The Effect of Export Barriers on Perceived Export Performance in Libyan SMEs

1. Introduction

Small and medium-sized enterprises (SMEs) are almost always assumed to be the major factor for job creation, dynamism in the private sector, and even for the diversification of economies in developing countries, but very often their potential to grow is limited due to insufficient resources and poor access to the markets. Internationalization—above all, the case of exporting—gives SMEs the chance to gradually accumulate demand thereby venturing further than their unproductive home crown territories, draw in experience and knowledge, and ultimately gain in competitiveness. Cutting through the academic jargon, from a capabilities angle, one could say that through exporting a company can not only prove its strength but also get a chance to learn, improve, and reconfigure the resources as it encounters new technologies, customer needs, and—most importantly—competition.

On the other hand, exporting cannot be viewed as a cakewalk. The “export barriers” that come both from within and outside the firms influence for many SMEs the export decision, as well as the sustainability of the export activity. Firm-level constraints (like financial, managerial expertise, planning, and knowledge gaps) and external constraints (like border procedures, regulatory complexity, standards compliance, and institutional instability) are usually acknowledged as the different types of barriers in the export-barrier literature. This framing has ample empirical support from export research that connects barriers to (perceived) export performance across various SME contexts. For example, there is evidence from Turkey that explicitly models the barrier–perceived performance relationship (Altıntaş et al., 2007) along with influential syntheses of export barriers and performance determinants (Leonidou, 2004; Sousa et al., 2008).

The Libyan context exacerbates and makes these problems more significant from an analytical viewpoint. Libya since 2011 has been experiencing extended periods of institutional disruption and macroeconomic instability that have adversely impacted the local businesses’ ability to grow, particularly in the case of non-oil exports. Under these conditions, the SMEs in the sectors where exports are theoretically possible—such as processing, agriculture, and services—often deal with high uncertainty, scattered support, and lack of access to necessary infrastructure, finance and other facilitators. To make the study both comparable and contextually pertinent, it places Libyan SME exporting within a regional and institutional evidence framework by relying on international datasets and reports (World Bank, 2023; WTO, 2022; UNCTAD, 2022; AfDB, 2021) and national sources of Libya (LEPC, 2021).

The article is conceptually built on the integration of different theoretical viewpoints that illuminate why export barriers lead to varying performance outcomes for firms and settings. The first one is the Resource-Based View (RBV) which states that resource differences create performance variability; thus, SMEs with stronger internal resources (financial capital, managerial expertise, and innovation capacity) are in a better position to resist constraints and hold on to the competitive advantage they have gained (Barney, 1991). Second, Institutional Theory asserts that the strategies of firms and their outcomes are determined by the formal and informal rules in their environment; where institutions are weak, “institutional voids” increase the cost and risk of transactions which, in turn, makes obtaining and maintaining market participation and performance harder (North, 1990; Scott, 2014). Third, the Uppsala internationalization model views exporting as a gradual learning process in which firms increase commitment as they gain experiential knowledge; this is especially suitable for SMEs that are uncertainty and information asymmetries (Johanson & Vahlne, 2015). Apart from these theories, the international business literature points out the role that networks play as one of the main ways through which SMEs can get access to foreign-market information and resources that are otherwise hard to develop internally. Networks can minimize transaction costs and uncertainty and determine market entry options—this is especially relevant in high-risk settings where the formal support from institutions is limited (Coviello & Munro, 1997).

On the methodological front the paper takes on a secondary-data method that aims to synthesize the evidence in settings where data are scarce and complicated even from the institutional perspective. Quantitative and qualitative secondary sources were the only basis of the research allowing for triangulation and comparison through institutional indicators and peer-reviewed findings (World Bank, 2023; WTO, 2022; UNCTAD, 2022; AfDB, 2021; LEPC, 2021). The systematic literature review process in line with PRISMA principles was put in place to identify studies on SME export barriers from 2000 to 2025, and was followed by structured screening, quality appraisal, and extraction to ensure transparency and replicability (Booth, Sutton, & Papaioannou, 2021).

