Proceedings of 9th Asia-Pacific Business Research Conference
5 - 6 November 2015, Bayview Hotel, Singapore, ISBN: 978-1-922069-87-0
Indonesian SMEs’ Export Strategy and Process
Mohamad D. Revindo1, Christopher Gan2 and Cuong Cao Nguyen3
Using primary data collected through a survey questionnaire in 7 provinces in Java
and Bali regions during April-August 2014, this study aims to investigate the export
process and strategy undertaken by exporting Small and Medium-sized Enterprises
(SMEs) in Indonesia. SMEs in Indonesia have not been able to capitalise the global
market opportunity brought about by trade liberalisation. SMEs’ contribution to
Indonesia’s merchandise export is estimated at 9.3%, which is very low compared to
their contribution to Indonesia’s GDP and employments and lower than SMEs’ export
contribution in other ASEAN Countries.
The study sample consists of 235 exporting SMEs, 114 export intendersand 112
SMEs with no intention to export. The findings show that potential exporters can be
identified through their firm and owner characteristics. In addition, SMEs are driven by
certain motivating factors to export. In terms of export destinations, SMEs differ in
targeting the foreign markets to enter for their first export. After the first export,
exporting SMEs also differ in the way they expand their export markets. The findings
also indicate that the time taken following SMEs’ establishment until the first export
differs across provinces and products.
JEL Classification: F23, M16, M13
Keywords: SME internationalisation, export driver, export process, export strategy
1. Introduction
The world’s rapid export growth has been evident in the last two decades. The
world’s merchandise export value had tripled from 6.1 trillion USD in 2001 to 18.7
trillion USD in 2014(ITC, 2014). However, the benefits of global market opportunity
are not reaped equally among countries and enterprises. Large enterprisesappear to
be more able to capitalise the trade opportunity than SMEs. For example, in the mid2000s SMEs in US, Switzerland, the Netherlands, United Kingdomand Japan
contributed only 30%, 37.6%, 33.8%, 34.2 and 31% of exports, respectively
(Hammer and Stamps, 2010). This export inequality is even more prevalent in
emerging countries, where SMEs in Malaysia, Vietnam and Indonesia accounted for
only 28%, 17% and 9.3% of national export, respectively (Wignaraja, 2012).
The low SMEs’ contribution to Indonesia’s export contradicts theirroles in making up
99.99% of business entities, providing 97.16% job opportunities and creating 59.08%
of Indonesia’s GDPin 2012(Ministry of Cooperatives and SMEs Republic of
Indonesia, 2014). The poor SME export performance persists despite several
measures launched by the Government of Indonesia (GOI) including export
financing, technical and managerial training as well as export promotion. Hence,
further research in this area is necessary.
In order to have a good understanding on SME export, the literature emphasized the
importance of understanding the strategy, pattern and process undertaken by SMEs
to export (Melén, 2009, Nguyen et al., 2013). There are manystudies conducted on
_______________________________________________________
1
Presenting author, Department of Financial and Business System, Faculty of Agribusiness and Commerce,
Lincoln University, New Zealand (Mohamad.Revindo@lincolnuni.ac.nz).
2
Corresponding author, Department of Financial and Business Systems, Faculty of Agribusiness and Commerce,
Lincoln University, New Zealand (Christopher.Gan@lincoln.ac.nz), PO Box 84, Lincoln University, Lincoln 7647,
Christchurch, New Zealand, T 64 3 325 2811, F 64 3 325 3847.
3
Department of Financial and Business Systems, Faculty of Agribusiness and Commerce, Lincoln University,
New Zealand (Cuong.Nguyen@lincoln.ac.nz).
Proceedings of 9th Asia-Pacific Business Research Conference
5 - 6 November 2015, Bayview Hotel, Singapore, ISBN: 978-1-922069-87-0
SME export, but very limited reference to Indonesian SMEs. Therefore, this study
attempts to address the following questions: (1) What factorsdrive Indonesian SMEs’
to export?(2) What process is undertaken by Indonesian SMEs to become exporter?
and(3) What strategy is pursued by Indonesian SMEs to enter foreign market?The
findings will give a better understanding to policy makers to foster SME export, to
SME owners/manager to speed up their export process and lend support to theories
of SME internationalisation.
2. Brief Literature Review
There are several theories of firm internationalisation that explain the SME export
strategy and process. First, the Stage Approachsuggests that firms would take small
incremental, gradual and sequential steps in increasing their engagement in
international activities (Johanson and Vahlne, 1990). Firms begin international
activities from foreign markets that have less psychic distance or perceived as having
many similarities to the home market.
