Export Behavior of Small and Medium Sized Enterprises in an Emerging Economy.

Summary This thesis is presented as a collection of three empirical papers. The overall objective of this thesis is to examine the export behavior of small and medium-sized enterprises (SMEs) in an emerging economy, Malaysia. This study focuses, specifically, on two research areas: export determinants and export strategy. The first and second papers analyze, respectively, the internal and external determinants of export decisions. The third paper examines export strategy in the context of market selection. The results and contributions are discussed in each article.The first article examines the impact of financial factors on the export decision. In particular, we incorporate the two major key financial dimensions, cost and capital, to study how the perception of cost, internal capital capacity, and external capital constraint determines the firm's export status. Our results show that exporters perceive a lower cost of exporting and are less constrained by external capital than non-exporters. However, we find that exporters show a lower internal capital capacity than non-exporters. This paper contributes to the literature while incorporating push and pull factors to understand the combined effect of financial determinants on export decisions. The second paper assesses the effectiveness of export promotion programs. In particular, we examine the level of awareness, frequency of use, and perceived usefulness of these programs between non-exporters and exporters. Our results suggest that exporters have more awareness, are more frequent users, and consider these programs more useful than non-exporters. However, both groups show higher levels of awareness, more frequent use, and higher levels of perceived usefulness of programs related to export information and sponsored international trade shows than those related to financial assistance such as credit counseling. In addition, the analysis also revealed that frequency of use and perceived usefulness for most programs are positively related to export experience, but not to export sales. This study helps us better understand the impact of export programs on export initiation and expansion across the different stages of exporting in an emerging economy. The third paper examines the relationship between competitive strategies and export market selection. Drawing on the literature of comparative advantage for emerging country exporters, and the characteristics of demand in export markets, we test hypotheses on how cost dominance, differentiation, and targeting strategies influence exporting to developed and developing countries. Differentiation strategies show opposite effects to cost, while targeting strategies are negatively associated with exports to both types of markets. This study contributes to the literature by showing that competitive strategies act as a firm-level determinant of export market selection.