Exporting to Internationalise; Why only a Small Percentage of Emerging SMEs From Developing Countries Succeed When a Large Majority Fails

Abstract

Small and Medium Enterprises (SMEs), account for more than 95% of all businesses in many countries (Chiao, Yang, & Yu, 2006). These foster economic development and are significant contributors to employment and wealth generation (Etemad, 2004). An observed phenomenon is the increased momentum of internationalisation of SMEs in the developed world (Lu & Beamish, 2001).

A concern however is the small percentage of the SMEs from developing countries emulating this trend. Also remain unexplained are: (1) What makes a small percentage of SMEs in developing countries to succeed in internationalising their businesses when the large majority fail? (2) What provides the differential advantage to the growth businesses?

Therefore, this paper attempts to address the research question “What impact the owner-managers perceptions of internal and external barriers have on the internationalisation process of the SMEs in a developing country?”

The data was gathered from owner-managers of SMEs using a mail survey. Export growth was used as the dependent variable in the study. The differential performance of “growth” and “non-growth” SMEs in foreign markets is elucidated in relation to the owner-managers perception of informational, operational, marketing and environmental barriers to growth . Significant differences were found between “growth’ and “non-growth” businesses in relation to the owner-managers’ perception of the above barriers investigated.