Application of human resource management's universal model: An examination of people versus institutions as barriers of internationalization for SMEs in a small developing country

Abstract

Although the importance of people and institutions has been highlighted in multinational enterprise studies, the association between people, institutions, and the internationalization of small to medium‐sized enterprise (SMEs) is an underexplored issue from the context of a small developing country. We examine theories subsumed under the Universal Model of human resource management (HRM) onto SMEs to study the hypothesized people and institutionally orientated barriers posed to SMEs’ internationalization. Using quantitative analysis, the impacts of the barriers on internationalization are highlighted with particular attention to employer attractiveness. Following extant literature review, this study has used primary data collected through questionnaires from 212 Bangladeshi SMEs. We developed and validated the partial least square‐based structural equation model (PLS‐SEM) to assess the impacts and successfully framed people versus institutional barriers as a second‐order hierarchical reflective model, which has not been done previously. Given their marginal significance over institutions, people‐oriented cultural barriers should be included as an extension of the Universal Model to study SME internationalization.