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Internationalisation challenges of SMEs: role of intellectual capital

Article  in  International Journal of Learning and Intellectual Capital · January 2021

DOI: 10.1504/IJLIC.2021.10035394

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Int. J. Learning and Intellectual Capital, Vol. X, No. Y, xxxx 1

Internationalisation challenges of SMEs:

role of intellectual capital

Sajjida Reza
Faculty of Management Sciences,
Balochistan University of Information Technology,
Engineering, and Management Sciences (BUITEMS), Pakistan
Email: sajida.reza@buitms.edu.pk

Muhammad Shujaat Mubarik*

College of Business Management,
Institute of Business Management,
Karachi, Pakistan
Email: shujaatmubarik@gmail.com
*Corresponding author

Navaz Naghavi
School of Accounting and Finance,
Faculty of Business and Law,
Taylor’s University, Malaysia
Email: drnavaz.naghavi@gmail.com

Raja Rub Nawaz

Department of Management Sciences,
Mohammad Ali Jinnah University, Pakistan
Email: rajarabnawaz.maju@gmail.com

Abstract: The study examines the impact of internationalisation challenges on

the internationalisation of small and medium enterprises (SMEs). Second, the
study investigates the role of intellectual capital in the association between
internationalisation challenges and the firm’s internalisation. By collecting data
from 211 manufacturing sector SMEs of Pakistan, PLS-SEM was employed to
analyze the hypothesised relationship. Second, one-way ANOVA was
employed to check whether the internationalisation differs by the level of IC or
not. The results depicted a significant negative influence of all four groups of
internationalisation challenges on the firm’s international performance. Results
also showed a significant and direct impact of human capital and structural
capital on a firms’ international performance. Results showed that IC
significantly and negatively moderated the association between
internationalisation challenges and performance. Likewise, results also showed
that firms with stronger IC were having better international performance as
compare to the firms with weaker IC.

Copyright © 20XX Inderscience Enterprises Ltd.

2 S. Reza et al.

Keywords: small and medium enterprise; SME; internationalisation;

intellectual capital; PLS-SEM.

Reference to this paper should be made as follows: Reza, S., Mubarik, M.S.,
Naghavi, N. and Nawaz, R.R. (xxxx) ‘Internationalisation challenges of SMEs:
role of intellectual capital’, Int. J. Learning and Intellectual Capital, Vol. X,
No. Y, pp.xxx–xxx.

Biographical notes: Sajjida Reza is a Lecturer at Faculty of Management

Sciences, Baluchistan University of Information Technology, Engineering, and
Management Sciences. She is also a PhD scholar at Mohammad Ali Jinnah
University, Karachi, Pakistan. Her areas of research are supply chain strategies,
sustainability and firm internationalisation.

Muhammad Shujaat Mubarik is a Professor and Associate Dean at College of

Business Management, Institute of Business Management (IoBM), Karachi.
His areas of interest are intellectual capital, firm internationalisation, and
supply chain strategies.

Navaz Naghavi is a Lecturer at Taylor’s University. Her areas of research are

financial economics, entrepreneurship and emerging markets.

Raja Rub Nawaz is a scholar at Muhammad Ali Jinnah University, Pakistan.

His area of research are international marketing, firm internationalisation and
supply chain excellence.

1 Introduction

The influx of disruptive technologies, together with globalisation, has actuated the
businesses, irrespective of their size, age, and ownership, to go internationally (Zahra and
George, 2002). Conventionally, the process of internationalisation is thought limited to
the big firms or multinational corporations; thus, excluding the small and medium
enterprises (SMEs). Since the global economic situations have critically affected the
domestic business environment, the SMEs did not have the option of isolation or
remaining indifferent from the surroundings (Andersson et al., 2004). The trend of
internationalisation has multifarious consequences. On the one hand, it hones the firm’s
managerial skills and capabilities, and on the other hand, it improves resource utilisation
and risk mitigation (da Rocha et al., 2009; Pinho and Martins, 2010) along with
international exposure to competition and experience. Internationalisation usually refers
to the external direction (beyond the local geographical boundaries) of the international
operations of a firm (Zeng et al., 2008). The empirical studies on the internationalisation
process emphasise either exporting, licensing, franchising, or foreign direct investment.
SME internationalisation is managed through three unique but interconnected
methods: internationalisation process, export development and barriers, and international
entrepreneurship (Manolova et al., 2002). Given the fact that a substantial proportion of
large businesses are broadening their markets through internationalisation, it becomes
logical to assume that SMEs can expand themselves too by adopting the same process
(Mahmood and Mubarik, 2020). Expanding at the international level and tapping the
international markets can invigorate the SMEs and spur their performance. Nevertheless,
 Internationalisation challenges of SMEs 3

expanding in international markets is not an easy task, and firms may face many tough
challenges in this process. Identifying such challenges that SMEs face in the international
process and how they do affect the internationalising process are the two most critical
topics in the SMEs internationalisation literature. Identification and analysis of the impact
of such challenges are essential as SMEs (Khan et al., 2020) often lack in relational and
managerial capabilities and financial resources. Although SMEs internationalisation is
captivating the attention of scholars across the globe, a few studies could be found
identifying the challenges those SMEs face in the process of internationalisation and how
do these challenges influence the performance of SMEs. A large proportion of the
research work on internationalisation challenges and their impacts on the performance
has concentrated on the multinational corporations and large firms. Owing to their size,
SMEs possess certain unique characteristics, which can affect their level of commitment,
risk-taking ability, and control in the internationalisation process. SMEs, in contrast to
the large businesses, have a peculiar management attributes, business processes, and
structures of ownerships, which profoundly affect their internationalisation performance
(Khan et al., 2020; Mubarik et al., 2016a, 2016b). Since the choice to expand in the
international market is a critical decision for SMEs, it requires a focused study
identifying the specific challenges that SMEs face in the internationalisation process and
their impact upon internationalisation performance.
Further, intellectual capital (IC) – a firm’s employees’ knowledge skills, and abilities
(human capital), its relationship with various stakeholders (relational capital – RC) and
its business processes (structural capital) – can play a profound role in the relationship
between identified challenges and internalisation performance. SMEs with a higher level
of IC can perform better while expanding to international markets (Mubarik et al., 2018).
Likewise, the intact level of IC characterised by the employees equipped with the right
skills and attitude, effective business processes, and integrated relationship with
customers, employees, and suppliers can significantly help to overcome the challenges a
firm faces in the process of internationalisation. Reviewing the literature, it is hard to find
any significant work focusing on the role of IC in the association between the challenges
an SME faces while internationalising and its internalisation performance (Ahmed et al.,
2019).
Identification of challenges that SMEs face while internationalising, their impact on
the internalisation performance, and the role that IC plays between the challenges and
SMEs internalisation performance are three essential aspects to be investigated
(Mahmood and Mubarik, 2020; Alam et al., 2020; Ahmed et al., 2019). The research
studies on these aspects are limited, and scholastic work steered on large organisations
cannot be directly applied to SMEs (Mubarik et al., 2020).
In this context, the present study undertakes this task. The first objective of the study
is identify the challenges those SMEs faced in internationalisation. The second objective
of the study is to examine the role of IC in the association between SME challenges and
internationalisation performance.
We analyse the data from Pakistani manufacturing sector SMEs that are considered as
the engine of the country’s economic growth (Mubarik, 2015). In Pakistan, SMEs
comprise 90% of all firms and employ 67% of the country’s labour force. Pakistan,
according to Dasanayaka (2011), is assumed to be a cradle of SMEs. Going international
with such a large sector is both an advantage and a risk. Pakistan SMEs, which are
concentrated in textile, apparel, leather, food and beverage sectors, wood, metal, and
handicrafts (Dasanayaka, 2008), have to maintain their competitive position in the
4 S. Reza et al.

