The Effect Of Export Promotion Programs On Internationalization

Published Date: 02 Nov 2017

Moreover, German companies participating in country-wide promotion programs on average perceive the programs as satisfactory, yet in need of improvement. More precisely, the participants of the study perceived the programs of export promotion agencies at federal/state level to be least helpful, followed by bfai (today: Germany Trade and Invest) and embassies. On the contrary, companies expressed highest satisfaction with the programs offered by federations, private consultancies, and foreign chambers of commerce.

With respect to the export promotion instruments applied by the agencies, it is important to note that, from a relative point of view, even a smaller proportion of firms is aware of the exact services offered than is the case for the awareness export promotion agencies overall. The relative utilization of export promotion instruments varies heavily from instrument to instrument. Given that export credit guarantees and investment guarantees are an important part of the export promotion approach of the BMWi (as highlighted by the German Minister of Federal Economics and Technology), it should be noted that of those companies aware of export credit guarantees (35.6 percent) and investment guarantees (1.5 percent), solely 1.2 percent and 0.1 percent make use of these instruments, respectively.

Finally, companies expressed the following perceptions with respect to the usefulness of these instruments. Most useful promotion instruments are political aid, followed by export credit guarantees, export financing programs, office communities, investment guarantees, delegation trips, and information on foreign markets. Participants expressed less satisfaction with the helpfulness of advisory services on foreign markets, trade fairs abroad, matchmaking events, and information events.

Please note that while the results above refer to both, SMEs and MNEs, the values obtained for SMEs are virtually always lower than for MNEs. This means that overall a smaller proportion of SMEs is aware of export promotion organizations and their services than MNEs are, and the SME’s perceived usefulness of the organizations and their services generally is perceived to be lower than is perceived by MNE. This, according to Haunschild et al. (2007), could indicate that the programs are not customized towards the export promotion needs of SMEs.

In conclusion, this study has shown that solely a small part of German SMEs is aware and utilizes export promotion services available. Further, German SMEs participating in export promotion programs on average perceive the programs to be satisfactory, yet in need of improvement. Finally, despite the importance of SMEs (BMWi, 2013), the results obtained indicate, that German export promotion programs are not sufficiently customized towards the needs of SMEs.

6.2 Export Promotion Agencies

Case 1 - Governmental Export Promotion Agency: Germany Trade and Invest

Introduction to the Case

In 2009, Germany Trade and Invest (GTAI) resulted from a merger between the German Office for Foreign Trade (bfai) and the Invest in Germany agency (BMWi, 2013) [1] . According to the informant, as a subsidiary of the Federal Ministry of Economics and Technology (BMWi), GTAI represents one of three pillars of the German ‘three pillar concept of foreign trade promoton’. The other two pillars are the Federal Foreign Office and its embassies in foreign countries, as well as the foreign chambers of commerce. The informant emphasized the cooperation among these three pillars:

"The idea is that these three organizations do not work against each other, but with each other."

GTAI’s role within this context is to provide German companies with information on export opportunities in foreign markets (Informant) and promote "Germany as a business and technology location" to foreign investors (GTAI, 2013) [2] , the former being export promotion and the latter being investment promotion. With respect to export promotion, the informant stated that GTAI has a broad network of correspondents in many countries who write articles about conditions in a given country or region:

"For instance one correspondent in Stockholm, he writes about market opportunities in Sweden, Denmark and Norway."

In addition to market conditions, GTAI informs about circumstances concerning legal, customs, and other general matters:

"What do I need to consider when I am active in foreign markets?"

Regarding the last statement, the informant highlighted the afore mentioned online portal named ’ixPOS’ [3] , which GTAI is in charge of, and "pools information on Germany’s various programmes to promote foreign trade and investment into a ‘one-stop’ online platform" (BMWi, 2013) [4] . In the same breath, the informant remarks that in a database to be found on GTAI’s own webpage, companies can search for and participate in international project tenders.

However, so the informant, foreign chambers of commerce, who consult companies on a project basis, complement GTAI’s services:

"German companies that export can […] participate in delegation trips, trawl through different firms, or they can, if they are active, undertake value-added-tax reimbursement proceedings […]"

R1a: The Effect of Export Promotion Programs on Internationalization Speed

The informant’s view on internationalization speed is the following:

"Internationalization consists of different steps […] and the speed depends on how long each step takes."

The informant further specified the nature and order of these steps: a) collecting information on foreign markets, b) network building, c) exporting as the first foreign entry mode, d) licensing, e) joint ventures, and f) investments as the final step of internationalization.

