Localized capabilities and the internationalization of manufacturing activities by SMEs

In this paper it is argued that the internationalization of production through foreign direct investment (FDI) by small and medium-sized enterprises (SMEs) is influenced by local level idiosyncracies. Although SMEs suffer from inherent constraints to international growth (due to the scarce availability of financial and managerial resources), the presence of qualified localized capabilities strengthen and complement their competitive/ownership advantages, thus favouring their internationalization. These capabilities are related to the advanced specialized services available to the firms, the existence of a ‘marshallian atmosphere’, and an environment conducive to innovation and learning. However, it is argued that negative externalities stemming from protectionism-oriented public intervention discourage the international growth of firms and negatively influence the propensity of SMEs to internationalize. Empirical support for these premises is provided by this study of the Italian case over the decade 1986–1995.     

HRM in New Zealand biotechnology SMEs: emergence of employment systems through entrepreneurship

Biotechnology is an industry where human resources embody the knowledge and thereby the competitive strength of the firm. Strategic HRM models have established the importance of resource dependency and institutional perspectives in understanding small biotechnology firms. These models, however, have seldom included the impact of managerial agency, particularly with regard to the role of the founder-scientist. Using three exploratory case studies of biotechnology small and medium enterprises (SMEs), we examine the role of founder-scientists in addressing the requirements of institutional legitimacy and scarce resources (human and capital) in their firms.     

Can Institutional Change Impact High-technology Firm Growth?: Evidence from Germany’s Neuer Markt

To facilitate the transformation of the German economy from the traditional manufacturing industries towards emerging new technologies, a new segment of the Frankfurt exchange was introduced in 1997 — the Neuer Markt. To examine whether the Neuer Markt was successful, we compare the relationship between firm size and growth for firms listed on the Neuer Markt and contrast the results with two benchmarks: (1) for German firms prior to the 1990s (to reflect the older traditional manufacturing sector) and (2) for the stylized results for the US. This study provides evidence that not only did many new firms obtain funding from the Neuer Markt; but that for the first time in recent history, Germany succeeded in enabling smaller firms to grow faster than larger firms. This suggests that the new policies were not only successful in promoting a new type of firm that otherwise might not exist, but in transforming the sources of growth and innovation within the German economy.     

The contours of employee voice in SMEs: the importance of context

This article develops a context‐sensitive approach to analyse how and why voice operates in small‐ to medium‐sized enterprises (SMEs), an area that remains under‐theorised and under‐researched. By building on a priori frameworks with proven ability to unpack complexity and take account of the wider context of SMEs, this article explores how resources (human and social capital) and constraints (product market, labour market and strategic orientation) interact to shape voice practices. The article finds significant differences between ‘reported’ compared with ‘actual’ practices in situ, and identifies different types of firms (‘strategic market regulation’, ‘strategic market‐led’ and ‘non‐strategic market‐led’) along with the factors that influence the form and practice of voice. Overall, the article argues that researchers should further pursue research that appreciates the layered nature of ontology and the role played by firm context to explain complex organisational phenomena, if we are to advance our understanding of voice practices in SMEs and beyond.     

Henry George's Thought in Relation to Modern Economics

Abstract . Henry George's influence on economic thought has been neglected although his readers included Clark, Marshall, Hobson, Commons, Lerner and Böhm-Bawerk and his ideas provoked thought and discussion, Clark made clear that George stimulated him to develop his marginal productivity theory. But the 19th century American theorist affected or touched upon the neoclassical concept of capital, the theory of externality, the neoclassical versus the classical concept of monopoly; the entitlements approach to distributive justice; the burden of debt and other transfer incomes and capital formation and the theory of expectations. George's influence is wider than generally recognized. The last of the classical economists, he wrote in high Victorian prose about some very modern problems.     

The negative influence of the entrepreneur’s level of higher education on the attractiveness of European SMEs as alliance partners in Brazil: the role of practical experience and international entrepreneurial orientation

Notwithstanding the contemporary relevance of alliance strategies for SME internationalisation, especially in the case of uncertain business environments, few studies have investigated human resource issues in the context of SMEs prior to alliance formation. Even more scarce are studies looking at the impact of a manager/entrepreneur’s characteristics on pre-alliance formation, despite recognition of the expected crucial role of the entrepreneur in this context and of the strong connection between an entrepreneur and their SME. Drawing on international entrepreneurship theory and empirical observations from an exploratory study, we propose a post hoc conceptual model. The exploratory empirical part of our study employs a sample of entrepreneurs from biotechnology SMEs in the United Kingdom and Germany intending to ally in a large emerging market (i.e. Brazil). Our empirical observations suggest an anomalous (at first glance) negative association between the entrepreneur’s level of higher education (a construct at the individual level) and the attractiveness of the SME as a partner firm vis-à-vis alliance formation (a construct at the firm level). Our post hoc model emphasises the role of practical experience and the corresponding levels of international entrepreneurial orientation as theorised variables mediating the observed empirical relationship. We develop theoretical propositions, and suggest practical implications and future research directions.     

