Internationalization of Ethiopian Apparel SMEs

Abstract

The main aim of this research was to identify the internationalization patterns of SMEs in developing countries. The study aimed to identify the influence of inward international activities on outward international activities. From the internationalization models and theories, the stage models of internationalization, the network approach and the contingency view were examined. In addition, the role of a manager/owner in the internationalization process of SMEs and the motivations for SMEs to internationalize their operations was analyzed.

The theoretical part of the research was based on earlier research and literature. Based on the extant research, propositions related to internationalization process of SMEs were drawn and a conceptual model, which includes international activities comprising inward and outward internationalization, external factors, internal factors and business network, was developed. In the empirical part of the research, the Propositions were tested through quantitative research.

The empirical part of the research analyzed the contribution and link of the inward internationalization to outward internationalization of apparel SMEs in Ethiopia. Over 28 questionnaires were delivered to apparel SMEs in Ethiopia. The findings of the study indicate that the majority of SMEs undertake both inward and outward internationalization at the same time. In addition, for the majority of the SMEs, the year they started their business and the year they began either inward or outward international activities was the same. Building long term relationship was perceived to be important. The international orientation of the manager/owner was found to influence the internationalization of SMEs in Ethiopia. Export subsidies, internationalization of customers, and internationalization of competitors were found to impact the decision of SMEs to start operating internationally.

According to the research results, the contingency view in conjunction with the network approach and some aspect of the stage models explains the internationalization process of apparel SMEs in Ethiopia. The role of a manager/owner was found to be important in the internationalization process of SMEs. Reactive motivations were found to trigger firm’s decision to start operating internationally.