The Effects of Timing and Order of Government Support Mechanisms for SME Exports

Abstract

When small and medium-sized enterprises (SMEs) enter export markets, they face liabilities of smallness and foreignness. Their chances of success increase if they receive some support. Thus, many governments provide some export support for SMEs having realized that success in exports helps firm success and creates positive spillovers. We test the efficacy of three such support mechanisms: support for strategic export planning, support for trade fair participation and participation in ministerial visits and compare their relative results in various “time dimensions” (Jones & Coviello, J Int Bus Stud 36(3):284–303, 2005). Unlike past studies, we go beyond testing the effect of one support mechanism and compare the effect of the above different support mechanisms. We also show the importance of considering different dimensions of time – chronological “clock” time, “stopwatch” reference time, time sequence, and effect length time. We found evidence for the benefit of receiving multiple support mechanisms and we explored the sequence of receiving multiple support mechanisms. More specifically, our results suggest that exports are best facilitated by first receiving support to attend a trade fair, then developing an export plan; and then participating a ministerial visit abroad. Also, our study suggests that effect length is an important, previously ignored, dimension of time to consider. Empirically, hypotheses are tested on a longitudinal data set of Estonian SMEs receiving different types of government export support during 2009–2017. The data set was constructed from registry data covering the entire population of Estonian firms.