The Determinants of Internationalization of Small and Medium Enterprises (Smes): A Case in Malaysia

Abstract: Internationalization is recognized as a valuable strategy for organizations ’ growth and expansion; however little is known about the determinants of internationalization of SMEs in Malaysia, which is in a fast growing economy. In attempt to investigate the antecedents of internationalization, three key determinants are identified: the competitive advantage, the management attitude and the management knowledge and experience. The problem statement was as follows; are there any differences in landscape of both internationalization of the Malaysian SMEs compared to developed economies and on the factors that influences the variations in the SMEs internationalization in those economies. Therefore, the research focus will be to understand the extent of the internationalization of the Malaysian SMEs and to understand whether competitive advantage, the management’s international knowledge and experience and its attitude determine internationalization as the case in developed economies. The research used a survey instrument for a sample consists of 300 SMEs located in Northern region of Malaysia in the manufacturing sector. The unit of analysis was organizations and the target respondents were business owners and export managers. The internationalization of the SMEs is measured by an index – index of internationalization. The findings showed that competitive advantage, management attitude and international knowledge and experience do not show a significant relationship with internationalization. The findings clearly show that emerging economies has different set of variables that explains internationalization which will pave way for future research interest. The implications for policy makers and ideas for future research are discussed.