Determinants of SME Internationalisation and the Impact on Business Performance: An Empirical Study of Outward Internationalisation Adoption by Malaysian SMEs

Zaki, Adyzakrie Mohamad (2019) Determinants of SME Internationalisation and the Impact on Business Performance: An Empirical Study of Outward Internationalisation Adoption by Malaysian SMEs. Doctoral thesis, Birmingham City University.

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Abstract

The reduction in trade barriers, rapid governments’ bilateral agreements and the improvement of communication technology have increased opportunities for businesses to expand their activities in foreign markets (Javalgi et al., 2003). In conjunction with this phenomenon, previous studies suggest that there is an increasing number of Small and Medium Sized Enterprises (SMEs) conducting international business (e.g. Oviatt and McDougall, 2005; and Ketkar and Acs, 2013). However, Asia Pacific Economic Cooperation (APEC) Policy Support Unit (2010) has recorded a slightly lower share of total export value by SMEs in developing countries vis-a-vis developed countries.

This research investigates the different factors influencing SMEs’ decision to internationalise in developing countries (such as Malaysia). This research also examines the relationship between the SME internationalisation adoption and its business performance since the relationship remains vague (Kuivalainen and Sundqvist, 2007; Lu and Beamish 2006; and Zahra et al., 2000). Furthermore, the study deepens understanding of the complex interrelationship between internationalisation determinants (that influence top management’s decision to internationalise) and how such factors (internal and external) have an impact upon SME’s business performance.

This paper underlines the following research questions: i) what are the different determinants impacting internationalisation adoption of Malaysian SMEs? ii) how the integration of internal and external determinants impact internationalisation adoption by Malaysian SMEs? iii) what is the role of ethics attributes in influencing Malaysian SMEs’ decision to internationalise? iv) what are the impacts of internationalisation adoption on Malaysian SMEs’ financial and non-financial performance?

This research has designed the research methodology based on the post-positivist approach to achieve the research aims and answer the research questions. The triangulation approach was started from an in-depth literature review by systematically stratifying previous research studies in the field. The researcher subsequently conducted semi-structured interviews to purify the findings in the extant literature. 20 vii Malaysian experts including Malaysian internationalising SMEs and public officials were interviewed during the purification phase. The research samples were selected purposefully from a publicly available export directory which was obtained from Malaysia External Trade Development Corporation (MATRADE) website.

This research has developed the research framework and hypotheses based on the findings of exploratory interviews. The following step tested the framework through empirical research to prove its validity in explaining SMEs’ internationalisation in Malaysia. A mix of online and mail survey questionnaire was conducted to test the research hypotheses empirically. Finally, the research analysed 218 survey data in various statistical techniques including Cronbach-Alpha test, simple linear regression, multiple regression, structural equation modelling (SEM) and one-sample t-test.

This study found that factors influencing internationalisation of Malaysian SMEs vary. While all measures related to entrepreneur/ human capital, firm and environmental attributes have a significant positive relationship to internationalisation adoption, the measures related to ethics attributes are found not impacting internationalisation adoption by Malaysian SMEs. However, the research found environmental attributes and perceived level of internet fraud mediate the relationship between firm attributes and internationalisation adoption by Malaysian SMEs. Finally, internationalisation adoption is found positively significant in impacting the financial and non-financial performance of SMEs in Malaysia.

This research will contribute to the academic activities, practitioners and policymakers. For academic activities, research contribution is about understanding the different factors impact on internationalisation adoption, which several factors are yet, undiscovered in Malaysia such as ethics attributes and management entrepreneur orientation (as discussed in chapter 3 and chapter 11). Furthermore, this research contributes to fulfilling the limited number of study in determining difference factors of Malaysian SMEs internationalisation by adopting a holistic research approach involving quantitative and qualitative methods. Also, it contributes to differentiating internationalisation determinants across sectors as previous literature concentrated only upon the manufacturing sector in Malaysia context. Furthermore, the research expands the integrative model of understanding SME internationalisation by Coviello viii and McAuley (1999) in investigating the role of ethics attributes in internationalisation adoption which have never been studied. For practitioners, this research provides a guideline to entrepreneurs or managers who look for determinants that can accelerate internationalisation process of their firms. Also, internationalised SMEs may use the result of this research as a guideline to strengthen their firms and to be more competitive in foreign markets. Policymakers, government and business support agencies may also benefit from this study regarding accommodating the most appropriate support to SMEs who wish to diversify their business abroad, which in turn, will help the government in increasing country’s GDP performance and providing more employability opportunities for citizens.

