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Trading Places – SMEs in the Global Economy

A Critical Research Handbook

Edited by Lester Lloyd-Reason and Leigh Sear

Lester Lloyd-Reason and Leigh Sear bring together leading researchers and thinkers in this critical guide to the ongoing, worldwide research shaping the role played by SMEs within today’s global economy. The expert contributors contend that the past twenty years have seen an explosion in research into international SMEs, resulting in a considerable body of academic literature and thinking. This research, they argue, may merely serve to increase our lack of understanding in this area, and often results in myths and misconceptions upon which SME policies and support programmes have been developed and introduced.
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Chapter 5: Entrepreneurs and their Personal and Business Relations: Shaping Manufacturing SMEs’ Global Strategy

Telma Barbosa and Ted Fuller


Telma Barbosa and Ted Fuller Introduction Research on SME internationalisation has focused on a number of issues including export decision associated factors (for instance, Ford et al. 1980; Cavusgil 1984; Aaby and Salter 1989); export behaviour and performance determining factors (Denis and Depelteau 1985; Beamish and Munro 1987; Reid and Rosson 1987; Dichtl et al. 1990; Gemunden 1991; Holzmuller and Kasper 1991) and successful export strategies (Namiki 1988; Baird, Lyles and Orris 1994; Cavusgil and Zou 1994; Dhanaraj and Beamish 2003). However, an impeding criticism has been put forward: SME internationalisation research lacks theoretical foundation (Gemunden 1991; Mendenhall, Beaty and Oddou 1993; Ellis 2000; Dhanaraj and Beamish 2003). Internationalisation theories (the economic-based theories, the process, behaviouralbased theory and the network approach) are concerned with large companies and their subsidiaries, and their application to SMEs is not said to be entirely supported by empirical findings (Rao and Naidu 1992; Bell 1995; Crick 1995; Reuber and Fischer 1997; Zafarullah, Ali and Young 1998), given their determinism and disregard for the role of the decision makers in making strategic choices (Andersson 2000). The network theory concerns companies which benefit from a priori highly internationalised networks (Blankenburg 1995) and so would not apply to the case of SMEs ‘whose network horizon is limited to the local market’ (Ellis 2000). But what is the rationale of SMEs’ internationalisation process, decision making and strategy? It is reasonably well established that SMEs operate through their relationships and their networks, relying on social capital rather than market...

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