Internationalization of SMEs: Context, Models and Implementation

During the last three decades SMEs have been very important players in national economies. They are dynamic and flexible and their role in job creation is crucial. Moreover, due to internationalization of economies and accelerating globalization processes a decade ago, a growing number of SMEs have been trying to take advantage of new environmental conditions, i.e. appearing chances for internationalization. Thus, many of them have started entering new markets. It should be stressed that internationalization of firms – as a research topic – until 1970s concerned large enterprises rather than SMEs. It was due to the fact that most of small firms not only functioned locally, but what is more, were not interested in going international at that time. However, international behaviours of SMEs as well as researchers’ attitudes towards internationalization have changed over time. Initially, internationalization was viewed as an export-led phenomenon and an incremental process. Later, new approaches were developed.The purpose of this book is to present internationalization of SMEs in a broad sense; its contexts, models and ways of implementation. The book tries to combine two perspectives – the academic theory and the business practice. From the theoretical point of view, the book covers a long research period – since the early 1970s (e.g. stages models) up till now (e.g. holistic and integrative approaches or knowledge-based models). From the pragmatic point of view, the book shows the steps needed to prepare and implement the successful international strategies, especially in the European context. On one hand, the book can be considered as interesting to academic scholars as well as PhD students exploring the present-day concepts of internationalization of SMEs. On the other hand, the book is addressed to economics and business bachelor and master students as a supplementary textbook. It may also be of interest to entrepreneurs as well as managers, who are considering or are just interested in going international. The book offers to them the knowledge they require as well as useful tips. The book consists of six chapters, the first two of which try to combine the theory with the practice, while the last four have more theoretical character. Chapter 1: Context of Contemporary Internationalization Processes of SMEs, has introductory character. At first, the key terms (internationalization, globalization, Europeanization) and their contexts are explained. It also presents the role of SMEs in contemporary European economy according to statistical data and research results. Finally, the influence of these processes on SMEs are described.Chapter 2: European Context of Internationalization, shows the conditions for internationalization European businesses within the European Union. The EU law in the field of doing cross-border business (including the EU freedom of establishment and the legal forms of businesses) was discussed. Finally, the formal and economic conditions for doing business in the EU in the international comparative perspective, were discussed.Chapter 3: Internationalization Strategies for SMEs, elaborates on the implementation of internationalization strategies, their preparation and structures. It presents modes of internationalization in three groups, which are sales internationalization (e.g. indirect, direct, cooperative export, representative offices), contractual forms based on the international cooperation (e.g. licensing, franchising, strategic alliances), foreign direct investments (e.g. branches, joint-venture and wholly-owned subsidiaries). The role and importance of ownership structure for greenfield and brownfield international business was also discussed. Chapter 4: Classical Approaches towards Small Firm Internationalization, presents “old” internationalization theories. In spite of fast development of the research and new approaches towards small firm internationalization, most of the described theories are still very strong and significant paradigms. Stages theory, ‘eclectic paradigm’ (OLI), resource-based models, ‘born global’ SMEs may be examples of the classical approach. Moreover, models for transformed economies are presented.Chapter 5: Internationalization of SMEs through Networks, concerns the role of network in small firm internationalization process. This approach concentrates on the market and the relationship of the firm to that market. According to the network approach internationalization is seen as a process in which relationships are continuously established and developed, with the aim of achieving objectives of the firm. The impact of network relationship on SMEs internationalization process is also described.Chapter 6: New Approach towards Internationalization of SMEs, shows the attempts to integrate different approaches towards internationalization. There is no doubt that nowadays internationalization is a complex phenomenon. Therefore, researchers have been looking for new conceptual frameworks. Holistic approach, integrative model and knowledge-based models are described.