International Entrepreneurship in Latin America: Lessons from Theory and Practice

Cap. Libro y Libros: International Entrepreneurship in Latin America: Lessons from Theory and Practice


2015 - Palgrave Macmillan - Book: International Business in Latin America. Innovation, Geography and Internactionalization. Pp. 57 - 82


1. Introduction The integration of the world economy has been one of the most important economic events of the last decades. Globalization has been driven by technological changes, policies of commercial openness, support of international trade at governmental and institutional levels, and an increase in international competitiveness. These processes have caused a higher degree of integration and interdependence between countries, with a clear increase in international businesses.  Within this context not only multinational enterprises have international orientations; new and smaller firms are forced to extend the scope of their business because they face a major number of competitors in a much wider market. Small and medium enterprises, SMEs, are relevant because of their ability to provide employment, improve the income distribution, introduce more innovation in the markets where they operate and generate more competitiveness (Andersson and Wiktor, 2003). Although SMEs are a major source of growth and job creation, SMEs appear to be underrepresented in the international economy relative to their contribution in national and local economies (OECD, 2005). Many SMEs have advanced in their internationalization processes and many countries are adopting specific policies and programs to enhance the potential for this type of enterprise, consequently encouraging their incorporation in global markets. Both private and public sectors are playing an important role in helping SMEs to be more active in international trade (Czinkota, 2002; OECD, 2005). From a strategic point of view, internationalization could be one of the aspects that can be considered as a key factor for business success, especially in SMEs that have a high-growth perspective. For example, one of the most integrated economic regions, the European Union, has been developing public policies to provide incentives for the internationalization processes and the entrepreneurial ability of the small firms. Internationalization is a way of obtaining far-reaching competitiveness in the value stream and generating a sustainable competitive advantage (EuroChile, 2008). Countries with relatively small internal markets (Liechtenstein, Luxemburg, Denmark or Austria) must foster their internationalization and their SMEs must aim at more international markets.  Entrepreneurs in economies with small internal markets tend to place more emphasis on this than economies with large internal markets such as Brazil, China, Russia, India and the United States. However, this is moderated by the quality of the workforce: the most internationalized economies, such as Singapore and Israel, tend to score very high in international education rankings (Breznitz, 2007) In this context, information provided by The Global Entrepreneurship Monitor (GEM) is of great interest in order to analyze the results of internationalization of SMEs in Latin American countries.  The GEM methodology allows us to calculate a variable that represents a good approach to the entrepreneurial exporting orientation (Reynolds, Bosma, Autio, Hunt, Bono, Servais, López-García and Chin, 2005). This indicator is measured by the percentage of clients that an entrepreneur has abroad.  A specific GEM measure assesses the extent to which entrepreneurs sell to customers outside their economies. Figure 1 shows four categories of early-stage entrepreneurs (TEA) related to the degree of internationalization, from 0% of their customers living outside the origin country, to high degrees of internationalization with 75-100% of the customers living outside the country. As was expected, EU economies, with a large tradition of international commerce, access to an integrated economic zone, and their geographic proximity, exhibit a high proportion of entrepreneurs with at least 25% of their customers living outside of the country. In contrast, Latin American and Sub-Saharan economies show a lower proportion of high internationally oriented entrepreneurs.  


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