As a positive effect of GTAI’ export promotion the informant pointed out transparency through publishing information and hence facilitating the comprehension and analysis of foreign markets. According to the informant, this transparency also has a positive effect on internationalization speed as companies are not required to search for information, instead with GTAI, companies can find bundled information, which quickly reveals a company’s chances. In his view, internationalization speed is GTAI’s task. This service is targeted towards the needs of:

"SMEs, which do not possess the capacities, do not have their own business development department, do not have an expert who is well versed in the European market […]"

Finally, another indicator with respect to the effect of export promotion on internationalization speed and the understanding of internationalization speed can be identified:

"[…] Germany is the third largest exporter worldwide in absolute terms. If one compares this with China and the USA, countries that have many more companies and a considerably larger population, this means that companies in Germany are much more active."

The informant pinpointed that, considering Germany’s ratio of international activity relative to the number of German firms, compared with other leading exporters, Germany is a strong example for this study. Overall, this indicates a positive effect of export promotion programs on the internationalization speed of its economy.

According to German Federal Statistical Office ‘Destatis’ (2013) [5] , Germany’s actual export values in 2009, 2010, and 2011 were €803.3 billion, €952.0 billion, and €1061.2 billion, respectively. Further, according to a recent press release of Destatis (February 8, 2013) [6] , Germany’s actual export value in 2012 was €1097.4 billion. Given these high values, the average internationalization speed score is approximately 4.5 (as compared with China and the USA). Internationalization speed acceleration from its previous year has been -18.4 percent for 2009 (slowdown), +18.5 percent for 2010, +11.5 percent for 2011, and +3.4 percent for 2012. An overall internationalization speed acceleration from 2009 until 2012 of +36.6 percent has been reached.

R1b: Differences in Export Promotion Effectiveness for Conventional SMEs and Born Globals

As a follow up question, the author asked for reasons why one firm species might profit more from GTAI’s services than others. The informant expounded that it is more difficult to obtain market information for firms, which manufacture extraordinarily niche products than for firms less specialized in their products:

"Of course we can say something about the specialized engineering sector, […] but a particular screw and its revenue potential… this, a company needs to find out on its own."

In addition, he stated that firms very well informed about a particular foreign market might only find complementary information with GTAI. Other than that, so the informant, all firms profit the same way from GTAI’s information.

R2: Moderating Effects of Conventional SMEs and Born Globals on the Effect of Export Promotion Programs on Internationalization Speed

Regarding the different approaches conventional SMEs and born globals take with respect to export promotion services, the informant first stressed that the effectiveness of the approach chosen does not depend on the size of a firm but could depend on the nature of a given firm’s industry. Nevertheless, he explains that GTAI is not able to see different patterns in the SME’s implementation of their services as GTAI does not have direct contact with their client firms. All in all, the informant expresses that differentiating between slow and fast internationalization should not be seen as negative and positive, respectively. He adds:

"Being born global can also imply being exposed to many risks."

R3: How to Increase the Effectiveness of Export Promotion Programs and Hence Internationalization Speed - Issues and Solutions

Issues

The informant explained that GTAI collaborates with several "large" associations, which inform GTAI about the export promotion needs of companies:

"So, we meet them, work with all the large associations, for instance […] the engineering association […], and these associations tell us exactly what their companies are interested in, when planning to do business abroad."

Moreover, GTAI identifies its clients’ export promotion needs by means of its correspondents who are in contact with the foreign chambers of commerce and the firms themselves (informant). GTAI ensures feedback with respect to their services via the associations. Also:

"If they did not ask us anymore, then they would be dissatisfied. We actually assume that the associations are satisfied with our information."

Solutions

The informant reckoned that his colleagues are aware of what other export promotion agencies worldwide are doing but thinks that the first priority is to look for what German companies need. Further, he mentioned that there are some similarities with other agencies; however, export promotion programs need to be adjusted towards the needs of a given home market:

"Countries like Sweden or Finland, […] which have way less companies, have completely different demands."

Case 2 – Public-Private Export Promotion Agency: International coordination office of the International Geothermal Center

Introduction to the Case and its Context

The International Coordination Office of the International Geothermal Center primarily offers information on foreign markets, access to international business partners, and foreign market trips (International Geothermal Center website, 2013) [7] . The overarching Geothermal Center itself is an alliance of business, research, and political organizations (International Geothermal Center website, 2013) [8] .

The interviewee informs firms participating in his organization’s export promotion programs about contact points and other information via newsletters, trade fairs, surveys, and various events. Via surveys, the organization particularly asks companies what their export promotion needs, such as destinations in the upcoming year, are.

The International Coordination Office accompanies companies in their projects to the fullest extent possible:

"I will make sure, and I think this holds for all promotion agencies, to accompany these projects in the long run – based on curiosity and survival instinct."

