Entrepreneurship, Globalization & Canadian Public Policy

Journal of International Management, Volume 7, Issue 3, 2001, Pages 235–251

University of Alberta School of Business Research Paper No. 2013-642

Posted: 12 Jun 2013

See all articles by Zoltan J. Acs

Zoltan J. Acs

Schar School of Policy and Government

Randall Morck

University of Alberta - Department of Finance and Statistical Analysis; National Bureau of Economic Research (NBER); European Corporate Governence Institute; Asian Bureau of Finance and Economic Research

Bernard Yin Yeung

National University of Singapore - Business School

Date Written: November 10, 2000

Abstract

This paper examines the impact of governmental policies in influencing the path of internationalization of small- and medium-sized enterprises (SMEs). It focuses on the role of institutions mandated to assist internationalization, as exemplified by Canada's Export Development Corporation (EDC). We illustrate and examine critically the role that governments typically play in assisting and influencing the international expansion of domestic firms. We argue that the activities of agencies such as EDC — mainly in financing and in insuring against the risks inherent in export activities — may actually be counterproductive to the long-term interests of many SMEs by skewing managers' decisions toward direct exporting, rather than toward indirect exporting by entering the value chain of already-established multinational enterprises (MNEs). A consequence may be to divert the constrained resources of entrepreneurial firms away from their greatest comparative advantage — innovation — toward managing direct entry into international markets in which they are at a comparative disadvantage relative to larger established MNEs. Highly innovative SMEs might be better off by leaving the internationalization of their innovations to MNEs and sharing some of the international direct exporting profits with them instead. The implications are relevant for governmental policies toward internationalizing SMEs not just in Canada but in open, market-oriented economies everywhere.

Keywords: Entrepreneurship, Innovation, Globalization, Multinational enterprise

Suggested Citation

Acs, Zoltan J. and Morck, Randall K. and Yeung, Bernard Yin, Entrepreneurship, Globalization & Canadian Public Policy (November 10, 2000). Journal of International Management, Volume 7, Issue 3, 2001, Pages 235–251; University of Alberta School of Business Research Paper No. 2013-642. Available at SSRN: https://ssrn.com/abstract=2277050

Zoltan J. Acs (Contact Author)

Schar School of Policy and Government ( email )

Founders Hall
3351 Fairfax Dr.
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703-993-1780 (Phone)

HOME PAGE: http://home.ubalt.edu/zacs

Randall K. Morck

University of Alberta - Department of Finance and Statistical Analysis ( email )

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National Bureau of Economic Research (NBER)

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European Corporate Governence Institute ( email )

c/o ECARES ULB CP 114
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Belgium

Asian Bureau of Finance and Economic Research ( email )

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1 Business Link
Singapore, 117592
Singapore

Bernard Yin Yeung

National University of Singapore - Business School ( email )

15 Kent Ridge Drive
BIZ 1 Level 6
Singapore, 119245
Singapore
65 6516 3075 (Phone)
65 6779 1365 (Fax)

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