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Existing research linking ICT to IM:

The influence of information and communication technologies (ICT) on the globalisation of small and medium-sized enterprises (SMEs). Existing research linking ICT to IM:

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Existing research linking ICT to IM:

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  1. The influence of information and communication technologies (ICT) on the globalisation of small and medium-sized enterprises (SMEs)

  2. Existing research linking ICT to IM: • General influence of ICT as a driver of the globalisation and redefinition of social, economic, and industry structures (e.g., “increasing returns”) • Global IT-Management (development/implementation of ICT) • ICT as a unique competitive advantage • Influence of ICT on efficiency (one-/multidimensional) • Alignment of ICT and strategy (‘fit’, models of Porter, Bartlett et al.) • Impact of ICT on organisation (TAC, network structures, efficiency) • Impact of Internet and E-commerce (new industries and VACs)

  3. Gaps in research: • Most evidence of ICT in global business is anecdotal • Dearth of papers dealing with the organisational impacts of ICT in the global context • Basic limitation is that most studies carried out on global ICT are distinctly static in character • Paucity of empirical research how enterprises develop and manage their ICT capabilities in global context • Lack of research on influence of ICT on the globalisation of SMEs

  4. Basic characteristics of globalisation: • Def.: Historical process in which emergence and reproduction of social systems expands from formerly dispersed and unconnected local contexts to a globally differentiated social context • Mechanism: Global differentiation and integration of social systems (e.g. firms) • A major driver of globalisation is technological progress • ICT are both catalysts of globalisation and solution base from which to address international main challenges.

  5. Indicators of economic globalisation • World merchandise trade (billion US Dollars) • 1953: 1963: 1973: 1983: 1993: 2000: 2005: • Exports: 84 157 579 1,835 3,641 6,186.0 10,120 • Imports: 84 163 589 1,881 3,752 6,490.0 • (Source: Worldbank Report 2001, WTO 2006) • Flows of foreign direct investment (billion US Dollars) • 1982: 1990: 2000: 2002: 2005: • FDI outflows: 57 202 1,200 647 779 • Cross-border M&As: n.a. 151 1,144 370 716 • (Source: World Investment Report 2001, 2003, 2007). • World stock FDI (bn US $) :1960: $99 2000: $5,980 2005: 10,670 • Transborder companies (number): 1969: 7” 2001: 50” 2005: 70” • (Source: UNCTAD 2001, 2007)

  6. Formation of social systems:

  7. Integration of local and global ‘consensual domains’:

  8. Globalisation of Traditional SMEs Globalisation as „RINGS IN THE WATER“ Globalisation of Born Globals

  9. Basic characteristics of the globalisation of firms: • Internationalisation: Changes in the level and dispersion of activities across local markets • Global network formation: Internal and external development of global network structures • Evolutionary dynamics: Firms develop in a co-evolutionary interplay with their environment (here: globalisation) • Basic assumption: Firms have to develop the respective capabilities in order to globalise successfully.

  10. Internationalisation capability: Global differentiation Global network capability: Global integration Capability of global evolutionary dynamics time Globalisation capabilities of firms:

  11. Evolutionary capabilities: Quantum leap of globali-sation National business stage Global business stage

  12. Influence of ICT on internationalisation: • Competition: Internet tends to expand the geographic market and to increase competition • Barriers: The Internet may reverse the role of knowledge as a limiting factor to that of a catalyst • Extension: ICT brings extended connectivity with speed and will expand boundaries of firms and networks • Speed: Internet reduces uncertainty of doing business in foreign markets and thus accelerates the internationalisation process •  ICT-intensive firms internationalise faster and more extensively than less ICT-intensive firms

  13. Influence of ICT on internationalisation: • By using ICT, SMEs can compensate information and specialisation advantages of large firms • ICT facilitate the instant build-up of global activities based on e- commerce and co-operations •  globalisation process of many SMEs is accelerated • Internet enables firms to identify new market opportunities • Internet allows SMEs to gain deeper knowledge of target markets, to select suppliers and to establish direct contact with clients using a low cost medium. • The Internet makes it easier for firms to expand internationally

  14. Influence of ICT on internationalisation: • Internet strategies are relatively inexpensive, especially when compared to direct exports • E-commerce transactions allow SMEs to have a bigger market control as compared to indirect exports • ICT will facilitate strategies that target cross-national consumer segments. • Web marketing may even the playing field between large and small companies • ICT also reduce large firms’ advantages of centralised purchasing and in-house suppliers. • ICT allow small, specialised firms to exploit fragmented product markets on the basis of their flexible response

  15. Influence of ICT on global networking: • The importance of coordination skills are a defining competitive competence for the Internet age • ICT has promoted transnational interactions and precipitated the growth of globally networked organisations and co-operations • Internet technology provides better opportunities for global strategic positioning than previous generations of ICT • ICT are vital means in the coordination and learning of organisational processes • International connectivity and linkage between SMEs provide network externalities and increase the business activities of SMEs internationally

  16. Influence of ICT on global evolutionary processes: • ICT can provide a cost-effective backbone for enabling timely decision-making and rapid communication of those decisions in a globally competing firm • ICT has the capability to enable dramatic organisational transformation • ICT can enhance scope for knowledge sharing among multiple network participants at distant locations in a long-term, iterative process • ICT fuels the evolutionary mechanisms of social systems (Van de Ven/Poole 1995, Borghoff 2005)

  17. Conclusions: • The three characteristics of globalisation and respective firm capabilities capture the basic globalisation process of SMEs • ICT may contribute to enhance the globalisation capabilities of SMEs • ICT may accelerate the globalisation process of SMEs • The effect of ICT to the globalisation process of an SME depends on proper management and the attitudes of key decision-makers towards ICT

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