Second, the Network Approach argues that networking, in which firms establish and
develop relation withcustomers, suppliers, the industry, distributors, regulatory and
public agencies as well as other market actors, can stimulate and facilitate the firms
to venture abroad (Johanson and Mattsson, 1988). For SMEs, networking will help to
minimize the need for knowledge development and adjustment in international
markets as well as exploit established network positions in a foreign country (Ruzzier
et al., 2006).
Third, the International New Ventures (INV) theory argues that many small firms can
internationalise very early because of the followings: the managers have a strong
international entrepreneurial orientation and outlook; targeting relatively distinctive
products to niche markets; optimize the advancements of communication and
information technologies; and use external and independent intermediaries for
distribution in foreign markets (Cavusgil and Knight, 2009).
Fourth, the Resource-Based View(RBV) emphasizes that to enter international
markets firms should consider whether theirresources can be a source of sustained
competitive advantage. In particular, firms should assess whether theirresources are
valuable, unique, imperfectly imitable or substitutable (Barney, 1991). Firms
resources may include physical capital resources, human capital resources,
organisational capital resources, intangible assets and financial resources(Chatterjee
and Wernerfelt, 1991).
However, previous studies have identified several key elements of export strategy
and process (see Table 1). Those export strategy and process elements include firm
characteristics (who), export motivating factors (why), product selection (what),
market selection (where), entry modes (how) and point of entrance (when).
Proceedings of 9th Asia-Pacific Business Research Conference
5 - 6 November 2015, Bayview Hotel, Singapore, ISBN: 978-1-922069-87-0
Table 1: Key Elements in SME Export Strategy and Process
Elements
Views and Descriptions
Firm characteristics
(who)
Export motives
(why)
Products (what)
Market selection
(where)











Entry modes (how)
Point of entrance
(when)



Firm’s size and age
Owner’s age, experience, education and gender
Internal or external environment motivating factors
Proactive or reactive nature
Growth motives, knowledge-related motives, network/social ties
and domestic/regional market factors
Established or newly developed products
Customized or tailor-made products
Close-distanced markets similar to domestic markets
Market where firm’s strengthscan meet the demand/enquiry
Market where the networks are available
Sell directly to final consumer or sell indirectly through distributors
and/or agents
Produce in home country or in foreign countries
After firm establishes the business in domestic market
Immediate international orientation after firm establishments
Sources: Ottaviano and Martincus (2011), Welch and Wiedersheim-Paul (1980), Leonidou (1988),
OECD (2009), Johanson and Vahlne (1990), Johanson and Mattsson (1988), Cavusgil and Knight
(2009), Barney (1991).
3. Data and Methodology
3.1 Data collection
This study uses primary data collected through a survey questionnaire administered
randomly in 7 provinces in Java and Bali regions during April-August 2014. The
study sample consists of 271 exporting SMEs and 226 non-exporting SMEs.
However, only 235 exporting SMEs were actively exporting at the time of the survey.
As for non-exporting SMEs, 114 reported that they have intention and plan to export
in the future while the remaining 112 have no intention to export.
Hereafter in this study,the term Export Status is used to represent the grouping of
SMEs by export experience and intention and the following terms are used to
classify SMEs by their export statuses: 1) Exporters or Exporting SMEs, refers to
SMEs which have been conducting direct export activities and are actively exporting
atthe time of the survey, 2) Export Intender, refers to non-exporting SMEs that
haveintention and plan to export in the future, and 3) Non-Intenderor No Intention to
Export, refers to non-exporting SMEs with neither intention nor plan to export.
3.2 Methodology
The first step of the analysis distinguishesthree SMEexport statuses (exporters,
export intenders and non-intenders) in terms of their firm and owner characteristics.
The next step distinguishes exporters and export intenders by the motivating factors
to export and the target market selection. The third stepexamineshow exporters
differ in their market expansion pattern and how exporters in different provinces and
with different products differ in the time taken to become exporter. We use
descriptive statistics, mean comparison (t-test and F-test) and independence test
(Chi-square test) to identify those classifications.
Proceedings of 9th Asia-Pacific Business Research Conference
5 - 6 November 2015, Bayview Hotel, Singapore, ISBN: 978-1-922069-87-0
4. Findings and Discussions
4.1 Distribution of sample
Table 2 shows the sample composition by product and export status.From
461sample, 69 SMEs produced more than one type of product while the remaining
392specialised in a specific type of product.
