Literature Review: SME Internationalization in Nigerian Agribusiness

This report presents a literature review focused on the internationalization strategies for Small and Medium Enterprises (SMEs) within the Nigerian agribusiness sector. The review analyzes secondary sources, including research papers and reports, to explore the challenges, barriers, and opportunities associated with SMEs going international. It examines various internationalization theories, such as the Uppsala, location advantage, and comparative advantage theories, to identify effective strategies for Nigerian agricultural businesses. The report highlights the importance of adapting strategies based on the size and structure of the enterprises, considering factors like market conditions, technological advancements, and the need for global presence. It also discusses the relevance of strategies like multidomestic and transnational approaches, emphasizing the importance of addressing financial, managerial, and industry-specific barriers to achieve successful internationalization. The report concludes by underscoring the potential for Nigerian agribusinesses to expand globally and compete effectively in the international market.

Table of Contents
Introduction...............................................................................................................................................1
Literature Review......................................................................................................................................1
Conclusion................................................................................................................................................11
References................................................................................................................................................13

1
Introduction
In this paper literature review has been written. The literature review is on the strategies for the
Small and Medium Enterprise's internationalization of the local agricultural business in Nigeria.
In a way to complete this literature review, the resources which have been analyzed and referred
are all secondary in nature. Various previous research paper and report has been reviewed and
analyzed mainly to complete this literature review in an effective manner. AT the end of this
entire literature review the proper list of references has also been provided in APA style.
Nigerian Agribusiness industry
Nigeria has the biggest economy in Africa yet is a centre salary, blended economy and
developing business sector with growing money related administrations in the interchanges,
innovation and diversion segments. 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 go internationalization the process may involve a lot of challenges, barriers, and
opportunity. But Nigerian small and medium scale agri based enterprises should respond to the
challenges in an effective manner.
Literature Review
SME internationalization is creating at an aggravating pace, showing the overall significance of
SMEs to both neighbourhood and overall markets. Starting late, convey has transformed into a
key kind of SME internationalization. The cultivating portion has wound up being fundamental

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to the improvement of the Nigerian economy; to the extent innovative outcomes and occupation
creation, a considerable amount of these is a sound delegate for SMEs ability to convey their
things.
Due to the increase in competition as well as modernization of the technology, it becomes prime
importance for the small and medium enterprise to have internationalization. It is because it will
lead them to perform effectively as well as efficiently in the stiff competitive market scenario.
Internationalization will enable the small and medium enterprise to develop a global presence
and to have and earn handsome profit. It is fact that more than 69 per cent of the population in
Nigeria is engaged in agriculture business and production (Peng, M. W. 2016). It is providing
near about 35 per cent employment as per the 2010 statistics. Hence, it can be said that going
internalization for the Nigerian agriculture business unit’s especially small and medium
enterprise is of prime importance. But at the same time selecting the best strategies and method
to adopt while going internationalization should also be considered and focused at large. It is
because applying and adopting proper and internationalization process and strategies play a vital
role in making the small and medium enterprise attain success and objectives in an effective
manner. There are various strategies and method of going internationalization which a small and
medium enterprise can adopt and follow in internalization process.
Nigerian SMEs have thought of new things and organizations, or better methodologies for
packaging the things with the objective that they are speaking to worldwide buyers. It takes an
ambitious concentrated firm in Nigeria to present a huge amount of money for conveying
without considering the high peril drew in with offering abroad. Many exchanging SMEs will go
to the level of getting from the banks, using their homes as assurance security without
considering the last result of losing their homes with the true objective to convey into an outside

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country. Ambitious centred SMEs in Nigeria can along these lines be recognized as firms with a
capacity to proactively look for after overall business openings with things that are innovative
paying little personality to the threats included. For a firm to have the ability to make an
elucidation of benefits into purposes of intrigue and execution, the firm needs obvious capacities.
It is basic to reliably make, join, and reconfigure firms' aptitudes and limits with the true
objective to adjust to change in the business focus. It has been perceived by (Hermannsdottir et.
al. 2007) that inventive presentation can be critical in achieving firm execution in an outside
market if the internal and external parts are all around balanced.
According to the (Adewumi, B. A. 2008a), there are many strategies for the internationalization
process which help the small and medium agricultural enterprises in Nigeria. The researcher
highlighted that there are many reasons which pushed small and medium agricultural enterprises
to go internationalization such as capturing the maximum number of the potential customer, to
enhance the global presence, and to effectively utilize the resources. The best strategies are based
on the structure and size of the enterprises. There are no one way best strategies for
internationalization (Adewumi, B. A. 2008a).
Nigeria SMEs are for the most part governed by close to nothing 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 green
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

