Challenges in the Internationalization of SMEs Emerging Markets

Abstract

The research was focused on the Small and Medium Enterprises (SMEs) which represent a diverse and dynamic segment of the business world, with their significance extending beyond the number of employees they employ. In contemporary literature, SMEs are categorized based on criteria set up by the European Commission, considering not only staff headcount but also turn-over and balance sheets. Also, the aim of this research is to identify challenges faced by the Finnish start-up SMEs in the internationalization process in the high-tech business domain. Starts-up SMEs attempting to internationalize in emerging markets like China are unable to gain opportunities in same manner as established SMEs and large-scale counterparts.

Based on the qualitative research method , a case study of a Finnish SME in high-tech industry was asked to identify the challenges faced by SMEs in the similar context when internationalizing in emerging market. Internationalization profile of the selected case company was analysed and in-depth group interview was carried out. This group of employees participated in an inter-view and the participants' perspectives were synthesized to highlight the multifaceted challenges that Finnish SMEs face in their internationalization efforts. The emphasis was found to be on the importance of strategic financial planning, cultural understanding, talent management, comprehensive research, currency fluctuation supportive regulatory environments for successful market entry and long-term operations in emerging economies.

Furthermore, particularly in the high-tech industries, SMEs are increasingly looking beyond domestic markets to expand their reach in an interconnected global economy. This journey is marked by the need for adequate finances, resources, and expertise. They seek international networks to help them establish themselves and explore niche opportunities in emerging markets. However, the path to internationalization presents a myriad of challenges, from navigating the complexities of foreign markets to dealing with geopolitical factors and cultural nuances. This research aims to bridge this gap by finding and discussing the challenges met by high-tech SMEs during their internationalization journey. By examining the specific hurdles faced by these startups, this study looks to supply valuable insights that can guide not only high-tech SMEs in Finland but also those in related industries looking to expand their global footprint. As SMEs increasingly play a critical role in the global economy, understanding and addressing the challenges they face during internationalization is vital for their continued growth and success.