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Internationalization capabilities of SMEs: A comparative study of the manufacturing and industrial service sectors

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Abstract

Nowadays, the global economy requires developed countries to undergo industrial restructuring. In this context, industrial small- and medium-sized enterprises (SMEs) need to collaborate with the service sector to enhance their competitiveness and strategic capabilities. Indeed, industrial service SMEs have been the object of particular attention from governments since these enterprises have become a key element for manufacturing and innovation networks in developed countries. However, these firms, as well as the manufacturing SMEs they serve, now face the challenge to internationalize. This paper addresses the of the strategic capabilities required by SMEs in general, and manufacturing and industrial service SMEs in particular, to internationalize, as well as the effect of these capabilities on their export performance. These strategic capabilities are presented in a research model, which relates human resources (HR), product development capabilities and market development capabilities to export performance. In testing this model with a sample of 347 Canadian and French SMEs, similarities and differences between the two types of SMEs are highlighted.

Résumé

De nos jours, l’économie mondiale oblige les entreprises des pays développés à subir un processus de restructuration. Dans ce contexte, les entreprises industrielles se doivent de collaborer avec le secteur des services afin d’améliorer leur compétitivité. En effet, les PME de services industriels ont fait l’objet d’une attention particulière de la part des gouvernements, puisqu’elles sont devenues indispensables à la bonne marche des réseaux de production et d’innovation dans les pays développés. Toutefois, tout comme les PME industrielles avec lesquelles elles collaborent, elles font aujourd’hui face au défi que représente l’internationalisation. On doit alors se questionner sur les capacités stratégiques dont ont besoin les PME en général, et plus précisément les PME industrielles et celles de services industriels, de même que sur l’effet de ces capacités sur leur performance internationale. Un modèle de recherche qui allie les ressources humaines, les capacités en développement de produits et celles en développement de marchés au rendement à l’exportation nous permet d’identifier les similarités et les différences à cet égard entre les deux types de PME.

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Notes

  1. GoF = [ΣAVE i /n]1/2 × [ΣR i /n]1/2

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Acknowledgments

The authors would like to thank the Editor-in-Chief and the reviewers whose insights and suggestions contributed to a significant improvement in this paper.

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  1. Institut de recherche sur les PME, Université du Québec à Trois-Rivières, 3351, boul. des Forges C.P. 500, Trois-Rivières, QC, Canada, G9A 5H7

    Louis Raymond, Josée St-Pierre, Sylvestre Uwizeyemungu & Thang Le Dinh

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Summary highlights

Contributions: This study is one of the first to analyse the strategic capabilities deemed essential to the internationalization of SMEs in an integrated manner, and to do so while highlighting significant differences between manufacturing and service firms in this regard, therefore providing a number of contributions to research and practice.

Research questions/purpose: To what extent do the strategic capabilities of SMEs with regard to the development of their human resources, their products and services and their markets influence their export performance? And do the relationships between these strategic capabilities and export performance vary by sector, i.e. whether SMEs operate in the manufacturing or the service sector?

Results/findings: Testing a research model through structural equation modelling, using data from 347 SMEs in the manufacturing and industrial service sectors, allowed us to explain the combined effect of HR development, product/service development and market development capabilities upon the export performance of these firms.

Theoretical implications and recommendations: The results of this study first contribute new empirical evidence on the fundamental relationship between innovation and internationalization in SMEs. The pivotal role of R&D with regard to internationalization has been underscored for both manufacturing and service SMEs, notwithstanding the fundamental differences between product and service innovation. Another contribution is to the emerging research domains of service innovation and internationalization of services, as specific differences between industrial services and manufacturing are highlighted.

Practical implications and recommendations: The successful internationalization of SMEs is more probable when they can attract and retain qualified human resources, especially those dedicated to R&D, through renewed HRM practices. The R&D-related capabilities of SMEs in the industrial service sector deserve special attention. Furthermore, government policies designed to stimulate the internationalization of SMEs should be more finely targeted, taking into account the differences identified here between manufacturing and industrial service SMEs.

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Raymond, L., St-Pierre, J., Uwizeyemungu, S. et al. Internationalization capabilities of SMEs: A comparative study of the manufacturing and industrial service sectors. J Int Entrep 12, 230–253 (2014). https://doi.org/10.1007/s10843-014-0123-7

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