Internationalisation of SMEs: does entrepreneurial orientation matter?
| DOI | https://doi.org/10.1108/WJEMSD-08-2016-0039 |
| Pages | 96-113 |
| Date | 08 May 2017 |
| Published date | 08 May 2017 |
| Author | Mohammed Ngoma,Abaho Ernest,Sudi Nangoli,Kusemererwa Christopher |
| Subject Matter | Strategy,Business ethics,Sustainability |
Internationalisation of SMEs:
does entrepreneurial
orientation matter?
Mohammed Ngoma, Abaho Ernest, Sudi Nangoli and
Kusemererwa Christopher
Graduate Studies and Research,
Makerere University Business School, Kampala, Uganda
Abstract
Purpose –The purpose of this paper is to investigate entrepreneurial orientation (EO) as a predictor of
internationalisation of small- and medium-sized enterprises (SMEs). The key research question is “to what extent
do the dimensions of EO (innovativeness,proactiveness and risktaking) predict internationalisation of SMEs?”
Design/methodology/approach –The studyadopts a cross-sectional surveyto collect data from 282 SMEs,
with theuse of a multi-dimensionalself-administered questionnaire. All themeasures in this study wereadopted
from existing instruments from previous studies and all showed a CVI above 0.8. Data were analysed
quantitativelyusing descriptive statistics,correlations and hierarchicalregression. The nature and strengthof
the relationshipsbetween the variables was tested usingthe zero-order bivariate correlationanalysis.
Findings –The study establishes a significant relationship between the dimensions of EO and
internationalisation of SMEs.
Research limitations/implications –This paper contributes to the c orpus of literature on
internationalisation of SMEs. Future research should considerthe major constructs from a longitudinal point
of view given that cross-sectional studies sometimes fail to examine theinteraction effect of the variables.
Practical implications –The paper illustrates how EO dimensions can influence an entrepreneur’s
decision to go international especially handling the process of internationalisation and its dynamics.
Originality/value –The paper provides cont extual evidence from a developing co untry to the effect that
as local investors get more inclined to EO, they in the process ease their way to joining the international
business arena.
Keywords SMEs, Innovativeness, Strategy, Internationalisation, Risk taking, Proactiveness
Paper type Research paper
1. Introduction
Small- and medium-sized enterprises (SMEs) are responsible for creation of most jobs,
products, tax revenues, welfare and pove rty alleviation in developing econom ies
(Ahimbisibwe et al., 2016; Kandasaami, 2004; Ntayi et al., 2011; Kwesiga, 2006; Kasekende
and Opondo, 2003). They provide the economy with a continuous supply of ideas, skills and
innovations necessary to promote competition and the efficient allocation of scarce
resources (Ahmed and Nwankwo, 2013; Kasekende and Opondo, 2003). It is thus not
surprising that varied studies continue to be conducted to develop strategies for enhancing
SME performance (see, e.g. Sari et al., 2008; Lussier et al., 2016; Beyene, 2002). The OECD
(2009) emphasises that the internationalisation of entrepreneurship among SMEs embodies
considerable relevance principally owing to the observed growth effects of cross-border
venturing, and their demonstrated capacity to drive economic development at national,
regional and global levels. In this regard, the internationalisation of SMEs has continued to
be embraced as a conduit for enhancing economic and social transformation of developing
nations within African (Ibeh, 2005). In Uganda, for example, SMEs are found in all sectors
ranging from manufacturing, construction, hotels and restaurants, education, banking and
finance, wholesale and retail trade. There is an estimated 1,069,848 number of SMEs that
account for 90 per cent of Uganda’s private sector. This sector employs between 2.5 and
4 million people in Uganda.
World Journal of
Entrepreneurship, Management
and Sustainable Development
Vol. 13 No. 2, 2017
pp. 96-113
© Emerald PublishingLimited
2042-5961
DOI 10.1108/WJEMSD-08-2016-0039
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/2042-5961.htm
96
WJEMSD
13,2
When an SMEdecides to engage in international activities, regardlessof its nature, it hasto
follow some pattern of activity that is most likely to be consistent or logical over time.
This pattern can be called the internationalisation development strategy. Prior empirical
investigations have alluded that there is a significant relationship between entrepreneurship
orientationand business performance (Mahmood and Hanafi, 2013),and that firms that adopt
proactive orientation (PO) achieve higher performance, profitability and growth compared to
those that adopt a conservative or ientation (Okpara, 2009). Entrepreneurial orien tation (EO)
seems to havea predictive value on firm’sgrowth (Ferreira and Azevedo, 2007). Whilestudies
on entrepreneurship orientation are evident,findings from these studiesdo not sufficiently link
EO to internationalisation of SMEs.
The internationalisation notion has received abundant and keen audience in the research
circles from various vantage points, including organisation theory, marketing, strategic
management, international management and small business management. For both large
and small businesses, attention has been on concerns like international decision making and
management, the development of international activities and antecedents of SME
internationalisation (Ruzzier, Hisrich and Antoncic, 2006). Research on internationalisation
has mainly focussed on large companies especially multinational companies. Studies on
internationalisation of SMEs in developing countries remain sparse (Sari et al., 2008). It thus
becomes critical to understand the entrepreneurial dynamics that affect the
internationalisation of SMEs from the behavioural point of view. The entrepreneurial
dynamics are viewed from the firm’s EO, reflecting a firm’s commitment and capability to
pursue entrepreneurship activity. In this study EO is based on risk taking, innovation and
proactiveness as recommended by Miller (1983). The study is uncured on the McClelland’s
need for achievement theory (McClelland, 1961).
2. Motivation of the study
Research by Kandasaami (2004) shows that many economies around the globe are
thriving on the internationalisation potential of their SMEs. For example, according to
McKinsey Report (1993) as cited in Kandasaami (2004), four-fifths (80 per cent) of the
recent breed of emerging exporters in Australia are small- and medium-sized firms.
Existent studies show that the significant positive impact that internationalisation of
SMEs exerts on an economy is ubiquitous in various industries and economies (see, e.g.
Crick, 2007; Cavusgil, 1984; Ibeh, 2005). Internationalisation of businesses comes with
added advantage to the entrepreneur such as increased revenue. However, SMEs in
Uganda have not taken advantage of the internationalisation opportunities including
those provided within the East African Community region. While extant literature has
demonstrated that the strongest predictors of SME internationalisation are investment
capital, access to credit information and ownership of fixed assets (Wamono et al., 2012),
thereislittleempiricalevidenceontherole of EO on the internationalisation of SMEs
in Uganda. This study intends to investigate the effect of EO on internationalisation
of SMEs.
The study contributes to the advancement of internationalisation of SMEs research in
several significant ways. First of all, the findings of the study would help the policy makers
in the Government of Uganda and other related economies especially through the ministry of
trade and investment to come up with appropriate policies that can enhance internationalisation
of SMEs. There is also a contribution made to the body of knowledge about EO and
internationalisation of SMEs with contextual evidence from a low-resourced country –Uganda.
3. Theoretical underpinning of the study
This study uses McClelland’s need for achievement theory to explain the influence of EO
components on internationalisation of SMEs (McClelland, 1961; Miller, 1983). Need for
97
Entrepreneurial
orientation
To continue reading
Request your trial