According to a European project on Supporting the Internationalisation of SME’s (December, 2007),
SMEs that do not consider internationalisation are unknowingly self imposing a severe restriction on their potential for long term survival
According to the report, the barriers SME’s face with regard to internationalisation
are a lack of financial resources but most of all lack of skills or skilled human capital to tackle internationalisation
The report recognises the important role technology has played, and continues to play, in breaking down borders and facilitating globalisation. It also makes an important observation; even if you as an SME decide not to trade internationally, and instead concentrate on your domestic market, you must still be able and willing to compete with international SME’s that target your market.
Therefore, a pro-active attitude to global competition and markets is increasingly becoming not a choice but a matter of necessity.
It is not just access to new markets that is driving SME’s to internationalise but also access to technology and, not surprisingly, those SME’s that do internationalise have shown a greater capacity to innovate.
So what are the drivers?
- The “international orientation of decision makers”, which is, more often than not, the owner/manager.
- The size of the SME.
- The industry/sector to which the SME belongs to.
Interestingly, although the research indicates that international firms are more productive, this is not limited to firms that export. Firms that import are also international and have equally demonstrated increases in productivity.
Finally, seeing it is something close to my heart,
In relation to SME competitiveness, for the vast majority of companies there is a large potential for innovation in operations and management, including the acquisition of IT and quality systems and capabilities. To further highlight this point its is important to remember that “marketing” entrepreneurs will go international before “technical” entrepreneurs and that innovation at plant level is not a guarantee per se of improved or increased performance. In this sense, greater use of the possibilities offered by IT and support for greater use of ecommerce and CRM systems (just to mention two examples) point one way forward and can be the most relevant innovation strategy for small companies, crafts and services.