Challenges to Small Firms Internationalisation

Abstract

Small firms, today have assumed significance and they are playing a crucial role in enhancing economic development, in the context of underdeveloped countries.(Guha,2009) views that this sector represents the socio economic policies that govern the country's future. (Srivastava and Syngkon, 2008) states that the development of small scale enterprises have been viewed as a powerful instrument for achieving the twin objectives of accelerated industrial growth and creation of productive employment opportunities in an economy. Their characteristic of being a 'one- man- show' and possessing other advantages like lesser gestation period. local resource utilization, low capital investment, lab our intensiveness and adaptability with changing social and economic environment add a positive framework for entrepreneurship. The small size instead of acting as barrier provide flexibility to be responsive to changing circumstances and the entrepreneurial dynamism that promote creativity, endow them with a combination of characteristics crucial to achieving competitive advantage(Calof, 1994). The four arguments in favor of small scale industries rests on employment that has potential for large scale employment opportunities which substantially contributes to national economies by making disproportionate contribution to employment generation as compared to large firms. (Yenkataraman, 1993) argues that whereas the employment-output ratio is the lowest in the small scale sector, employment generating capacity of small sector is eight times higher than the large scale sector. The equality argument ensures equitable distribution of national income and wealth. Decentralization is on small firm's localization and use of local resources to meet local demands, aiming at balanced regional development. Latent resource argument suggests that small enterprises have the capacity of utilizing latent resources upto the optimum extent.