World Technopolis Review

World Technopolis Association (세계과학도시연합)
권호 표지
DOI QR코드

DOI QR Code

Factors Influencing Global Expansion/Scalability of Small and Medium Enterprises: A Kenyan Case

  • Osano, Hezron Mogaka (Entrepreneurship and Technology Management, The Technical University of Kenya)
  • Received : 2019.03.03
  • Accepted : 2019.06.24
  • Published : 2019.07.05
Download PDF
⟨ Previous Next ⟩

Abstract

The purpose of this research was to investigate the factors influencing global expansion/scalability of Kenyan Small and Medium Enterprises (SMEs). Factor analysis and multiple/multivariate regression analysis to determine the functional relationship between independent variables (factors) and the dependent variable was used. The independent variables were: innovation & technology, fitness/appropriateness of management, global marketing strategy; and support environment and the dependent variable, global expansion/scalability. Data was collected from a survey of randomly selected firms of 205, drawn from a population of 440 firms from Kenya Manufacturers Directory, with 175 firms responding. The key findings from the research in relation to Kenyan SMEs were that: there is a functional relationship between global market strategy and global expansion; there is a functional relationship between innovation and technology orientation and global expansion, there is no significant functional relationship between supportive environment of firms and their global expansion; and there is no significant functional relationship between fitness/appropriateness of management and global expansion/scalability. The implications for practice is that the ranking of the factors in order of priority supports focusing concern on the orientation of business strategy toward global market strategy, market research geared at obtaining foreign market intelligence, innovation and technology, product adaptation, service orientation, collaborative ventures, and long-range vision as key factors in making Kenyan firms successful in the international market. The implication for policy and practice is that there is need for collaboration between industry and government in pursuing policies for global expansion/scalability and among SMEs and large enterprises particularly in areas of rapid technological change.