Item Type: Thesis (Doctoral)
Additional Information: Without the contribution of knowledge, moral supports, and helps from many people and institutions; this thesis would have never been written. Indeed, the completion of this thesis has come true with the support of those whom I am grateful to address my appreciation. Sincere gratitude goes to the Director of Study, Professor Hatem El- Gohary for his invaluable advice, help and support towards the completion of this thesis. I could not finish the thesis in a right way and on the scheduled timeline given without his brotherly advice and supervision. My utmost gratitude to my second supervisor, Professor David J. Edwards for his always available guidance, friendship and support. I very much appreciate their professional supervision which in turn, has increased my confidence, maturity, and skills in doing academic research as I was initially from a non-academic background. Thanks also to other academics’ contributor for their knowledge sharing when I was struggling with ill-formed ideas and in need of specific advice. Among them: the panellist of the Doctoral Colloquium of European International Business Academy (EIBA) included: i) Professor Peter Gabrielson (from Vaasa University, Finland); ii) Dr Quyen Nguyen (Reading University, United Kingdom); iii) Dr Luzrrezia Casulli (Strathclyde University, Scotland); and iv) Dr Miguel Torres (Leeds University, United Kingdom). Thanks for their valuable comments, insights, and encouragement in determining the study focus. Sincere gratitude to the Malaysian government through my employer Majlis Amanah Rakyat (MARA) and GIATMARA Malaysia which awarded me with the prestigious staff development grant so-called ‘Top Executive Development Program.’ Indeed, I will do my best to share the knowledge and experience in achieving the organisation’s goals and objectives in future. My sincere thanks to all PhD colleagues particularly Dr Syed Mohsin, Nadia Asghar, Dr Rebecca, Sepideh Zahiri, Vijay Ramachandran and Sundas Hussain for their iii continuous support and sharing information about the PhD administration matters and made the PhD journey joyful. My most profound appreciation also goes to my family (mainly mom Badariah and dad Zaki) who are continually encouraging and providing inspiration throughout my life. Their sincere love, encouragement and prayers are the source of success in my life. I admire their encouragement throughout achieving this PhD completion. Also, high gratitude and love go to my wife Mazidatul Husni who gave her permanent caring, excellent support, patience and sacrifices during completion of this thesis. This thesis may not be completed without her. I would also express highly gratitude to my children Asyfa, Airis, Ameera and Aleema for their sacrifice and understanding, as well as, for filling my heart with great happiness and love. I hope one day, I would be the best role model for their academic and career paths. Also, the completion of this thesis is supported by the participation of more than 230 Malaysian SMEs. Therefore, my appreciation goes the SMEs in this research for their valuable information and sharing the firms’ internationalisation experiences in the interviews and survey questionnaires. My sincere thanks to the Birmingham City Business School staffs especially Lovain Hynes, Faheemah Akhter, Cath Eden, Professor Maxine Lintern and all team members who continuously support and provided the best university’s facilities during completion of this thesis. I should also express high gratitude to the faculty panels who awarded me as the PhD student of the year in the Dean’s Award 2018. Indeed, the appreciation given by the university is very helpful in my future career development. Finally, I acknowledge that without God’s permission, this work would have never existed.
Uncontrolled Keywords: Small and Medium Enterprises (SMEs); Malaysia; Determinants; Internationalisation Adoption; Business Performance
Subjects: N100 Business studies
Divisions: REF UoA Output Collections > Doctoral Theses Collection
Depositing User: Kip Darling
Date Deposited: 19 Mar 2019 16:49
Last Modified: 19 Mar 2019 16:49
URI: http://www.open-access.bcu.ac.uk/id/eprint/7274

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