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Dr. Niki Kyriakidou Senior Lecturer LBU

Evaluating the Internationalisation strategy: The case study of a SME in the UK chemical distribution industry. Dr. Niki Kyriakidou Senior Lecturer LBU Evripidis Lampadarios Associate Lecturer LBU – Business Manager EME. Outline. Why SMEs? Why UK Chemical distribution?

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Dr. Niki Kyriakidou Senior Lecturer LBU

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  1. Evaluating the Internationalisation strategy: The case study of a SME in the UK chemical distribution industry Dr. Niki Kyriakidou Senior Lecturer LBU Evripidis Lampadarios Associate Lecturer LBU – Business Manager EME

  2. Outline • Why SMEs? • Why UK Chemical distribution? • Why internationalisation? • Why WSB as case study? • Research questions • Findings • Contribution and future research

  3. Why SMEs? • Vehicle for invigorating the enterprise economy (Beaver and Carr, 2002; Dobbs and Hamilton, 2007; Holmes et al., 2010; Simpson et al., 2012; Unger et al., 2011) • Integral to contemporary economic and social regeneration (Harriganet al., 2011; Lussier and Halabi, 2010; Philip, 2011; Robson et al., 2009) • Promote economic growth and increase a country’s competitiveness and wealth (Amoroset al., 2013; Franco and Haase, 2010) • Essential for the establishment of a solid industrial base (Arandoet al., 2009; Dickson and Weaver, 2008; Harris and Gibson, 2006; Smallboneet al., 2010) • Key driver to innovation and R&D(Azimzadehet al., 2013; European Union, 2015; Halabi and Lussier, 2014; Robbins et al., 2000). • Above all…Employment generation (Dobbs and Hamilton, 2007; Galapova and McKie 2012; Raju et al., 2011; Smallbone and Wyer, 2000; Tilley and Tonge, 2003). Due to importance of small businesses to the stability and health of the society, an understanding of the factors contributory to their success is crucial (Blackburn and Kovalainen, 2009; Holmes et al., 2010; Halabi and Lussier, 2014; Philip, 2011; Raju et al., 2011).

  4. Why UK Chemical distribution? • No contemporary academic and business research • Significant contributor to the UK economy and employment (turnover of GBP 4.43bn in 2014, 6.800 direct employees) • Mature and well-established practise • But still developing (growing at 5% per annum) • Subject to strong consolidation • Heavily supporting the chemical industry • High level of fragmentation (over 280 in UK) • Over 75% are SMEs… (BCG, 2013; CBA, 2015; CEFIC, 2014; Chemagility, 2012 and 2015; Districonsult, 2013; FECC, 2015; Hornke, 2013)

  5. Why internationalisation? • Established as a success factor for SMEs (Dobbs and Hamilton, 2007; Bierly and Gallagher, 2007; Lee et al., 2012; Mudambiand Zahra, 2007; Pangarkar, 2008; Zhou et al., 2007) • European chemical distributors (BCG, 2013; Districonsult, 2013; FECC, 2013; Chemagility, 2008)but only one study by Hornke (2012) • Due to strong globalisation, expanding to other markets becomes critical to success (BCG, 2013; Chemagility, 2015; Eberhard, 2014) • No research aiming at evaluating the internationalisation process of SMEs in the specific industry and the skills / capabilities required for success.

  6. Why WSB as case study? • Typical of the average SME in the UK CDI • Established 1880 • £15m turnover; 13 employees • based in North England • 80% UK 20% export but looking to expand • Operating in a wide and varied range of markets • Representing large chemical manufacturers in the UK • Trading under their own products and brands. • Face-to-face in-depth interviews with 5 senior managers with exporting responsibilities and the Managing Director

  7. Research Questions…. • Identify the internationalization process in the context of the UK chemical distribution industry • Explore current practice in skills development • Identify the key competences of international managers.

  8. Internationalisation process

  9. Internationalisation process • There isn’t one theory to explain the internationalisation process of WSB. The Uppsala / stage and RBV appear to be more applicable …in line with Etemad and Wright (1999) that SME behaviour, as a holistic process, cannot be explained fully by any one existing theory and therefore insight must be drawn from various theoretical models.

  10. Exploring managers’ skills and cultural awareness • No formal and written internationalisation strategy • No formal communication and processes established • The internationalisation process was ‘inherited’ through an acquisition and never developed properly • Attitude towards internationalisations is 90% reactive and 10% proactive • There is a strong focus in the UK market • There is no training and skills development programme in place • Training is informal, done on an ad-hoc basis. Managers identify their own needs and act accordingly • However, there is also utilisation of external resources such as UKTI, chamber of commerce and some external advice • No cultural awareness training; whatever elements are present are through the experience and long service of the managers….proves the point that WSB relies on the existing skills of its employees rather than developing them through a training programme

  11. Key competences of international managers • Cultural awareness • Foreign market knowledge • Language skills • Negotiation • Communication However: consistent use of agents to alleviate all the above….

