A Study into the Internationalisation of SMEs: Challenges and Strategies from a Saudi Arabian Perspective

Abstract

The purpose of this research is to identify the challenges faced by Saudi Arabian SMEs during internationalisation of their business. Internationalisation is not restricted to export or international trade but can also include cross-border investments and financing. Vision 2030 of the Saudi Government plans to propel Saudi SMEs into a higher growth trajectory through internationalisation, thus also diversifying the economy away from oil industry. Hence, identification of barriers and challenges faced by Saudi SMEs during internationalisation is a timely topic of research, and any strategic suggestions for the SME firms as well as any policy suggestion for the regulators, such as Saudi SME regulator Monshaat, may be of value for the plan of Vision 2030 to work more effectively for Saudi SMEs. For this purpose, data was collected from more than 80 Saudi SMEs through a carefully designed survey questionnaire. The data reveals that non-export forms of internationalisation are facing comparatively more hurdles in general. Also, it was found that specific aspects of legal aid for Saudi SMEs when in dispute with foreign stakeholders and certain transactional issues arising out of inadequacy of Saudi financial system when dealing with internationalised Saudi SMEs were important factor in deciding the level of satisfaction of firms participating in the survey with regard overall conducive environment for them to internationalise their businesses. Relevant prescriptive strategies to be followed by Saudi firms under these conditions and suggestive policy guidance for the regulators were provided, along with indication for future research direction on this topic.