Table2: Distribution of Sampleby Product and Export Status
Products
Furniture
Agro Products
Handicraft
Garments
Household Utensils
Leather Products
Food & Beverages
Machinery Components
Other Products
Multi-products
Total Sample
SMEs' Export Status
Export
NonExporter
Intender Intender
39
16
21
20
4
4
51
21
11
29
24
12
13
4
8
10
5
5
14
12
27
7
5
6
7
7
10
45
16
8
235
114
112
Total Sample
Number
%
76
28
83
65
25
20
53
18
24
69
461
16.5%
6.1%
18.0%
14.1%
5.4%
4.3%
11.5%
3.9%
5.2%
15.0%
100.0%
4.2 Characteristics of Respondents
Table 3 shows theage/experience of the surveyed SMEs in terms ofthe number of
years the firmshavebeen operating.The result shows exporters are the most
experienced (19.19 years)while the export intenders are the youngest (15.91 years)
and the age difference across the export status is statistically significant at 5% level.
Table 3 also shows the sampled SMEs by size, measured by total number of
employees. The χ2value of 37.237 (significant at 1% level) suggests that SME size
composition differs across export status. In particular, exporters are dominated by
medium enterprises (20-99 employees) while export intenders and non-intenders are
dominated by small enterprises (less than 20 employees).
Table 3: SMEs’ Age and Size
Firm Characteristics
Firm Age
Mean
Std. Deviation
Firm Size
≤ 19 employees
20 - 99 employees
Total
Exporter
19.19
11.577
83 35.3%
152 64.7%
235 100.0%
SMEs' Export Status
Export Intender
Non-Intender
15.91
9.406
68 59.6%
46 40.4%
114 100.0%
18.45
12.158
75 67.0%
37 33.0%
112 100.0%
Statistical
Test
F=
3.300**
χ2 =
37.237***
** and *** represent significance at the 5% and 1% levels, respectively.
The surveyed SME owners have diverse socio-demographic backgrounds (see
Table 4).In terms of owners’ age, the χ2value of 19.099 (significant at 5% level)
indicates thedifference in the composition of SME owners by age group across
Proceedings of 9th Asia-Pacific Business Research Conference
5 - 6 November 2015, Bayview Hotel, Singapore, ISBN: 978-1-922069-87-0
export status. Most of export intender’s owners are aged between 36-55 years while
the owners of exporter and non-intender are widely distributed in various age groups.
Table 4:SME Owners’ Characteristics
Owner
Characteristics
Owners' Age Group
Under 25
26-35
36-45
46-55
56-65
66 or older
Total
Gender
Male
Female
Total
SMEs' Export Status
Export
Exporter
Non-Intender
Intender
3
18
64
84
52
14
235
2
6
44
45
15
2
114
1.3%
7.7%
27.2%
35.7%
22.1%
6.0%
100%
175 74.5%
60 25.5%
235 100%
1.8%
5.3%
38.6%
39.5%
13.2%
1.8%
100%
80 70.2%
34 29.8%
114 100%
1
5
30
43
32
1
112
Statistical
Test
.9%
4.5%
26.8%
38.4%
28.6%
.9%
χ2 =
19.099**
100%
77 68.8%
35 31.3%
112 100%
χ2 = 1.486
** representssignificance at the 5% level.
SME owners are predominantly male (>70%) which is observed in all export statuses
(the value of χ2 = 1.486, insignificant at 10% level).
SME ownershave diverse educational background (see Table 5). A large share of
exporting SME and export intender owners have a bachelor degree while a large
share of non-intender owners are high school graduates and the difference is
significant at 1% level.
Table 5: SME Owners’ Education and Training
Owner Education
Education
Primary school
Junior high
Senior high
College
Degree
Postgraduate
Total
Overseas Education
Yes
Never
Total
Overseas Training
Yes
Never
Total
Exporter
8
4
54
23
125
21
235
SMEs' Export Status
Export Intender Non-Intender
3.4%
1.7%
23.0%
9.8%
53.2%
8.9%
100%
4
10
38
7
49
6
114
3.5%
8.8%
33.3%
6.1%
43.0%
5.3%
100%
11
17
54
5
21
4
112
9.8%
15.2%
48.2%
4.5%
18.8%
3.6%
Statistical
Test
χ2 =
72.006***
100%
36 15.3%
199 84.7%
235 100%
5 4.4%
109 95.6%
114 100%
1 .9%
111 99.1%
112 100%
χ2 =
23.146***
22 9%
213 91%
235 100%
2 2%
112 98%
114 100%
0 0%
112 100%
112 100%
χ2 =
17.127***
*** represents significance at the 1% level.
Proceedings of 9th Asia-Pacific Business Research Conference
5 - 6 November 2015, Bayview Hotel, Singapore, ISBN: 978-1-922069-87-0
SME owners have different overseas study experience(χ2 = 23.146,significant at 1%
level). The result shows that15.3% of exporting SME owners have studied abroad
while only few export intender and non-intender owners have such experience.
