Strategies, Barriers and Export Performance of Nigerian SMEs

This report examines internationalization strategies for Small and Medium Enterprises (SMEs), specifically focusing on local agricultural businesses in Nigeria. The research investigates the benefits of internationalization, such as increased customer base and profitability, while also addressing the challenges SMEs face, including lack of resources and innovative ideas. A survey of professionals in the agricultural sector reveals that knowledge gaps, financial constraints, and technological limitations are key barriers to internationalization. The study emphasizes the importance of e-commerce and market research for successful entry into international markets. The report provides an overview of the Nigerian agribusiness industry, explores the concept of internationalization and its benefits for SMEs, reviews existing literature on barriers to internationalization, and presents a conceptual framework. The research methodology includes a qualitative approach, utilizing a descriptive design and an inductive research approach. The data was collected through surveys, and the analysis provides insights into the strategies and challenges for Nigerian SMEs aiming to expand internationally. The report concludes with recommendations for SMEs to overcome barriers and improve their export performance.

Running Head: Internationalization
STRATEGIES FOR SMALL AND MEDIUM ENTERPRISE
INTERNATIONALIZATION AND BARRIERS OF
INTERNATIONALIZATION AND EXPORT PERFORMANCE OF
LOCAL AGRICULTURAL BUSINESSES IN NIGERIA
Name:
Year:

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Abstract
Internationalization is an effective strategy that enables the small and medium enterprises (SMEs) across
the world. Entering the international market enables the SMEs to tap the larger customer base and
increase the profitability. However, for operating in the international market successfully, the businesses
need to have innovative strategies and advanced infrastructure. The SMEs often lack adequate
resources and innovative ideas and so, these organizations fail to operate in the international market
successfully. The agricultural SMEs in Nigeria face intense competition in the domestic market. So, the
organizations are focusing on entering the international market. In the current research, survey is
conducted among the professionals who are involved to the agricultural businesses. The findings of
survey, after thematic analysis of the responses, indicate that the lack of knowledge, financial resources,
innovative ideas and advanced technology are the key barriers to internationalization. Operating in the
international market would be easier if the businesses invest in e-commerce technology and market
research.
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Acknowledgement
I would like to express my special thanks of gratitude to my teacher who gave me the golden
opportunity to do this wonderful project on the topic, STRATEGIES FOR SMALL AND MEDIUM
ENTERPRISE INTERNATIONALIZATION AND BARRIERS OF INTERNATIONALIZATION AND EXPORT
PERFORMANCE OF LOCAL AGRICULTURAL BUSINESSES IN NIGERIA, which also helped me in doing a lot
of Research and I came to know about so many new things I am really thankful.
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Contents
Abstract.......................................................................................................................................................2
Acknowledgement.......................................................................................................................................3
Chapter 1: Introduction...............................................................................................................................6
1. Introduction.........................................................................................................................................6
1.1 Aim and Objectives of the Research..................................................................................................7
1.2 Research Question.............................................................................................................................8
1.3 Outline of the Research.....................................................................................................................9
1.4 Literature Review.............................................................................................................................10
1.5 Methodology...................................................................................................................................11
1.7 Barriers of Internationalization and Export Performance of Local Agricultural Businesses in Nigeria
...............................................................................................................................................................12
1.8 Conclusion.......................................................................................................................................13
Chapter 2: Literature Review.....................................................................................................................14
2.1 Introduction to The Nigerian Agribusiness industry........................................................................14
2.2 Internationalization and its benefits in SMEs...................................................................................15
2.3 Barriers of SMEs Internationalization..............................................................................................15
2.4 Need for internationalization..........................................................................................................21
2.5 Conceptual framework....................................................................................................................23
2.6 Organization Readiness...................................................................................................................27
2.7 Conclusion.......................................................................................................................................28
Chapter 3: Research Methodology............................................................................................................29
3.1 Introduction.....................................................................................................................................29
3.2 Research Objectives.........................................................................................................................30
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3.3 Research Question...........................................................................................................................31
3.4 Research Method............................................................................................................................31
3.5 Research Design...............................................................................................................................32
3.6 Research Approach..........................................................................................................................33
