Internationalization or: How SMEs lead themselves to international success

The success of Switzerland as a business location depends to a large extent on the success of small and medium-sized enterprises (SMEs) in a wide variety of sectors. Because Switzerland as a domestic market is quickly saturated, especially for highly specialized niche offerings, many Swiss SMEs seek success abroad at an early stage. Research on the internationalization of companies has so far focused on large companies and multinational corporations. A systematic study of the special prerequisites and necessary leadership and management competencies of SMEs has been lacking.

Internationalization among SMEs is oriented toward opportunities

A study by the Lucerne University of Applied Sciences and Arts, sponsored by Innosuisse, now shows that the internationalization of SMEs and large corporations differs significantly. "Small and medium-sized enterprises embark on internationalization in rapid cycles, orienting themselves to the opportunities or contingencies that present themselves, and are heavily dependent on entrepreneurship and the leadership and management skills of their executives," says project leader Prof. Dr. Ingo Stolz, describing the initial situation from qualitative interviews with over 20 Swiss SMEs. This contradicts previous descriptions and models, which traditionally describe internationalization in stages as a linear and strategically driven process. In the subsequent quantitative study, the researchers surveyed around 70 additional companies to determine the extent of their internationalization competencies. The study focused on the following questions: Which paths lead to the successful internationalization of SMEs? What leadership and management competencies are important for pursuing these paths? How can we measure whether the necessary competencies are available to a sufficient extent? And how can these competencies - if necessary - be developed?

Between intuition and rational decision-making

Executives of SMEs usually accompany internationalization projects through three phases: a start-up phase to search for possible scenarios and opportunities; a consolidation phase to test a concrete implementation idea by launching pilot projects; and an establishment phase for the consistent implementation and scaling of an internationalization project. During these three phases, an SME executive finds himself in two areas of tension, more so than in other business situations: on the one hand, he must identify the right time for intuitive action or for rational decision-making. On the other hand, they must use existing resources efficiently without missing the opportunity to make bold investments in new things.

Internationalization requires diverse competencies

The leadership and management competencies for internationalization can be divided into seven sub-areas: Risk awareness, strategy, adaptive organization, entrepreneurship, intercultural competence, international partnerships and market orientation. Successfully internationalizing SME executives have good internationalization competencies in all seven sub-areas. Depending on the phase of internationalization, the competencies within these seven sub-areas vary.

The Lucerne Model of SME Internationalization (see graphic), which emerged from the project, summarizes these findings. Based on this, the research team developed a measurement tool for determining the leadership and management competencies of SME executives in the areas relevant to internationalization. In this way, not only can existing competencies and any gaps be ascertained, but appropriate development steps can also be initiated.

The study results are available now at hslu.ch/kmu-international freely available for download. They will be enriched at the International Leadership Forum Lucerne (ILFL) with the concrete experiences by the corporate partners of the research project. In an open dialogue, SME entrepreneurs and executives are invited to discuss the internationalization of SMEs based on these latest research findings, exchange best practices and discover innovative entrepreneurial approaches at ILFL. An intensive exchange of experiences, practical workshops and inspiring keynotes provide the appropriate framework for this in a varied program.