Survival of the Fittest: Which SMEs Internationalize Most Extensively and Effectively?

Small and medium-sized enterprises (SMEs) are a growing force in Canada’s export-based economy, accounting for more than a third of the total value of sales abroad. But although many SMEs have internationalized successfully, many others have tried and failed. This report reviews more than 50 studies published within the past five years to find out why some SMEs have been able to internationalize both extensively—measured in number of foreign markets and ratio of exports to domestic sales—and effectively. It identifies three groups of success factors—environment-level, firm-level, and management-level—and looks at how these are related to the extensiveness and effectiveness of internationalization. The authors conclude that more research, particularly longitudinal research, is needed to identify predictors of effective internationalization. Importantly, they argue that future public policy support aimed at exporting SMEs should target only those firms most likely to benefit from internationalization.