Abstract
Orientation: Globally, the majority of Small and Medium-sized entities (SMEs) are resource constrained. As a result, not all SMEs are able to fully exploit the benefits associated with international trade as they face challenges when exporting their produce.Research purpose: This article presents an investigation into the impact of access to finance on firm performance and exporting behaviour of SMEs in Harare, Zimbabwe.Motivation for the study: The article stems from the observation that although there is a growing importance and contribution of SMEs worldwide, research has shown that only a few of these SMEs are involved in international trade.Research design, approach and method: A cross-sectional study was employed with quantitative methods being utilised. The collected data were analysed using a structural equation modelling technique, which employed the Smart partial least squares software (version 2.0).Main findings: The key findings reveal that a significant positive relationship between access to finance and SMEs exporting behaviour does exist. Furthermore, the study’s findings challenge the notion that firm performance has a significant impact on exporting behaviour and show a negative impact of access to finance on SME firm performance.Practical/managerial implications: There is a need to put systems in place in Zimbabwe that that will (1) prioritise the need to have clear routes to market and increase awareness among SME owners, and (2) help SMEs overcome high costs associated with participating in export of goods and services.Contribution/value-add: The article provides a unique empirical analysis of the relationship that exists between access to finance, firm performance and export behaviour of SME firms in Zimbabwe, and thereby makes a valid contribution to SME literature.
Highlights
Financing of small- and medium-sized entities (SMEs) has been a subject of debate between policymakers, researchers and other stakeholders globally
Irene (2017) cited Abor and Quartely (2010) and provided a Southern African perspective stating that SMEs contributed 57% towards the gross domestic product (GDP) and accounted for 61% of jobs created in the country
The SME owners or managers whose businesses are located in Harare, the Zengeza and Glenview clusters; who are involved in the direct manufacturing of wood and steel furniture, with a firm of 2 years old or more; and who comply with the definition of a small and medium enterprise contained in the CZI were the respondents in this study
Summary
Financing of small- and medium-sized entities (SMEs) has been a subject of debate between policymakers, researchers and other stakeholders globally. The low export involvement of developing country SMEs might be because of their failure to access finance from local and international capital markets (Chipangura & Kaseke 2012). This relates to the inaccessibility of formal long-term and short-term loans for investing in non-current assets and for working capital purposes so that SMEs could enhance their operations (Ferrando & Mavrakis 2017; Oricchio et al 2017). Literature on the same subject from African countries is scarce It is the goal of this study to contribute to literature through investigating how access to finance impacts the export behaviour of SMEs in Harare, Zimbabwe.
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