The effect of sub-national institutions and international entrepreneurial capability on international performance of export-focused SMEs: Evidence from China and South Korea

Abstract

A number of recent studies have taken notice of the differences among sub-national institutions within the convoluted structures of Asian economies. The influence that the institutional environment exerts upon the performance of larger multi-national enterprises (MNEs) in Asian markets is well-documented; however, the relationship between sub-national institutions, international entrepreneurial capability (IEC), and international performance (IP) is a realm that has been less closely explored. This paper seeks to address that gap by assessing the effect of relevant sub-national institutions, namely, local government support, legal rules, government transparency, and government efficiency on the IEC of export-focused small and medium-sized enterprises (SMEs) in two leading Asian economies. The researchers have devised and assessed a model that links sub-national institutions, their IEC and IP. To this end, data was collected from export-focused SMEs in two important emerging markets, China and South Korea. Three rounds of data collection resulted in 217 complete surveys. This paper discusses the analyzed data as well as the theoretical and managerial contributions of those findings.