The study's analytical focus is intentionally comparative and policy-relevant. It plans to (i) pinpoint the internal (firm-level)

2. Literature Review

Small and medium-sized enterprises (SMEs) have become the main engine of economic development everywhere and their importance is recognized everywhere as they create jobs, encourage diversification, and help maintain local production networks especially in situations where the formal private sector is limited structurally (Beck & Demirgüç-Kunt, 2006; Ayyagari et al., 2011). The role of SMEs as the backbone of the economy becomes even more pronounced in resource-dependent and institutionally weak locations: they frequently act as the “economic stabilizer” at the community level when national coordination is weak or disrupted (El Taraboulsi-McCarthy, 2019). However, the same conditions that make SMEs the most important actors in society and economy also exacerbate their problems—especially financial frictions, capability gaps, and the lack of reliable support systems—creating a constant conflict between policy expectations and actual export participation (UNCTAD, 2022; World Bank, 2023). This dissertation positions Libya’s SMEs within this conflict, stressing that low export participation is not simply a decision made at the firm level but rather a product of multi-layered constraints that determine export readiness and competitiveness.

Exporting is typically viewed as the most internationalization route for SMEs to enter the international market because it requires less commitment that is not reversible than foreign direct investment and has the potential to provide “learning-by-exporting” advantages that improve quality and innovation (Cavusgil & Zou, 1994; OECD, 2021). Nevertheless, SME exporting is rarely a straightforward and simple decision; rather, it is a process of capability-building that is highly influenced by managers’ know-how, standard organizational routines, and the ability to deal with uncertainty across different institutional environments (Leonidou et al., 2010; Johanson & Vahlne, 2015). Following the Uppsala internationalization model, SMEs often start their foreign activities with low commitment and then gradually increase the extent of their engagement as they gain experience and develop market-specific knowledge—thus making perceived uncertainty and learning limitations central factors that influence export outcomes (Johanson & Vahlne, 2015). As a result, the thesis sees exporting as an ongoing learning process rather than an isolated strategic act.

One of the major topics of the literature deals with the “export barriers” pointing as the most direct reason for limited destocking of the export sector, the irregularity of activities and underperformance of SMEs. These barriers to export are defined as factors that cause the foreign market entry and operation to be more expensive, risky, and complicated and thus discourage companies from exporting or weaken their export performance after entering the market (Leonidou, 2004). It is a very important issue to differentiate between objective barriers (measurable limitations in markets and institutions) and perceived barriers (the way that management evaluates the situation and makes decisions under uncertainty). The difference makes a bigger impact on SMEs than on larger companies because their decision-making is centralized and they have limited resources; thus, the way the managers perceive the situation can either amplify or even substitute the objective constraints in determining the export behavior (Leonidou, 2004).

The majority of studies on export management classify barriers into internal and external and that is the classification that this research follows. Internal barriers to exporting emerge from the company and are typically made up of factors like: lack of international experience among the management, insufficient planning of the export process, lack of knowledge related to export, shortage of working capital, and lack of operational capabilities required to ensure compliance with quality and standards (Chabowski et al., 2011; Bellone et al., 2010; Styles & Ambler, 2000). These issues are directly detrimental to export readiness: even in the presence of external opportunities, SMEs may not have the required financial and organizational capacity to pay for the market research, product adaptations, certification, and management of payment cycles that are lengthy in cross-border trade (Bellone et al., 2010). From a capability perspective also, technological and process-related weaknesses are still important since they limit SMEs' ability to meet foreign customers' quality requirements and delivery reliability, which are crucial for performance in export markets (Golovko & Valentini, 2011).