Keywords

SGGHBZ_2019_v8n1_21_f0001.png 이미지

Fig. 1. Summarized conceptual framework

Table 1. Number of employees

SGGHBZ_2019_v8n1_21_t0001.png 이미지

Table 2. Mode of Entry to Export Market

SGGHBZ_2019_v8n1_21_t0002.png 이미지

Table 3. Sources of foreign trade information

SGGHBZ_2019_v8n1_21_t0003.png 이미지

Table 4. Summary of Rankings

SGGHBZ_2019_v8n1_21_t0004.png 이미지

Table 5. Summarised Correlations

SGGHBZ_2019_v8n1_21_t0005.png 이미지

Table 6. Model Summaryb

SGGHBZ_2019_v8n1_21_t0006.png 이미지

Table 6 (a). ANOVAa

SGGHBZ_2019_v8n1_21_t0007.png 이미지

References

  1. Afsharghasemi, A., Zain, M., Sambasivan, M., and Imm, S. N. S. (2013) "Market Orientation, Government Regulation, Competitive Advantage and Internationalization of SMEs: A Study in Malaysia," Journal of Business Administration Research 2(2): 13-22.
  2. Amiti, M., and Konings, J. (2007) "Trade Liberalization, Intermediate Inputs, and Productivity: Evidence from Indonesia", American Economic Review 97(5): 1611-38. https://doi.org/10.1257/aer.97.5.1611
  3. Armario, J. M., Ruiz, D. M., and Armario, E. M. (2008) "Market Orientation and Internationalization in Small and Medium-Sized Enterprise," Journal of Small Business Management 46(4): 485-511. https://doi.org/10.1111/j.1540-627X.2008.00253.x
  4. Aulakh, F. S., Kotabe, M., and Teegen, H. (2000) "Export Strategies and Performance of Firms from Emerging Economies: Evidence from Brazil, Chile and Mexico", Academy of Management Journal 43(3): 342-361. https://doi.org/10.2307/1556399
  5. Autio, E., Sapienza, H. J., and Almeida, J. G. (2000). "Effects of Age at Entry, Knowledge Intensity, and Imitability on International Growth", Academy of Management Journal 43(5): 902-906. https://doi.org/10.2307/1556418
  6. Ayyagari, M., Asli Demirguc-Kunt, A., and Maksimovic, V. (Jan. 1, 2006) "How Important are Financing Constraints? The Role of Finance in Business Environment," World Bank Policy Research Working Paper No. 3820. Available at SSRN: https://ssrn.com/abstract=1266547
  7. Becker, W., and Dietz, J. (2004) "R&D Cooperation and innovation activities of firms: evidence for the Germany manufacturing industry," Research Policy 33: 209-223. https://doi.org/10.1016/j.respol.2003.07.003
  8. Belassi, W., Kondra, A. Z., and Tukel, O. I. (2007) "New product development projects: the effects of organizational culture," Project Management Journal 38(4): 12-24. https://doi.org/10.1002/pmj.20017
  9. Bouri, A., Breij, M., Diop, M., Kempner, R., Klinger, B., and Stevenson, K. (Nov. 2011) Report on Support to SMEs in Developing Countries through Financial Intermediaries, Dalberg Global Development Advisors. Available at: https://www.eib.org/attachments/dalberg_sme-briefing-paper.pdf
  10. Bula, H. O. (July 2012) "Evolution and Theories of Entrepreneurship: A Critical Review on the Kenyan Perspective," International Journal of Business and Commerce 1(11): 81-96.
  11. Burt, R. S. (1995) Structural Holes, Cambridge, MA: Harvard University Press.
  12. Burt, R. S. (2000) "The Network Structure of Social Capital," Research in Organizational Behavior 22: 345-423. https://doi.org/10.1016/S0191-3085(00)22009-1
  13. Caliendo, L., and Rossi-Hansberg, E. (2012) "The Impact of Trade on Organization and Productivity", The Quarterly Journal of Economics 127(3): 1393-1467. http://dx.doi.org/10.1093/qje/qjs016.
  14. Cavusgil, S.T., and Naor, J. (1987) "Firm and Management Characteristics as Discriminators of Export marketing activity", Journal of Business research 15: 221-35. https://doi.org/10.1016/0148-2963(87)90025-7
  15. Cavusgil, S.T., and Tamer, S. (1980) "On the Internationalisation Process of Firms," European Research 8 (November): 273-281.
  16. Chelliah, S., Pandian, S., Sulaiman, M., and Munusamy, J. (2010) "The moderating effect of firm size: Internationalization of small and medium enterprises (SMEs) in the manufacturing sector," African Journal of Business Management 4: 3096-3109. [Online] Available: http://www.academicjournals.org/AJBM
  17. Chetty, S., and Campbell-Hunt, C. (2003) "A Strategic Approach to Internationalisation: A traditional versus a "Born-Global" Approach," Journal of International Marketing 12(1): 57-81. https://doi.org/10.1509/jimk.12.1.57.25651
  18. Crick, D. (2007) "SMEs' Barriers towards Internationalization and Assistance Requirements in the UK," Journal of Small Business & Entrepreneurship 20(3): 233-244. https://doi.org/10.1080/08276331.2007.10593397
  19. Crick, D., and Czinkota, M. R. (1995) "Export assistance: Another look at whether we are supporting the best programmes", International Marketing Review 12(3): 61-72. https://doi.org/10.1108/02651339510091708
  20. Cohen, M., and Levinthal, D. A. (1990) "Absorptive capacity: A new perspective on learning and innovation," Administrative Science Quarterly 35(1): 128-152. https://doi.org/10.2307/2393553
