Impact of Institutional Environment on Export Performance

The assignment discusses the importance of small and medium-sized enterprises (SMEs) in the context of export undertakings, focusing on the role they play in economic development, particularly in developing nations like Nigeria. The study highlights the significant barriers that SMEs face when it comes to internationalization, including lack of resources, know-how, and experience, which hinders their ability to effectively implement different types of strategies for internationalization exercises, such as exporting. In order to overcome these challenges, governments need to create tax incentives and provide licenses that are friendly to SMEs, making the framework less demanding for export-oriented SMEs.

FEEDBACKS ON CHAPTER 2 – LITERATURE REVIEW.
1. Give a few points on “Benefits of Internationalization”.
2. Include the use of journals on SMES internationalization in this research chapter of the
literature review.
3. Include “Organization Readiness” as a heading explaining it in a short paragraph just
before the “Conclusion”.
4. Include details of institutional perspective/environmental export support policies and
what governments do to aid SMEs internationalization.
5. Don’t focus on Nigeria alone, but also give similar examples of other emerging
economies.
6. Give this chapter an appropriate structure with proper headings and sub-headings
where necessary.
NOTE!!!
Highlight all areas corrected in line with the feedback in yellow for easier
identification of corrected areas.

STRATEGIES FOR SMALL AND MEDIUM ENTERPRISE INTERNATIONALIZATION AND BARRIERS
OF INTERNATIONALIZATION AND EXPORT PERFORMANCE OF LOCAL AGRICULTURAL
BUSINESSES IN NIGERIA.
Chapter 2. Literature Review.
Introduction to The Nigerian Agribusiness industry.
Nigeria has the biggest economy in Africa where agriculture remains the largest sector of its
Nigerian economy and employs two-thirds of the total labor force, the production hurdles have
significantly stifled the performance of the sector. Over the past 20 years, value-added per
capita in agriculture has risen by less than 1% per cent annually.
It has subsistence farming segment which has not stayed aware of quick populace
development. It is found from the history that Nigeria is well in agribusiness management. It is
one of the countries which are engaged in the activity of agribusiness. Responding to the needs
of the hour it becomes prime importance for the Nigerian Small and medium agribusiness
enterprises to go internationalization. It is often found that while planning to internationalize,
the process may involve a lot of challenges and barriers. But Nigerian small and medium scale
agricultural based enterprises should respond to the challenges in an effective manner and
some of these barriers can be identified below

Barriers of SMEs Internationalization.
Some example of SMEs barriers are- financial barriers, managerial barriers, industry and firm
specify barriers and so on. The financial barriers thus have been checked as particularly
significant for the SME where there are the novel products as well as technologies (Cheong,
Song, & Hu, 2016). In this respect, from some past research, it has been found that it holds for
the organization as it relies heavily on in case of advanced knowledge as per the instance from
the research institutes or for the universities. The researchers Kotabe & Murray (2018), in his
research conclusion and findings highlighted that it is very important to remove the barriers for
internationalization in an effective manner. It is because removing the barriers by implementing
the strategies as those are needed of the hour to make the small and medium agriculture
enterprise effective and healthy (Kotabe & Murray, 2018).
It is the Intellectual Property Right (IPRs) which is more significant at this respect. So this area is
found to exist as the considerable body for review. These SMEs needs to check the form of IPR
in practice in situations where they employ innovation. Those firms are found significantly in
that respect. So SMEs is needed to check that it is not affected by the financial constraints
(Meyer & Peng, 2016). Those firms which are found to engage in both the case of innovation as
well as internationalization is found as the innovation activities which are hampered by the
financial issues.
Nigerian SMEs have thought of new ways or better methodologies for preparing for
internationalization with the objective that they are appealing to the worldwide market. It
takes an ambitious concentrated firm in Nigeria to present a huge amount of money for

