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Entrepreneurship, globalization, and public policy

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  • 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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Keywords: Entrepreneurship Innovation Globalization Multinational enterprise;

References

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  1. repec:fth:michin:282 is not listed on IDEAS
  2. Anne O. Krueger, 1990. "Government Failures in Development," NBER Working Papers 3340, National Bureau of Economic Research, Inc.
  3. Morck, R. & Yeung, B., 1991. "Why Investors Value Multinationality," Working Papers 282, Research Seminar in International Economics, University of Michigan.
  4. Acs, Zoltan J & Audretsch, David B, 1988. "Innovation in Large and Small Firms: An Empirical Analysis," American Economic Review, American Economic Association, vol. 78(4), pages 678-90, September.
  5. Morck, Randall & Yeung, Bernard, 1992. "Internalization : An event study test," Journal of International Economics, Elsevier, vol. 33(1-2), pages 41-56, August.
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Cited by:
  1. Minas Pediaditakis & Kleanthis Thomaidis, 2006. "Globalization and International Entrepreneurship," European Research Studies Journal, European Research Studies Journal, vol. 0(1-2), pages 25-44.
  2. Zoltan Acs & Colm O’Gorman & Laszlo Szerb & Siri Terjesen, 2007. "Could the Irish Miracle be Repeated in Hungary?," Small Business Economics, Springer, vol. 28(2), pages 123-142, March.
  3. 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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