Technology Transfer, Finance Channels, and SME Performance: New Evidence from Developing Countries

Mehmet Huseyin Bilgin, Chi Keung Marco Lau, Ender Demir

Research output: Contribution to journalArticlepeer-review

12 Citations (Scopus)


This paper attempts to explore the determinants for small and medium enterprise (SME) performance. In particular, we investigate how training, technology adoption, finance channels and exporting behavior affect SMEs' performance by examining the determinants of the profit per worker. Using a rich and up to date firm-level dataset, we find evidence that SMEs can improve performance by importing more foreign materials inputs and by utilizing foreign technologies from technologically advanced economies. This effect of technology spillover is particularly important for smaller enterprises in developing countries because in-house innovation is expensive. We further find that both informal finance sources and formal finance channels do not enhance the performance of smaller enterprises in financing daily operations and interestingly, informal channels hamper a firm's performance. There is no evidence for the effect of on-the-job training on firm performance. The exporting behavior of firms measured by the percentage of exports has no significant impact on firm performance.
Original languageEnglish
Pages (from-to)215-235
Number of pages21
JournalSingapore Economic Review
Issue number3
Publication statusPublished - 26 Sep 2012
Externally publishedYes


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