The impact of Government Support on the Internationalisation of Emerging Countries SMEs: A Qualitative Study of Saudi Arabia

Abstract

One manifestation of the era of globalisation is the internationalisation of firms. Internationalisation can be advantageous for businesses and countries, so governments support such activities to encourage and accelerate local firms’ expansion globally. In this qualitative research project, fifteen semi-structured interviews were conducted with participants representing government and SMEs. The purpose was to investigate and comprehend the role of governmental support in relation to SMEs internationalisation in the context of an emerging country—specifically, Saudi Arabia. This study gathered contextual evidence showing that the government is offering favourable treatment to certain sectors and firms as a result of resource allocation bias. This helps the favoured SMEs to internationalise but simultaneously hinders other SMEs. Besides, in this context, SMEs deem government support as a factor that influences their internationalisation in two different aspects: internationalisation decisions and the foreign markets entry mode. To create a perception of government internationalisation support, SME decision-makers consider several stimuli of perception. Two examples of this are government reputation and SME involvement in policies drafting. All these results shed light on how this governmental intervention affects SMEs’ internationalisation. They also show potential venues to improve similar policies in emerging countries to boost SMEs’ internationalisation.