Smes in developing countries: financial and economic factors that affect export strategies (página 2)

Theoretical and empirical research findings
published in the last 10 to 20 years on the factors that explain
SMEs involvement in exporting all agree on one point: the limited
ability to acquire information and knowledge about foreign
markets and to manage foreign activities is largely responsible
for their relatively low level of exporting commitment and poor
performance (Julien & Ramangalahy, 2003). As a result of
these limitations, industrial districts or clusters have
been increasingly recognized as an organizational model enabling
small and medium-sized enterprises (SMEs) to compete nationally
and internationally (Belso-Martinez, 2006).

The creation or process of joining a cluster,
according to Zyglidopoulos (2006), assists the
internationalization process of SMEs in two ways: first, cluster
reputation directly alleviates the internationalization
constraints that SMEs face and, second, cluster reputation has an
indirect positive effect on internationalization through its
influence on the other cluster-specific factor conditions (p.
82). For instance, Mezquita and Lazzarini (2008) contributes to
this latter trend in the cluster literature by outlining specific
mechanisms through which firms that properly coordinate their
actions with other firms perform better than those firms that do
not (p. 376). It is very important to remember that being inside
a cluster does not guarantee success in the international
market.

Besides clustering, SMEs face different barriers
to survival, growth, and innovation. Research by Larsen and Lewis
(2007) found that the majority of failures in SMEs performance
were due to multiple factors such as under capitalization,
short-term liquidity problems, insufficient working capital,
insufficient start-up capital, and poor financial management;
based on Foley and Green (1995) research, developing overseas
markets is particularly difficult for SMEs with their limited
financial and human resources. One option is to employ overseas
agents to represent the company. However, according to Larsen and
Lewis (2007), agents often work for a number of businesses in the
same sector and may not be motivated to sell any particular SME"s
products in preference to those of another (p. 143).

Research involving marketing
techniques (Keh et al., 2007), noted that information on
customers and competitors has significant effect on marketing
decision-making and that there is a need to continuously gather
information on customer needs and competitor capabilities in
order to deliver consistently high-quality products and services
as well as to create superior customer value (p. 594). After
acquiring information, it is crucial that SMEs use the
information to their advantage. Unless the collected information
is used, it does not provide any tangible benefit (Johnson and
Kuehn, 1987).

Some studies demonstrate the importance of using
marketing information pertaining to customers and competitors in
making marketing-mix decisions, which contributes to higher firm
performance in the entrepreneurial setting. This research
concludes that information acquisition and utilization should not
be a one-time event; rather it should be an on-going process
through day-to-day interactions with customers, suppliers, and
other business associates. This also suggests the need to have
good communication and networking skills (Keh et al., 2007).

Briefly, SMEs risks arises from the fact that SME
management is typically thinner than that of a large, diversified
company; in a similar vein, an SME likely has limited management
skills, international experience and infrastructure, resulting in
a steeper learning curve and a greater need to rely on
third-party organizations, which can be expensive. In part
because of the relatively high costs of hiring outside experts,
SME management tends to prefer a "do-it-yourself approach and may
hesitate to work with third parties and to invest in the
necessary outside counsel and support (Ganster, 2007). At the
same time, research by Larsen and Lewis (2007) confirmed that
SMEs themselves see the real barriers to partnerships to be
associated with an inability to overcome marketing barriers, find
suitable partners and a lack of trust.

In relation to developing countries, specifically
Latin American countries, the lack of access to
investment capital, technology know-how and commercial linkages
are among the broader challenges facing established SMEs. Also,
local firms that remain privately held may still resist raising
the functional importance of finance and R&D (Martin, 2008).
In fact, some countries have turned to higher education to solve
most of these barriers. Swift and Lawrence (2003) showed that
foreign language skills and lack of cultural understanding have
become one of the main problems to solve, and how the SMEs have
turned to higher education to overcome these difficulties. As
Granell (2000) observes: …the secret of success for winning in
the new economy is to manage cultural diversity with information,
intelligence, a critical and demanding attitude, patience and,
above all, with much respect for and understanding of the culture
of others.

Methodology

Hypothesis & Model

H1: The more strategies SMEs use to internationalize
their products/services, the more participation in the global
market they have.

H2: The lack of capitalization and
financial management is positively related to a low export
performance.

H3: Legal aspects and foreign regulations are
positively related to impediment to export.

H4: Participation in the foreign market is positively
related to being a cluster member.

Target Population Owners,
managers, and/or senior management members of small and
medium-sized enterprises located in developing countries.

Sampling Frame

The sample group was composed of owners,
managers, and/or senior management members of small and
medium-sized enterprises. The initials respondents, were selected
from referrals or contacts located in the target market.
Additional information and more respondents were obtained from
referrals provided by the initial participants.

