BARRIERS TO THE INTERNATIONALIZATION OF SMALL AND MEDIUM ENTERPRISES (SMES) IN SRI LANKA

Abstract

During the internationalization of Sri Lankan, small and medium enterprises (SMEs) through exporting has been facing various exporting barriers that influence their firms’ export performance and consequently the country’s economy growth. Therefore, this research aims to identify the exporting barriers that exist in SME firms’ internal and external environments. 165 Sri Lanka’s SMEs exporting processed food and beverage products participated in this study. Data were collected through a structured questionnaire and analyzed using mixed methods. Export sales performance was as a dependent variable with internal and external export barriers as independent variables. Internal export barriers were categorized as informational, functional, financial, and marketing barriers, while external export barriers were identified as procedural, governmental, task, and environmental barriers. The results derived from the study indicate that four internal export barriers; functional, informational, financial, and marketing barriers significantly hinder Sri Lanka’s SMEs’ internationalization, whereas one external export barrier that is procedural barriers have a positive impact. It is recommended that necessary policy measures to be implemented to address these barriers, which would benefit both SME firms and the Sri Lankan economy.