conveying without considering the high risk portrayed in going abroad and internationalizing.
Most SMEs will go to the level of getting loans from the banks, using their homes as assurance
security without considering the last result of losing their homes with the true objective of
developing international markets (Brea Solís, Casadesus Masanell, & Grifell Tatjé, 2015).‐ ‐ ‐
Ambitious centered SMEs in Nigeria can progress along these lines be recognized as firms with a
capacity to proactively look for business establishment that is innovative paying little attention
to the risks included. For a firm to have the ability execute its plans to go into foreign markets,
the firm needs to have the ability and capacity to internationalize, such as a strong financial
base and business research knowledge on the market they intend breaking into. It is basic for
SMEs looking to internationalize to consider its strengths and weaknesses in accordance with
the aims of establishing its business internationally putting into consideration the objectives of
the business and the changes or level of uncertainty that may arise and alter the business focus.
It has been perceived by (Hermannsdottir et. al. 2007) that resourceful performance can be
critical in achieving firm execution in a foreign market if the internal and external parts are put
in place or considered and put in place.
On the other hand, the significance of the entrepreneurial management is found to survive as
well as operate within the firms which are recognized within the entrepreneurship writing. It is
the best way to provide the Entrepreneurial orientation is called the capacity for participating
the innovative processes for attempting the degree for risky ventures as well as taking part with
the proactive developments. It has been characterized that some Nigerian SMEs are found to
think about the new items as well as administrations for the better approaches of bundling the
items where the goal as they are found to appeal the global purchasers (Meyer & Peng, 2016).

According to (Goldman, 2018) Nigerian agribusiness organization is facing a financial problem
which is a potential hindrance or blockage in taking decision for going international operation.
In his research study, thus the author (Goldman, 2018) has mentioned that the Nigerian
agribusiness organization needs to strengthen its financial condition in order to effectively go
for international operation effectively and efficiently. In the research conclusion, the author
mentioned that Nigerian small and medium agro-based organization are lacking innovative
tools and equipment which is preventing them from operating at an international scale. As
already mentioned, the main reason for this is the lack of financial planning (Goldman, S. 2018).
Hence, it can be argued that Nigerian small and medium agri based organization must need to
have proper financial planning in a way to avail the opportunity to operate at an international
level.
Nigeria SMEs are for the most part governed and administered through internal management,
government and medium scale agro-based undertakings having some ability in the making of
mass things consumed in homes and ventures and for passage progressions, especially in
genuine cash yields and natural item age and taking care of. Nigeria is one of the primary
countries in the age of cultivating things. For instance, natural items, cassava, yam, cowpea and
cocoa and what's more regular items, verdant and root vegetables, grain vegetables and animal
things, of which the mass is from the SMEs. These environmental friendly things are
exceedingly fleeting and records of postharvest setbacks of this thing are high with Nigeria
having up to half it has been represented that Nigerian cultivation perseveres through disasters
as much as half for vegetables, 30% for roots and tubers, and 20% for grains (FMARD, 2001).

This example is counterproductive and does not bolster agro-based money related
improvement in a significantly destitute agrarian economy.
………………………………
Knowledge barriers
Other than the financial issues Nigeria has faced the problem in the field of knowledge barrier.
There are four sources which represent this export barrier as it affects the activities which
include the internal resource constraints, exogenous variables, export knowledge along with
the procedural barriers. These export knowledge barriers thus refer to the lack in the case of
information as it is related with the export activity. As per the pioneering work, it is needed to
assert that there is the lack of knowledge within the foreign markets which constitute the
barrier as it will increase the commitment for international activity among the company (Genus,
Rigakis, & Dickson, 2003). It is also found that there are many things which are identified as the
knowledge barriers, like the lack of the awareness for the export assistance, the lack of
awareness of the benefits for the export markets (such as higher sales, profits and channel
expansion etc), the lack of the knowledge for the best potential markets and the lack of the
qualified staff which has the overall knowledge as they want to enter the export market.
Resource Barriers
There are several studies which have been identified through the internal resources as per the
impediment as it limits the ability for the firms to export. The following factors which are being

highlighted with the internal resource barriers and there are the lacks of financial resources as
it is necessary for the fund's requirement as they are initiating the operation of the finance
export. As per Genus, Rigakis & Dickson (2003), in the case of Nigeria, the additional barrier
that is needed to identify as the internal constraints which hamper the export activity. It is
needed to utilize the honouring letters for crediting which has been found due to the lack of
personnel in order to devote the time for the export activities (Genus, Rigakis, & Dickson,
2003). Moreover, there is the firm which requires that the number for the external support
resources like the banks is willing to support the firms in case of international activities or the
local trading firms as it enables to indirect the export operations for manufacture.
Procedure Barriers
It is needed to identify the limit of export activities as per the factors which are pertaining to
the procedural barriers. As per Elkington (2018), the SME’s of Nigeria are found to be interested
in case of exporting their faces with the number for the procedural barriers. Those procedural
barriers are found to relate with the activity itself as it ahs the origins for the firms within the
domestic market for the foreign markets (Elkington, 2018). As per Baumgartner & Rauter
(2017), procedural barriers at the reference of Nigeria it is subdivided within two types, one is
controllable and that can be easily resolved and another is not controllable which requires the
case-by-case decisions as it is independent for the routine as it is found to acquire through the
experience, like the non-tariff barriers. It is based on the relevant export that the literature
indicates among the procedural barriers which include the following issues, such as, red tape
and the documentation. This red tape or the bureaucracy can be identified as the obstacle for
exporting, importing tariffs like there is another factor which is identified for stumbling the