exporting markets. We adopted a two-fold approach to attaining the research objectives.

In the first step, we thoroughly review the literature to identify the internationalisation
challenges, which are then grouped into various classes according to their nature. In the
second step, data were collected from 211 manufacturing sector SMEs of Pakistan to
analyse the impact of identified challenges, grouped in the classes, on SMEs’
international performance and the role of IC in the association between the former and
latter. In doing so, the paper has three major contributions. First, the study highlights
which class(es) of internationalisation challenges faced by SMEs are perceived to be
more significantly crucial than others. Second, by employing PLS-SEM, the study
provides empirical evidence on the role of IC in SMEs’ internationalisation performance.
Third, the study provides empirical evidence on the effect of internationalisation
challenges on SMEs’ internationalisation performance. Since the work is focused upon
the practical issue. The government, industry, and researchers can profoundly benefit
from the work. The above contribution makes this study first of its kind in the area of
SMEs internationalisation.

2 Literature review

2.1 SMEs internationalisation

Internationalisation encompasses business activities that are beyond the national borders
undertaken for value-addition to the organisation (Welch and Luostarinen, 1988). Firms,
irrespective of their size, have to build adequate competencies for competing at the
international level. Hence, SMEs are expected to participate in foreign markets actively.
In the last two decades, scholars have investigated the performance of SMEs in
international markets with renewed dimensions of inquiry (Lin and Lin, 2016).
Internationalisation, as a business practice in the last few decades, has been adopted by
SMEs as a route to success (Zeng et al., 2009; Lin and Lin, 2016) since it is considered as
an elixir for maximising business opportunities. Many SMEs have been successful in
their foreign endeavours and are playing a significant role in the future growth of their
domestic markets (Manolova et al., 2002; Knowles et al., 2006; Etemad, 2004;
Andersson et al., 2004; Kuada, 2006).
Owing to their specific characteristics, SMEs restrict their internationalisation to
exporting alone (Etemad, 2004; Kuada, 2006; Paul et al., 2017). Researchers (e.g.,
Eusebio et al., 2007; Westhead, 2008) consider export as the main and relevant means of
internationalisation, which in the world markets is favoured both by the companies as
well as the countries (Tesfom and Lutz, 2006). The global growth in exporting trends is a
consequence of emergent liberalisation, assimilation, and competition in global
economies (Neupert et al., 2006). The policy behind SMEs’ internationalisation via
exporting is bi-dimensional. One dimension revolves around increasing the exports by
encouraging the existing exporters. The other dimension is to incentivise the
non-exporters towards exporting (Ahmed et al., 2004). The application of the same
concept could be examined at different economic levels. SMEs in developing countries
can, considerably, gain from exporting as it could herald their growth and profitability. In
this study, we use a firm’s export performance as an indicator of internationalisation.
Hence the terms export performance, international performance, and internationalisation
performance would be used interchangeably throughout this study.
 Internationalisation challenges of SMEs 5

It is apparent that SMEs are increasingly becoming international, and they are
entering into international markets at a much earlier age than had been the case in
previous decades (Andersson et al., 2004). However, these firms may encounter critical
challenges that may restrain their capabilities to materialise the international growth
opportunities. Firms with small size may be vulnerable to internationalisation barriers, as
resource constraints and organisational limitations, etc. (Katsikeas and Morgan, 1994;
Miesenbock, 1988). In the following section, we briefly discuss the challenges that a firm
may face in the internationalisation performance.
Although, there are various theories that explain SME internationalisation. The
Uppsala model defines firm internationalisation as an incremental process and suggests
that firms adopts exporting to nearby markets as the first step to internationalise
(Johanson and Vahlne, 1977). The network theory explains as to how firms
internationalise through regular enlargement of network relationships with foreign people
and firms. International new venture identifies businesses that, from inception, seek to
derive significant competitive advantage from the use of resources and the sale of outputs
in multiple countries (Oviatt and McDougall, 1994). Such firms make use of foreign
direct investments and hybrid structures of entry modes shortly after inception, instead of
adopting an incremental approach to internationalisation (Knight and Cavusgil, 1996).

2.2 SMEs challenges and internationalisation

Both academic and empirical research, focusing on challenges faced by firms while
internationalising their business activities, have recognised a perceptive relationship
between export challenges and export activities (Ghauri et al., 2003; Hakan et al., 2007).
In literature, challenges (to exporting) are described as impediments that hamper the
capabilities of the firm to either start or develop or continue business activities in foreign
markets (Morgan and Katsikeas, 1997). Arteaga-Ortiz and Fernández-Ortiz (2010) state
that any factor, which hinders the initiation, maximisation or sustenance of export
strategies of a company, can be considered as a challenge to export activities. If not
tackled timely and appropriately, these challenges could fail export operations
accompanied by financial losses and most often deter further or new business initiatives
(Leonidou, 2004). Export challenges are considered as problems to the extent that they
are imperative and not easy to manage (Morgan and Katsikeas, 1997). The studies of
Leonidou (2004) and Devadason and Subramaniam (2016) consider these challenges as
the major impediment in the way of international performance. Organised efforts are
required to either remove or lessen the impacts of such challenges on the export
performance and prospective operations of firms (Ter Wengel and Rodriguez, 2006).
Different researchers have considered internationalisation challenges in different
contexts. In this respect, two significant dimensions are considered where these
challenges are investigated: one where these challenges deter companies aspiring export
ventures for the first time, and the other where these challenges are faced by firms that
are already involved in export activities (Morgan and Katsikeas, 1997). For
convenience’s sake, these characteristics have been considered together and have been
placed into various classification by different authors. In this regard, Leonidou (1995), in
a seminal study, catalogued the challenges into two major groups and named them as
internal and external export barriers. Researchers, in the last three decades, contributed to
the internationalisation literature and classified the challenges based on comparison
between exporting and non-exporting firms (Leonidou, 1995; Morgan and Katsikeas,
6 S. Reza et al.

