SMEs and The New International Business Space
Terry MughanProfessor of International ManagementAshcroft International Business School
So what is the New Space?
1. A space for all companies2. A space for ideas
3. A space for relationships4. A space for all citizens
So what was the old space?Not so much a space as a set of
boxes1. Boxes for trade figures,
multinational brands and exporters
2. Latterly, boxes for FDI too3. Market share and competitive
lone wolves.
And the New Space is about......?
:
• Flexible, learning companies of all sizes
•Mobile citizens and knowledge sharing• Supra-national and sub-national units
of organisation• Open innovation
The New Space• Flexible, learning companies of all sizes
• Mobile citizens and knowledge sharing
• Open innovation
• Supra-national and sub-national units of organisation and collaboration
Who are the key stakeholders in international business?
1. Companies2. The global citizen
3. National and supranational governance
FDI
Multinational Transnational
Mini-multi
Born GlobalSME
International
Public/private/social
Open innovation
Exporting
International knowledge trading
Regional growth policy
Student entrepreneurs
Migrant entrepreneurs
Global
MNC
Universities
And these views are based on what ...?
•Empirical studies of SME behaviour carried out for EEDA, UKTI and
OECD/APEC
•Work with leading European science parks and MNCs
Key Issues:► Why does the company go international?► How do they do it?► What problems do they encounter?► Where do they go for help?
EEDA - Competing Effectively in International
Markets
How did we do it?
Telephone survey of 1,200 SMEs Face-to-face interviews with
the strategic leader of 80 SMEs
Competing Effectively in International Markets
Who did we talk to:A: The CuriousB: The FrustratedC: The TentativeD: The EnthusiasticE: The Successful
Competing Effectively in International Markets
Strategy Implications:► Complexity
► Transferable skills and knowledge► Sustainability of support
► Relationships and networks
Competing Effectively in International Markets
To improve international business support services for potential high-growth companies.
Identified from CEIM study
Middle-market as labelled by PWC
Interest in ‘born globals’
Impact of economic change (globalisation, ) on SMEs
To promote knowledge-sharing between HEIs, companies and government support agencies.
OBJECTIVES OF THE ENTIRE PROJECT
HOW WE HAVE HELPEDTHE COMPANIES
STRATEGIC
MARKET DECISIONS RELATIONSHIP MANAGEMENT
Strategic competenceOrganisational learningPlanningChange management
Environment assessment
Competitor analysis
Human Resources
Market entryCultural issues
language skills
Long distance management
Conflict resolution
Knowledge exchange
Partnership management
EXPORTING AND BEYOND
• Exporting is not an end in itself• Other activities should accompany and follow on from exporting• Innovation and competitiveness in product and process in the firm is the goal.
Source: Robert Salomon, Learning from Exporting, Edward Elgar, 2006
• Firms that become exporters in a given year experience more product innovation the following year
• The more markets you enter, the more you innovate
• Going directly to markets results in more innovation
Global Destinations for International Students at the Post-Secondary (Tertiary) Level, 2001 and 2008
“[..] inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation [..].”
Chesbrough, H., W. Vanhaverbeke, and J. West, eds. Open Innovation: Researching a New Paradigm. 2006, Oxford University Press.
‘Open innovation’
Outside-In-ProcessesIntegrating external knowledge in the innovation process:
--> Using the expertise of suppliers, customers and external partners in order to improve the quality of the innovation process.
Inside-Out-ProcessesExternalising IP or internal knowledge: PUSH!, Business Angel Forum, Regional hubs, Experts‘ Database... Capitalise on this IP/knowledge through licensing, joint ventures and spin offs.
OI Processes „If we can‘t turn all our discoveries into products, why don‘t we license them to third parties or even sell them entirely?“Gerard Kleisterlee, Philips
Stakeholders• Companies• Scientists• Government• Suppliers of
knowledge (consultants, business schools)
Primary target group:
• Companies
Secondary target group:
• Other stakeholders
Open Innovation
Companies
ScienceGovernment Others
Project
Primary Target group
Secondary Target group
Stake
holders
Research Development Commercialisation
Core Market Focus
Company Boundaries
Products in-sourced (e.g. Co-branding)
IP in-licensing
IP out-licensing
Technology Spin-outs
Ideas & Technologies
Docherty, M. (006), Primer on ‘Open Innovation’: Principles and Practice, pdma (Product Development and Management Association) Vision (April 006), pp.13-17.Chesbrough, H. (003), Open Innovation: The New Imperative for Creating and Profiting From Technology, Boston: Harvard Business School Press.
The model of ‘open innovation’
Innovation policy and governance structures urgently need to anticipate changes and new developments in the national and European innovation system.
New generation of Innovation Governance has to open up for better horizontal and vertical co-operation of the regulatory regime
Policy makers and intermediaries have to prepare the innovation governance system for the paradigm shift to Open Innovation.
Benefit through learning from the experiences of the growing “co-opetition” culture in the private sector.
Towards “Open Innovation Governance”
So what will this mean?
1. A larger proportion of educated globally minded citizens in all countries
2. A greater number of real born globals, i.e. cross-nationally constructed companies
3. More transnational legislation permitting cross-national company formation
4. Better, accessible skills everywhere to help companies compete and collaborate
internationally
Within clusters, universities can provide: People (employees, interns) Expertise (consulting services) Knowledge (tacit, explicit) Resources (equipment, facilities, incubation) Public spaces (conferences, networking) New firms (spin-outs, start-ups)
But risk of ‘mixed mission’ ◦ (academic / commercial, short-term / long-term)?
Education
Academic
Research
Relevant to work(Business value)
(Integration of values)
Transfer of knowledge into innovations(Value of competitiveness)
Academic education(Intellectual value)
World class academic research(Value of new knowledge)
RELEVANT
LINEAR
CYCLIC
THEMATICImpactsCREATIONS
• Industry and Services
• Academy
• Government
Global
Society
Region
31
Open Innovation Agency – Possible Structure
Open Innovation Agency
OI–Network:Business support,
Research and Education Institutes
Shareholders: RDAs and other Regional Intermediaries
Infrastructure, Personnel
Membership Fees
Companies Research Institutes/Universitie
s
Premium Services
Excellence hubs and Cluster Initiatives
Services: Brokerage, Assessment, Education and Training, Communication
European/Intl. Co-operation
Prof. Terry MughanDirector, The Centre for Innovation in
International BusinessAshcroft International Business SchoolAnglia Ruskin UniversityEast Road, Cambridge, CB1 1PT
Tel: 0044 1223-196248Fax: 0044 1223-698825Email: [email protected]
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