Performance, Internationalization, and Firm-specific Advantages of SMEs in a Newly-Industrialized Economy

Performance, Internationalization, and Firm-specific Advantages of SMEs in a Newly-Industrialized... In light of the lack of empirical evidence regarding issues of internationalization as they affect small and medium-sized enterprises (SMEs) from newly-industrialized economies (NIEs), this study aims to expand the applicability of existent internationalization theories. So far, such theories have largely been developed with MNCs from industrialized economies in mind. In examining a 1996 sample of 1,419 Taiwanese SMEs, we found that the relationship between internationalization and performance could be graphically depicted as one of inverted U-shaped curvilinearity, and that a specific level of internationalization corresponded to maximum profitability. Our empirical findings also confirmed a relationship of U-shaped curvilinearity between advertising investment and performance, indicating that a minimum level of investment is required in order for advertising to be effective. Investments in research and development (R&D) were also shown to be positively associated with firm performance. The external validity of our internationalization theories regarding SMEs from NIEs was generally supported, though some modifications allowing for consideration of the particular context of individual SMEs will ultimately become a necessity. Small Business Economics Springer Journals

Performance, Internationalization, and Firm-specific Advantages of SMEs in a Newly-Industrialized Economy

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Kluwer Academic Publishers
Copyright © 2006 by Springer
Business and Management; Management; Microeconomics; Entrepreneurship; Industrial Organization
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