This paper examined the effects of internal and external environmental factors of small and medium-sized Korean firms relative to their intention to utilize the FTA. Based on a survey of 72 small and medium-sized firms located in Gwangju and Jeonnam provinces in Korea, the empirical results indicate that a firm’s internal characteristics, participation in FTA education and capabilities of utilizing FTA positively affect their intention to utilize the FTA. These results suggest that a firm’s participation in FTA education contributes towards building absorptive capacity, which in turn also heightens its intention to utilize the FTA. In addition, capabilities of utilizing FTA have a positive effect on FTA utilization suggesting that such capabilities of utilizing FTA reduces the complexity and uncertainty of the FTA. Furthermore, external environmental factors such as intensity of competition in the domestic market and degree of dependence on foreign trade seem to have a positive effect on FTA utilization which show that competition intensity in the domestic market encourages more firms to take advantage of the FTA.
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