The goal of this study is to understand the effect of informal structures and practices on the expansion of EMs-based SMEs at the national and international levels. It focuses on five main areas: informal linkages (horizontal and vertical), access to government funding, access to government contracts, access to market information and knowledge, and development of firms’ capabilities. The data was collected from 828 SMEs in Brazil and China and analysed using multivariate regressions. The results show that informal linkages as well as access to private sources of funding and credit risk reduction mechanisms, government contracts and funding, distribution channels, and market knowledge support the national and international expansion of SMEs in emerging markets. Also, the support from the government in the form of contracts and special arrangements seems to be instrumental in the first stage of the SMEs’ expansion (outside their main home markets), and the access to funding with preferential conditions appears to contribute in the second stage of the companies’ expansion to international markets. All these factors, together with the familiarity and ease of communication outside the home market, proved to help SMEs overcome market failures, reduce uncertainty and transaction costs, and develop business capabilities needed to serve international markets. This article is among the first to provide empirical evidence about the positive effect of informal linkages and state-supported contracts and funding on the expansion of SMEs from emerging markets.

dx.doi.org/10.5465/ambpp.2016.12239abstract
Academy of Management Proceedings
Incae Business School

Cardoza, G, Fornes, G., Altamira, M., & Santos, V. (2017). Informal Structures and Practices in the National and International Expansion of SMEs from EMs. Academy of Management Proceedings, 2016(1). doi:10.5465/ambpp.2016.12239abstract