Internationalization Of Small And Medium-sized Enterprises Research Articles

Impact of government export assistance on internationalization of SMEs from developing nations

PurposeThe purpose of this paper is to examine the effects of government assistance programmes on internationalization of SMEs from an Asian developing nation.Design/methodology/approachPrimary data from a sample of 203 SMEs in three export‐oriented industries in Bangladesh were analyzed using structural equations model to examine both direct and indirect causal effects of government assistance on their internationalization.FindingsResults suggest that the usage of market development‐related government assistance significantly influence internationalization directly as well as indirectly via other determinants, whereas finance‐ and guarantee‐related assistance has only indirect effect.Practical implicationsGovernment export assistance programmes play an important role in the SMEs' internationalization process by contributing to a number of firm‐ and management‐related factors that determine international marketing performance of a firm. The study provides a guideline for SME managers as to how they can benefit from both categories of export assistance programmes in improving their positive attitudes towards the export market environment, building their knowledge and enhancing commitment to exporting for better success in their international operations.Originality/valueThe importance of export assistance programmes is well recognized in the literature but its causal effect on internationalization of small and medium‐sized enterprises (SMEs) is low. The paper tries to fill this gap by reporting the results of an empirical study examining effects of government assistance programmes on internationalization of SMEs from an Asian developing nation, where there is a gross dearth of research.

The Impact of Foreign Trade Promotion on the Foreign Sales Intensity of SMEs

Small and medium-sized enterprises (SMEs) show structural shortcomings with regard to the development of international markets. Thus, it is the explicit goal of foreign trade promotion to foster the degree of internationalisation of SMEs. Yet, empirical research whether foreign trade promotion helps SMEs to overcome barriers to internationalisation is quite rare. Our paper addresses this issue, by investigating the impact of the foreign trade promotion on the foreign sales intensity of firms. We test our hypotheses on a sample of 655 German firms. We present empirical evidence that the use of foreign trade promotion is positively linked to the foreign sales-to-total sales ratio. However, the effect of such public support on foreign sales intensity is not the same for SMEs and large companies. While we find a positive impact for SMEs, in the case of large companies the usage of support schemes has no significant effect on the foreign sales-to-total sales ratio. Thus, our findings provide evidence that large companies incorporate windfall gains when drawing on foreign trade promotion schemes.

The internet and SME internationalisation: promises and illusions

The internet is an important business tool and the increasing trade levels reflect that fact. It has been argued that the internet is particularly appealing for small and medium-sized enterprises (SMEs) that wish to internationalise their activities. The objective of this paper is (1) to identify the advantages the internet offers to these SMEs, and (2) to point out some of the drawbacks that SMEs face when carrying out international transactions through the Internet. Eight propositions are developed and ideas for future research discussed.

International trade management competencies

This study surveyed 141 foreign-owned and Chinese-owned exporting Small And Medium-Sized Enterprises (SMEs) located in China. The results indicated that financial management was ranked as the highest level of competencies occupied, followed by marketing, export operation and human resource management, respectively. The most serious internal barriers encountered were connected with know-how competencies, while government export policy and treatments were the most frequently quoted external barriers. Highly successful firms did occupy higher level of international trade management competencies than those low successful firms. The findings suggest that knowledge based-economic policy should be considered as one of the most effective policy for fostering SME internationalisation sustainable development.

Internationalization of knowledge-intensive SMEs: The role of network relationships in the entry to a psychically distant market

Abstract Current research emphasizes the role of extant network relationships in the international development of small- and medium-sized enterprises (SMEs). Inevitably, these relationships are there, most likely, to provide linkages with and facilitate entry into psychically and geographically close markets. But what of firms entering psychically distant markets, for strategic reasons, as is usually the case with knowledge-intensive SMEs? Will existing network relationships remain important, and will they operate in a similar way. In this exploratory case study, in which eight Finnish software SMEs enter the Japanese market, the decision to enter these markets is found to be for strategic reasons rather than in order to follow network relationships. In addition, the way to enter these markets is not seen influenced by extant business relationships. It seems more reasonable to argue that the important relationships were actively utilized or developed to achieve the market entry, and were, in many cases, mediated relationships with non-profit government-owned consulting firms.

