International Journal of Management, Knowledge and Learning, 1(1), 109–123
Global SMEs’ Strategy
Mitja I. Tavčar and Valerij Dermol
International School for Social and Business Studies, Slovenia
In developed countries the number of SMEs vastly exceeds the number of
MNCs. An important share of SMEs are somehow linked to MNCs – but the
impression prevails, that SMEs are in a subordinate position and certainly do
not have a global strategy. We argue, however, that there should be partner-
ship relations between MNCs and SMEs. The share of importance is condi-
tioned by the degree, how well SMEs understand the MNCs global policy and
how they support it with their activity. Through that MNCs become a part of
SMEs’ global strategy, which consequently becomes their strategy as well.
The paper includes a number of SMEs’ considerations and actions to be in-
cluded in the MNCs’ global strategy – as well as some propositions upon
public support needed for this purpose.
Keywords: outsourcing, global business strategy, small and medium sized
enterprises, multinational corporations
Introduction
SMEs represent a huge economic potential. Their strength is in the number
of enterprises, which is very high, in the potential to grow and prosper
in the sense of creating employment opportunities, but also in the sense
of creativity and innovation. Nevertheless, in quite a lot of developed and
developing countries this potential remains just a potential.
For example, results of GEM (Rebernik, Tominc, & Crnogaj, 2011) show
that in many European countries in the year 2010 the volume of en-
trepreneurial activities decreased. In seems that the most important reason
for closing many enterprises has been their low profits or even losses. Be-
sides, one of the problems of many countries, when considering the growth
of SMEs, is the low growth aspirations of the active population and low
internationalisation levels of SMEs as well. One of the reasons for such
a situation might be the relatively low level of educational attainment in
SMEs.
One of the solutions to these problems might be in linking SMEs with
larger companies. The latter might act as a catalyst encouraging innovative-
ness of SMEs, their aspirations to grow and internationalise and to con-
tribute as much as possible to national and international economies. Links
between SMEs and larger companies might be established in different ways,
but in our paper we especially consider the possibility of so-called outsourc-
ing and offshoring. In our opinion a strategic approach to this kind of busi-
www.issbs.si/press/ISSN/2232-5697/1_109-123.pdf
110 Mitja I. Tavčar and Valerij Dermol
ness cooperation should be implemented in SMEs and larger companies
as well. We believe that besides SMEs and larger companies, economic
policy makers should be involved too. They should try to develop appropri-
ate business frameworks, such as education and training, knowledge and
technology transfer, development policy and the like.
Importance of Small and Medium Enterprises (SMEs)
for National Economies
SMEs’ Contribution to Economies
By definition, SMEs should be independent and not part of a larger en-
terprise, they should be managed in a personalized manner, and have a
relatively small share of the market (Carter & Jones-Evans, 2006). There
are three different SMEs categories – micro, small and medium sized en-
terprises differentiated by the number of employees, turnover and asset
thresholds. We can talk about SMEs when at least two of the three criteria
are met – there are fewer than 250 employees employed in SMEs, their
turnover should not exceed 50 million EUR, and their asset value should
not exceed 43 million EUR.
The analysis of the importance of SMEs operating in national and world
economies (Carter & Jones-Evans, 2006; GEM, 2011) shows that the share
of SMEs exceeds 99.7% of all enterprises in the majority of countries (e. g.
EU, US and Japan) and that the majority of the active population (i. e. more
than 50% or even 70% in the case of Europe) are employed by SMEs. In
accordance with this GEM (2011) reports that in OECD countries SMEs
create about two thirds of jobs.
Innovation and technological change seem to be an important factor re-
lated to the growth of the SMEs sector in recent years as well. Carter and
Jones-Evans (2006) add that large companies’ defragmentation, develop-
ment of the service sector, changes in the labour market and public policies
have been positively related with the prosperity of SMEs in recent years.
Synergies between SMEs and Large Enterprises
Nevertheless, there are some important aspects which should be men-
tioned when considering the positive roles of SMEs in modern economies.
