Regulation of internationalisation from the perspective of SMEs in the EU and the Slovak Republic

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Internationalisation is becoming increasingly important in relation to the competitiveness of businesses of all sizes. Its importance from a macroeconomic point of view lies mainly in the fact that it accelerates the national economy through long-term foreign trade activity. From a microeconomic point of view, territorial expansion and the extension of activities into new markets is a way of achieving an increase in the growth of the enterprises themselves.

The degree of internationalisation of SMEs is also related to the openness of the economy, which intensifies the involvement of enterprises in foreign trade activities. The internationalisation of SMEs at EU level brings with it the benefits of the EU single market. Nevertheless, the internationalisation rate of European SMEs is low in some countries. This depends on a number of factors (e.g. the efficiency of the supporting infrastructure and the sectoral orientation of SMEs).

Enterprises in the SME size category are often confronted with various challenges when engaging in international activities (dealing with different regulations, lack of production or financial resources and, last but not least, lack of information). Unlike large enterprises, SMEs are generally more vulnerable to trade barriers and the risks arising from them. On the other hand, they can adapt more flexibly to market changes.

The quantitative and qualitative analysis revealed a number of key findings from the SME environment that more clearly reflect their position, as well as the opportunities for expanding activities aimed at international markets. Compared to other EU Member States, Slovakia was at the tail end in terms of the share of SME exports to EU countries in the period under review.

The territorial as well as commodity structure of exporting and importing SMEs from Slovakia is characterized by a high degree of concentration both on the EU market and on the narrow orientation of exported as well as imported commodity groups.

In 2015–2018, the Slovak Republic ranked first along with 15 other EU countries

(Italy, Portugal, Spain, France, the Netherlands, Belgium, the Czech Republic, Slovenia, Hungary, Poland, Croatia, Austria, Denmark, Romania and Luxembourg) in the tracking of the results in the area of the “Cross-border trade” indicator (in the sense of Doing Business). In addition to a fundamental change in the methodology for calculating the monitored indicator, Slovakia’s ranking alongside other EU countries is also related to the fact that reforms were adopted in 2012–2015 that facilitated cross-border trade.

Relevant barriers to the export of Slovak SMEs were also identified on the basis of the SBA quantitative survey, as well as on the basis of the implemented support for SMEs by the SBA. The results show that these obstacles include in particular the area of human resources (lack of qualified personnel covering internationalisation in the enterprises themselves). Other risk areas identified include low awareness, particularly in the area of e-commerce. However, in terms of internal barriers, the perceived barriers are also considered to be the area of preparation of analyses and necessary documentation, which are crucial for entering a foreign market (e.g. analysis of foreign market risks, preparation of a financial project, appropriate export strategy, etc.).

A survey carried out by the EC has highlighted the barriers to exports for European SMEs. According to this survey, one of the most significant barriers to exporting by Slovak SMEs is financial investment, which is perceived as too high. Others included administrative processes (as was the case in other EU countries), as well as dealing with cross-border complaints and, last but not least, delivery costs.

In terms of territory outside the EU, there has been an increase in the total number of barriers to trade and investment in the period under review, reflecting an increase in protectionism in third countries. Most obstacles were recorded across borders. They were related to restrictions on services, investment, intellectual property rights or unjustified technical barriers to trade. The highest number of obstacles reported in the period under review was in agriculture and fisheries. Others included the automotive sector as well as the ICT and electronics sectors.

The success of intensifying the internationalisation of SMEs cannot be achieved without eliminating the identified barriers. The individual barriers identified are, in most cases, inherently linked to each other. Public support can thus play an important role in promoting the internationalisation of SMEs. However, the success of penetrating foreign markets will also depend on the elimination of identified internal process barriers of the enterprises themselves (e.g. through the use of project consultancy, market research, etc.), through participation in exhibitions, networking to mentoring, or training and advice in various areas, as well as the financial assistance itself.

Import and export activities of an enterprise are among the most common forms of foreign market entry. In recent years, the interest of Slovak SMEs in franchising has been growing. Co-partnership (joint venture and piggyback) is not a very preferred form of entering foreign markets in our conditions. European as well as Slovak legislation regulates transnational forms of entrepreneurship (European Company, European Cooperative Society, European Economic Interest Grouping), which are not often used either among SMEs, but rather among large enterprises.

The regulation of internationalisation in business is a constantly evolving process. For this reason, both the EU legislative bodies and national authorities are actively engaged in the progressive removal of obstacles. The adoption of best practices to support the internationalisation of SMEs, which reflect the practice at the EU level, should aim at bringing the export activity of Slovak SMEs closer to the most successful EU exporters (among small and medium-sized enterprises).