Current Operational Practices of U.S. Small and Medium-Sized Enterprises in Europe
Prater, Edmund, Ghosh, Soumen, Journal of Small Business Management
This article presents the results of a survey of all U.S.-owned small and mediumsized enterprises (SMEs) with physical facilities in Europe. It is a snapshot of the role of key strategic, tactical, and operational elements of U.S. SME globalization in Europe. It presents descriptive results regarding drivers of expansion, barriers to entry, entry strategies and current operating strategies, growth strategies, operational barriers, and the use of strategic alliances by SMEs in Europe. The findings are also compared with the literature on large firms. This allows the reader to see the distinct differences between small and large U.S. firms operating in Europe.
The global market has traditionally been the battlefield of large, multinational corporations (MNCs). However, the past 20 years has witnessed the evolution of a new global manufacturing environment, with firms of all sizes now competing globally in order to obtain new competitive advantages. Unfortunately, most global operational research has focused on the practices of MNCs and neglected the fact that small and medium sized enterprises (SMEs) and MNCs do not operate in similar ways. This paper helps fill that gap by presenting the results of a survey of all U.S.-owned SMEs in Europe and detailing their key strategic, tactical, and operational elements.
The literature's neglect of smaller firms is ironic because, in developing countries, SMEs account for more than 90 percent of all jobs, sales, and value added. In developed countries, SMEs account for over 50 percent of these measures (UN 1992). In fact, firms with fewer than 500 employees employ almost half of the U.S. workforce, and over 88 percent of U.S. firms have fewer than 20 employees (Fiegenbaum and Karnani 1989). In addition, U.S.-based SMEs are increasingly active in global markets. A survey of over 400 winners of the Entrepreneur of the Year (EOY) Award found that 56 percent of the respondents were active in the global arena and that another 39 percent plan to expand into new global markets (Ernst & Young 1995).
The objective of this paper is to further investigate the salient features related to some of the strategic, tactical, and operational elements of SMEs as they globalize. Although some research has looked at general SME issues and foreign direct investment, most studies have focused on large multinational corporations or small firms that export directly (Czinkota and Johnston 1983). This neglects the operational needs of those firms that have moved beyond exporting to establish a physical presence in markets abroad. For those SMEs that have moved beyond direct exporting and actually placed facilities overseas, research on understanding the strategic and operational aspects of the globalization process is virtually missing in the current literature. This is of concern as there are differences with respect to both general and specific operational issues (Cagliano, Blackmon, and Voss 2001).
This paper presents the results of an investigation of the role of key strategic, tactical, and operational elements of U.S. SME globalization in Europe. It presents descriptive results regarding drivers of expansion, barriers to entry, entry strategies and current operating strategies, growth strategies, operational barriers, and the use of strategic alliances by SMEs in Europe. The findings are also compared with the literature on large firms. This allows the reader to see the typical differences among these factors between small and large firms operating in Europe.
There are several reasons to focus on Europe. First, for U.S. SMEs, Europe has been the most popular location for overseas expansion because of the relative similarities in markets, language, and culture in comparison with other areas of the world. Second, we feel that the overall globalization process of U.S. SMEs in the world can be effectively studied by focusing on U.S. SME globalization in Europe because of the longer history of U.S. firms in Europe compared to other regions of the world. Third, focusing on Europe also helps to keep the study tractable and manageable as gathering data on a worldwide basis for U.S. SMEs is extremely difficult. The data collection for this study was conducted with the collaboration of the Lorraine (France) Development Agency, the Euro Information Center, and the Center for International Business Education and Research (CIBER) at Georgia Tech.
