Abstract
This study aims to investigate factors that influence the relationship quality between Malaysia SMEs exporter and foreign intermediaries. This paper draws insights from two integrating theories such as social capital theory (SCT) and internationalization process (IP) theory to evaluate the synergistic consequences of several constructs such as cultural similarity, effective communication, knowledge sharing and trust on export performance. The model is tested using Structural Equation Modeling (SEM) via Smart PLS on a sample of 203 SME exporters in Malaysia. The findings revealed that all hypotheses are supported. The research highlights that cultural similarity is a catalyst in internationalization process and show the mechanism on how cultural similarity can influence effective communication and knowledge sharing thus impetus trust which finally reflect the performance outcomes. The findings extended the application of the underpinning theories and their tenets in explaining the Malaysian SMEs’ export performance use foreign intermediaries.
Highlights
Changes in business structure due to rapid globalization and high standards of technology have compelled SMEs around the world to establish business networks and change the selection of entry modes for the success of new international ventures (Pinho, 2016; Ripolles et al, 2012)
The results show that all appropriate factor loadings are greater than 0.5 and a very conservative Composite reliability (CR) cut-off level for all constructs are higher than 0.70 (Nunnally, 1967)
The result indicates that cultural similarity between exporters and their intermediaries has a significantly positive relationship with export performance
Summary
Changes in business structure due to rapid globalization and high standards of technology have compelled SMEs around the world to establish business networks and change the selection of entry modes for the success of new international ventures (Pinho, 2016; Ripolles et al, 2012). Strong networking with competent foreign intermediaries can provide SMEs with adequate competitive advantage as well as allow them to penetrate foreign markets and surpass the complexities inherent in exporting and succeed in managing their foreign businesses. Export intermediaries play a crucial role in international trade as a transactional link between individuals and organizations (Peng & York, 2001). Balabanis (2000) claims that intermediaries can help exporters to distinguish between customers and distribution infrastructure providers, help exporters bridge the knowledge gap, as well as reduce risks and uncertainties when operating in a foreign market. Establishing a working partnership is crucial for small businesses to enhance their competitive capability since this capability is limited in SMEs due to scarcity of tangible and intangible resources (Saleh & Ndubisi, 2011)
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