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Entrepreneurship, globalization, and public policy

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Author Info

  • Acs, Zoltan J.
  • Morck, Randall K.
  • Yeung, Bernard

Abstract

This paper examines the impact of governmental policies in influencing the path of internationalization of small- and medium-sized enterprises (SMEs). It focuses on the role of institutions mandated to assist internationalization, as exemplified by Canada's Export Development Corporation (EDC). We illustrate and examine critically the role that governments typically play in assisting and influencing the international expansion of domestic firms. We argue that the activities of agencies such as EDC -- mainly in financing and in insuring against the risks inherent in export activities -- may actually be counterproductive to the long-term interests of many SMEs by skewing managers' decisions toward direct exporting, rather than toward indirect exporting by entering the value chain of already-established multinational enterprises (MNEs). A consequence may be to divert the constrained resources of entrepreneurial firms away from their greatest comparative advantage -- innovation -- toward managing direct entry into international markets in which they are at a comparative disadvantage relative to larger established MNEs. Highly innovative SMEs might be better off by leaving the internationalization of their innovations to MNEs and sharing some of the international direct exporting profits with them instead. The implications are relevant for governmental policies toward internationalizing SMEs not just in Canada but in open, market-oriented economies everywhere.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of International Management.

Volume (Year): 7 (2001)
Issue (Month): 3 ()
Pages: 235-251

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Handle: RePEc:eee:intman:v:7:y:2001:i:3:p:235-251

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Related research

Keywords: Entrepreneurship Innovation Globalization Multinational enterprise;

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Cited by:
  1. Zoltan Acs & Colm O'Gorman & Laszlo Szerb & Siri Terjesen, 2006. "Could The Irish Miracle Be Repeated in Hungary?," Papers on Entrepreneurship, Growth and Public Policy 2005-33, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
  2. Gongming Qian & Lee Li & Zhengming Qian, 2012. "Internalization Or Externalization: What Determines The Mode Of Governance For Small- And Medium-Sized Technology Enterprises?," Journal of Global Entrepreneurship, Global Research Agency, vol. 3(1), pages 83-90, July.

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