Intention to Export of Small Firms in The Processed Foods Industry

In terms of numbers, the Indonesian economy is dominated by micro and small sized firms (MSEs), but their contributions to exporting are not significant. The government expects the contributions of MSEs towards exporting to improve in the future. The majority of Indonesian MSEs operate in the processed food sector. A processed food is a consumer good that requires adaptations to enter a foreign market as food fundamentally has cultural aspects. This research aims to study small firms’ intention to export processed food. The data was collected through in-depth interviews with owners-managers of three small enterprises. The research found that the first firm sells some of its products to foreign countries, whereas the other two firms sell their products in the domestic market. All of the firms have a relatively high intention to export but face similar problems both internally and externally. The internal barriers are: (1) the perception of the high risks of internationalization; (2) the low quality of human resources; (3) the durability of the product (4) the quality of packaging; (5) limitations in capital for export financing; and (6) limited access to international market information. The problem (4) is faced by exporting firms. In contrast, the external barriers are: (1) mandatory regulations to have halal certification; (2) the enforcement of taxes for small firms; (2) the lack of government assistance in marketing to international markets; and (3) the scarcity of raw materials and