Internationalization effects on financial performance: The case of Portuguese industrial SMEs

Authors

  • Luis Pacheco Universidade Portucalense - Infante D. Henrique

Abstract

The objective of this paper is to empirically examine the relationship between the firms’ degree of internationalization and their financial performance. The literature about performance determinants is abundant however, the relation between internationalization and profitability in the context of Small and Medium Enterprises (SMEs) is much less studied. It used an unbalanced panel data of 4.133 Portuguese industrial SMEs for the period from 2010 to 2016 and applied a random effects model. The results indicate that internationalization, measured as export intensity/diversity/distance, influences firm profitability, in particular when exports are directed to distant markets and conducted by small firms. Also, the presence of a non-linear relationship between internationalization and profitability calls for managers’ attention to its dysfunctional consequences for firm performance, especially at intermediate levels of internationalization. Due to SMEs relevance in the majority of the economies, our results and its implications can be generalized to other countries.

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Published

2019-10-30

Issue

Vol. 29 No. 3 (2019)

Section

Articles

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How to Cite

Internationalization effects on financial performance: The case of Portuguese industrial SMEs. (2019). Journal of Small Business Strategy (archive Only), 29(3), 97-116. https://libjournals.mtsu.edu/index.php/jsbs/article/view/1214