The role of intermediaries in facilitating internationaltrade for small and medium-sized enterprises (SMES)

This thesis documents that intermediaries play an important role in facilitating international trade. In international trade theory, it is generally assumed that manufacturing companies that want to serve the foreign market send their products directly to their end consumers. However, what we actually observe is that trade mediators are often involved in the exchange of goods and services across borders. Intermediaries are economic agents that buy from suppliers for sale to buyers or allow buyers and sellers to meet and conduct transactions. If buyers and sellers are located in different countries, they are trade intermediaries. These include wholesalers and retailers in the exporting and importing countries and major trading companies. Recently, researchers began to investigate why firms prefer to use a trading instrument to export their goods directly. SMEs have an important role in the economies of countries due to their important role in their development. Numerous studies have indicated that SMEs play important roles in the economies and development of countries, especially in developing countries. Siam and Rahahleh (2010) stated that the role of SMEs in their countries' economies has the capacity to create employment opportunities, to employ labor force, to maximize economic surplus, to increase the added value of national income and to limit unemployment problems. According to Al-Mahruq (2010), SMEs are the backbone of the private sector all over the world and contribute to the social goals of the countries in which they operate. SMEs face challenges due to increased competition, the ability to adapt to rapidly changing market demand, technological change and capacity constraints related to knowledge, innovation and creativity. However, for many SMEs, their potential is often not fully realized due to factors related to their small scale. Among these factors are: lack of resources (finance, technology, skilled labor, market access and market knowledge); Economics of scale and lack of scope; higher transaction costs associated with large enterprises; lack of knowledge, knowledge and networks that may contribute to the lack of experience in domestic and international markets; market competition of large multinational corporations caused by globalization and economic integration. In general, smaller and more difficult markets are more likely to be served through trade intermediaries. Intermediaries are used by relatively smaller firms and find it difficult to enter their export market. In addition, there is a strong relationship between brokerage shares and smaller and higher trading costs.