International Expansion: Theory versus Practice
There are several models that have been used to describe how firms expand into the international arena. The product life cycle model (Vernon 1966) focuses on product innovation and scale economies within an individual firm. The Uppsala model (Johanson and Vahlne 1977), also known as the Stage Theory, focuses on a logical and gradual process of internationalization by companies. The Monopolistic Advantage Theory (Hymer 1976) is based on an economic view of optimal costs and revenues. It posits that firms will internationalize after consolidating an economic advantage (for example, low cost or increased market share and revenues) in their domestic market. On the other hand, the core of the Oligopolistic Theory (Knickerbocker 1973) is risk reduction. Specifically, the internationalization of a business is prone to risk. Firms wish to reduce this risk as much as possible. In order to do so, they will imitate the actions of other members of their oligopoly. The goal is that by imitating other firms' actions, they reduce the risk of being different (Oviat and McDougall 1995, 1994; McDougall, Shane, and Oviatt 1994). However, the Network Theory (Jarillo 1988; Thorelli 1986) argues that markets are basically relationships between customers, suppliers, competitors, manufacturers, and others.
These models are applied regularly to large MNCs. However, researchers have argued that these models cannot be applied directly to smaller firms in most cases. For example, Dodge, Fullerton, and Robbins (1994) specifically mention that "there is a need to modify the paradigm which characterizes the stages of growth progression and the resulting sets of problems encountered ... It is readily apparent that competition, and not the stages of the organizational life cycle, is the dominant dimension in bringing about change in the relative importance of identified problems for small business ... small businesses with a short-term perspective do not fit into the hypothesized model of the organizational life cycle." Recently, research has begun to address this issue. For example, a six-stage model of small business internationalization has also been developed (Dollinger 1995). This model moves from passive to active exporting and then to developing physical facilities abroad. In addition, Gankema, Snuf, and Zwart (2000) argue that stage theory can be adapted (within certain limits) to SMEs. However, the key question is still left unanswered: if the stages and growth progression of small firms differ from larger firms, then how do the operational decisions and choices differ?
As an example of specific differences, let us look at a firm's global supply chain structure, which has an important bearing on its global competitiveness. A firm's global supply chain structure deals with the management and strategic positioning of the different elements of its supply chain [research and development (R & D), manufacturing plants, distribution centers, suppliers, and sales centers] around the globe. Traditionally, MNCs have used self-contained logistical structures. However, MNCs have now begun to look at their global supply chain as an integrated unit. This has evolved to where special product lines are transported using optimized logistics centers. A logistics center is an integrated system that uses fewer carriers, and outsources or joint ventures many of its functions to third-party providers (Goldsborough 1992). Contrary to the current practices of large MNCs, a pilot study conducted by the authors found distinct differences for smaller firms. Of those firms that were either expanding into Europe or were expanding current operations within Europe, very few considered out-sourcing or joint/venturing agreements. Similarly, Roth (1992) found that medium-sized firms opted for "selective globalization" where they focused on a subset of the supply chain. This behavior is provoked by the cost of configuring and coordinating integrated logistics systems to support the entire global supply chain, even though the best SMEs do focus on their entire supply chains (Anderson and Fagerhaug 1999). This is just one specific example of how SME operations overseas differ from larger firms. The goal of this research is to help identify other operational differences between SMEs and MNCs in the international arena and lay the groundwork for further research.
The initial step of the research was the construction of a mailing database of all U.S.-owned SMEs with physical operations in Europe. These operations included manufacturing, R & D, or ware-housing/distribution facilities. This step is a key hurdle that has possibly limited research on SMEs in the past as SMEs frequently change status. For example, 71 percent of all start-up firms in the U.S. fail within their first eight years of existence (Small Business Administration, U.S. 1995). Of those that initially succeed in foreign markets, many are acquired by locally owned firms, whose ownership and management change fairly often. Larger firms, on the other hand, are relatively stable, thus easing the process of developing a mailing database. In this case Dun and Bradstreet succeeded in combining several sources to develop the needed mailing database of all U.S.-owned SMEs with physical operations in Europe.
The survey instrument was mailed to every U.S.-owned firm with some type of manufacturing operation in Europe, thus eliminating issues of sample selection bias. After removing surveys that were not complete or undeliverable, we had the following mailing and response statistics, as shown in Table 1.
