that existed in Addis Ababa. It is also learned from the Ministry of Trade
and Regional Integration (MoTRI) officer briefing that, though some exporters' offices were
located outside of Addis (less than 5%), the majority (over 95%) established their offices here in
Addis Ababa.

3.3. Sample Size and Sampling Technique

To gather unbiased information from the oilseed exporters, the study procedures utilized to
define the sample size and sampling technique were essentially and carefully executed. Because
everyone in the targeted group was involved in the oilseed export industry. Accordingly, the
researcher collected the required information from senior-level experts who have been working
with the selected oilseed exporters. The researcher targeted those individuals whose titles were
export managers, senior export officers, marketing managers, managers, and deputy managers
who had a deep understanding of the company's oilseed export processes as well as the country
at large. Based on this fact, the researcher applied a purposive or judgmental sampling technique
to collect the potential information relevant to the study. Hence, the questionnaire has targeted on
those top-ranking oilseeds exporters whose volume of exports determines the total of the country
exporting. The questionnaire has been distributed to 194 exporters after selection has done as per
the exporters export performance to the country.

According to the Ministry of Trade and Regional Integration (MoTRI) report, it is estimated that
there were 398 active oilseed exporters in Ethiopia. Out of this figure, the estimated total number
of oilseed exporters whose offices were located in Addis Ababa was around 378 (95% x 398).
The expected sample size for the study was determined by a simplified formula provided by
Yamane (1967), a 95% confidence level, and a 5 percent error.

Thus, the entire sample size was 194, as per the below computation and each of the element
indicated in the formula has been explained accordingly.

36
 𝟏 + 𝑵(𝒆)𝟐
n = N

n = 378
1 + 378(0.05)2
n = 194

Where;
N = total number of populations = 378
n = sample size = 194
e = sampling error = 0.05

3.4. Data Collection Techniques

The study used both primary and secondary source of information. The primary sources of
information were all exporters of oilseeds, as proposed by the sample size. The data was
collected through the application of surveys. Surveys were created for the chosen oilseed
exporters. Formalized surveys were organized and distributed to every exporter. The
fundamental secondary data was sourced from articles, publications, journals, reports, websites,
and books and the related literature review has been structured out of the information collected
from the stated sources.

In addition, there are three sections to the questionnaire. The first section provided information
on the respondents' demographics, including their organization type, educational attainment,
export business type, present position within the exporting company, and years of experience in
export transactions. Lastly, there were short-answer questions that appeared in statement form.
Through such questionnaires, the researcher has collected some additional important information
from the respondents. The questions have been collected both through email and physically. The
study used SPSS the latest version of computer software to handle the information and generate
the results.

3.5. Data Analysis Techniques

Fundamentally, the study analyzed data in the form of Likert scales using explanatory research
approach. Several publications supporting the idea that Likert scale data is interval data and
should be examined using parametric measurements as opposed to nonparametric statistical

37
measurements are written, despite the fact that the data appears to be ordinal in character.
Compared to nonparametric statistics, parametric statistical measurement has a stronger ability to
highlight the relevance of the variables. Given that the data were gathered using a Likert scale,
they ought to have been combined to create interval variables, or Likert scale data. Therefore, the
standard linear regression model was a suitable model to examine such interval data. Given that
the study's independent variables were continuous and numbered more than two; the number of
explanatory factors may have been examined using a linear multiple regression model.
Following the presentation and analysis of the data, the statistical parameters used to examine the
relationship and significance of the explanatory variables to identify the predicted variables were
the statistical coefficients R2, ANOVA, F-test, T-test, and similar ones.

3.6. Model Specification

In essence, the study examined and interpreted the connection between those independent factors
and the dependent variable using the multiple linear regression model (MLRM). The model used
one dependent variable (performance of oilseed exports) and five independent variables
(company, product, industry, marketing, and macro-environment). Accordingly, the association
mentioned above's regression model formula has been demonstrated as below:

𝑌 = 𝛽0 + 𝛽1𝑋1 + 𝛽2𝑋2 + 𝛽3𝑋3 + 𝛽4𝑋4 + 𝛽5𝑋5 + 𝑈

Where;
Y = Performance of oilseeds export
𝑋1 =Company
𝑋2= Product
𝑋3= Industry
𝑋4= Marketing
𝑋5= Macro-
Environment U = Error
term
𝛽𝑖 = Statistical coefficient
𝛽0 = Intercept /constant

38
3.7. Reliability and Validity of the Research
Reliability and validity are dictating about how well method measures something. Accordingly,
both of the concepts are needed to accelerate acceptance of the research or study.
3.7.1. Research Validity
Many researchers proposed that the validity of the research be checked based on the truthfulness
of the data integration seen within the given research study. Anol (2012) revealed that the
theoretical assessment of validity focuses on how well the idea of a theoretical construct is
translated into or represented in an operational measure. Based on his valued argument, the
validity of the research can be assessed using theoretical or empirical approaches. Given this, the
validity of the study was checked by the review of earlier literature as well as the theoretical
thoughts that extended to validate the value of the questionnaire.

Ashulekha (2023), proposed that using SPSS software, it is possible to measure the validity of
the questionnaire being used in the research. It stated that if the significance value of the
observation is less than 0.05, the question or instrument being used is valid, and if the
significance is greater than 0.05, the question or instrument is not valid. Hence, it is concluded
that the questions used in the research work would be valid if the result of the correlation
between each question and its total value (score) as a whole was less than 0.05. Based on the
stated facts, the questions applied in this study have been checked using SPSS, and finally, the
result obtained out of the total score is less than 0.05 for each question. Here the questions used
in the research fulfill the given assumption.

