Globalization and Entrepreneurship: Policy and Strategy Perspectives

Citation

Lloyd Reason, L. (2004), "Globalization and Entrepreneurship: Policy and Strategy Perspectives", Journal of Small Business and Enterprise Development, Vol. 11 No. 2, pp. 266-267. https://doi.org/10.1108/14626000410537227

Part of the McGill International Entrepreneurship series published by Edward Elgar, Globalization and Entrepreneurship is a collection of 11 papers presented at a conference held in September 2000 at McGill University in Montreal, Canada, under the joint auspices of McGill's Business and Management Research Centre and the Dobson Centre for Entrepreneurial Studies. This 3‐day event aimed to explore research being undertaken in the emerging area of international entrepreneurship and brought together leading scholars from international business and from small business/entrepreneurship, to stimulate integration of research in what had previously been widely divergent fields.

The book, one of the three texts to emerge from the conference, comprises of a highly interesting collection of papers, and is divided into three parts. Part one, “The Internationalisation Process”, focuses on traditional models of SME internationalisation: exporting, integrated partnership with large firms through contract manufacturing and foreign direct investment. The Editors, Hamid Etemad and Richard Wright set the scene for the book through their introductory chapter globalization and entrepreneurship in which they discuss the need for new insights and new perspectives on the rather tired debate surrounding the internationalisation of SMEs. This text they argue, seeks to provide new insights into how SMEs can leverage advantage through commonalities, or mutual benefits, shared with others based in different parts of the world – often regardless of size – to establish a meaningful presence in international markets.

The first paper provides a useful analysis of the most common route to international trade, exporting, by Poutziouris, Soufani and Michelason through an empirical study of 4,345 international SMEs drawn from ten broad sectors, over a period of 10 years. Using multivariate statistical techniques, their paper finds much evidence of the phenomenon commonly known as “born global” SMEs, but finds little support for the “stage” theories of internationalisation. Their paper does however, reinforce earlier evidence that export growth is positively correlated to size. One interesting finding in this paper however, is the highly significant and negative impact of “financial gearing”: SMEs with higher export intensity were found to have lower debt‐to‐asset ratios than exporters. Which means that either these firms are more profitable (financing growth from retained earnings) or they leverage their assets more effectively than firms with lower export intensity. That is, are exporting firms better managed than their non‐exporting counterparts?

Part one continues with a useful study into outsourcing by two researchers from Portugal, Dahab and Esperanc. This increasingly important area of SME global activity is often overlooked, but this paper makes a solid contribution to the subject. Through the development of the concept of “integrated outsourcing”, the authors demonstrate how smaller firms can gain efficiencies of world‐scale production by integrating directly into the value chain of the large firm, thus gaining indirectly some of the experiential aspects of internationalisation through the larger firm. Specifically, through the development of two case studies, the authors illustrate how synergistic, integrated outsourcing arrangements can provide SMEs with opportunities both to achieve new efficiencies and to “piggy‐back” on large firms to enter foreign markets.

This section is then concluded by a paper by Manalova, which looks at small multinationals in global competition. Through the development of a model of industry structural and competitive forces on FDI by SMEs, this paper addresses the question of what structures and competitive forces determine foreign direct investment by SMEs. This model is then operationalised by formulating 12 propositions on the directional impact of these forces, and discusses the theoretical and practical implications of the framework.

Part two, titled “Facilitating Small‐Firm Internationalisation”, has a slightly less coherent feel to it, but nevertheless includes four interesting papers on a diverse range of areas. First, a study into the challenges and opportunities facing Australian SMEs concludes that a lack of a well‐defined industrial policy, coupled with low labour production, causes Australian SMEs to lose out on all fronts. This policy orientation is continued in the next contribution, which researches into the practical implementation of localised, industry‐specific assistance programs through the study of cluster development programs in New Zealand. This well researched paper has a number of strong insights into the broader implications relevant to public policy and SME management with regard to these programs, wherever they may be located.

There follows a comprehensive, multidisciplinary review of the literature on ethnic minority entrepreneurship, social capital and networks. Effectively a theory building paper, the authors argue that although there is strong evidence and use of “dense” co‐ethnic networks, many ethnic groups do not make use of their ethnic resources and lack “dense” resources, relying instead on informal family networks. This section ends with a study which attempts to understand better the role of woman entrepreneurs in other cultures through interviewing woman entrepreneurs in Japan and the Czech Republic.

In the concluding section of the book, the editors turn their attention to the future developments in the area of international entrepreneurship with a section titled “Emerging Dimensions of Management Policy”. This excellent concluding section to the text begins with the contention that high‐technology, knowledge‐intensive organisations are the vanguard of a new, global economy that is rapidly overriding national and cultural boundaries. Employing a so‐called Knowledge Practices Survey, the authors attempt to establish a momentary “fingerprint” of the cultural and practical profiles of 69 small firms in the diverse areas of Silicon Valley, California, The Netherlands and Singapore. Although each area has its own culture, the authors argue that there is an intercontinental innovation culture among leading‐edge firms – which they call techno‐culture – that transcends national boundaries.

E‐commerce is the subject of the penultimate chapter, which develops in‐depth case studies of four Thai firms, two successfully utilising e‐commerce and two less well. The key message of the chapter is that irrespective of the process of international activity, in the modern global trading environment, small firms must be globally competitive to survive, regardless of whether or not they compete directly in foreign markets. To conclude the text, Hamed, one of the editors, pulls a number of themes together in a review of the role and management of relationships in the internationalisation of SMEs. The chapter argues that the conventional models of managing relationships by virtue of hierarchy and ownership are being replaced by partnership‐based arrangements, in which size is largely immaterial. The key to the successful internationalisation within SMEs, he concludes, no longer lies just in their internal resources and management capabilities, but increasingly in the ability of SME managers to understand their relative position in relation to their network with which they have established interdependence, and to manage such inter‐firm relationships to generate globally competitive value chains.

Overall, this is an impressive text and the editors have done a very good job here in pulling together a very interesting range of papers to create a coherent narrative. Although at first glance, the papers chosen for inclusion have a slightly disjointed feel, the text works very effectively as a snapshot of current research into a number of key areas of international entrepreneurship and the implication for the small firm. In turn Edward Elgar are to be congratulated for allowing the authors to provide this very useful contribution to the literature as part of their growing list on globalization, entrepreneurship and related areas of study.