The Impact of the

CEO’s Openness
towards
Internationalization of
Small and Medium
Enterprises (SMEs) in
Bangladesh
(A study on the openness personality trait
of CEOs of SMEs)

By: Amlan Turya Bala

Student ID: 2019281224
Multinational Management
School of Management
North Western Polytechnical University
 The Impact of the CEO’s Openness towards
Internationalization of Small and Medium
Enterprises (SMEs) in Bangladesh

Abstract
Recent large and diverse international economic models say that efficiency
determines how businesses engage in direct export and international investment.
In practice, however, many successful companies are not internationalized,
while many unsustainable companies are. This situation indicates that non-
productivity variables affect internationalization.
This study examines a range of potential factors – the personal features of the
CEO – with a discrete panel data set for small and medium enterprises (SMEs)
in Bangladesh. We believe that the Internationalization of SMEs is more likely
if the CEO is more risk-taking, progressive and open to new ideas and globally
experienced.

Introduction
The influence of company's internal characteristics on the degree of
internationalization is a major focus of international entrepreneurship.
Emerging-market businesses seek foreign markets in order to achieve
competitive advantage and to avoid disadvantaging domestic institutions.
Internationalization provides numerous benefits, including incentives for
innovation, new expertise, and exposure to new markets and innovation in long-
term profitability. However, the general lack of capital, management skills and
expertise has shown that a majority of SMEs are unable to penetrate
international markets. Characteristic traits such as openness, extroversion,
neuroticism, agreeableness and conscientiousness play a very significant role in
the decision making capability of the CEO, which in turn can create a pathway
for internationalization.
Psychological factors like overconfidence and executive function were
considered important factors in the internationalization of SMEs. In the
behaviour decision theory, under very complex decision-making
situations management decisions are often the result of behavioural factors and
are not necessarily in the best interests of the company. The market conditions
are unstable in a developing and emerging markets such as Bangladesh. In
Bangladesh, SMEs are lacking resources and capital for investment in major
projects and thus seek less risky and more stable and certain markets to secure
their survival and achieve a sustainable result.

Literature Review
Many studies have examined the role of personality particularly for
entrepreneurial purposes, but the role of personality in the internationalization
process has been ignored specifically to this date. There are various forms of
personality, but "Big Five" personality traits are generally more academically
known. This study therefore focuses on the role of one the five main
characteristics: openness, extroversion, neuroticism, agreeableness and
conscientiousness in SMEs owners and managers. This study has mainly
worked with the openness characteristic trait of the CEOs of SMEs. Mayfield et
al. (2008) defining the following features as the following:
 Openness to experience: shows active mind, aesthetic friendship,
preferred for variety, expert curiosity and broad cultural interest.
 Extroversion: shows sociability, talk ability, affirmative behaviour,
optimism and joy and robustness.
 Neuroticism: shows mood, tension, anxiety and shyness.
 Agreeableness: defines personal warmth, altruism, sympathy, usefulness
and cooperation.
 Conscientiousness: represents resolve, good will, power, coherence and
speed.
Managers with a precise mental model are suggested to make appropriate
decisions on competitive and turbulent markets, thus facilitating
competitiveness and superior performance (Gary and Wood, 2011). The concept
of internationalization relies not on demographic characteristics but on
managers' knowledge (Maitland and Sammartino, 2015). In high uncertainty
managers' cognitive frameworks are considered central to taking effective
decision-making in an ambiguous environment (Kaplan, 2008). The
technological frameworks are, however, seen as key drivers to facilitate
technological changes in organizations (Orlikowski and Gash, 1994).

Problem Statement
Does openness of CEO towards new ideas and experience play significant roles
in the internationalization of Small and Medium Enterprises (SMEs) in
Bangladesh?

Objectives of the Research

 To determine the impact on the internationalisation of SMEs of the role
of openness to new experience personality trait of the CEO.

 To determine the impact of ‘openness to new ideas’ personality trait of

CEOs on the internationalization of SMEs

Significance of the Research

 This research will help us to understand the role of the openness
personality trait on the CEO’s decisions towards internationalization of
Small and Medium Enterprises (SMEs) in Bangladesh.

Research Hypothesis Development

Hypothesis 1: Openness to experience personality of CEO is positively
related to SMEs’ internationalization.

