Impact of government export assistance on internationalization of SMEs from developing nations

The purpose of this paper is to examine the effects of government assistance programmes on internationalization of SMEs from an Asian developing nation.

Primary data from a sample of 203 SMEs in three export‐oriented industries in Bangladesh were analyzed using structural equations model to examine both direct and indirect causal effects of government assistance on their internationalization.

Results suggest that the usage of market development‐related government assistance significantly influence internationalization directly as well as indirectly via other determinants, whereas finance‐ and guarantee‐related assistance has only indirect effect.

Government export assistance programmes play an important role in the SMEs' internationalization process by contributing to a number of firm‐ and management‐related factors that determine international marketing performance of a firm. The study provides a guideline for SME managers as to how they can benefit from both categories of export assistance programmes in improving their positive attitudes towards the export market environment, building their knowledge and enhancing commitment to exporting for better success in their international operations.

The importance of export assistance programmes is well recognized in the literature but its causal effect on internationalization of small and medium‐sized enterprises (SMEs) is low. The paper tries to fill this gap by reporting the results of an empirical study examining effects of government assistance programmes on internationalization of SMEs from an Asian developing nation, where there is a gross dearth of research.