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Barriers to Export Performance in Developing Countries Small and Medium Enterprises – Study of the Nigerian Agro-Industry: Chapter 2- Literature Review
Added on -2019-09-20
This literature review discusses the diverse internationalization theories for SMEs and the benefits of internationalization. It also focuses on the Nigerian agro-industry and the barriers faced by SMEs when exporting their products beyond the domestic boundary. The role of governments and other institutions in supporting SME internationalization is also analyzed.
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Running Head: Literature ReviewBarriers to Export Performance in DevelopingCountries Small and Medium Enterprises –Study of the Nigerian Agro-Industry”:Chapter 2- Literature Review
1Literature ReviewTable of ContentsIntroduction:....................................................................................................................................2Literature Review:...........................................................................................................................3Theory of Internationalization for SMEs:....................................................................................3Benefits of Internationalization:..................................................................................................4Motive of SMEs to internationalize:............................................................................................5Background of Nigerian Agro-Industry:.....................................................................................6Barriers to internationalization of the agro-industry:..................................................................8Barriers on export performance of SMEs agro-business:............................................................9Role of government and other institutions in aiding SME internationalization:.......................10Conceptual framework:.............................................................................................................12Organization Readiness:............................................................................................................14Conclusion:....................................................................................................................................14References:....................................................................................................................................16
2Literature ReviewIntroduction: This literature review elucidates the diverse internationalization theories based on which the SMEs undertake to take their operations to an international level. There are several reasons due to which the modern SMEs look forward to spreading their businesses beyond the national boundaries such as for gaining global reputation, enhancing market share, growth, profitability and also for the purpose of ensuring sustainability in the long run [ CITATION STa15 \l 1033 ].It can be observed that with the advancement of the emerging nations owing to the enhanced influence of globalization, the role played by the SMEs in the economic development of the emerging nations is assuming increasing significance and this is one of the major motivations forthe SMEs to take their businesses to an international arena. The Nigerian agro-industry has the potential to enhance its current production capacity along with the opportunity to market the agricultural products to different countries which will ensure generation of significant revenues in billions per year for the country through the export of its agricultural products. However, thereare certain barriers that the SMEs have to face when they are planning to export their products beyond the domestic boundary [ CITATION Mik142 \l 1033 ]. These are the barriers to internationalization and exports that have been studied in this chapter. Furthermore, the role of the governments and other institutions of the emerging nations in supporting the internationalization of SMEs has also been analyzed in this chapter. Finally, the discussion of theconceptual framework of the study is put forward with the concept of organizational readiness that makes the SMEs, especially the ones operating in the agricultural sector to consider these barriers and implement appropriate strategies in overcoming them.
3Literature ReviewLiterature Review:Theory of Internationalization for SMEs: In the opinion of Anderson and Gatignon (1986), international expansion for a business organisation is important if it wants to achieve growth and profitability in the long run. An organisation of any size or scale must consider a suitable entry mode for entering into an international market. There are several factors that need to be considered by an organisation that wishes to enhance its business operations into other countries and as such a trade-off has to be made between the costs allocated for several resources and the need for control that is required tobe undertaken by the organisation that wishes to achieve an international expansion. There can be several modes of international market entry depending on the type of the business, nature of its products and services and the environment of the business. Some of the most common modes of international market entry undertaken by organisations consist of licensing, joint venture, wholly-owned subsidiary, contractual joint venture, franchising, etc. [ CITATION Eri86 \l 1033 ].According to the observations of Wright, Westhead and Ucbasaran (2007), the SMEs face several challenges in expanding their business operations at an international level, such as the lack of adequate funds and other resources, along with absence of adequate technological and technical know-how that might facilitate the internationalisation process. The International New Venture (INV) theory considers international entrepreneurship for the SMEs that is guided by several factors like the timing of the process of internationalisation, the entry mode for internationalization, effects of the factors related to the national environment, availability of various external resources that leverage the motive of internationalization, etc. Therefore, the International New Venture (INV) strategy can be considered as one of the most widely
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