October 20, 2021
Introduction
Organised in partnership with the European International Business Academy and AIB, the round table discussion aimed to contribute to the understanding about the internationalisation strategies of SMEs, the opportunities they can seize and the challenges they face.
In particular, discussions sought new insights from academic practitioners and policymakers on how SMEs can invest in foreign markets and perform other international activities. Discussions also aimed to shed new light on the essential role of SMEs in providing jobs, creating value, advancing innovation and contributing to sustainable development. Additionally, the round table discussion identified major trends and key factors of success in the internationalisation strategies of SMEs in both developed and developing countries. The ultimate aim of the round table discussion is to formulate selected policy recommendations for policymakers to improve the monitoring and the facilitation of the internationalisation of SMEs. Discussants particularly addressed the following issues:
(i) In which regions and countries do SMEs invest? What are their objectives and strategies?
(ii) What are the main factors that can lead to successful internationalisation?
(iii) What determines the mode of entry in individual host countries (FDI, trade, contractual arrangements, etc.)?
(iv) What is the impact of SME investment on local communities in the host countries?
(v) Through which channels, and how, do SMEs contribute to the development of host economies?
Session highlights
Concerning the regions that SMEs invest in, and their objectives and strategies, Panellists indicated that their investment is currently tilting towards emerging economies like China. The objective of investing in such markets is to find more markets for their products, obtain cheaper (available) resources including labour, widen their scope and to obtain more profit. Panellists disclosed that they largely enter foreign markets through partnerships with local companies. However, they also employ e-commerce as a strategy to enter other markets.
Panellists indicated that the provision of enabling policy environments both at home and abroad can enhance internationalisation. They shared the view that host countries should put in place proper policy measures that will attract investors into their countries. Such policies should be more SMEs focused and not always on multinationals. Particularly, investment promotion agencies (IPAs) should direct more attention to attracting SMEs. Moreover, home governments should provide more information on potential foreign markets where SMEs can invest.
Bilateral trade agreements as intimated by Panellist are a sure way for SMEs to enter foreign markets. However, firms are eager to exit from markets if the policy environment is not favourable or predatory.
Some Panellists mentioned that they are able to contribute to the development of host countries through providing more employment, knowledge sharing to local firms and as well engaging in corporate social responsibilities.
In conclusion Panellist suggested the following measures as a way to promote internalisation of SMEs:
Host countries,
- IPAs should focus more on SMEs
- Address operational difficulties such as certification, acquisition of permits, registration etc.
- Provision of information on potential or attractive businesses
- Provision of security of investment
- Tax system should be more SME friendly
- Provision of level playing field for both local and foreign firms
Home countries,
- Enhance SMEs access to third country markets
- Facilitate SMEs access to trade defence instruments
- Provide support by addressing the queries of SMEs
- Extend mentoring or capacity building program such as the Erasmus Young Entrepreneurs Global mentoring scheme
- Provision of international business knowledge
Investors
Investors (SMEs) should know that international investment is risky and therefore they can mitigate this through outsourcing and partnerships.
On the panel were:
- Igor Kalinić, Head of Sector, Competitiveness and Internationalisation, European Innovation Council and SMEs Executive Agency, European Commission, Belgium
- Pedro Novo, Executive Director, bpifrance, France
- Philippe Eyraud, CEO, Mixel Agitators, France
- Etienne Vauchez, President of La Fabrique de l’Exportation and CEO of Export Entreprises, France
- Noémie Dominguez, Associate Professor of International Business, Jean Moulin Lyon 3 University, France
- Maria Elo, Associate Professor, Department of Marketing & Management, University of Southern Denmark
- Pervez Ghauri, Professor of International Business, Birmingham Business School, University of Birmingham, United Kingdom
- Antonella Zucchella, Professor of Marketing and International Entrepreneurship, University of Pavia, Italy
Moderator
- Ulrike Mayrhofer, Professor of International Business, IAE Nice, Université Côte d’Azur, France