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Internationalization of Small and Medium-Size Enterprises from Selected Central European Economies

Author

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  • Marjan SvetliÄiÄ
  • Andreja JakliÄ
  • Anže Burger
Abstract
This paper examines differences in outward foreign direct investment (FDI) activity between small and medium-size enterprises (SMEs) and large enterprises in five Central European economies (CEEs). The effects of firm size on motives, barriers, and the competitive advantages of outward investment are examined by surveying 180 firms. Employment effects are examined on a single country. The results indicate more similarities than differences in internationalization patterns and prove SMEs to be capable of internationalization strategies. Similar to large CEE firms, SMEs' investment abroad is mainly market seeking. Both groups of firms identified similar barriers, but SMEs face larger financial and capacity problems. Their larger counterparts enjoy superiority in marketing and production capabilities, but, on average, lack the agility needed for swift and efficient market entry. As SMEs frequently target specialized niches, their main competitive advantages are technological know-how, organizational flexibility, and closer relationships with their customers. Larger competitors, apart from technological know-how, rely on the benefits arising from scale economies and marketing. Home-country employment effects of SMEs are positive and larger than they are for large firms. Our empirical results show that differences found in theoretical propositions and previous empirical studies apply, to a large degree, to companies from CEEs, though the specific characteristics of both types of firms and the intensity of differences are not yet as pronounced as they are in other developed countries, which is to some extent a transition-specific phenomenon. The differences identified suggest adaptations in support policy programs for SME internationalization.

Suggested Citation

  • Marjan SvetliÄiÄ & Andreja JakliÄ & Anže Burger, 2007. "Internationalization of Small and Medium-Size Enterprises from Selected Central European Economies," Eastern European Economics, Taylor & Francis Journals, vol. 45(4), pages 36-65, August.
    • Handle: RePEc:mes:eaeuec:v:45:y:2007:i:4:p:36-65
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    Cited by:

    1. Bagheri, Mahshid & Mitchelmore, Siwan & Bamiatzi, Vassiliki & Nikolopoulos, Konstantinos, 2019. "Internationalization Orientation in SMEs: The Mediating Role of Technological Innovation," Journal of International Management, Elsevier, vol. 25(1), pages 121-139.
    2. Cantner, Uwe & Günther, Jutta & Hassan, Sohaib Shahzad & Jindra, Björn, 2013. "Outward FDI from the Central and Eastern European Transition Economies – A Discrete Choice Analysis of Location Choice within the European Union," MPRA Paper 51817, University Library of Munich, Germany, revised 04 Jun 2013.
    3. René Díaz-Pichardo & Cecilia Cantú-González & Patricia López-Hernández & Gerard McElwee, 2012. "From Farmers to Entrepreneurs," Journal of Entrepreneurship and Innovation in Emerging Economies, Entrepreneurship Development Institute of India, vol. 21(1), pages 91-116, March.
    4. Marcela Tuzová & Martina Toulová & Lea Kubíčková, 2017. "The Specifics of the Internationalization Process of Czech SMEs in the Food Industry," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 65(3), pages 1055-1064.
    5. Desislava I. Yordanova, 2016. "Differences between Bulgarian Family and Non-family Businesses: A Multivariate Logit Approach," International Review of Management and Marketing, Econjournals, vol. 6(4), pages 779-789.
    6. Sumit Majumdar, 2011. "Scalability versus flexibility: firm size and R&D in Indian industry," The Journal of Technology Transfer, Springer, vol. 36(1), pages 101-116, February.
    7. Jaklič, Andreja & Obloj, Krzysztof & Svetličič, Marjan & Kronegger, Luka, 2020. "Evolution of Central and Eastern Europe related international business research," Journal of Business Research, Elsevier, vol. 108(C), pages 421-434.
    8. Tsvetan Davidkov & Desislava Yordanova, 2015. "Enhancing SME Internationalization in a Transition Economy: The role of Internal Factors," International Journal of Finance, Insurance and Risk Management, International Journal of Finance, Insurance and Risk Management, vol. 5(3), pages 945-945.
    9. Ipsmiller, Edith & Dikova, Desislava, 2021. "Internationalization from Central and Eastern Europe: A systematic literature review," Journal of International Management, Elsevier, vol. 27(4).
    10. Dikova, Desislava & Jaklič, Andreja & Burger, Anže & Kunčič, Aljaž, 2016. "What is beneficial for first-time SME-exporters from a transition economy: A diversified or a focused export-strategy?," Journal of World Business, Elsevier, vol. 51(2), pages 185-199.
    11. Morais, Flávio & Ferreira, João J., 2020. "SME internationalisation process: Key issues and contributions, existing gaps and the future research agenda," European Management Journal, Elsevier, vol. 38(1), pages 62-77.
    12. Pejman Ebrahimi & Seyed Mozaffar Mirbargkar, 2017. "Green entrepreneurship and green innovation for SME development in market turbulence," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 7(2), pages 203-228, August.
    13. Ana Brochado & Carla Azevedo lobo & Luís Pacheco & Isabel Maldonado, 2020. "Drivers of and Barriers to the SME Internationalisation Process in a Small Open Economy," Economics Bulletin, AccessEcon, vol. 40(4), pages 2932-2942.
    14. Rant Melita Balas & Černe Simone Korenjak, 2017. "How to Successfully Internationalize SMEs from the CEE Region: The Role of Strategies of Differentiation and Education," Journal of Management and Business Administration. Central Europe, Sciendo, vol. 25(4), pages 2-27, December.
    15. Andreja Jaklič & Paraskevi Karageorgu, 2015. "Internationalisation at Home: Exploiting the Potential of the Non-nationals' and Expatriates' Community," Entrepreneurial Business and Economics Review, Centre for Strategic and International Entrepreneurship at the Cracow University of Economics., vol. 3(4), pages 49-72.
    16. Desislava I. Yordanova, 2016. "Differences between Bulgarian Family and Non-family Businesses: A Multivariate Logit Approach," International Review of Management and Marketing, Econjournals, vol. 6(4), pages 779-789.
    17. Darshana Mudalige & Noor Azizi Ismail & Marlin Abdul Malek, 2016. "Exploratory Study on Relationship between Entrepreneur Characteristics and Dynamic Capabilities in Export SMES," Paradigm, , vol. 20(2), pages 113-130, December.
    18. Cantner, Uwe & Günther, Jutta & Hassan, Sohaib Shahzad & Jindra, Björn, 2013. "Outward FDI from Central and East European Transition Economies – A discrete choice analysis of location within the EU," MPRA Paper 51804, University Library of Munich, Germany, revised 12 Aug 2013.

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