Abstract

Purpose –Foreign market entry is considered as a key strategy to grow and survive over longer period of time for the Small and Medium Enterprises (SMEs). The decision to enter in a foreign market is not a straight forward story. Considering the resource limitation, SMEs need to analyse the key barriers to enter in foreign markets very carefully. The purpose of this paper is to identify these barriers for the SMEs in an emerging economy.

Design/methodology/approach – This study has used primary data collected through the questionnaires from 212 Bangladeshi SMEs. A mixed method data analysis technique is used to analyse the firms both from micro and macro levels. Following the running example based case study approach, this study has developed and validated partial least square based structural model (PLS-SEM) to assess the key barriers to enter in foreign markets.

Findings –This study has identified the key socio economic barriers faced by the SMEs in an emerging economy to enter into the foreign markets. It has successfully framed the socio-economic barriers to enter in foreign markets for Bangladeshi SMEs as a second order hierarchical model.

Originality/value- It is often believed that the foreign market entry is more affected by the social barriers as explained by the existing theories including Uppsala model. Using institutional view, this study revealed that the international market expansions of SMEs in developing countries are more sensitive to the economic barriers.