The internationalisation of SMEs from China: The case of Ningxia Hui Autonomous Region

Abstract

This paper aims to study the international expansion of small and medium-sized enterprises (SMEs) in an emerging economy. Mathews ' (2006: 5-27) linkage-leverage-learning (LLL) model is the framework applied to analyse the process of international expansion of SMEs. To operationalise the study of the barriers, the LLL model was linked to the work of Leonidou (2004: 279-302). The data was collected from 125 SMEs operating in Ningxia, China, and then analysed using multivariate regressions; the models used the firms' export intensity at the regional, national and international level as dependent variables. Four models were run: two analysing the internal and external barriers hindering firms' international expansion, and the other two models studying the characteristics of Chinese international companies (state funding and ownership) as independent variables. The results show that 12 of the barriers defined by Leonidou (2004) are hindering the expansion of Ningxia's SMEs, that the ownership from the state does not play an Asia Pac J Manag (2011) 28:737-759

China goes global: public policies' influence on small- and medium-sized enterprises' international expansion

“…Similar results have been reported in recent years using smaller samples and case studies (Ge and Ding 2008, Cardoza and Fornes 2011. This may indicate that: (i) the government supports (or has supported) only a group of tier 1, national champions, or chosen companies and/or industries in their internationalisation process, (ii) the Government supports (or has supported) the internationalisation of companies only to politically or economically strategic markets (like the US and the EU to acquire capabilities, or Africa for natural resources, for example), (iii) the Government supported the first wave of companies going abroad but as the number of firms grows this support tends to be less tangible, and/or (iv) there is a new breed of competitive networks or alliances based on the combination of complementary capabilities (Williamson and Yin 2009, Fornes and Butt Philip 2012, Williamson et al 2013 where the support of the government has not been a key element in their internationalisation process.…”

“…They show that SMEs (especially from MD) do not have the necessary funding to expand their operations internationally and that private sources of funding are necessary in addition to the support from the government (similar to what was found in Ningxia (Cardoza and Fornes 2011) and in Anhui ).…”

“…This research method is similar to the one followed by Cardoza and Fornes (2011) and Fornes, Cardoza and Xu (2012) and was chosen to allow comparisons.…”

“…As a consequence, many Chinese SMEs find that public assistance programmes and services are inefficient and not always suited to their needs (Liu 2007). In particular, these asymmetries have been found to have an inhibitor effect in the growth of SMEs in China (Kanamori et al 2007); also the lack of information and knowledge about markets and consumers constitutes an obstacle in the process of SMEs' expansion (Cardoza and Fornes 2011). These market and state failures have led firms to rely on interpersonal relationships (guanxi) to overcome them and build trust (Bhagat et al 2010, Cai et al 2010.…”

“…However, with a few exceptions (Yamakawa et al 2008, Cardoza and Fornes 2011, Zhu et al 2011, the institutional environment's influence on SMEs' international expansion has received little attention from researchers and it remains a relatively underexplored topic, particularly in emerging and transition economies. The present study aims to help fill this gap.…”