The effect of foreign market knowledge on SME export performance: a study of non-traditional SMEs in Ghana

Abstract

Purpose: It is well documented in the extant literature that knowledge plays a crucial role in small and medium enterprise (SME) internationalization. Exporting SMEs from developing economies faces many challenges, including lack of knowledge about institutions in foreign markets and inadequate knowledge about foreign institutions and limited internationalization knowledge (IK). However, research on the export performance of SMEs has thus far focused on the internationalization strategies of multinational corporations. This study aims to explore the effect of foreign market knowledge on SME export performance. The authors also assessed the moderating effect of employee absorptive capacity in the knowledge-performance nexus. Design/methodology/approach – The authors adopted a survey design to collect data from owners managers of SMEs and exporters in the Greater Accra region of Ghana. A total of 350 questionnaires were distributed based on convenience. Of this number, 257 usable responses were used in the final analysis. The authors tested the proposed model using partial least squares-structural equation modeling. Findings: The findings show that the three types of foreign market knowledge tested in this study, namely, foreign institutional knowledge (FIK), foreign business knowledge and IK have positive and significant effects on SME exporters’ performance. It also shows that employees’ absorptive capacity the relationship between FIK and SME exporters’ performance. Originality/value: The study demonstrates the types of knowledge relevant to SME export performance. The study further demonstrates the moderating effect of employee absorptive capacity on the relationship between knowledge and export performance. The study advances existing knowledge on SME performance. especially from an emerging economy context.