Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
EMERGENCE AND INTERNATIONALIZATION OF SMALLER MANUFACTURING ENTERPRISES IN CENTRAL EUROPE: IMPLICATIONS FOR ENTREPRENEURS AND MANAGERS George Tesar, Ph.D., Professor Emeritus Umeå University (Sweden) and University of Wisconsin-Whitewater Abstract Research concerning internationalization of smaller manufacturing enterprises, and more specifically research concerning their entry into international markets, has been the focus of the researchers listed below. This research has produced an enormous amount of knowledge on the subject and is not necessarily limited to the conventionally specified countries in Central Europe (CE) after the systemic changes in late 1989. The outcomes of many of the studies were compared to strategies and operations of other smaller manufacturing enterprises worldwide. Some of the original research instruments and open ended research methodologies were successfully replicated in other countries. Most of the studies were quantitative in nature; however, some were conducted in a qualitative format using case studies. In order to understand some of the internationalization issues related to market entries by smaller manufacturing enterprises, it became obvious early on in the studies that researchers needed to understand some of the operational and theoretical aspects of the external business environments in which these enterprises were funded and operated. In some early studies, the major forces were identified and their significance was related to strategies and operations of smaller manufacturing enterprises attempting to enter international markets. Typically these included: technological, social, life style, and legal forces. Since smaller manufacturing enterprises are managed by a variety of managers, in some cases executives, it was also necessary to identify the top operating managers and develop their strategic and operational profiles—those of craftsman, promoters, and rational managers. Some of the top operating managers also projected entrepreneurial characteristics. Not all top operating managers can be classified as above. Entrepreneurial tendencies are primarily found among craftsmen and promoter type managers. It should be noted that many of the initial internationalization activities such as exporting are frequently perceived as an entrepreneurial initiative by the top operating managers. The objective of this presentation is to highlight some of the longitudinal research studies focusing on the evolution of international orientation and market entry strategy and operations among smaller manufacturing enterprises in Central Europe. The presentation is divided into two parts. The first part focuses on environmental forces that act on Central European smaller manufacturing enterprises, and the second part discusses factors that influence propensities of smaller manufacturing enterprises to enter international markets. 1 Propositions: Proposition 1: SMEs in CE are clearly a product of rapidly changing environments. As the environment in each CE country moves closer to the international “standard” and the environmental forces stabilize, SMEs will become more professionally stable and will increase their propensity to enter international (export) markets. Proposition 2: The propensity of individual SMEs in CE to enter international markets is still a subjective decision made by SMEs’ management based on insufficient resources—including technology—and individual perceptions of international markets. Proposition 3: SMEs in CE still perceive international markets as limiting in scope and restrictive in market opportunities. SMEs’ managers feel that they have more market flexibility by not directly entering international markets. Proposition 4: The international potential of SMEs in CE through their participation in international markets is still limited. What is needed? 1. Comprehensive research to focus on the external business environment itself. More specifically, it is important to examine the nature of the external business environment that is needed to stimulate the growth of SMEs in CE countries. The external business environments are still substantially different and provide different levels of opportunities for SMEs. 2. Understand what types of SMEs are more likely to grow and expand in what kind of external business environment, for example, more aggressive international market oriented SMEs might be products of more stable and open external business environments. 3. Exploration of the decision-making process among SMEs in CE regarding their participation in international markets. It appears that managers of SMEs in CE are preoccupied with relatively low-level operational issues without the necessary understanding of major strategic issues. Sources and previous studies: Marks, Denton and George Tesar, “Different Objectives, Different Models: The Challenge of Integrating EU and CEE Higher Education,” Transformation in Business and Economics, 4/1 (2005), 7-18. Moini, Hamid, “ABC Plastic Limited,” a case study, in Tesar, George and others, Smaller Manufacturing Enterprises in an International Context: A Longitudinal Exploration (London: Imperial College Press, 2010), 180-93. Moini, Hamid, “KMF Limited,” a case study, in Tesar, George and others, Smaller Manufacturing Enterprises in an International Context: A Longitudinal Exploration (London: Imperial College Press, 2010), 194-206. 2 Moini, Hamid, “Winery Startup within a Wine-Producing Cluster,” in Marketing Management in Geographically Remote Industrial Clusters: Implications for Business-to-Consumer Marketing by G. Tesar and J. Bodin (London: World Scientific Press, 2013), 405-17. Moini, Hamid, František Kalouda, and George Tesar, “Foreign Market Entry: The Case of SMEs in the Czech Republic,” Journal of East-West Business, 14/1 (2008), 41-64. Moini, Hamid, František Kalouda, and George Tesar, “Internationalization of Family-Owned Businesses in the Czech Republic,” International Journal of Entrepreneurial Venturing, 4/4, 2010. Tesar, George, Steven W. Anderson, and Miroslav Keřkovský, “SH a.s. A Company in Search of its Market Options,” in Strategic Technology Management: Building Bridges between Sciences, Engineering, and Business Management, 2nd edition, edited by Tesar, G. and others (London: Imperial College Press, 2008), 333-59. Tesar, George and Hamid Moini, “A Look at Academic Research in Central and Eastern Europe: