Institutional influences on SME exporters under divergent transition paths: Comparative insights from Tajikistan and Kyrgyzstan

Abstract

This paper compares the influence of national institutional environments on the internationalisation of SME exporters from two countries, Tajikistan and Kyrgyzstan, which followed divergent paths in the transition process. It contributes in several ways, notably by extending scholarly debate on divergent paths of transition to the IB literature, and enriching the institution-based view of IB with perspectives from the new institutional economics and comparative institutionalism and offering fresh evidence of how formal and informal institutions and the enforcement mechanism interact to create specific incentives and barriers for internationalising SMEs. The study, one of the first to examine SME exporters from the former Soviet Republics of Central Asia, cautions against the tendency to attribute countries in the transitional periphery with homogenous institutional environments. Analysis of case study evidence suggests appreciable differences in the institutional environments facing SME exporters in the comparator countries. More specifically, SME exporters in Tajikistan seem to experience tougher institutional constraints relative to their Kyrgyzstan counterparts, and this divergence in institutional environments appears to affect the internationalisation prospects and competitiveness of Tajikistan and Kyrgyzstan SME exporters adversely and favourably respectively. The above findings are richly illustrated in the paper, which also discusses implications for theory, managerial and policy decision making and future research.