Entrepreneurial SMEs adoption of Evolutionary strategies

The focus on entrepreneurial SMEs’ internationalization strategies is imperative since SMEs role in the economies is very crucial. Among the OECD countries, SMEs represent 95% of all enterprises and generation of more than half of employment of the private sector (cited by Kumar, Antony and Douglas 2009). According to the OECD’s statistical findings, SMEs from the most industrialised countries have of late accounted for substantial export proportions (Knight 2001).These internationalisation trends of SMEs are anticipated to gain increased momentum owing to the increased integration of the global economy coupled with the continued technological advancement and the decline of government-imposed trade barriers (Lu 2001).

Business internationalisation according to Welch and Luostarinen (1988) is the process in which organizations get involved directly or indirectly in international operations. It is the process of bringing together resources and strategies and adapting them to international environment (Calof and Beamish 1995, cited by Javalgi and Todd 2011). It is considered as the process is been considered to combine different resources within the enterprise (Gankema, Snuif and Zwart 2000). Research has shown that SMEs have adopted different approaches to approach internationalisation. These approaches include; network approach, stage and international entrepreneurship approach. It is studied that for these approaches to be effective, they should be resource based to sustain establishment of firm’s international activities (Ahokangas 1998). The incentive to venture into international markets through exportation and creation of subsidiaries helps firms increase rents as well as increase access to technology with an ultimate goal of remaining competitive

According to Bell, Crick and Young (2004), there are three main factors that affect the internationalisation of SMEs. Among these, management and ownership issues take precedence. This is due to the fact that ownership influences a firm’s business strategies as well as their international focus. Second, market and product development strategies affect SMEs’ internationalisation. Further, the introduction of new technology processes direct SMEs’ re-examination of their strategic directions.

Internationalisation takes different entrepreneurial options to warrant efficiency and competitiveness. As an internationalisation option, joint venture is said to be an agreement between parties to develop a new entity by contributing equity where parties exercise control over the enterprise and share rents as well as benefits, costs and expenses subsequently (Ippaso 2002).The main purpose of joining ventures is to bring a combination of expertise and wealth resources to converge to one entity with joint management in a synergistic manner. In addition, other benefits include profit and loss sharing as well as joint proprietary interest. An example of this option is Microsoft and GE joint venture as well as Cadbury Schweppes PLC Carlyle Group joint venture. Joint ventures are considered to help entrepreneurial SMEs grow and expand into new markets although they can be complex and may require reliable relationships within (Ippaso 2002).

Some of the advantages identified for this option include: joint ventures can help enter previously barrier bound entries, they can also provide a platform to access expertise without hiring more staff, and they can leverage on existing technologies and share the risks of uncertainly high-risk venture (Inkpen and Crossan 1995). In addition, joint ventures can help establish SMEs presence in new and untapped markets and especially in the international level. Although the benefits and merits of joint ventures make it much desirable an option, some of the pitfalls can be so detrimental. Joint ventures can be grounds to setting unrealistic business objectives that may not be aligned to common goals and poor tactical decisions can be made when the member companies’ roles are misunderstood as well as complexities in the adoption and integration of differing cultures, styles of management and working relations.

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