11
Table 1.2. Top ten barriers to SME internationalisation, as reported by policy makers,
OECD countries
Source: OECD (2008).
External Barriers
A recent OECD study on access to “high growth markets”, which also draws on surveys to both SMEs
and policy makers, reveal that, when it comes to “unfamiliar markets”, which are perceived to have
higher entry barriers than traditional markets, SMEs are likely to evaluate external barriers more than
policy makers. In particular, whereas high tariff barriers and some business barriers are commonly
perceived to be severe by policy makers and SMEs , there appears to be a gap in perceptions with
regard to the evaluation for governmental barriers, such as lack of home government assistance,
restrictions to foreign ownership and movement of personnel, unequal treatment compared to domestic
firms, or lack of transparency in laws and regulations in the foreign country (OECD, 2013).
Another problem faced especially by SMEs in developing countries is ‘the country of origin effect’
(Tesform and Lutz, 2006, p. 277). This effect implies that a product coming from a developing country
might signal low confidence with regard to attitudes among international buyers towards the product
compared with those coming from their developed counterparts.
1.5.3.Overcoming Barriers
SME’s that are proactive, innovative and that have the ability to take risk, may be able to overcome
the limitations and barriers referred to above. Despite the constraints, entrepreneurial oriented SME’s
may still be able to enhance their performance in exporting. One of the ways SMES have tried to
overcome barriers to internationalization is by developing networking capability (Saarenketo et al.
(2004). Various studies confirm that networking, building trusts, collaboration and relationship help
SMEs to overcome the challenges in the internationalisation process (Jansson and Sandberg 2008).
Due to lower transaction volume SMEs can be effective and efficient in coordinating
internationalisation activities. SMEs can compensate for their liabilities of smallness through the
establishment of inter-firm cooperations (Fink et al. 2008). Many
1.6. Networks and Networking
The business environment is today described by scholars as a web of networks which can be formal
and informal. Networking is seen as a source of market information and knowledge, which are often
acquired in longer terms when there are no relationships with the host country. Therefore, networks
are a bridging mechanism that allow for rapid internationalisation (Mitgwe, 2006). The emphasis of
the network approach is in bringing the involved parties closer by using the information that the firm
Rank-Weighted
Factor
Description of Barrier
1 Inadequate quantity of and/or untrained personnel for internationalisation
2 Shortage of working capital to finance exports
3 Limited information to locate/analyse markets
4 Difficulty in identifying foreign business opportunities
5 lack of managerial time to deal with internationalisation
6 Inability to contact potential overseas customers
7 Difficulty in developing new products for foreign markets
8 Unfamiliar foreign business practices
9 Meeting export product quality/standard/specifications
10 Unfamiliar exporting procedures/paperwork