3.7.2. Research Reliability

The notion of dependability pertains to the instrument's or the questions'/instruments'
independent stability, consistency, and repeatability. Since dependability relates to the
consistency of a measuring instrument's parts, testing for reliability is crucial (Huck, 2007). If all
of the scale's components measure the same construct and "hang together," the scale is
considered to have good internal consistency and dependability (Robinson, 2009).

39
The Cronbach Alpha coefficient is the internal consistency metric that is most frequently
employed. When using Likert scales, it is thought to be the best acceptable reliability measure
(Whitley, 2002; Robinson, 2009). No absolute rules exist for internal consistency; however, most
agree on a minimum internal consistency coefficient of 0.70 (Whitley, 2002); (Robinson, 2009).
Hinton et al. (2004) have suggested four cut-off points for reliability, which include excellent
reliability (0.90 and above), high reliability (0.70-0.90), moderate reliability (0.50-0.70), and low
reliability (0.50 and below). Although reliability is important for the study, it is not sufficient
unless combined with validity.

All of the points often show how well the things contained in a variable are positively connected
and they all represent the variables because the value is close to one. The computed Alpha (α)
value for the reliability test is displayed in the following six items:

Table 1. Reliability Statistics

Variables Cronbach‘s Alpha Number of Items Level of Reliability
Company 0.82 5 High Reliability

Product 0.73 4 High Reliability

Industry 0.74 4 High Reliability

Marketing 0.85 6 High Reliability

Macro-Environment 0.86 6 High Reliability

Export Performance 0.91 6 High Reliability

(Source: SPSS Result, 2023)

As indicated in the above table, Cronbach‗s alpha coefficient values for each variable are greater
than 0.70, which in turn enables the researcher to conclude that the measurements could be
applied for further analysis with acceptable reliability test results.

40
 CHAPTER FOUR

4. PRESENTATION, ANALYSIS AND INTERPRETATION

This chapter presents the study's data presentation, interpretation, and analysis. Accordingly, the
details of the chapter have three sections. The first section provides background information on
the respondents, while the second uses SPSS software to analyze factors affecting oilseed export
performance using traditional linear multiple regression models. Through short-answer
questions, the respondents' perceptions are described in the final section. It has been possible to
gather all of the sample-size questionnaires from reputable oilseed exporters using unwavering
dedication and effort during the questionnaire distribution period. As a result, every
questionnaire is completed and sent back.

4.1 Demographic Profile of the Respondents

Generally, the respondents' demographic characteristics would have received a lot of attention in
this section of the study. The researcher processed, examined, and interpreted the respondent
profile, which included information on gender, age, education, employment history, and other
relevant aspects.

4.1.1 Gender of the Respondents

As shown in the table below, both female and male respondents participated. Out of the total,
about 30.4% of the respondents are female, and the remaining 69.6% are male. However, based
on the given facts, it is seen that the majority of the respondents are male, which exceeds 76
(39.2%) over females.

Table 2. Gender of the Respondents

Gender of Respondents Frequency Percent Valid Percent Cumulative Percent
Valid Female 59 30.4 30.4 30.4
Male 135 69.6 69.6 100.0
Total 194 100.0 100.0
(Source: Own Survey Result, 2023)

41
 4.1.2. Respondents Age Distribution
The way it is depicted in the table below is to explain that the majority of the respondents are
between the ages of 26 and 35, which is about 61.9% of the respondents. The others fall between
36-45 years 47(24.2%), 46-55 years 17(8.8%), and 25 years, and the lower 10(5.2%) counts from
second to fourth place, respectively. It is learned from the data that almost all age groups covered
in the questionnaires have been working in the selected oilseed exporting companies and it is
observed that the age group of 26-35 which accounts for 120(61.9%) has taken the lion's share of
the respondents.

Table 3. Respondents Age Distribution

Cumulative
Age of the Respondents Frequency Percent Valid Percent Percent
Valid 25 Years and Lower 10 5.2 5.2 5.2
26-35 Years 120 61.9 61.9 67.0
36-45 Years 47 24.2 24.2 91.2
46-55 Years 17 8.8 8.8 100.0
Total 194 100.0 100.0
(Source: Own Survey Result, 2023)

4.1.3. Level of Education of the Respondents

Currently, the need for well-educated human resources within a given company's working
process is unquestionable. Through a high level of educational background, any company can be
able to perform the existing work efficiently and effectively. It is one of the key elements of the
level of competition at the time. The below table shows the total of respondents ranking 62.9%
as first-degree holders, 36.6% hold master‘s degrees, and the remaining 0.5% are college
diploma holders. From the given figure, it is declared that the exporting companies are handled
by well-educated people who possess diplomas for master‘s holders. Based on the displayed data
in the table, it is observed that the majority of the respondents are degree holders, which account
for 122(62.9%) out of the total.

42
Table 4. Educational Level of Respondents
Educational Level Frequency Percent Valid Percent Cumulative Percent
Valid Diploma 1 0.5 0.5 0.5
Degree 122 62.9 62.9 63.4
Master 71 36.6 36.6 100.0
Total 194 100.0 100.0
(Source: Own Survey Result, 2023)

4.1.4. Current Position of the Respondents

To ensure that the data was extremely valid and dependable, the researcher carefully gathered the
necessary information from the respondents. Consequently, diverse people with disparate roles
are contributing to the overall success of the study project. As a result, managers, deputy
managers, export managers, and senior export managers took part in answering the study
questions. Export managers and senior export officers have completed and responded to the
majority of the questionnaires, accounting for 79 (40.7%) and 83 (42.8%) of the total, according
to the statistics displayed in the table.

