Greater risk and a smaller opportunity: The opportunity space of SME internationalization in lower-income countries

21 Pages Posted: 1 May 2023

See all articles by Chikondi Ng’ombe

Chikondi Ng’ombe

University of Pretoria - Gordon Institute of Business Science

Theunis Mans

University of Pretoria - Gordon Institute of Business Science

Helena Barnard

University of Pretoria - Gordon Institute of Business Science

Date Written: April 27, 2023

Abstract

Why do small and medium-sized enterprises (SMEs) from lower-income countries internationalize using high-commitment modes? In this exploratory, qualitative study of 22 SMEs from South Africa (a middle-income country) and Malawi, Zambia and Zimbabwe (low-income countries), we document that the SMEs typically have both a greater tolerance for risk, likely due to the region from which they originate, and an appetite for opportunities smaller than what would be acceptable to multinational enterprises (MNEs) from advanced economies. This provides a very different opportunity space for the two types of enterprises. The size of the home country seems to matter: SMEs from middle-income countries often work on their own and target other emerging markets, but in poorer countries, SMEs often work synergistically with MNEs from more advanced economies, acting as their “delivery arm” into the small markets in their immediate region. This opens up a new way of understanding MNE-led development. Facilitating the development of partnerships between local SMEs and advanced MNEs is a potentially fruitful avenue that policymakers from poor countries can pursue to help their countries open to the benefits of internationalization.

Keywords: Africa, CSA, FSA, micro-multinationals, opportunity, risk

JEL Classification: F63, L25, L26, M16, O19

Suggested Citation

Ng’ombe, Chikondi and Mans, Theunis and Barnard, Helena, Greater risk and a smaller opportunity: The opportunity space of SME internationalization in lower-income countries (April 27, 2023). Transnational Corporations Journal, Vol. 30, No. 1, 2023, Available at SSRN: https://ssrn.com/abstract=4431845

Chikondi Ng’ombe

University of Pretoria - Gordon Institute of Business Science ( email )

Theunis Mans

University of Pretoria - Gordon Institute of Business Science ( email )

Helena Barnard (Contact Author)

University of Pretoria - Gordon Institute of Business Science ( email )

26 Melville Road
Illovo
Johannesburg, 2146
South Africa
+27117714213 (Phone)
+27117714177 (Fax)

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