1.1 and 68% for Germany (UK Essay,

 

 

1.1     Introduction

 

 

Small
and medium enterprises (SMEs) primarily defined the industrial structure
of the world to a larger extent.  Significance of SMEs is not limited to
emerging economies.  Establishing and nurturing SMEs is equally important
either we talk about the least developed, developing or developed economies of
the world.  SMEs
are significant because of various reasons.  For example, 66% of
employment in Japan is generated by SMEs.  This figure is 53% for USA and
68% for Germany (UK Essay, 2014).  In addition to this SMEs are
responsible for 55% value addition in Japan, 51% for USA and 45% for Germany
(UK Essay, 2014).

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SMEs have also been increased focus of research
attention because of various reasons (Shaw, 2004; Shaw
and Willams, 1998).  Their potential to export and thus import employment is one
of these reasons.  It is important to understand and keep on enhancing
this understanding about what determines SMEs export
performance.  This understanding is important because of significant role
SMEs are playing in national economies around the world.  Scholarly
literature is very much rich on what determines SMEs’ ability to
export.  One of the classifications to study determinants of SMEs’
export performance is based on industrial structure of these SMEs i.e.,
SMEs in manufacturing and SMEs in services sector. 

 

1.2     Literature Review

Various authors have reflected on determinants
of SMEs export performance (Iqbal and Urata, 2002). Authors such as
Zou and Stan (1998), have highlighted the factors common to what determine SMEs
export performance.  According to these authors commitment, networking,
specific internal resources, entrepreneurship spirit and reliability of supply
are the important factors.  Ellis and Pecotich
(2001), highlighted the determinants
of SMEs in services export business.  According to these authors in
service sector there are some factors which can be associated with
all types of SMEs dealing in services. Authors referred these
factors as fundamental performance drivers.  These consist of: 1) long
term commitment to the market, 2) relationship and network development, 3)
concept proved in home market, 4) patience and 5) entrepreneurial spirit. 
In addition to these factors, the authors identified separate set of factors
contributing towards performance of SMEs exporting services which can be
classified as low vs. high on degree of face to face contact and low vs. high
on degree of tangibility.

The literature pertained to export performance
determinants of SMEs is substantially rich.  Richness of the
literature is defined in terms of various streams of studies.  
Studies focusing on e.g., geographical belongingness of SMEs, in context
of developed and developing countries of the world, with respect to industry
and possibly with respect to markets SMEs have targeted. 

Oo
(2013), studied the SMEs performance in the Kyaing Tong area, Myanmar. He found
that  export performance of SMEs in
Myanmar have a positive relation with nature of firm, firm knowledge, location
of firm, customer orientation, competitor orientation,  organizational  capability, strategic competencies,
commitment competencies, external factors and inside -firm orientation. External
factors are important performance oriented factors for firm survival and
performance (Van,
1993). These factors influence directly or indirectly on Decisions
making in Entrepreneurial process and contribute in firm’s performance at the
end. External factors also make impact on personality and attitude of
entrepreneur (Radiah,
Mohd Azid, 2009).

 

In
developing countries economic progress is largely depend on small and medium
enterprises. Large employment is also generated by SMEs and it makes large
participation in gross domestic product (Nwokah,
2008). Expansion of SME’s has not only make opportunities for
employment but also help to reduce poverty of all countries (Schumacher, 1973).

Shah, javed and syed (2013), had discussed
internationalization of small and medium enterprises in Pakistan. Research had
focused on the factors that effect the internationalization of SMEs in Pakistan
and it revealed that research and development, government support, growth of
export industry, entrepreneurial
associations are important
factors for internationalization development. Whereas international trade
restrictions, inadequate economic policies, lack of research facilities, lack of infrastructure, not enough finance are the
barriers for export performance of SMEs.

 

Research and development is also a very important
contributor in export performance of SMEs. Uniqueness of product or service
with low price can be done through R&D which generate a good image of the
product and able to get more competitive advantage (Ali & Faisal, 2010).

There will be focus on foreign qualified
and highly trained staff which will be aware of the new dimensions of changing
economic world.  Managerial skills are
also important for export performance of industry. Skillful decision makers,
with talented team, are able to develop competitive products which contribute
in national economy and promote more employment and revenue. Small businesses
contribute more in national economic growth as compared to large business (Phulpoto,
Shaikh & Rahpoto, 2012).

