Internationalization of South Carolina Enterprises: A Mixed-Methods Study of Barriers and Economic Incentives Andrew J. Beall, DBA Johnny L. Morris, PhD 1

Background 99% of businesses in the United States are small, provide >50% of employment, yet only 8% generate revenue from exports (Tesfayohannes & Habegger, 2011). Internationalization: a term used by scholars when an enterprise purchases from or sells to counterparties in at least one foreign country (Chetty & Campbell-Hunt, 2003). Prior research focus was on large enterprises; limited research has been done on small businesses and no research in South Carolina (Sen & Hag, 2010). 2

Background Researchers found support for two broad theories of internationalization linked to industry type and service delivery: – Stage theory of incremental international expansion (Johanson & Vahlne, 1977). – Rapid international expansion or “born-global” (Knight & Cavusgil; 2004; Ovaitt & McDougall, 1994; ). Specific barriers and economic incentives influence leader decisions to engage in international commerce (Hynes, 2010; Korsakienė & Tvaronavičienė, 2012). 3

Economic Incentives Resource Seeking Competitive Threat Declining Domestic Demand Absorb Excess Capacity Market Opportunity Supply Chain Efficiency Exploit Particular Uniqueness 4

Barriers Leader Inexperience High Cost to Accumulate Knowledge Expropriation Risk of Intellectual Property Disadvantage of Size Disadvantage of Newness Limited Resources Ample Domestic Market Opportunity Resistance to Share Control Disadvantage of Foreignness 5

Research Problem Absent knowledge of the benefits, barriers, and incentives that motivate internationalization of South Carolina firms, leaders risk underperformance of the enterprise due to missed opportunity by non-participation, or conversely, deploying limited resources in the unprofitable pursuit of international markets. 6

Research Purpose The purpose of the research study was to explore the internationalization experience of leaders for South Carolina small and medium-sized enterprises and examine differences in leader-perceived levels of success for Lowcountry firms compared on the basis of international status. 7

Research Questions What are the barriers to internationalization for small and medium-sized enterprises (SMEs) in Lowcountry South Carolina? What economic incentives motivate internationalization of South Carolina SMEs? Are there significant differences in revenue growth for South Carolina SMEs based on international status? 8

Research Method Exploratory-sequential mixed-methods design study of industrial and manufacturing firms in seven coastal counties of South Carolina. Initial phase included limited in-person interviews of eight leaders. Results of initial phase used to calibrate subsequent survey. Second phase included a 22 question survey offered to 261 business leaders. 9

Results (Beall, 2013) Demographics of respondent firms captured by international status, county, industry type, number of employees, foreign-market networks, and international experience. Leaders of international firms felt foreign market commerce important to the success of the enterprise. Leaders of domestic-only firms felt no disadvantage from the lack of foreign activity. 10

Barriers identified: ample domestic opportunity, resource scarcity, and limited foreign-market knowledge. Incentives identified: foreign-market opportunities, supply chain opportunities, and competitive pressures. International firms reported higher revenue growth, larger number of employees, and larger customer bases. 11 Results (Beall, 2013)

Recommendations Conduct the study with a larger number of participants to increase statistical power. Seek additional measures to operationalize the construct “enterprise success.” Modify future questionnaire to capture leader opinions on barriers and incentives regardless of reported international status. Investigate the potential benefit to domestic enterprises from greater knowledge of foreign market opportunity. 12

References Beall, A. J. (2013). Internationalization of South Carolina enterprises: A mixed-methods study of barriers and economic incentives. Doctor of Business Administration, University of Phoenix, Phoenix, AZ. Retrieved from ( ProQuest ) Chetty, S., & Campbell-Hunt, C. (2003). Paths to internationalisation among small- to medium-sized firms: A global versus regional approach. European Journal of Marketing, 37(5), doi: / Hynes, B. (2010). International small business growth: A process perspective. Irish Journal of Management, 29(2), Retrieved from /IJM_29_2_Final_crop.pdf Johanson, J., & Vahlne, J.-E. (1977). The internationalization process of the firm--a model of knowledge development and increasing foreign market commitments. Journal of International Business Studies, 8(1), doi: /palgrave.jibs Knight, G. A., & Cavusgil, S. T. (2004). Innovation organizational capabilities and the born-global firm. Journal of International Business Studies, 35(2), doi: /palgrave.jibs Korsakienė, R., & Tvaronavičienė, M. (2012). The internationalization of SMEs: An integrative approach. Journal of Business Economics & Management, 13(2), doi: / Oviatt, B. M., & McDougall, P. P. (1994). Toward a theory of international new ventures. Journal of International Business Studies, 25(1), doi: /palgrave.jibs Sen, A., & Haq, K. (2010). Internationalization of SMEs: Opportunities and limitations in the golden age of globalization. International Business and Economics Research Journal, 9(5), Retrieved from Tesfayohannes, M., & Habegger, J. (2011). The reality of international business environment and the challenges of small business in Pennsylvania: Conceptual review. The Business Review, Cambridge, 17(1), Retrieved from 13