Namely, not all of the numerous SMEs possess high potential for creating
new jobs. Research (see Carter & Jones-Evans, 2006) confirms that only
a very small proportion of SMEs, the so-called ‘gazelles,’ significantly con-
tributes to creating new jobs. Besides, very few SMEs grow. The overall
rates of employment growth are especially low in Europe. Scarpeta, Hem-
mings, Tressesl, & Woo (2002), for example, showed that employment gains
of US SMEs are significantly higher than those of European SMEs – their
rates of growth are two times higher than the employment growth of Finnish
International Journal of Management, Knowledge and Learning
Global SMEs’ Strategy 111
SMEs and four times higher than the growth of enterprises in the UK or
Denmark.
It also seems that too much emphasis can perhaps be given to the con-
viction that SMEs represent a key source of innovation. Carter and Jones-
Evans (2006) highlight some research claiming that most innovative firms
in the US and Germany are not SMEs but larger enterprises, especially the
ones with formal R&D departments. We believe that SMEs are often an
important source of new ideas and creativity (Schumpeter, 1934), but as
already said, innovation and new knowledge capitalisation is more in the
domain of larger enterprises.
It seems that the power of influence of SMEs within national and interna-
tional economies is lower than the influence of larger companies. Compared
to large enterprises SMEs are small in size, they do not grow as much as
they could, and their innovation capabilities are often weaker than expected,
but on the other hand they are quite numerous and employing more peo-
ple as well, when compared to the number and employment rates of larger
enterprises. UNCTAD (2010), for example, reports that there are over 400
million entrepreneurs in 54 countries, but according to World Investment Re-
port there are only 889,416 large, multinational companies (MNCs) around
the world with 82,053 parent corporations and 807,363 affiliates. As one
can see, the ratio between SMEs and MNCs is approximately 1:500.
Nevertheless, the practice shows high levels of interdependence be-
tween SMEs and large enterprises. European statistics show that more
than 3.7 million or 7% of SMEs are suppliers to major industrial firms (EIM
& Ikei, 2009) on one hand, and on the other, even ‘the largest firms [. . .]
cannot always undertake major innovations alone’ (Dickson & Hadjimano-
lis, 1996). Innovation is a learning process which requires the exchange of
knowledge and a high level of interaction and cooperation between different
partners (Roelandt & Hertog, 1999).
In the studies of networking some authors focus primarily on the hor-
izontal links and cooperation between SMEs. Marshall (1961), for exam-
ple, names this type of networks industrial districts. Others highlight the
links between large enterprises and their suppliers, usually SMEs (Marceau,
1999). In such cases hierarchical relationships or clusters in the vertical
supply chain appear. Links may be developed between firms which need
or base their business on the same resources. Furthermore, relationships
emerge among enterprises involved in joint innovation or joint production
(Marceau, 1999). Whittington, College, and Owen-Smith (2009) list other
possible reasons for networking, e. g. the reduced costs of moving goods,
increased availability of people and ideas, external economies of scale, al-
lowing clustered firms to benefit from spill-over of knowledge, and making
R&D programmes more fertile than those of their isolated competitors. Net-
Volume 1, Issue 1, 2012
112 Mitja I. Tavčar and Valerij Dermol
working is an important factor in fostering innovation (Dickson & Hadjimano-
lis, 1996). Summarising some research findings, Whittington et al. (2009)
note that ‘there is a strong correlation between an organization’s network
of partnerships and its innovative output, particularly in research-intensive
industries.’
Need to Support the SMEs
Governments can have a profound impact on how all firms, large and SMEs
operate and on their opportunities to grow. Governments’ policies in this
area have become key focal points of efforts to help improve how SMEs
develop and cooperate with large enterprises.
There are three main dimensions to the government role (Carter & Jones-
Evans, 2006). Governments can act as regulators, as economic agents and
as strategic planners and promoters. As regulators they determine trade
rules, legal forms of companies, the extent of legal limits regarding com-
pany liabilities, strength of anti-trust and monopoly regulations, and influ-
ence regulation on conditions at work, consumer protection, environmental
regulations, etc. As economic agents they define taxation, and influence the
competitive environment by developing of government services, acting as
an important employer and by introducing different social engineering and
redistribution policies. As strategic planners, governments finance and sup-
port SMEs by offering grants, subsidies, loans or information and knowledge
through education and training, R&D, marketing and productivity initiatives,
and international trade protection and barriers.