There are solely approximately 40 companies the informant knows very well after having worked with them for about two years. In turn, the informant receives direct, personal feedback from participating companies, for instance at dinners and matching events, and thus can see the internationalization success of these companies and the effects of the export promotion initiatives. In addition, an organization named ‘Exportinitiative’ conducts surveys with firms in order to investigate the export promotion users’ satisfaction with the services offered.

R1a: The Effect of Export Promotion Programs on Internationalization Speed

First of all, the informant commented that the success of promotion of trade and industry overall is difficult to measure.

In the informant’s point of view, trips to foreign countries, including matching and B2B conversations, organized by the foreign chambers of commerce, seem to be "very very good". For each trip, at least one company usually states that it has gotten a contact it would not have gotten without the export promotion service. Moreover:

"Domestic business trips and information about markets are working well."

The informant emphasized that companies utilizing export promotion services for the first time should not expect to see results immediately.

Regarding the level of detail the International Coordination office can provide companies with when it comes to information about specific markets, the informant explicated that due to the relatively small number of employees, the organization often recommends experts in a particular foreign market.

R1b: Differences in Export Promotion Effectiveness for Conventional SMEs and Born Globals

The effectiveness of export promotion programs is the same for both, companies that first internationalize on their own and companies that ask the export promotion agency for support right from the beginning of an internationalization effort.

With respect to the difference between conventional SMEs and born globals, the informant believed that the effectiveness of these programs will be the same for both types of firms, yet accredited that the "sample size" of the 40 companies he looks after would be too small for a valid answer.

R2: Moderating Effects of Conventional SMEs and Born Globals on the Effect of Export Promotion Programs on Internationalization Speed

Environmental technology companies that are specialized in geothermal technologies oftentimes are too small so that internationalization simply is not considered. A distinction between the implementation of conventional SMEs and born globals cannot be made, either, so the informant.

R3: How to Increase the Effectiveness of Export Promotion Programs and Hence Internationalization Speed - Issues and Solutions

The informant emphasized that for the geothermal industry it is hard to increase the effectiveness of the programs as there are problems in the industry itself, particularly in Germany, rather than in the export promotion programs:

"[…] three years ago, the price for gas decreased by 30 percent, this all in all hurts the renewable energies area. […] and once the domestic market is missing, exporting is also slightly difficult."

Finally, the interviewee expressed great confidence that investing in education in worldwide hotspots and getting international experts to Germany would yield a long-term improvement of export promotion effectiveness.

Case 3 – NGO – Market Entry Consultancy: Entryplanet

Introduction to the Case

Entryplanet provides its clients with a full range of consulting services relating to an intended global market entry (Entryplanet website, 2013) [9] . Entryplanet’s clients include companies, active in all sorts of industries, as well as governments in 120 countries, which are supported by the consultancy’s global network of partners. According to the interviewee, the NGO’s core competency is a bundle of marketing, sales and PR, which is essential for entering a new market. All in all, the NGO provides firms with all services required for a market entry from a single source and implements projects within a time period of approximately three to five years, depending on the case. Internationalizing with Entryplanet requires companies to have a budget of at least €100000, which according to the Interviewee, could partly be obtained from investors and/or governmental institutions. The NGO cooperates with GTAI as well as the foreign chambers of commerce, yet is the sole organization offering all services, whereas:

"There are of course parts of export promotion, which are offered by the foreign chambers of commerce, who say: "we also support the market entry process", but what we do is 100 percent and they do a part of it."

According to the informant, when receiving consulting services from Entryplanet, there will be an interplay between the client, the NGO itself, and the NGO’s partners worldwide. The NGO has existed for four years and currently employs 15 consultants. Finally, Entryplanet markets its own services via word-of-mouth, delegation trips, and its global partner network.

Being asked about his view on the constitution of the German export promotion agency network, the interviewee listed the BMWi, GTAI, GIZ, the different chambers, as well as organizations at a state level, and the embassies.

"After these, the NGOs come into play."

Finally, the interviewee accentuated that there is no competition among the members of this export promotion network.

R1a: The Effect of Export Promotion Programs on Internationalization Speed

The interviewee’s view on international success is the following. First of all, it depends on the objective of internationalization. Second, revenue, which is seen by most companies as the core of internationalization success, profoundly depends on a strong brand:

"[…] the goal is to build the brand. Revenue merely is a result of brand awareness."

According to the informant, internationalization speed depends on the objective of internationalization and the investment a company is willing and able to make. In other words, if a company spends more money on building its brand, the speed of internationalization will generally be higher.

The main positive effects of Entryplanet’s services are increased brand awareness, and all information from a one-stop shop, so the interviewee.

In comparison with other export promotion agencies, such as GTAI, the informant emphasized that other agencies are specialized and very good at what they are doing, and that their effects on internationalization speed will neither be weaker nor stronger.

