Understanding Small Business International Strategic Change: The Influence of Internal Resource Capacity – Evidence from a Developing Country

Abstract

With the advent of globalisation, it could be argued that internationalisation is a necessity for the proportion of SMEs in sub-Saharan Africa. Most governments in sub-Saharan Africa have embraced this phenomenon. Currently, there are a number of on-going programmes designed by governments, international organisations and local associations to attract as many small businesses in sub-Saharan Africa to engage in the export business as possible because of the macro and micro benefits that is derived from the event. Yet, export involvement by small firms from this region of the world continues to be low, but it is argued that for SMEs, regardless of the amount of the macro programmes offered to them, their actual export success resides within the firm capacity. As a result, this study uses empirical data from Ghana, and employs logistic regression to predict the type of SME which will successfully change its strategy from being a wholly domestic business and becoming an international business firm, given a set of resource stocks. Based on the logit model, it is found that small firms with educated workforce, those with foreign ownership and those that possess large size will be more likely to change their strategy from being a wholly domestic business to an international business firms. Implications for future research, public policy and practice, based on the findings of the study are suggested.