block of exporters. There are the non-tariff barriers like the establishment of the various quality
control as well as the safety standards where it is occasionally involve the requirement for
adapting the products as per the needs of various foreign markets transportation (Baumgartner
& Rauter, 2017). There are also some distribution difficulties for the foreign markets as well as
the domestic markets as it is found to limit the ability for the exporters. There is the difficulty
for finding the trustworthy if distributor for Nigeria.
Exogenous Barriers
It is finally identified that as per exogenous barriers which are needed to obtain the uncertainty
of the international markets. It is largely due to the activities for the other players within the
market and mainly it is due to the activities for the other players within the market, like the
competitors, supply and demand as well as the foreign governments. It means there are
variable transcend which controls the exporting company. There are the factors, like the
powerful competition as it can be faced the foreign markets which have been cited at this
context. There is the political instability for the foreign markets as well as the risk of losing the
money (Fransen, Verlegh, Kirmani, & Smit, 2015). There is the study which is highlighted by the
dynamic nature for the barriers for exporting. So it has been identified consistently that the
variations within the barrier as it perceptions by the export stage within Nigeria.
Need for internationalization
According to the viewpoint of (Peng, M. W. 2017), as there are a lot of barriers in Nigerian small
and medium scale agribusiness enterprises, it has been planning for internationalization. The
researcher has mentioned some of the barriers like financial barriers, human resource barriers,

and specification of the firm as well as industry (Peng, M. W. 2017). It is evident that if the
country is already rich in agriculture production then Nigerian enterprises will face intense
competition from those SMEs and hence it will become one of the barriers to making entry. In a
country like USA and Canada If Nigerian small and medium agri based enterprises want to make
an entry as FDI then they have to face a problem related to the availability of the cheap human
resource. It is because in the United States of America and in Canada the cost of labor is more
as compared to Nigeria, and other developing countries and nationalities (Ali, 2018). But if
talking about technological advancement and modernization, United States of America, Canada
and France are vibrant markets with tougher competitions. It would be difficult for the Nigerian
small and medium scale agri based enterprises to take a final decision regarding the entry into
United States, Canada and so on. Hence, it can be said that the decision regarding the
internationalization can be taken according to the demanding situation of the particular
enterprises. If the enterprise is enough strong and has sufficient financial resources then it may
plan to go international operation at large (Baumgartner & Rauter, 2017). Whereas if the
enterprise lack the proper financial resources and capabilities then it needs to drop the plan to
make the entry into a developed nation. In this case, it may take the decision to enter into
China, India as in this country it may get access to cheap labor and resources. Which will give
strategic as well as competitive advantages to the particular small and medium scale agri based
enterprises?
For Example if Nigerian small and medium agricultural enterprises want to enter into the USA
as the part of internationalizing their business and setting up operations in that foreign market,
then they need to first look into the matter of availability of labor as in the USA they will not get

cheap labor, but at the same time, the USA will help them with advanced technology and
equipment's. So here firm need to analyze the costs and benefits than taking the final decision
of making entry into the USA market at large.
According to the viewpoint (Ibrahim 2017) Nigerian small and medium scale agribusiness
enterprises may use the location advantage theory while planning to go international. It is
because it will help them in analyzing the strategic as well as a competitive advantage in an
effective manner (Ibrahim et al., 2017). The research conclusion of the researcher highlights
that Location advantage theory helps the organization is going to international operation
successfully.
Additionally, as per the Okpara and Pamela (2012), it has been demonstrated that In case of
SME, there is the contribution in enormously in order to create the employment along with the
family incomes within Nigeria (Walsh & Dodds, 2017). It has been further found that for the
contribution of SME there is 20 to 45 per cent of the full-time business. Moreover, there is 30 to
50 per cent for the rural household earnings (Brea Solís, Casadesus Masanell, & Grifell Tatjé,‐ ‐ ‐
2015). In some cases, the performance for SME will be low as per the expectation and that
would produce the sound in case of improving the bigger economy. In South Africa, SMEs are
found within 80 percentages as per the formal business along with the 95 per cent for the
overall business division. There is 46 per cent for financial activities with 84 per cent of private
labour (Chan & Huff, 2014).
Conceptual framework