The overall response rate was 8.0 percent. Although this response rate is not as high as one might wish, this survey is the only one to the authors' knowledge that surveys the entire sample of U.S. SMEs with manufacturing operations in Europe. The problem of somewhat low response rates in international data collection efforts has also been noted by other empirical studies of this nature (Klassen and Whybark 1994), which found that achieving high survey response rates in studies addressing an international environment is difficult. Another contributing factor may have been that the survey did not go out under a specific group letterhead. Instead, the survey was sent out under a joint letterhead of the European Union (EU) Information Directorate and the CIBER office of Georgia Tech. Although confidentiality was assured, there is a possibility that U.S. firms may have been reluctant to disclose any information to an official EU body for fear of it being turned over to their European competitors.
For the usable surveys returned, Table 2 shows the percentage responses by industry type. The Mann-Whitney nonparametric test was run to test the difference between mean response rates for firm sizes in each group of Standard Industry Classification (SIC in Table 2) codes. None of the differences were found to be statistically significant at the 0.10 significance level, thereby indicating the absence of any specific industry bias in the response rates.
The responses were also checked for country bias. Although the majority of responses came from Western European firms, this is also where the majority of U.S.-owned firms in Europe are located. Thus, no statistical country specific bias was found among the sample responses.
To determine the possibility of nonresponse bias in the survey data, we followed the method recommended in Armstrong and Overton (1977) and Lambert and Harrington (1990), where statistically significant differences were tested for in the responses of early and late waves of the returned surveys. The last ten survey items in the analysis were considered to be representative of the nonrespondents. The sample of 104 usable surveys was split into two groups based on early (94) and late (10) returns. T-tests were performed on these two groups. The results of these tests indicated no significant differences among the two groups, thus suggesting that nonresponse bias is not a problem in this study.
Survey Validity Issues
During the design of the survey instrument, several validity measures were addressed. These are content, face, and criterion validity (Fink 1995). In this study, content validity was established by a pilot survey and on-site interviews conducted by the authors, as well as the findings from the EOY survey (Ernst & Young 1995). In addition, the survey was pretested with several global logistics and operations managers. (1) The logistics and operations managers also provided content and face validity. The criterion validity of the survey was established by using the EOY study (Ernst & Young 1995) with U.S. results from 1990-1995 and the Canadian results from 1995. Also, all aspects of the survey were reviewed and tested through on-site interviews of U.S.- and locally owned firms throughout Europe. These interviews were conducted by using the case study guidelines given in Chetty (1996).
As mentioned earlier, the intent of this study is to perform an exploratory analysis in order to identify the key factors critically impacting the European entry and operations issues faced by U.S. SMEs with physical operations in Europe. These factors are compared to those previously identified in the literature for large firms so that comparative differences can be observed. The key issues influencing the internationalization of SMEs that are addressed in this study are as follows:
* country location,
* drivers for European expansion,
* barriers to entry,
* current operations strategies,
* growth strategies,
* key issues in European operations, and
* use of strategic alliances.
In the remainder of this section, findings and analysis of the survey data are presented to shed light on the above factors that are important determinants of the SME globalization process.
Country Location in Europe
As shown in Figure 1, the preferred location for U.S. SME entry into Europe is the United Kingdom. This is followed by the Benelux region, France, and Germany (multiple choices were allowed from each respondent). Most practitioners seem to agree that the reason for expansion into the United Kingdom is based on the historical ties between the United Kingdom and United States. This is also supported by the "psychic distance" aspect of the Uppsala model (Johanson and Vahlne 1977). The key issue is the "psychic distance" to these foreign markets, that is, the differences between two countries in language, culture, business practice, and so on. Smaller firms feel comfortable moving to a country with a similar culture and language. French firms expanding into the North American market work similarly by first moving into French Quebec. The Benelux region (the combination of Belgium, the Netherlands, and Luxembourg) is another popular area for U.S. SMEs because of its logistics expertise and history of international trading practices. France and Germany are popular because of their centralized location and access to other European areas.
