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- Posted in Internationalization barriers
- March 23, 2015
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According to European Union (2012), the lack of information about the foreign markets is the main barrier of SMEs accessing international markets.
Inadequate knowledge of foreign markets also emerged as a top barrier in recent studies (European Commission, 2012; OECD, 2009). This factor was highlighted as the most cited internationalization barrier among the responding companies in the research conducted by OECD, suggesting that the lack of information remains a critical challenge to SMEs even in the current era of extensive information availability (OECD, 2009; European Commission, 2010).
Berry and Brock (2004) assume that the accumulation of knowledge related to foreign markets is considered to be one of the key drivers of a gradual internationalization process. This knowledge can reduce uncertainty and the perceived risk of internationalizing by providing the firm with information about foreign markets (Hamill and Gregory, 1997).
Resource availability involves the ability to identify where the necessary resources are available, essentially focusing on search costs and difficulties. Resource access involves a firm’s ability to acquire needed resources. Uncertainty often blocks the access to resources for new SMEs because existing firms are reluctant to exchange resources with them.
OECD (2009) explains in details the complexity of this barrier and how SMEs should be able to overcome it:
- Informational barriers: problems in identifying, selecting and contacting foreign markets due to information inefficiencies.
- Limited information to locate/analyze markets: difficulty in finding and analyzing informational sources required to reduce the level of uncertainty of international markets.
- Unreliable data about the international market: problems associated with finding reliable references used to attempt to increase understanding of foreign markets (including access to data, ability to retrieve data quickly, and the cost of obtaining data).
- Identifying foreign business opportunities: difficulty in recognizing and selecting opportunities in foreign markets (including customers, contacts, business partners and joint ventures).
The difficulties in accessing information are in general the result of lack of previous international experience of the management or entrepreneurs, inability to use online marketing applications, inability to create business (local and foreign) networks, lack of risk-seeking behavior of entrepreneurs and management internationally, etc. (Onkelinx and Sleuwaegen, 2008).
There is also the lack of government support, since the conditions to facilitate internationalization by making information, data, statistics and assistance accessible to all companies, despite their activity, size or budget, are still not being put into practice properly (Onkelinx and Sleuwaegen, 2008; OECD, 2009; Berry and Brock, 2004).
Despite all these reasons, it is considered that using the power of the crowds, SMEs can get over this barrier accomplishing their goal of going abroad. One usage of the crowdsourcing is to provide critical information about markets.
- Berry, M.M.J., Brock, J.K.-U. (2004). Marketspace and the internationalization process of the small firm. Journal of International Entrepreneurship, 2(3), 187–216.
- European Union. (2012). Basic information on the European Union. Retrieved July 11, 2013, from: http://europa.eu/about-eu/basic-information/index_en.htm
- European Commission. (2012). How to export shrimps to the European Union. Retrieved July 11, 2013, from: http://trade.ec.europa.eu/doclib/docs/2012/march/tradoc_149275.pdf
- Hamill, J., Gregory, K. (1997). Internet marketing in the internationalization of UK SMEs. Journal of Marketing Management, 13(1-3), 9-28.
- 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
- Onkelinx, J., Sleuwaegen, L. (2008). Internationalization of SMEs. Research Report. Falnders DC. Retrieved July 11, 2013, from: http://www.flandersdc. be/download/nl/20085481/file/flandersdc_internationalization_of_sme_s.pdf