SMEs’ impediments and developments in the internationalization process
Authors: Hashim Fariza 
Published: April 2015

Purpose

– The purpose of this paper is, first, to examine the factors that impede SMEs in their internationalization process; second, to analyse the effectiveness of the government support and development programs of the SMEs; and finally, to examine the networking efforts by Malaysian SMEs at the industrial level.

Design/methodology/approach

– This study is descriptive in nature. Secondary data are the main source of data collection. Data were obtained from reliable and authoritative sources such as SME Corp, government agency publications, newspapers, international business journals and other related periodicals. A meta-analysis technique was used in this study where results from previous and current studies on similar topics were critically reviewed.

Findings

– This study found that Malaysian SMEs faced external and internal impediments in their efforts of expanding their operations internationally. Externally there is a lack of skilled workers available in the domestic labour market; increased competition in the domestic market due to the regional economic agreement among neighbouring countries; lack of physical infrastructure allocated to the SMEs; and government assistance offered does not reach SMEs due to high level of bureaucracy and poor communication. Despite the impediments encountered by SMEs, they still obtained benefits from various policies, programmes and incentives provided by the government.

Research limitations/implications

– Meta-analysis conducted on the challenges of Malaysian SMEs in its internationalization process might be inadequate as it is limited to the availability of the current and previous studies. Additionally, quantitative data obtained from the secondary source was not raw data thus statistical testing could not be further conducted and analysed. Data obtained from the local authoritative sources detected different problems and challenges from those found in previous and current studies.

Practical implications

– This study indicates several implications for managers and policy makers. Malaysian SMEs need to evaluate its capability before embarking into new geographic locations and engage internationally. With diverse programmes offered by the government, SMEs have a wide range of choice when involving the whole value chain activities, either through marketing their products in the market or manufacturing and supplying the products to large firms or MNCs. Involving international markets is not only about expanding the market but also for seeking lower costs and resources as well as operating with management efficiency.

Originality/value

– This study contributes to the body of knowledge of international business and entrepreneurship literature in three ways. First, research on SMEs from emerging countries involved in international market tend to be limited in literature, most of them are concentrated in the developed countries; thus this study would extend the understanding about the internationalization process among SMEs. Second, this study focused on the impediments of SMEs in their implementation strategies which represent the practicality of the phenomenon thus bridging the gap between theories and realities. Third, this study brings to light the significance of networking relationships in international business and entrepreneurship primarily among SMEs due to their size limitations. Finally, the meta-analysis technique which is seldom used in the international business and entrepreneurial literature is adopted in this study. This technique provides another approach for the researchers to examine and address the issues in the field.