Policy and Strategy Perspectives
The McGill International Entrepreneurship series
Edited by Hamid Etemad and Richard Wright
Chapter 4: Small Multinationals in Global Competition: An Industry Perspective
Tatiana S. Manalova* INTRODUCTION Small and medium-sized enterprises (SMEs) have become increasingly dynamic international participants. In Europe, they account for up to a third of France and Sweden’s exports and for over 50 per cent of Italy and Ireland’s exports (OECD, 1997). Even in the USA, where small businesses have traditionally been oriented towards the domestic market, 97 per cent of all 1999 exporters were small businesses, and the number of small business exporters tripled between 1987 and 1997 (SBA, 2000). Not only are SMEs active exporters, but they also undertake direct investment in foreign countries (Fujita, 1995a, 1995b). Small foreign investors establish production, sales, service, R&D or other aﬃliates abroad, joining global competition as small multinationals. There are more than 235,000 small multinational corporations in the OECD countries alone and this number is expected to grow continually (OECD, 1997; Fujita, 1998). Of particular interest to this study is the observation that foreign direct investment by SMEs tends to be clustered in several industries, such as computers and associated peripherals, software, industrial electronics, and medical technology (Oviatt and McDougall, 1997; Knight and Cavusgil, 1997). Since SMEs enter global competition in increasing numbers, yet are not uniformly distributed across industries, it follows that some inherent industry structural and competitive characteristics favor the emergence of small multinationals. Hence the research question guiding this study is: What industry structural and competitive forces determine foreign direct investment by small and medium-sized enterprises? Globalization has been touted as the order of the...
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