Why Eastern Europe dominates Croatian exports?

Abstract

Exports are a crucial contribution to the competitiveness of post-transition countries. Accordingly, Croatia expresses a need for stronger integration into the world economy. The purpose of this paper is to investigate reasons for which Croatian exporters are most prevalent on the market of Eastern Europe. Deciding on internationalization depends on various factors which are measured by using CAGE (cultural, administrative, geographical and economic) distance framework which identifies cultural, administrative, geographical and economic differences. Two basic goals are set: (i) identify how managers of Croatian exporting companies perceive the degree of export obstacles between Eastern Europe and Croatia in relation to other markets; (ii) empirically and statistically determine the effect of export obstacles in Eastern Europe on the export results of Croatian companies. Research comprises original datasets on attitudes of Croatian managers according to distances between Croatia and Eastern Europe using the CAGE distance framework. Research models, with the export activity of the firm as a dependent variable and the above-mentioned attitudes of managers as independent variables, are created using multiple linear regressions, and a stepwise approach to selecting variables. The results indicate that cultural and geographic differences have no impact on export performance. On the other hand, some administrative differences adversely affect export performance, while economic differences have a positive effect on the share of exports. The fundamental restriction of this research is the cross-sectional approach. Additional insight can be achieved by conducting in-depth interviews which in turn could be the starting point for future research.