Field of study: International Business/International Entrepreneurship
Small and Medium-Sized Enterprises:
Definitions, Economic Functions and
Determinants of Internationalisation
This study investigates a number of motives stimulating the internationalisation of small and medium-sized enterprises (SMEs).The internationalisation of SMEs usually is not part of a strategy but a reaction to a stimulus. An internationalisation stimulus is a factor fostering a firm’s decision to start or maintain committing some resources to act on an international basis. The reaction to stimuli is an indicator for the flexibility of SMEs. It is an interesting point that flexibility helps small firms to overcome the lack of financial resources and is their advantage with regard to internationalisation.
After dealing with different definitions of "small" and "medium" with regard to enterprize size and evaluating on the economic functions of smaller firms this work explains the ten following internationalization stimuli:
- Potential for extra growth/sales/profit
- Production of goods with unique qualities
- Influence of decision maker
- Orders from abroad
- Saturation/shrinkage in domestic market
- Intense competition of domestic market
- Networking
- Fulfilling an international need
- Limitation of trade barriers
- Global trade infrastructure
Table of Contents
1. Introduction
2. Theoretical Background
2.1. Small and Medium-Sized Enterprises
2.2. Internationalisation
2.3. Export
3. Economic Functions of SMEs
3.1. A Pluralistic Economic Structure
3.2. Job Creation
3.3. Economic Growth
4. Motives for SMEs to Internationalise
4.1. Internal and External Motives
4.2. Early Stages of Research
4.2.1. Internal Motives
4.2.2. External Motives
4.3. Modern Approaches of Research
4.3.1. Internal Motives
4.3.2. External Motives
5. Discussion
5.1. Justification
5.2. Summary
5.3. Practical Implications
6. Limitations and Further Research
Objectives and Research Focus
This work investigates the primary internal and external motives that stimulate the internationalisation process of small and medium-sized enterprises (SMEs). The central research question examines how various factors—ranging from economic needs and decision-maker characteristics to global network opportunities—act as catalysts for SMEs to engage in cross-border activities beyond their domestic markets.
- The economic role of SMEs in job creation and growth.
- Categorisation of internationalisation motives into internal and external stimuli.
- Differences between early research models and modern, technology-driven approaches.
- The impact of trade barriers and global trade infrastructure on SME strategies.
- Practical implications for entrepreneurs and policy makers in fostering SME internationalisation.
Excerpts from the Book
Production of goods with unique qualities
The production of goods with special features is consistent for SMEs as they often serve niche markets which are not attractive enough for LSEs (Mundim et al. 2000). They abstain from mass production and place great emphasis on highly adapted goods, which create special value for the targeted customer. The main focus is on the unique qualities of the SME’s products as their generic strategy (Porter 2008) harps on differentiation or niche products.
But on an international basis, there is only a little need for further adaption of goods which were already designed to target a niche market. Therefore, export of such goods is an adequate cost-efficient way that many authors describe in their studies about internationalisation motives (Katsikeas and Piercy 1993; Leonidou 1995). If products are very innovative and specialised it is recommendable to enter foreign markets since there may be no competitors and the SME may benefit from the first mover advantages.
Summary of Chapters
1. Introduction: This chapter outlines the scope of the study, defining internationalisation as a reaction to specific stimuli and highlighting the importance of studying SME flexibility in international markets.
2. Theoretical Background: This section establishes definitions for SMEs, the concept of internationalisation, and the role of export as the primary entry mode for smaller firms.
3. Economic Functions of SMEs: This chapter explores how SMEs contribute to a pluralistic economic structure, drive job creation, and foster national economic growth.
4. Motives for SMEs to Internationalise: This core section provides a detailed analysis of internal and external stimuli, contrasting traditional early-stage research with modern, network-based approaches.
5. Discussion: This chapter justifies the categorisation of motives, summarises key findings, and discusses how the insights can be applied to business and political strategy.
6. Limitations and Further Research: The final chapter reflects on the scope of the study, the chosen geographical constraints, and suggests directions for future investigations into SME internationalisation.
Keywords
SME, Internationalisation, Export, Economic Growth, Job Creation, Internal Motives, External Motives, Trade Barriers, Global Infrastructure, Networking, Niche Markets, Entrepreneurship, Strategic Alliances, Competitive Advantage, Innovation.
Frequently Asked Questions
What is the core focus of this study?
The study investigates the various internal and external motives that stimulate the internationalisation process of small and medium-sized enterprises (SMEs).
What are the primary thematic areas covered?
The paper covers the definition and economic functions of SMEs, the role of export as a business strategy, and a detailed categorisation of internationalisation stimuli.
What is the primary research goal?
The goal is to explain how ten selected stimuli foster or facilitate the internationalisation of SMEs to help practitioners understand and leverage these factors.
Which methodology is employed in this research?
The work uses a comprehensive literature review and comparative analysis of existing empirical studies, specifically building upon the contributions of Leonidou (1995).
What topics are discussed in the main section?
The main section details internal motives (e.g., unique product qualities, decision-maker influence, networking) and external motives (e.g., unsolicited orders, domestic market shrinkage, trade infrastructure).
Which keywords define this work?
The work is defined by terms such as SMEs, Internationalisation, Export, Economic Growth, Job Creation, and Network Relationships.
How do "modern approaches" differ from "early stages" in the research?
Early stages focused on incremental export steps and physical market entry, while modern approaches incorporate the impact of ICT, global value chains, and rapid network building.
Why is the "decision maker" considered an internal motive?
The entrepreneur or owner is seen as the primary internal force, as their managerial interest, risk tolerance, and perception of opportunities are essential for initiating international activities.
- Arbeit zitieren
- Lisa Hohneck (Autor:in), 2013, Small and Medium-Sized Enterprises, München, GRIN Verlag, https://www.grin.com/document/229712
