Barriers to enter in foreign markets: evidence from SMEs in emerging market

Abstract

Purpose -For Small and Medium Enterprises (SMEs), entering foreign markets is considered a key strategy for growth and survival. However, the decision to enter is hardly straightforward.SMEs need to analyse the key barriers to entering these markets, so the purpose of this paper is to identify the obstacles that exist to SMEs in an emerging economy.Design/methodology/approach -This study has collected primary data through questionnaires from 212 Bangladeshi SMEs. A mixed method data analysis technique is used to analyse firms from micro and macro level. Following the running example based case study approach, this paper has developed and validated a partial least square based structural model (PLS-SEM) to assess the key barriers to entering foreign markets.Findings -In entering into foreign markets, and emerging economies, this study has identified key socio-economic barriers faced by Bangladeshi SMEs. Additionally, the study has successfully framed the obstacles as a second order hierarchical model. Originality/value -Consider that foreign market entry is perhaps more affected by social barriers as explained by existing theories, including the Uppsala model. Using institutional interpretation, this study reveals that in developing countries, SME international market expansion is more sensitive to the existence of economic barriers.

Examining economic and technology‐related barriers of small‐ and medium‐sized enterprises internationalisation: An emerging economy context

“…Values of Cronbach's alpha for all latent constructs were above 0.7, demonstrating unidimensionality and high internal consistency of the measurement scale (Rahman & Mendy, ). Moreover, AVE (shown in Table ) both for administrative and economic regulatory barriers is also well above the modest threshold point of 0.50 (Fornell & Bookstein, ), which also indicates that each construct captures adequate variance from its items and all the constructs are conceptually distinct (Rahman et al, ), which ensure the convergent validity of all the scales used in the model. Finally, the composite reliability (CR) of all constructs is above 0.7, which is acceptable (Fornell & Bookstein, ).…”

“…Moreover, AVE (shown in Table 3) both for administrative and economic regulatory barriers is also well above the modest threshold point of 0.50 (Fornell & Bookstein, 1982), which also indicates that each construct captures adequate variance from its items and all the constructs are conceptually distinct (Rahman et al, 2017), which ensure the convergent validity of all the scales used in the model.…”

“…The PLS model was interpreted and analysed in three steps in order to ensure the validity and reliability of the measurement scales: (a) interpretation of the measurement model, (b) interpretation of the structural model, and (c) assessment of the relationships (hypothesis testing) in the model (Rahman et al, ).…”

“…Although the warehouse facilities are better in developed country, in many cases, it is very expensive for the resource constrained SMEs. Rahman et al () concluded that a huge number of SMEs' from developing countries suffer from poor warehouse facilities. Thus, this study proposed that poor ware house facilities has negative influence on SMEs' participation in internationalisation.H2c Poor warehouse facilities as technology‐related barrier and Bangladeshi SMEs' participation in international market will be associated.…”

“…In Bangladesh, 82% of enterprises are SMEs that is similar to the share of small and microenterprises in the United Kingdom and other western economies (Rahman, Uddin, & Lodorfos, ). In addition, Bangladesh has huge potential to become one of the leading exporters of garments products produced by Bangladeshi businesses including SMEs (Mendy & Rahman, ).…”