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aluation of existing business assumptions and the development of a new ‘dominant logic’ throughout the organisation in support of sustained international involvement.
KEY WORDS Internationalisation, small and medium-sized enterprises (SMEs), learning, networks
INTRODUCTION The challenge of creating an internationally competitive economy provides the UK policy context for support to assist the internationalisation process in small and medium-sized enterprises (SMEs). Given the wider environmental trend towards global convergence, as well as the adoption of outsourcing options by firms of all sizes, international activity is increasingly recognised as a growth option for SMEs (Schmidt, 1996; Coviello and McAuley, 1999). SMEs form a significant feature of the European economy, representing 95 per cent of commercial organisations within the European Union and accounting for over 70 per cent of employment and 80 per cent of turnover (European Network for SME Research, 1994). Most small firms, in the UK as well as in Europe, aspire for survival and independence, rather than substantial business growth (Curran, 1999). The opportunities of international activity, however, are increasingly likely to form part of the survival tactics or the growth strategies for those that do wish to expand (Tonge et al., 1998). SMEs are important to the European economy and, as markets arebecoming increasingly multicultural and transnational, the European Parliament and governments of member states have emphasised the role of national and local enterprise support agencies in facilitating the successful expansion of international business activity among smaller firms (Organisation for Economic Co-operation and Development, 1997; Eyre and Smallman, 1998). The transition from domestic firm to established international player is an uncertain and dynamic one for firms of all sizes. For smaller enterprises, however, operating internationally is particularly challenging. Owner-managers, for example, develop personalised objectives based on their personal lives outside the firm as well as plans for their business. These may mitigate against the management of the rigours of growth and change (Storey, 1994). Limited financial resources and time pressures may also constrain the ability of managers in the SME to think beyond tactical and operationally urgent issues (Marlow, 1998). Informal, and often intuitive, planning and control systems that characterise the sector further inhibit the systematic development of international activity (Baird et al., 1994). As a consequence, international activity may well result in negative outcomes for SMEs (Barber et al., 1989; Storey, 1994). Against this background, this paper seeks to address three questions relating to the development of international activity in SMEs. —
What are the challenges faced by managers as their organisations become progressively international? —
What do managers need to learn to meet these challenges? —
How are these learning needs met in practice? The precise definition of what constitutes an SME is problematic, depending as much on industry sector and national location as on categories of employment size or annual turnover (Storey, 1994). Current European Union classifications suggest that a small firm is one that employs 1–49 staff, and an SME employs fewer than 250 people. Business Links networks, established in the UK to offer a service to smaller firms, offer a service to those employi