Being asked about Entrylanet’s strongest foreign market entry instrument, the interviewee answered:

"Ultimately, it’s our network. Our global network. Because it really accelerates a lot and spares […] the client his/her own effort spent on searching."

The informant added that the network could save a client up to two years of time in the process of internationalizing, including the search for relevant business partners etc.

Finally, Entryplanet ensures the effectiveness of its programs with the help of the so-called "Entrylocker" system. With this system, the NGO first identifies the current ("ist") situation and the desired ("soll") situation and then fills the gap between these two situations by means of its solutions. This system is backed up by a project management system to ensure a timely project implementation. Moreover, the NGO asks its clients for feedback on a regular basis and emphasizes the importance of understanding its clients to the fullest extent possible, mentioning minor differences in a language used as an example.

R1b: Differences in Export Promotion Effectiveness for Conventional SMEs and Born Globals

With regards to the question whom Entryplanet can help more - firms that first internationalized on their own or firms that seek the advice from Entryplanet right from the beginning of internationalization - the informant responded:

"This is a matter of awareness. The awareness of needing professional support logically is higher if one has tried on his/her own. Well, the probability is higher. […] It is more attractive with those that have gathered their own experience. […]"

He further explained that having to create the awareness of all the different issues of internationalization a client might face takes time. Hence, the internationalization speed on average might be higher for firms that have gathered their own internationalization experience prior to asking for advice from Entryplanet.

Being asked about the different effects Entryplanet’s services can have on conventional SMEs as compared with born globals, the interviewee clearly stated that given the success of born globals, they are not in need of export promotion services:

"They proved themselves that they can do it. They don’t need us."

R3: How to Increase the Effectiveness of Export Promotion Programs and Hence Internationalization Speed - Issues and Solutions

Discussing the experience the researcher and the informant have made in the export community of ixPOS, the informant stated:

"We have a lot of ideas how to market this portal more effectively. […] this is a product, which lives from its participants and its activity. […] we have very good ideas regarding ixPOS since at the beginning we devoted ourselves to it and exhaustively used it. […] it is an extremely sound network. […] We see a lot of opportunities to offer it in a more high-quality manner. This needs to be publicized, marketed. […] If GTAI is interested, we could meet and investigate how we could effectively design it within a project."

Being asked what else could increase the effectiveness of the export promotion programs, mentioning more cooperation between the export promotion organizations within the export promotion network as an example, the informant responded:

"Yes, clearly. We all exist and we all know from each other. […] We have so many NGOs and governmental organizations that perform extremely well. However, and here we get back to the needs of an entrepreneur… and this is what it’s for, we shouldn’t forget about this. […]If one wants to offer this from a single source, or in a kind of a centralized or consolidated form, there needs to be a central organization that summarizes these services. […] And this doesn’t exist yet. And exactly this is the central point […] and Germany needs this."

This is where Entryplanet should come into play, in the center of the export promotion network, so the informant:

"The capability is there, but the strike isn’t yet. So if we want strike capability, we need to consolidate it."

6.3 Participating Conventional SMEs

Case 4 – Participating Conventional SME: PEWO

Introduction to the Case

PEWO is an environmental technology company, which builds efficient cooling and heating systems (PEWO website, 2013) [10] . Data on the company’s background and internationalization metrics can be found below.

PEWO

Basic Data

Countries

Internationalization Activity Measures

Number of Employees

250

Foreign Revenue/Domestic Revenue 2009

Score 1

5/95

1

Year of Foundation

> 30 years ago;

2003 new foundation

Foreign Revenue/Domestic Revenue 2012

Score 2

5/95

1

Initiation of Internationalization

2003

Various countries

Number of Countries

2009

Score 3

21

5

Export Promotion Participation

2012

Finland

Number of Countries

2012

Score 4

21

5

Total Internationalization Period (years)

10

About 21 countries: e.g. A, AFG, B, CH, GB, I, IE, NL, PL, S, TR

Geographic Distance

2009

Score 5

Europe

3

Internationalization Control Period

2009-2012

2009-2012:

See total internationalization period

Geographic Distance

2012

Score 6

Europe

3

Internationalization Speed Score 2009

3

Internationalization Speed Score 2012

3

Speed Acceleration 2009-2012

+0%

Average Internationalization Speed Score

3

According to the interviewee, the company has never been internationally active during the 80s and 90s and started an internationalization path of sporadic nature in 2003. The focus of PEWO is European market and will be in the near future. The background of the management is largely local and not particularly international. Combining these facts with the data in the table above, PEWO can unambiguously be identified as a conventional SME.

