Barriers to exporting: new insights into UK SMEs

Do, Hang, Cowling, Marc and Blackburn, Robert (2015) Barriers to exporting: new insights into UK SMEs. In Proceedings of RENT XXIV: Research in Entrepreneurship and Small Business: Entrepreneurial Society: a Platform for New Solutions to Old Problems.

Abstract

Drawing on a cross-sectional survey of 5,723 UK SMEs, this paper examines the challenges and barriers perceived by owner-managers to exporting. The paper will contribute to developing our understanding of the barriers to exporting by analyzing the relative importance of firm-related factors, resource endowments, entrepreneurial intentions and innovation in determining SMEs owner-managers? decision to export. The results show that planning intentionality acted to reduce the probability of not having suitable products or services being a barrier to exporting. Capability was also found to exert a negative effect, although only at the 10% significance level. Process innovation was associated with a significant reduction in the probability of firms citing lack of a strategic export focus in their business plans. Innovation and capabilities did not have any effect on firms having citing sufficient domestic market demand as a barrier to exporting nor in terms of their ability to locate international customers. Planning intentionality was found to be positively associated with firms? having sufficient domestic sales. Planning intentionality was found to have a positive association with costs being a barrier to exporting. In contrast, capability was associated with a reduction in the probability of costs being a barrier to exporting. Finally, we find that product-service innovation, planning intentionality and goal setting were all found to exert a positive effect on the probability that a firm would begin exporting in the future. These results provide support for the theory of planned behavior, and resource-based theories in relation to understanding SMEs? export behaviour. Our analysis found that three factors dominate SME?s barriers to exporting. These include ?not having a suitable product or service?; ?not having exporting as a strategic objective?; and ?having sufficient domestic sales?. However, ?Innovation capabilities? were unlikely to constrain SMEs in exporting, and indeed innovators were more likely to incorporate exporting into their business plans. Firm capabilities were found to be important in reducing the likelihood that ?not having a suitable product or service? or being concerned about ?the costs of internationalisation? represented a barrier to exporting. This suggests that building up firm level capabilities can stimulate SMEs to internationalize their activities. Our findings regarding business planning are mixed. More planning was associated with a reduction in the probability that firms would not have a suitable product or service appropriate for export markets, and firms were more likely to cite sufficient domestic sales as a reason for not seeking to export. Hence, planning is beneficial as firms are better able to have marketable products/services and generate significant sales in home markets. In conclusion, our analysis has contributed to the resource based view, theory of goal- setting and planned behaviour in explaining owner-managers? perception and behaviours in relation to exporting. Practically, our results provide entrepreneurs and policy-makers insights into understanding export barriers, enhancing the initiatives for the Export Drive 2020 launched by UK government.

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Contributors

Author: Hang Do

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