  12. Contribution and future research This research: • addresses the gap in small business success in the UK chemical distribution industry • fulfils the need for more empirical studies • improves the understanding of the chemical distribution industry and of the small businesses operating in it. Future research: look at the whole UK and European industry / qualitative approach

  13. References (I) • Amorós, J. E., Bosma, N. S. and Levie, J. (2013) Ten Years of Global Entrepreneurship Monitor: Accomplishments and Prospects, International Journal of Entrepreneurial Venturing, Vol. 5, No. 2, pp. 120-152. • Arando, S., Pena, I. and Verheul, I. (2009) Market entry of firms with different legal forms: an empirical test of the influence of institutional factors, International Entrepreneurship and Management Journal, Vol. 5 No. 1, pp. 77-95. • Azimzadeh, S. M., Pitts, B., Ehsani, M. and Kordnaeij, A. (2013) The Vital Factors for Small and Medium Sized Sport Enterprises Start-ups, Asian Social Science, Vol. 9, No. 5, pp. 243-253. • Beaver, G. and Carr, P. (2002) The enterprise culture: understanding a misunderstood concept, Journal of Strategic Change, Vol. 11, No. 2, pp. 105-113. • Bierly, P. E. and Gallagher, S. (2007) Exploring alliance partner selection: fit, trust and strategic expediency, Long Range Planning, Vol. 40, pp. 134-153. • Boston Consulting Group (2013) The Growing Opportunity for Chemical Distributors: Reducing complexicity for producers through tailored service offerings, [online], Available at: https://www.bcgperspectives.com/content/articles/process_industries_supply_chain_management_growing_opportunity_chemical_distributors/#chapter1, [Accessed 20th February 2014]. • CEFIC (2014) Chemicals Trends report, [online], Available at: http://www.cefic.org/Documents/FactsAndFigures/Chemical%20Trends%20Report/Chemicals%20Trends%20Report.April.23.2014.pdf, [Accessed 20th April 2014]. • Chemagility(2008) UK Chemical Distributor Market Report 2008: Information, Insight and analysis of the UK Chemical distribution industry, Surrey: Chemagility. • Chemagility(2012) A Global Perspective on the World Chemical Distribution Market, First Panel Session: Chemical Distribution Industry Landscape, presented at the FECC Annual Congress, Lisbon, May 21-23rd, 2012, [online], Available at: http://www.assicconline.it/menu/documents/06_brown.pdf, [Accessed 29th May 2015]. • Chemagility(2015) United Kingdom Chemical Distribution Report 2015, Surrey: Chemagility. • Chemical Business Association (CBA) (2015) [website], Available at: http://www.chemical.org.uk/aboutus.aspx, [Accessed 25th February 2014]. • Dickson, P. H. and Weaver, K. M. (2008) The role of the institutional environment in determining firm orientation towards entrepreneurial behaviour, International Entrepreneurship and Management Journal, Vol. 4, No. 4, pp. 467-483. • Districonsult(2013) Old Game - New Rules? Chemical Distribution in the Age of Volatility, [online], Available at: http://www.districonsult.com/en/index-districonsult%2Bnewsletter-1-34%2B~%2Bold%2Bgame%2Bnew%2Brules%2B2013.html, [Accessed: 27th February 2014].

