The internationalization process in the small and medium sized firms: A case study on the Italian clothing industry

Abstract

In this research we use a data-base that reveals the propensity for contractual ventures and direct investments (1051 operations) of the clothing Italian companies during the period 1987–1991, on a national (342 operations) and international level (709 operations). The latter were analyzed with reference to the internal (412) and external growth strategies (297), cooperative (362) and non-cooperative (347) deals. Our analysis focuses on the different strategies that SMEs, on one hand, and large companies, on the other hand, show in the internationalization process. Main results of the study are:

• the international growth of the SMEs takes place mainly through contractual agreements (68%), more so than with non-cooperative operation (32%), whereas in large companies the non-cooperative strategies slightly prevail (54%). Consequently, the external growth strategy is very important for the SMEs (72%) and somewhat less important for the large companies (54%);

• the cooperative growth is usually seen by SMEs as an expansion both of the commercial (48% of the operations involves commercial purposes) and of the production areas (48% of the cases). This could indicate that SMEs try to organize on an international level the same network model used in Italy: SMEs decentralize their production within the country through networks of companies and industrial districts, whose horizontal connections (among SMEs themselves) and vertical connections (with large companies) provide flexibility and low costs;

• large companies' expectations of the Single European Market have brought a great number of international operations in Europe (24%), notwithstanding the notable importance of Japan (23%) and U.S. (17%); on the contrary, SMEs focus on “niche and rich markets” as Japan (40%); but as far as the contractual agreements are concerned, both types of firm privilege the Japanese market: almost 50% of SMEs' international agreements are directed towards Japan (33% in the large company's case);

• large companies and SMEs in the middle and high segments of the market carry out more operations than companies operating in the low quality and casual segments;

• generally speaking, in Italy there is an urgent need for industrial policies promoting SMEs access to cooperative instruments (“learning by cooperating”).