“WHY SMALL AND MEDIUM SIZED BUSINESS GO INTERNATIONAL?”

“Why small and medium sized businesses go international?

Why small and medium sized businesses go international?

The incubators for Small and medium-sized enterprises (SMEs) originated in late 50s, and were accompanied by emergence of new technologies and industrial revolution. Business Incubation can have some definitions and approaches. According to National Business Incubators Association (NBIA), “Business incubation catalyzes process of starting and growing companies, providing entrepreneurs with expertise, networks and tools they need to make their ventures successful. Incubation programs diversify economies, commercialize technologies, create jobs and build wealth.” (Chan 1999:21)Business incubators have got rapid development around world.

So far there are more than 5,000 various types of business incubators in world, among which about 1000 in Asia (548 in China, ranking second in world), about 1000 in North America, more than 900 in Europe, and nearly 400 in Latin America. From perspective of development stages, business incubators go through four stages: project incubation= enterprise incubation= growth incubation= international incubation. At present, China has made certain achievements in first three stages, but is still in exploratory stage on international development of business incubation.

With globalization of world economy, internationalization has become new trend for further development of business incubators. Compared to study on Business incubator in western countries, China was 30 years behind. China's incubator development can be divided into five stages. The first incubator feasibility study was set up in 1987, which was launched by Wuhan Donghu Enterprise Center. (Corti 1999:p145)

The study on western business incubators operating management is very rich. There are mainly four kinds of theories to support business incubators:

1) The idea of part advantage by British academic economists Adam Smith and David Ricado,

2) The idea of spatial product lifecycle expanding by Hakanson L and

3) The theory of centre resource.

Figure 1: The Flow Chart for Business Incubation.

International Business Incubator and its Development

International Business Incubator (IBI) is the new incubator model which helps foreign and domestic companies into new domestic and international markets and to promote cooperation between international cooperation partners. This model is considered “third generation” of incubators. These incubators provide the full range of support services for development of knowledge-based businesses. Most of them are export-oriented and display outstanding development rates and sales records. (Lefebvre 1999:p11)

This incubation model - based on convergence of support mechanisms - is already present in China. Their strength is based on their capacity to share knowledge and resources, and on linkages and synergies that can be created in the research and development framework. IBI is development and improvement based on general science and technology business incubators. The major difference from general incubator lies: they provide international standard infrastructure and service environment, bring in foreign SMEs, research institutions and S&T achievement, and at same time, they help them to set up cooperation with Chinese enterprises to explore new markets, and seek common development; on other hand, they provide service for domestic SMEs and R & D institutions to enter international market, and expand international business ...