R1a: The Effect of Export Promotion Programs on Internationalization Speed

PEWO participated in a delegation trip to Finland, which had been organized by the foreign chambers of commerce in Finland. All in all, the informant was satisfied with the export promotion service since the event had been organized and financed by the foreign chambers of commerce and included a presentation, connecting with potential business partners, as well as a market analysis:

"[…] since this was financed by the foreign chambers of commerce, this was a pretty decent thing."

As positive aspects he underlined the way the event was executed, the opportunity to speak in front of a relevant audience, and the chance to have conversations with potential clients. So far, nevertheless, the export promotion service has not led to any business contacts worth mentioning. On the other side, one could not know whether there will be a better outcome of the event in the near future. Moreover, one could also see the positive side of not having gotten any substantial business contacts yet:

"[…] because the insight is positive: over there, it probably doesn’t work out too easily."

All in all, the interview could not see a substantial effect of export promotion programs on the firm’s internationalization speed, yet generally thinks that the effect of export promotion programs are positive. The overall internationalization speed score obtained within this research is 3 (medium speed). There has been an internationalization speed acceleration of about zero percent within three years.

The concept of internationalization speed, according to the informant’s understanding, is international revenue and market share relative to the amount of time needed in order to increase these two measures.

R2: View and Implementation of Export Promotion Programs and Internationalization

The interviewee became aware of the export promotion service through background knowledge obtained through his University studies, and ultimately through own research via the Internet. PEWO is still open for new export promotion services but could have capacity problems when faced with a large number of new international orders. For the interviewee, the export promotion service utilized was important, but for the company:

"[…] it wasn’t at the top of our priority list."

For his firm, it is more important to pursue personal international contacts:

"I highly value interpersonal relationships […] and less formalism, market research institutions, and market analyses […]."

This is done in order to succeed in the firm’s internationalization process in the long-run. Further, the company is not interested in fast international growth but in organic growth. In the view of the informant, this also contributes to the success of his firm.

Finally, the firm is not aware of many export promotion opportunities that go beyond the state level, while it sometimes checks the webpage of the BMWi.

R3: How to Increase the Effectiveness of Export Promotion Programs and Hence Internationalization Speed - Issues and Solutions

According to the interviewee, there is irregular contact with the foreign chamber of commerce in Finland.

While the process of obtaining export promotion needs from PEWO was easy (via e-mail), the informant thought that the result of identifying the export promotion needs of the firm could have been more tailored towards the company:

"[…] in order to establish even better contacts."

He acknowledged, however, that the foreign chambers of commerce could sometimes be overwhelmed by the level of detail they have to face in a given industry.

With respect to the online platform ixPOS and its export community, the interviewee expressed his satisfaction. Nonetheless:

"[…] the whole thing has just started and hence is progressing little by little. But it’s a good thing, which should be made public more heavily so that it’s more well-known."

Being told about the researcher’s experiences in the export community, the interviewee responded in greater detail:

"Yeah, there really is partially spam, and partially scam […] but it needs to be marketed more heavily, I think, so that reasonable firms and serious enquiries are in there."

Furthermore, for the sake of acquiring business contacts, the informant currently is registered in various portals, such as ixPOS and LinkedIn and various others, but:

"But it would be nice if there was one central one-stop shop, like ixPOS, which, however needs to be more publicized, so as to collect this…"

Case 5 - Participating Conventional SME: Lipp

Introduction to the Case

Lipp is an environmental technology firm, which constructs containers for the reliable storage and processing of solids and liquids (Company website, 2013) [11] . The company website (2013) highlights the following key properties of Lipp:

"50 years of experience - a family-owned company for the past 50 years with over 170 pioneering, prize-winning patents and 10,000 projects - realised worldwide"

Lipp

Basic Data

Countries

Internationalization Activity Measures

Number of Employees

55

Foreign Revenue/Domestic Revenue 2009

Score 1

30/70

2

Year of Foundation

1958

Foreign Revenue/Domestic Revenue 2012

Score 2

50/50

3

Initiation of Internationalization

1980

China

Number of Countries

2009

Score 3

70

5

Export Promotion Participation

1980

Worldwide

Number of Countries

2012

Score 4

80

5

Total Internationalization Period (years)

33

> 80 countries, e.g. CAN, CN, CZ, FM, GR, J, R, ROK, SYR

Geographic Distance

2009

Score 5

Wordwide

5

Internationalization Control Period

2009-2012

2009:

CN, ROK, J

2012:

CAN, FM, I, T, USA, etc.

Geographic Distance

2012

Score 6

Worldwide

5

Internationalization Speed Score 2009

4

Internationalization Speed Score 2012

4.3

Speed Acceleration 2009-2012

+8.3%

Average Internationalization Speed Score

4.15

The informant emphasized that Lipp, primarily by means of a licensing approach:

"is a small medium-sized company, which, despite its size, is very internationally oriented and which will continue to internationalize."