1997; Westhead, 2008), new and conventional enterprises (Kahiya, 2013; da Rocha et al.,
2009), born-global/INV and gradualist firms (Kalinic and Forza, 2012; Uner et al., 2013),
developed and developing countries (Neupert et al., 2006; Tesfom and Lutz, 2006),
upstream and downstream activities (Kuada, 2006; Zeng et al., 2008), theoretical models
and importance and level of difficulty of barriers (Moini, 1997; Paul et al., 2017; Welch
and Luostarinen, 1988; Zeng et al., 2009), and even firm size. In the firm size domain, the
effect of exporting challenges faced by SMEs in developing countries picked up
significant attention of the researchers owing to its multiple inherent and acquired
business-friendly characteristics, but the studies have inconsistencies in their findings due
to the varied conceptual, and methodological settings of the study conducted.
Cavusgil and Zou (1994) distributed the export challenges of SMEs into internal (firm
and product characteristics) and external (industry and export market characteristics)
forces. Barriers have also been divided into marketing, procedures, international business
knowledge, and practice, financial, and technical sub-classes. Another schema of
strategic, operational, informational, and process-based aspects of exporting obstacles is
formulated by Morgan and Katsikeas (1997) to study export initiation and expansion.
Leonidou (2004), in a meta-analytic study, branched 39 export challenges into
informational, functional, marketing; and procedural, governmental, task, and
environmental issues. The export performance was also measured through the sets of
export market attractiveness, foreign practices, export venture management, distribution
access, adaptation to the foreign market, and government policy (Julian and Ahmed,
2005). Tesfom and Lutz (2006) classified the export marketing problems into the
company, product, industry, export market, and macro environment barriers.
Arteaga-Ortiz and Fernández-Ortiz (2010) compiled the challenges into four generic
dimensions of knowledge, resources, procedure, and exogenous, which will be discussed
individually.

2.2.1 Knowledge-related challenges

Knowledge challenge may refer to the ignorance or lack of general information about the
exporting activities. For a company to implement a successful strategy in an environment,
information is the lynchpin (Belich and Dubinsky, 1995; Venkatraman and Prescott,
1990). In order to accomplish the set goals in internationalisation activities, companies
need to develop a system of organisational learning whereby companies can recognise,
scrutinise and appraise essential information from the milieu (Hart et al., 1994) to
formulate and implement winning strategies. In the absence of informed judgments about
global markets, this process is severely hampered (Samiee and Walters, 1991). In this
regard, companies can conduct marketing research activities to gather information about
export potentials or pertinent information that can be provided by related government
sections, although this source of information is often ignored by the companies (Sullivan
and Bauerschmidt, 1989). These intelligence-based resources are potent means of
information for decision making in the realm of internationalisation approaches. If the
companies lack the capabilities or resources to go for market research, then this poses a
serious hindrance to obtaining requisite information (Kedia and Chhokar, 1986; Yaprak,
1985). From the above discussion, it is deduced that to prosper in exporting activities,
SMEs ought to have intelligence-based export knowledge and exercise judgments’ based
on them; otherwise, endeavours for internationalisation would be seriously hampered.
Therefore, it is proposed:
 Internationalisation challenges of SMEs 7

Hypothesis 1 The challenge of export knowledge has a negative impact on the

internationalisation of SMEs.

2.2.2 Resource-based challenges

Resource-based challenges include constraints related to production (Morgan and
Katsikeas, 1997), personnel, and capital (Kahiya, 2013; Rao and Naidu, 1993) to
operationalise processes. The abundance of resources enables firms to grow at a faster
pace, have profitable transactions and flexible organisational slack. Lacking in the
resources prevents companies from taking exporting activities, which could indirectly be
indicative of the relationship between the size of the firm and the internationalisation
approach (Arteaga-Ortiz and Fernández-Ortiz, 2010). The scarcity of resources
negatively influences the level of the IC of a firm and also creates hurdles in the way of
internalisation. Inadequate capacity to produce and capable-staff scarcity reflects the
incompetence of the firm to fulfil the demands in foreign markets and thus a failure
towards international competition. Due to inadequate pool of requisite export resources, a
company fails to obtain credits from banks or finance export activities, which impose
strategic limitations on the firm whereby exporting ventures are either not opted for or
discontinued (Naidu and Prasad, 1994). Hence, it is proposed:
Hypothesis 2 The challenge of export resources has a negative impact on the
internationalisation of SMEs.

2.2.3 Procedural challenges

Procedural challenges encompass issues that arise when the companies perform export
activities. When exporting interactions exist between the firm and other parties, such as
distribution channels, third-party service providers, governmental-regulatory and
policy-units, etc., obstacles are bound to occur because of the intricate nature of
these transactions (Czinkota, 1994). Similarly, cultural-specific issues, especially
communication obstacles, also sprout in international interactions (Sullivan and
Bauerschmidt, 1989). More often, firms complain about the lengthy, technical and
bureaucratic workflow present while approaching for government assistance in export, or
fulfilling the document and certification requirements (Kotabe and Czinkota, 1992;
Yaprak, 1985). It is hypothesised that:
Hypothesis 3 The challenge of export procedures has a negative impact on the
internationalisation of SMEs.

2.2.4 Exogenous challenges

Exogenous challenges occur due to external elements on which the firm has no control
(Paul et al., 2017) and these may involve improper trade institutions, fierce international
competition, differing exchange rates, political instability, international agreements, etc.,
(Arteaga-Ortiz and Fernández-Ortiz, 2010). For example, the present pandemic
COVID19 outbreak is severely impacting the ability of firms, irrespective of their size, to
go internationally. The effect of this outbreak would be more lethal and disastrous for
SMEs. These challenges are beyond the regulation of the firm so very often they pose
threats to the export endeavours. Based on this reasoning, it is hypothesised:
8 S. Reza et al.

Hypothesis 4 The exogenous challenges to export have a negative impact on the

internationalisation of SMEs.

