A How-To for Business Practitioners
There is huge potential in entering international markets. At the same time, such a step requires enormous and specialized resources and the ability to expertly deal with new cultures, different regulatory framework conditions, and novel competitors. Are we ready for the international market? And if so, where should we go first? Many small and medium-sized enterprises find themselves pondering these two central questions.
Thomas Lindner of the University of Innsbruck and Jonas Puck, a professor at WU Vienna, have dedicated numerous scientific studies to this topic. They have formulated practical tips based on their findings, which will provide guidance and support particularly to small enterprises, and have developed tools that make recent research findings accessible and applicable for smaller firms.
Current research highlights three fields that determine whether a company will be well advised to pursue internationalization:
Based on their research and experience gained from jointly accompanying the internationalization projects of numerous SMEs, Jonas Puck and Thomas Lindner have developed a simple tool to measure what they term “Internationalization Readiness.” As a first step, the tool quickly generates a profound and holistic overview of the challenges and opportunities a given SME would encounter on the international stage. These results can then easily be translated into concrete measures to make the enterprise fit for international markets.
SMEs are the backbone of the Austrian economy. Without international business, there is often a limit to growth in Austria. This is why we enjoy working with SMEs and supporting them in their internationalization endeavors so much. In this process, we also gain very relevant input for our research.
Readiness is one thing, but it’s just as essential to identify the suitable markets to successfully go global as a next step.
Once entrepreneurs have gauged the market potential, they can next look at the question whether expanding to a given target country aligns with their company’s current business activities and structures. In this respect, three things are particularly relevant.
In the course of several research projects jointly realized at WU Vienna and the University of Innsbruck, Thomas Lindner and Jonas Puck have investigated a wide selection of aspects that shape market selection mechanisms.
Among other things, we found out that many SMEs do not select markets strategically but based on (random) requests and network contacts. They then end up investing a lot of money in the wrong markets: money that likely could have been used much more profitably in other countries.
Modern data analysis methods relying on artificial intelligence and machine learning combined with big data can go a long way in providing a good assessment of potential markets quickly and at relatively low costs. “In our research but also in our work with companies, we have incorporated new data analysis methods at a very early stage. Especially small companies can gain a competitive edge regarding both costs and information that should not be underestimated,” Lindner explains.
“It’s true that the challenges of international markets are significant, particularly for smaller companies. At the same time, research offers numerous solutions to tackle these challenges,” Thomas Lindner points out. “And these are not only helpful but also affordable for small companies: for me, there’s no doubt about the huge opportunities they can bring to SMEs,” Jonas Puck adds.
Read also how legal knowledge for managers of SMEs can contribute to more security and cost savings.