Networking Strategies And Internationalization For Small And Medium Enterprises (SMEs)

Discuss about the Small and Medium Enterprises (SMEs) -Internationalization, networks, and Strategies. 

This topic focuses on in small and medium enterprises networking strategies and internationalization.  It is an academic justification that tries to examine networks and strategies that SMEs may use in the process of internationalization.

Literature Assessment- In essence, this model tells us that the process of internationalization is an evolutionary process, where SMEs become increasingly international as time goes by.

Research Question- what are the methods and impact of network and strategies in the internationalization of activities of Small and Medium Enterprises (SMEs)

The aim of the study- The study aims to understand methods of open networking strategies in SMEs and the effects on internationalization.

This study focuses on the techniques by which SMEs are impacted by networking strategies and the factors general and specific that affect them. The article is based on the importance of small business in the economic development of the SMEs, as well as the state of the development for small and medium-sized businesses at the present stage. The paper considers the prospects and development of the economy. Reforms in the sphere of small and medium-sized businesses, designed to solve a number of problems, these enterprises: to stimulate the demand for the products for small and medium-sized businesses, access to public procurement, the provision of financial resources, stimulating the development of entrepreneurial activities on the territory of separate regions, and others (Alberti, F.G., Ferrario, S. and Pizzurno, E., 2018).

The adoption of a long-term strategy with clear objectives will allow adjusting existing forms of business support. Now business support is shifting in support of development institutions that help "grow" business and businessmen. Another critical stage of the conference was the launch of the second season of the accelerated program ScaleUp. This is a comprehensive program for training existing entrepreneurs for sustainable growth, developed by the Center for Entrepreneurship and implemented in cities in 2016

The research analyzes the importance of small business in the development of the economy of the world, as well as the state of growth of small and medium-sized businesses at the present stage. The paper considers the prospects and development goals of this sector of the economy. Reforms carried out in the sphere of small and medium business are designed to solve a number of problems faced by these enterprises: stimulating demand for small and medium-sized enterprises, access to public procurement, ensuring the availability of financial resources, encouraging the development of entrepreneurial activity in the territory of individual regions, and others places (Brunswicker, S. and Vanhaverbeke, W., 2015).

Research Question

Development on the strategy and networks of SMEs are essential elements. Form on the strategy for internationalization of SMEs does not help the least, but it also removes the amount of doubt that can be influenced by the decision of the method for internationalization. Briefly, do not take it, but it's probably an internationalization, and so it's fruitlessly effortless, strategically developed a plan, cute and so forth. Assure that the strategy is clear and is based on realistic possibilities, taking into consideration the factories, which can be influenced by the process.

Internationalization includes risk, which will play a much more important role in shaping your business strategy (Toulová, M., Tuzová, M. and Straka, J., 2016). The nature of the road on the internationalization of bi was included on the street by the nature of the action, by "on the back" and the trace of the operation's operation into the staff on the ground. 

Many factors are important, which can be influenced by the process of knowledge in the foreign language. Educate yourself in the servants, but you will be able to equip yourself with skills, and the Catholic administrator or property of the flock, and show your health when selecting for the region, and in you expand the business.

Politically and economically, in the global economy, influence has undoubtedly been influenced by the concept before internationalization, which then inclusively turned on, deletion of just wear and tear on sinks for other pages. Such internationalization can be a lot of formation of a foreign investor into an alien country (foreign investment precursors), an agency for partnership with the company's aliens, a hireling for helpers in foreign countries, participation in international affairs and many others (Child, J. and Hsieh, L.H., 2014).

Historically, the internationalization plan on the business in SMEs at the same time with the ability to manage the preoccupation of the more and the term can be interpreted and is determined from the different points of glaze.

As a result of technics, the contribution of the global economy to the economy is obvious: the fact that the exchange of commodities is very strong is a potential partner of the partner. The investigators say, between time and time, between the manufacture of a firm and the neunata of steam, the international effect was brief-factor (Chen, H.L., Hsu, W.T. and Chang, C.Y., 2014) 

Contrary to all SMEs, and decided to solve the problem of international action (somehow in the country's own land, such and such), the scheme and the next is determined by a scheme that includes a series of actions, the next and will integrate the strategy into the firmament.

