Export Barriers for SMEs from Emerging Market: A Model of Analysis for Non-Tech Companies.
| Autor | Morini, Cristiano |
| Cargo | Research Article |
INTRODUCTION
According to Al-Hyari, Al-Weshah, and Alnsour (2012), internationalization brings a significant increase in business opportunities. In order to succeed, export firms must overcome the barriers to internationalization. Studies regarding the internationalization of firms from emerging markets (EM) are not quite common in the literature (Al-Hyari, Al-Weshah, & Alnsour, 2012; Bianchi, Carneiro, & Wickramasekera, 2018; Revindo, Gan, & Massie, 2019; Roy, Sekhar, & Vyas, 2016; Senik, Isa, Sham, & Ayob, 2014), especially focusing on non-tech companies. This kind of companies is characterized by little knowledge and limited resources. They are necessitydriven in terms of entrepreneurship and barely intend to export.
We focused on this content because three quarters of the countries in the world are not developed (Silver, 2003). Most of the firms in those countries are not from the tech sector. Examining to what extent barriers hinder the export process may allow enough fuel to face the problem, thus contributing to ameliorate the economic growth and producing some efficiency in these firms.
Academic literature covers a variety of internationalization studies, but the process of identifying barriers to emerging markets from small and medium enterprises (EM-SMEs) is not wellunderstood regarding non-tech companies from a comprehensive perspective, which is understood as a wider and deeper one, encompassing aspects from the market as well as from the firm (mainly related to the human aspect).
According to Dabic et al. (2020), there is a clear gap in the literature regarding emerging markets in the internationalization process. They also stand to the gap related to low-tech industries, as they emphasize a possible risk that the studies provided by scholars, policymakers, and practitioners are exclusively tailored toward high-tech firms. Some studies focus on the barriers to internationalization with regard to information and marketing (Hosseini, Fallon, Weerakkody, & Sivarajah, 2019), to resilience and non-resilience (Rahman & Mendy, 2019), to human- and technology-oriented (Mendy & Rahman, 2019), and to exporting barriers from developed countries (Tan, Brewer, & Liesch, 2018).
Leonidou's (2004) work is a reference because he analyzed and listed 39 export barriers from 32 empirical works, with special implications for small businesses. His paper became a high-cited reference in this content.
Since Leonidou's (2004) reference paper was published, we added papers that analyze mainly barriers or some marginal barriers by examining the export stimuli. Our version updated that list and added a managerial/entrepreneurial dimension, testing all dimensions analyzed together. The managerial dimension concerns psychological aspects of decision-makers, as cognitive style, proactiveness, and tolerance to ambiguity (Acedo & Galan, 2011). In Acedo and Galan (2011), some variables of the theory of planned behavior (TPB) are used to stress the role played by the manager as a required condition to understand the behavior and results of the export stimuli of the firm.
Our paper offers a contribution by developing a measurement model (a) testing the existing barriers simultaneously with the managerial/entrepreneurial barriers and with (b) the focus on non-tech firms. The existing studies are focused on specific aspects of barriers that may hinder internationalization, but they do not consider personal characteristics either as a barrier or in the context of non-tech firms. This is new and may contribute to the process to evolve the knowledge, adding a new layer of analysis to the existing ones.
Even though some studies split the barriers into more dimensions (Cardoza & Fornes, 2011; Bianchi et al., 2018), we opted to maintain the taxonomy of internal and external barriers. What is new in our paper it that we added a managerial dimension as an internal barrier (firm's perspective), and we examine those barriers in a non-tech based firm of the emerging market. These lenses either were not explicitly mentioned in other studies or were not analyzed in a comprehensive and combined way. How could EM-SMEs reach the global market? What barriers hinder the export process the most? After doing the literature review, we raised nine hypotheses that have not been analyzed altogether before.
Thus, the objective of this article is to analyze the perception of managers and decision-makers of EM-SMEs about the barriers to exporting, contributing to add a new dimension and examining a new combined model of analysis, since the seminal paper published by Leonidou (2004). The literature review identified almost only studies related to internationalization barriers in tech companies (Arroteia & Hafeez, 2021; Cahen, Lahiri, & Borini, 2016), and little is done concerning non-tech industries from EM. The research question that came up from the literature review is: What are the export barriers for non-tech EM-SMEs? Which aspects does it encompass? We contribute to answering these questions.
