A Framework of Internationalization of Malaysian SMEs:Incorporating the Ethnicity Factor

The Malaysian context presents a unique opportunity in entrepreneurship and economic development research due to substantial gaps in performance between indigenous-owned enterprises and those of other ethnic minorities. A low participation of indigenous small and medium enterprises (SMEs) in international business, despite huge government support, has been a source of anxiety for policy-makers. Given that many studies indicate a positive relationship between government support and internationalization, this situation has posed a puzzle for international business scholars. Mainly it suggests that, in Malaysia, there is a pressing need to incorporate ethnicity within existing frameworks of internationalization developed by western scholars. Thus in the current paper a more refined internationalization framework was developed which can help to explain, not only the overall internationalization status of Malaysian SMEs, but also ethnic differentials in SME internationalization and performance in the country. Drawing from a review of literatures in international business and ethnic entrepreneurship, as well as in-depth analyses of the research context, the proposed framework is expected to provide directions for future empirical studies in related areas.