Table 5. Current Position of the Respondents

Cumulative
Your Current Position in the Firm Frequency Percent Valid Percent Percent
Valid Manager 20 10.3 10.3 10.3
Deputy Manager 12 6.2 6.2 16.5
Export Manager 79 40.7 40.7 57.2
Senior Export Officer 83 42.8 42.8 100.0
Total 194 100.0 100.0
(Source: Own Survey Result, 2023)

4.1.5. Working Experience of the Respondents

The respondents' working experiences were grouped into four categories, and each of the age
groups participated while the questionnaires were distributed. Accordingly, the below table

43
displays that the majority of the respondents with working experience of 6-10 years have taken
the share of 74 (38.10%). The next big allotment went to respondents whose experiences were
more than 10 years which accounts for 71 (36.6%). The third and fourth places were occupied by
those respondents who were working less than 2 years 2(1%) and 2-5 years 47(24.2%)
respectively.

Table 6. Working Experiences of the Respondents

Cumulative
Description Frequency Percent Valid Percent Percent
Valid Less than 2 years 2 1.0 1.0 1.0
2-5 Years 47 24.2 24.2 25.3
6-10 Years 74 38.1 38.1 63.4
Above 10 Years 71 36.6 36.6 100.0
Total 194 100.0 100.0
(Source: Own Survey Result, 2023)

4.2. Multiple Regression Analysis

Different authors suggested the concept of multiple linear regression analysis. Some explains
linear regression estimates the coefficients of the linear equation, involving one or more
independent variables that best predict the value of the dependent variable.

In light of this, it can be said that multiple regression analysis is a statistical method that
forecasts the value of a response variable by utilizing a number of explanatory factors.
Modeling the linear relationship between the explanatory (independent) factors and response
(dependent) variables is the aim of multiple linear regression.

4.2.1. Tests of Linear Regression Analysis Assumptions

The linear regression analysis requires the fulfillment of certain assumptions before any analysis
is carried out. The data that was collected has been passed through the stated assumptions to
obtain the intended results. Here, the researcher tried to show the main important assumptions of
tests entailed by linear regression analysis.

44
 4.2.1.1. All the Variables are Continuous
The ordinal data should be changed into a composite mean. Based on the ideal collected data the
researcher has performed the same operation and all the ordinal data have been changed into a
continuous and composite mean using SPSS for each independent as well as dependent variable.

4.2.1.2. Linearity Test

The word linear indicates that there should be a straight-line relationship between two variables.
As it is proposed by Hair et al. (1998) linearity relationship between the dependent and
independent variables represents the degree to which the change in the dependent variable is
associated with the independent variable.

Accordingly, in SPSS software a graphical method for determining whether or not a data set is
roughly normally distributed is the normal probability plot. Based on the results obtained from
the software it is revealed that there is a leaner relationship between the independent and
dependent variables and the same has been shown in the below figure.

Generally, the data is observed against a theoretical normal distribution in such a way that the
points should form an approximate straight line. Departure from this straight line indicates
departures from normality. Hence, the study has met this assumption.

Figure 2. Linearity Test

(Source: SPSS Regression Result, 2023)

45
 4.2.1.3. Outliers Test
The other important assumption in linear regression analysis is the outlier‘s test. These are data
points that are far from other data points. In other words, they‘re unusual values in a dataset.
Outliers are problematic for many statistical analyses because they can cause tests to either miss
significant findings or distort real results (Hawkins, 2014).

The study has been checked and evaluated in the SPSS system, and it was found that there is no
outlier detected in the system. The figure displayed below justified the same, and here the
researcher has confirmed that the outliers have been checked in the system and there are no
circles or asterisks on either end of the plot, which is an indication that no outliers are present.

Figure 3. Outliers Test

(Source: SPSS Regression Result; 2023)

4.2.1.4. Autocorrelation
This assumption declares that errors are independent and there is no relationship between the
independent variables and the residual variable. The values of the residuals must be independent.

Many researchers have noted that the result of the Durban Watson, which is obtained from the
SPSS system, should fall between 0 <1.920<4. Brooks (2008) explains that this is an assumption

46
that the covariance between the error terms over time is zero. Meaning that the errors are
uncorrelated with one another. If the errors were not correlated with one another, it would be
stated that they are auto-correlated or that they are serially correlated. If the Durbin-Watson test
statistics have a p-value closer to two, there is no autocorrelation problem.

The study carried out the Durbin-Watson test to detect or check the presence of autocorrelation
problems. Based on the details as indicated in the below table, the system reveals a Durban
Watson value of 1.905. Thus, the result lies between 0 <1.905<4, assuring that there is no
violation of autocorrelation. Therefore, there is no relationship between the residual variable and
the independent variable, and the assumption here is satisfied.

Table 7. Durban-Watson Result

Adjusted R Std. Error of the
Model R R Square Square Estimate Durbin-Watson
1 .850a .722 .715 .20145 1.905
a. Predictors: (Constant), Macro-Environment Factors, Marketing Factors, Company Factors,
Product Factors, Industry Factors.
b. Dependent Variable: Export Performance
(Source: Own Survey Regression Result, 2023)

4.2.1.5.Homoscedasticity
As stated by William (2015), when the linear regression assumption of homoscedasticity is
broken or the error term's variance is not constant, it is referred to as heteroscedasticity.

The general concept of homoscedasticity explains that the dependent variable has the same
variance for all the values of the independent variables, or that the variance of residuals is
constant. Thus, the study performed a homoscedasticity test in the system, and based on the
scatterplot output as indicated below, it appears that the spots are diffused and do not form a
clear specific pattern, so it can be concluded that the regression model does not cause a
heteroscedasticity problem.

47
Figure 4. Homoscedasticity Test

(Source: SPSS Regression Result, 2023)

4.2.1.6.Normality Test
This assumption stresses that the residual values are approximately normally distributed. Based
on Gujarat (2004), the normal distribution of the error term is among the ordinary least square‘s
regression model assumptions. It's critical to determine whether or not the residuals are skewed
in order to evaluate the normalcy assumption. The assumption of normalcy has been met if the
residuals are not skewed. The researcher has conducted normality assumption testing using the
SPSS system, and the histogram shown below appears to be a bell-shaped covering of all the
data being studied. Based on the graph, the assumption of normality has been met.