Likewise, SME owners have different overseas training/short courseexperience (χ2 =
17.127,significant at 1% level). Table 5 shows9% of the exporting SME owners have
overseas training/short courses experience compared to only a few export intender
and non-intender owners withsuch experiences.
Table 6: SME Owners’ Work Experience
Owner
Experience
Owner Experience
Mean
Std. Deviation
Overseas Work
Yes
Never
Total
MNC Experience
Yes
Never
Total
Exporter
18.53
8.679
SMEs' Export Status
Export Intender Non-Intender
16.27
8.540
17.67
8.630
Statistical
Test
F = 2.639*
33 14%
202 86%
235 100%
2 2%
112 98%
114 100%
1 1%
111 99%
112 100%
χ2 =
25.930***
43 18%
192 82%
235 100%
6 5%
108 95%
114 100%
7 6%
105 94%
112 100%
χ2 =
17.043***
* and *** represent significance at the 10% and 1% levels, respectively.
The differences in owners’ characteristics are also observed in terms of work
experience as indicated by F-value of 2.639 (significant at 10% level).Table 6 shows
that the exporting SME owners are the most experienced while the export intender
owners are less experienced than non-intenders.
Some of SME owners have overseas work experience and this kind of experience
differs across export status (χ2 = 25.930 and significant at 1% level). Table 6 shows
that very few of export intender and non-intender owners have overseas work
experience while12.6% of exporting SME owners have such experience.Finally, 18%
of exporting SME owners had previously worked for MNC/exporting firms, compared
to 5% and 6% export intender and non-intender owners, respectively.
4.3 Drivers to Export
The exporter or export-intender respondents were asked to rate how important each
of the 22 export motivating factor in their attempt to export on a 3 point Likert-scale
(1 = not motivating, 2 motivating, 3 = very motivating).Table 7 shows that the
average score given by exporters are higher than those by export intenders for
20factors, 13 of which are statistically significant.
Proceedings of 9th Asia-Pacific Business Research Conference
5 - 6 November 2015, Bayview Hotel, Singapore, ISBN: 978-1-922069-87-0
Table 7: Motivating Factors to Export
Mean Score
Export
Exporter
Intender
Exploit or exercise new markets
2.48
2.41
Large size of destination markets
2.48
2.18
Stability of destination markets
2.21
2.04
Gain “first mover advantage” in destination markets
2.02
1.78
Follow peers/competitors’ action
1.94
1.91
Owner/manager’s international experience & exposure 1.92
1.66
Owner/manager’s awareness of global opportunity
2.15
1.82
Firm’s size, age and experience
2.09
1.82
Introduce new products from R&D activities
2.35
2.16
Confidence in the uniqueness/quality of the product
2.51
2.27
(Expected) weak domestic (Rupiah) exchange rate
2.16
1.98
Availability & accessibility of business networks
2.07
1.91
Advice & referral trust from social networks
2.18
2.18
Indonesian emigrant communities in target markets
1.72
1.78
Enquiries/demand from foreign customers
2.55
2.33
Limited home market for company’s products
1.85
1.76
Stiff competition in home market
1.95
1.91
Encouragement/incentives from home government
1.88
1.70
Home country’s good image in destination markets
2.18
1.96
Close location to country’s borders
1.88
1.86
Decreasing transportation & communication cost
2.18
2.10
Simplified domestic export procedure
2.06
1.97
N
235
114
Motives to Export
Statistical
Test
1.047
4.111***
2.525**
3.074***
.363
3.480***
4.712***
4.104***
2.715***
3.422***
2.139**
2.313**
-.046
-.729
3.028***
1.283
.445
2.105**
3.105***
.236
1.224
1.092
** and *** representsignificance at the 5% and 1% levels, respectively.
The Likert-scale responses can also be used to identify the main motivating factors
to export (see Table 8). For exporting SMEs, “Enquiries/demand from foreign
customers” and “Confidence in the uniqueness/quality of the product”are the top
motivating factors whilethe main motivating factors for export intenders is to “Exploit
or exercise new markets”.
