INTERNATIONALISING SMEs HELP TO GROW THE ECONOMY

A study from the European Commission has shown the benefits of internationalisation by small companies for the development of local economies.

The report "Internationalisation of European SMEs” maps the level of internationalisation of small firms in Europe and identifies the main barriers and advantages of the internationalisation process.

It found that:

• internationally-active SMEs report an employment growth of 7 per cent whereas the figure stood at 1 per cent for those without any international activities.
• there is also a strong relationship between internationalisation and innovation. 26 per cent of internationally active SMEs introduced products or services that were new for their sector in their country as compared to 8 per cent for other small businesses
• the sectors of activity with the highest share of exporting SMEs are mining (58 per cent), manufacturing (56 per cent), wholesale trade (54 per cent), research (54 per cent), sales of motor vehicles (53 per cent), renting (39 per cent) and transport and communication (39 per cent).
• only 16 per cent of SMEs are aware of public support programmes for internationalisation and only a small number of SMEs use public support.

The EU has also produced a document which proposes policy recommendations based on the situation, barriers and drivers for internationalisation as well as a good practice brochure that presents a collection of national and regional policies that tackle some of the main problems faced by SMEs in internationalisation.

One of the schemes that is recognised as good practice is the "First flight" programme run by Enterprise Ireland, which is aimed at helping companies who are new to exporting by assisting the company’s management team to develop an action plan for internationalisation. The critical aspect of the programme is that through mentoring and business support, it provides high value information that can be directly tailored for use by participating SMEs and is viewed as the first step to a long-term internationalisation and exporting strategy.

Such support schemes make a real difference to the success of small companies and it is easy to forget, in the discussion about the inward investment role of International Business Wales (IBW), that another key role undertaken by the organisation was in helping Welsh companies develop international strategies to help grow their business.

With the abolition of both IBW and FS4B (the business support arm of WAG), there will now be little support available for those businesses wishing to take the first step in developing their export potential. Focusing on six sectors, as WAG has done, is contrary to the call, by academic researchers in the field, for a more balanced policy support which takes into account the diversity of SMEs that operate, or are capable of operating, in foreign markets.

Given the recent dismal performance of Welsh companies when it comes to international trading activities, we need more, not less, businesses to export their goods and services around the World, especially given the potential impact on employment growth within the Welsh economy.