48
Figure 5. Normality Test

(Source: SPSS Regression Result, 2023)

Further, to enhance the accuracy of normality testing, the researcher has done additional
normality testing using the Shapiro-Wilk method through the SPSS system, and the result
obtained as indicated below shows that every variable in the study had a p-value larger than 0.05,
indicating that the variables followed a normal distribution. As a result, it is possible to conclude
that the residual value is normally distributed and that the regression analysis processes were
successful.

Ho: Errors that are normally distributed

Ha: Errors not normally distributed
Table 8. Normality Test
Kolmogorov-Smirnova Shapiro-Wilk
Statistic Df Sig. Statistic Df Sig.
Studentized Residual .068 194 .029 .989 194 .135
a. Lilliefors Significance Correction
(Source: Own Survey Regression Result, 2023)

49
 4.2.1.7.Multicollinearity Test
This assumption is highly stressed because the independent variables are not strongly correlated
with one another. According to Andy (2013), a tolerance value of less than 0.1 most likely
denotes a significant collinearity issue. Burns (2008) clarifies that a VIF value higher than 10 is
similarly a cause for alarm. Based on the idea given, the researcher has made a multicollinearity
test using the SPSS system and found that each of the independent variables has a VIF value
below 10 and a tolerance of over 0.1, indicating that there is no influence of multicollinearity
among the explanatory factors. Consequently, the null hypothesis is rejected.

Ho: There is a multicollinearity problem

Ha: There is no multicollinearity
problem

Table 9. Multicollinearity Test

Collinearity Statistics
Model Tolerance VIF
1 (Constant)
Company Factors .626 1.597
Product Factors .545 1.836
Industry Factors .328 3.046
Marketing Factors .514 1.944
Macro-Environment .606 1.649
Factors
(Source: Own Survey Regression Result, 2023)

4.2.2. Multiple Linear Regression Analysis

The researcher has applied multiple linear regressions since there is one dependent variable, i.e.,
the export performance of oilseeds, and more than two independent variables. The independent
variables were conducted to determine the explanatory influence of the independent variables
called company, product, industry, marketing, and macro- environmental factors. The study has
been conducted to rectify the relationship between dependent and independent variables as well
50
as to determine the major variables that influence dependent variables. Here, the 95% confidence
interval along with the significance level of 0.05 was used. In addition, the researcher has used
multiple regression analysis because the characteristics of the data are continuous.

4.2.2.1.Model Summary
The most important table generated in a linear regression test in SPSS is the model summary.
It provides details about the characteristics of the model. In the present study, company,
product, industry, marketing, macro- environment, and export performance of oilseeds were
the main variables considered. The model summary table looks like below:

Table 10. Model Summary Test

Adjusted R Std. Error of the
Model R R Square Square Estimate Durbin-Watson
1 .850a .722 .715 .20145 1.905
a. Predictors: (Constant), Macro- Environmental Factors, Marketing Factors, Company Factors,
Product Factors, Industry Factors
b. Dependent Variable: Export Performance
(Source: Own Survey Regression Result, 2023)

The R-value represents the correlation between the dependent and independent variables.
According to Pedhazur (1982), it is the value of the multiple correlation coefficient between the
predictors and the outcome, with a range from 0 to 1, a larger value indicating a larger
correlation, and 1 representing an equation that perfectly predicts the observed value. As it is
clearly shown in the model summary above, the value of R is 0.850, which entails that the linear
combination of the five independent variables highly predicted the dependent.

R-square shows the total variation for the dependent variable that could be explained by the
independent variables. The linear combination of the predictor variables (independent
variables) including company, product, industry, marketing, and macro- environment

51
describes 72.2 % of the variance in oilseed export performance, and the remaining 27.8% is
found to be superfluous variables, yet not been studied in this regression model.

Adjusted R-square shows the generalization of the results, i.e., the variation of the sample
results from the population in multiple regression. It is required to have a difference between
the R-square and adjusted R-square minimums (0.722-0.715=0.007). In this case, the value is
0.715, which is not far away from 0.722, so it is good. In general, it can be deduced that if
the general population instead of a representative sample were used to create the model, it
would account for about 0.7% which is very less variance in the outcome.

Based on the above information and explanations, it is found that the given model summary table
is satisfactory to carry out the next proceedings. However, if the values are unsatisfactory, then
there is a need to adjust the data until the desired results have been attained.

4.2.2.2. ANOVA Analysis

ANOVA, stands for analysis of variance, is a test used to determine the difference between
research results from three or more unrelated samples or groups.

Table 11. ANOVA Test

Model Sum of Squares Df Mean Square F Sig.
1 Regression 19.812 5 3.962 97.637 .000b
Residual 7.630 188 .041
Total 27.442 193
a. Dependent Variable: Export Performance
b. Predictors: (Constant), Macro- Environmental Factors, Marketing Factors, Company Factors,
Product Factors, Industry Factors
(Source: Own Survey Regression Result, 2023)

From the table, the most significant part is the F-ratio, which is a test of the null hypothesis
that the regression coefficients are all equal to zero. According to Pedhazur (1982), it is

52
highlighted that the ANOVA table shows the overall significance of the model from a
statistical perspective.

Accordingly, elements of the above table for analyzing the result are:
 P-value/Sig value: Typically, a study will select a 95% confidence interval or 5% of the
significance threshold. As a result, the p-value needs to be lower than 0.05. It is determined
to be 0.000 in the table above. Therefore, the result is significant.
 F-ratio: It represents an improvement in the prediction of the variable by fitting the model
after considering the inaccuracy present in the model. It is a null hypothesis. A value is
greater than 1 for the F-ratio yield-efficient model. In the above table, the value is 97.637,
which is good.

