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Localized capabilities and the internationalization of manufacturing activities by SMEs

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  • Sergio Mariotti
  • Lucia Piscitello

Abstract

In this paper it is argued that the internationalization of production through foreign direct investment (FDI) by small and medium-sized enterprises (SMEs) is influenced by local level idiosyncracies. Although SMEs suffer from inherent constraints to international growth (due to the scarce availability of financial and managerial resources), the presence of qualified localized capabilities strengthen and complement their competitive/ownership advantages, thus favouring their internationalization. These capabilities are related to the advanced specialized services available to the firms, the existence of a ‘marshallian atmosphere’, and an environment conducive to innovation and learning. However, it is argued that negative externalities stemming from protectionism-oriented public intervention discourage the international growth of firms and negatively influence the propensity of SMEs to internationalize. Empirical support for these premises is provided by this study of the Italian case over the decade 1986--1995.

Suggested Citation

  • Sergio Mariotti & Lucia Piscitello, 2001. "Localized capabilities and the internationalization of manufacturing activities by SMEs," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 13(1), pages 65-80, January.
    • Handle: RePEc:taf:entreg:v:13:y:2001:i:1:p:65-80
    DOI: 10.1080/089856201750046810
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    Cited by:

    1. Chan-Yuan Wong & Jeffrey Sheu & Keun Lee, 2023. "Assessing the quest of SMEs in pivoting for new technological ventures: comparing the patenting indexes of seven developed cities," Scientometrics, Springer;Akadémiai Kiadó, vol. 128(7), pages 4029-4064, July.
    2. Paul, Justin & Parthasarathy, Sundar & Gupta, Parul, 2017. "Exporting challenges of SMEs: A review and future research agenda," Journal of World Business, Elsevier, vol. 52(3), pages 327-342.
    3. Arild Aspelund & Vitali Butsko, 2010. "Small And Middle‐Sized Enterprises' Offshoring Production: A Study Of Firm Decisions And Consequences," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 101(3), pages 262-275, July.
    4. Ekaterina Islankina, 2015. "Internationalization Of Regional Clusters: Theoretical And Empirical Issues," HSE Working papers WP BRP 41/STI/2015, National Research University Higher School of Economics.
    5. Mehmet Civelek & Vladimír Krajèík, 2022. "How do SMEs from different countries perceive export impediments depending on their firm-level characteristics? System approach," Oeconomia Copernicana, Institute of Economic Research, vol. 13(1), pages 55-78, March.
    6. Perez-Suarez, M. & Belda Alvarez, J.I., 2019. "The Export Competitiveness Of Social Economy Enterprises. The Case Of Southern Spain," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 19(2), pages 57-74.
    7. Marian Gorynia & Barbara Jankowska, 2007. "Wpływ klasterów na konkurencyjność i internacjonalizację przedsiębiorstw," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 7-8, pages 1-18.
    8. Jaideep Anand & Gerald McDermott & Ram Mudambi & Rajneesh Narula, 2021. "Innovation in and from emerging economies: New insights and lessons for international business research," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 52(4), pages 545-559, June.
    9. Laufs, Katharina & Schwens, Christian, 2014. "Foreign market entry mode choice of small and medium-sized enterprises: A systematic review and future research agenda," International Business Review, Elsevier, vol. 23(6), pages 1109-1126.
    10. John Cantwell & Rajneesh Narula, 2001. "The Eclectic Paradigm in the Global Economy," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 8(2), pages 155-172.
    11. Al-Laham, Andreas & Souitaris, Vangelis, 2008. "Network embeddedness and new-venture internationalization: Analyzing international linkages in the German biotech industry," Journal of Business Venturing, Elsevier, vol. 23(5), pages 567-586, September.
    12. repec:rdg:wpaper:em-dp2004-04 is not listed on IDEAS
    13. Liu, Xiaming & Xiao, Wen & Huang, Xianhai, 2008. "Bounded entrepreneurship and internationalisation of indigenous Chinese private-owned firms," International Business Review, Elsevier, vol. 17(4), pages 488-508, August.
    14. Narula, Rajneesh, 2001. "Multinational Firms, Regional Integration and Globalising Markets: Implications for Developing Countries," Research Memorandum 035, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
    15. Constantina Kottaridi & Fragkiskos Filippaios & Marina Papanastassiou & Robert Pearce, 2013. "Regional Mix and the Roles of Foreign Subsidiaries: A New Conceptualization and Empirical Evidence on the UK Case," SPOUDAI Journal of Economics and Business, SPOUDAI Journal of Economics and Business, University of Piraeus, vol. 63(1-2), pages 47-74, June.
    16. Luis Javier Garcia-Martinez & Sascha Kraus & Matthias Breier & Andreas Kallmuenzer, 2023. "Untangling the relationship between small and medium-sized enterprises and growth: a review of extant literature," International Entrepreneurship and Management Journal, Springer, vol. 19(2), pages 455-479, June.

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