SMEs and The New International Business Space

Terry MughanProfessor of International ManagementAshcroft International Business School

So what is the New Space?

1. A space for all companies2. A space for ideas

3. A space for relationships4. A space for all citizens

So what was the old space?Not so much a space as a set of

boxes1. Boxes for trade figures,

multinational brands and exporters

2. Latterly, boxes for FDI too3. Market share and competitive

lone wolves.

And the New Space is about......?

:

• Flexible, learning companies of all sizes

•Mobile citizens and knowledge sharing• Supra-national and sub-national units

of organisation• Open innovation

The New Space• Flexible, learning companies of all sizes

• Mobile citizens and knowledge sharing

• Open innovation

• Supra-national and sub-national units of organisation and collaboration

Who are the key stakeholders in international business?

1. Companies2. The global citizen

3. National and supranational governance

FDI

Multinational Transnational

Mini-multi

Born GlobalSME

International

Public/private/social

Open innovation

Exporting

International knowledge trading

Regional growth policy

Student entrepreneurs

Migrant entrepreneurs

Global

MNC

Universities

And these views are based on what ...?

•Empirical studies of SME behaviour carried out for EEDA, UKTI and

OECD/APEC

•Work with leading European science parks and MNCs

Key Issues:► Why does the company go international?► How do they do it?► What problems do they encounter?► Where do they go for help?

EEDA - Competing Effectively in International

Markets

How did we do it?

Telephone survey of 1,200 SMEs Face-to-face interviews with

the strategic leader of 80 SMEs

Competing Effectively in International Markets

Who did we talk to:A: The CuriousB: The FrustratedC: The TentativeD: The EnthusiasticE: The Successful

Competing Effectively in International Markets

Strategy Implications:► Complexity

► Transferable skills and knowledge► Sustainability of support

► Relationships and networks

Competing Effectively in International Markets

i10 AND THE H.I.G.H.E.R.

PROJECT

To improve international business support services for potential high-growth companies.

Identified from CEIM study

Middle-market as labelled by PWC

Interest in ‘born globals’

Impact of economic change (globalisation, ) on SMEs

To promote knowledge-sharing between HEIs, companies and government support agencies.

OBJECTIVES OF THE ENTIRE PROJECT

HOW WE HAVE HELPEDTHE COMPANIES

STRATEGIC

MARKET DECISIONS RELATIONSHIP MANAGEMENT

Strategic competenceOrganisational learningPlanningChange management

Environment assessment

Competitor analysis

Human Resources

Market entryCultural issues

language skills

Long distance management

Conflict resolution

Knowledge exchange

Partnership management

EXPORTING AND BEYOND

• Exporting is not an end in itself• Other activities should accompany and follow on from exporting• Innovation and competitiveness in product and process in the firm is the goal.

Source: Robert Salomon, Learning from Exporting, Edward Elgar, 2006

• Firms that become exporters in a given year experience more product innovation the following year

• The more markets you enter, the more you innovate

• Going directly to markets results in more innovation

The Global Citizen

Global Destinations for International Students at the Post-Secondary (Tertiary) Level, 2001 and 2008

Open Innovation

“[..] inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation [..].”

Chesbrough, H., W. Vanhaverbeke, and J. West, eds. Open Innovation: Researching a New Paradigm. 2006, Oxford University Press.

‘Open innovation’

Outside-In-ProcessesIntegrating external knowledge in the innovation process:

--> Using the expertise of suppliers, customers and external partners in order to improve the quality of the innovation process.

Inside-Out-ProcessesExternalising IP or internal knowledge: PUSH!, Business Angel Forum, Regional hubs, Experts‘ Database... Capitalise on this IP/knowledge through licensing, joint ventures and spin offs.

OI Processes „If we can‘t turn all our discoveries into products, why don‘t we license them to third parties or even sell them entirely?“Gerard Kleisterlee, Philips

Stakeholders• Companies• Scientists• Government• Suppliers of

knowledge (consultants, business schools)

Primary target group:

• Companies

Secondary target group:

• Other stakeholders

Open Innovation

Companies

ScienceGovernment Others

Project

Primary Target group

Secondary Target group

Stake

holders

Research Development Commercialisation

Core Market Focus

Company Boundaries

Products in-sourced (e.g. Co-branding)

IP in-licensing

IP out-licensing

Technology Spin-outs

Ideas & Technologies

Docherty, M. (006), Primer on ‘Open Innovation’: Principles and Practice, pdma (Product Development and Management Association) Vision (April 006), pp.13-17.Chesbrough, H. (003), Open Innovation: The New Imperative for Creating and Profiting From Technology, Boston: Harvard Business School Press.

The model of ‘open innovation’

Collaboration and Governance

Innovation policy and governance structures urgently need to anticipate changes and new developments in the national and European innovation system.

New generation of Innovation Governance has to open up for better horizontal and vertical co-operation of the regulatory regime

Policy makers and intermediaries have to prepare the innovation governance system for the paradigm shift to Open Innovation.

Benefit through learning from the experiences of the growing “co-opetition” culture in the private sector.

Towards “Open Innovation Governance”

So what will this mean?

1. A larger proportion of educated globally minded citizens in all countries

2. A greater number of real born globals, i.e. cross-nationally constructed companies

3. More transnational legislation permitting cross-national company formation

4. Better, accessible skills everywhere to help companies compete and collaborate

internationally

Within clusters, universities can provide: People (employees, interns) Expertise (consulting services) Knowledge (tacit, explicit) Resources (equipment, facilities, incubation) Public spaces (conferences, networking) New firms (spin-outs, start-ups)

But risk of ‘mixed mission’ ◦ (academic / commercial, short-term / long-term)?

Education

Academic

Research

Relevant to work(Business value)

(Integration of values)

Transfer of knowledge into innovations(Value of competitiveness)

Academic education(Intellectual value)

World class academic research(Value of new knowledge)

RELEVANT

LINEAR

CYCLIC

THEMATICImpactsCREATIONS

• Industry and Services

• Academy

• Government

Global

Society

Region

31

Open Innovation Agency – Possible Structure

Open Innovation Agency

OI–Network:Business support,

Research and Education Institutes

Shareholders: RDAs and other Regional Intermediaries

Infrastructure, Personnel

Membership Fees

Companies Research Institutes/Universitie

s

Premium Services

Excellence hubs and Cluster Initiatives

Services: Brokerage, Assessment, Education and Training, Communication

European/Intl. Co-operation

Prof. Terry MughanDirector, The Centre for Innovation in

International BusinessAshcroft International Business SchoolAnglia Ruskin UniversityEast Road, Cambridge, CB1 1PT

Tel: 0044 1223-196248Fax: 0044 1223-698825Email: terry.mughan@anglia.ac.uk

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