  21. Cornell University, INSEAD, and the World Intellectual Property Organization (2018) The Global Innovation Index 2018: Energizing the World with Innovation, Ithaca, Fontainebleau, and Geneva.
  22. Deloitte (2016) Industry 4.0: Is Africa ready for digital transformation?. Available at from: https://www2.deloitte.com/content/dam/Deloitte/za/Documents/manufacturing/za-Africa-industry-4.0-report-April14.pdf
  23. Dorin, C., and Alexandru, G. S. (July 2014) "Dinamics of the entrepreneurship Concept: Literature review," Annals of the University of Oradea, Economic Science Series. Available at: http://steconomiceuoradea.ro/anale/volume/2014/n1/046.pdf
  24. Drucker, P. F. (1985) Innovation and Entrepreneurship: Practices and Principles, New York: Harper & Row.
  25. Easterby-Smith, M., Thorpe, R., and Jackson, P. R. (2008) Management Research, London: SAGE Publications Ltd.
  26. Government of Kenya (2003-2007) National Export Strategy, Ministry of Trade and Industry, Kenya, Nairobi: Government Printer.
  27. Government of Kenya (2007) Vision 2030, Ministry of Planning and National Development, Nairobi: The Government Printer.
  28. Government of Kenya (2008) Science, Technology and Innovation Policy and Strategy, Nairobi: Government Printer.
  29. Government of Kenya (2013a) Kenya Gazette Supplement No. 43 (Acts No. 28): The Science Technology and Innovation Act 2013, Nairobi: Government Printer
  30. Government of Kenya (2013b) Sector Plan for Science Technology and Innovation Sector 2013 - 2017: Revitalizing and Harnessing Science, Technology and Innovation for Kenya's Prosperity and Global Competitiveness, Nairobi: Government Printer
  31. Giuliani, E., and Bel, M.l (2005) "The Micro-Determinants of Meso-Level Learning and Innovation: Evidence from a Chilean WineCluster," Research Policy 34(1): 47-68. https://doi.org/10.1016/j.respol.2004.10.008
  32. Hall, C. (2003) "Impediments to International SME Activity: Evidence and proposed framework for Monitoring," Discussion paper February 2003, APEC SMEWG, Malaysia.
  33. Harveston, P. D., Kedia, B. L., and Davis, P. S. (2000) "Internationalization of born global and gradual globalizing firms: The impact of themanager," Advances in Competitiveness Research 8(1): 92-99.
  34. Hitt, M. A., Hoskisson, R. E., and Ireland, R. D. (1994) "A midrange theory of the interactive effects of international and product diversification on innovation and performance," Journal of Management 20(2): 297-326. https://doi.org/10.1016/0149-2063(94)90018-3
  35. ICSB MSMEs Report (2018) ICSB Global MSMEs Annual Report, Washington: International Council for Small Business. Available at: https://icsb.org/REPORTICSB2018
  36. Johansson, J., and Vahlne, J .E. (1977) "The internationalisation process of the firm: Managerial behaviour, agency costs, and ownership structure," Journal of International Business Studies 8(1): 23-32. https://doi.org/10.1057/palgrave.jibs.8490676
  37. Johansson, J., and Vahlne, J. E. (2009) "The Uppsala internationalization process model revisited: From liability of foreignness to liability of outsidership," Journal of International Business Studies 40: 1411-1431 https://doi.org/10.1057/jibs.2009.24
  38. Johansson, J., and Wiedersheim-Paul, F. (1975) "The Internationalisation of the Firm - Four Swedish Cases," Journal of Management Studies 12(3): 305-322. https://doi.org/10.1111/j.1467-6486.1975.tb00514.x
  39. Johnson, J. E. (2004) "Factors Influencing the Early Internationalization of High Technology Start-ups: US and UK Evidence," Journal of International Entrepreneurship 2: 139-154. https://doi.org/10.1023/B:JIEN.0000026910.87323.4e
  40. Jolly, V. K., Alahuhta, M., and Jeannet, J. (1992) "Challenging the Incumbents: How High Technology Start-Ups Compete Globally." Journal of Strategic Change 1: 71-82. https://doi.org/10.1002/jsc.4240010203
  41. Katwalo, A. M. (2010) "Competence and critical success factor development as an avenue for achieving sustainable Micro and Small Enterprises in Africa," Journal of Management Policy & Practice 11(5): 139-144.
  42. KIPPRA (2013) Kenya Economic Report 2013: Creating an Enabling Environment for Stimulating Investment for Competitive and Sustainable Counties, Nairobi: Kenya Institute for Public Policy Research and Analysis (KIPPRA). Available at: https://www.issuelab.org/resources/21900/21900.pdf
  43. Kiran, V., Majumdar, M., and Kishore, K. (March-May 2013) "Internationalization of SMEs: Finding A Way Ahead American International Journal of Research in Humanities," Arts and Social Sciences 2(1): 18-23.
  44. Kira, A. R. (2013) "Determinants of Financing Constraints in East African Countries' SMEs," International Journal of Business and Management 8(8). DOI: 10.5539/ijbm.v8n8p49