3.7 Research Philosophy........................................................................................................................34
3.8 Sampling Technique.........................................................................................................................36
3.9 Data Collection Technique...............................................................................................................37
3.10 Data Evaluation Technique............................................................................................................38
3.11 Ethical Consideration.....................................................................................................................39
3.12 Validity and reliability....................................................................................................................39
3.13 Limitation of study.........................................................................................................................40
CHAPTER 4: DATA ANALYSIS......................................................................................................................42
4.1 Introduction.....................................................................................................................................42
4.2 Presentation of Data........................................................................................................................42
4.3 Analysis............................................................................................................................................50
4.4 Conclusion.......................................................................................................................................52
Chapter 5: Conclusion...............................................................................................................................53
5.1 Introduction.....................................................................................................................................53
5.2 Linking to Objectives........................................................................................................................53
5.3 Recommendations...........................................................................................................................57
5.4 Chapter Summary............................................................................................................................58
Appendix 1: Survey Questionnaire and Responses....................................................................................69
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Chapter 1: Introduction
1. Introduction
Small and medium-sized enterprises are some of the most effective sources of growth for
advanced industrialized countries and for emerging countries alike. The underlying growth
prospects in such kinds of enterprises are huge compared to large organization. SMEs have
gained recognition over time with their own characteristics (Dimitratos et al., 2016). The
agencies are considered as one of the large parts of the private sector of the developed and
developing countries. However, it was seen that SMEs have a causal link with economic
development as there is evidence that show that small firms usually faces larger growth
constraints than the big firms due to less access to external finance (Eniola&Ektebang, 2014).
Internationalization is usually denoted by big business, however, it is slowly being carried out by
the small business as well with their limited resources (Dimitratos et al., 2016). The reason
behind internationalization is to increase sales, diversify associated risks and operation, getting
better clients, reduce costs and other benefits for business. The agricultural sector of Nigeria
has always faced with issues such as the lack of development, marketing problems, unstable
prices and others (Eriksson et al., 2015). Internationalization will help them to improve on these
potential barriers so that they can experience continuous growth. The agricultural sector of
Nigeria is experiencing a lower development and growth rate over decades with an average
growth rate standing at 6 to 8 percent per year. Thus, it became necessary to research the
strategies that small and medium-size enterprise like the agricultural production of Nigeria can
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use to promote their internationalization process and solve the issues they are facing such as
growth sales and profitability.
1.1 Aim and Objectives of the Research
The aim and objectives of the dissertation will help in offering a clear view to the research on
strategies for small and medium enterprises internationalization and barriers of
internationalization with reference to export performance of local agricultural businesses in a
developing country like Nigeria and areas that need to be achieved through thorough research
and analysis.
AIM: The research aims at examining the strategies that SMEs can use to internationalize the
local agricultural production in Nigeria. It establishes an inclination to know the ways in which
the small and medium sector enterprise can grow internationally and have a global presence
even after facing various constraints such as financial earnings or financial help from external
sources. The major goal of the study will be to understand industrialization and the strategies
other small sector firms have adopted worldwide to get an international presence. This study
will explore whether similar strategies can be implemented in the SMEs of Nigeria.
OBJECTIVES: The objectives of the research is as follows:
• To study the meaning of internationalization: Industrialization has various meanings as it is
understood by different people on a different sphere. Understanding internationalization will
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be the first and the foremost aim of the paper as without understanding this term it will be
difficult to set the strategies that can help attain the industrialization.
• To examine the internationalization of SMEs: Industrialization of the SMEs will help in offering
a close link between these two terms as industrialization is mostly considered to be adopted by
large firms. Thus, getting it clear that industrialization can also be used by SMEs to attain
growth is also beneficial and possible in today’s world. Thus, this objective aims at explaining
the ways in which internationalization is also attached with SMEs.
• To examine the strategies for SME internationalization: The objective stands out as the major
portion of the objective that will help in examining the comparative strategies that have been
taken by SMEs for attaining industrialization. It is a crucial part of the paper as attaining this
objective will help in stating the ways SMEs in Nigeria can also get globalized.
• To investigate the barriers and challenges that SME local agricultural production in Nigeria can
use to internationalize: The objective that will accomplished through primary research and also
help in suggesting the strategies for SMEs in Nigeria. The objective will allow coming with the
complete outcome of the paper as it will help in knowing the strategies that are already used by
some of the SMEs in Nigeria.
