INNOVATION IN DISTRIBUTION CHANNEL(S) & COST EFFICIENCY ON SMALL & MEDIUM ENTERPRISE SCALES' PERFORMANCE: INTRODUCTIONFor decades, small & medium enterprises (SMEs) have been existed & major in their establishments. Thailand (99.5 %-Nagai, 2007); Malaysia (99.2 %-Shankar, 2010); Korea (more than 80 %-Yhee, 2001) & Indonesia (more than 95 %-Akira et al, 2011) as well as in most rest of the economy. Because of it, they bring positive impacts for countries. Malaysia(32 % of GDP, 19 % of exports, & 56 % of employment & expected benefiting more from 2000 to 2020 period -Shankar,2010). American SMEs have become a great engine in employment creation too (Agyapong, 2010). Singapore, Taiwan, Thailand, & South Korea (SMEs to employment ranged from 35% to nearly 61 % by contributing value added from 22 % to 40 % -Salleh, 1991). Another contribution of SMEs is poverty alleviation by jobs’ creation (Vandenberg, 2006).

These days, adopting export-oriented for SMEs’ performance is precious. Engaging in global market letting them be more recognizable upon competitors & affords them better entree to new markets. It also impacts positively on firms’ competitiveness mainly in the long term (Karagozoglu & Lindell, 1998). Furthermore, taking action in worldwide operations, enabling them to amplify new competencies in different environments (Vieira, 2009). Dunusinghe & Kotz supported surely that involving in international trade/export boosting economic growth/GDP.
However, as the characteristic of distribution channel once it is established usually difficult to change (Ramaseshan et al, 1994) & realizing of its crucial role on overall firm performance, interestingly, export malfunctions happen because of process activities instead of some other factors.
For years since 1970s distribution channel had been known at length for (Williamson, 1989, 2007) its capability to ease transaction cost & others. Empirical evidence transparently emerged in sorts of findings. As international channel operation is significant with export performance(Ely, 2009), the 1990s work of Weigand found interesting indications that the applications of non-formal channels might generate the unkind intermediaries leading to performance alleviation. Ramaseshan, & Zdenko et al, argued it is the channel members’ position that determine the performance. Anderson, supported channel members’ performance can be enhanced by certain coordination degree among them.