The Slum Multiple: A Cyborg Micro‐history of an Informal Settlement in Lisbon

This article proposes a cyborg reading of the process of informal settlement by internal and postcolonial immigrants in Lisbon's periphery from the 1970s to the present. Cyborg does not stand for a neo‐organicist or cybernetic understanding of the informal city but rather for the conjunction of the multiple enactments of city life under conditions of urban informality—in this case the fourfold combination of history/migration; architecture/low‐fi technologies; inhabitation/body/memory; and governmentality/urban capital. The 40‐year event of settlement and inhabitation is presented through an ethnographic micro‐history of one neighbourhood in particular, with a strong focus on slum dwellers' life stories, on the details of the artefact‐machines they have built, their informal dwellings, and on their social and mental experience of place. Responding to recent calls for multidisciplinary ethnographies of informality, the article brings the specificity of Lisbon's informal settlements—their growth based in postcolonial rather than rural migrations—into current debates on informal urbanisms and geographies of sociotechnical urban assemblages.     

Marketing in medium-sized manufacturing firms: The state-of-the-art in France and in Quebec

An examination of the relationship between marketing and SMEs raises two kinds of questions: the first relates to the categories of SMEs studied, and it goes without saying that their responses will depend on their size (very small, small, and medium); the second depends on the elements likely or not to bring out a marketing approach. In fact, we can infer a large part of this approach from the answers having to do with segmentation practices, positioning, and information research. These three practices constitute the foundation of this approach. For all that, to ask questions directly (especially with regard to segmentation) would lead to biased responses. Taking these premises into account and with understanding of marketing behaviour in the medium-sized firms as an objective, we conducted two surveys in two locations, France and Québec (Canada), in which only enterprises with 50 to 250 employees were retained. The results show that if the marketing approach of the medium-sized firms is always focused on client distinction (more than on the market as such), competition leading to positioning is very much a part of their preoccupations; finally, these enterprises commonly practice commercial intelligence. This implies structuring commercial activity in general and marketing in particular, the two not always well delimited. These last two traits differentiate them from the other categories of SMEs, the very small enterprises (VSEs) and the small enterprises (SEs).

Industrial districts: something more than a neighbourhood

The expansion of globalization has led to the relocation of many industrial activities. In particular, this process has affected industrial districts in the traditional industries. However, different districts vary in their capacity to retain activities. The robustness of industrial districts and, in consequence, their capacity to retain core activities at home and thus avoid painful relocations can be analysed by means of the relational capital developed at the district level. The relational structure within the district affects and determines the capacity of innovation of the district firms. This paper analyses the extent to which innovation depends on the amount of relational capital developed at the district level. We have addressed this proposition using internal human mobility, shared vision and trusting co-operation as indicators of the amount and quality of relational capital. In order to support theoretical propositions we have conducted empirical research comparing different industrial districts in the Valencian region of Spain. Research findings suggest a significant association between social capital variables and innovation outcomes. In consequence, these factors can facilitate retaining activities in districts.     

New product development in foreign customer relationships: a study of international SMEs

Abstract

This study identifies a gap in research concerning how small and medium-sized enterprises (SMEs) can benefit from pursuing locally (rather than globally) oriented internationalization strategies. Becoming overly dependent on one single foreign market could potentially reduce the inflow and diversity of new knowledge that can serve as input for new product development. This study discusses how this risk can be minimized. In this endeavour we create a theoretical model that investigates how the local sales concentration and relationship-specific commitment of SMEs relates to new product development. To do this we draw on the behavioural internationalization process framework. The theoretical model is tested on an effective sample of 188 Swedish SMEs. The results show that relationship-specific commitment mediates the effect of local sales concentration on new product development. The implication is that investments which enable collaboration in important business relationships are crucial requisites for keeping firms innovative and in pace with market fluctuations. The findings thus contribute to international business literature by showing that a local market scope of operations combined with a relationship orientation are beneficial for new product development in international SMEs.     