External barriers to exports are factors that limit the firm's ability to export and include the complexity of regulations, ineffective customs and documentation procedures, unpredictable policy climates, inadequate infrastructure (transportation, ports, digital connectivity), fierce competition from foreign countries, and the fragility of institutions (Seringhaus & Botschen, 1991; Zou & Stan, 1998; Portugal-Pérez & Wilson, 2012). Where institutions are weak, the barriers intersect; for example, the lack of infrastructure raises logistics and delivery costs along with their uncertainties, while the regulatory changes heighten the compliance risk and at the same time hinder the relationships with foreign partners (Filippaios et al., 2008). In conflict areas, the external barriers are compounded by the aforementioned problems of political uncertainty, security, and economic instability—these conditions negatively impact trade as they make it more uncertain and less attractive to invest in long-term export strategies (Chen & Novy, 2021).

Literature also highlights the direct impact of tariffs and non-tariff measures on SMEs' export opportunities as another factor to assess. Though tariffs can make an exporter less competitive in terms of pricing, non-tariff barriers often cost more to comply with, which the SMEs bear alone, particularly those without technical staff or money for testing and certification (Disdier et al., 2008; Hoekman & Nicita, 2011). Technical barriers to trade are often cited as a major problem for SMEs because, in compliance, capital investment may be necessary as well as frequent certifications; thus, the threshold for entering high-standard markets goes up (Sheldon, 2017).

Barriers to exports performance relationship has been generally explained from different theoretical angles. First, the resource-based view (RBV) asserts that export performance is determined by resources and capabilities that are valuable and difficult to copy; however, barriers limit performance by constraining SMEs’ capacity to create and apply export-relevant capabilities like management skills, knowledge of the market, innovation, and operational flexibility (Barney, 1991). Second, institutional theory points out that performance varies with the quality of regulations, enforcement, trade facilitation, and governance; weak institutions raise uncertainty and transaction risks, thus, making it less efficient and appealing to keep nurturing the market with exports (Aidis et al., 2008). Third, the behavioral internationalization model emphasizes that barriers work through management's perceptions and attitudes towards risk—exporting could be seen as more complex and that could lead to reluctant exporting postures and ineffective strategic planning, thus, even when there are chances, the performance will still be undermined (Figueira-de-Lemos et al., 2011). The thesis scientifically connects these mechanisms to the internal resources, learning dynamics, and institutional context perceived export performance in Libya.

In conclusion, the thesis clearly focuses on perceived export performance as the main outcome because in data-scarce places it is difficult to find reliable objective export indicators at firm level. In such situations, perceived performance is regarded as a valid proxy that reflects the managerial evaluation of export results under actual operational restrictions, which corresponds with the broader trend of relying on perceptions in SME exporting research (Leonidou, 2004). This consistency lies in the thesis’ secondary-evidence design and its triangulation rationale that seeks to diminish single-source bias by combining peer-reviewed studies and institutional datasets covering the years 2000-2025 (Booth, Sutton, & Papaioannou, 2021).

3. Methodology

This article features a research design that is descriptive-analytical and that relies on secondary data only, which corresponds with the methodological framework of the original thesis. The option for a secondary-data approach is supported by the constraints that are structural and institutional, which characterize the Libyan context, where firm-level primary data are rare, fragmented, and often not trustworthy due to the long-lasting political instability and poor statistical systems. In such contexts, collecting secondary evidence of high quality is considered an appropriate and very good strategy to analyze export-related phenomena and to make policy-relevant conclusions.

Data were obtained from studies published in peer-reviewed journals, reports by international institutions, and national official resources covering the period from 2000 to 2025. Key institutional sources are the World Bank, World Trade Organization (WTO), United Nations Conference on Trade and Development (UNCTAD), African Development Bank (AfDB) and Libyan Export Promotion Center (LEPC). The indicators on the performance of SMEs, trade facilitation, logistics, the quality of institutions and export barriers are comparable, which enables conducting cross-country and regional benchmarking related to Libya. Academic sources were identified through systematic searches of major databases, especially for studies focused on export barriers, SMEs internationalization, and associated with export performance in developing and conflict-affected economies.

