Managing the internationalisation process of small and medium enterprises in Africa and Asia Pacific

Citation

Oly Ndubisi, N. (2009), "Managing the internationalisation process of small and medium enterprises in Africa and Asia Pacific", Journal of Enterprise Information Management, Vol. 22 No. 4. https://doi.org/10.1108/jeim.2009.08822daa.001

Managing the internationalisation process of small and medium enterprises in Africa and Asia Pacific

Article Type: Guest editorial From: Journal of Enterprise Information Management, Volume 22, Issue 4

This special issue of the Journal of Enterprise Information Management focuses on management of the internationalisation process of small and medium enterprises in Africa and Asia Pacific. Internationalisation has been defined as the process of increasing involvement in international operations (Welch and Luostarinen, 1988). A narrower definition describes the outward movement in an individual firm’s or larger grouping’s international operations (Buckley, 1983; Johanson and Wiedersheim-Paul, 1975). However, outward growth is tied with inward growth, and success in outward activities is dependent in part on inward performance (Huszagh and Huszagh, 1986; Welch and Luostarinen, 1988). The outward-inward growth link has been enabled by the growth in reciprocal trade, which has resulted to an increasing number of small and medium enterprises (SMEs) venturing into foreign markets that were initially thought to be impossible due to their financial and foreign market knowledge constraints. As shown by Matanda and Ndubisi, and Shamsuddoha et al. in this issue, this, combined with government support initiatives in some cases, has culminated in a number of SMEs internationalising their activities. SMEs are gaining more and more inroads into overseas markets through different modes of entry and market oriented strategies. As demonstrated by Matanda and Ndubisi, market orientation is associated with high value creation and business performance of these SMEs.

Moreover, SMEs are also building relationships and business networks in these markets in order to access services (see Xiao and Fu in this issue), gain vital market information and marketing intelligence, and to be successful ultimately. The network theory of internationalisation (Fletcher and Brown, 2005; Ndubisi, 2008) gives the notion that relationships are connected between the partners and form part of the firm’s wider network. The consequent network is likely to have the following characteristics:

1. 1.

   Reciprocity. Contribution of each party should be in balance over the total relationship but not necessarily for each specific transaction.

2. 2.

   Independence. The parties are knowledgeable about each other and draw on this information when solving problems.

3. 3.

   Loose coupling. While the network does not involve formal legal obligations it does provide a reasonably stable framework for interaction and communication.

4. 4.

   Power. This is used to exploit the interdependencies that exist in the network.

5. 5.

   Boundedness. Because the network in which a firm is embedded in its own country becomes linked to the network of the importer or partner in the other country and that network in turn is linked to other networks, it is difficult to place a boundary around networks (Fletcher and Brown, 2005).

For SMEs relationships to be successful and mutually beneficial, partners should wield significant bargaining power (as power asymmetry can result in exploitation and poor relationship quality as shown by Gyau and Spiller), and such relationships should have as hallmarks, interdependence and inter-organisation integration as outlined in this issue by Rajaguru and Matanda. According to Rachagan and Satkunasingam in this issue, there is also the need to improve corporate governance of SMEs.

This special issue contains six papers. All the papers submitted for the special issue went through a double blind review process before final acceptance. Each paper was reviewed first by the special issue editor for its suitability for the special issue before it was sent to two reviewers who are experts in the subject matter of the paper. Based on the reviewers’ recommendations the paper was rejected or revised and accepted.

The first paper by Matanda and Ndubisi examines how market orientation and supplier perceived value affect business performance of SMEs in sub-Saharan Africa. Based on data collected from over two hundred fresh food suppliers in Zimbabwe, the authors establish that whilst customer orientation enhances supplier perceived value creation, competitor orientation and inter-functional coordination are negatively associated with it. Moreover, supplier perceived value creation has a mediating effect on the link between market orientation and business performance, whereas supplier perceived value creation has negative and positive effects on financial performance and marketing performance respectively.

Shamsuddoha and colleagues in the second paper investigate the role of government assistance on internationalisation of SMEs in Bangladesh. Using structural equations model to examine both direct and indirect causal effects of government assistance on their internationalisation, their findings suggest that the usage of market development-related government assistance significantly influences internationalisation directly as well as indirectly through other determinants whereas finance- and guarantee-related assistance has only indirect effect.

Xiao and Fu in their large scale study of usage of external business services by small and medium-sized enterprises (SMEs) in China found that firm size, sector, exporter and growth-intention appear to be important factors influencing demand side of services, whereas professional staff, referral via local SME bureau and networking appear to be the main variables influencing supply-side behaviour.

In paper four, Gyau and Spiller compare relationship quality in the international fresh produce business. The paper compares Ghana’s small exporters’ perceptions of the quality of their relationship with retailers relative to the wholesalers and the food service firms. They found relationship quality with large retailers to be lowest and resulting from power asymmetry in the relationship of small suppliers in Ghana with large European retailers.

Rajaguru and Matanda in the penultimate article investigate the mediating role of organisational level supply chain activities on the effect of inter-organisational information systems and activity integration on business performance of retailing organizations. The results suggest that inter-organisational information systems and activity integration have positive effects on customer responsiveness and financial performance of organisations. Organisational-level supply chain functions mediate in the relationship of IOIS and activity integration with customer responsiveness and financial performance.

The last article by Rachagan and Satkunasingam looks at the corporate governance practices of SMEs. They argue that since there is a positive correlation between good governance and performance, it is therefore imperative that the corporate governance practices of SMEs are enhanced by assurance that appropriate monitoring occurs and procedures are in place. This will also help in attracting FDI and enhancing foreign investors’ willingness to partner with Malaysian SMEs.

The authors agree that internationalisation of SMEs is on the rise, and for this growth to sustain and for SMEs in Africa and Asia Pacific to compete effectively in different world markets, a conducive business environment is needed, and different strategies based on approaches which are emic and holistic are necessary.

Nelson Oly NdubisiNottingham University Business School, Malaysia