Abstract:
Why do small and medium-sized enterprises (SMEs) from lower-income countries
internationalize using high-commitment modes? In this exploratory, qualitative
study of 22 SMEs from South Africa (a middle-income country) and Malawi, Zambia
and Zimbabwe (low-income countries), we document that the SMEs typically
have both a greater tolerance for risk, likely due to the region from which they
originate, and an appetite for opportunities smaller than what would be acceptable
to multinational enterprises (MNEs) from advanced economies. This provides a
very different opportunity space for the two types of enterprises. The size of the
home country seems to matter: SMEs from middle-income countries often work
on their own and target other emerging markets, but in poorer countries, SMEs
often work synergistically with MNEs from more advanced economies, acting as
their “delivery arm” into the small markets in their immediate region. This opens up
a new way of understanding MNE-led development. Facilitating the development
of partnerships between local SMEs and advanced MNEs is a potentially fruitful
avenue that policymakers from poor countries can pursue to help their countries
open to the benefits of internationalization.