[FIGURE 1 OMITTED]
Drivers for European Expansion
In trying to develop a "snapshot" of SME globalization practices, it is interesting to identify the drivers influencing initial entry. The key drivers that smaller firms considered when entering the European market are shown in Table 3. The responses were based on a five-point Likert scale with 1 = not at all important and 5 = very important. The bars on the right side represent the results of the Fisher multiple comparison test for differences in means (each bar represents groupings within which the differences in means are not statistically significant). Duncan's and Tukey's multiple range tests were also performed. However, the Fisher test was slightly more discriminatory and provided more distinct groups.
Of course, the most important driver of entry to European markets is access to new markets. However, there are distinct differences between the drivers for SMEs found here and those found for MNCs previously in the literature. Specifically, one key difference from MNC drivers is that of the need to follow clients. Our onsite interviews with small firm owners have borne out that this is a key issue that is overlooked by most research. Many firms end up overseas not because of some strategy or long-term plan. Instead, they are forced there to keep a business presence with a current client. In some cases, small firms have no choice in the matter. A larger firm determines to move to a particular overseas location and the smaller supplier is simply expected to follow. Thus, in many cases, small firms have far less control over their international plans and strategies than larger MNCs. As an example, recent research (Meyer and Skak 2002) found that an SME's business network and plain serendipity were major drivers in entering Eastern Europe.
It is expected that expanding into a new overseas market entails overcoming several barriers. The main entry barriers experienced by U.S. SMEs expanding into Europe are listed below in Table 4, along with the Fisher multiple comparison results.
Some of the issues on this list come as no surprise. For example, it is well established in the literature that knowledge of foreign languages and cultures is an important factor for firms expanding overseas (Barkema, Bell, and Pennings 1996). In addition, management's working knowledge of international markets and related issues is important to export success (Moini 1995). Similar research has been carried out for larger firms. For example, Klassen and Whybark (1994) show the following as the key issues (in order of importance) for MNCs:
* lack of a global view,
* manufacturing strategy,
* culture/language differences,
* managing global logistics,
* managing factory networks,
* organizational structure,
* transfer of management skills,
* performance measurement,
* material sourcing,
* international communication, and
* foreign exchange management.
However, there are specific differences between Klassen and Whybark's issues and those for SMEs. First, managing foreign exchange risk ranked last for MNCs, while it is among the second tier of concerns for SMEs. This may be attributed to the fact that managing short-term cash flow is a critical issue for smaller firms. In fact, cash flow problems are often the primary cause for the failure of SMEs (Small Business Administration, U.S. 1994). In an international market, the fluctuations of exchange rates can be weathered by larger firms but have a much more negative impact on the financial resources of SMEs. This has direct implications on the ability of an SME to export and physically expand into international markets (Westhead and Wright 2001).
International communications was ranked very low for MNCs, but among SMEs it is second in overall importance. This probably reflects the ability of larger firms to set up corporate communication networks via satellite or microwave. Larger firms can also rotate teams of individuals between the home office and foreign divisions, thus keeping lines of communication open between organizational units. These resources are usually not available to SMEs, although the advent of the World Wide Web has provided greater communications resources to SMEs.
Finally, the need to develop a manufacturing strategy ranked high for MNCs but low for SMEs. This reflects issues addressed in the next section, namely that SMEs often tend to ignore long-term strategic planning, and focus more on short-term operational issues.
European Entry and Current Operating Strategies
Once a firm has made the strategic decision to locate facilities overseas, it must then determine its entry strategy (Hill, Hwang, and Chan 1990). We were interested in identifying not only the SME's entry strategies, but also the operations strategies that were currently being used for operations and competitive advantage. The responses to those questions were evaluated and are shown in Tables 5 and 6, respectively. Note that the mean score reflects a binary value of 1 (the strategy was used) or 0 (the strategy was not used). Each firm could list multiple strategies.
In comparing the entry strategies with the current operations strategies, there seems to be very little difference. There is a growing use of more capital intensive strategies, such as establishing overseas subsidiaries and manufacturing facilities, following an SME's entry into Europe. However, as indicated by the Fisher test, this does not appear to be statistically significant.
