Barriers in the internationalization of Podlasie SMEs – GoSmart BSR project experience

Barriers in the internationalization of Podlasie SMEs – GoSmart BSR project experience

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Last Updated May 15, 2020

There is no unambiguous definition of internationalization although a lot of theories that has made great contribution to enterprise internationalization have been propounded. Internationalization is commonly understood as an extending the company's activity to foreign markets to ensure a better competitive position. The company's operation on the local market differs from its operation on foreign markets. Examples of many companies indicate that internationalization processes, even if they enable them to gain new markets, involve the need to overcome various types of barriers. The aim of this paper was to identify barriers of internationalization among SMEs in Podlaskie voivodeship.

The study indicates that internationalization raises interest, but it also generates many problems that entrepreneurs need to deal with. The entrepreneurs that took part in the study indicated several barriers that hamper or even make it impossible to establish business activity on foreign markets.

In the opinion of the respondents, the most important barrier in the implementation of projects on foreign markets is the financial barrier. Internationalization-related expenditures (e.g. furnishing new facilities, increasing employment levels, introducing specific changes in the organization's structure) may deter enterprises from international expansion, but also impede the implementation of market strategies and achieving the assumed competitive position. Lack of sufficient financial resources may also extend the planned activities over time, which may ultimately affect their effectiveness.

Another group of internal barriers is the information (knowledge) barriers. According to the surveyed company representatives, they experience a lack of knowledge in the field of legal and financial regulations, about the market and clients. These knowledge gaps can become a source of market errors and, therefore, generate significant additional costs. In addition, insufficient language competences of SME employees are a significant barrier.

Among the external barriers, respondents pointed primarily to strong competition on the foreign market and unfavourable legal and financial regulations. These barriers make the attempts to operate on the international market seem extremely risky. In contrast to internal barriers, which can be realistically estimated, perception of external barriers as subjective and yet significantly inhibits international projects.

Authors: Joanna Godlewska,  Katarzyna Krot, Anna Tomaszuk

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