Market Orientation, Government Regulation, Competitive Advantage and Internationalization of SMEs: A Study in Malaysia

Abstract

Small and medium-sized enterprises (SMEs) make remarkable contributions to the economic growth of developing countries. As a newly industrialized country, the Malaysian economy predominantly depends on the SME sector. However, this study seeks to redress this by reporting the key drivers influencing the internationalization process of SMEs such as market orientation, government regulation and competitive advantage on internationalization of manufacturing SMEs in Malaysia. To empirically test those factors, primary data was gathered using the survey questionnaire method. The survey instrument was distributed to all manufacturing SMEs involved in exporting which are located in the Klang Valley of Malaysia and totally 257 questionnaires were received (FMM, 2012). The findings indicate the significant role of market orientation, government regulation and competitive advantage in their process of internationalization. Furthermore, the study has added to body of knowledge by introducing competitive advantage as a mediating variable between market orientation and government regulation with internationalization of manufacturing SMEs in Malaysia. The results of this research could help practitioners and managers of SMEs in the manufacturing sector to be in a better position to improve their internationalization efforts.