In terms of initial strategies that SMEs use to expand into Europe, the key issue seems to be cost. It is not surprising that entry strategies with the least investment and capital intensity were the most preferred by SMEs. Operational strategies for SMEs tend to focus on low-cost options such as using local management or exporting. Of course, this can have negative long-term as well as short-term effects (Bernstein 2001). However, MNCs have the financial capital to use joint ventures or buyouts as options in their international expansion.
These findings are interesting in that they seem to indicate that there is no strong connection between entry strategies and current operations strategies. This lends support to previous research on SME strategy. Specifically, Bantel and Osborn (1995) found that smaller firms were more likely to have no identifiable strategy. They also found that SMEs tend to concentrate on means rather than the end in their operations. This may be due to the amount of competition and uncertainty that a firm has to deal with. In addition, Matthews and Scott (1995) have found that formal planning among SMEs is inversely proportional to the uncertainty in their business environment. Thus, when uncertainty is high, SMEs tend to rely on "gut instinct" rather than a formal planning process. Other research has viewed this lack of a planned strategy as "serendipity on a firm's growth path" (Meyer and Skak 2002). One other issue to note is the lack of use of joint ventures (JVs). While U.S. firms do not use joint ventures, this does not mean that JVs are not used in other global areas. In China, for example, when guanxi (personal relationships) are vital to business, it has been shown (Worldsources 2000) that SMEs do make use of JVs to a large extent.
Once a firm has established a presence in Europe, its next goal is usually to establish a growth strategy in the short to medium term. The growth strategies that were identified by the respondents are shown in Table 7 and seem to match very well with the data gathered on the EOY Award winners (Ernst & Young 1995).
The top three strategies are in the same statistical grouping and are not surprising. Introducing new products and expanding into new markets are fairly well established growth strategies for firms. However, it is interesting to note that upgrading operations technology is not used as a frequent growth strategy by SMEs. This differs from larger firms operating in the international arena. For example, Bowersox et al. (1989) found that leading edge MNCs emphasize their operational and logistics capabilities. They provide extra support for these areas to obtain a strategic advantage (Bowersox 1987).
In addition to entry, operational, and growth strategies, there are also several operational challenges that SMEs must deal with. These operational challenges can be quite different than those encountered by the firm in its home market. Table 8 lists the key operational challenges identified by the SME respondents.
Obtaining good financial data was a major operational issue identified by SMEs. As mentioned in the previous section, this is probably attributable to the fact that managing cash flow is a critical issue for SMEs. In contrast, MNCs not only have larger cash reserves than SMEs, but financial institutions are more willing to advance credit to MNCs. While this issue is frequently challenging in an SME's home country, it can be particularly exasperating in foreign countries (U.S. Small Business Administration 1994).
Another key operational challenge is achieving the desired attributes of quality, given its critical importance for attaining market success. In this case, it seems that SMEs have heeded the market pressure for greater emphasis on quality issues as previous research has argued for (Azzone and Cainarca 1993). Dealing with environmental issues did not score that highly. While it has been argued that environmental issues are important (Daugherty, Autry, and Ellinger 2001; Bartlett and Ghoshal 1991), our on-site interviews showed a wait-and-see attitude among SMES. Specifically, only SMEs with operations in Germany tend to place a great deal of emphasis on environmental issues. This is because German law has historically stipulated that firms deal with reverse logistics requirements. Although similar laws have been passed for the entire EU, these are being phased in. Most SMEs seem to be waiting until the last moment to address any detrimental environmental impacts of their daily operations. Of course, this neglect of environmental issues is not a new phenomenon for SMEs (Biondi, Frey, and Iraldo 2000).
Another issue is that of outsourcing business functions. There is a wealth of literature that argues for the benefit of outsourcing business functions for large firms in order to reduce overhead, focus on core competencies, and manage the supply chain (Goldsborough 1992; Wyatt 1992). While one would expect that the same issues would hold true for SMEs, we find that outsourcing ranked last (statistically significant) among operational challenges. It is possible that this result for SMEs is attributable to the issue of control and coordination. Outsourcing business functions often increase the dissemination risk of proprietary knowledge and know-how, and SMEs therefore tend to be more careful about this. However, our on-site interviews indicate that SMEs with higher information technology capabilities are more likely to outsource some of their business functions. This is due to their increased ability to track, control, and coordinate these activities. However, as has been shown before (Rishel and Burns 1997), not all SMEs integrate their technical capabilities in order to support their operations.
