Community Research and Development Information Service - CORDIS

FP5

National Corporate Cultures and International Competitiveness Strategies - the Challenge of Globalisation for European SMEs, Final Report

Funded under: FP5-HUMAN POTENTIAL

Abstract

Companies can either act autonomously or co-operatively whilst moving business activities abroad. Our hypothesis did not prove valid that under the pressures of globalisation, small and medium-sized enterprises (SMEs) would increasingly choose a cooperative strategy. On the contrary, the majority of sampled companies follow predominantly an autonomous strategy. "Predominantly" means that companies usually make simultaneous use of different entry modes, i.e. direct exporting via independent representatives, subsidiaries for sales and offshore manufacturing, etc. Companies with an autonomous strategy may use international co-operative arrangements in one entry mode but predominantly prefer to go it alone.
In order to keep risks and cost under control, SMEs tend to follow an evolutionary expansion path, demonstrating an increasing commitment to internationalisation over time. However, our findings also show that progression to more committed forms of entry mode are not inevitable. Also, there are counter-examples of regression to less committed forms of entry mode. The resource situation of a particular company at a particular moment, and how this company can manipulate its resource situation, seems crucial in this respect. It is specifically through the handling of relational contracts and contacts that companies seem able to buffer and secure risks, to a greater or lesser extent.
Crucial for our understanding is to differentiate between explicit co-operative arrangements and informal network relationships. Supportive linkages with firms, institutions and personal ties provide opportunities, motives and support without a contractual agreement typical for strategic alliances. W e call this the supportive role of networks or supportive networks. Network relationships exert a major influence on the strategy of SMEs in terms of why, how and where they internationalise activities.

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Record Number: 7108 / Last updated on: 2005-10-26
Category: MISC