MAPPING THE ANTECEDENTS OF THE INTERNATIONALIZATION OF INDONESIAN SMES: THE MANAGERIAL & POLICY IMPLICATIONS

Abstract

Even though a vast amount of previous research examining the antecedents of firm
internationalization is widely documented, the examination of comprehensive antecedents of
SME internationalization in Indonesia’s context is not yet found. This study is aimed at
exploratively mapping the antecedents of the internationalization of Indonesian SMEs. Based
on a survey of 131 SMEs, employing SmartPLS3, all 85 indicators of SME
internationalization were mapped. The findings show that out of 85 indicators, 55 are positive
antecedents of SME internationalization. The coefficient of determinant, R
2
of all antecedent
dimensions are strong with CFMs (characteristics of foreign markets) endogenous latent
variable is 0.706, the largest, followed by the R
2
for OCs (organizational characteristics), HC
(human capital), SC (social capital), CDM (characteristics of domestic market), MI (market
internationalization) and I (industry) which are 0.562, 0.547, 0.312, 0.310, 0.267, and 0.166
consecutively. In addition, the inner model suggests that overall IAs (internationalization
antecedents) has the strongest positive relation with Characteristics of Foreign Markets
(0.840), followed by Organizational Characteristics (P=0.749), Human Capital (P=0.740),
Social Capital (P=0.559), Characteristics of Domestic Markets (P=0.557), and Industry
(P=0.408). Only Market Internationalization was found not to be an antecedent of SME
internationalization, indicated by the negative coefficient on the path from
Internationalization Antecedents (IAs) to Market Internationalization (MI) at P=-0.517. This
study contributes to the stream of literature from the perspective of a developing country,
Indonesia, and provides managerial and policy implications as suggested by the findings.