BUS613: Advanced International Business

Data regarding all observed variables of latent constructs of this empirical analysis are collected on an annual basis per country from the World Bank database (data.worldbank.org). To capture the impact of port infrastructure quality and remove potential bias from small island economies with negligible economic activity on a global scale, we have selected countries that have seaports with yearly container traffic of 200,000 twenty equivalent units (TEUs). In total, 91 countries were considered for analysis. Most of the previous impact studies discussed in Section 2 used a defined set of observed variables on empirical levels. However, when it comes to multi-facet, hardly direct measurable issues like logistics performance and seaborne trade, the essence to develop latent constructs using multiple observed indicators becomes relevant. Therefore, we designed a set of latent variables consisting of multiple observed indicators. This served as the motivation to select structural equation modelling (SEM) as the appropriate method of analysis. According to Kline, a sample size for complex SEM should be more than 100. Accordingly, data have been pooled from three years (namely 2010, 2012 and 2014), generating 228 observations, except for observations with missing values. Table 1 lists all the latent constructs with observed indicators along with their codes.

Table 1 List of observed and latent variables

The quality of port infrastructure (QPI) construct is formed with one observed variable, named QPI, which covers business executives' perception of their country's port facilities. Data are on a Likert scale from 1 to 7, where 1 represents the port infrastructure considered extremely underdeveloped and 7 represents efficiency by international standards (see http://data.worldbank.org/indicator/IQ.WEF.PORT.XQ for details).

The logistics performance construct consists of six indicators as listed in Table 1. Lun et al. used the same set of LP data as a proxy for trade facilitation. The set of LP indicators is based on empirical survey data collected by the World Bank on a regular basis. The LP Index measures logistics performance on the country level through asking operators on the ground (global freight forwarders and express carriers) to provide feedback on the logistics “friendliness” of the countries in which they operate (see http://lpi.worldbank.org/ for further details).

Seaborne trade can be expressed by container or cargo throughput, as used by Deng et al. and Shan et al. (2014). However, throughput alone cannot totally represent the value and intensity of seaborne trade of a country. Therefore, a latent construct with country-level container throughput in TEUs and liner shipping connectivity index is formed. The LSC index represents the connectivity of countries with each other in the form of a global liner shipping network. The LSC index is based on five maritime transport components (i.e. number of ships handled, their container-carrying capacity, maximum vessel size, number of services, and number of companies that deploy container ships in a country's ports; see  http://data.worldbank.org/indicator/IS.SHP.GCNW.XQ for details).

The economics literature usually uses total GDP or GDP per capita to measure an economy at a countrywide level. Therefore, we used per capita GDP, after controlling for purchasing power parity, to form the national economy construct using a single indicator. As data used for empirical analysis involve large numbers, it is log transformed, and their descriptive statistics are presented in Table 2.

Table 2 Descriptive statistics of variables