When does Exit from Exports Benefit the Performance of SMEs?

Abstract

The purpose of this paper is to answer the question ‘when does exit from export markets influence post-exit SME performance?’. Based on the internationalization-performance literature and a contingency view, it is argued that exit can have a positive effect on firm performance if the firm has high levels of organizational slack and experiences a highly dynamic environment. Using longitudinal data from Swedish manufacturing firms, it is found that high levels of potential slack have a positive moderating effect on firm performance but that available and recoverable slack have no significant effect. Support is found for the importance of environmental dynamism as a moderator between exit and SME performance. These findings add to the current literature in internationalization and SME performance by focusing on exit from exports as an alternative to continuous international growth and by emphasizing that exit is not always equal to failure. Moreover, with the changing international environment it makes pract...