How does institutional environment affect the internationalization of small enterprises?

Despite internationalization could become a huge step forward on the development path of small companies, it could also be a formidable challenge. While operating in a weak institutional environment, small firms can hardly create strong competitive advantage even on domestic let alone international markets. This effect becomes even more distinct during stagnation and recovery after economic crisis The present study uses the dataset of 134 (mainly developing and emerging) economies to analyze the influence of regulatory and normative components of institutional profile on the share of exporters among small enterprises. Besides contributing to our understanding of the institutional factors determining the decision of small firms to internationalize, the results of this study could also signalize developing and emerging economies' governments to enhance their regulatory quality as a part of their efforts to facilitate and diversify merchandise exports. (C) 2014 Elsevier B.V.