Examining Economic and Technology Related Barriers of Internationalisation for SMEs: A Hierarchical Reflective Model on an Emerging Economy Context

In today's global marketplace, Small and Medium Sized Enterprises (SMEs) are increasingly looking at internationalisation strategies to boost growth, profitability and competitiveness. However, challenges such as socio-cultural differences, political institutions, limited resources, competitive challenges, market threats, economic and technological barriers all hinders SMEs from entering and competing favourably in the international markets. Considering the important link between lack of resources and internationalisation of SMEs, this study examined economic and technology related barriers of SMEs internationalisation from an emerging market context. The key objectives of this research are to identify key economic and technology related barriers of internationalisation and compare relative importance of these two particular categories. To compare the relative importance of these two particular categories of barriers, this study developed a Partial Least Square based Structural Equation Model (PLS-SEM). The factors or items of the model were identified from extant literature review. For the purpose of validation, this paper has employed primary data gathered from questionnaires from 212 Bangladeshi SMEs. Area wise cluster sampling was used for the purpose of country representation and due to absence of complete data base on the Bangladeshi SMEs. The findings of the paper suggest that, technology related barriers seems to more influential than economic barriers. As the difference is very low, importance should be given to both types of barriers where possible. Conceptually, this study extends this area of research by re framing economic and technology related barriers of internationalisation as a hierarchical reflective model. Empirically, it confirms that PLS-SEM can be used to compare the relative importance of these two types of barriers. Practically, policy makers can give slightly more priorities on the technology related barriers where it is not possible to give equal importance to both because of limited resource in developing economies