Besides, government can significantly affect linking and cooperating ini-
tiatives between SMEs and larger enterprises. The Slovenian government,
for example, puts quite a lot of effort into encouraging R&D links and train-
ing focused links between SMEs, larger enterprises, and also research or-
ganisations and higher education institutions by introducing financial incen-
tives. From 2009 to 2015 the government plans to encourage R&D and
training activities through three key mechanisms of integration (Compe-
tence Centres, Centres of Excellence and Development, Centres of Slove-
nian Economy) amounting to about 314 million EUR. This amount of money
shows the relatively high importance of these three mechanisms, since it
exceeds the volume of almost two years of regular government investment
in R&D in Slovenia (Dermol & Drev, 2011).
Global Business Strategies of Multinational Companies (MNCs)
Definition of MNCs
In the paper we focus on larger companies operating in international mar-
kets. It is proper, however, to distinguish among companies concerning
their strategic focus. We can identify international, transnational, global and
International Journal of Management, Knowledge and Learning
Global SMEs’ Strategy 113
Fo
cu
s
on
co
st
re
du
ct
io
n
Focus on local responsiveness
International Multinational
Global Transnational
Figure 1 Types of MNCs
multinational companies. In short, international companies are exporters
and importers; they have no foreign investment and make their products
or services only in their home country. Transnational companies invest in
many countries, may have global headquarters, but also distribute decision-
making power to various national headquarters. Multinational companies, in
the narrower sense, have investments only in a few countries and are more
responsive to local preferences than a global company. Global companies,
on the other hand, have investments in dozens of countries but maintain
strong headquarters only in one, usually their home country. In this paper,
however, we use the term ‘multinational’ for all companies operating in sev-
eral or many countries (see Figure 1) (Hines, 2007).
Total revenues of the 50 largest MNCs in the world in 2010 were quite
large – approximately $850 billion (for comparison, the US federal budget
for 2012 was in the amount of $2500 billion). MNCs create and enact
strategies that are best suited to their power and core capabilities, trying
to think globally and operate locally (Wikipedia, 2012). MNCs’ mantra is
obviously economy of scale, since they prefer to homogenize products as
much as the markets allow them to keep the costs as low as possible. Their
marketing campaigns often span the globe with only one message (albeit in
different languages) in an attempt to smooth out differences in local tastes
and preferences. A crucial factor for MNCs is also the jurisdiction in the
countries where they operate.
Outsourcing and Offshoring as an Opportunity for or a Threat to SMEs
Global Business Strategy can be defined as the business strategies en-
gaged by the businesses, companies or firms operating in a global business
environment and serving consumers throughout the world. Global business
strategies are adopted by businesses to meet their short and long term
objectives.
The short term goals of the business would be related to improving the
Volume 1, Issue 1, 2012
114 Mitja I. Tavčar and Valerij Dermol
day-to-day operations of a company while the long term objectives are gen-
erally targeted towards improving a company’s performance – to increase
the profits, sales and earnings, ensuring growth and stability of the busi-
ness and dominance over the national or regional market in the long run
(Economy Watch, 2010). Nevertheless, the shortest way to improve com-
pany performance is to cut its costs, and this is much easier outside than
inside the firm. Additionally, large companies’ economics are burdened by
administrative costs, internal inefficiency, cost of unionized wages etc.
Further, when considering cost structure, we assume that the share of
wages substantially exceeds the cost of materials etc., especially in high-
tech companies. Additionally, the wages of qualified workers and profes-
sionals – which may have ample power vs. management – can’t be easily
controlled. This however, is quite difficult to handle in the legal, social and
economic environment of developed countries, and much easier in many
less developed countries. In these countries the supply of labour by far ex-
ceeds demand. Besides, in many such countries the quality of labour and
available talents in demanding disciplines (e. g. informatics) are equal to
or even better than the average levels in developed countries. In addition,
the cost and capacity of up-to-date communications and transport allow for
high quality and low cost bridging of global distances. Due to the efforts
to cut the costs, outsourcing or offshoring (which is defined as overseas
outsourcing) has become an important business strategy of MNCs.