By answering the RQs, we propose a new model of analysis, including a managerial dimension to the existent ones. The Leonidou's (2004) reference model was evolving from then to 2020 (as also shown by Narayanan, 2015). The results of our work show that, despite the relevant role of the governmental aspect, it is not the only one to blame. Internal barriers, associated with the company and its manager's individual capabilities, also hinder this process.
The main theoretical contribution of this study is twofold: (a) it revealed the hitherto neglected role of managerial dimension in the set of barriers, thus helping (b) to evolve the understanding of the barriers in a novel model, by bridging human and market dimensions in the context of the non-tech EM-SMEs. This may provide (c) arguments for policymakers to (re)act in this context. Understanding the export process, opportunities, problems, and the challenges faced by SMEs is an opportunity for policymakers and researchers (Paul, 2020). To this end, a model was proposed, developed, and validated in a selected industrial sector. Unlike other studies, like Luo and Tung (2007), the focus was not on EM-MNEs (multinational enterprises from emerging markets), which go abroad as a springboard to exploit their advantages in other countries. MNEs have developed expertise in mass production and they have to exploit innovation by scale-up. The export process of the SMEs is quite different in the willingness of achieving the target markets. Therefore, the focus was neither in MNEs nor in tech companies.
We propose a comprehensive model by enriching the theoretical discussion, calibrating the analysis to the non-tech EM-SMEs. This paper focuses on the direct export process regarding the internationalization, for which the export process is the first and most common way. The research was carried out in the Brazilian context.
This article begins with a discussion of export barriers mainly from the EMs' firms. Then we describe a survey undertaken in Brazilian SMEs. A confirmatory factor analysis was taken using a structural equation model applied to the set of items used to measure the exporting barriers. We used the dimensions captured from the literature review and combined them in a novel model. We analyzed and discussed the results. We then draw implications relating to EM-SMEs in non-tech companies. We conclude with the limitations and suggestions for future works, emphasizing our contribution to evolving the SME internationalization theory.
LITERATURE REVIEW
We used the European Union (EU) criterion to classify companies into micro-, small and medium-sized enterprises. In general, there are several ways to classify the size of a company, each of them designed by federal agencies for their own purposes. Economic and fiscal criteria generally use the number of staff employed and the company's revenue, but even between these two, there is great variability. We opted for the European Union's criterion as it allows international comparisons. It considers that a micro-sized enterprise would have up to nine employed persons; a small-sized enterprise would have between 10 and 49; and a medium-sized enterprise would have between 50 and 249 (Organisation for Economic Co-operation and Development [OECD], 2005).
We will conduct the literature review by two main streams (originally proposed by Leonidou, 2004), both focusing on SMEs: (a) internal and external barriers to the internationalization of companies; and (b) other approaches.
Since the work published by Leonidou (2004), several studies came up identifying internal and external barriers to internationalization, mainly in SMEs (Cardoza & Fornes, 2011; Castano, Mendez, & Galindo, 2016; Ciravegna, Majano, & Zhan, 2014; Gardo, Garcia, & Descals, 2015; Kunday & Senguler, 2015; Mohr & Shoobridge, 2011; Oliveira, Leite, Shibao, & Lucato, 2017; Roux & Bengesi, 2014; Roy et al., 2016).
In addition, among those that have gone international, the ability to innovate and seek new technologies stands out (Amoros, Basco, & Romani, 2016). Companies that went abroad explored resources by their rareness, value, and most of the time non-imitable characteristics (Barney, 1991). While updating and technologically improving production processes reduce the cost of operations, product and service innovations allow them to enter competitive environments in the international market (Buse, Tiwari, Herstatt, 2010; Cahen et al., 2016; Kamakura, Ramon-Jeronimo, & Gravel, 2012; Rahman, Uddin, & Lodorfos, 2017). However, studies regarding innovation and tech companies will not be focused on this paper.
The barriers can also be associated with cultural factors, such as language, methods of 'doing' business, culture, ideology (Colapinto, Gavinelli, Zenga, & Gregorio, 2015; Krakawer, Jussani, & Vasconcellos, 2013), and family members (in the case of family SMEs, such as their reluctance to go...
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