SME internationalization as a challenge to interpersonal communication competence

This paper investigates how the internationalization of small and medium-sized enterprises (SMEs) poses a challenge to the interpersonal communication competence of SME owners, managers and employees. Interpersonal communication competence is discussed particularly in the contexts of networking and business collaboration. Collaborative arrangements even with competitors are needed in today’s global business world. Through collaborative interaction it is possible, for instance, to reduce development and production costs or channel resources to creating new innovative products (Stohl & Walker 2002: 237). The expansion of business activities across international borders, in particular, requires networking and collaborative interaction regionally, nationally and internationally. Based on the literature of interpersonal and intercultural communication competence, interpersonal networks and collaborative interaction, this paper provides an analysis of the interpersonal communication competence specific to and needed in the context of SME internationalization.

The importance of the internet in international business‐to‐business markets

PurposeThe purpose of this paper is to provide empirical evidence on the actual use and market performance effects of information and communication technologies (ICT) with regard to international business‐to‐business marketing activities of small and medium‐sized enterprises (SMEs).Design/methodology/approachThe analysis is based on survey data from 635 Danish and Norwegian SMEs with international marketing activities. The two primary research questions regarding actual use and performance effects are addressed by descriptive statistics and structural equation modelling, respectively.FindingsFindings suggest that, contrary to expectation, Norwegian and Danish international SMEs are not heavy users of ICT. Rather, ICT is predominantly used for market information search and to develop long‐term customer relationships. In both those areas the use of ICT is positively associated with the firm's satisfaction with its development of new market knowledge. The use of ICT for sales purposes is limited and apparently negatively associated with the firm's satisfaction with its development of new market knowledge. There is no significant association between the use of ICT and the firm's satisfaction with its international performance.Practical implicationsThis study contributes with new knowledge regarding the potential and limitations of the use of ICT in international business‐to‐business marketing. Heavy usage of ICT seems to be primarily directed towards information search and relationship development. The study also supports that ICT usage have positive impact on the accumulation of new market knowledge (and indirectly on international performance). Use of ICT for sales activities seems to be quite limited, and perhaps not even advisable. The reason for this may be that media richness associated with face‐to‐face interaction is beneficial for establishment of commitment and trust.Originality/valueThis paper makes an original contribution to the field of knowledge regarding the potential (and limitations) of ICT in international business‐to‐business marketing.

The impact of internationalisation on the competitive strategies of SMEs

The aim of this research was to study the effect of internationalisation on the competitive strategies of Small- and Medium-sized Enterprises (SMEs). An empirical study, based on the 'strategic fit' theory, was conducted on a sample of 59 SMEs. It revealed that international SMEs are significantly different from regional SMEs in terms of a number of 'competitive dimensions'. International SMEs are exposed to greater demands with regard to differentiating their products and minimising their production costs. They also adopt more pronounced concentration strategies.

Knowledge storage and access in automotive components' SMEs in India

Knowledge has emerged as the key resource in the post-industrial society. Creation of knowledge is a costly affair, and the half-life of knowledge is getting increasingly shorter, owing to fast changes and newer developments. It is critical for organisations to store the knowledge, and provide access to it, in a professional and efficient manner throughout the organisation for leveraging it for achieving sustainable competitiveness. This research work looks at knowledge storage and access practices in small- and medium-sized enterprises (SMEs) in the automotive components industry in India. International SMEs fare better than Indian SMEs in stored knowledge in terms of relevance, importance and timeliness as well as access. Knowledge is mostly stored electronically and on paper. In terms of access, knowledge about markets takes maximum time whereas knowledge about the company's products/services takes minimum time. The study includes both macro and micro perspectives by covering experts as well as firms.

Interpersonal Communication Competence in SME Internationalization

Facing economic globalization, internationalization has become the lifeblood for many small and medium sized enterprises (SMEs). The aim of this paper is to illustrate internationalization of an SME as a challenge to interpersonal communication competence. In international business, the competition for products, prices and technologies has expanded to successful development and management of business collaboration and international networks. Networks are created, developed and maintained through social interaction. Therefore it is a necessity to analyze what is interpersonal communication competence in the formation, development and maintenance of such interpersonal relations that are successful for SMEs in their efforts of internationalization. 
 
 Building upon existing literature on interpersonal and intercultural communication, communication networks and SME internationalization, this theoretical paper aims to examine demands of internationalization from the perspective of interpersonal communication competence of SMEs’ owner-managers and employees.