Study Aim

As a result of the analysis of the statistical data of the international region related to the creation of a gross regional product and the implementation of foreign economic activity, it became evident that the export contribution of small and medium-sized enterprises (SMEs) to the economy of the region is substantially less than their contribution to the formation of the gross regional product.

This indicates the existence of both internal and external barriers to the implementation of foreign economic activities of SMEs, as well as the existing underutilized growth potential in this area.

Insufficient experience and knowledge in the field of foreign economic activity;

Lack of information on markets; lack of financial resources to enter foreign markets.

The benefits of participating in internationalization for SMEs are quite understandable. Presence in the world market stimulates productivity and the need to apply innovative approaches in all existing business processes. Also, when entering foreign markets, SMEs gain access to new ideas and technologies that are not used in the domestic market (Wu, B. and Deng, P., 2016). Thus, internationalization gives SMEs a much larger growth potential than the domestic market, and such companies outperform their "home" counterparts regarding various performance indicators (profitability, productivity, and sales).

The growth driver is able to become a small and medium-sized business, the potential of which is still far from being solved, despite the fact that the number of small and medium enterprises per capita in the same South of Australia is higher than in the whole country. "We see that, for example, in the region, the indicators characterizing the development of SMEs are higher than the average Australian ones. For example, in terms of the number of small and micro-companies, as well as the proportion of people of working age employed in SMEs. Nevertheless, the share of employed at this stage does not increase but rather decreases.

The development strategy becomes an essential element of the SME ecosystem.One of the main criteria for healthy growth of SMEs should be the average life expectancy of the company. Given the World Bank data and data from financial institutions, the average life expectancy of 90% of registered companies is no more than one year. Only 3% of companies work for five years or more. Scaling successful projects can turn an SME into a driver. 

According to the director of the economy department, the development of SMEs becomes one of the most important points in the formation of a long-term development strategy for any city. "Rostov shows a good index of industrial growth, he is one of the leaders of industrial development in. But everyone understands that this is due to large enterprises. Since today urban policy is aimed at the withdrawal of large enterprises outside the cities, the role of SMEs in shaping the city's economy is increasing. Therefore, the work of scaling successful examples is so important,

Prospects and Development of SMEs

Undoubtedly, further advanced growth of the South is possible only on the basis of developed strategies - this work was not carried out until recently in the regions. Since 2017, the situation has changed. The strategy of social and economic development of the regions should be written in each region.

The development strategy becomes an essential element of the SME ecosystem

Now we are focusing on the development of support institutions. Indeed, we need to develop an ecosystem in which entrepreneurship will grow. But you need to create an environment that would increase the capitalization of companies. We see in the West examples of companies Uber or Amazon, showing not the most outstanding financial results, but they have investors who believe in the development model of these companies, invest in them. From this grows their capitalization and profit of shareholders.

To date, small businesses play an essential role in the development of the economy of any country, and there is no exception. From the state of small business depends on the saturation of the market with goods of the required quality, the number of employees at small businesses. Such enterprises adapt more quickly to the constantly changing market conditions and therefore can mitigate the impact of structural changes, they make a significant contribution to the development of the regions, are also able to quickly introduce technical innovations and update the production base (Felício, J.A., Meidut?, I. and Kyvik, Ø., 2016).

Below is a figure showing internationalization process in SMEs

https://www.google.com/search?q=internationalization+of+business&source=lnms&tbm=isch

The mission of the development strategy in this sector of the economy is to create a competitive, flexible and adaptive economy that could ensure a high rate of technological renewal of production and stable employment. The government decided to achieve this goal through the development of small and medium-sized businesses, which would contribute to a sustainable improvement in the quality of life and the growth of the share of the middle class.

Small and medium-sized businesses, promotion and popularization of entrepreneurial activities, organization of information and consulting and marketing support for SMEs (Altbach and De Wit, 2015). In addition, the responsibilities of this organization will include monitoring the provision of support to SMEs and the implementation of a set of measures to increase the share of purchases of goods, works, services by certain types of legal entities from SMEs. Another way to achieve the objectives of the strategy is to create a separate niche for small and medium enterprises . To the activities that contribute to this, it is possible to attribute:

Foreign Economic Barriers

There are several theories that try to explain the determinants of the internationalization of companies to other markets. Mainly there are two groups of theories that try to explain the export behavior of small and medium enterprises.