Hypothesis 2: Openness to new ideas personality of CEO is positively

related to SMEs’ internationalization.
Theoretical Framework Model of the Research
 Dependent Variable: Internationalisation of SMEs in this study is a
dependent variable. While different terms such as the entry into foreign
markets, large markets or international markets are used for
internationalization. This research was based on four items used by
Adomako et al. (2017) for the internationalization of SMEs in order to
produce more reliable results. Such items represent a wider overview of
the cycle of internationalisation. In the five-point Likert scale of 1 (very
small scale) and 5 (very large), the CEOs of SMEs would be asked
"what's the focus on the internationalization of their companies over the
past three years."

 Independent Variable: The personality trait of openness is used as

independent variables. While different personality features have been
applied in earlier studies, I rely on the ‘Big Five’ personality measures
used by Mayfield et al. (2008). In his studies Hahn et al. (2012) suggest
short measures are more sensitive than large measures in personality
studies. I therefore use relatively short measures.
Five points have been used to assess openness to experience. "I often seek
to explore new and interesting locations" is a sample item. Five items
were used to measure openness to new ideas characteristic. "In a meeting
I love to hear new and exciting ideas from my subordinates" is a sample
point. The CEOs are asked based on the five point Likert scale ranging
from 1(strongly disagree) to 5 (Strongly agree)

 Controlled Variable: Prior international experience of the CEOs acted

as the controlled variable. Since international experiences of the CEO can
play a significant role in determining the internationalization process of
the SMEs in a developing country like Bangladesh, it has been considered
to be an important controlled variable.
Research Methodology
Data from SMEs in production, trading and service industries are collected for
this study. Four major industrial zones in Bangladesh are targeted because in
these regions the majority of companies have headquarters:
 Gazipur Economic Zone, Dhaka.
 Narayanganj Economic Zone, Dhaka,
 Maheshkhali Economic Zone, Cox’s Bazar.
 Mongla Economic Zone, Bagerhat.
The list of companies and primary contact of the SMEs were acquired from
https://www.bangladeshyellowpages.com/ and a close contact from the
Department of the Bangladesh Chamber of Commerce. A series of
questionnaire was prepared in both printed as well as Google Form format. The
Google Form format has been taken up so that the response rate from the CEOs
could be much higher, since there is a chance of not being able to meet the
CEOs personally due to unavailability, but in case of an online questionnaire
they can be filled out from anywhere and at any time.

Conclusion and Discussion

This research explored empirically the significance of the ‘openness’
personality trait of the CEO on the internationalization of SMEs. It brings
together an important research gap and new evidence on the relationship
between personalities and firms' internationalization in existing literature. This
work shows that openness of CEOs towards new ideas and experiences affect
the degree of internationalisation of SMEs. This study suggests how CEOs with
openness to new ideas and experience are inherently striving for global markets.
CEOs for small and medium businesses that have an open approach to
innovative concepts and skills have been found to be more responsive towards
strategic processes. Alternatively, CEOs of SMEs that have an opposite
personality trait have limited transparency to usual circumstances, does not take
in new stimuli, prevent new circumstances and build obstacles to strategic
versatility. CEOs who are ‘open to experience’ personality continuously support
new information, new thinking and new start-ups. The present study confirms
that CEOs with openness traits are more interested in internationalisation and
are seeking entry into the foreign market.
Theoretical Implication
This research contributes in terms of the psychological factors of CEOs to the
existing literature on internationalization and international business. This study
provides insight into the theory of the CEO's internationalization strategies. This
research empirically demonstrates that certain types of personality
characteristics play a crucial role in internationalization. Globalization and
various markets have not only challenged business entities in emerging but also
in advanced markets; therefore, CEOs are looking for unique strategies and
innovative measures to compete in various markets. This work confirms and
demonstrates that, in these situations, openness is an important factor in
internationalizing.

Limitations of the Study and Recommendations for

Future Research
There are few limitations in this research that can be addressed in future studies.
Such as, since CEOs not only have busy schedules but they are more prone to
showing ignorance towards filling up questionnaires. This paper has worked
with only one personal trait whereas there are several other personal traits that
play significant roles in determining a CEO’s decision towards
internationalization. Thus in future researches, researchers can work on a
broader perspective.

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