Internationalization of Small and Medium-sized Enterprises (SMEs) and International Entrepreneurship: A Critique and Policy Implications

Wright M., Westhead P. and Ucbasaran D. (2007) Internationalization of small and medium-sized enterprises (SMEs) and international entrepreneurship: a critique and policy implications, Regional Studies 41, 1013–1029. Practitioners are seeking to provide a supportive environment for growing ventures. An important policy challenge is the provision of support for small and medium-sized enterprises (SMEs) seeking to internationalize. To guide practitioner resource allocation decisions, recent conceptual and empirical developments relating to SME internationalization are discussed. An international entrepreneurship perspective is presented as a counterpoint to the established internationalization perspectives, which may have guided practitioner understanding of the aspirations and needs of SMEs. The emerging international entrepreneurship perspective relating to SME internationalization is critically reviewed with regard to the following seven themes: the timing of internationalization; the intensity and susta...

Mutual trust as a key to internationalization of SMEs

PurposeThe purpose of this paper is to offer an understanding as to whether trust‐based coordination is feasible in the context of small and medium‐sized enterprises (SME) internationalization processes, and if so, what impact these cooperative arrangements can have on corporate success.Design/methodology/approachTo answer the research hypotheses, multiple regression analyses based on a postal questionnaire survey (n = 58 SMEs from Austria, the Czech Republic and Slovenia) were computed.FindingsIt is found that self‐commitment facilitates the establishment and maintenance of heterarchic cross‐border cooperation relationships of SMEs that cannot evolve based on market or hierarchical coordination. It is also found that the establishment of trust‐based cooperation relationships with foreign partners positively affects the success of the participating companies.Research limitations/implicationsOnly Slovenian and Czech enterprises and their internationalization have been investigated and compared to Austrian enterprises. Only SMEs have been investigated, no large companies. It is not clear that the presented empirical findings also hold true for larger enterprises.Practical implicationsActive measures such as building more knowledge (getting to know) and openly approaching other enterprises should be encouraged in internationalization processes. Thus, protectionist labor market politics on the macro level are highly counterproductive. At the micro level, parties involved should acquire specific knowledge (e.g. languages or social codes) as well as that they replace prejudices and skepticism by profound knowledge on and openness towards the other, e.g. through exchange programs for employees.Originality/valueThe paper is the first to analyze the role of trust‐based cooperation relationships on the internationalization processes of SMEs in the context of Austrian and Central and Eastern Country (CEEC) enterprises. The results of this research can become important for SMEs which want to pursue an internationalization strategy in the context of the CEEC.

The internationalization of SMEs: developing and testing a multi-dimensional measure on Slovenian firms

The internationalization of small and medium-sized enterprises (SMEs) is explored by focusing on a clarification of the internationalization construct. A set of hypotheses is conceptually developed, including the main dimensions of internationalization (operation mode, market, product, time and performance). The proposed multi-dimensional internationalization construct is empirically tested.Questionnaire data were collected from a sample of 161 Slovenian SMEs. Scales were tested for reliability and validity. Key data analysis (confirmatory factor analyses and structural equation modelling) was conducted using the EQS structural equation modelling software.The multi-dimensionality of the developed SME internationalization construct is confirmed. The findings support the proposed SME internationalization hypotheses for the product, time and performance dimensions in full, and the operation mode and market dimensions in part. The proposed internationalization construct can be considered to be a valid measure of the internationalization of SMEs by capturing their multi-dimensionality.The new construct advanced in this study is richer than previous research and offers a relatively complete picture that can be used as a research framework in future examinations of internationalization. The developed internationalization construct advances SME internationalization theory and is informative for practitioners in developing SME internationalization programmes.

Human capital and SME internationalization: a structural equation modeling study

AbstractThis study uses a structural equation modeling technique to predict the internationalization of small and medium‐sized enterprises (SMEs) from the entrepreneur's human capital (dimensions: international business skills, international orientation, environmental perception, and management know‐how). While international orientation and environmental risk perception predicted internationalization, international business skills and management know‐how did not. The implications of these findings for research and practice are discussed. Copyright © 2007 ASAC. Published by John Wiley & Sons, Ltd.

Internationalisation of SMEs: European comparative studies

We examine new research on the internationalisation of Small and Medium-sized Enterprises (SMEs) in 27 European countries. We find that, in both established market economies and in transition economies, SME international entrepreneurship is driven by internal resources and capabilities, membership in networks or clusters, favourable government policies, economy, competitive market conditions, and industry structure. We then develop a conceptual model and propositions of the drivers of European SME internationalisation. Our findings have important implications for managers in improving their firms' international market performance.