Table 8: Top 5 Motivating Factors to Export
1
2
Exporters
Enquiries/demand from foreign
customers
Confidence in the
uniqueness/quality of the
product
Score
2.55
1
2.51
2
3
Large size of destination
markets
2.48
3
4
Exploit or exercise new markets
2.48
4
5
Introduce new products from
R&D activities
2.35
5
Export Intenders
Exploit or exercise new
markets
Enquiries/demand from foreign
customers
Confidence in the
uniqueness/quality of the
product
Large size of destination
markets
Advice & referral trust from
social networks
Score
2.41
2.33
2.27
2.18
2.18
4.4 Sources of Information Regarding Export
The respondents who were identified as exporters or export intenders were asked
whatsources of information they accessed to explore export opportunities in target
Proceedings of 9th Asia-Pacific Business Research Conference
5 - 6 November 2015, Bayview Hotel, Singapore, ISBN: 978-1-922069-87-0
markets.They reported that they used10 sources of information but the Chi-square
test value of 30.559 (significant at 1% level) indicates that they differ in the extent to
which they use them (see Table 9).
Table 9: SMEs’ sources of information regarding export opportunities
Frequency of Accessiona
Statistical
Sources of Information
Export
Test
Exporters
Intenders
Newspapers, television and
29
23
internet media
Web/online Resources
63
51
Business association
65
25
Business partners/associates
126
68
Central government agencies
53
13
χ2 =
Regional government agencies
31
12
30.559***
Family/relatives
38
23
Indonesian emigrant societies
6
8
in target markets
Contact made by buyer
133
54
Trade show/expo
19
1
Others
4
1
*** represents significance at the 1% level
a) Represents the frequency a source of information is accessed by SMEs
Most of exporting SMEs wait for the potential buyers to makecontact, which reflects
SMEs’ risk aversion in exporting (George et al., 2005). The presence of actual
buyers minimise the cost of payment collection and customers’ complaints (Shih and
Wickramasekera, 2011, Battaglia et al., 2006). Alternatively, SMEs sought
information regarding foreign market opportunities from business partners/business
associates, with whom SMEs build trust through previous business
transactions/activities(Senik et al., 2011).
4.5 First Entryinto Foreign Market
SMEs must decide which market they will first attempt to enter. In the survey, the
exporters were requested to indicate which foreign market(s) they actually entered
for the first time while the export intenders were asked which foreign market(s) they
plan to enter.
Table 10:First Entered Foreign Market
Foreign Market Destinations
Exporters
First Market
(Actual)
Export Intenders
First Market
(Planned)
Statistical
test
Western Europe
East Asia
ASEAN countries bordering Indonesia
Oceania
North America
ASEAN countries bordering Indonesia
Middle East
Others
65
57
43
33
17
6
7
14
17
20
40
16
14
8
3
3
χ2 =
23.449***
*** represents significance at the 1% level.
Proceedings of 9th Asia-Pacific Business Research Conference
5 - 6 November 2015, Bayview Hotel, Singapore, ISBN: 978-1-922069-87-0
Table 10 shows that the export intenders plan to begin exporting to bordering
ASEAN countries (40 cases), followed by East Asia (20 cases). However, the
exporting SMEsreported that their first exportwas actually toWestern Europe (65
cases) or East Asia (57 cases) (χ2= 23.449, significant at 1% level).
The market selection in the export plan of export intendersmay be influenced by
close distance and socio-economic similarities consideration(Johanson and Vahlne,
1990). On the contrary, the exporting SMEs did not actually begin exporting to
neighbouring countries but rather to large markets with high purchasing power.
4.6 Export Market Expansion
SMEs that were successful in their first export to a certain market(s) may consider to
expand their export to other countries. The survey asked the exporting SMEs how
they expand their market after the first export (see Table 11).
Table 11: Market Expansion after the First Export
First export
market
Expand the
market after
first export
Export
expansion
destinations
Destinations
Number of cases
Western
Europe
65
East
Asia
57
64
55
37
32
17
98.46%
96.49%
86.05%
96.97%
100.00%
34
18
35
18
27
12
32
57
15
12
13
15
37
20
41
13
16
9
17
19
4
2
4
7
26
19
9
13
9
4
11
12
0
1
2
7
25
8
21
13
21
5
12
18
6
4
9
7
3
5
9
3
7
2
9
11
5
2
2
2
Number
%
ASEAN Border
ASEAN Other
East Asia
Middle East
Oceania
South Asia
North America
Western Europe
Eastern Europe
CIS
Africa
South America
Bordering
Oceania
ASEAN
43
33
North
America
17
Table 11 shows that most of exporting SMEs are not content with only one foreign
market, regardless of their first export market, and therefore expanded the market
thereafter. However, the market expansion path/pattern shows a considerable
variation. SMEs that began exporting to neighbouring ASEAN countries expand
gradually to the next less-distanced markets.On the contrary, SMEs that began
exporting from distanced or high income markets exhibit more varied pattern of
export expansion path.
