Academic journal article European Journal of Interdisciplinary Studies

Strategies for Internationalization of Romanian SMEs. Focus on the European Market

Academic journal article European Journal of Interdisciplinary Studies

Strategies for Internationalization of Romanian SMEs. Focus on the European Market

Article excerpt

1.Introduction

The accelerated process of globalization in recent decades has determined the world economy to become increasingly integrated, strengthening the global business environment, beyond national and regional environment (Daniels, 2015). Globalization is defined in several ways, each reflecting a particular scientific or ideological position on the meaning of the concept. Two main approaches can be distinguished: globalization as a set of interdependencies - growing in recent decades - between national economies; the theory is based on considering national economy and the nation state as the basic structures of the global world and globalization as a progressive process of integration, mainly in the economic field, in a single system, structured on several levels: local (national), regional and global.

The internationalization of a company can be considered as a process with several stages, of progressive involvement in international affairs. A general model of this process includes four main stages - the internationalization of trade, the internationalization of production, company internationalization, globalization of business - each of them corresponding with specific forms of transactions and motivations. However, depending on its resources and objectives, a company can engage more or less deeply and sustainable into the international business environment (Popa, 1997).

The integration of European market, liberalization of markets, the evolution of ways of communication and exchanging information, the development of transport corridors and technology are factors that have opened new horizons and created the proper framework for new business opportunities, not only for multinational companies operating globally but also for SMEs. The current opportunities and the pressure to internationalize are two sides of the same coin. Large companies fear they may not survive unless they become players in the international market, while smaller companies see a chance to develop faster if they extend outside the country.

2.Literature Review

In recent decades, SMEs are considered to be key factor for growth, employment and economic competitiveness. According to OECD (2000) approach, SMEs are defined as entities with independent legal entities (non-subsidiary, independent firms), with a maximum number of employees; this number varies from country to country but usually the upper limit is 250 employees (North American classification, 500 employees). In other cases, financial criteria such as turnover or balance (balance sheet valuations) are used to define SMEs. The OECD estimates that small and medium companies represent about 95% of all firms (business) and have 60-70% of the employed workforce (Johnson and Turner, 2003).

According to Hollensen (2014) SMEs have three basic characteristics: the manner of organization - employees of SME work directly with the company owner / manager / entrepreneur, and they are easily influenced by them; risk taking - inexperience or lack of information about foreign markets involve decision making under risk conditions; flexibility - easy communication with customers allows the company to react in real time to their needs.

2.1.SMEs and the Internationalization Process

The involvement of companies in international affairs is the result of management decisions, which are based on a number of reasons. In this regard, in the literature, a distinction is made between two types of motivations: proactive and reactive (Popa, 1997). Reactive motivations are the company's response to the pressures coming from the business environment, such as growing competition, decreased domestic sales, excess of production capacities, proximity to customers. Proactive motivations are based on the voluntary commitment of the company to international affairs in order to capitalize on comparative, strategic or competitive advantages. In the category of these factors we include: access to resources, cost reduction, technological advance. …

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