2.3 IC, internationalisation challenges, and international performance

In order to neutralise the negative effect of the challenges that a firm faces in the way of
internationalisation and to increase its international performance, IC can play an
instrumental role. Taking the theoretical foundations from a knowledge-based view
(KBV), we suggest that a firm with a higher level of IC has the higher capabilities to
control both internal and external challenges that hamper its performance (Menor et al.,
2007). Further, IC – ‘defined as the stock of a company’s intangible resources which are
valuable, rare, inimitable, and non-substitutable (VRIN) and exist in the form of
knowledge, experience, organisational technology, customer relationships, and
professional skills’ – can uplift the ability of a SMEs to compete in the international
market (Roos and Roos, 1997; Bontis, 1998; Kianto et al., 2014; Mubarik et al., 2019). It
is also termed as the total of ‘hidden’ assets of the personnel of the organisation (Roos
and Roos, 1997). IC, as established by empirical research, enhances organisation’s
innovativeness, competitive advantage, and value creation (Tan et al., 2007) and when
strategically manipulated, IC can change perceived risks and rewards of managerial
actions which pave the way for market penetration, product innovation, and first-mover
advantage (Hayton, 2005). The most agreed upon sub-dimensions of IC includes human
capital, RC, and structural capital (Martín-de-Castro et al., 2011).
 Human capital: It encompasses the knowledge, expertise, and professional skills,
experience, education level, and creativity of employees of an organisation
(Mubarik, 2015). A firm with a higher level of HC can have a higher capability to
internationalise. The higher level of HC, characterised by the employees’ strong
communication, and technical skills, experience, and education, can help an
organisation to overcome the challenges in the way of internationalisation (Ahmed
et al., 2019). Researchers (e.g., Bontis et al., 1999; Ahmed et al., 2019; Asiaei and
Bontis, 2019) consider human capital a significant source of strategic renewal and
resilience, which can profoundly tackle the challenges faced by an organisation.
Specifically, HC can significantly subdue the knowledge related; thus, positively
influencing the exports of a firm (Mubarik et al., 2018). This leads us to draw the
following hypothesis:
 RC: It revolves around value and knowledge rooted in the external relationships of
the firm with its customers, suppliers, distributors, partners, local society, and all
other related parties (Roos and Roos, 1997; Kianto et al., 2014). It is described as
‘guanxi,’ in Chinese, which is an important relationship element in the culture and
society of China (Arribas et al., 2013). RC can help the organisation to better
collaborate with supply chain partners through enhanced communication, sharing of
information, and win-win concerns. In doing so, it helps the organisation to reduce
the lethal impact of challenges (both internal and external) that organisations face in
the process of internationalisation. RC, through external knowledge, improves an
organisation’s efficiency in processing exports (Mubarik
et al., 2018). In this context, we hypothesise:
 Internationalisation challenges of SMEs 9

 Structural capital: It represents the knowledge rooted in the organisational processes,

structures, databases, patents, and routines (Asiaei and Bontis, 2019). It is the overall
schema of impersonal linkages between people or units, i.e., actors (Nahapiet and
Ghoshal, 1998). This knowledge and experience are acquired through the processes
and information systems of the organisation (Hsu and Wang, 2012). An organisation
with a highly intact business process, reliable ERP systems, and organisational
strategies have significant leverage in dealing with the difficulties and challenges
while internationalising (Asiaei and Bontis, 2019; Mubarik et al., 2018). By
conveniently neutralising the impacts of internationalisation challenges through SC,
such firms can take the of being an early mover in the market. Against this backdrop,
we hypothesise:
Hypothesis 5 The IC significantly moderates the association between SMEs
internalisation challenges (knowledge-related challenges; resource-based
challenges, procedural challenges, and exogenous challenges) and its
internationalisation performance
Hypothesis 6 The IC has a significant and positive impact on SMEs’
internationalisation performance.

Figure 1 Conceptual model

3 Methodology

3.1 Population and sampling

The population of the study is the manufacturing sector, SMEs. The study adopts the
approach suggested by Mubarik (2015) for the sampling of SMEs. In doing so, we
selected the 07 major sectors of SME, i.e., textile, leather, food, electronics, sports, small
scale engineering, and furniture (see Table 1). The sampling frame was decided on the
data obtained from SMEDA, Jamal Yellow pages and the chamber of commerce’s
listings. SMEs who were exporting their merchandise for at least three years were
10 S. Reza et al.

included in the sample. Data was collected with the assistance of Mohammad Ali Jinnah
University, Business Research Center. Data was collected from 250 SMEs through a self-
administered questionnaire. Adherence to research ethics was confirmed throughout the
research. Participation in the survey was purely voluntary, and the respondents were not
coerced in any way for their opinions. Strict confidentiality of the respondents’ profile
was maintained, and the information thus obtained was not shared with any third party.
As a pre-notification (Diamantopoulos and Schlegelmilch, 1996) the sample units were
informed initially though telephone about the purpose of the survey. In due course, their
cooperation was solicited, and confidentiality was assured. Out of 250 questionnaires
distributed, 211 (approx. 85%) responses were received, with only 77% (193) usable
replies. The rest were rejected either due to non-variation in responses or missing data.
The sample thus attained fulfils the minimum size required of 70 respondents with
statistical power as 0.8 and minimum 0.25 R-squared value as per recommendations of
Hair et al. (2016).
Table 1 Respondents demography (n = 211)

Industry-wise breakup
Textile 68 32%
Leather 41 19%
Food 29 14%
Electronics 23 11%
Sports 18 9%
Small scale engineering 17 8%
Furniture 15 7%
Size
Small 99 47%
Medium 112 53%
Geographical dispersion
Karachi 55 26%
Lahore 41 19%
Gujranwala 36 17%
Islamabad 17 8%
Sialkot 29 14%
Faisalabad 33 16%
Firm age (years)
1 to 4 48 23%
5 to 9 61 29%
10 to 14 55 26%
15 years < 47 22%
SMEs exporting experience
1 to 3 70 33%
4 to 6 57 27%
7 to 9 45 21%
10 years < 39 18%
 Internationalisation challenges of SMEs 11

3.2 Data collection instrument

The questionnaire was adapted, and pilot tested on a random sample of manufacturing
sector SMEs of Pakistan. Alterations were, accordingly, made in the items of the
constructs for improved comprehension of the respondents. The finalised questionnaire
comprised of 43 items was administered for the data collection. Details of the number of
items of each construct and their sources are exhibited in Table 2. The items were scaled
on a five-point Likert scale, having anchor degrees of 1 being ‘I totally disagree’ to 5
being ‘I totally agree’ with equivalent degrees in-between. Linear extrapolation technique
devised by Armstrong and Overton (1977) was adopted to tackle the issue of
non-response bias. Similarly, reliability and validity have been addressed during the
assessment of the measurement model and reported in the analysis section.
Table 2 Constructs, items, and sources