4.7 Timing to Become Exporter
Table 12 shows the average time taken for SMEs to begin exporting following firm
establishment in 7 provinces.
Proceedings of 9th Asia-Pacific Business Research Conference
5 - 6 November 2015, Bayview Hotel, Singapore, ISBN: 978-1-922069-87-0
Table 12: Time to become Exporter after Firm Establishment (years)
Std.
Statistical
Provinces
N
Mean
Minimum Maximum
Deviation
Test
Bali
DI Yogyakarta
Jawa Barat
DKI Jakarta
Banten
Jawa Tengah
Jawa Timur
Total
39
46
17
50
10
11
62
235
1.74
2.39
3.65
6.02
6.20
8.18
10.94
5.83
3.185
2.809
6.264
6.052
7.829
9.611
10.116
7.690
0
0
0
0
1
0
0
0
13
11
24
37
26
28
44
44
F = 10.325***
*** represent significance at the 1% level.
The average firm age of exporting SMEs in Bali and DI Yogyakarta were 1.74 and
2.39 years old when they exported for the first time. Theseare two small provinces
which are main tourist destinations in Indonesia, enabling SMEs’ exposure to
foreigners. However, SMEs in Jawa Timur and Jawa Tengah Provinces on average
took 10.94 and 8.18 years to be begin their first export. These two provinces have
bigger population and advance industrialisation, enabling local SMEs to concentrate
on the local/regional markets.
The timing to become exporter also differs across products (see Table 13). SMEs
that produce furniture, leather products or multi-products become exporter in a
relatively short time (3.49, 4.00 and 3.56 years, respectively) compared to SMEs that
produce other types of products. However, SMEs that produce agro products and
food and beverages took longer time to make their first export (9.95 and 12.14 years
after their establishments, respectively).
Table 13: Firms’ Age at the First Export (years), by products
Products
Furniture
Leather Products
Garments
Handicraft
Machinery Components
Household Utensils
Agro Products
Food & Beverages
Multi-products
Other Products
Total
N
Mean
Std.
Minimum Maximum
Deviation
39
10
29
51
7
13
20
14
3.49
4.00
6.00
6.18
6.29
7.31
9.95
12.14
6.824
5.907
5.169
7.888
5.407
3.614
8.918
13.120
0
0
0
0
1
1
0
1
34
20
19
38
16
13
29
44
45
7
235
3.56
5.43
5.83
7.079
5.653
7.690
0
0
0
41
13
44
Statistical
Test
F=
2.849***
*** represent significance at the 1% level.
5. Conclusions and Policy Implications
SMEs in developing countries, particularly in Indonesia, are less able to capitalise
international market opportunities compared to their larger counterparts. The
literature suggests that in order to foster SME export it is crucial to understand the
export strategy and process undertaken by SMEs. This current study attempts to
bridge the gap in the literature with reference to Indonesian SMEs’ export.
Proceedings of 9th Asia-Pacific Business Research Conference
5 - 6 November 2015, Bayview Hotel, Singapore, ISBN: 978-1-922069-87-0
The findings suggest that potential exporters can be identified from their firm and
owner characteristics, driven to export by certain motivating factors and rely on
certain sources of information. Although experienced SMEs may have advantage in
export activities, many SMEs become exporters in a short time after their
establishments. These early internationalisation of SMEs are evident in certain
product, certain provinces and/or certain owner characteristics. For SMEs, large and
high income markets are more important than close-distanced markets. In general,
the findingsshow mixed evidencesfor International New Venture theory, Network
Approach and Resource Based View, except for theStage Approach.
Export assistance programs aimed at fosteringexport may be more effective if they
concentrate on SMEs with export potential. Export assistance programs should focus
on intensifying interaction between potential exporters and potential buyers, for
example through business matches/meeting as well as potential exporters with
business associates in the industry.Technical assistance may focus on certain
products that already sell in foreign markets and attention shouldaddress how SMEs
maintain and improve their products quality. Finally, export promotion to high income
and large market is just as important as to neighbouring countries.
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