Internationalization strategy and process: evidence from Indonesian SMEs

Abstract

Small and medium-sized enterprises (SME) are less able to take advantage of export opportunities from trade liberalization than large firms despite various export assistances provided by the government. This study aims to investigate the strategy and process undertaken by Indonesian SMEs to become exporter. The evidences were collected from 271 exporting SMEs and 226 non-exporting SMEs in 7 provinces. The findings show that potential exporters can be identified through their firm and owner characteristics. Exporting SMEs are driven by certain motivating factors and utilize certain types of networking to source reliable information regarding export opportunities. The findings also show that SMEs’ initial export market is mainly determined by target markets’ size and purchasing power and the time taken for SMEs to internationalize differs across provinces and product groups.