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Performance, Internationalization, and Firm-specific Advantages of SMEs in a Newly-Industrialized Economy

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Abstract

In light of the lack of empirical evidence regarding issues of internationalization as they affect small and medium-sized enterprises (SMEs) from newly-industrialized economies (NIEs), this study aims to expand the applicability of existent internationalization theories. So far, such theories have largely been developed with MNCs from industrialized economies in mind. In examining a 1996 sample of 1,419 Taiwanese SMEs, we found that the relationship between internationalization and performance could be graphically depicted as one of inverted U-shaped curvilinearity, and that a specific level of internationalization corresponded to maximum profitability. Our empirical findings also confirmed a relationship of U-shaped curvilinearity between advertising investment and performance, indicating that a minimum level of investment is required in order for advertising to be effective. Investments in research and development (R&D) were also shown to be positively associated with firm performance. The external validity of our internationalization theories regarding SMEs from NIEs was generally supported, though some modifications allowing for consideration of the particular context of individual SMEs will ultimately become a necessity.

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Authors and Affiliations

  1. Department of Business Administration, College of Management, National Changhua University of Education, 2, Shi-Da Road, 500, Changhua, Taiwan, ROC

    Yu-Ching Chiao

  2. Department of International Business, College of Management, National Dong Hwa University, 1, Sec. 2, Da-Hsueh Road, 974, Shou-Feng, Hualien, Taiwan, ROC

    Kuo-Pin Yang

  3. Department of Business Administration, College of Commerce, National Chengchi University, 64, Sec. 2, Chihnan Road, Taipei, Taiwan, ROC

    Chwo-Ming Joseph Yu

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  1. Yu-Ching Chiao
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Correspondence to Chwo-Ming Joseph Yu.

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Chiao, YC., Yang, KP. & Yu, CM.J. Performance, Internationalization, and Firm-specific Advantages of SMEs in a Newly-Industrialized Economy. Small Bus Econ 26, 475–492 (2006). https://doi.org/10.1007/s11187-005-5604-6

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