Identification and ranking of export barriers of small and medium enterprises (SMEs) of Rasht city

Dissertation for Master's Degree in International Business Management

Abstract

The basis of business in any country is based on the activities of small and medium enterprises. In our country, despite the fact that more than 95% of all production units are in the small and medium industries group, these enterprises have not gained a significant share in the national gross product and added value and suffer from many obstacles in the development of exports, especially to foreign countries. The main purpose of the above research is to rank the export barriers of small and medium enterprises in Rasht city. For this purpose, after examining the background of the subject, a number of obstacles were identified based on the studies of Londio (2004) and in order to rank each of them, after designing a questionnaire of paired comparisons and distributing them among 140 managers and experts of small and medium enterprises in Rasht, who are known as experts in this field, the Analytical Hierarchy (AHP) method was used. The results of the research showed that from the point of view of the respondents, marketing obstacles with a weight of 0.231, environment with a weight of 0.225, and government obstacles with a weight of 0.162 are the most important, respectively. At the end, suggestions were made to deal with the above obstacles. 

Key words: small and medium enterprises, export development, export barriers, AHP method.Introduction

The small is beautiful strategy was proposed by the German economist Schumacher in economic literature. According to this strategy, unemployment is the most important problem of third world countries and the problem of the flood of migrants from villages to cities, the need to pay attention to industrial policies and programs to reduce unemployment; The most important policies for economic growth and development have been mentioned. The advantages listed for this strategy are:

Employment opportunities should arise in rural areas and small towns,

These opportunities should be cheap enough,

Considering that the population of third world countries does not have sufficient education and the illiteracy rate

in these areas is higher compared to developed areas, the chosen production methods should be relatively

selected,

Production methods should be in a way that uses local resources and its products are generally for local and native use.

Finally, according to this strategy, the only way to achieve the above goals is through the creation of small industries. While there is no evidence of serious weaknesses in small industries in terms of efficiency compared to large industries, on the contrary, it has been proven in many countries of the world that small industries are operating much more efficiently and even competitively with large industries. Therefore, small and medium businesses have been the focus of development in many developing countries in the past decade or two. So that most of the employment and production of these countries has been allocated to itself. Therefore, many industrial development policies in emerging countries have moved towards the development of small and medium enterprises.

Small and medium enterprises are considered as one of the key sources of dynamism, innovation and flexibility in industrialized countries as well as in developing countries. They are responsible for creating employment and more importantly for innovation, productivity and economic growth. If the small and medium enterprises sector does not receive financial resources from outside the enterprise itself for investment, the capacity to acquire capital for each employee or worker, and hence the productivity and monthly wages, will be seriously affected and disruptions will be created in these cases (Shehbazi, 2013). There are wide obstacles that put their survival under the radius. In the rest of this chapter, we will refer to the general mention of the research, and in the rest of the chapters, the above obstacles will be explained more clearly.

1-2. Statement of the problem

Small and medium-sized businesses have been the axis of development of many developing countries in the past decade or two, so that most of the employment and production of these countries have been allocated to them. Therefore, many industrial development policies in emerging countries have moved towards the development of small and medium enterprises [1]. SMEs are considered as one of the key sources of dynamism, innovation and flexibility in industrialized countries as well as in developing countries.They are responsible for creating employment and more importantly for innovation, productivity and economic growth. If the sector of small and medium enterprises does not receive financial resources from outside the enterprise itself for investment, the capacity to acquire capital for each employee or worker, and hence the productivity and monthly wages, will be seriously affected and disruptions will be created in these cases (Shehbazi, 2013).

Also, recent applied studies show that in high-income countries, the share of SMEs in GDP is 55% and their share in employment is more than 65%. is In low-income countries, the share of GDP is more than 60% and the share of employment is more than 70%. This share in middle income countries is 95 and 70% respectively. For example, in the member states of the European Union, there are nearly 25 million small businesses that make up 99% of all businesses; These companies have assigned the majority of 95 million workers, which provide 55% of all jobs in the private sector. The importance of these enterprises in export and productivity growth is also significant (Keskin and Sentork[2], 2010).

Therefore, to speed up the process of industrialization, priority should be given to the growth of small and medium industries, not large industries. For this reason, there is currently an unprecedented enthusiasm and desire for small industries in many countries of the world. Many countries of the world have provided significant support to their small industries and have formulated several economic policies in order to expand and strengthen them. This issue has become so important that it is rare to find a country in which there is no law or laws to support small industries (Asgari, 2017).

In Iran, according to the definition of the central bank, companies with 50 employees or less are recognized as small and medium-sized companies, constituting 98% of all companies. This amount is equal to 44% of the total employment and the added value of these companies is 34% in total (Shehbazi, 2011). This statistic shows the huge contribution of such companies in the economic activities of our country. But unfortunately, in our country, small and medium-sized enterprises are facing internal and external problems such as: lack of facilities, limited resources, weak management, lack of specialized banks to pay facilities, low public confidence in the activities of these institutions, low standard of manufactured goods, and lack of communication networks (Nazarinejad et al., 2017). Also, Mozafari (2006) states that in our country, small and medium enterprises with problems and setbacks such as: lack of necessary scales from various aspects of capital, production and market; Lack of suitable environments for business growth from various legal, legal, etc. aspects; lack of software and organizational infrastructure; production with old technologies and lack of access to new technologies; lack of consistent communication with the banking and financial networks of the country; They face the lack of inter-company cooperation networks. Therefore, in order to strengthen and develop small and medium enterprises as much as possible, executive solutions such as; Adjusting policies to increase the share of small and medium-sized enterprises in non-specific domestic production, increasing efforts to create employment through the development of self-employment, increasing loans and other financial facilities by simplifying the banking system, raising the skill level of workers, experts and managers working in enterprises, strengthening industrial clusters in various trades, etc. They should be taken into consideration (Nazarinejad et al., 2017).

In general, in our country, despite the significant presence of small and medium industries in the industrial structure, these units are facing problems and these companies are not able to create a relative advantage over large companies in the industrial and economic development of the country. Also, the marketing power of these companies to sell their products is relatively weak due to insufficient knowledge of the market needs in all parts of the country and foreign markets, and therefore they face the problem of lack of demand for their products and this is effective in reducing their sales and profits (Amin Biddekhti and Zargar, 2019). Therefore, in the above research, we decided to identify the export barriers of small and medium enterprises in Rasht city, which are also involved in many of the problems mentioned above. Based on this, the main research question was formulated as follows: What are the export barriers of small and medium enterprises in Rasht city? Also, after identifying these obstacles, we will try to provide solutions to get out of the current situation. 

1-3.