  45. Kirzner, I. M. (1997) "Entrepreneurial Discovery and the Competitive Market Process: An Austrian Approach," Journal of Economic Literature 35: 60-85.
  46. Knight, G., and Cavusgil, S. T. (1996) "The Born Global Firm: A Challenge to Traditional Internationalisation Theory," Advances in International Marketing 8: 11-26.
  47. Koschatzky, K., Kulicke, M., and Zenker, A. (Eds.) (2001) Innovation Networks, Concepts and Challenges in the European Perspective, Heidelberg: Springer Science & Business Media.
  48. Kotler, P., Jatusripitak, S., and Maesincee, S. (1997) The Marketing of Nations: A Strategic Approach to Building National Wealth, New York: Free Press.
  49. Lall, S., and Pietrobelli, C. (2002) Failing to Compete: Technology Development and Technology Systems in Africa, Mass: Edward Elgar Publishing Ltd.
  50. Lileeva, A., and Trefler, D. (2010) "Improved Access to Foreign Markets Raises Plant-Level Productivity\ldots for Some Plants", The Quarterly Journal of Economics 125(3): 1051-99. https://doi.org/10.1162/qjec.2010.125.3.1051
  51. Lin, K.-H., and Chaney, I. (October 2007) "The Influence of Domestic Interfirm Networks on the Internationalization Process of Taiwanese SMEs," Asia Pacific Business Review 13(4): 565-583. https://doi.org/10.1080/13602380701345499
  52. Lind, D. A., Marchal, W. G., and Wathen, S. A. (2010) Statistical Techniques in Business and Economics (14th edition), New York: McGraw-Hill Higher Education.
  53. Madsen, T. K., and Servais, P. (1997) "The internationalization of born globals: An evolutionary process," International Business Review 6(6): 561-583. https://doi.org/10.1016/S0969-5931(97)00032-2
  54. Pauluzzo, R., and Mason, M. C. (March 9, 2011) "SMEs: The Path Towards International Success," Oxford Journal, Special Issue: Emerging Trends and Issues in Management and Economics, Association for Business and Economics Research (ABER) 8(1). Available at SSRN: https://ssrn.com/abstract=1781767
  55. Matanda, M. J. (2012) "Internationalization of Established Small Manufacturers in a Developing Economy: A Case Study of Kenyan SMEs," Thunderbird International Business Review 54(4), July/August. DOI: 10.1002/tie.21480
  56. McDougall, P. P., and Oviatt, B. M. (2000) "International entrepreneurship: The intersection of two paths," Academy of Management Journal 43(5): 902-906. DOI: 10.2307/1556418
  57. McDougall, P. P., Oviat, B. M., and Schrader, R. C. (2003) "A comparison of international and domestic new ventures," Journal of International Entrepreneurship 1(1): 59-82. https://doi.org/10.1023/A:1023246622972
  58. Mitanosk, P. T, Kojic, J., Jaksic, M. L., and Marinkovie, S. (2013) "Developing SMEs through University Support Centres: A Comparative Analysis," Journal for Theory and Practice Management 67: 15-24.
  59. Moen, O., and Servais, P. (2002) "Born Global or Gradual Global? Examining the Export Behaviour of Small and Medium-Sized Enterprises," Journal of International Marketing 10(3): 49-72. https://doi.org/10.1509/jimk.10.3.49.19540
  60. Moini, A. H. (1995) "An Inquiry into Successful Exporting: An Empirical Investigation Using a Three-Stage Model," Journal of Small Business Management 33(3): 9-25.
  61. Morgan, N. A., Vorhies, D. W., and Mason, C. H. (2009) "Market orientation, marketing capabilities, and firm performance," Strategic Management Journal 30: 909-920. DOI: 10.1002/smj.764
  62. Mtigwe, B. (2006) "Theoretical milestones in international business: The journey to international entrepreneurship theory," Journal of International Entrepreneurship 4: 5-25. DOI 10.1007/s10843-006-5872-5
  63. Neter, J., Kutner, M. N., Wasserman, W., and Nachtsheim, C. (1996) Applied Linear Regression Models, New York: Mc-Graw Hill/Irwin.
  64. OECD (2010: 9-15) The OECD Innovation Strategy: Getting a Head Start on Tomorrow, Paris: OECD Publishing. Available at: https://doi.org/10.1787/9789264083479-en.
  65. OECD (2018) OECD Ministerial Conference: Enabling SMEs to Scale Up, Discussion Paper Paris: OECD Publishing.
  66. Oviatt, B. M., and McDougall, P. P. (1994) "Toward a Theory of International New Ventures," Journal of International Business Studies 25(1): 45-64. https://doi.org/10.1057/palgrave.jibs.8490193
  67. Oviatt, B. M., and McDougall, P. P. (1995) "Global Start-ups: Entrepreneurs on a Worldwide stage," Academy of Management Executive 9(2): 30-44.
  68. Oviatt, B. M., and McDougall, P. P. (1997) "Challenges for internationalization process theory: The case of international new ventures," Management International Review 37(2): 85-99.
  69. Oviatt, B. M., and McDougall, P. P. (2005) "Defining international entrepreneurship and modeling the speed of internationalization," Entrepreneurship Theory & Practice 29(5): 537-553. https://doi.org/10.1111/j.1540-6520.2005.00097.x
