SME’s export intensity: enhancers, inhibitors and firm characteristics

Abstract

This study aims to investigate the factors explaining the variation in SMEs’ degree of internationalization, measured by export intensity (i.e. the share of export revenue in total revenue). Primary data were collected through survey administered using questionnaire in seven provinces in Indonesia, yielding 497 usable responses. Principal component analysis was used to solve dimensionality issues of perceptual variables while Generalized Linear Model (fractional logit regression) and the Ordinary Least Square regression were used in the estimation. The findings show that SMEs’ export expansion is positively affected by firm characteristics namely firm age and total employees, as well as some exhibiting factors namely owners’ international work experience, central government assistance, network relationships with non-government actors, location, export market of choices and years of exporting. By contrast, SMEs’ export continuation is adversely affected by perceived difficulties in overcoming informational and human resources barriers, distribution, logistics and promotional barriers, financial barriers, foreign government barriers, procedural barriers and price barriers. The findings suggest that post-export assistance is as important as creating new exporters. Further, the findings provide insights on specific types of assistances required by exporting SMEs to exploit their export-exhibiting factors while also overcoming the export-inhibiting factors.