Barriers to Internationalisation of Smes in a Developing Country Uploaded Successfully
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ANZMAC 2009
Barriers to internationalisation of SMEs in a developing country Dr. Kodicara Asoka Gunaratne, Unitec New Zealand Abstract A high percentage of small and medium sized enterprises (SMEs) in the developing countries fail to enter foreign markets due to their inability to overcome the entry barriers. This study therefore investigated the barriers to internationalisation of SMEs in Sri Lanka. Results are based on a postal questionnaire survey. Factor analysis was used to examine the underlying constructs in the data gathered. The four factors identified were labelled as – informational, operational, marketing and environmental barriers. Significant differences were observed in the evaluations of impact of a number of barriers between the owner-managers (OMs) of “growth” and “nongrowth” businesses. Results demonstrate internationalisation of SMEs is plagued by many obstacles in the home environment. Key words: Internationalisation, SMEs, barriers to exports
ANZMAC 2009
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Barriers to Internationalisation of SMEs in a Developing Country Introduction SMEs are of great importance to the expansion of export earnings in developing countries. However existing research shows that these businesses are under represented in the international economy as a result of the impediments to market access (APEC, 2004). A number of factors impede the participation of SMEs in the global economy. The conditions in the input and output markets, the skills and competencies of the employees, and the ownermanagers’ entrepreneurial orientation (Kazem and van der Heijden, 2006), influence the success of SMEs in foreign markets. It has been suggested that some of the dramatic changes that are taking place in the global market place would create new opportunities for businesses and bring prosperity to exporting nations (Cateora and Graham, 2007). Some of these are: the advances in information and transportation technologies; easing of trading
ANZMAC 2009
Barriers to internationalisation of SMEs in a developing country Dr. Kodicara Asoka Gunaratne, Unitec New Zealand Abstract A high percentage of small and medium sized enterprises (SMEs) in the developing countries fail to enter foreign markets due to their inability to overcome the entry barriers. This study therefore investigated the barriers to internationalisation of SMEs in Sri Lanka. Results are based on a postal questionnaire survey. Factor analysis was used to examine the underlying constructs in the data gathered. The four factors identified were labelled as – informational, operational, marketing and environmental barriers. Significant differences were observed in the evaluations of impact of a number of barriers between the owner-managers (OMs) of “growth” and “nongrowth” businesses. Results demonstrate internationalisation of SMEs is plagued by many obstacles in the home environment. Key words: Internationalisation, SMEs, barriers to exports
ANZMAC 2009
Page 2 of 8
Barriers to Internationalisation of SMEs in a Developing Country Introduction SMEs are of great importance to the expansion of export earnings in developing countries. However existing research shows that these businesses are under represented in the international economy as a result of the impediments to market access (APEC, 2004). A number of factors impede the participation of SMEs in the global economy. The conditions in the input and output markets, the skills and competencies of the employees, and the ownermanagers’ entrepreneurial orientation (Kazem and van der Heijden, 2006), influence the success of SMEs in foreign markets. It has been suggested that some of the dramatic changes that are taking place in the global market place would create new opportunities for businesses and bring prosperity to exporting nations (Cateora and Graham, 2007). Some of these are: the advances in information and transportation technologies; easing of trading