Nowadays, however, there is a passionate resistance to the offshoring
strategies. Namely, many politicians and trade unions argue that they in-
crease unemployment especially among qualified workers in high-tech in-
dustries. The protests seem to be the loudest in US, but are virtually
nonexistent in Europe due to ample reserves of low-paid labour, mostly
in south-eastern European countries. Garrido (2007) presents some sug-
gestive evidence of the adverse impacts of offshoring. Namely, the AFL-CIO
labour unions in USA claim that 3 million jobs were lost since 1998, and
1.78 million or 59% of them were lost due to reductions in manufacturing.
The consulting firm Deloitte found out that one third of big financial insti-
tutions have transferred their operations abroad and 75% of them intend
to do the same in the next two years, and the 2009 Strategic Outsourcing
Conference reported a strong surge in outsourcing due to the crisis. Be-
sides, the Forrester Research consultants predict a transition of 3.4 million
‘white collar’ workers offshore until 2015, Hewlett Packard announced that
800,000 workers would be moved offshore to reduce costs by about $30
million yearly. The report of US Commerce department also notes that US
MNCs have closed 2.9 million jobs in US, and have created 2–4 million jobs
offshore.
Dramatic announcements abound – but beyond the criticism that MNCs,
International Journal of Management, Knowledge and Learning
Global SMEs’ Strategy 115
by offshoring, diminish workplaces in USA at a cost of $300 billion, there
is another truth. Federal law allows (1) tax relief on equipment purchases
connected with offshore activities (approx. $150 million per year) and (2)
payment of tax on profits delayed until repatriation. Thus the MNCs leave
up to $1 billion outside USA. This alone is a dramatic motive to increase
offshoring offshoring (Rasmus, 2010).
But still, at least 90% of jobs in the US require proximity to the main
companies and therefore cannot be transferred overseas (Krodel, F., Keller,
A., Ratajczyk, M., & Maier, 2011). Besides, there are quite some underde-
veloped areas in the US and vicinity as well (e. g. the reserves for American
natives, Mexico). There can be heard voices opposed to inshore operations
in the US but their potentials are limited, last but not least by traditional
culture and ways of life (Jamess, 2011).
Global Business Strategies of SMEs
Concepts of Global SMEs Strategies
The power and influence of MNCs exceed as a rule the capacities of SMEs.
But, SMEs are becoming increasingly a crucial factor of MNCs’ performance
as well. To increase flexibility and decrease costs of hierarchy, large com-
panies strive to transfer as many activities and functions to other firms,
which they control in many ways. It is possible to identify different forms
of activity and function transfer reaching from outsourcing, operating con-
tracts, to daughter firms in a corporation, cooperation, joint-ventures, etc. In
all these cases, decreased costs of hierarchy are in diverse ways compen-
sated by increasing the costs of exerting control and negotiating (Coase,
1937; Williamson 1981; Foss, 1996, 1998).
A simple and short term oriented approach is to use outsourcing to de-
crease costs. Namely, there are so many small firms willing to perform the
same tasks for lower price. Outsourcing is then considered as a strategy fol-
lowing the concept of ‘lean organization,’ creating more value for customers
with fewer resources, maximizing customer value while minimizing waste.
Simplifying the concept can lead to so-called ‘pragmatic outsourcing,’ which
means outsourcing activities to the supplier by quoting the lowest price
(Krym, 2011).
This approach, however, may start a vicious circle of low prices to sup-
pliers – barely enough for existence. Suppliers create no profit to invest in
new core capabilities; they just cut wages and other expenses to the lowest
possible level. As pressures on wages increase, the insourcing enterprise
tries to get higher prices for the same product or service. This is not accept-
able to the outsourcing enterprise, forcing it to find new insourcing partners
and transfer the business to them. The previous insourcer, exhausted and
under pressure to increase wages, is on the short way to bankruptcy. But,
Volume 1, Issue 1, 2012
116 Mitja I. Tavčar and Valerij Dermol
the outsourcing party must invest to enable the new insourcer to perform
according to purchasing specifications, organize logistics, introduce quality
control, etc. All of these often surpass the advantage of lower price to the
supplier. This process might be repeated again and again, leaving behind
bankrupted SMEs and, due to the necessary investments in changing part-
ners, negatively affecting the outsourcing party as well. For SMEs, entering
the ‘pragmatic insourcing’ as the last and desperate attempt to survive
is obviously not a viable strategy. On the other hand, larger companies
need solid partners as well. In such endeavours they expect good value for
money, new initiatives, ideas and capabilities from the insourcing party and
not just low prices for meager services (Lean Enterprise Institute, n. d.).