SMEs and the Potential for A Collaborative Path to Environmental Responsibility

Globally, the potential for small and medium‐sized enterprises (SMEs) to collectively impact negatively on the environment is great. Therefore, the adoption, and maintenance, of environmentally responsible practices by this group of firms is especially critical. Studies of environmental practices successfully implemented by small firms have revealed that relationships with other firms, or other organizations, can contribute to greater awareness of the benefits of such activities and, therefore, enhance the possibility of environmental engagement. Collaborative relationships may provide opportunities for SMEs to overcome some of the barriers to implementing environmental initiatives associated with their size, and/or associated characteristics. This paper focuses on attitudes of SME owner‐managers to a variety of environmental issues (including regulation and voluntary standards), and to collaborating with other firms (in either a formal or informal sense). The data this paper draws upon are from two waves of an ongoing longitudinal survey of New Zealand SMEs. Copyright © 2014 John Wiley & Sons, Ltd and ERP Environment     

Innovating in the local systems of small medium sized enterprises: the experience of Tuscany

Innovation policies addressed to SMEs in Tuscany (and in Italy as well) have given, so far, a very limited contribution to improving the SMEs performance in terms of competitiveness and technological enhancement. The interpretation the paper attempts to demonstrate is that innovation policies have been designed for a ‘generic’ SME, in a frame of traditional sectors, within administrative areas, whereas successful SMEs are not merely operating in a given sector or area; they are agglomerated in peculiar Spatial Systems of Small Enterprises (SESS). The productive, spacial, social models of functioning of a typical SESS are described in order to:

(i) identify the local mechanism of interdependencies (between firms, labour force and local government), which generates relevant flows of external economies;

(ii) prove that innovation policies have neglected the vital characteristic of the SMEs (their agglomertion in SESSs).

Finally, a new innovation policy for SMEs designed by the Regional Government of Tuscany is presented.     

The complementarity of IT and HRM capabilities for competitive performance: a configurational analysis of manufacturing and industrial service SMEs

ABSTRACT

Building on the resource-based view (RBV) perspective, we analyse the combined effects of two highly-valued organizational resources, namely information technology (IT) capabilities and human resource management (HRM) capabilities, on the competitive performance of small and medium-sized enterprises (SMEs). Three resource configurations are derived from data on 227 SMEs (121 from the manufacturing sector and 106 from the industrial services sector) through a cluster analysis. These resource configurations are labelled IT Capabilities-dominant Configuration (ITC), e-Business Capabilities-dominant Configuration (e-BC), and HRM Capabilities-dominant Configuration (HRC). This last configuration is the best-performing, followed by the e-BC, with the ITC as the worst-performing. The results also show that manufacturing and service firms are very unevenly distributed within HRC and ITC configurations, suggesting notable differences between the two sectors regarding their respective IT and non-IT capability-building. The fact that service SMEs are overwhelmingly represented (93%) in the worst-performing configuration and completely absent (0%) in the most effective configuration while displaying the strongest IT infrastructure capabilities confirms that the IT productivity paradox is aggravated in service SMEs and calls for further research on this issue.     

A Dependence-Trust Modelm of Export Alliance Performance in Small and Medium Enterprises (SMEs)

Abstract

This paper focuses on the export performance of US environmental technology (EnviroTech) firms, which are predominantly small and medium enterprises (SMEs). We conceptualize and empirically test a model of perceived export performance contingent upon the perceived effectiveness of host country partner (HCP) alliances, dependence, and trust in the HCP. We find that US SME EnviroTech firms contemplating exports need two critical ingredients for success. First, they must forge close, cooperative, long-term strategic alliances with HCPs for mutual benefit. And second, they must pay specific attention to building trust in the HCP in order to achieve greater success with the strategic alliance and exports. Though dependence on a host country partner increases the vulnerability of the exporter and detracts from an effective alliance, trust is the antidote that can neutralize the negative impact of dependence.     

Raising the bar (8)

This editorial summarizes the papers published in issue 13(3) so as to raise the bar in applied spatial economic research and highlight new trends. The first paper challenges the home market hypothesis that large countries host more firms relative to their size than small countries by considering the lobbying activities of multinational firms. The second paper analyzes the implications of a spatial weight matrix used to estimate a spatial econometric model that depends on an endogenous economic variable. By adding a spatial context, the third paper provides a novel contribution to the literature on international norms in de facto measures of human rights performance. The fourth paper examines the determinants of accepting informal work in Poland. The fifth paper deals with non-stationarity and cointegration in a dynamic spatial econometric panel data model when the number of observations in the time – rather than in the cross-sectional– domain tends to infinity.     

