Drivers of SME internationalisation: implications for firm growth and competitiveness (CR 2014)

The aim of the study is to provide new empirical evidence on the degree and modes of internationalisation of European SMEs using various firm level datasets. A specific objective of the study is to investigate the link and causality between firm growth and international activity, in the sense, for example, of whether there may be critical thresholds below which firms are less likely to export. A further focus of the study is the role of indirect exports. We investigate drivers of internationalisation and firm characteristics of internationally active SMEs as compared to non-internationalised firms. Indicators, such as the export participation and export share of SMEs as compared to large firms are calculated. Particular attention is put on the patterns of SMEs exports by destination region (EU, EEA, other countries). The study uses probit and two-part models to determine the export status and export intensity. Possible factors influencing the export decisions of SMEs include the initial level of labour productivity, innovation activities, foreign ownership and geographical location and policy factors such as business climate conditions. Based on the empirical results, we develop a set of policy recommendations. The project is part of the WIFO-led Framework Contract and provides one of the background studies for the European Competitiveness Report 2014. It is conducted in cooperation with ESRI, CIREM and Statistics Sweden.