Internationalization of small businesses of border region: A study of the determinants

Abstract

Cross border entrepreneurship has been accepted as a strategy to boost economic development of the areas that are typically peripheral to national territories. In the same line, the small businesses of three bordering states of northeastern region of India (NER) have been trying to internationalize their activities by utilizing long international border with Bangladesh. The present paper attempts to identify the factors that play a critical role during the internationalization process of small businesses of NER with Bangladesh, and possible measures that can be considered to reduce the impact of the identified barriers. In order to understand the background of cross border interactions, this paper, first, factually ascertains characteristics of the trade flow across the borders of the three states of NER with Bangladesh and vice‐versa. More specifically, the following were examined through the analyses of: a) quantum of cross border trade flow across 15 designated land port customs stations b) quality of trade flow in terms of commodity traded and variety of trade basket. The paper also analyses the stage wise business relationship development process of small businesses of bordering states of NER with their Bangladeshi counterpart and provides insights to the different entrepreneur centric factors and regulation centric factors that effect relationship formation. This paper argues that for achieving the economic benefits, arising out of unique geographical position of NER, a clear understanding of the cross border business relationship developmental process and the associated factors are important for the policy makers of both the countries to assess the situation in a better way and make or adjust policy prescriptions accordingly.