The economic environment and associated constraints have significant and unequal effects on Small and medium enterprises (SMEs). Constraints have been used, among other growth factors, to understand why some SMEs fail to grow while others foster. However, beyond knowing the effects or constraints, it is important entrepreneurs know how they can avoid constraints. The study provides an important contribution by showing that South-African SMEs that face constraints because of competition, government rules and regulations, financing gaps and corruption, can navigate away from these constraints by going international. The evidence shows a positive moderating effect of internationalization on the relationship between local constraints and SME growth. However, the results also reveal that lack of government support is a significant constraint to growth when SMEs export internationally.
Small, Medium and Micro Enterprises (SMME) play a significant role in an economy. SMMEs are an important source of jobs, entrepreneurial spirit and innovation. However, despite the noted contribution of SMMEs, in many countries they face serious constraints, often resulting in failure. The constraints and economic environment have significant and unequal effects on SMMEs in different industries and in different locations. Constraints have been used, amongst other growth factors, to understand why some SMMEs fail to grow. The aims of this study was to examine the effect of financial constraints on SMME growth and to investigate the moderating effect of microfinance on overcoming, avoiding or
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