Reviewing Gov’t Policies May Spur International Trade by SMEs, CBOC Report Says

(Canadian Economic Press – Sean McKibbon)

Canadian small and medium size enterprises (SMEs) are not very active in international trade but policy makers can help to change this, says the author of a new report commissioned by the Conference Board of Canada.

“Obviously it’s beyond capability of a lot of SMEs to be engaged in international markets,” says Kathleen Macmillan, the author of the report entitled ‘Canadian SMEs and Globalization: Success Factors and Challenges.’

“But if there are small companies with good ideas and the potential to make it we should look at what kind of obstacles there are holding them back and are they policy accessible? Is there some kind of low hanging fruit there that we can address that would help SMEs?”

Macmillan cites a 2004 survey by the Canadian Federation of Independent business showing that of the 9,577 small business owners surveyed, 51% engaged in some form of trade. Thirty-six percent of those did so through importing or exporting, and 15% by participating in a global supply chain.

Macmillan said that, in her review of research relating to small firms engaged in international trade, she noticed a few emerging trends. She said companies that are “innovation intensive,” tend to become more internationally focused. She also said that newer firms, those younger than three years, were just as likely to find success in foreign markets as more established firms. She added that small firms tend to have less capacity to push back against regulations and trade barriers that hurt their competitiveness.

As a result, Macmillan said governments should try to reduce trade barriers, review their own policies that tend to favor more established firms and attempt to foster innovation through industrial clusters, facilitating networking and information sharing.

“The most surprising thing I found was that small firms that have just begun to exist show similar levels of internationalization as more established firm. So that old notion that you have to establish yourself first in your home country is wrong. You don’t have to graduate to international markets. There are many firms that are ‘born global,’“ she said. The report can be downloaded from the Conference Board of Canada website.