Since, however, Lipp was not internationally oriented right from inception of its business it can be categorized as a conventional SME. Considering the enormous amount of countries the firm operates in, and the speed at which the firm reached these foreign markets by skipping the usual first step of a regular internationalization process – exporting - its internationalization path is rather unconventional. Hence, it can be identified as a conventional SME with some born global internationalization path elements.

R1a: The Effect of Export Promotion Programs on Internationalization Speed

Since the 1980s, Lipp has participated in international trade fairs, particularly in joint booths, arranged by the BMWi and the foreign chambers of commerce. The informant emphasized that the costs and the complexity of participating in these trade fairs were very low due to the joint booths organized by the export promotion agencies, which in turn facilitated internationalization. Being asked, whether the informant thinks that export promotion programs increased internationalization speed for his firm, he responded with confidence:

"[…] by getting to these international trade fairs and by being more internationally present, more people become aware of one’s business. Definitely."

With regards to any potential negative effects of export promotion programs, the informant stated:

"We perceive export promotion programs as fundamentally positive.

[…] Having regularly attended international trade fairs for years, international interest in our business significantly increased."

This also reflected in Lipp’s average internationalization speed score of 4.15 (high speed). Moreover, in the control period (2009 until 2012), the firm’s internationalization speed accelerated by 8.3 percent. As for the view on internationalization speed, the informant defined it as the international activity in foreign markets relative to time; international activity being the activities in different foreign markets and/or within a foreign market.

R2: View and Implementation of Export Promotion Programs and Internationalization

Lipp first got to know about the international trade fairs promotion instrument through the foreign chambers of commerce. However, Lipp first acquainted itself with the possibilities of expanding to foreign markets on its own. The informant stated that Lipp has not utilized any more "complex" export promotion services, such as export financing programs. Their approach to export promotion programs was to participate in as many internationalize trade fairs and countries as possible, in order to be present in those markets.

With respect to the importance of export promotion programs for his firm, the informant explains:

"We internationalized both via export promotion and via existing contacts in various countries. We did not prefer any of these two approaches."

Finally, the interviewee accentuated that due to its size, it is not able to employ a person who is always looking for suitable export promotion programs. This is probably rather the case for a larger company (informant).

R3: How to Increase the Effectiveness of Export Promotion Programs and Hence Internationalization Speed - Issues and Solutions

According to the informant, one key success factor for internationalization success is Lipp’s technology. Additionally, Lipp adapts itself to the countries it conducts business in, so the informant. Finally, the interviewee underlined another key success factor for sound internationalization:

"[…] innovative strength; meaning that one continuously gets new things out there and continuously develops one’s business […]."

On the one hand, the informant stated that firms, which have participated in trade fairs, regularly receive calls and information about upcoming events by export promotion agencies. On the other hand, so the interviewee, his firm was not asked about their exact export promotion needs. He thought that the approach of export promotion programs was to rather first establish a given program and then to ask firms whether they needed this. Based on his experience, the information offered by the foreign chambers of commerce could be improved:

"Many of these services offered by the foreign chambers of commerce often are some country facts…well, usually, the information that is for free… there you can find the GDP of Thailand and there are so and so many people […] information you can also find on Wikipedia […]."

The informant thought that export promotion programs should be more adapted to today’s conditions:

"The way export promotion programs are designed to some extent, is probably pretty old… Maybe from the 80s. They should not solely take Germany as a starting point but also try to consider the targeted foreign countries, markets and clients."

Moreover, he thought that more transparent information on a more regular basis would be useful with respect to the different export promotion options and current events:

"You are a member of the chamber of commerce and industry, pay all kinds of fees and taxes and so on, and then it wouldn’t be too bad if there was proactive awareness creation by these ministries and offices."

Finally, he expressed that the overall German export promotion system should be more transparent and easier to understand:

"Whom do I need to contact for these and these purposes? Who is responsible for me? What can I expect from whom? What can I not expect from whom?"

6.4 Non-participating Conventional SMEs

Case 6 – Non-participating Conventional SME: Anonymous Firm

Introduction to the Case

Anonymous Firm is an environmental technology company, which builds environmental protection systems to purify air, water, and soil (Anonymous, 2013). The main characteristics of the firm and results determined from the interviews and the company’s webpage are summarized in the table below.