The analytical framework consists of three theoretical perspectives: the Resource-Based View (RBV), Institutional Theory, and Uppsala Internationalization Model. These frameworks directed the classification of export barriers into internal (firm-level) and external (environmental/institutional) groups and organized the interpretation of how these barriers impact perceived export performance. The analysis does not resort to statistical testing but rather to thematic synthesis and comparative evaluation, which brings out recurring patterns, major constraints, and converging findings across the sources.

To be more valid and reliable, the study incorporates triangulation, comparing evidence from different data sources and regions to eliminate the bias of a single-source. Despite the fact that the methodology does not allow for causal inference at the firm level, it still results in a clear and context-sensitive understanding of export barriers and their performance consequences for Libyan SMEs. Among the methodological limitations, which are considered as the main ones in conducting research in fragile-state contexts, are the issues of data timeliness and reliance on perceived performance indicators rather than on objective ones, which are also seen as inherent to such settings.

4. Results

To evaluate the effect of internal and external export barriers on the perceived export performance of Libyan SMEs, this chapter delves deeply into the secondary data that served as the primary source of information. Using information culled from international databases, reports from relevant institutions, and primary research, this chapter paints a comprehensive picture of Libya's export status.

The study drew on a variety of descriptive and comparative methodologies to examine Libya in relation to its North African and Mediterranean neighbors, paying special attention to the similarities, connections, and contextual differences between the two. In order to make sense of the results, the researchers looked to three primary theoretical frameworks: the Uppsala Internationalization Model, Institutional Theory, and the Resource-Based View (RBV). Taken as a whole, these models explain how a company's internal resources, external institutions, and the power of experience all play a role in shaping a small or medium-sized enterprise's (SME) export behavior and perceptions of its own performance.

4.1. Examining Internal Export Restrictions

One kind of export barrier is the firm's own internal biases and assumptions. These obstacles are faced by businesses that struggle with innovation, have ineffective management, and lack adequate funding, among other things. The key determinants of export success, according to Leonidou (2004), are these obstacles because they affect resource allocation and decision-making directly.

According to research carried out by the Libyan Export Promotion Center (LEPC, 2021), more than 70% of small and medium-sized enterprises (SMEs) in Libya lack export-specific departments and appropriate training. Official export funding is available to fewer than 12% of Libyan SMEs, according to a World Bank analysis citing financial data from 2023. This suggests that there is still a significant dependence on unofficial finance and individual savings, which has limited opportunities to access international markets.

Further complicating matters are management and human resources flaws. Lack of managerial experience causes risk aversion and reduced trust in dealings with international partners, according to a 2007 study on Turkish SMEs by Altıntaş, Tokol, and Harcar. Libyan managers, like their Turkish counterparts, have limited exposure to international techniques, hence they frequently prioritize the company's survival over developing a strategy to increase exports in the long run. In Table 1 we can see a summary of the internal obstacles that have the greatest impact on Libyan SMEs.

Table 1: Key Internal Barriers Affecting Libyan SMEs

Source: Compiled from LEPC (2021), World Bank (2023), and Sousa et al. (2008).

As a theoretical framework, the Resource-Based View (RBV) supports the aforementioned obstacles. According to RBV, a company's competitive advantage comes from its unique resources, which are those that are precious, scarce, costly to replicate, and non-substitutable. According to Morgan and Katsikeas (1997), small and medium-sized enterprises (SMEs) in Libya face difficulties in overcoming export restrictions due to a lack of resources, particularly financial capital and experienced manpower.

4.2. Examination of External Export Restrictions

Externe export barriers are those that arise from outside sources, such as inefficient bureaucracy, outdated infrastructure, uncertain trade restrictions, and fierce rivalry. External obstacles are overshadowed in Libya by the country's institutional instability and its ineffective regulation enforcement.

By comparing the average time it takes for customs in Libya (18 days per shipment) to that in Tunisia (12 days) and Egypt (9 days), we find that Libyan exporters are already in the worst position in North Africa when it comes to administrative burdening (WTO, 2022; UNCTAD, 2022). Moreover, due to insufficient logistical infrastructure, high operational expenses, and inadequate port capacity, the country is unable to compete on a worldwide scale. Table 2 displays the comparable measures that demonstrate Libya's subpar performance when compared to its regional counterparts.