 

Mesquita and Lazzarini (2008), discussed
the collective efficiencies in weak infrastructure of developing and poor
economies. Researcher discussed the vertical ties and horizontal ties in SMEs
economies. Supply chain is a source of vertical ties which helps to increase
manufacturing productivity whereas horizontal ties with the help of joint
product innovation enable to raise production. These two concepts jointly make
competitive product for SMEs. 

 

 Majeed, Ahmad and Khawaja (2006), made a
research on 75 developing countries including South East Asian countries. They found
that continual economic growth rate is extremely important for export
promotion. Sustained economic progress effects export promotion in a positive
way. Strong communication infrastructure is required for growth of export
performance. All modules of business, which are different in nature, must have
a strong collaboration with each other. These modules can be research and
development, technology, infrastructure, govt. policies, economic policies, growth
of export industry, entrepreneurial associations. Exchange rate policy
should be stable so that exchange-rate risks are minimized so that investors
feel safe while investing in SMEs. The important point that researcher raised
to replace the agriculture exports by industrial exports which generate a
better profit margin in large market as industrial product have stable prices
with high gains. Precisely, export determinants are Production Level, production
growth, real exchange rate, communication facilities, indirect Taxes, Official development
assistance, savings, industrialization, labor force, foreign direct investment.
Internal barriers are has more impact in export performances than external
barriers in textile industry in Pakistan
(Khattak, Arslan, and Umair, 2011).

 

A study of Sharma (2001), investigates
exports determinant in India using annual data for 1970-98. The results of
study suggest that demand for Indian exports increase when its export price
falls in relation to world prices. Furthermore, the real appreciation of the
rupee adversely effects Indian exports. Exports supply is positively related to
the domestic relative price of exports and higher domestic demand reduces
export supply. Foreign investors appear to have statistically no significant
impact on export performance, although the coefficient of FDI has a positive
sign

.   

Wegnel and Rodriguez (2006),
studied the export performance of SMEs of Indonesia. They concluded that when
there are more exporters then firms going to increase of exports. For
Indonesian industry, export performance become higher in presence of foreign
investors or buyers. Large firms tend to export more than small firms but more
financing, credits and modern equipments in form of machines and technology can
increase exports of SMEs. Imports in form of raw material or labor can cause
reduction in exports. Use of domestic inputs (labor, raw material etc) increase
exports in small firms. Indonesia introduces size-neutral policies that allow
many small firms to enter into the market with lower business cost. With that
policy many firms came into market that increases the competition within firms
and promote trend for exports. Reduction of initial business cost attracts more
small and medium size firms to enter into market with new thoughts and
dimensions that enhance export performance.  

 

 

1.3     Problem Statement

Small
and medium enterprises (SMEs) significantly impact the economy of
any country. It is source of handsome amount of exports, resulting large number
of employment and progress of country. The research tends to explore the factors
which are necessary for the export performance of SMEs. The focus of this
research is to identify the export performance indicators of South East Asian Countries
and SAARC countries. Pakistan is important member in South
Asian Association for Regional Cooperation (SAARC) council
and Pakistan’s SMEs are largely link with these countries, so identification of
factors that increase export values will greatly impact on performance of SMEs
of Pakistan.   

 

1.4     Objective of the study

Precisely the objectives of this study are:

To develop an informed insight
about factors determining export performance of SMEs based on review of
literature.
To synthesize all export
performance determinants in ASEAN and SAARC countries.
To identify the association of
export performance factors with Pakistan’s SMEs.
To identify the significance of
those factors in development of SMEs industry. 

The greater focus of this study will be
SMEs based in countries pertained to Association
of South East Asian Nations (ASEAN) and the South Asian Association for Regional Cooperation (SAARC) countries.  Proximity of these
economies with Pakistan e.g., with respect to most of these countries
started their journey towards industrialization through SMEs formation and
development, as is the case of Pakistan makes it pertinent to bring these
countries into greater focus.

 The study will focus on different sectors of
businesses of SMEs in the selected area.

