Building Regional Export Champions: A New Framework for Understanding SME Success

By Jaya Prakash Pradhan December 5, 2015 714

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Type	Journal article (conceptual framework + empirical test)
Title	“Regional Export Advantage of Rising Power SMEs: Analytics and Determinants in the Indian Context”
Authors	Jaya Prakash Pradhan & Keshab Das
Published	2015 · Critical Perspectives on International Business, 11(3/4), pp. 236–258 · Emerald
Data	SME manufacturing exports across Indian states · 1995–2008
Read	DOI: 10.1108/cpoib-10-2013-0040

This is a plain-language summary of “Regional Export Advantage of Rising Power SMEs: Analytics and Determinants in the Indian Context” (Pradhan & Das, Critical Perspectives on International Business, 2015).

In short:

Most international-business research treats the country as the unit of analysis. This study argues the action is sub-national — and offers a new framework, Regional Export Advantage (REA), to explain it.
For Indian SMEs, exporting is geographically concentrated: Southern India alone accounted for about half of organised-manufacturing SME exports (2000–2008), with Western India next.
What gives a region its edge: technological knowledge, skills, ports, urban areas, and foreign investment — with skills mattering even more than basic infrastructure.

Rethinking space in international business

Why do small firms in some Indian states export far more than those in others? Standard trade analysis, built around national borders, can’t answer that — it has no place for the enormous differences within a country. This study, with Keshab Das, fills the gap by introducing a framework for thinking about exports at the regional level: Regional Export Advantage, or REA.

The REA framework gathers the regional ingredients of export success into four groups. Market conditions capture the size, growth, and sophistication of local demand. Factor conditions cover the workforce, infrastructure, and access to capital. The technological base is the region’s stock of knowledge, its industrial specialisation, and its R&D capability. And spatial elements account for urban concentration, industrial clustering, and the presence of foreign investment. Together, these determine whether a region grows export-capable firms.

What the evidence showed

Tested across Indian states for 1995–2008 (using a fractional logit model suited to share data), the framework held up — and three forces stood out.

Technology mattered most clearly: states with more patent activity exported more, especially in high-tech sectors, with knowledge spillovers seeming to lift all firms in tech-rich regions. Human capital mattered across every technology level — and, strikingly, skills mattered more than basic infrastructure. And there was a distinct urban advantage: cities act as export catalysts, with metropolitan regions showing higher export intensity. Port access and FDI presence rounded out the list of decisive factors, while the size and sophistication of local demand mattered most for medium- and high-tech SMEs.

The geography is telling. SME exports were concentrated in just a few states, with Southern India accounting for about half of organised-manufacturing SME exports and Western India next. (It’s worth noting the contrast with all manufacturing exports, where the western states of Gujarat and Maharashtra dominate — for small firms specifically, the South leads.)

What the study contributes

The paper makes three contributions worth naming. It assembled the first comprehensive data on state-level SME exports; it brought a fitting statistical method (fractional logit) to the problem of regional export shares; and it offered a theoretical framework — REA — for understanding why some regions out-export others. Its core message for policy follows directly: a region’s export performance can be built, through deliberate investment in technological assets, skills, technology clusters, R&D by local firms, and stronger university–industry links — not left to the capabilities of individual companies alone.

Read the academic abstract

Purpose — To examine the sub-national regional dimension of exports by small and medium-sized enterprises (SMEs) in India, one of the prominent emerging economies or “rising powers.” Design/methodology/approach — An analytical framework on regional export advantage (REA) was formulated from the theoretical and empirical literature, then estimated for Indian states using the fractional logit model. Findings — Exports by rising-power Indian SMEs are geographically limited to a few states: Southern India alone accounted for half of organised-manufacturing SME exports during 2000–2008, followed by Western India. Regional stock of technological knowledge, skill availability, port facilities, urban areas, and FDI stocks emerge as crucial determinants of states’ shares in SME exports across technological categories; the size and sophistication of local demand also matter, at least for medium- and high-technology SMEs. Practical implications — Sub-national policy aimed at upgrading regional technological assets and skills — via technology clusters, local-firm R&D, industry–university linkages, and investment in education and training — can help states gain export advantage. Originality/value — The paper brings new analytics and insight to the role of sub-national space in the internationalisation of rising-power SMEs, contributing to an international-business literature that is predominantly occupied with the “nation” as the unit of location.

Cite this article

Pradhan, J. P., & Das, K. (2015). Regional export advantage of rising power SMEs: Analytics and determinants in the Indian context. Critical Perspectives on International Business, 11(3/4), 236–258. https://doi.org/10.1108/cpoib-10-2013-0040

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