In a nutshell, the results estimate that since the ANOVA table's p-value is less than the
acceptable significance level, the projected null hypothesis may be rejected in a subsequent
analysis. Moreover, it can be concluded that the regression approach produced a far more
accurate oilseed export performance estimate.

4.2.2.3. The Regression Coefficient

The other important factor to be discussed in regression analysis is the concept of the regression
coefficient. The strength of the relationship, or the importance of the variable in the model, and
the degree to which it affects the dependent variable are displayed in the table below. This
analysis facilitates a study's hypothesis testing. In addition, using a standardized beta coefficient,
the degree to which each independent variable affected the state of the dependent variable was
assessed. The average amount of change in the dependent variable brought about by a marginal
(unit) change in the independent variable is explained by the regression coefficient. As a result,
an independent variable's larger beta coefficient value demonstrates that it is a more significant
predictor of the dependent variable.

53
Table 12. Summary of Coefficients
Unstandardized Standardized
Coefficients Coefficients
Model B Std. Error Beta T Sig.
1 (Constant) .564 .170 3.313 .001
Company Factors .135 .027 .240 4.939 .000
Product Factors .109 .039 .147 2.813 .005
Industry Factors .156 .065 .162 2.411 .017
Marketing Factors .271 .047 .307 5.734 .000
Macro-Environmental
Factors .238 .047 .251 5.080 .000
a. Dependent Variable: Export Performance
(Source: Own Regression Result, 2023)

It is crucial to note that, as the table above makes clear, the variable with the highest Beta value
makes the biggest contribution to the explanation of the variance of the dependent variable,
which is determined by every other variable in the model and is displayed in the Beta column
below the standard coefficients.

According to Pedhazur (1982), using the commonly used regression coefficient Beta (β) in
multiple regression is helpful given that it lets us assess how strongly each of the independent
variables has a relationship with the dependent variable. The Βeta, as indicated in the above
table, are values of regression coefficients for company, product, industry, marketing, and
macro- environment.

Further, the coefficient table demonstrates the structure of the variables' constant beta value (β)
and p-value to determine the hypothesis's level of relevance. Based on the displayed figures as
shown in the above table, the significance level of each variable (P-value) is .000, .005, .017,
.000, .000, along with their standardized coefficients (β) being .240, .147, .162, .307, and .251,
respectively.

54
On the other side, the model's predictions for oilseed export accomplishments are generated by
the table above employing the explanatory variables of company, product, industry, marketing,
and macroenvironmental factors. Accordingly, the output reveals that all explanatory variables
used in the study have a significant effect on the predicted variable of oilseed export
performance. It further explains that all variables affect the outcome of the variable positively,
i.e., if those influencing variables increase marginally (one unit), increasing the dependent
variable by β (beta coefficient).

Following the overall results, the regression equation that predicts the factors that affect oilseed
export performance as a function of a linear combination of company, product, industry,
marketing, and macro- environmental factors is depicted below:

𝑌 = .564 + .135𝑥1 + .109𝑥2 +.156𝑥3 + .271𝑥4 + .238𝑥5 + 𝑈

Where: 𝑌 = Oilseed‘s export performance

𝑥1=Company
𝑥2=Product
𝑥3=Industry
𝑥4=Marketing
𝑥5=Macro- Environment
𝑈= Error

Given the above, it is deduced that all the factors used in the study are affecting the level of
oilseed export performance at different degrees of magnitude. It is seen that marketing is the
main element influencing oilseed export performance (β=0.271, sig=0.000), followed by macro-
environmental which is (β=0.238, sig=0.000). The others factor the industry (β=0.156,
sig=0.017), the company (β=0.135, sig=0.000), and the product (β=0.109, sig=0.005) are
affecting oilseeds export performance, respectively.

55
On top of the data collected from the main questions, the researcher also collected other
important data from the exporters through short-answer questions as a supplement to the main
questions. Hence, the exporters listed exhaustively those major factors and challenges hindering
oilseed export performance in Ethiopia. Accordingly, current political situations, climate
variability, high bureaucracy, frequent changes of policies, price, lack of awareness about the
oilseeds industry, lack of working capital, fluctuation of the exchange rate, instability of the
country, huge transportation costs, minimum government appreciation, international market
volatility, weak government institutional support, lack of enough fertilizers, lack of working
mechanization, macro-environmental factors, oilseeds export trends, international market
deterioration, poor production capacity along with quality and quantity aspects, shortage of
exportable items, complicated documents requirements, limited access for loan and credit
services and all the like are considered the major challenges or problems for oilseeds export.

They explained that out of the major problems listed above price, as part of marketing is found to
be the more determinant factor exporters are facing at the time. They added that there is an
imbalance between the local price and the international price. The local costs or prices are set by
a few centers organized by the government (ECX and MoTRI), which are very expensive and
highly rigid as compared to the international market. This situation creates huge problems for the
exporters, and due to such malfunctioning operations, they become incompetent in line with the
international market.

Ultimately, they recommended that the government create a conducive environment to enhance
the capacity of the exporters. They also added that the government should work closely with the
exporters to solve all of the above-mentioned problems amicably.

4.2.2.4. Hypothesis Test

Hypothesis testing is a statistical method used to determine if there is enough evidence in sample
data to conclude a population. It involves formulating two competing hypotheses, the null
hypothesis (Ho) and the alternative hypothesis (Ha), and then collecting data to assess the
evidence.

56
Testing the significant variables, interpreting the regression's outcome, and drawing conclusions
about the research questions all depend on the results of a hypothesis test. The researcher set the
projected hypothesis, assuming all selected predictors are determined by the performance of the
dependent variables, in order to simplify and improve the understanding of the investigation. The
dependent variable is influenced by all of the variables in the model, according to the alternative
hypothesis Ha, which is stated in full here under.

H1 - The study's primary hypothesis entails that the company has a significant influence on
oilseed export performance.