  14. References (II) • Dobbs M. and Hamilton R. T. (2007) Small business growth: recent evidence and new directions, International Journal of Entrepreneurial Behaviour and Research, Vol. 13, No. 5, pp. 296 – 322. • European Union (2015) Fact and figures about the EU´s Small and Medium Enterprise (SME), [online], Available at: http://ec.europa.eu/enterprise/policies/sme/facts-figures-analysis/index_en.htm, [Accessed 15th April 2015]. • Eberhard, G. (2014) Growth and consolidation, ICIS Chemical Business, July 21-27, pp. 44-46. • Etemad, H. and Wright, R. W. (1999) Internationalization of SMEs: Management Responses to a Changing Environment, Journal of International Marketing, Vol. 7, pp. 4-10. • FECC (2013) The Chemical distribution Sector in Europe [online] Fecc.org., Available at: http://www.fecc.org/fecc/about-fecc/the-chemical-distribution-sector-in-europe, [Accessed 9th March 2015]. • FECC (2015) European business plan 2015, [online], Available at: http://www.fecc.org/fecc/images/stories/downloads/GTDP/2014/FECC_BusPlan_2015_def.pdf, [Accessed 20th February 2015]. • Franco, M., and Haase, H. (2010) Failure factors in small and medium-sized enterprises: qualitative study from an attributional perspective, International Entrepreneurship and Management Journal, Vol. 6, No. 4, pp. 503-521. • Galabova, L. and McKie, L. (2012) 'The five fingers of my hand’: human capital and well-being in SMEs, Personnel Review, Vol. 42, Iss. 6, pp. 662 - 683. • Halabi, C. E. and Lussier, R. N. (2014) A model for predicting small firm performance, Journal of Small Business and Enterprise Development, Vol. 21, Iss. 1, pp. 4-25. • Harrigan, P., Ramsey, E. and Ibbotson, P. (2011) Critical factors underpinning the e-CRM activities of SMEs, Journal of Marketing Management, Vol. 27, No. 5–6, pp. 503–529. • Harris, M. L. and Gibson, S. G. (2006) Determining the common problems of early growth of small businesses in EastemNorth Carolina, SAM Advanced Management Journal, Vol. 71, No. 2, pp. 39-55. • Holmes, P., Hunt, A. and Stone, I. (2010) An analysis of new firm survival using a hazard function, Applied Economics, Vol. 42, pp. 185-195. • Hornke, M. (2013) The future of chemical distribution in Europe: Customer relations as key value lever, Journal of business Chemistry, Vol. 9, Iss. 2, pp. 65-66.

  15. References (III) • Hornke, M. (2012) Chemical Distribution 2012, [online], Available at http://www.chemanager-online.com/file/track/11755/1, [Accessed 20th February 2014]. • Lee, H., Kelley, D., Lee, J. and Lee, S. (2012) SME Survival: The Impact of Internationalization, Technology Resources and Alliances, Journal of Small Business Management, Vol. 50, pp. 1–19. • Lussier, R. N. and Halabi C. E. (2010) Three-Country Comparison of the Business Success versus Failure Prediction Model, Journal of Small Business Management, Vol. 48, No. 3, pp. 360–377. • Mudambi, R., and Zahra, S. A. (2007) The Survival of International New Ventures, Journal of InternationalBusiness Studies, Vol. 38, No. 2, pp. 332–352. • Pangarkar, N. (2008) Internationalization and performance of small and medium-sized enterprises, Journal of World Business, Vol. 43, pp. 475–485. • Philip, M. (2011) Factors Affecting Business Success of Small & Medium Enterprises (SMEs), Entrepreneurship: Theory and Practice, Vol. 32, No. 4, pp. 635-657. • Raju, P. S., Lonial, S. C., Crum, M. D. (2011) Market orientation in the context of SMEs: A conceptual framework, Journal of Business Research, Vol. 64, pp.1320–1326. • Robbins, D. K., Pantuosco, L. J., Parker, D. F. and Fuller, B. K. (2000) An empirical assessment of the contribution of small business employment to US state economic performance, Small Business Economics, Vol. 15, No. 4, pp. 293-302. • Robson, P. J., Wijbenga, F. and Parker, S. (2009) Entrepreneurship and policy, challenges and directions for future research, International Small Business Journal, Vol. 27, No. 5, pp. 531-535. • Simpson, M., Padmore, J. and Newman, N. (2012) Towards a new model of success and performance in SMEs, International Journal of Entrepreneurial Behaviour and Research, Vol. 18, Iss. 3, pp. 264-285. • Smallbone, D. and Wyer, P. (2000) Growth and development in the small firm, In: Carter, S. And James-Evans, D. (Eds), Enterprise and Small Business, Harlow: Prentice Hall. • Smallbone, D., Welter, F., Voytovich, A. and Egorov, I. (2010) Government and entrepreneurship in transition economies: the case of small firms in business services in Ukraine, Service Industries Journal, Vol. 30, No. 5, pp. 655-670. • Tilley, F. and Tonge, J. (2003) Introduction, In: Jones, O and Tilley, F. (eds), Competitive Advantage in SMEs: Organising for Innovation and Entrepreneurship, Chichester: John Wiley & Sons. • Unger, J.M., Rauch, A., Frese, M. and Rosenbusch, N. (2011) Human capital and entrepreneurial success: A meta-analytical review, Journal of Business Venturing, Vol. 26, pp. 341-358. • Zhou, L. X., Wu, W. P. and Luo, X. M. (2007) Internationalization and the performance of born-global SMEs: the mediating role of social networks, Journal of International Business Studies, Vol. 38, No. 4, pp. 673-679.

  16. Thank you Any Questions?

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