Financial Management

Entrepreneurship and Small Business Management Article Review

Title: Internationalization Drivers of Small and Medium-Sized Manufacturing

Enterprises in Ethiopia: The Case of Leather and Leather Products Industry

International Journal of Business and Economic Development

Authors: Yehualashet Demeke and Germinah Evelyn-Tsoka
Publisher: Problems and Perspectives in Management, Volume 13[3, Issue 4 [3
Date of Publishing: Tuesday, 15 December 2015
FOUNDER LLC “Consulting Publishing Company “Business Perspectives”
Number of pages 12
Citation
(2014) International drivers of small and medium-sized manufacturing enterprises in Ethiopia:
the case of leather and leather products industry

ACRONYMS SMEs:
The small and medium sized enterprises

Research Topic, Reporting Format and Purpose

The research paper clearly and briefly discusses and analysis the factors or drivers o f
internationalization of small and medium-sized manufacturing enterprises of leather and
leather products industries in Ethiopia. Not much research works has been done to this area to
understand and comprehend the prospective for firm internationalization. As stated in the

Basic Summary
This study aims to unveil the most important factors driving internationalization
process of Ethiopian SMEs operating in leather and leather products industry located in
Addis Ababa. The small and medium sized enterprises (SMEs) sector in Ethiopia is a
significant group within the economy in terms of firm numbers and total employment. Thus,
their internationalization will have a significant impact on industrialization and
economic development of Ethiopia. The internationalization phenomenon is examined in
a more comprehensive manner than in many previous studies, through integrated theoretical
lenses.

PURPOSE OF ARTICLE
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This study aims to unveil the most important factors driving internationalization process of
Ethiopian SMEs operating in leather and leather products industry located in Addis Ababa. The
small and medium sized enterprises (SMEs) sector in Ethiopia is a significant group within the
economy in terms of firm numbers and total employment. Thus, their internationalization will have
a significant impact on industrialization and economic development of Ethiopia. The
internationalization phenomenon is examined in a more comprehensive manner than in many
previous studies, through integrated theoretical lenses.

RESEARCH METHODOLOGY
Mixed research approach of quantitative survey, semi structured interview and review of extant
literatures were used to obtain the required data. Stratified random sampling was used to select
90 SMEs of which 36 of them were exporting and the remaining 54 are domestic oriented SMEs.
Instrumentation of questionnaire and interview protocol was used to gather primary data. Both
instruments were reviewed by experts of international business, entrepreneurship and marketing

STATEMENT OF THE PROBLEM

Because of the absence of International drivers of small and medium-sized
manufacturing enterprises in Ethiopia, the researchers aimed to provide empirical
evidence of the leather and leather products industry in Ethiopian companies.

OBJECTIVE OF THE STUDY

The main objective of this study is to analyze and evaluate the entrepreneurial orientation
characteristics of small and medium Enterprises (SMEs) in Ethiopia. Specifically, the study is
designed to achieve the following specific objectives: of this paper are:
1. To explore determinant factors that motivates business internationalization among Ethiopian
SMEs in the manufacturing industry.
2. To identify the pattern and mode of entry followed by Ethiopian SMEs in the manufacturing
industry to expand their business in foreign markets.
3. To identify the state of entrepreneurial orientation among the SME owner/managers in
Ethiopia?
4. To identify the state of innovativeness among the SME owner/managers in Ethiopia?
5. To identify the state of risk taking propensity among the SME owner/managers in Ethiopia?
6. To identify the state of pro-activeness among the SME owner/managers in Ethiopia?

HYPOTHESES
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The author well explained the research and explain how to understand
internationalization process of firms in manufacturing industries. The article has a definite
point of view about the small and medium sized internationalization process and the
article well maintain the reader's

DESCRIPTION CONCLUSION
The purpose of this study was to examine internationalization barriers of manufacturing SMEs
operating in Leather and Leather Products Industry located in the capital city of Ethiopia. The
small and medium sized enterprises (SMEs) sector in Ethiopia is a significant group within the
economy in terms of firm numbers and total employment. However, the SMEs sector’s share of
exports is disproportionately small, which raised considerable research concerns. Firm export
propensity was the dependent variable and internal and external export barrier factors were used
as explanatory variables. The study was conducted through mixed research design of quantitative
survey and case study. From the population of manufacturing SMEs operating in the Leather and
Leather products Industry, a sample was selected through the use of stratified random sampling
to ensure the effective representation of the population of exporting and non-exporting SMEs in
the capital of Ethiopia. In order to complement survey results nine (4 exporting and 5 non-
exporting) SMEs were selected through critical case purposive sampling and an in-depth
interviews were conducted. Statistical package for the social sciences (SPSS 20) was used to
analyze the quantitative data whereas, qualitative data were analyzed manually. Exploratory
factor analysis with Varimax rotation and Binary logistic regression analysis are the analytical
methods used. The statistical result showed that, logistics problem, insufficient finance,
functional barriers, lack of export knowledge and information, procedural barriers and
international trade barriers are the most significant obstacles of export trade in Ethiopia. The
overall results revealed that explanatory variables used in the analysis significantly predict the
dependent variable at 95% confidence level. Taken together, these results prompted the
presentation of numerous implications for theory, practice, and future research. Finally, the paper
recommended that internationalization of SMEs has to be encouraged by mitigating both internal
and external barriers identified in this study. Achievement of this will make manufacturing
SMEs to be more competitive in export trade that results in a better positioning of Ethiopia in
global leather and leather products market.

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CONCLUSION AND IMPLICATION
This study was a first-step to investigate SMEs entrepreneurial orientation in AA. The degree of
EO was moderate in the majority of SMEs in AA and there was a significant relationship
between pro-activeness, innovativeness, risk taking and overall EO with market share growth.
The findings further suggest that it may be better for SME owner/ managers in AA to improve
entrepreneurial posture towards identifying business opportunities and adopt appropriate
entrepreneurial strategies to enhance entrepreneurial orientation to challenge competition by
other firms in leather footwear in AA.

The findings of this study have some implications for theory, and practice particularly for
development of SMEs in AA. The theoretical contribution of this study provides new insights in
small business research concerning the AA to follow up similar studies, which may provide more
reliable data and interpretations in SME development.
Some points highlighted herein were for the government and nongovernment sector to focus on
promoting the level of EO by directing research and development activities, providing financial
resources, training package and consultancy services etc. Also contains some information useful
in collaborative work among governments agencies, the chamber of commerce as well as
Business Development Services (BDS) to direct more resources and energy to promote, and
encourage entrepreneurial culture towards enhance the entrepreneurial orientation of SMEs.
Further, the present study may also provide useful information for SME owner/managers in
relation to their individual level of entrepreneurial orientation as an assessment in developing
their skills.

RECOMMENDATIONS
Leather footwear in Addis Ababa is potential entities as another economic engine of growth as
reflected in the composition of the entrepreneurs and type of business they undertake. Ethiopian
SMAEs future development should spearhead in strategic firm-level entrepreneurship paradigm
as proved in the entrepreneurs‟ scores in EO. Thus, the Leather footwear sector entrepreneurs’
characteristics, industry and impact of EO on SMAEs proposed an alternative approach in the
present entrepreneurship development strategy. The findings suggest that the present
entrepreneur’s development policy should be modified to fit each SMEs‟ EO appropriate for
each firms.

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References

Anderson, S., Floren, H. (2011).Differences in managerial behavior between small international

and non international firms, Journal of International Entrepreneurship, 9, pp. 233-258.