Drivers Of Internationalisation
Enviado por Samito • 3 de Septiembre de 2011 • 3.583 Palabras (15 Páginas) • 1.174 Visitas
Table of Contents
1. Introduction ..................................................................................................... 4
2. What are small and medium sized enterprises? ............................................. 4
3. Internationalization for SMEs .......................................................................... 4
3.1 Preparations and Requirements ................................................................ 5
3.2 Basic Drivers ............................................................................................. 6
3.3 Strategic Drivers ........................................................................................ 9
3.4 Global Value Chain .................................................................................. 11
4. Conclusion .................................................................................................... 13
Bibliography ...................................................................................................... 14
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Table of Figures
Figure 1: Barriers to Internationalization as perceived by SMEs in OECD and
APEC economies, 2006 (OECD, 2007, p. 40) .................................................... 5
Figure 2: Motives for the decision to internationalize (Mellahi, Frynas & Finlay,
2005, p. 185) ....................................................................................................... 6
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1. Introduction
“Organizations that can realize the full potential of globalization will see dramatic
revenue growth. Those that can’t will lose market share.” (Diana Farrell, 2004)
As the globalization increases its pace, many big companies decided to internationalize
some of their activities or even their full value chain and became multi-national
enterprises (Dicken, 2007). Now the next logical step would be that the small and
medium sized enterprises (SME) follow. But why should they? Wouldn’t it be better if
the SMEs would concentrate their efforts on their home markets and try to gain more
market share, when the big companies are focused on new markets? What is the
benefit for the SMEs to go global?
This paper tries to answer these questions and tries to show which drivers can bring a
SME to think about going international. First of all, the SMEs and the
internationalization are defined and then the drivers for the SMEs to internationalize are
discussed. A special type of driver, the “global value chain” is also defined and
discussed and the last part is summarizing the results.
2. What are small and medium sized enterprises?
According to the OECD, there is no global single definition of small and medium sized
enterprises (SME) (OECD, 2008). Instead there is a variety of definitions in every
single country. But all countries normally use the factors “number of employees” and
“turnover” as criteria for distinguishing. In this paper, the German definition will be
used, which defines the SME as a company with less than 500 employees and a
turnover which is less than EUR 50 million (OECD, 2008). SME are also seen as
independent, non-subsidiary enterprises, which have no big company in the
background. These factors make it harder for the SME to grow internationally, because
normally this is very costly and labor intensive. These two resources SMEs have less
than big companies. Therefore the decision if and then how to go international has to
be very carefully thought through. This is going to be described in the next chapters.
3. Internationalization for SMEs
There are a lot of motives and factors that could drive a company to extend its
business into another country. If the need to grow is developed in an enterprise the
next decision should be, if to go for national or international growth. Especially for
SMEs it becomes more important to grow on an international scale, because they often
have to compete with big companies and need the advantages of, for example, new
markets or cheaper raw materials. But, as a survey of the OECD points out, the SMEs
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see a lot of barriers for internationalization (OECD, 2007). The following figure shows
the results of this survey:
Figure 1: Barriers to Internationalization as perceived by SMEs in OECD and APEC economies,
2006 (OECD, 2007, p. 40)
Astonishingly the second to forth reasons represent problems or concerns related to
communication and information. This is quite surprising, because with the upcoming of
the information and communication technology (ICT), these problems should become
less important (Turban et al, 2008). But there are also many reasons which are related
to the lower size and possibility a SME has in comparison with a big company.
Therefore the reasons or
...