Data were also gathered on 30 different business operations that could be outsourced or collaborated via joint venture agreements. These data include information on the typical contract lengths for each of these 30 business areas if they were outsourced. No SME had any contractual agreement that was over 12 months long. This supports the idea that SMEs generally do not tend to make use of strategic alliances for collaborative operations. Research has found that while formal cooperation such as strategic alliances and joint ventures are common for large firms (Wyatt 1992; Bowersox 1990), SMEs in general prefer flexible and informal relationships (Malecki and Tootle 1996). However, it should be noted that this particular aspect of SME behavior may not be applicable to other regions. As mentioned previously, recent research on SMEs in China (Worldsources 2000) found the use of joint ventures and strategic alliances to be very useful. This is supported by the small-business stage model outlined in Rowden's (2001) article, which argues that SMEs should use joint ventures and strategic partnerships for foreign production. This points out the fact that the operational differences between SMEs in different international arenas may be just as great as those differences between SMEs and MNCs.
This research provides a "snapshot" of the globalization practices of U.S. SMEs in Europe. This was carried out by using empirical data collected from a survey of all U.S. SMEs that have moved beyond exporting to setting up physical operations in Europe. While differences between SMEs and MNCs have been noted before, research has tended to focus on differences in overall structure and responses to different economic environments. This paper not only provides information on some strategic aspects of operations but also shows distinct differences of a daily operational nature. It also points out specific areas for further research. These include:
* Regarding entry drivers for European expansion, it was found that many times SMEs are pulled overseas by being required to follow their clients. Thus, SMEs may need to be proactive in determining what the long-term plans are of the firms they supply. This would provide them with some degree of "heads up" planning about the possibility of expanding overseas. It would be interesting to determine the percentage of SMEs (if any) provided with this type of long-term planning information.
* Regarding entry barriers, international communications between overseas facilities is the second biggest barrier that SMEs face, whereas MNCs list this very low on their problem list. Thus, it would be helpful to conduct research into what structural and organizational systems can aid SMEs in coordinating international operations.
* U.S. SMEs did not take advantage of outsourcing of operational functions such as logistics even though it has been argued for years that this is an efficient operations strategy. Research has been carried out on the factors that influence logistics outsourcing by large MNCs (Rao and Young 1994). However, it is necessary to determine what barriers SMEs face in logistics outsourcing and what factors help support its use.
* Another major difference between SMEs and MNCs was found in strategic alliances. While these tend to be used in many categories by MNCs, we found no examples of small firms making use of any type of long-term alliance in Europe. This is probably due to the need of SMEs to keep relationships flexible in order to respond quickly to changing business conditions. However, it has been shown that strategic alliances are used by SMEs in China (Worldsources 2000). Thus, it would be helpful to understand what specific regional factors facilitate the use of JVs and strategic alliances.
* SMEs in Germany have begun to deal with environmental issues such as reverse logistics. Yet other SMEs throughout the EU delay resolving these issues until required by law. As reverse logistics is "fast becoming a competitive necessity" (Daugherty, Autry, and Ellinger 2001), there is a need to determine if there are other governmental policies or business inducements that can facilitate SMEs in embracing environmental issues.
