Export Intensity, Geographic Diversification and the Role of Public Support: The Evidence from Old and New Europe SMEs

Abstract

Objective: The objective of the article is to investigate how public support (both financial and non-financial) affects the geographic scope and export intensity of SMEs originating from Old (EU15) and New Europe (the CEE12 region). In particular, the work considers the direct and indirect effects (via geographic scope) of public support on the export intensity of SMEs.

Research Design & Methods: The empirical analyses use a large, cross-country, cross-industry dataset of 2 375 European SMEs from 27 countries.

Findings: The study findings indicate that only financial public support is positively, directly and indirectly associated with the export intensity of European SMEs, regardless of the origin. The results related to non-financial public support are less conclusive. Additionally, the study reveals that despite significant, firm-level differences characterising internationally oriented SMEs from Old and New Europe, the examined relationships and effects of control variables are largely the same.

Implications & Recommendations: The article offers clear insights into the significance of financial vs. non-financial public support programmes for internationalisation activities of SMEs, encouraging further research to focus on the question which firms should receive public support and how to increase the awareness and propensity of the owners/managers of SMEs to consult public support providers.

Contribution & Value Added: The originality of this work lies in investigating the impact of public support for internationalisation efforts (export intensity and geographic diversification) of SMEs originating from different contexts of the EU15 and CEE12 countries.

Keywords

public support, export intensity, geographic diversification, SMEs, CEE

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