Influence of the capacities of top management on the internationalization of SMEs

Abstract

International diversification strategies require managerial skills capable of positioning businesses efficiently within a complex international environment. Based on resources and capabilities theory, this study examines the relationship between top management characteristics (age, education, professional experience, and language knowledge) and the international diversification of a given business. It also follows on from Herrmann and Datta's work (2005) by analysing the relationship between these managerial characteristics and SME performance. The analysis is based on a sample of 219 SMEs with international diversification strategies from the La Rioja (northern Spanish region). Regression techniques were used and the results confirmed the existence of a material relationship between a number of managerial characteristics and geographical diversification strategies for SMEs. Empirical evidence was also obtained of the relationship between Spanish SME profitability and certain managerial attributes according to their level of international diversification. Finally, the potential implications of the results of this study for both researchers and real businesses are also discussed. Policy-makers and public agencies can benefit from these results: the development of certain attributes in TMTs strengthens the development of international diversification policies, thus allowing SMEs to improve risk diversification and protection against exchange rate fluctuations.

Keywords:

• international diversification
• top management team
• SMEs

Acknowledgements

The authors are indebted to Bengt Johannisson, the former editor of Entrepreneurship & Regional Development, and the two anonymous referees who made helpful and valuable comments on earlier versions of this paper.

Notes

Note

1. Additionally, to provide a more detailed explanation, both the number and the variety of trips abroad were introduced to analyse the extent to which this may indicate greater knowledge of foreign business practices. However, the representative items had to be eliminated due to the lack of representative response (absence of response above 62%).