Rethinking organizational resilience and strategic renewal in SMEs

ABSTRACT

Building on work that associates organizational resilience with crisis recovery and strategic renewal, I examine how small- and medium-sized enterprises (SMEs) vary in the formalisation of activities intended to achieve strategic growth and activities to enhance resilience against acute operational interruptions. Drawing on data from 265 SMEs in the United Kingdom, the main argument of this paper is that variations in formalisation activities reflect differences in firm location, personal networks, the influence of external crisis events, and entrepreneurs’ attitudes towards the prevention of crises. The resulting typology identifies four clusters: Attentive Interventionists, Light Planners, Rooted Strategists and Reliant Neighbours. These findings contrast with prior theorizations of firms as either resilient or vulnerable and further illuminate our understanding of SME resilience and how this is shaped by historical, developmental and strategic factors. The study further develops associations between resilience and social capital, examines how locational choices generate a proximity premium, and develops a growth-survival-maturity perspective on SME resilience. Data reveals an interplay between an ensemble of entrepreneurial activities and decisions about planning, networks, learning, and location. Thus, the study offers a rethinking of prior theorizations about organizational resilience and strategic renewal.     

Circular economy to enhance sustainability of small and medium‐sized enterprises

The circular economy (CE) represents a major paradigm shift of moving from the concepts of linear to circular supply chains across multiple industries. Although some aspects of CE adoption within industrial supply chains have been researched extensively (particularly addressing challenges of design, implementation, and operations), the research that relates CE practices with sustainability performance to reveal the current state of CE practices within small and medium‐sized enterprises (SMEs) is scant. The aim of this research was to facilitate SMEs to achieve greater sustainability through CE implementation. This research addresses three research questions—How are CE fields of action related to sustainability performance? What are the issues, challenges, and opportunities of adopting CE in SMEs? And what key strategies, resources, and competences facilitate effective implementation of CE in SMEs? This study adopts a mixed method approach (qualitative and quantitative) using survey research, focus group, and case studies; 130 randomly selected SMEs within the Midlands of the United Kingdom have been surveyed, and the responses are analysed using statistical tools along with findings from focus groups and case studies. The study reveals that all CE fields of action (take, make, distribute, use, and recover) of SMEs are correlated to economic performance, but only make and use are related to environmental and social performance. The study further derives strategies, resources, and competences for achieving sustainability across all the CE field of actions. Additionally, this research reveals the issues and challenges, strategies, resources, and competences required for implementing CE in SMEs.     

Expect the unexpected: examining the shaping role of entrepreneurial orientation on causal and effectual decision-making logic during economic crisis

ABSTRACT

While many firms operate in dynamic environments, the competitive conditions faced by firms during an economic crisis are especially unstable and turbulent. We examine firm strategic decision-making in this distinctive context and investigate the question of whether causal and effectual logic provide similar paths to performance during such challenging economic times. Further, we examine the potential impact that a firm’s level of entrepreneurial orientation (EO) has upon the relationship between managers’ predominant decision-making logic and their firm’s overall performance in this crisis. To test these relationships, we employ a robust national random sample of 447 Russian small and medium-sized enterprises (SMEs) collected from 2015 to 2016 during a period of economic crisis. Our results indicate that EO plays an important moderating role, shaping the nature of the relationships between managers’ decision-making logic and financial performance. Moreover, additional analysis identifies the presence of a non-linear relationship between both logics and the performance of SMEs.     

Emerging Australian Biotechnology Companies: Globalizing or Just Playing?

The biotechnology industry is seen as one of the most globalized. It is also an industry dominated by SMEs in most countries. It would be expected then that these biotechnology SMEs themselves would be global in their focus. It is the intent of this research to understand the globalization issues that are encouraging biotechnology companies to go global, whether these companies really are truly global companies, and if not, at which stage of the globalization process these companies are operating. The study is undertaken using secondary quantitative data on all the publicly listed biotechnology companies in Australia that have undertaken some form of internationalization, based on 2003/4 annual reports. The main conclusion from the research is Australian biotechnology companies are still in an immature stage of development in the globalization process. The companies’ market strategies are directed at profitable countries and regions, such as the USA and Europe. This neglects other markets that are more accessible and can provide much needed early income streams. The internationalization effort of Australian biotechnology companies is only partial and could not be considered to be a true globalization effort.     

Predictors of flexible working arrangement provision in small and medium enterprises (SMEs)

SMEs comprise 99.7% of all private sector businesses in Australia and employ 70% of the private sector workforce. They are therefore important to policies on flexible work arrangements (FWAs). The provision of FWAs has been found to usually contribute positively to employee well-being and business performance. However, the majority of studies focus on large firms and it is unclear whether these associations apply equally to SMEs. Using data from the Australian Bureau of Statistics Business Longitudinal database for 2007–2011(n = 2788), this study investigates the extent to which factors such as firm size, industry sector, terms of employment, employees’ skills and use of the internet at work affect the provision of FWAs in SMEs. The findings show that smaller businesses are constrained by resources to provide FWAs, but do so in pursuit of industry norms and/or as a result of the profile of their employees. It is also easier to provide FWAs in certain industries than in others and use of the internet facilitates the provision of FWAs.