Internationally active SMEs yield better results - EC study

A quarter of European Union-based small and medium-sized businesses export or have exported at some point during the last three years, a European Commission study has found.

Internationally active SMEs report an employment growth of seven per cent while the figure stood at one per cent for those without any international activities. There is also a strong relationship between internationalisation and innovation: 26 per cent of internationally active SMEs introduced products or services that were new for their sector in their country. For other small businesses this is only eight per cent. However, international activities are mostly geared towards other countries inside the internal market and only about 13 per cent of EU SMEs are active in markets outside the EU. European firms are more internationally active, compared with US and Japanese SMEs.

The study into "Internationalisation of European SMEs" mapped out the level of internationalisation of European SMEs and identifies the main barriers and advantages of internationalisation.

The survey aimed to provide an updated and comprehensive overview of the level of internationalisation of European SMEs. The data and conclusions of this study are based on a survey of 9,480 SMEs in 33 European countries in spring last year.

The research was carried out in all activities that put SMEs into any meaningful business relationship with a foreign partner: exports, imports, foreign direct investment, international subcontracting and international technical co-operation. The results allow an in-depth overview of the situation by country, SME size (micro, small, medium) and sector.

"European SMEs still depend largely on their domestic markets despite the opportunities brought by the enlarged single market and by globalisation at large," Commission vice-president Antonio Tajani, responsible for entrepreneurship and industry. "It's important for our smaller businesses to improve their performance in cross-border and international trade transactions in order to reinforce growth, enhance competitiveness and support the long term sustainability of companies."

The study analysed 26 separate sectors. The highest percentage of internationalised SMEs is found in wholesale trade, mining, manufacturing and sale of motor vehicles. Within services, the sector 'research' scores very highly. Sectors of activity with the highest share of exporting SMEs are mining (58 per cent), manufacturing (56 per cent), wholesale trade (54 per cent), research (54 per cent), sales of motor vehicles (53 per cent), renting (39 per cent) and transport and communication (39 per cent).

The survey, which found a direct link between internationalisation and increased SMEs performance, found that 25 per cent of EU SMEs export, or have exported at some point during the last three years. Partner countries are mostly other EU countries: 76 per cent of all exporting SMEs are oriented towards the internal market.

There is a direct link between the level of internationalisation and the size of the company. The larger the SME, the more internationalised. There is a negative correlation between the population size of the SME's home country and its level of international activity.

International SMEs create more jobs, reporting an employment growth of seven per cent versus only one per cent for SMEs without any international activities. International SMEs are also more innovative: 26 per cent of internationally active SMEs introduced products or services that were new for their sector in their country.

Import is a stepping stone to export: SMEs that both import and export, started with import twice as often (39 per cent) than with exports (18 per cent).

Public support goes largely unnoticed. Only 16 per cent of SMEs are aware of public support programmes for internationalisation and only a small number of SMEs use public support.

Overall, European firms are more active than their counterparts in Japan or the US. Even if only extra EU exports are considered they still perform better.

SMEs said awareness and use of public support programmes need to be promoted. Micro firms needed easier access to support measures as they are the ones that need and would benefit more from programmes.

Innovation and internationalisation are closely related. This strongly suggests the co-ordination of policy measures aimed at stimulating innovation and internationalisation or even merging the agencies that implement these two types of policies.

Import is a stepping stone to export, a fact public support programmes should take into account.