Success factors for successful internationalization
The study highlights the importance of strategies based on a company's individual strengths for successful internationalization.
International management experience is just as relevant as innovation. However, the entrepreneurs themselves are the most important factor for success in internationalization.
Ongoing increase in commitments abroad
The average sales volume of all SMEs surveyed amounted to CHF 40.74 million. On average, slightly less than half is generated in foreign markets. In late 2018, the surveyed SMEs were active, on average, in almost 20 countries on 3 continents.
Companies begin by expanding into neighboring countries before exploring more distant regions such as Asia, North America and Eastern Europe. After just one year, SMEs serve an average of 4.1 foreign markets on 1.5 continents, after three years 6.6 foreign markets on 1.8 continents and after five years 9.2 foreign markets on 2.2 continents.
The relative share of exports in total sales does not necessarily grow with the size of the company. Micro-enterprises have an average export share of 51%, small enterprises are significantly below that with an average of 38% and even medium-sized enterprises achieve slightly less with an average of 47%.
Internationalization increases the level of innovation
The study shows that international activities are indispensable for the well-being of the Swiss economy and in particular of SMEs. Internationalization generally increases the innovativeness of SMEs due to the associated learning effects.
The SMEs surveyed stated that on average the effects of their international business can most clearly be seen in product innovations (68.3%), new procedures/processes (64.5%) and an increase in staff competence (63.2%). At the micro-enterprises, business model innovations outweigh an increase in capability potential among staff.
Direct export is the most common but not the most successful sales channel
As in the previous studies on the international activities of Swiss SMEs, direct export is the most common but no longer the most successful distribution channel among the Swiss SMEs surveyed. Indirect exports via agencies and sales market assistants were the second most frequently mentioned but were rated with an even lower success value. Subsidiaries are increasingly being used. For the majority of SMEs surveyed, bulk buyers also represent a more successful sales channel than direct export.
Internationalization via global cities
The study confirms SMEs' preference for "hubs." When entering geographically and culturally more distant markets, such as Japan, Central America and Southeast Asia, SMEs usually have the greatest success in megacities such as Tokyo (54.1%), Mexico City (51.5%) and Singapore (47.3%). The list of top-ranking cities barely changed since the last SIES report.
The effects of digitization and research and development
The e-commerce turnover figures for Swiss SMEs are relatively sobering. The share of Internet sales is between 4-5% for the SMEs surveyed, with medium-sized companies reporting the lowest level at 4.1%. Only a few rely on digitization to fundamentally change their business models. Big data has thus far played a marginal role.
The degree of digitization of an internationally oriented SME is an interesting indicator. On the one hand, companies that increasingly invest in research and development are significantly more digitized; on the other hand, SMEs with a higher degree of digitization increasingly pursue exploratory goals.
Importance of informal networks
Despite their strength, SMEs depend on specific external support. Law firms are mentioned first, at 36.4%, followed by private individuals (33.0%). This confirms the importance of informal networks, which are indispensable for micro-enterprises in particular. The importance of this support is inversely proportional to a company's size: the smaller the company, the more important help from private individuals is.
The use of external services over the past three years has been characterized by participation in trade fairs (43.6%) and information events on international business (42.0%). Tailored informational events on countries and business practices are in third place, followed by network events on international expansion (22.7%).
Internationalization as a driver and success factor
Statistical analysis of the data shows a positive correlation between the number of countries serviced, research and development expenditures and relative performance. The more countries covered and the higher the R&D expenditure, the higher the relative performance reported by SMEs. The key to success is a diversified competence portfolio for decision-makers in order to evaluate entrepreneurial opportunities and realize innovations while still striving for operational excellence.
The findings of the present study show that SMEs can successfully internationalize in the coming months and years, provided that their owners and managers remain proactive and simply believe in what they are doing.
Swiss International Entrepreneurship Survey (SIES)
The Swiss International Entrepreneurship Survey 2019 (SIES 2019) is published every three years by the School of Management Fribourg in partnership with Swiss Export Risk Insurance (SERV). The study examines the international activities of Swiss SMEs, particularly with regard to their business, customers and growth, and documents new trends.
The results are based on responses from founder-CEOs (26.1%), CEOs (29.7%), successor-CEOs (22.0%), senior management (9.2%) and other individuals (13.0%) involved in strategic decisions. The average sales volume of all SMEs surveyed amounted to CHF 40.74 million. On average, slightly less than half (43.45%) is generated in foreign markets.