Table 2: Comparative Export Environment Indicators (2023)

Source: World Bank (2023); WTO (2022).

The aforementioned metrics back up the claim that Libyan exporters face systemic disadvantages. According to Leonidou (2004), small and medium-sized enterprises (SMEs) face challenges in satisfying export criteria and maintaining reputation in foreign markets due to an institutional environment marked by uncertain laws and minimal policy enforcement. The institutional theory provides the most satisfactory explanation of the issue.

4.3. Impact of Barriers on Perceived Export Performance

Perceived export performance is the expression of managers' qualitative feedback on the financial, strategic, and operational components of their company's performance in foreign markets (Zou & Stan, 1998).

In developing nations where export finance is severely limited, small and medium-sized enterprises (SMEs) experience a growth rate in exports that is approximately 40% lower than their counterparts in countries where export financing is easily accessible, according to the World Bank (2023). Firms lacking export-trained workers reported significantly lower levels of satisfaction with export results, according to a relevant study by Altıntaş et al. (2007).

The causes impacting these attitudes in Libya include both internal and external obstacles. A more risky or unprofitable approach to exporting is likely to be taken by SMEs when they face bureaucratic barriers and a lack of funding. In Libya, there is a lack of institutional support, which makes it difficult for managers to focus on operational efficiency, customer happiness, and brand awareness, all of which are important to export success.

According to the Uppsala Internationalization Model, exporting is a skill that requires patience and a foundation in first-hand experience. In the face of persistent problems, businesses often pull back to local markets, postponing or scrapping their ambitions for international expansion.

4.4. Evaluation of Internal and External Barriers in Comparison

Both internal and external factors can have an impact on export performance, but to varied degrees depending on the specifics. The degree to which an organization is prepared and able to adjust is more directly and significantly affected by internal factors. Contrarily, strong internal capabilities allow organizations to mitigate the effects of external obstacles to a greater degree than weaker ones (Leonidou, 2004; Morgan & Katsikeas, 1997).

This result lends credence to the third hypothesis (H3): Internal export constraints have a greater influence on the perceived export performance of Libyan SMEs compared to external ones. You can see the interdependence of all the parts in Figure 1.

This theoretical framework, which places an emphasis on capacity at the business level, provides an explanation for the relative merits of internal resources and external obstacles.

Figure 1: Theoretical Connection Between Perceived Performance and Export Barriers

4.5. Institutional and Policy Support Analysis

The backing of institutions is crucial to the expansion of exports. Initiatives such as trade missions and export readiness assessments have been launched by the Libyan Export Promotion Center (LEPC). But these initiatives are inconsistent and seldom extend beyond Tripoli and Benghazi.

The World Trade Organization, the United Nations Conference on Trade and Development, and the African Development Bank have all urged Libya to execute export reforms centering on the following issues:

1. Simplify the processes of paperwork and customs clearance.

2. Create online platforms for trading.

3. Arrange for export credit guarantees.

4. Provide instruction with an emphasis on exporting products.

Due to weak inter-agency coordination and fragmented governance institutions, Libya has been unable to implement these reforms (UNCTAD, 2022). Table 3 shows the primary institutional shortcomings of Libya's export system.

Table 3: Institutional Weaknesses Affecting SME Export Development

Source: Compiled from LEPC (2021); WTO (2022); UNCTAD (2022).

According to institutional theorists, the aforementioned shortcomings compound into institutional voids, which are defined as instances in which formal structures either do not exist or are unable to adequately support market transaction (North, 1990).

4.6. Discussion of Key Findings

The results show a few key things:

1. Internal obstacles are the most significant: Poor management and insufficient funds are the primary causes of the poor impression of export success.

2. The presence of external impediments, such as bureaucracy, trade restrictions that are difficult to forecast, and insufficient infrastructure, significantly raises trading costs.

3. When there is not a well-defined export policy or marketing strategy, these problems are made worse by institutional inadequacies.

