National Financial Structure Level of government support for SME internationalisation (Mogos Descotes, R. et al., 2011) Legal: legal system origins, bankruptcy processes, property right protection, bankruptcy laws (Beck & Demirguc-Kunt, 2006; Rahaman, 2011) Information: provision of information provision, information about markets, information about finance (Vasiliou & Daskalakis, 2009) Regulatory: entry regulations and costs of entry; tax (Beck & Demirguc-Kunt, 2006; Trevino, Thomas, & Cullen, 2008) Structure of institutions: commercial bank concentration, size, ownership (Berger & Udell, 2006) Credit type: supplier, bank, type of bank credit (Beck & Demirguc-Kunt, 2006; Berger & Udell, 2006) National Financial Structure Applied Financial, legal, and corruption problems consistently constrain the growth of SMEs more than larger firms in a cross-country analysis (Beck et al. 2005) The financing environment significantly affects the availability of funds to SMEs (Berger & Udell, 2006) Thus finance and the lending environment seen to constrain SME internationalisation and growth Lending Environment Theories 1. Trade-off theory 2. Pecking order theory (Myers, 1984). 3. Financial growth life cycle model (Berger & Udell, 1998) Theories Applied SME finance gap - “Effectively due to the limited size of SMEs and their generally lower creditworthiness, their access to financial market instruments is more limited than for large enterprises” (Balling, Bernet and Gnan, 2009). Majority of SMEs rely upon bank debt as a main source of funding Agency issues exist Information asymmetry - information problems in lending SME opaqueness Solutions needed to develop access to external debt finance SME Financing Theories 1. Process theory of internationalisation 2. New venture internationalisation theory 3. Resource based view 4. Ownership location internalisation paradigm 5. Integrative theoretic approach (Bell et al. 2003) Theories Applied Finance – a key resource for internationalisation (RBV) Different stages of internationalisation (PTI) – incremental development abroad (Johanson & Vahlne, 1977; Johanson & Wiedersheim-Paul, 1975) Fast internationalising by some firms/sectors - NVIT Foreign market entry modes, exporting and subsidiaries explained by PTI (Lu & Beamish, 2001, 2006) Foreign direct investment – explained by the OLI paradigm SME Internationalisation Research Questions 1.How important is national financial structure development in credit availability for different types of internationalising SMEs? 2. Are certain dimensions of the national financial structure more significant in credit availability for various types of internationalising SMEs? Topic Background 95% of enterprises across the world are small and medium sized enterprises (have less than 250 employees) Just 10-15% of these firms internationalise A key feature of SME survival and development is growth and ability to internationalise their operations According to the literature, finance deemed Number 1 growth constraint A causal relationship between financial resources and the ability for SMEs to grow and internationalise is found (Berra, Piatti, & Vitali, 1995; Chetty & Campbell-Hunt, 2003; Kalantaridis, 2004; Berger & Udell, 2006; de la Torre, Martínez Pería, & Schmukler, 2010; Stiebale, 2011; De Maeseneire & Claeys, 2012 and Rehman, 2012) Knowledge Gap Limited interest in the financing of small-business internationalisation (Nummela, Loane, & Bell, 2006) Key elements of the financial system that affect SME credit availability are somewhat neglected In particular the causal chain between government policies to a nation’s financial institution structure and lending infrastructure (Berger & Udell, 2006) Improvements in national institutions will ease growth constraints that face SMEs (Beck & Demirguc-Kunt, 2006) Research Design Mixed methods A. Survey SMEs - 6 sections 1.Background characteristics 2.Internationalisation experience 3.Finance used 4.Financial institution structure 5.The institutional environment 6.SMEs’ international outlook B. Interviews - Government agencies & EU policy makers C. Sample Germany, Ireland & UK – choosing internationalising SMEs from manufacturing & technology sectors Research Contribution From a policy perspective, assisting in deeper levels of engagement with the SME sector as I consider the causes of financial barriers to internationalisation faced by SMEs (De Maeseneire & Claeys, 2012) Considerable support of the applicability and usefulness of institutional foundations to assess SME credit availability and internationalisation (Zhu, Sarkis, & Lai, 2011) Expanding knowledge of SME internationalisation alongside a framework of institutional involvement Poignant post 2008 – comparison of different markets, using a diverse firm-sample Literature Reviewed