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The internationalisation of SMEs from China: The case of Ningxia Hui Autonomous Region

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Abstract

This paper aims to study the international expansion of small and medium-sized enterprises (SMEs) in an emerging economy. Mathews’ (2006: 5–27) linkage–leverage–learning (LLL) model is the framework applied to analyse the process of international expansion of SMEs. To operationalise the study of the barriers, the LLL model was linked to the work of Leonidou (2004: 279–302). The data was collected from 125 SMEs operating in Ningxia, China, and then analysed using multivariate regressions; the models used the firms’ export intensity at the regional, national and international level as dependent variables. Four models were run: two analysing the internal and external barriers hindering firms’ international expansion, and the other two models studying the characteristics of Chinese international companies (state funding and ownership) as independent variables. The results show that 12 of the barriers defined by Leonidou (2004) are hindering the expansion of Ningxia’s SMEs, that the ownership from the state does not play an important role in this expansion, and that the support from the state in the form of funds is helpful in the first stages of the expansion (regional level) and the funds from private sources are key to cross the country’s boundaries.

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Notes

  1. Leonidou found two main types of barriers: (1) internal barriers are “associated with organizational resources/capabilities and company approach to export business” and can be broken down into informational, functional and marketing; on the other hand, (2) external barriers are those “stemming from the home and host environment within which the firm operates” and can be classified as procedural, governmental, task and environmental.

  2. Ningxia is one of the least developed regions in China, and this initial exploratory study was deemed necessary as there are only a few works on Chinese SMEs outside the more developed cities/regions on the coast (and also because this is one of the first works applying Leonidou’s (2004) set of barriers to an emerging economy).

  3. EconEnvironment, ExchRate and PolInstability were not included in the regional and national expansion models as they do not apply. They were only included in the international expansion model.

  4. Export intensity (the ratio of sales outside the companies’ region of origin, Ningxia, to total sales); same reasons to the internal and external barriers apply.

  5. White proposed to analyse the R 2 of a regression equation that includes the squared residuals from a regression model with the cross-product of the regressors and squared regressors.

  6. Durbin–Watson coefficient: Internal: dr = 2.140; dn = 1.522; di = 2.060. External: dr = 2.043; dn = 2.021; di = 1.875. The test shows that there is no statistical evidence that the error terms are positively or negatively autocorrelated for the great majority of the models, with the exceptions of Internal dn for positive, Internal dr for negative, and Internal di for positive and negative for which the test is inconclusive.

  7. Durbin–Watson coefficient: Ownership: dr = 2.027; dn = 1.746; di = 1.947. The test shows that there is no statistical evidence that the error terms are positively or negatively autocorrelated in the three models.

  8. Durbin–Watson coefficient: Funding: dr = 2.190; dn = 1.765; di = 2.005.

  9. The fact that DomRegulations appears as a barrier in this work seems to support Boisot and Meyer’s proposition.

  10. Studies are being carried out in Jiangsu Province, Anhui Province and Shandong Province in China; and data is being collected in Brazil, Mexico, Peru and Colombia). These works are attempting to incorporate the findings and lessons from this first exploratory study; the focus of these research projects are now guided by the areas for future research included in the previous paragraph (Discussion section).

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Authors and Affiliations

  1. Sorbonne Nouvelle University, Paris, France

    Guillermo Cardoza

  2. Instituto de Empresa Business School (Spain), Maria de Molina 11, 28006, Madrid, Spain

    Guillermo Cardoza

  3. School of Management, University of Bath, Bath, UK

    Gaston Fornes

  4. University of Bristol (UK) and ESIC Business and Marketing School (Spain), 10 Priory Road, BS8 1TU, Bristol, UK

    Gaston Fornes

Authors
  1. Guillermo Cardoza
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  2. Gaston Fornes
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Correspondence to Gaston Fornes.

Additional information

The authors would like to thank the support and help received from the Ningxia Foreing Experts Bureau, in particular from its Director Mr Jikai Ma and his team.

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Cardoza, G., Fornes, G. The internationalisation of SMEs from China: The case of Ningxia Hui Autonomous Region. Asia Pac J Manag 28, 737–759 (2011). https://doi.org/10.1007/s10490-009-9174-z

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