Construct Sub-construct Items Sources

Intellectual Human capital 5 Subramaniam and Youndt (2005),
capital Relational capital 5 Ahmed et al. (2019)
Structural capital 5
Internationalisation 10 Mubarik (2015), Mubarik et al.,
(2020)
Knowledge challenges 6 Leonidou (2004), Andersson et al.
Procedural challenges 10 (2004), Anderson (2011),
Dasanayaka (2011), Calabrò et al.
Exogenous challenges 4 (2016), Paul et al. (2017)
Resource challenges 4

3.3 Analytical method

The study employs twofold techniques to test the hypothesised relationships. First, partial
least squares-structure equation modelling (PLS-SEM) is applied for analysing the
conceptualised framework. Structural equation modelling enable a researcher to explore
the statistical complexities of a theoretical network of relationships interlinking the latent
constructs of a study, and each of these constructs is measured with their respective
observable (manifest) indicators. Within the analysis, the statistical estimation of these
interlinking relationships is known through the adoption of different estimation
techniques relevant or deem appropriate to a study. PLS-SEM is employed for exploring
the predictive relationships. It is based on the concept of the predictive-relevance
methodological framework, and this methodological framework helps in causal
hypotheses testing. We have employed PLS-SEM because of its flexibility to model the
non-normal data. It is considered as an effective statistical technique with multi-block
testing and analysis methodology in various study disciplines (Henseler et al., 2009;
Ringle et al., 2012). PLS-SEM is employed in two stages. At first stage the validity and
reliability if measurement models are ascertained. At the second stage, path analysis is
conducted to analyse the hypothesised relationships. Further in order to test whether the
impact of internationalisation challenges differ by the level of IC, we employed one-way
analysis of variance (ANOVA). Before applying one way, ANOVA, data were checked
for normality and homogeneity of variances.
12 S. Reza et al.

4 Results and discussion

4.1 Measurement model analysis

In the model, all the five variables, along with the moderating variables, were reflective
latent constructs in nature. The data for the model was scrutinised for any missing values
which it had none. For construct reliability, values of the items were examined through
item loadings, Rho A, and composite reliability (CR). Few items’ loadings were found to
have low indicator reliability as the values fell below 0.6 which was the cut-off value for
exploratory research data (Hair et al., 2016; Hulland, 1999). Though items below
threshold values were gradually dropped and tested, however, items having values
between 0.6 and 0.7 were also tested for loading relevance to decide whether they should
be retained in the model or deleted. The deletion of the problematic items from the PLS
model led to the improvement of average variance extracted (AVE) and CR of their
constructs above the 0.5 thresholds. Knowledge challenges one item (KC04), four items
of procedural challenges (PC01, PC02, PC06, PC10), and one item of Internationalisation
(INT07) were dropped from the analysis (see Table 3). The rest of the indicator loadings
were retained as they were ≥ 0.7 though Hulland (1999) specified 0.5 as the minimum
acceptable threshold for loadings. These item loadings reflect that the five reflective
constructs possess acceptable indicator reliability. Instead of Cronbach’s alpha, Rho A
values were also checked for indicator reliability (Dijkstra and Henseler, 2015). All the
values were higher than the threshold of ≥ 0.7. Similarly, for the internal consistency of
the constructs, CR I checked. The CR values of 0.87 (exogenous challenges),
0.92 (internationalisation), 0.88 (knowledge challenges), 0.89 (procedural challenges),
and 0.90 (resource challenges) depicts that all five reflective constructs have high levels
of internal consistency reliability. The acceptable threshold value of CR ranges between
0.60 (Bagozzi and Yi, 1988) and 0.95 level. The CR value of human capital, social
capital, and RC were also above the threshold values, showing the constructs’ reliability
and validity (Table 3).
Convergent validity of the constructs is established through AVE values greater than
0.5 (Bagozzi and Yi, 1988; Fornell and Larcker, 1981). All the AVE values obtained
were higher than the mentioned criterion (see Table 2), thus demonstrating convergent
validity at the construct level. The latent construct procedural challenges’ AVE is
marginally higher than the specified value with 0.580. Discriminant validity is checked in
PLS-SEM through the Fornell-Larcker criterion (Fornell and Larcker, 1981). The results
of FL criteria exhibited in Table 4 show that square rooted values of AVE are higher than
the inter-construct
The endogenous latent variables are next checked for potential co-linearity problem.
None of the results show any problem of multi-co-linearity as all the values of variance
inflation factor are less than the threshold value of 5 (Hair et al., 2016). Common method
bias or variance (CMB/CMV) (Bagozzi and Yi, 1988; Podsakoff et al., 2003) have been
appropriately addressed in the study by incorporating ‘before data collection’ remedy.
The 43 items in the questionnaire were contextually grouped under respective latent
constructs (knowledge challenges, procedural challenges, resource challenges, exogenous
challenges, IC, and internationalisation) for consistent and focused responses from the
entrepreneurs.
 Internationalisation challenges of SMEs 13

Table 3 Measurement model assessment

Items Loadings AVE CR Rho_A

Exogenous EC01 0.89 0.62 0.87 0.77
challenges EC02 0.79
EC03 0.72
EC04 0.75
Knowledge KC01 0.842 0.6 0.88 0.81
challenges KC02 0.721
KC03 0.82
KC05 0.69
KC06 0.779
Procedural PC03 0.745 0.57 0.89 0.85
challenges PC04 0.792
PC05 0.739
PC07 0.82
PC08 0.67
PC09 0.77
Resource RC01 0.81 0.65 0.9 0.77
challenges RC03 0.79
RC03 0.85
RC04 0.77
RC03 0.81
Human capital HC1 0.78 0.55 0.86 0.84
HC2 0.83
HC3 0.69
HC4 0.71
HC5 0.68
Relational capital RC1 0.71 0.51 0.84 0.87
RC2 0.81
RC3 0.68
RC4 0.7
RC5 0.67
Structural capital SC1 0.79 0.67 0.91 0.85
SC2 0.88
SC3 0.82
SC4 0.85
SC5 0.74
Notes: Items removed: KC04, PC01, PC02, PC06, PC10, and INT07as indicators item
loadings were either less than 0.6 or failed the loading relevance test.
Correlations, hence, confirming the discriminant validity of the constructs.
14 S. Reza et al.

