Searching for a new perspective on institutional voids, networks, and the internationalisation of SMEs in emerging economies: A systematic literature review

Date

2021-04-12

Advisors

Journal Title

Journal ISSN

ISSN

0265-1335

Volume Title

Publisher

Emerald

Type

Article

Peer reviewed

Yes

Abstract

In recent decades, institutional theory has risen to prominence as a popular and powerful explanation for the internationalisation processes of small and medium-sized enterprises (SMEs). Within this domain, scholars argue that institutions are more than just background conditions (Liedong et al., 2020a); rather, they have a direct bearing on the strategic options available to entrepreneurs. The literature explores how resource-seeking SMEs adapt their internationalisation strategies to different institutional contexts; the assumption being that these enterprises can achieve and sustain competitive advantages in international markets through strategies that overcome or capitalise on the nature of such markets’ institutional environments (Marquis and Raynard, 2015). Nevertheless, SMEs often limit themselves to conforming to institutions in regard to endorsement, legitimacy, and access to resources (Su et al., 2017). Increasingly, however, the contemporary literature has signalled that institutions often fail to provide efficient solutions suited to internationalising SMEs (Schuck, 2014).

In 2020, consistent with this resource-based focus, two notable systematic literature reviews were published within the area of SME internationalisation. Dabic et al. (2020) noted the lack of human capital in the conversation on the internationalisation of SMEs, insisting that this lacuna represents a major barrier for the successful completion of the related processes. Likewise, Chandra et al. (2020) showed how institutional barriers significantly impact SME internationalisation processes in developing economies. Therein, an important contribution was the recognition of the role played by networks in compensating for this institutional void.

More specifically, they described how, in the absence of institutional support, SMEs create partnerships aimed at accelerating their internationalisation with foreign venture capitalists. Aligned with other observers (e.g., Greenwood et al., 2014), we present an alternative perspective, contending that the resource-based perspective that currently dominates the literature over-emphasises the lack of resources and that scholars should instead strive to better understand the conditions and processes that provide the context for any lack of resources. In constructing our argument, we review and critique the literature on internationalisation, institutions, and institutional voids. We claim that the gap left by weak formal institutions has given rise to complex alternative arrangements that offer support mechanisms for SMEs (Webb et al., 2014). Our review makes a distinctive contribution in relation to the creative and unorthodox arrangements that SMEs employ to overcome any market and formal institutional barriers. Accordingly, our review reveals unorthodox networks and networking as key enablers of SME internationalisation (Andersson, 2000). Building on this literature, the current argument notes that both intra- and inter-sectorial relationships provide novel opportunities for SMEs to access international markets and resources (Bembom and Schwens, 2018). Diverging from the top-down resource-based view of the role played by formal institutions in the internationalisation process, we bring informal institutions and networks to the fore and develop a bottom-up, community-driven conceptualisation of the internationalisation of SMEs under conditions of institutional voids. Thus, the overall objective of our research is to promote the development of a novel concept that comprises a participatory ecosystem. Rather than viewing internationalisation as the efforts made by a single entrepreneur to penetrate a particular external market, we perceive it as the collective map of a value chain consisting of multiple stakeholders, including formal institutions, their policies, and their services. The aim of this approach is to inspire contemporary scholars to develop an alternative understanding of SME participation in market environments; one that prioritises the access of entrepreneurs to market opportunities, rather than being predicated on the availability of resources. Undoubtedly, developing economy SMEs have to deal with limited resources (Dekel-Dachs et al., 2020), a reality over which they have little control. However, they do have options vis-à-vis how they react to it. For instance, the wider their access to information and market processes, the greater their capability for innovation. The participatory ecosystem promoted herein conceptualises institutions as the facilitators of a wide range of market actors in a network, who are thus enabled to support each other and create market opportunities in a more inclusive and efficient fashion.

From this perspective, our systematic review contributes to the scholarship on international marketing in three important ways: First, it advances the understanding of the role played by formal and informal institutions in the internationalization processes of SMEs in contexts characterized by varying levels of economic development. Second, it explores networks as specific marketing vehicles that address the institutional voids found across developed and emerging markets. Thirdly, it points at how SMEs develop alternative informal arrangements in order to overcome any barriers created by institutional voids.

Description

The file attached to this record is the author's final peer reviewed version.

Keywords

Systematic Literature Review, Institutional Voids, SMEs, Emerging Economies

Citation

Dekel-Dachs, O., Nadja-Janoszka, M., Stokes, P., Simba, A. and Tarba, S. (2021) Searching for a new perspective on institutional voids, networks, and the internationalisation of SMEs in emerging economies: A systematic literature Review. International Marketing Review,

Rights

Research Institute

Centre for Enterprise and Innovation (CEI)