In seems that the outsourcing party will invest to enhance the partner-
ship only if it encounters a willing and understanding attitude. The initiative
will, therefore, be on the side of SMEs too. They should study and evaluate
possible strategies on their own, prepare and propose improvements for
future cooperation with the larger enterprise and in this way try to influence
the global business strategies developed by MNCs. The SMEs will there-
fore succeed only if they understand, at least partially, the MNCs’ global
business strategy and find their own position in it. On the other hand, it
is possible to introduce their own strategies as well. SMEs global strate-
gies should fit the broader strategies of MNCs and they should become an
integral part of the MNCs’ strategies.
There are so many successful and long-lasting partnerships among
MNCs and SMEs around the world. They are, as a rule, based, on the
SME’s part, on creating a global – even if relatively narrow and limited
– strategy, integrated in the broader strategy of the MNC partner. Then,
‘small is beautiful’ is a lasting qualification.
Development of the Global Business Strategy of SMEs
We can identify a series of actions which should be considered when one
approaches the development of the global business strategy of SMEs:
(a) Identification of Possible Relationships between SMEs and MNCs on the
Hierarchy-Market Continuum (Figure 2)
The core of business strategy of the SME is its relation to MNCs, spanning
from very close to very loose ones – from so-called ‘market’ to ‘hierarchy’
concepts with many other concepts in-between these two extremes. There
are different opportunities and threats hiding within the transitions among
positions in the ‘hierarchy’ and ‘market’ continuum. Each possible relation-
ship and transition among SMEs and MNCs will be carefully analysed in the
process of strategy creation. Obviously, the analysis in a given relationship
between an MNC and an SME can lead to various considerations.
International Journal of Management, Knowledge and Learning
Global SMEs’ Strategy 117
C
os
t
of
co
nt
ro
l
‘Market’ ‘Hierarchy’
Ad hoc marketing
Marketing contracts
Cooperation/exchange
Outsourcing
Partial ownership
Corporation
Uniform enterprise
Total cost
Transaction costs Cost of hierarchy
Figure 2 Hierarchy-Market Continuum
Outsourcing is not the only possible cooperative arrangement between
two or more companies. Even inside of an enterprise, there are many coop-
erative arrangements – among functions, services, levels of management
and, most important, among individuals and groups engaged in joint ac-
tivities. Special cases of cooperation are corporations, possibly including
numerous firms connected by capital bonds. Besides, there are different
forms of cooperation, mostly bound by agreements; outsourcing is only one
of many possible commercial relations formalized in sales and purchasing
contracts, short or long term, fixed or variable; and furthermore licences,
franchises, etc. But, not many relationships are among the equally large,
powerful, popular etc. organizations. Imbalanced relations are facts of life
and can be fair and open, cooperative, even friendly. If they are properly
designed and based on the needs of partners, the relationships among
large MNCs and small SMEs may not necessarily be unequal, tense and ex-
ploiting. Nevertheless, in spite of uneven relationships, SMEs can in some
ways perform even better than the larger companies. SMEs employing just
a handful of top professionals can be much more flexible and innovative
than the larger ones. Relationships among small, innovative and large, pow-
erful companies, or relationships among ‘colonizers’ and ‘consolidators’
(Markides & Geroski, 2005) may be advantageous for both sides. Colo-
nizers develop new marketable, even revolutionary products, and sell the
designs to ‘consolidators,’ which have ample financial resources, effective
structures, production capabilities and access to global markets. In some
cases, they even buy a ‘colonizer,’ offering good remuneration to the experts
and better possibilities for R&D.