The first group refers to a gradual process of internationalization, in which stages are met. According to this approach, there is an internationalization procedure in which companies gradually commit their resources and efforts towards this objective.

The second group refers to accelerated internationalization processes. These theories explain that it is possible to find companies that from the beginning focus on the internationalization of the business. Companies that follow the pattern of accelerated internationalization begin with an emphasis on growth through sales in foreign markets. This type of companies, unlike what the gradual model indicates, do not expect to gain experience in the local market, and then in similar markets to eventually expand to other countries and / or continents. Within this current there is a great variety of denominations that would characterize the same phenomenon.

The graph shows the figure of Value Added to SMEs upon internationalization.

This paper intends to contribute to this last current of thought by studying the behavior of small and medium exporting companies (SMEs) in Australia. The results of this research partially support the theory of INV. For the Australian case, the variables suggested were studied: support networks, technological level of the industry in which the company participates, previous experience, size of the company and psychic distances between Australia and the countries to which which is exported. 

It is important to point out that the Australian economy presents high costs for internationalization. Its T or it is due, among other things, to its geographical location. However, like other studies done in the United States, Australia, Denmark, Sweden, New Zealand and Spain, previous experience is considered a determining factor that entrepreneurs have for an accelerated internationalization. Another aspect that stands out from the Australian INVs is that they are characterized by an increasing tendency to export to geographically and culturally distant countries. However, these exploratory results for the case of Australia reveal that the technological level and the support networks are not as influential as in other economies. After this introduction, the work is developed as follows: in the next section, It gives a general framework on the processes of internationalization in SMEs.

There are mainly two theoretical aspects that aim to explain the actions of SMEs with respect to their process of internationalization These are Uppsala's approach, which speaks of a gradual process, and the other current of accelerated internationalization is the approach of the so-called International New Ventures. Gradual Processes The Uppsala approach understands the process of internationalization as one more stage in the life of the companies that aspire to enter external markets. The model conceives internationalization as a gradual process in which companies export slowly to countries where psychic distances are smaller. According to this theory, there is a pattern that describes companies that seek to internationalize. In their origins, they will only serve the local market, and then start exporting irregularly. Then, it continues with independent agents as a way to export (Ciravegna, L., Lopez, L. and Kundu, S., 2014). When sufficient knowledge has been acquired, commercial subsidiaries are established and the internationalization process ends with establishing a productive subsidiary.. The progressive increase in knowledge and experience makes it possible to overcome psychological barriers and reduce the risks associated with a deep internationalization (Nyuur, R.B.B.I., Bre?i?, R. and Simintiras, A., 2016). However, it has also been criticized by others, who argue that it does not represent the actions of SMEs in the current context. Since the gradual model was developed (decade of the 70's) to date, a series of changes have arisen in the economic environment, such as the development of new forms of business (ex: e-commerce), advances in technologies that allow greater efficiency in the transfer times, development in telecommunications, reduction to trade barriers, etc. Accelerated Processes Given the globalization of the businesses, the increases in competition, the strategic alliances and the developments in the systems Information, among others, is that there is a need for companies to internationalize earlier and faster than in the past. The theory of International New Ventures explains that SMEs do not necessarily follow a gradual process of internationalization, but rather, thanks to the characteristics that the founder has - such as networks of contacts, alliances, prior knowledge, among others - companies start an immediate internationalization concentrating a great amount of effort and resources. The companies, according to this model, are characterized to develop competitive advantages through the use of the available resources to export to a series of countries. These companies seek to grow through sales in external markets, focusing on serving, mainly, niche markets. It is possible to identify certain particular characteristics in this type of companies, such as the role of the founder and its entrepreneurial characteristics. At the same time, they are companies that are prone to be in industries with a high technological level and tend to have a technological base. In other research, the presence of foreign capital within a company is mentioned as a key factor for its internationalization. Also, personal and corporate networks with public and private agents are highlighted as elements to obtain new resources, companies that achieve an efficient use of technological and non-technological factors. Given these characteristics there are a number of criteria to define International New Ventures In this way, the INVs have been defined as companies that, prior to the third year since their foundation, export figures greater than 25% of their total sales (Iturrioz, C., Aragón, C. and Narvaiza, L., 2015). 

