Dynamic Capability of the Firm: analysis of the impact of Internationalisation on SME performance in an emerging economy

Rahman, Mahfuzur, Hack-Polay, Dieu, Shafique, Sujana and Igwe, Paul (2021) Dynamic Capability of the Firm: analysis of the impact of Internationalisation on SME performance in an emerging economy. International Journal of Emerging Markets . ISSN 1746-8809

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Abstract

Purpose - Internationalisation is considered as a key strategy for the growth of Small and Medium Enterprises (SMEs). This article examines the relationship between dynamic capability, SMEs internationalisation and firm performance in the context of emerging economies. The objective of this paper is to evaluate the impact of financial, asset and market expansion on internationalisation of SMEs.

Design/methodology/approach - Using primary data from 212 SMEs from Bangladesh, structural equation modelling and mathematical (hierarchical reflective) model, the analysis enabled the measurement of the casual relationship on the impacts of internationalisation.

Findings – The results revealed that internationalisation of SMEs has significant impact on both financial and non-financial performance of SMEs in an emerging economy- Bangladesh. The paper has found internationalisation impacts on two dimensions (financial and non-financial) with eight defined indicators - higher sales, higher profit, assets maximisation, market expansion, competitive advantage, better reputation, better customer service and added knowledge.

Originality/value of paper- Despite several studies that examine the relationship between SME internationalisation and firm performance, limited research exists on emerging economies. This is contrary to the fact that SMEs are one of the main vehicles for growth in those economies such as Bangladesh. In this research we use the theories of dynamic capabilities to conceptualise how internationalisation becomes a core SME capability for SMEs in an emerging economy.

Keywords:Dynamic capabilities, Internationalization, SMEs, Firm performance, Small emerging country
Subjects:N Business and Administrative studies > N220 Institutional Management
Divisions:Lincoln International Business School
ID Code:45594
Deposited On:21 Jul 2021 09:28

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