1.2 Research Question
The research question for this research will be centered on; what are the barriers and possible
strategies that SME of local agricultural production in Nigeria can use to internationalize?
The rational for the Study.
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The paper aims at explaining industrialization and the strategies that can be used by the SMEs
in attaining the industrialization over time. The study focuses majorly to the SMEs of Nigeria
and the strategies that are beneficial for them. The paper is beneficial in many ways as
internationalization and globalization are one of the major motives of every company as it
improves competition and helps in surviving in the competitive world. Further, the strategies
that will be found in the outcome of the research will not only help the small firms of Nigeria,
but it can also effectively be used by any other SMEs operating worldwide, thus, and the
rationale of the study is that it offers worldwide benefit. Moreover, Nigerian firms will be able
to benefit from the research outcome as many of them still thinks that it is difficult for the SMEs
to expand their market.
1.3 Outline of the Research
The underlying sector offers a structural view of the paper in which the entire research will be
conducted along with the methodology used. The paper will be divided into different chapters
with each chapter having their own roles and objectives. Chapter one is the introduction part
that offers a description and purpose of the research is has been conducted. Chapter two is a
literature review that is formed after analyzing and studying past and current literature on the
topic. Chapter three is a key stage of the research that states the methodology that the
researcher used to collect the data for the study and the ways it used to analyze the data for
the final result. This chapter is followed by chapter four which presents the results and finally,
the discussion chapter showing all the possible outcome of the primary research conducted.
The last chapter is the conclusion and recommendations chapter, which finalizes the range of
outcome of the research based on the stated objectives.
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1.4 Literature Review
Internationalization is the process of planning and modifying the products in a way that can be
adapted by local languages and cultures of other areas. Internationalization is always confused
or compared with globalization in which the expansion of products to internationalize the
market is involved (Eriksson et al., 2015). Knight (2015) has further described
internationalization as an increasing importance of international trade, international relations,
treaties and other alliances with the global market. Internationalization has various benefits for
the SMEs that can help them grow in a better way. Dimitratos et al., (2016) has explained that
SMEs are able to dispense business risk across the markets they enter. It also helps in
generating increased sales and revenues that can be invested in the technologies and new
production processes. These are the key elements that are required in the growth process. It is
further stated the internationalization allows the enterprise to cooperate with the foreign
companies and get access to better technologies and ability to add innovation in the business.
Lastly, it helps in better efficiency and operational benefits for improving production potential.
Musteen, Datta& Butts (2014) has mentioned that the SMEs try to respond to the cross-border
marketing opportunities offered by the overseas opportunity that is given by their relational
contacts. Thus, business, as well as social networks, are found to be the most important factor
in the internationalization stage of such SMEs (Sui & Baum, 2014). Further, there should be
other elements as well such as business networks, knowledge of the market and others.
Dimitratos et al., (2016) has pointed out that the internationalization of the agricultural sector
has been the major factor in the contribution of the economic health of the industry.
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1.5 Methodology
The methodology helps in the research process that can be adapted to collect resources that
can help in investigating the strategies that can be used by the SMEs to adopt
internationalization. The researcher will use a qualitative research design to move forward with
the research. Further, a descriptive design in which a survey process will be used by the
researcher to collect the information on the topic. An inductive research approach will be
followed as the researcher will induce the data directly from the source. The data collection
method used by the research will be the primary method in which a survey will be conducted
through a questionnaire (Lewis, 2015). The participants of the survey will the agricultural
production companies that have already internationalized over the years to know the strategies
they have used. 10 agricultural production companies will be surveyed that has taken
internationalization and has been successful (Happo et al., 2017). The survey will be done in an
ethical manner with required confidentiality and bias-free responses.
1.6 Essential Strategies for Small and Medium Enterprise Internationalization
Internationalization, as a process of enhancing the utility of a commodity to meet international
standards, ensures that SMEs remain committed to offering the highest levels of quality. The
inclination to extend services to multiple countries cannot be ignored on multiple grounds
(Eniola&Ektebang, 2014). Most profoundly, it is necessary to adopt a continuous and
permanent strategy for increasing the client. The local customers will often not be enough,
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