Table 3 Measurement model assessment (continued)

Items Loadings AVE CR Rho_A

Internationalisation INT01 0.78 0.57 0.92 0.8
INT02 0.84
INT03 0.81
INT04 0.83
INT05 0.67
INT06 0.65
INT08 0.71
INT09 0.79
INT10 0.68
Notes: Items removed: KC04, PC01, PC02, PC06, PC10, and INT07as indicators item
loadings were either less than 0.6 or failed the loading relevance test.
Correlations, hence, confirming the discriminant validity of the constructs.
Table 4 Fornell-Larcker criterion result

EC KC PC RCI HC RC SC INT
Exogenous challenges 0.79
Knowledge challenges 0.58 0.775
Procedural challenges 0.64 0.25 0.755
Resource challenges 0.61 0.39 0.651 0.806
Human capital –0.24 –0.56 –0.09 –0.17 0.742
Relational capital –0.33 –0.32 –0.25 –0.11 0.36 0.714
Structural capital –0.15 –0.11 –0.21 –0.15 0.29 0.37 0.819
Internationalisation –0.37 –0.19 –0.33 –0.22 0.41 0.32 0.25 0.755
Note: Diagonals are the square root of AVE of the latent variables and indicates the
highest in any column or row.

4.2 Structural model analysis

In structural model assessment, the relationships between the latent constructs are
determined through their path coefficients and t-statistics by running the bootstrapping
test in SmartPLS. The bootstrapped values for hypothesis testing should be higher than
1.96 (t0.05, > 1.96, 2-tailed) (Peng and Lai, 2012). All the structural model relationships
(see Table 5) are found to be significant in the study.
The results of path analysis, denoted in Table 4, show that all four groups of
challenges exert significant and negative influences on the SME’s internationalisation
performance, thus supporting the four proposed hypotheses (H1 to H4). Based on the
findings, it could be concluded that the exogenous challenges ( = –0.275, p ≤ 0.05) have
the highest negative impact on the SMEs internalisation performance followed by
knowledge challenges ( = –0.24, p ≤ 0.05), resource challenges ( = –0.2237, p ≤ 0.05),
and procedural challenges ( = –0.189, p ≤ 0.05). It shows that internalisation challenges
greatly hinder a firm from internationalising itself through exporting. These results also
proclaim that overcoming such challenges can significantly boost the exports of the
 Internationalisation challenges of SMEs 15

firms, especially SMEs. Further, results show that two among three dimensions of IC,
namely HC ( = –0.314, p ≤ 0.05), and RC ( = –0.271, p ≤ 0.05), have a significant and
direct impact on a firm’s internationalisation performance. However, the third dimension
of IC, i.e., RC ( = –0.314, p ≤ 0.05), does not show any significant impact on
internationalisation. These results imply that improving SMEs’ IC, especially human
capital and structural capital, can greatly help to boost international performance. The
value of R square, i.e., 0.635, indicates the impact of all challenges together is substantial
(Chang et al., 2020; Zameer et al., 2020). It shows that all the independent variables
jointly explain 63.5% of the variance of the internationalisation construct with their
contribution of 0.285 (exogenous challenges), 0.238 (knowledge challenges), 0.176
(procedural challenges), and 0.240 (resource challenges).
Table 5 Structural model hypotheses testing

Std. Decision
Relationship(s) Std. beta f2 q2
error p-value Accept/reject
Knowledge challenges → –0.24 0.078 0.002** Accepted 0.079 0.026
Internationalisation
Resource challenges → –0.237 0.065 0.000** Accepted 0.085 0.028
Internationalisation
Procedural challenges → –0.189 0.076 0.021* Accepted 0.036 0.008
Internationalisation
Exogenous challenges → –0.275 0.08 0.000** Accepted 0.082 0.026
Internationalisation
Human capital → 0.314 0.091 0.000** Accepted 0.071 0.063
Internationalisation
Relational capital → 0.151 0.124 0.121 Rejected 0.003 0.002
Internationalisation
Structural capital → 0.271 0.0801 0.000** Accepted 0.062 0.071
Internationalisation

Besides R2 value, the predictive relevance (Q2) of the path model could also be assessed
by running the Blindfolding procedure. It is observed from Q2 value (0.385) in Table 5
that the model has high predictive relevance for the endogenous variable of
Internationalisation. The final level of analysis in structural model evaluation is the
assessment of the effect sizes f2 and q2. Following Cohen’s (1988) guidelines, it could be
concluded the exogenous variables, in general, have relatively moderate effect sizes on
the endogenous variable.
The moderation effect of IC on Internationalisation is examined through the results
obtained from bootstrapping. The results are exhibited in Table 6. The results show that
human capital significantly and negatively moderates the relationships between KC and
internationalisation ( = –0.082, p ≤ 0.05) and EC and Internationalisation ( = –0.237,
p ≤ 0.05) whereas HC does not play any significant role in the association between
RC-internationalisation and PC-internationalisation. The moderating impact of HC in the
association between KC and Internationalisation is quite substantial, showing its
momentous role to equip firms for overcoming the knowledge-related-challenges coming
in the way of internationalisation. Further results show a strong negative moderating role
of RC in the associations between RC and internationalisation ( = –0.278, p ≤ 0.01), PC,
and internationalisation ( = –0.181, p ≤ 0.01) and EC and internationalisation
16 S. Reza et al.

( = –0.134, p ≤ 0.05). Results on the role of structural capital depict its significant and
negative moderating role in the association between KC and internationalisation
( = –0.028, p ≤ 0.05) and EC and internationalisation ( = –0.273, p ≤ 0.05). Putting
together, the relationship between EC and internationalisation is significantly moderated
by all three dimensions of the IC. It shows that working on the IC can significantly help
to reduce the negative impacts of the exogenous challenges on a firm’s internal
performance. Likewise, the association between KC and internationalisation is moderated
by human capital and structural capital. Finally, the association between RC and
internationalisation and PC and internationalisation are moderated only by the RC.
Among others, RC appears to be the most critical dimension in this regard.
Table 6 Moderating role of IC