Inter‐organizational relationship strategies and management styles in SMEs

PurposeThe paper seeks to investigate and conceptualize differences in managerial styles and inter‐organizational relationship (IOR) strategies of small and medium‐sized enterprises (SMEs) in the international environment, and make managerial implications useful for business practitioners and educators.Design/methodology/approachThe study applies comparative management research methodology. The management style dimensions analyzed in the paper are supervision, decision making, information‐sharing styles, and paternalistic orientation. The types of IOR strategies considered are conjugate, confederate, agglomeratic, and organic. Data were collected through surveying managers of entrepreneurial firms from the USA, China, and Russia, operating in the same industry. Factor analysis was applied for scale validation, and regression models were used for hypotheses testing.FindingsThe relationship between managerial styles and types of IOR strategies pursued by SMEs was documented. The cross‐cultural differences in terms of SMEs' orientation towards different types of IOR were also revealed.Practical implicationsThe study indicated that it is possible to predict prevailing IOR strategies based on cultural differences in a systematic way. Because of SMEs' rapid globalization, the study findings contribute to the efforts of achieving better correspondence between IOR‐building strategies of small businesses in different countries. Educational and training programs preparing international SME managers to distinguish, substantiate and deal with the revealed cross‐cultural IOR differences will be helpful for achieving this goal.Originality/valueThe major value of the study is that it provides insight into IORs from the small business perspective in a cross‐cultural setting.

Performance, Internationalization, and Firm-specific Advantages of SMEs in a Newly-Industrialized Economy

In light of the lack of empirical evidence regarding issues of internationalization as they affect small and medium-sized enterprises (SMEs) from newly-industrialized economies (NIEs), this study aims to expand the applicability of existent internationalization theories. So far, such theories have largely been developed with MNCs from industrialized economies in mind. In examining a 1996 sample of 1,419 Taiwanese SMEs, we found that the relationship between internationalization and performance could be graphically depicted as one of inverted U-shaped curvilinearity, and that a specific level of internationalization corresponded to maximum profitability. Our empirical findings also confirmed a relationship of U-shaped curvilinearity between advertising investment and performance, indicating that a minimum level of investment is required in order for advertising to be effective. Investments in research and development (R&D) were also shown to be positively associated with firm performance. The external validity of our internationalization theories regarding SMEs from NIEs was generally supported, though some modifications allowing for consideration of the particular context of individual SMEs will ultimately become a necessity.

The internationalization and performance of SMEs

AbstractWe discuss and explore the effects of internationalization, an entrepreneurial strategy employed by small and medium‐sized enterprises (SMEs), on firm performance. Using concepts derived from the international business and entrepreneurship literatures, we develop four hypotheses that relate the extent of foreign direct investment (FDI) and exporting activity, and the relative use of alliances, to the corporate performance of internationalizing SMEs. Using a sample of 164 Japanese SMEs to test these hypotheses, we find that the positive impact of internationalization on performance extends primarily from the extent of a firm's FDI activity. We also find evidence consistent with the perspective that firms face a liability of foreignness. When firms first begin FDI activity, profitability declines, but greater levels of FDI are associated with higher performance. Exporting moderates the relationship FDI has with performance, as pursuing a strategy of high exporting concurrent with high FDI is less profitable than one that involves lower levels of exports when FDI levels are high. Finally, we find that alliances with partners with local knowledge can be an effective strategy to overcome the deficiencies SMEs face in resources and capabilities, when they expand into international markets. Copyright © 2001 John Wiley & Sons, Ltd.

Local Resource Mobilisation and Internationalisation Strategies in Small and Medium Sized Enterprises

Research on Fordism, industrial districts and flexible specialisation all emphasise a new role for small and medium-sized enterprises (SMEs) and an increasing globalisation of the marketplace. Special focus has been directed towards the increasing externalisation of tasks and a corresponding increase in cooperative arrangements or networking. This paper reports from a Scandinavian empirical study of the internationalisation of SMEs, their use of external resources, and in what sense local resources are mobilised in the process of internationalisation. Relevant literature is surveyed and a conceptual model on internationalisation is developed. In this model local business environment, the internal resources of the firm, the quality of the manager, and the ability of the firm to make use of external resources explain the export behaviour of the firm. Four different regions were included in a quasi-experimental design, each including their population of SMEs in the mechanical and wood product sector. The empirical part of the paper is mostly descriptive and includes analyses of the structural differences between the SME populations in the four regions and a report on their involvement in subcontracting, interfirm relations, and their use of producer services. Next the export behaviour is analysed and a simple analysis of the model ends the paper.