Long-Term Growth and Development Strategies for SMEs

Hypothesis of StudyTo analyze the behavior of Australian small and medium exporting companies (SMEs) They defined a series of variables that according to the literature affect the behavior of companies. Among the possible determinants of accelerated internationalization are the contact networks, institutional support, technological level, psychic distances, size of the company, institutional support and the previous experience of the entrepreneur.. It should be noted that an entrepreneur can have different types of networks or international contacts. The analysis points out that there are strong ties and weak ties. On the one hand, a strong bond is characterized by a lasting relationship, based on trust and focused on the generation of a strategic alliance (Freel, M. and Robson, P.J., 2017). One form of international contact based on a strong link is through contributions of foreign capital within the initial capital of the companies.

The presence of foreign capital in the initial capital of a SME increases the probability that it is INV. On the other hand, there are weak links, which are generated by the relationship with customers, suppliers and even friends. Although this type of ties is not as narrow as the first, it still provides important benefits for entrepreneurs. The main advantage of this type of ties lies in the fact that, requiring less investment than strong ties, they are more numerous. In this way, a form that can take a weak link may be to belong to a trade union organization, association or the support of governmental institutions. The support provided by these can facilitate companies to start their internationalization process. The participation of companies in this type of organizations can be understood as a complement, or substitute in case of absence, to the contact networks developed by the founding entrepreneur (Marinova, S., Nummela, N. and Larimo, J., 2017). With the help of them, greater efficiency is achieved in the procedures and processes for exporting. Thus, the study of the technological level has been included since the origins of the study of SME behavior. Additionally, point out that one of the most important factors for companies that are internationalized in the initial stages is to see factors specific to the industry and the relationship between the risk and return of this decision. Companies in high technological sectors are involved in markets of constant change and windows of growth opportunities are not open for a long time. In that sense, limiting itself to satisfying only the local market would not be a very favorable strategy and internationalization would allow extending the period in which the windows of opportunity are open (Dutot, V., Bergeron, F. and Raymond, L., 2014). Therefore: Hypothesis 3: the highest technological level of the sector in which the SME participates increases the probability that it is INV. In practically all of the theoretical management currents it is recognized that the entrepreneur's own characteristics play a decisive role in the strategy of the business. In fact, the generation of entrepreneurship is based on the entrepreneur's ability to recognize business opportunities. In this sense, there are two determining factors for the creation of new businesses. On the one hand there are business opportunities and on the other, people who are able to recognize them and know how to exploit them. consider that one of the main aspects that accelerates the internationalization of companies is the entrepreneur, either because of their psychological traits (for example, risk aversion) and personal characteristics (for example, knowledge based on previous experiences). Entrepreneurs' perception of business opportunities should be reflected in the internationalization strategy, where companies that have people with the know-how of how to export are those who also accelerate their internationalization process (Kunday, Ö. and ?engüler, E.P., 2015). Therefore Companies with a founder who has previous experience in business internationalization increases the probability that this is INV.

Benefits of Internationalization

Selection of the sample According to the above hypothesis, we will use a sample of 112 SMEs from Australia, a which will be applied a logistic regression model to study the change in the probability that a young export company will be classified as INV. The sample of 112 companies was built using a SMEs database

Conclusion

Companies with a founder who has previous experience in business internationalization increases the probability that this is INV. Accelerated Processes Given the globalization of the businesses, the increases in competition, the strategic alliances and the developments in the systems Information, among others, is that there is a need for companies to internationalize earlier and faster than in the past. The theory of International New Ventures explains that SMEs do not necessarily follow a gradual process of internationalization, but rather, thanks to the characteristics that the founder has - such as networks of contacts, alliances, prior knowledge, among others - companies start an immediate internationalization concentrating a great amount of effort and resources. 

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