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Improving SME Performance Globally
Edited by Pervez N. Ghauri and V. H. Manek Kirpalani
Alojzy Z. Nowak
SMEs account for nearly 99 per cent of all business entities in the EU, generating around 60 per cent of the EU’s GDP. Further, they are a key link in regional development. This chapter is about the importance of SMEs in Poland. It points out that it is becoming more popular for SMEs to participate in clusters of new technologies or consortia whose cooperation is not only confined to similar levels of research or technology, but relies on better recognition of the specific nature of a given local market, including its cultural aspect. In Poland it is the region that increasingly becomes a place of interactions necessary for emergence of modernization processes while the characteristics and specific potential of each region make it easier to reduce the risk inherent in innovation. Furthermore, innovative activities of companies in the twenty-first century will take into account profit maximization and human needs, in which the following technologies will play important roles: green, medical, information, biotech and nanotech. Moreover, the idea of the knowledge triangle of research & technology, education & innovation, and links with business, including SMEs is brought out, plus financial and tax policy issues for SMEs.
István Molnár and Pál Belyó
In this chapter the authors focus on the environment of SMEs and the national or international political and economic system that enables and supports SMEs in global competition. Therefore, a comprehensive view of SMEs is applied, while the overall information system and its efficient use and management is underlined. The case of Hungarian SMEs is discussed from historic, national, EU and global macroeconomic perspectives. The authors argue that with an increased speed of globalization, there is a need to move towards a more complex view of the SMEs to find the best fitting and most appropriate level of policy intervention and apply fact-based decision processes. The Hungarian case clearly demonstrates that competition and collaboration are simultaneously present on the global market and that only long-term, transparent national policies, along with targeted EU support can contribute to a successful SME recovery and a subsequent dynamic growth. Changing the business culture should include not only the assurance of proper financial support, education and training but also the use of information technology to conduct business (e.g., e-business), furthermore the collection of data, analysis of market data and market information and the generation of timely, accurate knowledge for decision-makers.
Rotem Shneor and Kalanit Efrat
Much of born global research focuses on early stages of the international new venture creation process, as well as on the motivations and drivers for its creation. However, the current chapter presents a study seeking to contribute to the understanding of born globals’ post-establishment performance. More specifically, the chapter presents a study examining the effects of their localization strategy choices and market intelligence gathering efforts on their performance. This is done through an analysis of survey data collected from 69 Israeli born global firms during 2012–13. The study reveals that localization efforts with respect to sales force management significantly impacts born globals’ performance. However, localization efforts with respect to product, price and promotions do not affect their performance. In addition, the study also shows that market intelligence generation efforts also have a significant impact. Finally, globals’ maturity level, as captured by three company age groups, did not affect their performance. Accordingly, the study contributes in shifting research focus to born globals’ performance, while highlighting the importance of marketing research and localization of sales force management for enhancing their performance. Moreover, by examining the relevance of marketing localization strategies for born globals, the current study also extends our understanding of their marketing practices. The chapter concludes with acknowledged limitations and suggested implications for future research and practice.
Saara Julkunen, Mika Gabrielsson and Markus Raatikainen
This research focuses on networking strategies, which have become an important theme in SME internationalization research. The empirical research follows an in-depth case study approach, and examines two cases – an international new venture (INV) and a traditional internationalizer, both originating from Finland, a small and open economy (SMOPEC). Based on the case evidence we suggest that firm internationalization and entrepreneurial processes are reflected in an international entrepreneurial strategy, which has a strong influence on the development of firms’ networking. The novelty of our research stems from that we find that INVs follow a global customer segment–driven strategy, whereas the traditionally internationalizing firm follows a geographical market–based strategy, resulting in different types of networking behaviour. While the INV seeks to partner with a multinational corporation (MNC) that has access to global segments, the traditional firm seeks to leverage an MNC with strong geographic organizations. For both firms it becomes important to decrease their interdependence on their MNC partners by developing their distinctiveness, but whereas the INV seeks to become an invaluable part of the MNC’s global offering, the traditional firm decreases dependence by offering strong local services. The practical implications are based on recommendations relating to how entrepreneurs with different approaches to internationalizing SMEs could network with larger partners and how to obtain benefits from this partnership to become an independent global player.
Olli Kuivalainen, Sami Saarenketo, Lasse Torkkeli and Kaisu Puumalainen
Small and medium-sized enterprises (SMEs) play an important part in the Finnish economy. In this chapter an overview of the internationalizing Finnish SMEs, their strategies, resources, product offerings and growth and international growth orientation is given. On the basis of primary data collected from the Finnish SMEs in five industries (N = 298 of which 110 had international experience) the profiles of their internationalization strategies are studied. The firms that can be seen as successful international entrepreneurial SMEs, that is, which have internationalized early and which have been able to sell their products in a number of countries are given the main focus. Also we take a look at existing support organizations in Finland. Finally, recommendations for both managers and public policy providers on how to improve SMEs’ international performance in the future are given.
Irene Mandl and Funda Celikel Esser
SMEs are about 99 per cent of all businesses in the European economy and provide about two-thirds of private sector employment. But they do not internationalize very much, except for few young born global firms. This study is on the drivers, barriers and the outcomes of SMEs’ internationalization, and the currently available public support to derive some policy pointers for improvement potentials. The ‘Europe 2020’ strategy aiming at achieving smart, sustainable and inclusive growth explicitly pinpoints internationalization as a priority of the European Commission. Internationalization of European SMEs generally follows a ‘waterfall strategy’, cascading from one country to the next, starting with geographically and culturally closer markets. The study discovers a negative relationship between firm size and use of public internationalization support. It recommends that internationalization should be considered as a process rather than a one-off support at the start. Also, while there is a multitude of start-up, innovation and internationalization support available across Europe, instruments combining these three elements should be more frequent.
Antonella Zucchella and Birgit Hagen
The largest part of Italian economic activity is in the hands of small and medium-sized enterprises, frequently managed by entrepreneurs and their families. The importance of the Italian entrepreneurial landscape makes it a relevant topic of study but the Italian case is also valuable to inform international entrepreneurship and small business studies for other reasons: Italy is characterized by traditional or specialization industries and firms that have achieved international competitiveness notwithstanding the prevailing small scale of their businesses. At the same time, the foreign growth potential of many small businesses has not been exploited yet. A second specificity is represented by the frequent concentration of economic activities, especially of smaller firms, in districts and local clusters. This spatial organization – nationally and internationally – of economic activities in Italy provides an interesting perspective about how SMEs cope with the liability of smallness and with problems related to institutional voids, a third condition that is in contrast with other main European economies. This work builds on a rich body of literature, from scientific works to statistical surveys, which is mostly unknown outside Italy. A primary objective of our research is to unveil this literature and help to discover specificities of Italian international SMEs, as well as commonalities with similar firms in other countries. Second, we aim at discussing critically this body of research, by comparing different Italian findings and by confronting them with the international literature, in order to elaborate some research propositions, which may be extensible to SMEs internationalization issues in different contexts.
Nicolas Li and Marian V. Jones
In this chapter, we review small and medium-sized enterprise (SME) internationalization in Scotland from both academic and policy-making stances. After providing some background information on Scottish SME internationalization, it is proposed that SMEs in Scotland follow the ‘ACE’ model as far as policy-makers are concerned. Although statistics shows that Scotland has sustained itself to be an open and innovation-driven economy, the academic attention appears to be limited on Scotland-context research and we call for more empirical efforts to support Scottish SME managers and policy-makers. This chapter concludes with recommendations and future prospects for Scottish SMEs.