Factors Affecting Propensity to Export: The Case of Indonesian SMEs

Mohamad Dian Revindo (School of Global and Strategic Studies, Universitas Indonesia (SKSG UI) and Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia (LPEM FEB UI))
Christopher Gan (Lincoln University, New Zealand)
Natanael Waraney Gerald Massie (Universitas Indonesia)

Gadjah Mada International Journal of Business
Vol 21, No 3 (2019): September-December

The benefits of trade liberalization are not shared equally among countries and enterprises across the globe. Small and Medium-sized Enterprises (SMEs) in developing countries are less able to participate in export markets than their larger counterparts, despite various export assistance provisions by their governments. This study aims to investigate the factors influencing Indonesian SMEs’ decisions and ability to engage in direct export activities. The evidence was collected from 271 exporting SMEs and 226 non-exporting SMEs in seven provinces in Java, Madura, and Bali. Logistic regressions were used to identify the distinct characteristics of the exporting SMEs. The findings show that the exporters differ from non-exporters in terms of their firms’ and owners’ characteristics, their perceptions toward export barriers, their participation in their national government’s export assistance program and network relationships. The academic, policy and managerial implications of the findings are discussed.