Table 1 Survey Statistics Total Usable Undeliverable (a) Nominal Survey Population Surveys Returned Response Rate 1,394 104 98 8.0 percent (a) This includes surveys that were undeliverable because the firms are no longer in business and those that are no longer U.S. owned. Table 2 Survey Response Percentages by Industry Type SIC Codes Small Firms (percent) 10-19 3.2 20-29 6.5 30-39 32.3 40-49 3.2 50-59 54.8 Table 3 Entry Drivers for European Expansion Mean Entry Driver Score * Access to New Markets and Potential Market Growth 4.74 | * Follow Clients 3.40 | * Availability of Resources 2.87 | | * Product Maturation 2.74 | * Access to Technology 2.67 | * Cost of Resources 2.64 | * Increased Domestic Competition 2.46 | | * Decline of Demand in U.S. Market 2.05 | * U.S. Regulations, Taxes, and Laws 2.02 | * Response to Foreign Firm Entering the U.S. Market 1.82 | Table 4 Entry Barriers Mean Entry Barrier Score * Dealing with Culture/Language Differences of the Target Markets/Countries 3.92 | * International Communication between Facilities 3.56 | | * Management's Lack of a Working Knowledge about 3.38 | | International Markets, Practices, Sources, | | Destinations, and Politics * Foreign Exchange Rates 3.33 | * Developing an Effective Organizational Structure in 3.26 | Your Facilities in Europe * Managing Global Logistics 3.20 | * Transfer of Management Skills from the U.S. to Europe 2.59 | * Developing Adequate Performance Measurements for 2.59 | Operations in Europe * Developing a Long-Term Manufacturing Strategy and 2.53 | Applying It to Day-to-Day Operations | * Continuing Material Sourcing from the U.S. or 2.53 | Developing New Material Sources in Europe | * Managing Factory (Production) Networks 2.28 | Table 5 Initial Entry Strategies Mean Entry Strategy Score * Using Locally Hired Management 0.46 | * Alliances with Foreign Distributors 0.44 | | * Exporting 0.28 | | * Overseas Sales Office 0.28 | | * Overseas Subsidiaries 0.28 | | * Licensing Programs 0.13 | | * Joint Ventures 0.13 | | * Overseas Manufacturing Facility 0.13 | | * Foreign Acquisition 0.10 | * Technology Alliances with Foreign Companies 0.02 | * Alliances with Foreign Suppliers 0.02 | Table 6 Current Operations Strategies Mean Current Operating Strategy Score * Using Locally Hired Management 0.59 | * Overseas Subsidiaries 0.54 | | * Overseas Sales Office 0.51 | | * Alliances with Foreign Distributors 0.38 | * Exporting 0.26 | | * Overseas Manufacturing Facility 0.18 | | * Licensing Programs 0.12 | | * Foreign Acquisitions 0.12 | | * Alliances with Foreign Suppliers 0.08 | * Joint Ventures 0.08 | * Technology Alliances with Foreign Companies 0.05 | Table 7 Growth Strategies Mean Growth Strategy Score * Introduce New Products/Services 3.64 | * Expand into New International Markets 3.33 | | * Expand into New European Markets 3.28 | | * Upgrade Financial Systems and Information 3.79 | | * Upgrade Operations Technology 2.77 | | * Acquire Another Company 2.08 | * Merge with Another Company 1.18 | Table 8 Operational Challenges Mean Operational Challenges Score * Obtaining Good Financial Data 3.80 | * Improving Quality 3.69 | | * Improving Automation/Technology 3.38 | | | * Managing Inventory 3.12 | | | * Dealing with Environmental Issues 3.10 | | * Having Reliable Suppliers 2.92 | | * Improving Turnaround Time 2.79 | * Outsourcing Business Functions 2.15 |
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Dr. Prater is assistant professor in the Department of Information Systems and Operations Management at the University of Texas at Arlington. His current research interests include international supply chains, small and medium-sized enterprises, and logistics outsourcing.
Dr. Ghosh is professor of operations management and director of the Center for Quality and Change Leadership in the DuPree College of Management at the Georgia Institute of Technology.…
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Publication information: Article title: Current Operational Practices of U.S. Small and Medium-Sized Enterprises in Europe. Contributors: Prater, Edmund - Author, Ghosh, Soumen - Author. Journal title: Journal of Small Business Management. Volume: 43. Issue: 2 Publication date: April 2005. Page number: 155+. © 2002 Journal of Small Business Management. COPYRIGHT 2005 Gale Group.