The Effect of SMEs’ Slack Resource on Internationalization: Focusing on SMEs’ Subcontracting Relationship

Jae-Jin, K. (2021). The Effect of SMEs’ Slack Resource on Internationalization: Focusing on SMEs’ Subcontracting Relationship. East Asian Journal of Business Economics, 9(1), 17-26, https://doi.org/10.20498/eajbe.2021.9.1.17

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Abstract

This study is to examine how the financial resources as slack resources and subcontracting of SMEs affect their internationalization. In order to identify slack resources, subcontracting, and internationalization of SMEs, 1,062 SME samples with less than 300 employees in the electronics industry manufacturing sector and subcontracting data are used to analyze their relationship with export activities by logistic regression analysis. This study consists of five chapters. Chapter 1 explains the background and purpose of the study as an introduction, and Chapter 2 presents hypotheses along with existing literature research. Chapter 3 deals with the data and variables used in statistical analysis, and Chapter 4 discusses the analysis results and examines hypothesis validation. Finally, Chapter 5 describes the conclusions, significance, and limitations. Slack resources can be divided into available, recoverable, and potential resources, and the analysis shows that only available resources are negatively (-) related to the internationalization of small and medium-sized enterprises. This can be interpreted as a high tendency for SMEs to avoid relatively risky choices such as entering overseas markets if they have a lot of cash resources. Subcontracting has also been shown to have a negative (-) relationship with internationalization. Domestic subcontracting means securing relatively safer domestic customers than overseas ones. Consequently, this result suggests that for SMEs particularly, high financial stability may be able to lead to decisions in less risky choices. This study was differentiated from existing studies on slack resources and internationalization, which was analyzed mainly for large companies and public listed companies. It extends the scope of the analysis to SMEs and, in particular, analyze the subcontracting situation of SMEs together. Thus, this study provides academic and practical implications that are useful for understanding SMEs' specific behaviors.

keywords: SMEs, Slack resource, Internationalization, Subcontracting

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Article Contents

Vol.9 No.1

The Effect of SMEs’ Slack Resource on Internationalization: Focusing on SMEs’ Subcontracting Relationship

Abstract

Reference

East Asian Journal of Business Economics