Determination of SME’s Internationalization in Malaysian Context

Abstract

The increasingly tight competition urged SMEs to expand the market beyond national borders, not only for their growth and expansion but also to participate in the nations’ economic development. Consequently, internationalization has become a vital component for any SME which necessitate enhancing our understanding on determinants of internationalization, particularly in emerging economies. To this end, a literature review is conducted to develop a new conceptual model. Certain variables are identified for influencing SME internationalization including export capability and networking capability. Additionally, it is proposed that the relationship between networking capability, export capability and SME internationalization might be mediated by competitive advantage. This study contributes to the scant literature on the determinants of the firm competitive advantage and its potential mediating role in the relationship between organizational capabilities and SME internationalization. Practically, the present study benefits policymakers and the government in developing countries to outline the suitable policies and frameworks to produce more SMEs that are capable to exploit the international markets.

Unraveling the Internationalization Barriers among Oil and Gas SMEs: A Path to Global Expansion

“…This phenomenon was again found in the literature that reveals Malaysian SMEs are not participating in international trade activities as much as expected compared to the campaign done by the government agency (Ismail and Zakaria, 2018;Falahah et al, 2020;Denicolai et al, 2021). Later it was reported by Foghani (2023), that only 13.3% of SMEs engaged in the international market which is considered low compared to developed nations.…”

“…SMEs Barriers to Internationalization: SMEs commonly suffer from their limited resources and size which hindered their efforts to gain access to global markets (Fariza, 2015;Falahah et al, 2020). Foghani (2023) stated that the external barriers to SME internationalization include procedural, governmental and task barriers (Hutchinson et al, 2009). Moreover, imperfections in the financial market, unpredictable exchange rates, as well as differences in cultures, languages and legal systems can also be seen as risks for SMEs in entering foreign markets (Cerrato et al, 2016).…”

“…However, several studies showed an argument on the internal barriers which are said to be more significant for SMEs as the owner-manager is the main determinant for a company's internationalization. Internal barriers to internationalization include informational, functional and marketing barriers (Foghani, 2023). In addition, management disinclination and attitudinal barriers, as well as a lack of human and financial resources, are found to be some of the most prominent internal barriers to the SME's internationalization process (Hutchinson et al, 2009).…”

“…On the other hand, according to Foghani (2023), there are four main categories for external barriers which are procedural, governmental, task and environmental barriers. Procedural barriers are related to the differences in procedures and documentation, communication and the payment policy such as the practical and operational issues regarding transactions with foreign customers.…”