Impact of Export Activities on Firm Performance: The Case of Indonesian SMEs

Abstract

— Firms venture abroad with a view to gaining many benefits, including revenue growth, above-normal returns, less revenue uncertainty, realization of economies of scale and scope, lower average cost of input, higher efficiency and enhanced competitiveness in domestic markets. This study investigates the impact of exporting on firm performance, with reference to Indonesian small and medium-sized enterprises (SMEs). The study uses primary data from the survey on 271 exporting SMEs in seven provinces in Jawa-Bali Region. The results show that SMEs experienced greatest performance improvement in product quality and least improvement in domestic sales after exporting. The results also showed that firm performance exhibits an inverted U-shaped relationship with export intensity. The policy and academic implications of the findings are discussed.