The four major barriers to internationalization: Inability to contact potential customers in foreign markets
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- Posted in Internationalization barriers
- March 22, 2015
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The problems in recognizing, choosing and making contact with foreign buyers create barriers for SMEs in entering foreign market (Shaw and Darroch, 2004; Ahmed et al., 2004; OECD 2012; Crick, 2007).
Connected to this barrier (and maybe a reason for it) is the lack of sales force or sales representatives in foreign markets. According to OECD (2009), recent surveys consolidate the importance of this barrier.
According to Crick (2007), SMEs face difficulties of locating adequate representation in target export markets while Kneller and Pisu (2007) identified that finding an appropriate foreign market partner is a key impediment to the internationalization of the SMEs.
Inability to contact overseas customers means the difficulty in contacting customers and finding partners in foreign markets due to geographical distance, different time-zones, poor research by the firm in identifying customers and limited exposure to sources listing potential customers such as online databases (OECD, 2009; Kneller and Pisu, 2007).
According to the UK Trade & Investment (2012) report, SMEs have experienced the difficulty identifying initial contacts in their selected market and establishing an initial dialogue with prospective customers or partners in the markets.
Nevertheless electronic commerce can help SMEs overcome this barrier by offering them the possibility to reach customers and partners around the clock all over the world (Crick, 2007; Hamill and Gregory, 1997).
- Ahmed, Z.U., Julian, C.C., Baalbaki, I., Hadidian, T.V. (2004). Export Barriers and Firm Internationalisation: A Study of Lebanese Entrepreneurs. Journal of Management & World Business Research, 1(1), 11-22.
- Crick, D. (2007). SMEs’ Barriers Towards Internationalisation and Assistance Requirements in the UK. Journal of Small Business & Entrepreneurship, 20(3), 233-244.
- Hamill, J., Gregory, K. (1997). Internet marketing in the internationalization of UK SMEs. Journal of Marketing Management, 13(1-3), 9-28.
- Kneller, R., & Pisu, M. (2007). Industrial Linkages and Export Spillovers from FDI. The World Economy, 30(1), 105-134.
- OECD. (2012). SMEs and Entrepreneurship: Glossary for Barriers to SME Access to International markets. Retrieved July 11, 2013, from: http://www.oecd.org/cfe/ smesandentrepreneurship/glossaryforbarrierstosmeaccesstointernationalmarkets.htm#EXTERNAL_BARRIER
- OECD. (2009). Top Barriers and Drivers to SME Internationalisation. Report by the OECD Working Party on SMEs and Entrepreneurship. Retrieved June 10, 2013, from: http://www.oecd.org/industry/smes/43357832.pdf
- Shaw, V., Darroch, J. (2004). Barriers to Internationalisation: A Study of Entrepreneurial New Ventures in New Zealand. Journal of International Entrepreneurship, 2(4), 327–343.