INTERNATIONALIZATION STRATEGIES OF SMALL AND MEDIUM BUSINESS IN UKRAINE

Author

, associate professor, Kharkiv, Pushinska, 77
ORCID ID: 0000-0003-0259-4191

In heading

Economic theory;

Signed print

08.09.2017

Issues number

2017 - № 3 (30)

Page

21-33

Type of articles

Scientific article

Code UDK

339.138:339.94

ISSN print

2411-5584

Abstract

Problem setting. Growing globalization and transnationalization of the world economy, along with increasing competition in both the national and international markets, require adequate response from business entities. Internationalization provides for enterprises not only the expansion of sales markets and the growth of sales volumes, but also increasing international competitiveness, expanding access to world capital markets and technologies. So, the іssues of the internationalization level choice, the international strategy formation are topical for ukrainian business.
Recent research and publications analysis. The works of J. Dunning, S. Hollensen, J. Johanson, A. Koch, A. Madhok, P. McDougall, B. Oviatt, M. Porter, F. Root etc are devoted to the selection and analysis of various internationalization strategies. Domestic scientists (P. Ilchuk, V. Kokorina, О. Myroshnichenko, О. Pasenchenko, I. Sytnik, T. Spivakovskaya, T. Shtal etc.) investigate theoretical and practical aspects of internationalization, the influence of penetration into foreign markets forms on the competitiveness of firms, their market positions, financial results. At the same time, the entering foreign markets strategies, problems and prospects of ukrainian SMEs internationalization need further research.
Paper objective. The purpose of the article is to give a comparative description of the internationalization strategic alternatives, to explore factors influencing their choice, to analyze the main forms, possibilities and barriers of ukrainian SMEs penetration into foreign markets.
Paper main body. Trade, cooperative and hierarchical internationalization strategies have different strategic goals, include different business configurations, the speed of access to external markets, different levels of control, participation, risk and flexibility, provide different opportunities for gaining knowledge and experience in international activities. The choice of strategy is influenced by internal and external factors, the characteristics of the desired strategy and the transaction itself. Theories of internationalization substantiate the choice of strategy depending on the combination of these factors. SMEs use mostly trade and cooperative strategies. The trade strategies can be realized through indirect, direct or joint export. The biggest difficulties encountered by exporters in Ukraine are the lack of access to trade finance, the inadequate level of manufacturing technology and personnel skills, the difficulties of identifying potential markets and buyers, insufficient compliance with international technical requirements and standards, currency control, the complexity and high cost of export procedures. As cooperative strategies, Ukrainian SMEs use contract manufacturing and private brands, as well as franchising.
Conclusions of the research. Ukrainian SMEs, as a rule, operate in accordance to the Uppsala model, starting with exports and eventually adding elements of more advanced strategies of internationalization. This choice is due to the lack of own and high cost of loan capital and lack of knowledge and experience in foreign markets. The competitive advantage of Ukrainian SMEs is mostly the price, but they are actively trying to add to it the quality and technology, provide the correspondence of the goods and services to different types of requirements and standards. In addition, the difficulties of export activity both external (cautious attitude towards partners from Ukraine, non-tariff trade restrictions, dependence on resellers, lack of information about potential consumers and counterparties, etc.) and internal (currency control, unfavorable political and economic environment in Ukraine, difficulties with the organization of delivery abroad, the customs procedures passing, getting access to financing, etc.) require the further internationalization of SME activities – the creation of their own sales channels, opening their overseas offices, subsidiaries, joint ventures.
Short Abstract for an article
Аbstract. The article describes and compares the main internationalization strategies. The factors influencing the form of penetration and presence in foreign markets are generalized. Particular attention is paid to the analysis of Ukrainian small and medium businesses trade and cooperative strategies of entering the foreign markets.

Keywords

Direct export, indirect export, joint export, cooperative strategies of internationalization, small and medium business globalization.

Reviewer

External reviewer

Article in PDF

3 21-33

Bibliography

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22.06.2017