This will include:

·        
Manufacturing based SMEs   

·        
Services oriented SMEs

    

1.5     Research
Questions

The research is to
examine the export performances of small and medium enterprises (SMEs) of ASEAN
and SAARC countries.

The present study
concerned with the following research questions:

What are the factors that determine the export
performance of SMEs?
Are export performance determinants of ASEAN
and SAARC countries having association with Pakistan’s SMEs performance?
Are those export performance factors making
significant impact on development of SMEs industry?

1.6     Research
Gap

To theorize the studies on Export performance
determinants of SMEs in this specified region. Some researches have been made
to explore the export performance factors in Indonesia, Bangkok, India and Malaysia.
No single study is found that has reviewed/ synthesized such literature in this
capacity (region and nature) so this will be the first hand contribution in the
theory. In order to assist SMEs in Pakistan, there is need to study what
determine/define export performance of SMEs in various countries. 
Proposed study is planned to fill this gap.

 

1.7     Significance
of the Study

Small and
medium enterprises (SME) have a significant contribution in revenue margins of
non-developing, developing and developed countries. Country’s economy mainly
depends on SMEs. SMEs generate large revenues due to their export items and export
performance plays a key role in enhancement of economies of any country. Countries
who have more SMEs are making prompt growth, as initial setup cost of SMEs is
very less whereas revenue in return is high. 
Current study is identifying the determinants of export performances of
SMEs in south east asian region. Identification of export performance factors
also help Pakistan’s SMEs and give clear guidelines to manufacturers and policy
makers in SME industry. Pakistan’s economy can grow if there will be clear strategy
about SMEs and remove the internal and external barriers which harm the SME
industry.   

1.8     Methodology

The
research is literature based so the simple literature review methodology would
be used. This study will focused on the literature relating to the determinants
of export performance published between 2005 and 2015. The goal is to trace the
new developments in the last decade and identify developments in export
performance research.

Methodology
would be Sampling & sampling strategy,Data Collection,Data Analysis,
writing/ completing research cycle

In
first stage (sampling & sampling Strategy) it
will be searched out that

1. Which data bases are to be included/ searched?

2. Search terms selection

3. Reviewing of search terms and data bases.
Succeeded sources of data will be searched out and categorized as per their
reliability and authenticity i.e. different famous journals like Jstore,
emerald and libraries of HEC and other universities.

In second
stage (Data Collection), the studies will be recognized by an efficient
process which combine electronic searched items with manual means. This method
has the advantage of efficiently generating a large number of articles which
contain the key search words and which are published in a wide variety of
journals. Examples of the key words include terms such as export, exporting,
determinants of export performance, south east asian, export sales, export
profits, export growth, export success, and satisfaction with export. The
manual search, on the other hand, was directed at sorting through the articles
published in major marketing and international business journals, tracking down
those articles listed in the references of major

export
performance studies, and searching the books on exporting. The acknowledged
articles will come from some of the most popular journals in marketing and
international business, including the Journal of Small
Business, Journal of Management, Journal of Marketing, Journal of Management
Review, International
Journal for Small and Medium Enterprises, Journal of Small Business and
Enterprise Development, Small and Medium Sized Enterprise and Entrepreneur
Review, International Small Business Journal, Journal of Small Business
Economics and International Journal of
Entrepreneurial Behavior & Research.

In third stage (Data Analysis) two phases
will be utilized

1. Appraising the data.

2. Synthesis of data.

A
Meta Analysis would be the answer. Useful information will be gathered from
published work via thesis/ articles etc. Priority will be given to latest
published work starting from 2010 onwards. In appraising of data it would be
noted that how the writer arrived at their findings, their research background,
methodology of their research, contribution to the existing evidence and the
relationship of their research question etc whereas in synthesis of data,
examination of the findings in the context will be searched out and try to
combine all those findings in one meaning full document. Whereas, the
researcher will use his expertise to interpret the patterns of different export
performance factors.

 

In the last
stage (writing/ completing research cycle) final report would be written
where the focus will be on what are the issues, quality of evidence, and
utilization of knowledge etc. While writing this thesis it will be taken under
consideration that the writing must be creative, precise, and brief and narrates
true research on export practices of SMEs in Asian countries. Focus will be on
SMEs, SMEs export practices; SMEs export behavior and other different
dimensions of it.

Refere