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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.
Uppsala Theory of Internationalization- Internationalization viewpoint has been inspired by the
Scandinavian. The main highlight of this theory is that there are many reason which make the
small and medium enterprise to go internalization such as if an enterprises want to increase sales
and export and import, needs to establish sound relationship with the foreign countries, need to
build global presence, want to exploit the available resources in an effective manner (Meyer, K.,
and Peng, M. W. 2016).
Location advantage theory- According to this theory small and medium enterprises try to access
the advantage of the location. It is that if an enterprise observes that particular location is very
much feasible for its growth as there is ample cheap and skilled labour are available then surely
small and medium enterprises try to go internationalization. In order to gain the competitive, as
well as a strategic advantage, the small and medium agriculture enterprises, enter to foreign
market through internalization.
Comparative Advantage Theory- David Ricardo propounded this theory. The theory
acknowledged the nearness of two countries, two things and one component of creation. In his
theory, a country conveys the thing that has brought down close favoured angle and import thing
whose relative cost is higher. The theory moreover acknowledged that the component of
advancement is agreed to the two nations and that trade is balanced and uncovers the surge of
money between nations. In any case, the speculation relies upon the work speculation of
characteristics, which communicates that the expense of the estimations of an item is comparable

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to the work time going into the creation strategy. Work is used in a settled degree in the creation
of everything being equivalent (Usman, 2011).
According to the (Ajayi, B. 2016) theory of Proprietorship advantage alludes the small and
medium agriculture enterprises to acquire particular resources, e.g., items, innovations or HR;
and impalpable, e.g., licenses or brands. These resources give favourable position to the
contributing firm by either bringing down the expenses or creating higher income that can
balance the exchange costs engaged with abroad tasks (Ajayi, B. 2016).
(Bijaoui, I. 2016) mentioned in his research report that Nigerian agricultural enterprise can
effectively go internationalization considering the location advantage theory. It is because
according to the location advantage theory firm can enter into foreign market mainly to achieve
the opportunity related to the location and availability of the resources in an effective manner
(Bijaoui, I. 2016). The researcher also mentioned that there are numerous barriers which
Nigerian Small and medium agriculture are facing while going internationalization. Such as
financial barriers, managerial barriers, industry and firm specify barriers and so on. The
researcher 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 strategies is the need of the hour to make the small and medium agriculture
enterprise effective and healthy.
According to the viewpoint of (Ibrahim 2017) developing the effective and sound strategies for
internationalization process is of prime need. It is because effective strategies will enable the
agricultural business and enterprise to go enter into the foreign market ineffective and successful
manner. Multidomestic international strategy, as it will help the enterprise to emphasize

6
responsiveness of the local requirements where the entry is to be made. Beside this global
strategy of internationalization help the small and medium agriculture enterprise to provide the
product and services according to the needs and demand of the global customer (Ibrahim et al.,
2017). This strategy particularly helps in building the global presences as well as enhancing the
customer base at large.
In case if Nigerian small and medium agricultural enterprises want to enter into USA market
then they need to first look into the matter of availability of labour as in the USA they will not
get cheap labour, but at the same time, the USA will help them with advanced technology and
equipment's. So here firm need to analyze the costa and benefits than taking the final decision of
making entry into the USA market at large.
(Bijaoui, I. 2016) mentioned that Nigerian small and medium agriculture enterprises can follow
transitional strategy. It is because transnational international strategy will help the agriculture
enterprises in maintaining the balance between local as well as global needs and demands in an
effective and efficient manner. The researcher highlighted in his research study that transnational
strategy of internationalization is the best internationalization strategy but firm needs to be
enough sound in regards to financing. It is found that agri product is the central elements of diets
all over the world. So it will be beneficial for the small and medium agribusiness enterprises to
go internationalization through following the transnational strategy (Bijaoui, I. 2016).
The market of Nigeria in regards to the agribusiness is found very effective and efficient. It is
growing day by day which highlights that the Nigerian Agri business enterprises are performing
well in its territory. The local agribusiness enterprises in Nigeria are almost small and medium in
their size. But the overall performance of these local small and medium agribusiness enterprises

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is sound. The growth index depicts future success and development prospectus of the
agribusiness. Hence, it can be concluded that Nigerian agribusiness enterprises have the potential
opportunity to go international. It will enhance their overall global presence and make them able
to stay in the competitive global market.
(Zoogah, 2015) mentioned that small and medium scale agribusiness enterprises need to
effectively manage their operation. It is because it will lead them to go internationalization in an
effective and efficient manner. The researcher highlighted in the research report that small and
medium scale agro-business enterprises need to select the global or transnational strategies while
planning to go international operation (Zoogah, D. B., Peng, M. W and Woldu, H. 2015).
According to the viewpoint of (Peng, M. W. 2017), there are a lot of barriers which Nigerian
small and medium scale agribusiness enterprises are facing in regards to going and 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 the industry 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 entry 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
labour is more as compared to India, 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 sound. 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

8
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 labour and resources. Which will give strategic as well as competitive
advantages to the particular small and medium scale agri based enterprises?
According to the viewpoint (Ibrahim 2017) Nigerian small and medium scale agribusiness
enterprises may use the location advantage theory while planning for going to 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).

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In the case of federal government, there are the other governmental establishments which
enhance for attending with the support for stimulation for SME growth along with the
sustainable development for the economy (Cheong, Song, & Hu, 2016). More important, there
are one of the cardinal objectives for SAP which is needed for this purpose.
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).

10
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 ascertaining 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

11
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 framework is drawn as follows:
Figure: Conceptual Framework
Source: (McAdam, Bititci, & Galbraith, 2017)
Conclusion
Therefore, there is no doubt that SME is assumed the imperative part in case of the economic
development for the developing nations. Thereby, 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 for internationalization exercises which includes exporting. Therefore, in the case

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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 endeavours 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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