The internationalization of small and medium-sized enterprises (SMEs) is a topic of considerable academic and practical interest, but there has been little research in the context of transition economies. This paper contributes to this field by examining the influence of aspects of the domestic institutional business environment on the degree of internationalization of SMEs in transition economies. Based on a dataset from the Business Environment and Enterprise Performance Survey 2009, the authors examine whether specific factors in the regulatory and administrative system affect the degree of SME internationalization, and propose a series of hypotheses. The findings highlight the significant role of tax rates, tax administration and corruption in the internationalization process, and demonstrate the importance of institutional factors for SMEs from transition economies.
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