Moderation effects Beta S.E p-values Decision

HC × KC → INT –0.082** 0.066 0.000 Supported
HC × RC → INT –0.074 0.050 0.143 Not supported
HC × PC → INT –0.114 0.089 0.422 Not supported
HC × EC → INT –0.237** 0.032 0.000 Supported
RC× KC → INT –0.182 0.122 0.138 Not supported
RC× RC → INT –0.278** 0.054 0.000 Supported
RC× PC → INT –0.181** 0.042 0.000 Supported
RC × EC → INT –0.134** 0.068 0.048 Supported
SC × KC → INT –0.028** 0.010 0.005 Supported
SC × RC → INT –0.051 0.044 0.245 Not Supported
SC × PC → INT –0.046 0.182 0.800 Not Supported
SC × EC → INT –0.273** 0.076 0.000 Supported
Notes: **p < 0.01, *p < 0.05.
To triangulate our results, we also applied one-way ANOVA to analyse whether the
internationalisation performance of the firm differs by the level of IC it possesses. The
significant results of ANOVA (F = 9.752; p < 0.01) and group comparisons results
appearing in Table 7 show that the performance of the firm with a higher level of IC s
better than those with the moderate and low level of IC. Likewise, results also show that
firms with a moderate level of IC have better internationalisation performance as
compare to the firm with a low level of IC.
It is important to note that results of direct effect, moderated effect, and one-ANOVA
not only reinforce the same story but also are greatly sync with the theoretical and
empirical literature. Specifically, the results on the effect of exogenous challenges (Paul
et al., 2017), resource challenges (Arteaga-Ortiz and Fernández-Ortiz, 2010; Naidu and
Prasad, 1994), knowledge related challenges (Niqab et al., 2020; Hart et al., 1994; Kedia
and Chhokar, 1986; Samiee and Walters, 1991; Yaprak, 1985), and procedural challenges
(Ghauri et al., 2003; Hakan et al., 2007; Morgan and Katsikeas, 1997) on
internationalisation performance are in line with the extant literature. Findings greatly
highlight the need to take these challenges seriously for improving international
performance. By controlling such challenges, several firms have successfully entered the
international markets (Ghauri et al., 2003; Paul et al., 2017). Focusing on the IC can help
firms in this regard as our results show that two out of three dimensions of IC have a
 Internationalisation challenges of SMEs 17

profound impact on internalisation performance. Likewise, results also show that each of
the IC is instrumental in controlling the adverse effects of internationalisation challenges.
Findings underscore the need to take these challenges seriously for improving
international performance. By neutralising the impacts of such challenges, a firm can
greatly enhance its chance to enter the international markets, and the development of IC
can help the firm in this regard (Ahmed et al., 2019).
Table 7 One-Way ANOVA

Group N Mean SD
Low (L): 2 to 2.99 63 2.71 0.19
Moderate(M): 3 to 3.99 91 3.78 0.17
High (H): 4 to 4.99 57 4.43 0.28
Levene statistics 0.743 (0.556)
F-value (ANOVA) 9.752 (0.000)
Tukey HSD group comparisons Mean difference p-value Eta square
L vs. M –1.07 0.002 0.11
L vs. H –1.72 0.001 0.17
M vs. H –0.65 0.048 0.05

Results on the moderating role of IC dimensions in the relationship between challenges

and internalisation are considerably aligned with the studies of Tesfom and Lutz (2006),
Han and Li (2015) and Sun et al. (2012). Nevertheless, there are some contrasts in the
results that are obvious while comparing with the extant literature. First and foremost is
the negligible moderating role of human capital in the association between procedural
challenges and internationalisation. According to Mubarik et al., (2020), a firm with
higher levels of human capital can have a higher potential to understand and deal with the
various procedures involved in the exports. They further argue that a firm with the intact
level of human capital can attain a competitive advantage in the presence of minimal
resources. However, our findings reflect that neither human capital moderates the
relationship between PC and internalisation, nor it has any role between RC and
internationalisation. The insignificant role in our case may be due to the prevalence of
specialist human capital and lack of generalist human capital. The specialist human
capital represents the skills and abilities of the employees who are directly applicable in
his organisational tasks and enable an employee to perform assigned tasks better. It may
not be necessary that such skills, knowledge, and abilities may apply to the understanding
of the external environment. Generalist human capital, in such a case, helps employees to
identify and understand the knowledge outside a firm. Procedural challenges are related
to the outside knowledge of the firm (Arteaga-Ortiz and Fernández-Ortiz, 2010). Hence,
understanding and dealing with such challenges require both generalist and specialist HC
skills. Further, results on the insignificant role of structural capital in the association
between RC – internationalisation and PC – internationalisation do not sync well with the
empirical studies. We argue that uplifting structural capital by standardising the business
processes may not directly affect the internationalisation, however, it has significant
indirect role in improving the export performance of a firm. Nevertheless, it can have an
indirect influence through improved other factors like a firm’s resilience, etc. Further, the
relationship management appears to be a key element for firm internationalisation. A
18 S. Reza et al.

smaller firms with strong relationships with stakeholders can tap the international market.
We argue that improving structural capital in the form of standardised business processes
and procedures may not directly overcome resource-related challenges
In condensed form, we find that the internationalisation challenges significantly
hamper the internalisation performance of a firm, and IC can play an important role in
controlling the effects of such challenges.

5 Conclusions and implications and limitations

The study has two primary objectives. First, to test the impact of four groups of
challenges on the internationalisation performance of SMEs. Second, to find out the role
of IC dimensions’ in the association between the four groups of challenges and the firm’s
internalisation. We collected the data from 211 manufacturing sector SMEs of Pakistan
for the analysis. We adopted a two-fold procedure to test the developed hypothesis. First,
we apply PLS-SEM to analyse the effect of challenges and to check the moderating role
of IC in the association between challenges and performance. Second, we applied a
one-way ANOVA to check whether the internationalisation performance differs by the
level of IC or not. The results of PLS-SEM depicted a significant negative influence of
the al four groups of challenges on the firm’s international performance. Whereas results
also showed a significant and direct impact of human capital and structural capital on a
firm’s international performance. Results showed that taking together all dimensions of
IC, it significantly and negatively moderates the association between challenges and
performance. These results proclaim that IC weakens (neutralises) the negative effects of
these challenges by equipping firms to overcome them. Likewise, results also showed
that firms with a higher level of IC were having better international performance. These
results indicate the negative role of challenges and constructive role of IC in the firm’s
international performance and greatly sync with the empirical and theoretical literature.
Findings offer some significant policy implications for the firm. In this context,
deliberate and systematic efforts to develop IC is a pre-requisite for internationalisation.
Here, we address the question as to how a firm can develop the three cords of IC. Starting
from RC, ‘cross-cultural management’ appears to be the most crucial strategy for
developing RC. Despite its pivotal importance, SMEs often ignore cross-cultural
management. In the context of political fragility and complex institutional environment in
Pakistan like other South Asian nations, a firm’s capability to manage and the
relationships with external stakeholders, including the export processing institutors,
governmental regulator bodies, export marketing companies, and export process
companies is crucial for internationalisation. Our argument is based upon the study of
Ajai (2015), who explicitly held a firm’s failure to manage the relationships with
stakeholders, both domestic and abroad responsible for the mal-international-
performance.
Likewise, the internalisation of a firm also depends upon “export resource
transformation capability – their ability to find new ways to configure their existing
export‐related assets or resources” [Boso et al., (2018), p.214]. Building such valuable
and rare capacities can give a lead to the firm in the international market. Human capital
development, a vital constituent f IC, can play an active role in this regard. The right
combination of talent management strategy and human resource management practices
and strategies can play an instrumental role in this regard (Debrah et al., 2018). Several
 Internationalisation challenges of SMEs 19

