Export segmentation effectiveness: index construction and link to export performance

Although the effectiveness of segmentation efforts is critical for a firm's performance in export markets, there is a lack of a psychometrically sound measuring instrument that can be used to assess a firm's export market segmentation efforts. In this study, we apply the conceptual framework recently proposed by Foedermayr and Diamantopoulos (2008) and generate a composite index of export segmentation effectiveness. The indicators of the index are proximal outcome measures of export segmentation decisions capturing different dimensions of segmentation success. We empirically validate the derived index on a sample of exporting companies and show that it positively impacts export performance. Suggestions for applying the proposed index in substantive export research are also made.