Anonymous Firm

Basic Data

Countries

Internationalization Activity Measures

Number of Employees

7

Foreign Revenue/Domestic Revenue 2008

Score 1

n/a

2

Year of Foundation

1980

Foreign Revenue/Domestic Revenue 2011

Score 2

20/80

2

Initiation of Internationalization

2005

Belgium, Netherlands

Number of Countries

2008

Score 3

2

1

Export Promotion Participation

-

Number of Countries

2011

Score 4

2

1

Total Internationalization Period (years)

8

Belgium. Netherlands

Geographic Distance

2008

Score 5

Neighboring

1

Internationalization Control Period

2008-2011

Belgium, Netherlands

Geographic Distance

2011

Score 6

Neighboring

1

Internationalization Speed Score 2008

1.3

Internationalization Speed Score 2011

1.3

Speed Acceleration 2008-2011

+0%

Average Internationalization Speed Score

1.3

Based on the data above, the firm is identified as a conventional SME.

R1a: The Effect of Export Promotion Programs on Internationalization Speed

As the informant’s firm has not participated in any export promotion program yet, there is no effect of export promotion programs on the internationalization speed of this case. Being asked whether he thought that export promotion could help his firm internationalize, he expressed:

"Yes, why not?"

The informant expressed positive feelings with respect to the fact that his firm has been receiving financial support within a scientific promotion program of the BMWi in cooperation with the University of Duisburg.

The firm has an overall internationalization speed score of 1.3 per year (very low speed). Within the firm’s control period, there was no speed acceleration. Regarding the issue of internationalization speed, the informant emphasized that internationalization speed depends on the size of a client’s firm: the bigger, the slower the process.

R2: View and Implementation of Export Promotion Programs and Internationalization

As this firm does not utilize any export promotion, it serves as a ‘negative’ case for this study.

When the interviewer asked the interviewee about the different options within the German export promotion landscape, the interviewee answered unequivocally:

"I do not have any idea of the different options."

His firm has attended a foreign trade fair in Belgium once. He adds:

"In Belgium, we got insufficient feedback, and we are a small firm, so it is difficult, how should I say, to find time for these events."

R3: How to Increase the Effectiveness of Export Promotion Programs and Hence Internationalization Speed - Issues and Solutions

The informant believes that his company was successful in its internationalization process due to its technology, the absence of the firm’s technology in foreign markets, and its price. Also, he mentioned, internationalization is facilitated when there is a middleman involved:

"Seeking clients on our own in a foreign country tends to be difficult. However, having someone as a contact person substantially facilitates getting an order."

When asked what he would desire from an export promotion program, the informant accentuated that such an intermediary would be helpful. Apart from that, he would like to get financial support. Moreover, he suggested:

"[…] Endeavors that reduce barriers so that one could find one’s way around."

Case 7 – Non-participating Conventional SME: ExTox Gasmess Systeme

Introduction to the Case

ExTox Gasmess Systeme is an environmental technology firm, which builds measuring and control systems for various types of toxic gases. All other information relevant for the identification of firm species and internationalization path, and its corresponding speed, can be found in the table below.

ExTox Gasmess Systeme

Basic Data

Countries

Internationalization Activity Measures

Number of Employees

63

Foreign Revenue/Domestic Revenue 2009

Score 1

14/86

1

Year of Foundation

2004

Foreign Revenue/Domestic Revenue 2012

Score 2

18/82

1

Initiation of Internationalization

Not defined

Number of Countries

2009

Score 3

12

4

Export Promotion Participation

-

Number of Countries

2012

Score 4

14

4

Total Internationalization Period (years)

Not defined

A, CZ, DK, ES, F, I, IND, NAM, NL, PNG, Q, S, SK, T

Geographic Distance

2009

Score 5

Worldwide

5

Internationalization Control Period

2009-2012

A, CZ, DK, ES, F, I, IND, NAM, NL, PNG, Q, S, SK, T

Geographic Distance

2012

Score 6

Worldwide

5

Internationalization Speed Score 2009

3.3

Internationalization Speed Score 2012

3.3

Speed Acceleration 2009-2012

+0%

Average Internationalization Speed Score

3.3

ExTox Gasmess Systeme is a conventional SME since, according to the informant, the firm has not been active in foreign markets from inception or close to inception. Other than that, the informant emphasized that most international activities were "exceptional situations", which largely happened as a reaction to international orders and usually not from the company’s own internationalization drive. As an example, he mentioned:

"[…] we are very present at standard trade fairs in Germany […] and it often happens that someone from Qatar or from Thailand appears and says that he would like to become our exclusive sales rep. in Qatar or in Thailand and that he would sell many of our devices."

Another reason why the firm is a conventional SME is that the company’s management does not have an international background.

In 2012, the firm discussed how to handle international orders in the most effective manner possible, the result being that ExTox Austria and ExTox Italy were founded. The informant added:

"[…] we promoted this, but they really are autonomous, independent firms in Austria and in Italy, which for the main part sell our products.

