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Barriers to internationalization: A study of small and medium enterprises in India

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Abstract

Small and medium enterprises (SMEs) play a significant role in the growth of the economy. Many SMEs have set up activities beyond their home markets, and their role is more important in contributing to future growth. They are confronted with international competition and forced to compete in international markets. In this study, authors have categorized obstacles to firm internalization as internal and external barriers. The three dimensions of external barriers include governmental and economic political/legal barriers, procedural, and currency barriers, and task and socio-cultural barriers. The internal barriers considered for the purpose of the study were informational barrier, managerial barriers, financial barriers, and marketing barriers. Authors have used adapted scale from previous researches in these domains. Database accumulated the SMEs that were involved in manufacturing activities in the state of Rajasthan, India. The measurement model is a confirmatory factor analysis. The measures used within this study were within the acceptable levels supporting the reliability of the constructs. The analysis of the data revealed that there was moderate correlation between the external and internal factors. Within the external factors, procedural and currency barriers showed the highest obstacle for SMEs in their pursuit for internationalization followed by task and socio-cultural factors. Results specified that the entrepreneurs were not able to handle and manage foreign exchange fluctuations due to their lack of knowledge in this field.

Abstrait

Petites et moyennes entreprises (PME) jouent un rôle important dans la croissance de l’économie. Beaucoup de PME ont mis en place des activités au-delà de leurs marchés domestiques et leur rôle est plus important en contribuant à la croissance future. Ils sont confrontés à la concurrence internationale et obligés de rivaliser sur les marchés internationaux. Dans cette étude, les auteurs ont classé les obstacles à raffermir internalization des obstacles internes et externes. Les trois dimensions de barrières extérieures comprend barrières gouvernementales et économiques, politiques/juridiques, procédurales et barrières de change et des tâches et les barrières socioculturelles. Les barrières internes, considérées comme le but de l’étude étaient barrière informationnelle, barrières managériales, obstacles financiers, et les barrières de marketing. Auteurs ont utilisé échelle adaptée de précédentes recherches dans ces domaines. Base de données accumule des PME qui ont été impliqués dans des activités de fabrication dans l’État du Rajasthan, en Inde. Le modèle de mesure est une analyse factorielle confirmatoire. Les mesures utilisées dans cette étude étaient dans les niveaux acceptables de soutien de la fiabilité des constructions. L’analyse des données a révélé qu’il y avait corrélation modérée entre les facteurs internes et externes. Dans les facteurs externes, les obstacles de procédure et de change ont montré le plus grand obstacle pour les PME dans leur poursuite de l’internationalisation, suivie par la tâche et les facteurs socio-culturels. Résultats précisé que les entrepreneurs ne sont pas en mesure de traiter et de gérer les fluctuations de change en raison de leur manque de connaissances dans ce domaine.

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Notes

  1. http://articles.economictimes.indiatimes.com/2013-06-09/news/39834857_1_smes-workforce-small-and-medium-enterprises (accessed on 09-03-2015)

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  1. Management Development Institute, Mehrauli Road, Sukhrali, Gurgaon, 122007, India

    Ankur Roy

  2. ABV-Indian Institute of Information Technology and Management, Room No. 152, BH-3, ABV-IIITM Morena Link Road, Gwalior, MP, 474015, India

    Chandra Sekhar

  3. ABV-Indian Institute of Information Technology and Management, Room No. 109; Block A, ABV-IIITM Morena Link Road, Gwalior, MP, 474015, India

    Vishal Vyas

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Correspondence to Chandra Sekhar.

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Roy, A., Sekhar, C. & Vyas, V. Barriers to internationalization: A study of small and medium enterprises in India. J Int Entrep 14, 513–538 (2016). https://doi.org/10.1007/s10843-016-0187-7

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