Micro-multinational enterprises in Malaysia: the role of entrepreneurial orientation and regulatory institutions

Abstract

The research on international new ventures, particularly born global enterprises, has consistently held a central position in the internationalisation of small and medium-sized enterprises (SMEs). While a surge of studies has focused on the accelerated internationalisation of SMEs, less attention has been given to their entry modes. This oversight is rooted in the traditional belief that SMEs, due to their small size, are best suited for exclusive concentration on exporting. Contrary to this notion, researchers advocate for the consideration of higher-commitment entry modes, such as licensing, franchising, and joint ventures, leading to the conceptualisation of ‘mMNEs’ to describe this evolving category of internationalised SMEs. Consequently, there is a call for future studies to challenge traditional perceptions of SMEs and explore the determinants of mMNEs. Addressing this research gap, this study aims to examine the impact of entrepreneurial orientation (EO), encompassing innovativeness, proactiveness and risk-taking, as well as regulatory institutions on the likelihood of internationalised SMEs transitioning into mMNEs. Specifically, this study investigates two primary relationships: (1) the direct influence of innovativeness, proactiveness and risk-taking on mMNEs and (2) the moderating role of regulatory institutions on the association between EO and mMNEs. Drawing on a survey of 253 Malaysian internationalised SMEs and employing logistic regression analysis, the findings indicate that proactiveness and a propensity for risk-taking facilitate the adoption of higher-commitment entry modes. Additionally, supportive regulatory institutions enhance the likelihood of SMEs with high proactiveness and risk-taking propensity becoming mMNEs. These results contribute to a deeper understanding of how both internal factors (EO) and external factors (regulatory institutions) play crucial roles in explaining mMNEs behaviour.