Based on the results obtained from the study, the given hypothesis should be accepted because
the computed p-value of the factor (0.000) is smaller than the critical value of p (0.05). This
addresses the fact that in any export endeavor, the strength of the company in different business
aspects is the most important requirement for the export success of the company. The company's
possessions, such as having adequate working capital, experienced human resources, consistent
working procedures, and a high capacity for management, have huge effects on oil seed export
performance.

H2- The second hypothesis of the study necessitates that the product has a significant influence
on oilseed export performance.

According to the study output, product is another important factor for oilseed export
performance. The result shows that the p-value of the product factor (0.005) is less than the
critical p-value of 0.05. Hence, product is one of the most important determinant factors for
oilseed export performance. The great integration of quality and quantity aspects of the product,
fulfilling the minimum quality requirements and standards, as well as appropriate product design
and image, create positive effects on the oilseeds export performance.

H3 The third projected hypothesis stated that industry has a significant influence on oilseed
export performance.

57
Hence, the calculated p-value is 0.017, which is less than the critical p-value of 0.05. According
to GAIN (2020), even though Ethiopia is one of the major global producers and exporters of
sesame seed, the country faces increasing challenges related to both supply-side and demand-
side constraints. Some of the major supply side constraints are diminishing productivity levels,
pests and diseases, and poor access to modern technology.

Thus, industry factors regulate export situations, and it is also the most important element that all
exporters should address at large. Further, there should be a need to understand and implement
the technology, processing, and necessary to acquire the expected oilseed export performance. In
every aspect of the industry, technology is playing a major role in facilitating export
performance.

H4- Marketing has a significant influence on oilseed export performance.

In light of the hypothesis projection, the result obtained from the study demonstrated that the p-
value of the given factor is 0.000 smaller than the critical value of 0.05. This suggests that
exporters should critically know about foreign as well as domestic market situations. Information
about demand and supply relationships, the international market, the payment aspect, the
structure of the marketing mix, and the like are important aspects of oilseed export performance.
It is anticipated that understanding all of the market-related information will improve the
performance of oilseed exports. Tewodros (2012) revealed that there is a lack of marketing
communication problems for export.

H5- The last hypothesis of the study neccessiates that the macroenvironment has a significant
influence on oilseed export performance.

In view of the given statement, the study result supports the concept positively, and it has been
seen that the p-value (0.000) is smaller than the critical value of 0.05. Thus, macroenvironmental
has also had favorable and noteworthy influences on oilseed export capabilities.

58
FAO's (2015) research emphasized that despite the government's efforts, the export performance
of the nation is still quite low, and the export structure is inflexible. Furthermore, because private
sector banks are prohibited by the National Bank of Ethiopia (NBE) from receiving foreign
currency credit lines from international banks, exporters have restricted access to trade financing
facilities.

Those macro-environmental factors are affecting the oilseeds industry and its export practices.
The macro-environmental factors are highly volatile, and the change in each element is directly
affecting oilseed export performance. Out of the total macro-environmental factors, gross
domestic product, inflation, exchange rate, economy, government support, transportation, and
infrastructure are the major factors that affect the oilseed export performance. All of the
exporters should be focused on the changing aspects of those factors to manage their export
activities efficiently.

Given the above explanations as well as the results obtained from the study, all of the proposed
hypotheses for the five independent factors (company, product, industry, marketing, and macro-
environment) have been accepted because the p-value for each factor is less than the critical
value, i.e., 0.05. A summary of each projected hypothesis is portrayed as follows:

Table 13. Summary of Hypothesis Test

Sig.
Hypothesis (P<0.05) Result
H1: The company has a significant influence on oilseed export .000 Accepted
performance
H2: Product has a significant influence on oilseed export performance .005 Accepted

H3: Industry has a significant influence on oilseed export performance .017 Accepted

H4: Marketing has a significant influence on oilseed export performance. .000 Accepted

H5: Macroenvironment has a significant influence on oilseed export

performance. .000 Accepted
(Source: Own Survey Regression Result, 2023)

59
 CHAPTER FIVE

5. SUMMARY, CONCLUSION AND RECOMMENDATION

Based on the study's overall contents, this chapter provides an overview of the main results,
suggestions, and conclusions. The results are further explained in addition to the consequences
and contributions. The section also tries to explain and provide hints on areas for further research
direction.

5.1. Summary of Major Findings

Data for the study was collected using both primary and secondary sources. The researcher
gathered the basic primary data obtained through the use of structured questionnaires. The
secondary data for the literature as well as other parts of the study was collected from articles,
books, and internet sources. The questionnaire was organized and categorized into three major
types: demographic profile, main questions, and short answer. The main part of the questions
was constructed according to the Likert scale type with methods for measuring data extended
from strongly disagree to strongly agree to evaluate the insights of oilseed exporters. There were
about 194 questionnaires distributed, and through careful follow-up and management, all of the
questionnaires were filled out and returned. Moreover, the whole gathered data was examined
using a linear multiple regression model after accomplishing all of the essential tests. The
hypothesis tests have been performed. To determine the best-estimated beta coefficient of
population parameters, the study's final data were examined and interpreted.

Subsequently, the research grasped those important elements affecting Ethiopia's oilseed export
industry's success by applying the primary data collected from the respondents. It has been
learned that all of the variables were affecting oilseed export performance in Ethiopia positively,
but at a different level of degree (coefficient). The individual variable taken into account for the
study has its own contribution towards oilseed export performance in Ethiopia. Given all of the
explanations, here is a summary of some of the major findings:

 The majority of the respondents were degree holders, categorized as 26-35, with 5 to 10
years of working experience. Both females and males participated.

