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Encouraging More SMEs To Take Their Big OE

Encouraging More SMEs To Take Their Big OE

Small and medium-sized companies (SMEs) may be the lifeblood of the New Zealand economy, but relatively few are taking advantage of international market opportunities and most are structured solely to meet domestic demand.

This begs the question, say the authors of an article in the latest University of Auckland Business Review, of how policymakers can identify those with latent export potential and expand their focus beyond the "low hanging fruit."

The article examines whether the comfort zone presented by buoyant domestic demand is possibly diverting the entrepreneurial creativity we need to grow in overseas markets. If New Zealand firms are not growing through international activities, are they growing at all?

"New Zealand firms travel the wealth-creation road in the family car, with room for the family but few others," say the authors - University of Auckland Business School Professor Nigel Haworth, Senior Lecturer Heather Wilson and visiting scholar Eugene Bowen (a former Trade NZ Representative).

"Contrast this with wealth creation in America, where large numbers of people are engaged, participate and benefit from the creation and growth of companies. To extend the analogy, the US travels to wealth creation in a bus." The authors' review of the literature on New Zealand SME internationalisation identifies an incomplete understanding of the motives, advantages and drivers of going international. They believe current Government policy either puts too much onus on SMEs or targets too few obvious international candidates.

Why many SMEs with a latent potential to grow internationally choose not to do, or are unaware of their potential, is unclear to the authors.

"It is particularly puzzling that the socially embedded and self-reinforcing elements of individual OE which encourage New Zealand individuals to expose themselves to risks, new experiences, knowledge development and personal growth, are not replicated at the level of the firm."

The authors recommend more work be done on identifying and encouraging New Zealand SMEs to take their big OE.

The twice-yearly University of Auckland Business Review, founded in 1999, is New Zealand's biggest circulation business magazine, with an audited net circulation of 18,179 (Audit Bureau of Circulation). Its overall readership is 49,000 (Nielsen Media Research Survey).

Other articles in the latest issue examine insider trading in New Zealand, the standard of New Zealand corporates' triple bottom line reporting, the status of local e-business, the challenges for New Zealand companies operating in Asia and the Business School's soon-to-be-launched Business Case Centre. Microsoft NZ CEO Ross Peat discusses the importance of value-based management practices, and a postgraduate student essay asks whether best practice destroys innovation. Overviews of these articles are provided below.

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