Comment: SMEs Going International – Capacity Building in SMEs for internationalisation, confidence, connections and capability
By Marian Jones and Melanie Hassett
In June, researchers from the University of Sheffield, Melanie Hassett, Marian Jones, Junzhe Ji and Tina McGuinness, along with Karl Warner from Edinburgh Napier University, hosted a sandpit event on the internationalisation of SMEs (small and medium sized enterprises). During the event they engaged in conversations with guests from local SMEs, government support agencies, and other facilitating bodies.
The aim of this event was to capture the entrepreneurial voice from lived experiences of ‘going international’ and to understand how entrepreneurs, intermediaries/support organisations and academics can create and share knowledge with potential to enhance sustainable success for SMEs in international markets.
The mechanisms through which a firm becomes international are well known, yet research shows that many firms find that building confidence and capabilities can be as problematic as dealing with exchange rates, freight forwarding and export guarantees. From that starting point, the group enjoyed an afternoon of lively conversation and shared narratives, and collectively generated a series of issues on which to build an agenda for future engagement, research and collaboration.
Participating were 13 entrepreneurs, four representatives from three intermediary/ support orgnisations, six academics and three doctoral researchers.
Enablers and barriers to internationalisation
The first set of issues emerging from the group conversations concerned enablers and barriers to internationalisation.
Home country enablers were reported as: institutional factors such as government programmes, availability of financial support, services provided by private and public sector intermediaries or support organisations, and availability of knowledge. Company/ firm enablers mentioned included, having: product, technology, or firm expertise; financial and digital capabilities, capability to access and understand information on international markets, and having a wide network and established product and corporate reputation in the UK.
International/ foreign country enablers,included having people in the right places such as culturally aware contacts (Chinese students was mentioned by one participant), access to the overseas networks of UK institutions, universal standards, internet and digitalisation beyond the home country (including understanding search engines), cultural awareness and experience, being aware of trends in international markets and industries, and interaction at international trade fairs.
Barriers to internationalisation within the home country were reported as: risk averse boards, parochial organisational culture, shortage of experienced human resource, financial resources and managerial time, and lack of support for development of young and new companies. Conversations revealed a long list of barriers stemming from the international environment and the firms’ own difficulties in knowing how to overcome international institutional and cultural barriers. Factors mentioned included: regulations and regulatory compliance and bureaucracy: risks (including IP, currency, corruption and general uncertainty); knowledge on where to go for support and market intelligence; understanding the fit between the the firm’s capabilities and scale and scope of opportunity; and problems associated with logistics. It was pointed out that many enablers can also be barriers and a “double-edged sword” for internationalising firms.
The lived experience
There was a general concensus that some of the biggest challenges stem from how we as human beings respond to internationalisation as a lived experience. One participant described the feeling as “being comfortable with being uncomfortable”.The group discussed this as being about learning to understand cultural differences and breaking cultural barriers as well as creating business relationships while feeling out of one’s comfort zone.
Another participant expressed fustration that examples of internationalisation provided by supporting bodies are about the most successful firms whereas she felt it was important to understand the complexities of the process, the hard work that goes into it and the failures that firms experience along the way. An issue that came out strongly from conversations was that widespread negative reporting in the media about international business and political issues is creating a very difficult atmosphere for firms trying to engage in international business.
Where do we go from here
In the concluding conversation the group explored areas identified by participants as deserving attention from service providers such as intermediary organisations, support organisations and universities. In summary the main themes identified were:
- Support for the SMEs in the ‘middle bit’, after the start-up phase
- Need to share positive and successful stories of internationalisation
- Need to share non-traditional success stories including the honest reality and hard work
- Learning-by-doing, and learning-by-engaging in, or constructing communities of practice
- How to change attitudes about culture and diversity at home and abroad
- Making international connections and networking (crossing cultural and institutional barriers and mindsets) at home and abroad
- Extending the multicultural university experience to local business communities.
The team would like to thank everyone who participated and aims to continue the conversation towards building a research agenda to better understand how confidence, capabilities and connections contribute to successful SME internationalisation.
Thank you to the Sheffield University Management School Research Impact and Stimulation Fund for enabling this sandpit to take place.
ABOVE: Capturing experiential knowledge. The stickers on the world map illustrate locations where workshop participants have done business.
ABOVE: Balloons and stones – discussing the barriers and enablers of SME internationalisation