Academic journal article Journal of International Business Research

Export Barriers and Performance of Small and Medium Size Enterprises

Academic journal article Journal of International Business Research

Export Barriers and Performance of Small and Medium Size Enterprises

Article excerpt

INTRODUCTION

Although the past two decades has seen a rapid growth on the SME literature, most of the literature on SME internationalisation has concentrated within international market entry, very little has dealt with the cost or processes of developing a foreign market for small businesses (Evangelista, 2005). The existing literature in this area is fragmented and does not provide a comprehensive approach to address the barriers to exporting (Leonidou, 2004). A detailed survey of studies addressing export barriers, has been well addressed by Leonidou (2004) and Tesfom and Lutz (2006). Most of these studies have been theoretical. The present study intends to contribute towards filling in this gap by investigating the barriers associated with building export markets by SMEs located in the Eastern Township and the factors influencing their successful export market development. More specifically this study intends to address the following research questions: What are the barriers constraining their export market development? What barriers can be attributed to the performance of exporting firms?

METHOD

Data was collected through a survey of exporting small and medium size firms located in the Eastern Townships. The study sample was drawn from a list of registered exporters from the Eastern Townships. From this list Only exporting firms with less than 500 employees were included in the contact list. A contact list of 275 SME exporters located in the Eastern Townships was identified where all 275 SMEs were first contacted by phone and later a questionnaire was sent to all respondent who accepted to take part in this survey. Out of that list, ninety respondents refused to participate in this study for various reasons leaving a list of 188 firms from which constant contacts were made to encourage their response. Finally, after all the measures were exhausted only 71 positively responded to the questionnaire. However, after scrutiny of the responses only 64 cases were found eligible for analysis. This final number of cases used in this study represents a response rate of 23 percent of the original targeted population. Thirty eight percent of the firms in the sample were in the manufacturing of industrial goods while 25 percent were in the consumer durable industries and the rest were in the manufacturing of non-durables including health care and pharmaceuticals. The survey's main source of data was through a structured interview. Measures used in this study have been drawn from similar empirical studies on SME internationalisation. The measures are as shown in the attached questionnaire in the Appendix. To ensure adequate cooperation and accuracy of the data the questionnaires were first prepared in English then translated into French and from French into English again using independent translators. A bilingual approach was used to contact the respondents, respondents who preferred English were provided with an English questionnaire and those that preferred French received a French questionnaire. To analyse the barriers facing exporters, respondents were asked to measure the extent to which they experience problems regarding the variables listed in Table 3 below. These constraints have been drawn from the most frequently referred list of constraints (see Leonidou, 2004). As Table 3 illustrates

As illustrated in Table 1, the main barriers that highly affected SME in their export transactions were those related to marketing costs which include high transport and insurance costs, currency risks and the difficulty in matching competitor prices. The least problem concern for most firms were problems related to control over foreign middlemen, meeting quality standards and shortage of working capital. To determine the underlying factors all variables indicating export market barriers were then subjected to factor analysis using principal component analysis and varimax rotation. …

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