In the ‘pragmatic’ concept of outsourcing the only requirement of the
outsourcing party is the lowest possible price – there is little place for a
Volume 1, Issue 1, 2012
118 Mitja I. Tavčar and Valerij Dermol
broader cooperation – and the insourcing party must either accept the con-
ditions or lose the customer. In creative outsourcing, the relationships and
roles of the outsourcing and insourcing partner are much more balanced –
oriented to lasting partnerships, negotiations are ‘win-win’ oriented.
(b) Mutual Understanding and Knowing of Business Partners
The absolute prerogative to achieve the desired outcome in a relationship
between an MNC and an SME is a reasonably detailed and in-depth knowl-
edge of each other. Oversimplified decisions related to the extent, contents,
target duration and changes during relationships may cause unpleasant
consequences. In extreme situations a broken relationship can be a cause
for the MNCs’ costly involvement in searching, analyzing, testing and quali-
fying of new possible partners, and on the other hand catastrophic loss of
business, followed by a long and risky recovery if not bankruptcy for more
vulnerable SMEs.
(c) Recognising and Meeting the Needs and Expectations of SMEs and MNCs
As already indicated, the starting point in the process of creating an SME’s
strategy should be a thorough analysis of the MNC with which the SME is
going to work. This analysis should be focused on finding the MNC’s needs
and expectations as well, and on creating a strategy meeting those needs
and expectations. Standard managerial tools used in creating strategy will
be used. The analysis of the partner’s short and long term needs and ex-
pectations may be based on the traditional SWOT model – strengths and
weaknesses for the SME to meet these needs and expectations. On the
other hand, an estimated SWOT will be done concerning SMEs’ evaluation
of possible advantages and disadvantages of a potential relationship with
the MNC. Differences among needs and expectations, time horizon of the
outsourcing, joint R&D, industrial property and many others will be dealt
with and resolved in integrative negotiations between the SME and MNC.
(d) Implementation of Strategic Planning Processes and Using Appropriate
Planning Techniques
Strategic planning is at the core of strategic management. SMEs forced into
a ‘pragmatic’ model usually do just basic planning for production. On the
other hand, SMEs involved in an active relationship with their customers
exercise more active planning according to their role in the mutual global
strategy shared with its customers, mostly MNCs. According to the basics
of strategic management, strategic planning includes (1) identification of
shareholders’ expectations (based on their unstable needs and lasting val-
ues), (2) determining long term goals and short term targets to be achieved
by synergistic activities, (3) structures and (4) financial as well as material
International Journal of Management, Knowledge and Learning
Global SMEs’ Strategy 119
and human resources (corresponding approximately to core competencies).
Strategic planning includes short term (usually annual) targets – and en-
ables the enterprise to master steps leading to the realization of long-term
goals. All of these will be sufficiently aligned with global strategy of the
enterprise and in sufficient extent with the MNC’s global strategy.
Setting up the goals and targets is a creative process. It can be improved
by the use of the technique of creating scenarios and verifying targets and
goals through comparative estimates (benchmarking).
(e) Knowing and Understanding the Cultures and Cultural Differences
of MNCs and SMEs
Strategic planning in the narrower sense is more or less a deterministic
activity dealing relatively little with human needs and values of employees,
customers and other important stakeholders. Nevertheless, this approach
is mirrored in the culture of enterprises and other organizations, as well
as in their environments, and strongly influences their behaviours. Recog-
nizing and understanding cultures are crucial abilities of managers, both in
the MNCs and in the SMEs tied to them. Important authors are Hofstede
(1980, 1991), writing about the culture of environments and Trompenaars
and Hampden-Turner (2001), writing about the cultures of organizations.
They define culture as a set of people’s specific behaviours which are based
on their values. We all have our own values. They might be related to per-
sonal or to organizational goals, and some of them to the ways and means
of attaining these goals. Whenever people are directed in an activity which
is opposed to their value, they will be reluctant and be under pressure,
even hostile. Understanding the culture of an organization, be it an MNC or
an SME, is a necessary condition to success. The same is valid for other
organizations, groups, publics etc.
