A Hierarchical Model of Capabilities for Financially Constrained Environments
An Internationalization of SMEs in Africa from A Resource-Based View Perspective
DOI:
https://doi.org/10.64261/nx556041Keywords:
Internationalization of SMEAbstract
While the African Continental Free Trade Area (AfCFTA) creates landmark opportunities for SMEs across Africa, access to adequate finance is still the main stumbling block preventing them from participating meaningfully in cross-border trade. We extend the Resource-Based View (RBV) streams with a hierarchical model of capability development for SME internationalization in resource-constrained settings and test its impact empirically. Based on survey data from 350 Ghanaian manufacturing SMEs operating in an AfCFTA environment, we show how financial resources serve as "meta-capabilities", facilitating the development and execution of higher-order organizational capabilities. Of these responses, 88.0% identify financial constraints as their main impediment to international trade, and both digitalization (r = 0.447, p < 0.01) and perceived challenges (r = 0.474, p < 0.01) are strongly correlated with financial constraints in a positive sense (Table1). According to regression analyses, financial constraints were one of the strongest predictors for SME difficulties (β = 0.406, p < 0.001) and digitalization paradoxically predicted higher financial constraints (β = 0.447, p < 0.001). These findings complement the implicit linearity in RBV by showing that if financial resources are necessary to gain access and develop/deploy other VRIN (valuable, rare, inimitable, non-substitutable) resources, there is a 'hierarchical' ordering whereby financial resources are accessed before other resources. Theoretically, we contribute to international business theory by contextualizing RBV for resource-constrained African markets and provide policy implications that are useful for policymakers, financial institutions and SME owners interested in leveraging AfCFTA benefits.
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