Prof. Dr. Ingo Stolz, your study is called “Guiding SMEs to international success”. Can you explain what really contributes to the success of an SME?
The internationalization process in an SME occurs differently from one in a large company. What works in a large corporation does not necessarily work in SMEs.
“Internationalization lives or dies with the CEO. For SMEs, it is not one strategic or expert decision that is decisive. The important factor is rather the CEO. The topic of internationalization cannot be delegated.”
Internationalization in SMEs is usually not a linear or strategic process, but rather an entrepreneurial process.
What exactly do you mean by “entrepreneurial process”?
As a CEO, you are in the middle of things and have to tackle them yourself. As an SME, you often start internationalization without knowing exactly where you are going. That's what I mean by it being highly entrepreneurial process. You can also say that internationalization usually starts off small, in the sense of being cost-effective and conserving resources. You often use your own network at first. For example, when a CEO travels with a customer that is active abroad in order to get an idea of the situation on site. This is a good opportunity to get informed and assess whether you can be successful there.
“This is how you approach internationalization, taking small, low-risk steps and testing what works.”
Testing, garnering experience, getting a feel for how it is there, traveling a lot yourself, going there yourself. These are the steps that take an SME further on its internationalization journey.
As mentioned above, it all especially depends on the executive manager: Are they brave or not? Are they keen to experiment? And, at the end of the process, it often takes courage to say: I'm gonna go through with it now and make the resources available. Since the SMEs’ resources are limited, this is a very brave decision. It is often at this point, with a lack of courage and follow-through, that attempts at internationalization fail.
In times of globalization and digitization, does an SME have to take a different approach to internationalization?
The core process is probably still very similar today: start in an entrepreneurial way, test and implement what you have learned and finally scale up.
“It is just the speed and opportunities that are different today.”
I guess one doesn’t have that much time for the whole process anymore. On the other hand, there are also many more possibilities: There is a good chance that my customer is already active abroad, or that my colleague already has experience in the export market chosen. In addition, it is now easier and quicker for SMEs to obtain the necessary knowledge and resources. Supporting organizations such as Switzerland Global Enterprise (S-GE) are certainly also decisive here.
In your study, you examined relevant leadership and management skills. What skills can be used to guide an SME to international success?
Our research shows that internationalization skills consist of individual skills in the following areas:
- Risk awareness
- Ability to learn with regard to organization
- Entrepreneurial spirit
- Intercultural skills
- International partnerships
- Market orientation
Skills in all these areas have to reach critical mass. That's the bad news: you've got to be an incredible jack of all trades. The good news is: you don't have to master all the skills right from the start. Skills can be built up in the course of the internationalization process. And you owe it to yourself to seek help. The study provides clues as to the areas in which one should develop themselves, what patterns of behaviors one should work on and what the best practices are to drive the business forward.
As a manager of an SME with limited time and financial resources, how do you acquire these missing skills?
Skills cannot be delegated, especially in the early phase. It is important that you get a feel for the market yourself. By traveling, you can also ideally acquire intercultural skills and set up international partnerships. When the international business grows, the skills become more specialized and can be better delegated, e.g. to a sales partner.
In the study, you write that leaders find themselves in a constant field of tension between intuitive action and rational decision-making. In which situations is it worth following your intuition?
It is worth trusting your gut particularly at the start of an internationalization process. The situation is often so complex that you cannot grasp it rationally: How does the logistics process work? What do I have to consider? Large companies invest immense effort into solving these issues. This is not possible for SMEs; in other words, SMEs need to work intuitively. In order to be able to listen reliably to your gut feeling, it is important to experience the situation yourself, e.g. abroad, and to gain experience – to refine your intuition.
About the “Guiding SMEs to international success” study
The study was written by Prof. Dr. Ingo Stolz and Sylvie Scherrer at the Lucerne University of Applied Sciences and Arts. The study examines the role of leaders in the context of internationalization in Swiss SMEs. Learn more about it here.