60
 Company factors are the most important factors in determining the dependent element, as
company factors increase by 1% and the dependent variable increases by 13.5%. Here,
company factors have a positive relationship with the dependent variable. (Ceteris paribus).
 As product variables rise by 1%, oilseed export performance also increases by 10.9%.
Product is found to be the most significant determinant factor for oilseed export performance
in Ethiopia, and it is also favorably correlated with oilseed export results. (Ceteris Paribus)
 As industry factors increase by 1%, oilseed export performance increases by 15.6%. It is a
significant determinant factor as well as having a direct or positive relationship with oilseed
export performance.
 Marketing factors are one of the important factors in ascertain the dependent variable. As
marketing factors increase by 1%, the dependent variable increases by 27.1%. Marketing
factors have a positive relationship with the dependent variable. (Ceteris Paribus).
 Macroenvironmental factors are one of the crucial elements in determining the dependent
variable. As macroenvironmental factors increase by 1%, the dependent variable increases by
23.8%. Macroenvironmental factors have a positive relationship with the dependent variable.
(Ceteris Paribus)
 The five independent variables (company, product, industry, marketing, and macro-
environment) affect oilseed export performance significantly, with a 95% confidence interval
and a significance value of 0.000, 0.005, 0.017, 0.000, and 0.000, respectively. Based on this
fact, the study model fits the regression equation written as below:

𝑌 = .564 + .135𝑥1 + .109𝑥2 +.156𝑥3 + .271𝑥4 + .238𝑥5 + 𝑈

 Some of the key determinant factors for oilseed export performance are identified. Among
the many current political situations, climate variability, high bureaucracy, frequent changes
of policies, unattractive pricing structure, lack of working capital, huge transportation costs,
international market volatility, weak government institutional support, lack of enough
fertilizers, lack of working mechanization, macro-environmental factors, oilseed export
trends, international market deterioration, poor production capacity in terms of quality and
quantity aspects, shortage of exportable items, complicated document requirements, and
limited access are the key determinant factors for oilseed export performance in Ethiopia.

61
 The relationship between the independent variable and export performance as dependent
variable is positive and significant.
 Finally, the regression model summary (R = 0.850) shows the linear combination of the five
independent variables (company, product, industry, market, and macroenvironmental). It
declares that oilseed export performance is a function of company, product, industry,
marketing, and macroenvironmental variables. They are predicting the dependent variable
strongly. It further explains that the linear aggregation of the independent variables explains
71.5% of the variance of oilseed export performance, and the remaining 28.5% is explained
by extraneous variables.

62
5.2. Conclusion
As it is mentioned in the literature part, exporting creates a balance of trade, economic growth,
job opportunities, and foreign exchange, and ultimately it provides huge development for the
country at large. Unlike the benefits the country has achieved so far through exporting, the
industry has still encountered a lot of problems, and the same has been confirmed based on the
responses of the exporters.

The focal point of the study was to investigate those major factors influencing oilseed export
performance in Ethiopia by examining and interrelating the five independent variables with that
of one dependent variable. The independent variable is composed of macroenvironmental
factors, marketing factors, industry factors, company factors, and product factors, whereas, the
dependent variable is oilseed export performance. The study includes those oilseed exporters
who are working in Ethiopia, and questionnaires were distributed to the selected sample size to
collect pertinent information from the exporters to attain the final goal of the study. Data analysis
has been carried out by applying a multiple linear regression analysis.

The following inference is made from the data analysis and study objectives in light of the
findings:
 Based on the findings, company, product, industry, marketing, and macroenvironmental
factors have positive effects on oilseed export performance. All of the factors used in the
research are positively and significantly related to the regressed dependent variable.

 Among the many explained by the respondents, the key determinant factors affecting oilseed
export performance are high bureaucracy, lack of working capital, irregularity of export rule
and policy, lack of government support, macro-environmental factors, fluctuation of price,
limited sources of pricing setting centers, market volatility, huge transportation costs, etc.

 The relationship between the independent variable and export performance as dependent
variable is positive and significant.

 Based on the research result, it is observed that marketing factors significantly affect oilseeds
export performance, and the second most important factors influencing oilseeds export

63
 performance are the macro- environmental factors, followed by industry factors, company
factors, and product factors, respectively.
5.3. Recommendation
In today‘s business effort, exporting a product to a given country is one of the important trade
facilitations among many countries. Exporting to countries like Ethiopian countries which are
facing a shortage of huge hard currencies, is highly important, and hence it should be thoroughly
monitored by all concerned parties as well as authorities. It generally creates so many benefits
for any country.

Considering many research results, it has been revealed that the Ethiopian exporting industry is
not providing all of the needed output as expected. It is noted that the country earns some of its
hard currency through the export of agricultural products. According to 2022 National Bank
Report, oilseed exports are the second most commercial product, providing the highest foreign
currency to the country. This ascertains that all the concerned bodies should work hand-in-hand
to enhance the required benefits of oilseed exporting. Based on the findings, the exporters'
suggestions, and the overall study, here are some of the recommendations that may help to
diminish or control the existing setbacks.

 The whole variables taken into consideration for the study affects the export performance
positively and significantly. Working on the stated factors enable the export performance
more productivity and profitable. Hence, all who involve in the export operations should give
attention on the same so as to rising the export performance as expected.
 The local price of the goods maintained by ECX and the Ministry of Trade and Regional
Integration. The result found that it is so rigid and expensive compared to the international
market price. Hence, it needs to revise the pricing method in order to develop fair and
competitive price.
 The government should study and review the current export policies and regulations to
determine the needs and requirements of the exporters. This revision could be taken as one of
the needed aspects for the exporters as it gives them support to enable compete in the global
market.

64
 The government offices that are working on oilseed export process, should work closely each
other to avoid unnecessary procedures, document requirements, and waste of time.

 Most of the exporters proposed that the share of foreign currency they are obtaining after the
sale or export of oilseeds is found to be very minimal. They asked the government to work
hard on the same to increase the allotment or percent to be given to the exporters.

