Quantitative Analysis of Managerial Capabilities and Internationalization of Manufacturing SMEs – Empirical Evidence from Developing Countries

Abstract

In this study, managerial capabilities: management capacity or size; management expertise; and management process were quantitatively analyzed through longitudinal methodology to ascertain their importance as one of the key driving forces or factors of firm’s international operations. The objective is to examine whether there is a significant relationship between these factors and the firm’s degree of internationalization. The study is based on a sample of 500 low, medium and highly-internationalized non-SMEs and SMEs from five developing countries. The results indicate that there is a significant difference in the managerial capabilities of SMEs and non-SMEs at all levels of internationalization. For example, management capacity (size) of SMEs was significantly less than their non-SMEs counterparts at the moderate and high levels of internationalization. SMEs were significantly less likely to employ a qualified managers (expertise) or uses professional training at the low, moderate and high levels of internationalization when compared to non-SMEs. SMEs were also found to be significantly less likely to develop management process, (international expansion, export and strategic plans, TQM, JIT, QA) when compared to non-SMEs. Overall, the study results suggest that compared to non-SMEs, SMEs grow internationally with less managerial capability.