  70. Ozcelik, E., and Taymaz, E. (2004) "Does innovation matter for international competitiveness in developing countries? The case of Turkish manufacturing industries," Research Policy 33(3): 409-424. https://doi.org/10.1016/j.respol.2003.09.011
  71. Plunket, A., Voisin, C., and Bellon, B. (Eds.) (2001) The Dynamics of Industrial Collaboration: A Diversity of Theories and Empirical Approaches, Cheltenham, Northampton: Edward Elgar Publishing.
  72. Punch, K. F. (2005) Introduction to Social Research: Quantitative and Qualitative Approaches, London: Sage.
  73. Rajesh, K. S., Suresh, K. G., and Deshmukh, S. G. (2008) "Strategy development by SMEs for competitiveness: a review," Benchmarking An international Journal 15(5): 525-547. DOI: 10.1108/14635770810903132
  74. Rennie, M. W. (1993) "Global Competitiveness: Born Global," The McKinsey Quarterly 4(4): 45-52.
  75. Roberts, A., Wallace, W., and Pfab, F. (2012) Introduction to Business Research 3: Research Methodology, Data Collection and Analysis, Results and Conclusions, Edinburgh: Edinburgh Business School, Heriot-Watt University. https://www.ebsglobal.net/documents/course-tasters/english/pdf/h17ls-bk-taster.pdf
  76. Roper, S., and Love, J. H. (2002) "Innovation and Export Performance: Evidence from UK and German Manufacturing Plants," Research Policy 31: 1087-1102. http://dx.doi.org/10.1016/S0048-7333(01)00175-5
  77. Rundh, B. (2007) "International Marketing Behavior amongst exporting firms," European Journal of Marketing 41(1/2): 181-198. https://doi.org/10.1108/03090560710718175
  78. Saia, A., Andrews, D., and Albrizio, S. (2015) Productivity Spillovers from the Global Frontier and Public Policy: Industry-level Evidence, OECD Economics Department Working Papers No.1238, Paris: OECD. Available at: https://www.oecd.org/eco/growth/Productivity-Spillovers-from-the-Global-Frontier-and-Public-Policy-Industry-Level-%20Evidence.pdf
  79. Scherer, F. M. (1999) New Perspectives on Economic Growth and Technological Innovation, The British-North American Committee: The Brookings Institution.
  80. Sekaran, U., and Bougie, R. (2013) Research Methods for Business: A skill-building approach (6th Ed), New York: John Wiley & Sons.
  81. Senik, Z. C., Scott-Ladd, B., Entrekin, L., and Adham, K. A. (2011) "Networking and internationalization of SMEs in emerging economies," Journal International Entrepreneurship 9(4): 259-281. https://doi.org/10.1007/s10843-011-0078-x
  82. Sharma, D. D., and Blomstermo, A. (2003) "The internationalization process of born globals: A network view," International Business Review 12(6): 739-753. https://doi.org/10.1016/j.ibusrev.2003.05.002
  83. Svetlicic, M., Jaklic, A., and Burger, A. (2007) "Internationalization of Small and Medium-Size Enterprises from Selected Central European Economies," Eastern European Economics 45(4): 36-65. https://doi.org/10.2753/EEE0012-8775450402
  84. Swedberg, R. (2002) Entrepreneurship: The Social Science View, Oxford: University Press.
  85. Tanev, S. (2012) "Global from the Start: The Characteristics of Born-Global Firms in the Technology Sector," Technology Innovation Management Review 2012(March): 5-8.
  86. UNIDO (2017) Accelerating clean energy through Industry 4.0: Manufacturing the next revolution, Vienna, Austria: United Nations Industrial Development Organization. Available at: https://www.unido.org/sites/default/files/2017-08/REPORT_Accelerating_clean_energy_through_Industry_4.0.Final_0.pdf
  87. Wang, C. H., Chen, K. Y., and Chen, S. C. (2012) "Total quality management, market orientation and hotel performance: The moderating effects of external environmental factors," International Journal of Hospitality Management 31(1): 119-129. https://doi.org/10.1016/j.ijhm.2011.03.013
  88. Weaver, K. M., Berkowitz, D., and Davies, L. (1998) "Increasing the Efficiency of National Export Promotion Programs: The Case of Norwegian Exporters," Journal of Small Business Management 36(4) 1-11.
  89. Weerawardena, J., Mort, G. S., Liesch, P. W., and Knight, G. (2007) "Conceptualizing accelerated internationalization in the born global firm: A dynamic capabilities perspective," Journal of World Business 42(3): 294-306. https://doi.org/10.1016/j.jwb.2007.04.004
  90. Westphal, L. E. (2002) "Technology Strategies for Economic Development in a Fast Changing Global Economy," Economics of Innovation and New Technology 11(4-5): 275-320. https://doi.org/10.1080/10438590200000002
  91. Wignaraja, G. (2002) "Creating Value: From Comparative to Competitive Advantage," Competitiveness Strategy in Developing Countries, ITC Executive Forum on National Export Strategies, International Trade Centre.