Internationalization: For SMEs Within And Beyond EU

In the context of EU, few small businesses expand beyond EU. It is in the agenda of the EU to increase internationalization of SMEs and access markets not just within the EU but to the markets beyond the EU.

Small and Medium Sized Enterprises (SMEs), in spite of being the drivers of economic growth, has still not overcome the challenges of Internationalization. It continues to be a major area of major concern for SMEs. It is common knowledge that there is no single solution or answer to internationalization.

Besides, there is very little research on Internationalization of SMEs. Even the limited number of research results available, focus more on ‘what is Internationalization (Ref). There is practically no research on ‘how’ internationalize.

In the context of EU, few small businesses expand beyond EU. It is in the agenda of the EU to increase internationalization of SMEs and access markets not just within the EU but to the markets beyond the EU. This is recognized as essential for Europe’s competitiveness, economic growth and innovation. While setting high priority to Internationalization, it is only logical to acknowledge that Internationalization is a two-way process. In order to help organizations of EU expand their market beyond, it is only logical that EU should also look within to create seamless framework for enabling SMEs for outside EU to expand within the EU.

More than 90% of global growth will happen outside of the EU and emerging markets are expected to contribute to more than 60% of the world’s GDP by 2030 (Ref). Therefore, the EU has rightfully raised the priorities to promote innovation and entrepreneurship among SMEs to come up with working models of Internationalization. There cannot be one model that works for all. SMEs, Consulting Organizations, multi-lateral agencies and Academic institutions should come up with specific models that could be adapted to various scenarios.

Some of the programs of EU such as Horizon 2020, Erasmus+ offers support to a wide range of socially impactful innovations that cover a wide spectrum of industries and markets. Through these Programs, the Organizations can come up with specific working models that solves certain internationalization challenges and enable SMEs to perform within the controlled environment of the EU. The hypothesis is, what could work well within the EU for specific business scenarios and industries, could work equally well in scenario beyond EU as well. The scope of such Programs extends to markets beyond the EU as well.

“Many small companies in the EU struggle to internationalise their business even with an open and fair trade framework in place. Only 25% of EU-based SMEs export at all and an even smaller portion export beyond the EU. The Commission aims to help European businesses face competition, access foreign markets, and find new business partners abroad. Going international increases SMEs' performance, enhances competitiveness, and reinforces sustainable growth.” (Ref)

The parameters for internationalization are numerous and one could always refer to numerous studies to draw inferences. Irrespective of the vastly differing opinions, one would simply agree to the basic fact that access to funds is the most essential aspect of business success. Any model that ensures access to funds is bound to be right. Business income will always remain the best source of funds. However, before reaching the stage of self-sustaining revenue generation, SMEs will need access to other funds from various instruments of debt, equity, grants and subsidies.

Coming up with a simple framework for internationalization which will ensure access to funds across markets will be a fascinating solution. One such solution is GT4SME.

GT4SME is an initiative of GIG Germany, and its consortium partners from Italy, Croatia, Turkey, Serbia. Supported by Erasmus+, the GT4SME project will provide a working framework for SMEs. The framework will help socially impactful SMEs within the EU to gain access to funds while expanding internationally (within EU to start with). While expanding the market, the SMEs will also ensure Digital Transformation, which is the way of future businesses.

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