Do SMEs in Inflationary countries carry potentials for Internationalization: Illustration from Sri Lankan Economy

University essay from Göteborgs universitet/Graduate School

Abstract: External environmental effects always create challenges to the business world. Current uncertain conditions around the world with unexpected natural as well as human interventions make the global business activities more complicated. Even with these complications, SMEs who have limited resources and competencies are struggling to survive in their local as well as global platforms. Meanwhile, SMEs play a crucial role in the economic development of countries around the world and its role in developing countries are critical. Under this thesis, we investigate the effects from an adverse economic environmental factor, inflation on internationalization of Small and Medium sized enterprises in a developing country, Sri Lanka. This research focuses mainly on SME businesses who are engaged with exporting agricultural products (tea, coconut, and spices). Moreover, this report will further investigate the practically used mitigation strategies by those firms in order to mitigate this significantly challenging situation. Analysing existing related theories, running empirical studies together with conducting interviews with 8 SME owners who are currently involved with export activities of agricultural products to different international markets. Therefore, it aims to provide insights into the specific impacts on their international business as well as identifying effective mitigation strategies utilized by these firms. Conclusion of this research will present a better understanding of the effects of inflation on internationalization of SMEs in developing countries and will elaborate effective strategies in order to minimize those effects on SMEs. As the SMEs play a considerable role in the global business world, this study will contribute to the international business literature as well as the decision makers when making effective decisions in relation to SME development in developing regions.

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