The conceptual framework has been set up with the specific components as they impact in case
of Nigerian agricultural SMEs for the export performance. Therefore, there is the conceptual
framework hypothesizes that there is the commitment for the institutional components in
order to have the impact over the entrepreneurial orientation along with the global system
capacities for Nigerian Agricultural SMEs as per the export performance (Dell'Era, Landoni, &
Verganti, 2015). There are the internal resources for the business for having the impact in case
of Nigerian agricultural SMEs performance which is the most respected entrepreneurial
orientation for the firm as it is needed to intellectualize for the innovation, reactiveness along
with the risk-taking activities for the company. Therefore, the institutional environment
components would find as the influence for the impact in order to EO for the export
performance. Thereby, it is the conceptual framework which provides the general structure in
case if investigational analysis along with it shows that there are the diagrammatical estimation
connections which are needed to induce for the study question (Elkington, 2018). Therefore,
the hypotheses are found to produce for each kind of research question. There are the
hypotheses which as it can be produced for many kinds of research questions. It is the study
research model which is needed to assess in which way the variables will be accompanying in
order to determine the agricultural sector for the performance of SME’s (Whyte & Lohmann,
2015).
There may be the internal resources for the SMEs and it is the EO of the organization. Those
resources are as risk-taking, innovative along with proactive.
On the other hand, there are some Institutional environmental factors which are related to the
government, legal along with wider factors (Fransen, Verlegh, Kirmani, & Smit, 2015).

As per the prevailing theory, there is the variable which is found to be probable for affecting the
export performance as it is measured.
There are three other types of research questions which are needed to ask within the model. So
the framework that is identified the effect for the institutional environment factors, like the
government policies with the impact for the EO as per the agricultural SME with the export
performance (Genus, Rigakis, & Dickson, 2003). In that case, the framework development is
found to be imperative as it will be ascertained along with describing the main factors which
will influence the variable for dependent and that suggests that there is the development in
case of the policy system as it will address the causes (McAdam, Bititci, & Galbraith, 2017).
Therefore, the firm resources like EO which is emphatically or the contrarily impact with the
performance of the company. It is further observed that there is the emerging economy like
Nigeria, institutional environmental variables which will influence for the impact for the
entrepreneurial orientation for the agricultural SMEs (Goldman, 2018). It is the entrepreneurial
orientation in case of SME where the capacity for the institutional environmental elements
which is needed to be relative with the significant enough as there is the impact on the export
performance (Green, 2016).
In case of the export undertakings for the firms which is considerable measurement as it will
focus in respect to the movements with the substantial multinational companies and it is
needed to assist for building up the knowledge for internationalization for small business.
Further, there is a lot of analysis which inspects the elements for the export performance as it
has been contemplated with the entrepreneurial orientation along with the institutional

environment as per the government policy (Kotabe & Murray, 2018). This study thus explores
that there is the institutional environment component which influences the effect for the
orientation in an entrepreneur. Thereby the conceptual frameworks are drawn in figure 1 and 2
as follows:
Figure 1: Conceptual Framework for Institutional Environment in respect to the
internationalization
Source: (McAdam, Bititci, & Galbraith, 2017)

Figure 2: Conceptual Framework of barriers in SME
Source (Elkington, 2018)
ORGANISATION READYNESS.
Conclusion
There is no doubt that SME is assumes or plays a vital role in cases of the economic
development and the developing nations. However, the barriers that is associated with
internationalization of SMEs is regularly inhibited with the lack of resources, their know-how as
well as the experience which will effectively take the interest for different types strategies for
internationalization exercises which includes exporting. Therefore, in the case of SME, it is the
developing nations and there is a high export orientation and it is ready to improve. It is further
overtaking the contenders along with it will make the same for the figured export risks in an
effective way in order to have beneficial customers for the global markets. There is the low EO.

Further, the SMEs are found to build up the hierarchical capacities along with the global
experience for well-doing a thing in case of export the activities as regardless of difficulties
which may take in compel for endeavors within the local market condition. Other than any
doubt, it is needed to go up against the difficulties along with outperforming then for the
development as well as flourishment. So, within Nigeria, it is the SME export which is being
worked in the export markets. For this reason, the governments create the tax incentives
measurement as well as it will take the license which provides the permit that will be more
SME’s friendly. It is allowed the frameworks for making it less demanding for the export of SME.
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