Keys to success in SME Globalisation

from Good Thinking (417 articles)

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May 16, 2007 Before the internet came along, the term “Multinational” signified big business. Forging a beachhead on another continent signified substance, lots of resources, a successful home market and a long term commitment. No longer – the internet enables business with someone in Kazakhstan as easily as it does with your next door neighbour and there’s a growing trend for small and medium-sized companies to successfully launch themselves as international businesses from start-up. Rapid internationalisation is occurring because a company need not establish itself in its home market before venturing overseas. Siv Marina Flo Karlsen of the BI Norwegian School of Management recently completed her doctoral thesis on this very subject and it provides insights for anyone doing business on the internet. “The key to success is having a strategic network and unique products,” says Flo.

Karlsen’s work identified the common characteristics of companies which achieved global success at an early stage. Here are the characteristics which are most likely to lead to rapid internationalisation:

1) The company’s products are unique, ingenious and innovative. They are also revolutionary and offer new ways of doing things. 2) The company’s founder or others with a major role have wide experience and extensive contact networks from previous work in similar industries. 3) The company has strong relationships with key personnel from large, successful organisations. 4) The company has good relationships with influential figures in the industry who can provide support and insight in any areas where it lacks expertise (e.g. research institutions). 5) All the personnel are very involved in the company and eager for it to succeed.

In her doctoral project for BI, Karlsen studied the internationalisation processes of selected small and medium-sized companies. She interviewed the key personnel (founders or others who were with the company from the start) from twelve companies which achieved early success in the international and global arenas, measured as proportion of exports and the number of continents where they operate.

“Some of the companies simply had no choice. Their products are designed for a global market, so they have to look beyond this country’s boundaries at an early stage in the company’s development,” says Karlsen, citing the Norwegian company IRTech as an example.

IRTech has developed niche products for the steel industry, a global industry which has no home market. As she explains, “All the clients are large international companies”.

Siv Marina Flø Karlsen conducted the work for her doctoral thesis at the Department of Marketing, BI Norwegian School of Management