Small and medium sized enterprises and the risks they face in an Essay

Small and medium sized enterprises and the risks they face in an international environment - Essay Example The study of international businesses and internationalization has been traditionally focused on the analysis of large corporations. Despite the growing importance of small and medium businesses, they often remain beyond the scope of scholarly studies. Apart from the fact that small and medium enterprises play a crucial role in the rapid advancement of economies, the prevailing majority of today’s international and multinational corporations have once been small and medium domestic enterprises. These are just some of the many reasons why the place of small and medium businesses in international trade should not be disregarded. More important is the question of risks faced by SMEs as they enter international trade. Recent advancements in technologies and transportation facilitate the subsequent integration of small and medium business forms into international trade communities. Therefore, SMEs should be aware of and be prepared to face international trade risks. Small and medium enterprises: Why so neglected? Small and medium enterprises are generally considered to create a strong foundation for the rapid advancement of economies. It is not surprising that so many developing countries provide SMEs with greater flexibility and freedom from taxation and administration burdens, to speed up their development and contribution to nations’ economic development. However, the current state of research often leaves small and medium-sized enterprises beyond the scope of analysis.... Yet, it should be remembered that â€Å"many MNEs developed from large, mature, domestic firms, and they commanded attention because they wielded significant economic power, especially after World War II† (Chandler 1986; Dunning 1981; Oviatt & McDougall 1994, p.45). Moreover, recent changes in the technological environment and transportation make it easier for domestic small and medium firms to expand to an international level. The growing number of consumers in international business makes international trade extremely attractive for domestic businesses, especially small and medium ones. Today, any small or medium businessman with a sufficient amount of capital can successfully conduct business anywhere in the world or travel to any part of the world, looking for international business opportunities (Oviatt & McDougall 1994). That small and medium enterprises find it easier to capture international business opportunities means the topic of their internationalization is becomi ng more urgent. Scholars in organization science are becoming more attentive to the issues of internationalization and international trade challenges affecting domestic SMEs. However, again, the most common issues considered in today’s research include the effects of public policies on SMEs, the nature and characteristics of entrepreneurial activities across countries, and comparing international and domestic enterprises (Oviatt, & McDougall 1994; Ohe et al. 1991). In light of these issues, a close look at the risks faced by domestic SMEs going into international trade is required. This report will help small and medium businesses going into the international trade