Trading Places – SMEs in the Global Economy

Margaret Fletcher (Centre for Internationalization and Enterprise Research (CIER), Department of Management, University of Glasgow, Glasgow, UK)

International Journal of Entrepreneurial Behavior & Research

ISSN: 1355-2554

Article publication date: 13 June 2008

745

Keywords

Citation

Fletcher, M. (2008), "Trading Places – SMEs in the Global Economy", International Journal of Entrepreneurial Behavior & Research, Vol. 14 No. 4, pp. 260-263. https://doi.org/10.1108/13552550810887426

Publisher

:

Emerald Group Publishing Limited

Copyright © 2008, Emerald Group Publishing Limited


As Professor Allan Gibb states in his preface, this book is most timely. Until recently, much of the previous SME research literature has concentrated narrowly upon export performance. However, since the early 1990s, we have seen a growing number of SMEs pursuing business opportunities in overseas markets using a variety of market entry modes. As internationalisation is eased by improvements in technology, infrastructure, globalisation and deregulation, firms are internationalising earlier and quicker than before, some from inception. This has presented challenges to extant international business theories.

In the introductory chapter to this book, the editors, Lester Lloyd‐Reason and Leigh Sear, state there is a need to develop a clearer understanding of the key issues surrounding the internationalisation of SMEs and that current academic models and theories needed to generate a better understanding of the nature and dynamics of the tensions facing SME owner/managers. As governments turn their attention to encouraging SMEs to internationalise to promote wealth creation and international competitiveness, there is a need to better inform policy‐makers in order to develop policies and programmes to support SMEs. The editors highlight a shortcoming of much policy which, they claim, primarily focuses on exporting. This book aims to critically review the state of current thinking and challenge existing concepts and theoretical frameworks on how SMEs trade globally. Each chapter concludes with key questions that have emerged.

The book is structured into three parts which seek to reflect the relationships between SMEs and the global economy:

  1. 1.

    Processes and Practices of SMEs and Global Trading.

  2. 2.

    Management, Leadership and Strategy in Global SMEs.

  3. 3.

    Learning, Skills and Knowledge in doing business.It concludes with a fourth section on the policy perspectives and the implications this has for support of SMEs:

  4. 4.

    SMEs in The Global Economy: Policy Perspectives.

In total 20 authors have contributed 12 chapters to the book. The authors comprise an international selection from Europe, the USA, Canada, Australia and New Zealand, specialising in entrepreneurship, SMEs, business strategy, international business and international entrepreneurship research.

Part I comprises three papers which present questions and issues aimed at developing an understanding of the global trading environment in which SMEs operate, and how develop global activities and relationships between SMEs and their stakeholders are developed. Chapter 2 (Griffiths et al.) explores the nature of global trading with reference to SMEs; how the forces of globalisation influence the environment in which SMEs operate, strategic responses by SMEs, and reflects on the implications for policy. In chapter 3, Dana et al. discuss traditional and emergent forms of global trading and highlight the opportunities available for firms to increase efficiency and profitability by operating in a multi‐polar network, as opposed to the idea of the centralised firm with a uni‐polar distribution of power and control. Palich and Bagby, in chapter 4, conclude the section with a profile of SMEs in the United States and Europe. Although small firms outnumber large firms in both countries, large firms have advantages in a global economy. For example, they argue access to foreign markets is more limited for SMEs.

Part II focuses on questions related to the management and organisation of global activities by SMEs. Barbosa and Fuller (chapter 5) consider entrepreneurs and their personal and business relations and the role and acquisition of social capital in the internationalisation of SMEs. They suggest support agencies should provide conditions for entrepreneurs to expand their networks and relationship management structures. In chapter 6, Herrmann uses case studies to explore the entrepreneurial abilities and skills required by SMEs to trade globally and manage ambiguity, complexity and uncertainty. Classified as core capacities which may need to change over time, they are thus dynamic and contingent on the environment. Herrmann highlights the importance of firm learning as a capability, which includes learning how to deal with high levels of uncertainty and complexity. This section is concluded by Mazzarol (chapter 7) who argues that the success of global operations is contingent on managerial commitment, learning and strategic networking and that policy makers should focus attention on the development of the management team's international business skills.

Part III focuses on the skills and knowledge required and how these are acquired through learning, networks and relationships. Mughan and Lloyd Reason in chapter 8 draw from two theoretical frameworks, namely, internationalisation process theory and the resource based view, to investigate internal and external success factors in a mixed methodology study of SMEs. The authors conclude with a model of support which proposes the development of learning and networks by SMEs rather than just access to information. Carlof and Dishman in chapter 9 continue with the theme of learning, and the role of competitive intelligence which can help SMEs compete globally. They conclude the support community has a role play to support and enhance small business intelligence capabilities. In chapter 10, Jay Mitra concludes this section, arguing that the successful internationalisation of SMEs is a function of their learning process and environments. The author explores different forms of learning at the individual, firm and pan‐organisational levels. Drawing from a mixture of theoretical models (which include international business theory and resource‐based view) and empirical evidence, five sets of propositions are developed which offer a framework for analysing how firms internationalise.

In part IV, the book concludes with two chapters which focus on policy perspectives. Chapter 11 by Stuart Smith, aims to show how “future thinking” can benefit the development and support of internationalising SMEs. With a focus on the impact of technology and ICT on globalisation, the author reviews the impact and influence of future trends and scenarios on how SMEs need to manage the development of global markets. In chapter 12, Sear and Lloyd‐Reason, conclude the book with a review of the major policy implications, and identify five key areas that emerge. Sear and Lloyd‐Reason take a pessimistic view of support for small firm internationalisation, suggesting that overall, policy makers and government agencies are failing to keep up with the pace of change in the global environment.

The book adds to a growing literature about SME internationalisation and international entrepreneurship which brings together academics from both international business and entrepreneurship disciplines (for example see Dana, 2006; Young et al., 2008), much called for in the international entrepreneurship literature (Oviatt and McDougall, 2005). A particular focus of the book is that it aims to bridge the gap between theory and practice and, thus, the book should be of interest to both academics and policy‐makers. The book addresses the changing patterns of SME internationalisation and supports current international business literature which highlights the importance of learning, networks and relationships and calls for and develops more holistic, integrative approaches to the analysis of SME internationalisation (for example, Jones and Coviello, 2005). Lessons for policy include the need to support SMEs to develop learning, international management and business skills, expand networks and relationship management structures and business intelligence capabilities.

References

Dana, L‐P. (2006), Handbook of Research on International Entrepreneurship, Edward Elgar, Cheltenham.

Jones, M.V. and Coviello, N. (2005), “Internationalization: conceptualizing an entrepreneurial process of behaviour in time”, Journal of International Business Studies, Vol. 36 No. 3, pp. 284303.

Oviatt, B.M. and McDougall, P.P. (2005), “Defining international entrepreneurship and modeling the speed of internationalization”, Entrepreneurship Theory and Practice, Vol. 29 No. 5, September, pp. 53753.

Young, S., Jones, M.V., Dimitratos, P. and Fletcher, M. (2008), Internationalization, Entrepreneurship and the Smaller Firms: Evidence from around the World, Edward Elgar, Cheltenham.

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