Small & Medium Sized Enterprises in an International Environment Essay

Small & Medium Sized Enterprises in an International Environment - Essay Example Center of discussion in this paper are small and medium sized businesses that are imperative to the economy of a country mainly for their roles in job creation, innovation and technological advancement. In recent years, small start-up and even smallest of businesses, particularly those from the high-technology industries are internationalizing at an increased rate. Most of the small businesses are launched with a plan of conducting cross-border business activities. Within the free trade zone of European Union, more efforts are put in to unite the countries both economically and politically and this transition has made tremendous changes in the international business contexts. For small and medium sized businesses, it has become easier for them to broaden their business activities globally, bringing newer opportunities as well as threats. Basically, there are three approaches to the internationalization of small businesses; they are stage approach, network approach and the born global approach. Stage approach states that internalization of small businesses occurs gradually from the domestic marketing through the export as primary mode of entry to another country. The network approach states that internalization of small businesses occurs through developing successful networks of business relationships to facilitate global business operations. Born Global firms are those small businesses that are launched with cross-border business activities in mind. ... ternalization of small businesses occurs through developing successful networks of business relationships to facilitate global business operations (Hynes, 2010, p. 90). Born Global firms are those small businesses that are launched with cross-border business activities in mind (Longenecker, Moore, Petty and Palich, nd, p. 443). In recent years, small businesses that are launched with a view to gradually internationalize the firm’s activities and this has tremendously impacted the roles that are played by the small business in international business contexts. Importance of Small Businesses in International Business Contexts Small Businesses as Engine for Job Creation Out of the 30.23 million businesses in the United States, around 99.7 percent as accounted to be 30.14 million are considered as small businesses (Scarborough, 2011, p. 23). Though they are generally termed as ‘small’ as they employ fewer than 100 employees their contribution to the economy is greater both nationally and internationally. Small and medium sized businesses employ more than 51 percent of the nation’s total private sector workforce, but the assets these small businesses posses are considerably less than big multinational and other businesses (Scarborough, 2011, p. 23). Small businesses are critically important to the economy of a country and the international economy in general due to the roles it plays such as job creation, innovation, long term growth etc. Malchow-Moller, Schjerning and Sorensen (2009, p. 16) asserted that entrepreneurs, especially of the small businesses, are widely believed to play pivotal roles in terms of job creation and wage growth. The father of entrepreneurship, Schumpeter, explained this concept through ‘creative destruction’ as entrepreneurship replace