[…] we expect to reach clients, which we wouldn’t be able to get from distance."

R1a: The Effect of Export Promotion Programs on Internationalization Speed

As the company is not utilizing any form of export promotion, there is no effect of export promotion programs on the internationalization speed of this firm. The average internationalization speed score this firm has reached on its own account is 3.3. Nevertheless, the acceleration of its internationalization process is nearly zero.

R2: View and Implementation of Export Promotion Programs and Internationalization

The informant of ExTox emphasized that it has never participated in any export promotion program – reason being that the firm has not been interested in growing internationally - and would not be aware of a particular way to find information about such a program.

The firm’s attitude towards the implementation of export promotion programs currently is, so the informant:

"It is beyond question that we have potential, which we haven’t exploited yet […] everything that has to do with exporting, technically is interesting for us, but to some extent we’re walking the path of least resistance."

Finally, the interviewee mentioned that ExTox has considered participating in a trade fair in Brazil. Nevertheless:

"[…] the trade fair costs €4000, and then the journey and the organization […] ultimately, the revenue we would expect from this… it’s not worth it…

But if you or someone else would tell me, OK, from this and this agency you can receive a promotion of €1000 […], then we would probably do it."

R3: How to Increase the Effectiveness of Export Promotion Programs and Hence Internationalization Speed

Being asked what the informant would expect from an export promotion program, he responded that in a foreign country, such as Brazil:

"[…] we would need support as for bureaucracy, and […] I don’t know the legislation that well there, for example in the US, there is a restrictive legislation, which restrains us a bit from its market."

6.5 Born Globals

Case 8 – Born Global (Participating): atech innovations

Introduction to the Case

atech innovations is an environmental technology company that offers its clients ceramic membranes for microfiltration and ultrafiltration (Company Website, 2013) [12] . Further information on the company background can be found in the table below.

atech innovations

Basic Data

Countries

Internationalization Activity Measures

Number of Employees

14

Foreign Revenue/Domestic Revenue 2000

Score 1

80/20

5

Year of Foundation

1989

Foreign Revenue/Domestic Revenue 2003

Score 2

80/20

5

Initiation of Internationalization

1989

F, ES, I, CH, NL

Number of Countries

2000

Score 3

10

3

Export Promotion Participation

2000

Number of Countries

2003

Score 4

12

4

Total Internationalization Period (years)

24

F, ES, I, CH, NL, DK, S, N, FIN, US, RUS, RC, ZA

Geographic Distance

2000

Score 5

Europe + US

4

Internationalization Control Period

2000-2003

2000: F, ES, I, CH, NL, DK, S, N, FIN, US

2003: + RUS, RC

Geographic Distance

2003

Score 6

Europe + Asia + US

5

Internationalization Speed Score 2000

4

Internationalization Speed Score 2003

4.7

Speed Acceleration 2000-2003

+16.7%

Average Internationalization Speed Score

4.3

The firm has been identified as a born global as it started its internationalization efforts right from inception of the business. Moreover, the top management has an international background:

"For me, being international is inevitable as I am an immigrant."

R1: The Effect of Export Promotion Programs on Internationalization Speed

The company first went to international trade fairs on its own; in 2000, it started participating in joint booths, for instance in China, promoted by the BMWi.

According to the informant, his company could not clearly identify any positive effects of export promotion programs. On the other side, the numbers obtained by the interviewee suggest an overall internationalization speed score of 4.3 (high speed), and a speec acceleration of 16.7 percent within three years. In the informant’s view, internationalization speed depends on the number of foreign markets a company is active in.

R2: View and Implementation of Export Promotion Programs and Internationalization

The firm regularly attended international trade fairs and integrated these into the company’s profile:

"It has become a tradition."

The informant himself was aware of export promotion programs already during the mid 80s.

R3: How to Increase the Effectiveness of Export Promotion Programs and Hence Internationalization Speed - Issues and Solutions

Issues.

First, regarding the process of getting into an export promotion program, the interviewee felt that it used to be arbitrary:

"The way they did it in Cologne was to invite interested companies, and then you had to fight for the best spots."

Second, he indicated that the programs were not completely satisfying since:

"Such a booth gets a couple of thousands of Euros of subsidization, but beyond that, there is no feedback, no accompaniment, all of this does not exist."

Regarding these trade fairs, he emphasized that local promotion agencies should be involved. At a later stage, he expanded his argument by saying that these local agencies are neither interconnected with export promotion agencies at state nor at federal level.

Finally, the interviewee stated that his company was never asked about its export promotion needs.

Solutions.

atech innovations’s key to internationalization success is that it was able to serve many large markets with employees who spoke the corresponding languages on native tongue level (informant).