Before e-mailing the questionnaire, the contact
list was updated in order to guarantee accurateness,
truthfulness, and optimal results. Participants were asked to
fill-in a survey which defines if they met the selection
criteria. The selected participants will be managers of all
levels and owners of SMEs who are actually internationalizing, or
looking forward to, their products and/or services. The surveys
will be administered to the e-mail addresses in the database;
this is done with the aim of selecting the target population that
meets the criteria until achieve the required sample size.

Sampling Technique

A Snowball Sampling technique was used to collect the data.
This sampling technique is appropriate because it is not very
expensive and can estimate rare characteristics; additionally,
this sampling technique seems to be appropriate to the study
because it lets us approach to know the SMEs" strategies to
internationalize their products; as well as to reach a business
network we did not have access and,
information that is normally difficult for researchers to
gather.

Primary Survey Method

E-mail survey sent through electronic method. The primary
survey method will be a structured questionnaire that consists of
a set of closed ended-questions, such as multiple choice, scales,
and some dichotomous questions.

This method is appropriate for this study because is quick,
inexpensive, flexible, efficient, and accurate. However, some of
these e-mail surveys could not be responded because they may be
confused with spams, or simply because they do not like to share
information related to the financial statements of the company.
The reason of using closed-ended questions is because they take
less time from the interviewer, the participant and the
researcher; so they are a less expensive survey method. Remember
that we are dealing with business people who do not have much
time to answer surveys.

Generally, the response rate is higher with surveys that use
closed-ended questions than with those that use open-ended
questions. Moreover, they are easier to analyze and can be more
specific.

Research
Results

Figure 1 shows that 50% of the companies that
answered to this survey were small-sized enterprises, 37.5% were
micro enterprises, and 12.5% medium-sized enterprises. Figure 2,
reports that 50% of the SMEs in this research do not participate
in any local cluster or international network, but they prefer to
operate on their own. Moreover, 75% of the companies that
internationalize their products or services state that customer
contact is the best strategy to open up new export markets.

As indicated in Figure 3, half of the SMEs use
competitive pricing as a strategy to internationalize their
product. However, 62.5% of them use strategies to export such as
brand development, control over
distribution, advertising, innovation in terms of marketing
techniques and, ability to offer new superior products. Finally,
this same figure indicates that 87.5% of these SMEs agree with
the fact that the ability to offer specialized products and the
quality of the products and services provided to the customers
are indispensable strategies to internationalize their products
or services. The
findings also show that there is no SME in this research that
disagree with the fact that poor marketing strategies -when
measuring specific advantages overseas- affect the decision of
SMEs to export (Figure 4). In fact, 62.5% of the participants
agree or strongly agree with this idea; on the other hand, 37.5%
do not agree or disagree in regards to the idea that marketing
strategies are vital to participate and survive in the
international market. On other words, almost 2 of every 3 SMEs
believe that without well prepared marketing strategies they may
fail to successfully reach the target market.

The
results also indicate that 87.5% of these enterprises think that
under-capitalization, legal aspects and foreign regulation, and
inability to find suitable partners or overseas agents (Figure 5)
are, beyond question, factors that negatively affect the decision
of SMEs to participate globally.

Simultaneously, 75% of them believe that
insufficient working capital (Figure 6), poor financial
management, high tariffs, and development of a strong supply
chain affect their decision to export but in a smaller degree.
Finally, almost 90% of these enterprises strongly disagree with
the fact that firm size affects the decision to go global.

Conclusions

The most important strategies that SMEs in
developing countries implement to internationalize their products
are: one, the ability to offer specialized products to specific
customer groups and, two, offer excellent quality products and
services to the international customers. In other words,
specialized products to niche markets and quality
products/services represent the more representative strategies
used by SMEs in developing countries to attract international
customers.

In addition, and according to the results, SMEs
that wish to improve their international performance and
competitiveness would be well advised to capitalize their
business and acquire sufficient working capital before going to
the target market. Furthermore, participants SMEs believe that
firm size, excessive competition, and barriers to entry are not a
big problem when it comes to internationalize their product.

Among the factors that negatively affect the
decision of SMEs to participate globally are: poor financial
management, legal aspects and foreign regulation, high tariffs,
inability to find overseas partners or agents, and development of
a strong supply chain.

Finally, the study concludes pointing out that
half of the SMEs in the study believe that they are better off by
themselves than being part of a local cluster or a network;
likewise, the participants believe that the best strategy to open
up new export markets is by customer contact.

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Autor:

Andrés Correa-Cortes

Jacksonville State UniversityCollege of Commerce
and Business Administration