Internationalisation of SMEs in least developed countries : a resource-based view

Alenzi, Fawaz A. (2022) Internationalisation of SMEs in least developed countries : a resource-based view. (PhD thesis), Kingston University, .


Small and Medium Enterprises (SMEs) have become an integral part of the economy of the modern nation-state and are responsible for job creation and innovation, as well as the growth and development of the wider country. The contributions made by SMEs increasingly impact upon national economies to such an extent that growth and prosperity in the SME sector is now thought to enable economies of Least Developed Countries (LDCs) to grow exponentially. The newly recognised importance of SMEs as a growth factor for LDC economies has moved the focus of researchers towards the impact of the internationalisation of these firms. Both the availability and the optimal utilisation of resources enabling SMEs to grow have subsequently been identified as crucial factors in both their growth and their internationalisation. There is still insufficient knowledge of the internationalisation of SMEs in the least Developed Countries (LDCs) and the existing body of research is thought inadequate to determining whether firm-specific resources can be used to explain whether an SME can be an exporter or non-exporter in such difficult environments. In response to this problematic, an evaluation of the internationalisation of SMEs would be of significant assistance to research into the economic impact that SMEs have on the least developed countries of Sub-Saharan LDCs. One of the factors that will influence the internationalisation of SMEs in LDCs is the availability of resources which has become one of the main focuses of this study. Studies in this area have identified knowledge-based and property-based resources as two categories of resources that determine internationalisation, leading this research towards an investigation of the impact of those two categories of resources on the ability to internationalise of SMEs operating in the least Developed Countries (LDCs). While a review of the research literature found a broad consensus for asserting a weak relationship between resources and innovation, the findings obtained from the data analysis conducted in this study establish a strong positive relationship between the resources of SMEs existing in Sub-Saharan LDCs and their exports. The majority of LDCs identified in this research project are located in the Sub-Saharan region of Africa, entailing that a significant proportion of this study is devoted to a critical evaluation of the impact of resources on the internationalisations of SMEs operating in Sub-Saharan LDCs. The overall aim of the research was therefore to investigate how the availability of resources impacts upon the process of internationalising the SMEs that operate in the Least Developed Countries (LDCs) of the Sub-Saharan region. The principal research objective can be outlined as follows: to analyse the relationship that a firm’s resources have with the level of internationalisation of SMEs in Sub-Saharan LDCs. Two further research questions have addressed the firm-specific resources which have a direct relationship with the internationalisation of SMEs in Sub-Saharan LDCs, and the type of innovation which is thought to have a mediating effect on the relationship between firm-specific resources and the internationalisation of SMEs in Sub-Saharan LDCs. In terms of methodology, this research places a conceptual focus on the Least Developed Countries of Benin, Guinea, Lesotho, Mali and Togo (LDCs), interrogating existing studies of these national economies in order to present a framework for analysis. Based upon the findings from data extracted from the 2016 World Bank Enterprises Survey for LDCs, the study findings establish that resources significantly influence the internationalisation of SMEs. Researchers gathered data from 713 SMEs operating in five LDC nations of Sub-Saharan African region which was analysed using SPSS software to verify the ten hypotheses developed here and so define the conceptual framework of the research. The research results were then generated by conducting Chi-Square and Logistic Regression analysis to compare the dependent, independent and control variables identified in the research. The series of hypotheses presented by this study were drawn from an analysis of their institutions tested through an application of the theory called the Resource-based View (RBV) The hypotheses developed here thus set out to support a conceptual framework best able to serve the findings of the research while working with a positivist research approach which uses quantitative data for explanatory aims. The hypotheses have taken human, financial and technological resources as their independent variables, considering while innovation as a a mediating factor responsible for the internationalisation of SMEs, while SME exports have been taken as the dependent variable for the hypotheses under interrogation. The testing of the ten hypotheses presented in the study found that human, financial and technological resources impact positively upon the likelihood that, as a firm, an SME will internationalise only where the availability of adequate financial resources has tended to have an impact on the innovation taking place in that SME. The research findings also reveal that there is a direct relation between the internationalisation of a SME and the element of innovation, whereas as a factor innovation only mediates the impact of financial resources in aiding in the internationalisation of SMEs. In addition, the study establishes that innovation has a significant positive impact on the exports of SMEs from Sub-Saharan LDCs. The study was hence able to conclude that innovation acts as a mediator for the resources necessary for SMEs operating in the Sub-Saharan LDCs to acquire export-oriented business. In doing so, the study highlights the essence and importance of these relationships and provides an enhanced understanding of the areas upon which SMEs should focus when growing their businesses.

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