4. Libya lags behind Egypt and Tunisia in terms of competitiveness, namely in the areas of trade facilitation, logistics performance, and participation of small and medium-sized enterprises (SMEs).

5. Confirmation of theory: RBV, Institutional Theory, and the Uppsala Model all work together to address the question of why internal resources and learning processes are crucial for overcoming structural barriers. Figure 2 shows the combined effects of these relationships.

Figure 2: Interaction Between Firm Resources, Institutional Context, and Export Performance

The offered model shows how export performance is dependent on effective firm-level resource coordination and enabling institutional settings.

5. Conclusion

This study aimed to investigate the role of export barriers in shaping SMEs' perceived export performance in Libya, backed by a structured synthesis of both academic and institutional secondary evidence. Through the Resource-Based View, Institutional Theory, and the Uppsala Internationalization Model, the research provided a context-sensitive interpretation of the continued underperformance of Libyan SMEs in the export market notwithstanding the strategic importance of exports for both economic diversification and private-sector development.

The results suggest that the most significant internal export barriers, which are the main internal factors, are already and only internal barriers. Unsuccessful access to finance, poor management capabilities, insufficient export planning, and low levels of innovation and technology have been identified as the key factors determining SMEs’ negative view on exports and their evaluation of export success. In an environment where managerial decision-making is very much concentrated, the above mentioned internal weaknesses are directly transformed into risk-averse strategies, export activities that are only responsive to market demand, and pessimistic evaluations of the performance of the export activities. Even when there is no shortage of market opportunities, SMEs that do not have the required internal capabilities generally see exporting as being unsustainable or too risky.

There exist export barriers of an external nature like bureaucratic inefficiencies, regulatory instability, infrastructural inadequacies, and institutional weakness that also have significant effects but they, however, mainly act as conditions that reinforce existing situations rather than as determinants that operate independently. The findings show that Libyan SMEs tend to view these constraints as structural realities that are beyond their control and they thus lower their expectations accordingly. Consequently, external barriers aggravate the already existing internal limitations thus creating a scenario of poor perception of performance rather than the external barriers being the sole cause of poor perceived performance. Additional measures confirm that Libya's logistics performance, export readiness, and institutional quality are still not up to par with its regional counterparts, which keeps on reinforcing the managers' notions of relative disadvantage in the international markets.

On the theoretical front, the research asserts that the interaction of firm’s resources, capabilities, and external barriers is the best way to explain the export performance of SMEs. The firm-level resources and capabilities determine the perception and management of external barriers, while the institutional setting influences the cost and risk of doing business. The prevalence of perceived export performance in this study underlines its analytical utility in data-restricted and conflict-affected countries where reliable or objective firm-level export data are often either unavailable or unreliable.

These results have two major implications. One implication is that, besides devising and implementing trade facilitation measures, the policymakers should consider internal capability gaps and come up with policies that support SMEs in terms of providing them with financing, training and managerial skills, export guidance, and innovation sectors. Managers and owners of SMEs are the other implication and they need to focus on the development of capabilities and the use of learning-oriented methods in their exporting activities, so that they can reduce perceived risks and increase their competitiveness.

To sum up, it is necessary to carry out a coordinated approach that simultaneously builds up the internal capabilities of SMEs and reduces the external constraints of the institutional environment in order to improve the export performance of Libyan SMEs. Without such synchronization, efforts to promote exports are unlikely to yield enduring improvements in performance or bring about any significant movement towards economic diversification in Libya.

Declaration of Competing Interest: The authors declare that they have no known competing financial interests or personal relationships that could have appeared to influence the work reported in this paper.

Funding Statement: No external funding was received for this research.

Data Availability: All data generated or analyzed during this study are included in the manuscript and supplementary material. Additional simulation data can be provided upon request.

Ethical Approval: Not applicable. The study involves no human subjects, animals, or sensitive data.

Declaration of Generative AI and AI-assisted Technologies: This study has not used any generative AI tools or technologies in the preparation of this manuscript.