(f) Establishing the Fit between SMEs’ and MNCs’ Business Strategies
Furthermore, an effective strategy of SMEs in relations with MNCs must be
reasonably congruent with the MNCs’ global business strategy becoming
the global strategy of the SMEs as well. Consequently, SMEs working with
several MNCs will have even several global sub-strategies on one hand, or
on the other, if feasible, a synthesis of them. This is a normal strategic
behaviour not only of most SMEs but of all organizations operating in the
marketing economy nowadays.
(g) Practising Learning in the Relationship between SMEs and MNCs
Last, but not least, the relationships between MNCs and connected SMEs
can be an important source of knowledge creation. Learning is, by defi-
nition, a social process based on ideas and a sifting process as well. In
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120 Mitja I. Tavčar and Valerij Dermol
this way, the knowledge can be internalized by members of all involved or-
ganizations. Learning is on the other hand an absolute necessity to build
new core competencies which facilitate the creation of competitive products
and services, leading to organizational success. There are five strategies
which could be used in this context: (1) collaboration which is highly recep-
tive and highly transparent, (2) competition which is highly receptive and
non-transparent), (3) compromise as a moderately receptive and transpar-
ent process, (4) accommodation which is non-receptive but highly transpar-
ent, and (5) avoidance which is neither receptive nor transparent (Larsson,
Bengtsson, Henriksson, & Sparks, 1998).
Supporting introduction to SMEs Strategy
Governments can significantly influence the collaboration between SMEs
and MNCs, encourage learning within the SMEs, and assist in the imple-
mentation of global strategic thinking. SMEs are somehow reluctant to use
consulting services as well, and therefore need some kind of a push from
outside. This push can come from governments offering grants, subsidies,
loans, education and training, and also R&D, marketing and productivity ini-
tiatives. We have already mentioned some mechanisms which the Slovenian
government is using to link SMEs and other organisations to foster training
and R&D, which is actually a kind of learning or transfer of knowledge (since
there are some knowledge organisations involved as well). Of course, in all
of these possibilities the idea of outsourcing should be built in the future
to show the SMEs that a strategic approach to MNCs might provide a good
opportunity to prosper and to grow.
The educational system with entrepreneurial learning approaches is an-
other opportunity which can be used to promote the idea of a systematic ap-
proach to outsourcing and global strategies in these areas. We have already
mentioned that learning – the education and experience of entrepreneurs –
is related to the performance of SMEs. Entrepreneurial learning is an issue
on which many educational institutions have been focusing lately (Dermol,
2010). We are of the opinion that the knowledge about outsourcing should
be considered as an important educational theme as well – especially within
the context of entrepreneurial learning.
Besides, many countries including Slovenia have developed a system of
SMEs’ support. Such systems usually include three support environments
(i. e. entrepreneurial, innovation and financial environment). The major roles
of such systems are to make the administration efforts at the entrance into
entrepreneurship as easy as possible, to offer the SMEs – especially high-
technology ones – the best possible operating environment and infrastruc-
ture with possibilities for networking with the R&D sector, and to improve
the access to finances, thus enabling the growth of SMEs. Again, we believe
International Journal of Management, Knowledge and Learning
Global SMEs’ Strategy 121
that the idea of outsourcing should be built into all the mentioned support
environments, and additionally, the mechanism introducing the possibilities
for SMEs to get in touch with possible MNCs looking for business partners
might be introduced as well.
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Mitja I. Tavčar was in management positions of several Slovenian corpora-
tions. Mitja I. Tavčar is a Professor at many universities in Slovenia, teaching
International Journal of Management, Knowledge and Learning
Global SMEs’ Strategy 123
in the fields of strategic and general management, management of non-profit
organizations, knowledge management, ethics management and cultures of
organizations, the marketing and consulting management. He participated in
a series of consultancy projects in large Slovenian companies. Has is an au-
thor of more than twenty books and monographs and participated in many
international conferences. mitja.tavcar@guest.arnes.si
Valerij Dermol is an Assistant Professor at the International School for Social
and Business Studies in Celje, Slovenia, Director of Knowledge Management
Master Programme and Assistant Dean for Research. He has been involved
in research projects on organisational learning, knowledge management and
lifelong learning. For many years he has been working as a trainer for some
international training companies. valerij.dermol@mfdps.si
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