BARRIERS AND PUBLIC POLICIES AFFECTING THE INTERNATIONAL EXPANSION OF LATIN AMERICAN SMEs.

Abstract

The paper aims to improve the understanding of the determinants of the international expansion of Latin American SMEs. To do this it adopts an institution theory perspective to study the interaction between public policies and other drivers of SMEs’ expansion in four main areas: access to public financial resources; access to public procurement contracts; adverse regulatory and inconsistent legal frameworks, and public assistance on information and knowledge about markets. The data was collected from 465 SMEs in Brazil, Colombia, and Peru and analysed using multivariate regressions. The findings of the research have implications for theory, practice, and policy making. They analyse the role of governments’ policies and strategies intended to support the international expansion of Latin American firms and questions their mid-to long-term impact. They also suggest that Latin American SMEs belonging to larger institutions (like business groups) seem to be in a stronger position to expand internationally. In addition, the findings show that SMEs perceive difficulties/barriers for their international expansion mainly in dealing with domestic regulations, in the domestic economic environment, and in the poor information about external markets. Also, the findings show that having the government as a customer has proved to be a facilitator for the firms to expand internationally. All in all, the findings of the paper enrich the debate on the impact of institutions, and in particular of public policies, on the international expansion of SMEs from emerging and transition economies.