Determinants and impediments in the internationalisation process of small and medium-sized manufacturing enterprises in Ethiopia

The purpose of this study was to investigate internationalisation of Ethiopian SMEs by examining internal and external factors that motivate or restrict internationalization process and the impact of internal and external barriers on SMEs export performance. The small and medium sized enterprises (SMEs) sector in Ethiopia is a significant group within the economy in terms of firm numbers and total employment. However, the SMEs sector’s share of exports is disproportionately small, which raised considerable research concerns. Firm export propensity and export performance were the dependent variables and export stimuli and barrier factors were used as explanatory variables. The study was conducted through mixed research design. A questionnaire was administered to 90(36 exporting and 54 nonexporting) SMEs in Leather and Leather Products Industry in Addis Ababa selected through stratified random sampling. In order to complement survey results nine (4 exporting and 5 non-exporting) SMEs were selected through critical case purposive sampling and an in-depth interviews were conducted. Statistical package for the social sciences (SPSS 20) was used to analyse the quantitative data whereas, qualitative data were analysed manually. Analytical techniques used were, Chisquare test of independence, Spearman rank order correlation, factor analysis, binary logistic regression analysis and multiple regression analysis. The statistical results of binary logistic regression analysis and chi-square tests indicated that managerial factors, internal marketing factors and foreign government related factors, firm ownership and size are the most significant motivators of SMEs internationalisation in Ethiopia. On the contrary the result showed that, logistics problem, insufficient finance, functional barriers, lack of export knowledge and information, procedural barriers and international trade barriers are the factors hindering it. Further analysis was conducted to examine the impact of export barriers on performance of firms. The result of multiple regression analysis indicated that, export barriers significantly and negatively affect export performance. The overall results revealed that explanatory variables used in the analysis significantly predict the dependent variable at 95% confidence level. Considering these results numerous implications for theory, practice, and future research were recommended. Finally, the study concluded that internationalisation of SMEs has to be encouraged by mitigating both internal and external barriers identified in this study.Business ManagementD. Admin. (Business Management

Internationalisation Barriers of Small and Medium-sized Manufacturing Enterprises in Ethiopia: Leather and Leather Products Industry in Focus

The purpose of this study was to examine internationalisation barriers of manufacturing SMEs operating in Leather and Leather Products Industry located in the capital city of Ethiopia. The small and medium sized enterprises (SMEs) sector in Ethiopia is a significant group within the economy in terms of firm numbers and total employment. However, the SMEs sector’s share of exports is disproportionately small, which raised considerable research concerns. Firm export propensity was the dependent variable and internal and external export barrier factors were used as explanatory variables. The study was conducted through mixed research design of quantitative survey and case study. From the population of manufacturing SMEs operating in the Leather and Leather products Industry, a sample was selected through the use of stratified random sampling to ensure the effective representation of the population of exporting and non-exporting SMEs in the capital of Ethiopia. In order to complement survey results nine (4 exporting and 5 non-exporting) SMEs were selected through critical case purposive sampling and an in-depth interviews were conducted. Statistical package for the social sciences (SPSS 20) was used to analyse the quantitative data whereas, qualitative data were analysed manually. Exploratory factor analysis with Varimax rotation and Binary logistic regression analysis are the analytical methods used. The statistical result showed that, logistics problem, insufficient finance, functional barriers, lack of export knowledge and information, procedural barriers and international trade barriers are the most significant obstacles of export trade in Ethiopia. The overall results revealed that explanatory variables used in the analysis significantly predict the dependent variable at 95% confidence level. Taken together, these results prompted the presentation of numerous implications for theory, practice, and future research. Finally, the paper recommended that internationalization of SMEs has to be encouraged by mitigating both internal and external barriers identified in this study. Achievement of this will make manufacturing SMEs to be more competitive in export trade that results in a better positioning of Ethiopia in global leather and leather products market