Abstract
The present research will also assess how these theories have influenced the internationalization process of SMEs in Australia. It considers some extensively used theories including the Uppsala Model, Network Theory and Resource-Based View, via cases like VinoMofo and Cochlear. Therefore, the study adopted a secondary research approach to analyse literature using a research onion model.
These research results imply that although internationalisation has many benefits for SMEs, the barriers continue to exist and include problems with a lack of resources, cultural differences, and competition in the international market.
The discussion then examines the effectiveness of the schematic treatment by analyzing SMEs’ success rates according to the various internationalization approaches. Evidence will be manifested in statistical data and factual examples and backed by the appendices to the paper.
Introduction
Globalization is one of the core tendencies of economic development therefore, the integration of SMEs into the world market is the key issue. But still, there are several main challenges peculiar to the SMEs in case of their international expansion and presence: over 2% of the world population as Australia contains a significant portion of the total population of the earth total population of the planet.
1 million SMEs, observes a gradual increase of its small businesses across the international market. However, a small proportion of them have successfully managed the challenges of Global markets (ABS, 2023). This paper aims to explore and analyse the conceptual models responsible for taking SMEs internationally and the application of these models to real-life Australian SMEs.
Aim and Objectives
Therefore, the main objective of this study is to assess and analyze critically the theoretical frameworks of internationalization and their applicability in the guarantee of global venture of SMEs. The objectives include:
- Critical Analysis of Internationalization Models: To understand the major theoretical concepts, such as the Uppsala Model, Network Theory, and Resource-Based View, of the SME growth period.
- Examination of Australian SME Case Studies: To discuss cases of actual Australian SMEs, including VinoMofo and Cochlear and estimate how successful their internationalization efforts have been.
- Identification of Barriers and Opportunities: To discover some of the main potential limitations of SMEs’ international business activities such as financial restrictions and cultural and regulatory disparities and examine the potential benefits of internationalization.
Literature Review
An understanding of different theoretical approaches to the internationalization of businesses has been well researched but with special emphasis on the large multinational firms, not the SMEs.
Uppsala Model: The ‘Uppsala Model of Internationalisation’ describes how firms initially start to internationalise locally, and then extend operations to other locations. When implemented in this less immediate way, this staged approach is especially applicable to SMEs who otherwise do not have the means to quickly expand globally. Cochlear, an Australian-based SME that began its operations by exporting to nearby Asian markets but later went global is a good example of this approach.
Network Theory: This theory emphasizes the need to construct good networks and relations in other countries for expansion to be successful. Vino Mofo, the Australian wine retailer, used partnerships with foreign suppliers and distributors to go to the U. S. and Europe to show how Network Theory is applicable in the process of SME internationalisation.
Resource-Based View (RBV): Based on the RBV, firms can get competitive advantage by the deployment of valuable resources and capabilities. As for SMEs this often implies utilization of specialized products or unique expertise. Cochlear, which was involved in the selling of hearing implant products and services, used technology as an asset which it utilized to penetrate international markets despite the fact it was relatively small.
Methodology
This research adopts a secondary research approach concerning the research onion model. The approach includes the following layers: The approach includes the following layers:
Philosophical Approach: The research approach followed in the study is positivism since the study is interested in the factual account of the phenomenon under investigation.
Research Approach: It is a theoretical-empirical approach manifested in the application of existing theories of internationalisation in an analysis of real SME cases.
Research Strategy: Documents, reports, case studies and any other published material were investigated through a method known as ‘Archival Research’ forming the primary data to assess the trends of internationalization.
Time Horizon: An exploratory survey was carried out to examine the sample of Australian SMEs’ internationalisation efforts over the last ten years.
Data Collection: Secondary data is gathered from industry journals, government documents (ABS statistical information) and case analyses of SMEs including Cochlear Ltd and Vino Mofo.
Findings
Statistical Overview of Australian SMEs: Statistical Overview of Australian SMEs:
Based on the Australian Bureau of Statistics ABS (2023) on the Show More analysis of the small business sector data, small businesses representing the SMEs account for 99%. Employing 8 % of the total Australian workforce and contributing to 57% of the gross domestic product. However, the results revealed that only 30 percent of the firms were trading internationally because of obstacles that include Access to Finance and lack of information on foreign markets.
Case Study: Vino Mofo:
Another example is the case of VinoMofo – a wine retailer that entered the U. S. and Europe while using strong supplier relationships proving the efficiency of the Network Theory. Europe showed 40% YoY growth and in 2022 the company generated about 35% of its total revenue from the international markets.
Case Study: Cochlear:
Cochlear is an SME with a focus on the hearing implant industry that applied the Uppsala Model when venturing into the Asian market before going International. Currently, Cochlear company covers over one hundred countries having seventy-five percent of its income from the international market.
Discussion (Thematic Analysis)
Theme 1: Gradual international market entry is developed based on the Uppsala model.
The key factor of novelty for the Uppsala Model, thus, applies particularly to SMEs because of the slow process of market involvement. The progressive strategic approach adopted by Cochlear meant that it launched in nearby culturally related markets and thus the company was in a position to minimize risk. However, the weakness of the model is that it is relatively slow and, therefore, can be inefficient for SMEs in the rapidly evolving fields.
Theme 2: Building Global Networks adopting a network theory
The effectiveness of VinoMofo proves that effective international networks should be established. Such business risks of moving into new markets were well managed by the company through entering into partnership agreements with overseas distributors and suppliers. Therefore, for the organisation that is searching for an efficient way to enter a certain market, Network Theory is especially effective for small and medium-sized organisations that have limited employment and financial opportunities.
Theme 3: Resource-Based View, this is therefore referred to as Leveraging Unique Resources or RBV.
Small and medium-sized enterprises that can internationalize, tend to deploy their unique resources to achieve this. Cochlear was also able to differentiate itself from competitors in mature and competitive markets where the firm specialised in hearing implants. Nevertheless, the Resource-Based View convicts SMEs into the perpetual need to innovate, to sustain a competitive advantage which can be a demoralizing waste of resources.
Summary
This research has provided a critical analysis of the literature on SMEs’ internationalisation process, using cases of VinoMofo and Cochlear from Australia. Consequently, the study’s findings imply that the process of internationalization has a lot of opportunities and rewards, yet SMEs encounter many problems, such as limited funds or access to credit, legislation restrictiveness, and cultural disparities.
This paper discusses the applicability of the Uppsala Model, Network Theory, and Resource Based –View where none of them can provide a sure way. Successfully operating Australian SMEs need to pay close attention to risk, network and utilizing their specific resources while operating in a global environment.
Appendices
- Australian Bureau of Statistics (2023). “SME Contribution to GDP and International Trade.”
- Case Study: Vino Mofo’s International Expansion (Company Reports, 2022).
- Cochlear’s Global Market Strategy (Annual Report, 2023).
