Sri Lankan SMEs and Perceived Export Barriers: Evidence from Manufacturing Sector

Abstract

At present globalized world, export sector plays a vital role in promoting economic growth in each and every economy. Developing countries use SMEs as a strategic tool to develop their export sector. But barriers existing in the export market hamper the maximum contribution of SMEs. Therefore the purpose of this study is to identify the major export barriers as well as sub barriers faced under each major export barrier by Sri Lankan exporters of Small and Medium Enterprises (SMEs). Export barriers were mainly divided into two; internal export barriers and external export barriers in line with the literature. In order to achieve the purpose of this study, the quantitative method was used. Data was collected from 129 SME owners and managers who operate in the manufacturing sector and Western Province in Sri Lanka. Data was analyzed by using the Statistical Package for Social Sciences (SPSS). The parametric test of ANOVA and Robust Test of Equality of Measure was performed to identify the major export barriers. Mean value of each barrier were calculated to identify the sub-barriers coming under each major export barrier. This study found that financial barriers, governmental barriers and economic barriers are the major export barriers faced by Sri Lankan exporters. On the other hand, high cost of capital to finance exports, lack of government incentives, lack of new technology, complexity of export documentation procedure, lack of financing sources, high tariff and non-tariff barriers, currency fluctuations, lack of                 competitive prices to foreign customers, high insurance cost and inadequate institutional support were the top ten sub barriers faced by Sri Lankan SMEs in the export market. The findings of this study may provide insights to make effective decisions to both exporters and non-exporters, SME owners, government policymakers, business educators, researchers as well as other decision makers.