Ten Years Later,” 8th Annual Conference on Marketing Strategies for Central and Eastern Europe, Conference Proceedings, Vienna, Austria, December 13 to 15, 2000. Tesar, George and Hamid Moini, “Long-term Analysis of Technologically Focused Smaller Manufacturing Enterprises,” Scandinavian Journal of Management, 15 (1999), 239-48. Tesar, George and Hamid Moini, “The Internet and Internationalization of Smaller Manufacturing Enterprises, Journal of Global Marketing, 18/3&4 (2005), 79-94. Tesar, George, Hamid Moini, John Kuada, and Olav Jull Sørensen, Smaller Manufacturing Enterprises in an International Context: A Longitudinal Exploration (London: Imperial College Press, 2010). Tesar, George, Hamid Moini, and Jerome K. Laurent, “Expectations before Privatization and Market Realities after Privatization: Technology Transfer,” International Journal of Technology Management, 21, 5/6 (2001). Tesar, George and Marie Přibová, "Electro-Products Limited," in Managing in Emerging Market Economies: Cases from the Czech and Slovak Republics, edited by Daniel S. Fogel (Boulder, Colorado: Westview Press, 1994, 202-8. Tesar, George and Marie Přibová, "Lusico: In Search of Market Opportunities," in Managing in Emerging Market Economies: Cases from the Czech and Slovak Republics, edited by Daniel S. Fogel (Boulder, Colorado: Westview Press, 1994, 196-201. Other sources by: Håkan Boter, Tom Bramorski, Marin Marinov, Denton Marks, Stan Paliwoda, Romeo V. Turcan 3 Environmental forces Technological climate Economic conditions Social conditions (including legal, ethical, and political) Life styles Figure 1.—ENVIRONMENTAL FORCES ACTING ON CENTRAL EUROPEAN SMALLER MANUFACTURING ENTERPRISES Periods of Development and Growth among Smaller Manufacturing Enterprises in Central Europe 1989 to 1993 1994 to 1998 1999 to 2010 Formation years Shake-out years Tenuous growth Completely open—with The lack of appropriate Appropriate technology adequate financial resources, technology started impacting becomes an issue especially global technology became financial efficiency. among existing and potential available. exporters. Very unstable—privatization Stabilizing economic and Relative stability with issues—financially unstable financial transaction; linkages to international commercial transaction. problematic international economies. payments. Very unstable—changing Unstable—legal structure Stabilizing—legal structure legal structure, questionable stabilizing, low ethical stabilized, ethical behavior ethical framework, and standards, political situation more positive in response to unstable political climate. in flux. outside influences, political situation in flux. Completely open—only Completely open—personal Constrained by managerial constrained by disposable gain from entrepreneurial behavior—partial separation income and ability to get income, life styles reflected between personal life style manufacturing. Little the type of entrepreneurial and managerial life style differentiation between culture. personal and entrepreneurial consumption. Factors connected with environmental forces in Central Europe: Corruption Political conflicts Economic instabilities (exports of low value items) Lack of innovation (entrepreneurial initiatives) © G. Tesar, 2015 (Madison) 4 2011 to present Stabilization Indigenous technology becomes available for exports; diminishing financial resources. Normalization of domestic and international payments. Stabilized—legal structured refined to meet outside standards, ethical behavior improving, political situation in flux. Managerial behavior—legal and tax separation between personal life and managerial life style. Ownership life style issues emerge among entrepreneurial concerns. Figure 2.—FACTORS INFLUENCING PROPENSITIES TO ENTER INTERNATIONAL MARKETS BY SMALLER MANUFACTURING ENTERPRISES IN CENTRAL EUROPE Periods of Development and Growth among Smaller Manufacturing Firms in Central Europe 1989 to 1993 1994 to 1998 1999 to 2010 2011 to present Factors Formation years Shake-out years Tenuous years Stabilization years Psychological distances Very short—lack of Short—international markets Medium—international Medium to long— experiences and and potential customers markets are perceived as the international markets are understanding of how placed undue burden on necessary evil—a great deal opening up—unsolicited international markets operate. management and operations. of caution is required. orders are received. Trust Very low—frequently Low—concerned about Low but increasing— Medium—good relationships accompanied by stereotypes financial disclosure and formation of working with existing customers— and suspicions. foreign competition. relationships with customers good relationships with abroad—need for financial financial institutions (foreign transparency. exchange). Commitment None—preferred individual Very low—contractual Low—international market Low to medium—learning orders frequently without agreements emerged but were participation increasing but how to manage in contractual agreements— generally unenforceable— perceived as disclosing international markets— opportunistic market prepaid orders were common proprietary information. mentoring by foreign selection. (conform letters of credit). customers. Time urgency Very low—opportunistic Very low—opportunistic Low—too much pressure on Medium—opportunities and behavior focused on behavior focused on best management—short delivery time dimensions in immediate results. results at the time— deadlines. international markets are international market options require attention of top were immerging. managers. Cooperation Very low—cooperation is Very low—cooperation is Low—cooperation is Medium—cooperation in perceived as a compromise— perceived as a compromise— perceived and viewed as a sales and marketing—but not limits flexibility. limits opportunities. long term obligation—needs in research and a different managerial development—necessary perspective. commitment in international markets. Commitment to quality None—new international Very low—quality is not Low—quality is specified by Low—recognized need to markets are price sensitive— important—most customers foreign customers—we try to meet quality demands— anything sells. abroad are one time meet it. quality demands require customers. attitudinal changes in management. Factors limiting foreign market entry: Attitudes, Perceptions, Preferences © G. Tesar 2015 (Madison) 5