 The government should create a conducive working environment to provide one-shop

window services to exporters. The process should be supplemented by modern technology to
facilitate export activities. This finally helps them avoid unnecessary waste of time.

 In a nutshell, based on exporters' feedback, the majority of the issues of oilseed export rely
on the government, and it is good for the government to work hard to strengthen and grow
the oilseed export industry in a better advancement. Exports are the main resource for
acquiring a country's hard currency, they should be well monitored and integrated with high-
level standards. The government works to improve credit facilitation, infrastructure, revision
of macro-environment factors, training, etc. The exporters also work on their internal
capacity to improve those key elements mentioned in every factor covered in the study and
should also work intensively with high-level government policymakers to avoid the existing
problems as well as to achieve the required results mutually and as expected.

65
5.4. Limitations and Direction for Future Research
To uplift the result obtained from the study as well as to limit the existing gaps, the need for
ongoing research is unquestionable. Given the scope, limitations, and findings of the study, it is
better to suggest the following points for future research accomplishments:

As noted above, the study has been performed based on those limited variables to investigate the
major factors affecting the performance of oilseed exports in Ethiopia. In addition, the study only
focused on oilseeds with limited independent factors, despite certain commercial items exported
from the country. In general, the independent variables covered in the study only explain 71.5%
of the dependent variable, whereas the remaining 28.5% of the variance is accounted for by extra
factors not examined in the research. This indicates that there is room to conduct further research
to fill the existing gaps because there are 28.5% of some of the variables to be included in future
research. Thus, the researcher suggests that future researchers should conduct continuous
research by including additional factors about the given topics to limit the existing problems and
also to generate fruitful results. Marketing channels, shipping vessel schedules, competency of
forwarders, warehousing issues, and other related factors are some of the indications the
researcher intends to recommend to be deeply studied by future researchers.

66
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Appendixes
Addis Ababa University
College of Business and Economics
School of Graduate Studies
Department of Management
Questionnaires Prepared for Oilseeds Exporters
Dear Respondents,

This questionnaire is designed to collect data for thesis work on the topic of ‗Factors Affecting
Export Performance: in the Case of Oil Seeds Export in Ethiopia‘‘. The study is to be undertaken
for the partial fulfillment of the requirement for an MSC in International Business specializing in
Import-Export Management. For the successful accomplishment of the study, your pertinent
response on the subject will be used as valuable input. I would like to assure you that the
information you are going to provide will be used only for academic purposes and should be kept
confidential. Therefore, I request that you fill out the questionnaire genuinely and without any
bias.

Thank you in advance for your cooperation.

General Directions:
 There is no need to write your name.
 Please place a tick mark as per the questions required in the box and write your short
and precise answer in the space provided.

Researcher address email mulefikre2012@gmail.com; cell hone: +251929 905756, A.A., Ethiopia.

A. Demographic Information
1. Gender
Female Male

2. Age
25 Years and Lower 26-35 Years 36-45 Years
46-55 Years 56 Years and Above

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3. Educational Level
Diploma Degree Master PhD
4. How long have you been exporting oilseed?
Less than 2 years 2-5 Years 6-10 Years Above 10 Years
5. Please specify your current position in the firm.
B. Main Questions
Please mark what you feel most appropriate, using a scale from 1 to 5 (where 1 = strongly
disagree, 2 = disagree, 3 = moderately agree, 4 = agree and 5 = strongly agree).
Company Factors 5 4 3 2 1
There is a lack of adequate working capital, which endangers
1 the entire production operation and increases cost.
There is a lack of trained and experienced human resources,
particularly for its managerial and professional employees,
2 better in the export market.
There is a lack of knowledge of foreign markets, business
3 practices, and competition.
4 There is an incapacity of management to generate foreign
sales.
There is a lack of expertise procedure and negotiation power
5 among exporters.
Product Factors 5 4 3 2 1
There is no problem with the quality and quantity of oilseed
6 seed production.
7 The exported oilseed cannot fulfill the required quality.
8 There is a failure to meet importers‘ quality standards.
There is an inability to establish a suitable design and image
9 for export markets.
Industry Factors 5 4 3 2 1
There is a lack of new technology that facilitates oilseed
10 exports.
11 There is a lack of awareness of the use of technology in
marketing.
12 There is low access to technology for processing.
There is an inability to compete with aggressive competition
13 in the foreign market.
Marketing Factors 5 4 3 2 1
14 Poor image of the exporter‘s country.
15 The bad image of products in the foreign market.
16 There is insufficient foreign demand for oilseed.

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 There is a lack of information about the export procedure for
17 oilseed.
18 International trade procedural complexity for oilseed export.
19 There is a delay in payment to the exported oilseed buyers.
Macro Environmental Factors 5 4 3 2 1
There is a lack of export promotion and assistance from the
20 government.
21 There is the inefficient promotion of government exports
abroad.
22 There is a high transportation cost.
23 The exporting process is costly.
There is inadequate infrastructure (transportation, electricity,
24 telecommunication, etc.) available for oilseed export.
The foreign exchange policy is not efficient for oilseed
25 exporters.
Trends in Export Performance Factors 5 4 3 2 1
26 Your company‘s oilseed export volume is increasing.
The company‘s market share in line with the international
27 market is increasing.
The profit gained from oilseed export throughout the country
28 is increasing.
29 The supply of oilseed in quantity is increasing.
30 The supply of oilseed in quality is improving.
31 The company‘s profit from exported oilseed is increasing.

C. Short-Answer Questions.
1. As per your day-to-day observations, what do you think are the main determinant factors, or
challenges related to oilseed exports in Ethiopia?
………………………………………………………………………………………………………
………………………………………………………………………………………………………
……………………………………………………………………………………………………
2. What is your possible recommendation to upgrade oilseed export performance?
………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………

Thank you for your usual cooperation!!!!

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