Influence of Managerial and Firm Characteristics on the Internationalization of Small and Medium Enterprises (SMEs) in Sri Lanka

Abstract

Sri Lanka’s Small and Medium Enterprises (SMEs) find it exporting as a simple way for their internationalization. They contribute less to the value of exports than large companies as they face several challenges that obstruct their export performance during internationalization. These challenges are linked to managerial and firm characteristics. This research attempts to identify the challenging factors that would influence Sri Lanka’s SME internationalization. Data for this research were collected from 165 Sri Lanka’s SMEs exporting processed food and beverage products through a structured questionnaire. Various techniques were employed to analyze the collected data. The internationalization of SMEs is the dependent variable, measured by export sales performance. Managerial characteristics such as the manager’s age, education, international experience, foreign language skills, and entrepreneurial orientation, and firm characteristics such as the firm’s age, size, export experience, and ownership are the two independent variables in this study. The findings indicate that SME managers with postgraduate education in Sri Lanka positively influence their export growth during internationalization. However, the entrepreneurial attitudes of SMEs negatively impact their internationalization. Therefore, postgraduate education of SME managers greatly improves the export performance of their respective companies during internationalization, whereas the perceived challenges of the entrepreneurial attitudes of SMEs decline the export performance. Therefore, it is necessary to develop strategies to overcome these challenges in the processed food and beverage industry in order to sustain both SMEs and the economy of Sri Lanka.