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Exporting

What makes exporting SMEs successful?

A 2010 report by PROCOMER and FUNDES analyzes the factors that led to the successful internationalization of some SMEs, enabling them to export their products to outside markets. According to this study, thriving SMEs efficiently manage international trade, use available services to facilitate the internationalization of their products and are concerned about strengthening their business skills. They also make good use of information technologies and institutional assistance programs.

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Published by ConnectAmericas

In a study published in 2010, Guisella Chaves Sanabria (of PROCOMER) and Oswaldo Segura (of FUNDES) examined the main factors that mostly determine the success of small and medium enterprises (SMEs) that opt for internationalization and decide to export their products. Toward these ends, they carried out a study on 37 Costa Rican businesses, of which 27 were successful and the other 10 were not. The examined factors were divided into six main areas: international trade management, services facilitating internationalization, entrepreneurial skills, export strategies, information technologies, and communication and institutional support. 

1. International Business Management

One of the first relevant factors is the need of adequate international business practices. Among other things, this entails further diversification of the client base, increased markets and exporting a broader variety of products. According to the study, successful SMEs “rely on the support of representatives abroad or of stores, offices or plants overseas, while a vast majority of those that are not successful depend on a foreign distributor.”

2. Services that facilitate internationalization

Successful firms showed increased commitment to business intelligence issues: in general, they were better informed about “possible market niches, tariff preferences for their products and how to locate potential customers”. They were also more active in terms of trade promotion: they visit their clients abroad more regularly and attend international fairs and product expos. In addition, the study concludes that successful SMEs exhibited “increased diversification of funding sources (state, private and foreign banks), while those that are not successful resort to state-owned banks only.”

3. Entrepreneurial Skills 

The study also found that 40% of successful firms apply some type of quality standards compared to 20% of those not successful.” Likewise, two thirds of successful SMEs undertook training activities compared to only one third of non-successful SMEs. ” 

4. Export Strategies

In regards to export strategies, successful SMEs “hire more international trade experts; rely less on outsourcing staff; incorporate innovative information technologies to a higher extent; take additional cost control measures; seek to certify the quality system; for the most part use e-trade, and employ less new products.”

5. Information Technologies

According to the study, “60% of successful businesses said they had a website compared to only 30% of those that were not successful.” Likewise, 45% of successful firms said they had used the Internet to shop and 35% to sell online. The ratio among non successful firms was 40% and 25%, respectively. 

6. Communication and institutional support

Lastly, in general terms, “successful SMEs stated that knowledge on markets, financing and investment funds were important factors for achieving successful outcomes.” 

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