factors affecting sme growth and policy options for internationalisation
TRANSCRIPT
Factors Affecting SME Growth and Policy Options for Internationalisation
Jay MitraUniversity of Essex
United Kingdom
Policy Session 2Enhancing Entrepreneurial Skills and Innovation Capabilities to better
integrate SMEs in the Global Market
Good Practices in SME Policy: Panel Discussions
Launch of the SME Policy Index and Western Balkans and Turkey 2016
OECDOECD Conference Centre, Paris France
28 April, 2016
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Demand Side Perspectives
An Agenda
• Opportunity identification• Innovation, • Resource Mobilisation • Opportunity Realisation • in the International Market
Place
A Measure of Actual International Activity
Smaller SMEs are less internationalised than bigger SMEs, 80% of SMEs with 50 to 249 employees are operating at an International level, 66% of SMEs with 10 to 49 employees are international
Why International?
Going Digital
GVC
Parti
cipa
tion
Source: OECD,(2014). SME Internationalisation: Characteristics, Barriers and Policy Options
Barriers and the Policy Response
1
2 3
Arm Ltd. and Licensing
The Air Spindles Story: Westwind/Air Bearings
SMEs and Internationalisation: Three Case Studies
Nutella’s GVC Source: adapted from P.Marsh, 2012
Sour
ce: A
. Bar
rell,
U.o
f Cam
brid
ge, 2
012
The Demand Side in the Western Balkans
Environmental Factors
Competitiveness
Internationalisation
Innovation and Skills
Turkey
SBA Performance in Turkey, 2007-15
Sour
ce: E
C SB
A Fa
ct S
heet
, 201
5
• 25.3% - one key founder;
• $52 billion in sales
• Employed 450,000 workers in 2005
• High representation in • Semiconductor,
computer, • communications
• Patent applications up from 7.3% in 1998 to 24.2% in 2006
• Chinese – largest group of inventors
An Envious Glance at the USA
Remittances: African migrants sent at least $40 billion in remittances to African countries in 2010.
Trade & investment flows: Trade Diversity: Migrants have a preference for their native country’s goods and services, thus supporting “nostalgic trade” in ethnic products. Migrants facilitate bilateral trade and investment flows
Diaspora bonds: possible through the issuance of a diaspora bond, a retail saving instrument
marketed to diaspora members.
Skill and technology transfer: Diasporas may also provide origin-country firms access to technology and skills through professional associations
Source: IMF, 2011
Diaspora Assets
The Diaspora: The Missing International Thread
Framing Demand Focused Heterogeneous PolicyOrganisational Differences & Relationships
Adaptation of Engagement
Developed and Emerging Economies
Large Firm SME Achieving mutual independence
Redressing power balance
Developed Emerging
Proactiveness
Exploit existing markets
Exploring market niche
Creating ecosystem/information asymmetry (structural trust)
Creating dialogue/information asymmetry (social trust)
Existing ecosystem/intermediaries
Substituting lack of institutional support
Innovation Incremental/downstream/ scale
Newness/upstream
Technology platforms/ network complementarities
Corporate incubators to select new ventures/ SME mini ecosystem
Partnering innovations using exiting VC in accelerators
Partnering innovation to build new VC or corporate risk capital
Risk-Taking
Status enhancement lack of flexibility
Status attainment v legitimacy deficit
High transaction costs for large firms /partner selection
Managing defection (large)Safeguarding IP (SMEs)
Intense legitimate competition restricting market potential
Intense dysfunctional competition restricting market potential
Systems Routines/existing
Experimentation
Enhancing network based systems for MNEs
Open Innovation systems/ project based activity
Enabling global production networks
Participating in upstream/downstream global production systems
SME Policy Index
1 1 8 8 & 9 9 & 10 9 &10
Source: adapted from Buckley & Prashantham, 2016
Contact
Professor Jay MitraProfessor of Business Enterprise and InnovationEssex Business SchoolUniversity of EssexWivenhoe ParkColchester CO4 3SQEssexUnited Kingdom
T: +44 (0) 1206 874859M: +44 (0) 7801552469E: [email protected]