Market Orientation of SMEs in Southeast Asia - An Empirical Analysis.pdf

Market Orientation of SMEs in Southeast Asia - An Empirical Analysis.pdf

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_________________________________________________________________________ 53 __________________________________ Market Orientation of SMEs in Southeast Asia Market Orientation of SMEs in South- east Asia: An Empirical Analysis MICHAEL L. TROILO Abstract There is a growing consensus among policymakers and academics that inter- nationalization of domestic firms will create jobs and wealth, yet relatively little is known about the incentives for small and medium enterprises (SMEs) to undertake this process. I analyze the motivations of SMEs from Vietnam, Indonesia and the Philippines to engage in exporting in the context of triangu- lation, which considers the impact of the global economy, national economy, and societal milieu on SMEs. I find that scarce demand in the home market is positively and significantly correlated with exporting, while favourable government incentives are less significant. Significant foreign demand and existing parent–subsidiary relationships are important explanations for SME exports from Vietnam, but not for Indonesia or the Philippines. These findings suggest that national economies are currently more important than the global economy for SME exports in Southeast Asia; my results call into question the ability of governments to encourage SMEs to internationalize via exporting. Keywords: SMEs, Southeast Asia, exporting, triangulation, global economy, national economy Introduction In recent years small and medium enterprises (SMEs) have attracted the attention of policymakers and scholars alike. The positive effect of entrepreneurship on economic development is well established (Boettke & Coyne 2003; Oviatt & McDougall 1994; Acs 1992), as is the correlation between international trade and economic growth (Hipsher 2008; Broda & Weinstein 2005). Nations have therefore embraced the formation and internationalization of SMEs 1 (Singh, Pathak & Naz 2010; Arinaitwe 2006) to boost their economies and standards of living. Despite this enthusiasm for SMEs, there is still much to learn about their formation and internationalization (Andersson 2004; Lu & Beamish 2001). This is particularly true for developing economies, where small businesses constitute the vast majority of business activity (Hipsher 2008;
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54 ____________________ The Copenhagen Journal of Asian Studies 30(1)•2012 Michael L. Troilo ___________________________________________________________ Amini 2004). While larger developing economies such as China, India and Brazil understandably occupy the attention of academics, smaller vibrant economies such as Vietnam, Indonesia and the Philippines are relatively underserved in scholarly literature. This article seeks both to join the larger conversation about SMEs and internationalization and to analyze the export patterns of the three countries just mentioned. In addition to furnishing generalizable results about trade among SMEs, this paper provides some stylized facts about three important economies in Southeast Asia. It also supplies the mar- ginal effects of key variables on exports whereas most current literature about trade and SMEs concentrates only on statistical significance. Fur- thermore, it employs a new perspective, triangulation, in considering
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