studies (e.g., Adams et al., 2017) have shown that firms having HR strategies performed
significantly better in the process of internationalisation. Similarly, developing
internationalisation, cross-cultural communication, and exporting skills, among others,
can significantly help the firms to overcome the challenges in the way of
internationalisation. Finally, standardisation and continuous improvement in the business
processes – structural capital development – can strengthen a firm’s capability in dealing
with internationalisation challenges. Revisiting existing business processes with the help
of employees can be the right strategy.
The study has some limitations which can offer direction to future research. First,
keeping in view the limited number of firms taken for the analysis, the results of the
study has limited generalisability. The results could be more generalised by expanding
the sampling frame and reaching more SMEs. It is recommended that to gauge the
internationalisation challenges in developing economies, a regional survey be considered,
which is based on a localised list of challenges inclusive of the ones identified in this
study. Secondly, the study used cross-sectional data for analysing the modelled
relationships. The future studies by taking secondary data, if possible, or collecting data
at-least two times from the same respondents can offer some deeper and more robust
insights.

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Annexure

Questionnaire
Dear Respondent, the following statements are categorised based on SMEs’ export
challenges, intellectual capital, and internationalisation.
You are requested to use the following scale to rate the given statements (keeping
your company in mind) by putting a circle around your preferred rating for each
statement.
1 2 3 4 5
I totally disagree I somewhat disagree I am not sure I somewhat agree I totally agree
Very high High I am not sure Low Very low

Item(s) Statements Rating

Knowledge challenges
KC1 The company lacks knowledge of potential export markets 1 2 3 4 5
KC2 The company staff lacks export planning 1 2 3 4 5
KC3 The company lacks knowledge regarding export assistance 1 2 3 4 5
programs
KC4 The company is not aware of the potential benefits of exporting 1 2 3 4 5
KC5 Knowledge of how to export is generally lacking in the 1 2 3 4 5
company
KC6 The company feels there is a lack of information about foreign 1 2 3 4 5
opportunities for its products/services
 Internationalisation challenges of SMEs 25

Resource challenges
RCI1 Methods of payment used in international operations are 1 2 3 4 5
financially high for the company
RCI2 The company lacks resources to recover export-related 1 2 3 4 5
investments in the required time
RCI3 The company lacks production capacity for export 1 2 3 4 5
RCI4 The company faces insufficient support of local banks having 1 2 3 4 5
sufficient international expertise
RCI5 There is an insufficient foreign network of banks providing 1 2 3 4 5
services to the company
Procedure challenges
PC1 Transportation costs and shipping arrangements hinder the 1 2 3 4 5
export activities of the company
PC2 Documentation and red tape hinder the export activities of the 1 2 3 4 5
company
PC3 Language differences hinder the export activities of the 1 2 3 4 5
company
PC4 Cultural differences hinder the export activities of the company 1 2 3 4 5
PC5 Tariff barriers hinder the export activities of the company 1 2 3 4 5
PC6 Nontariff barriers (product related standardisation 1 2 3 4 5
technicalities) hinder the export activities of the company
PC7 Differences in product usages in foreign markets hinder the 1 2 3 4 5
export activities of the company
PC8 Cost of adapting the product to the foreign market hinders the 1 2 3 4 5
export activities of the company
PC9 The company faces logistical difficulties in its export activities 1 2 3 4 5
PC10 The company faces difficulties in locating suitable distributor 1 2 3 4 5
or distribution channels in a foreign market
Exogenous challenges
EC1 Strong overseas competition poses a risk to the export activities 1 2 3 4 5
of the company
EC2 Variation of exchange rates hinder the export activities of the 1 2 3 4 5
company
EC3 Selling abroad poses a risk to the export activities of the 1 2 3 4 5
company
EC4 Political instability in the destination country poses a risk to the 1 2 3 4 5
export activities of the company
Structural capital
SC1 Much of our company’s knowledge is contained in manuals, 1 2 3 4 5
archives, and databases.
SC2 We usually follow the sequence of written rules and procedures 1 2 3 4 5
SC3 Our company embeds much of its knowledge and information
in structures, systems, and processes
SC4 Our company uses intellectual property rights 1 2 3 4 5
(patents/registered software, and copyrights) as a way to store
knowledge
 26 S. Reza et al.

SC5 Our company protects knowledge and key information to avoid 1 2 3 4 5

loss of key people left the company
Relational capital
RC1 Employees from different departments feel comfortable while 1 2 3 4 5
calling each other

RC2 Our employees apply the knowledge leaned from one area of 1 2 3 4 5
the company to the other area when they face any problem.
RC3 Our company is keen on developing long‐term relationships
with its suppliers and customers.

RC4 We collaborate extensively with external parties (e.g.,

customers and suppliers) to develop new solutions
RC5 Customer feedback guides our company activities 1 2 3 4 5
Human capital
HC1 Employees in our company are highly skilled in their 1 2 3 4 5
respective jobs.
HC2 Employees in our company are considered among the best 1 2 3 4 5
people in our industry
HC3 Employees in our company are experts in their particular jobs
and functions
HC4 Our employees are well‐educated compared with their peers in
the industry
HC5 Our employees can find simple solutions for more complex 1 2 3 4 5
problems.
Internationalisation
INT1 Our company has achieved a satisfactory export market share 1 2 3 4 5
INT 2 Our company considers export success as an achievement 1 2 3 4 5
INT 3 Level of exports as compared to industry 1 2 3 4 5
INT 4 The extent of export growth over past five-years 1 2 3 4 5
INT5 Export position of our company as compared to competitors 1 2 3 4 5
INT6 Our company exports to diverse international markets 1 2 3 4 5
INT7 Level of repurchase by international clients 1 2 3 4 5
INT8 We export diverse range of products 1 2 3 4 5
INT9 Our export sale has grown in the last five years 1 2 3 4 5
INT10 Export sale as compared to the domestic 1 2 3 4 5

--End of questionnaire--

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