Internationalization of SMEs

• self governed entities with purpose of fulfilling societal need without revenues as profit
  • motivation: serve social purpose remaining financially sustainable
  • processes: activities through which cash flow is generated 
  • outcomes: social and financial indicators 

• Proactiveness in NPOs 
  • Focus on stakeholder expectations 
  • Ability to anticipate future needs and challenges to achieve leadership
• Autonomy in NPOS:
  • Independence and freedom of decision
  • Satisfy multiple stakeholders 
• Risk tanking in NPOs
  • Social risk and risk of outsourcing 
  • Loss or failure of financial resources and support 
• Reciprocity dimension in NPOs
  • Ability to establish partnerships and cooperation 
  • Consider stakeholders’ interests 

• Collaboration with industry 
• Mobilization for research 
• University policies 
• Unconventionality 
• + proactiveness, innovativeness, risk taking 

• Cultural and national religious values
• National economic development 
  • Poor regions take less risk
• Diasporas and racial separation 
  • Entrepreneurship by excluded minorities: proactiveness and risk taking (sector-dependent) 

• Service export needs more than packing and sending a product 
• Services  
  • need more skill in personnel
  • face more cultural / language barriers
  • face diverse expectations 

• Work with customer: in services, the client is the target and is essential 
  • The service does not exist without the customer, he is integrated in production process 
• Characteristics of services vs manufactured products 
  • Tangibility of the service is not always the same ex. restaurants or teaching 
• Marketing (restrictions and implications)
  • A service is difficult to market because you can’t see it 
  • Loyalty depends more on the staff ad their relationship to clients 
• Role of staff 
  • Performance of staff is less easy to monitor
  • Services are less standardized, because different people offer the service differently 

1. Intangibility: some outcomes are tangible, large spectrum
2. Inseparability: production and outcome happen at same time. Not always true ex. communication service can be asked for and sent later 
3. Heterogeneity: difference amongst providers  
4. Perishability: goes fast after it is received ex. taxi ride, spectrum
5. Ownership: client doesn’t own the service; the service doesn’t enable the client to offer it himself  

• Degree of immateriality of outcome
• Degree of interactivity of customer in the service generation process 

• Location choice for tradeable services is considerably greater than for location-bound services, choice dependent on: 
  • Need to adapt products to local market conditions
  • Transport costs (tariff barriers)
  • Economies of scale in production
  • Availability of factor inputs (qualified personnel)
  • Degree of vertical and horizontal integration within the firm
    • (horizonal = same level of firm activities, vertical = upstream or downstream in value chain)
  • Government restrictions 

Explains how competitive advantage is generated by unique bundle of resources at core of firm

• Managerial resources
• Knowledge-based resources
• Organizational capabilities
• Relational resources
• Physical resources
• Together = export performance, competitive advantage 

• Firm characteristics: size, service type, years in business
• management characteristics
• firm-level resources 
• host country factors 
• choice inernational market entry mode / involvement 

• Difference between FDI and exporting 
  • If the resources don’t allow to do FDI, favor classical exporting 
• Classical export is more difficult for services 
  • Online-based services are easier to export than services needing personal and skills 

• Product embodied in skilled personnel
• Relatively high degree of client involvement 
• Relatively low capital intensity
• Project-based nature of business 

• technical facilitation
• process quality
• relational competence
• cultural sensitivity
• country of origin
• tangible cues
• service climate 
• product differentiability 
• management commitment 

degree of tangibiliy

degree of face to face contact 

1. Direct export
2. System export (follow large customer abroad or joint export by 2 or more complementary firms)
3. Owned subsidiary, direct entry (service-producing organization of its own in foreign market) 
4. Indirect entry, intermediate mode: franchising and licensing 
5. Electronic marketing, internet
6. Cooperating with partners / strategic alliances 
7. Fetching or importing clients 

• Market-driven
  • Find big demand somewhere
  • New actor in own market that pushes firm out 
• Customer-driven 
  • Follow a customer
• Technology-driven
  • New possibilities linked to technology 
• Project-driven