The Role of Business Strategies and Financial Decisions in Preparing for International Market Entry and Improving SMEs’ Performance: An Entrepreneurial Finance Perspective

Abstract

This paper strives to examine the role of international market entry in optimizing the effects of business strategies and financial decisions on SMEs’ performance. In addition, this study analyzes the role of financing access in moderating the effects of business strategies and financial access. The research sample was comprised of 250 SMEs from various industries in the city of Salatiga, Central Java Province, and the city of Medan, North Sumatra Province, Indonesia. A Partial Least Squares (PLS) - Structural Equation Modelling (SEM) was utilized to test the hypotheses. In general, this research demonstrates that: (1) business strategies and financial decisions are the determinants of international market entry, (2) business strategies are a determinant of SMEs’ performance, (3) business strategies and international market entry are factors of SMEs’ performance, and (4) international market entry optimizes the effects of business strategies on SMEs’ performance.