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Forum on Cross-Border Integration

Forum on Cross-Border Integration . T he production systems’ internationalisation (Main Conclusions) iCON: Competitiveness of SMEs through Innovation and Collaborative Entrepreneurship Corrado Campobasso corrado.campobasso@informest.it Gorizia/Gorica , 30.11.2010 .

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Forum on Cross-Border Integration

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  1. Forum on Cross-BorderIntegration The production systems’ internationalisation (Main Conclusions) iCON: Competitiveness of SMEs through Innovation and Collaborative Entrepreneurship Corrado Campobassocorrado.campobasso@informest.it Gorizia/Gorica, 30.11.2010

  2. The production systems’ internationalisation • General outline and Sources • Context of the internationalization of production systems in Europe, with a focus on Italy and Slovenia and their SMEs in the post-crisis scenario. • Main characteristics and mode (trade, FDIs, sub-contracting agreements, technology cooperation agreements). • Publications and databases: Eurostat, UNCTAD, DG Enterprise and Industry, EFIGE Project, Reprint-ICE

  3. The production systems’ internationalisation What matters most in internationalization? Business characteristics: firm size, productivity, skill intensity, ability to innovate (FP7 EFIGE project; ongoing) Industrial structure and size of the domestic market* Policies and Reforms (regional, national and EU) 3  1: Policies and Reforms can modify internal barriers to internationalization. Internationalization – competitiveness - growth link is a “two-way with threshold” process. If it is not reached a sufficient level of resources and capabilities internationalization is not a realistic option. *If Italy and Spain had the same industrial (sect. Empl.)/size structure of Germany they would register an increase in the export value of +37% and +24%.

  4. The production systems’ internationalisation • Firm size’s & Internationalised activities Source: EIM/GDCC survey, Informest calculations

  5. The production systems’ internationalisation • Member States & Internationalised activities Source: EIM/GDCC survey, Informest calculations

  6. The production systems’ internationalisation Member States & geographical areas Source: EIM/GDCC survey, Informest calculations

  7. The production systems’ internationalisation Member States & geographical areas Source: EIM/GDCC survey, Informest calculations

  8. The production systems’ internationalisation Member States & Internal Barriers to Internationalisation (important and very important) Source: EIM/GDCC survey, Informest calculations

  9. The production systems’ internationalisation Member States & External Barriers to Internationalisation in EU/EFTA (important in the relationship) Source: EIM/GDCC survey, Informest calculations

  10. The production systems’ internationalisation Member States & External Barriers to Internationalisation extra EU/EFTA (important in the relationship) Source: EIM/GDCC survey, Informest calculations

  11. The production systems’ internationalisation • Slovenia: a small Country with small firms? (Ciszewska-Mlinarič; Mlilnarič (2010)) SBA Fact Sheet 2009, based on Eurostat Structural Business Statistics

  12. The production systems’ internationalisation • Internationalisation is a 2-way process… but there are strong differences between inward/ outward FDIs both in Italy and Slovenia Source: UNCTAD FDI/TNC (www.unctad.org/fdistatistics)

  13. The production systemsinternationalisation The most stringent constraint in the period March-September 2010 Source: ECB/EC

  14. The production systems’ internationalisation • Main Conclusions/Scenario • Depressed EU demand in 2011-2012 (restrictive fiscal cycle) & selective recovery of exports  big and medium firms favored over small and micro more oriented towards the domestic market Source: ECB/EC

  15. The production systems’ internationalisation • Main Conclusions/Scenario • Crisis is not over for Fvg. The 2nd quarter: export is still contracting in Manzano district and Inox valley (Pordenone); recovery in Livenza, Maniago and San Daniele districts. • Slovenia. Slovenian large companies have reacted positively to the crisis (Splosna Plovba; Kolektor Group; Hidria; Iskra). Internationalization remain a strategic priority: sales promotion by the network of affiliates; defense and / or increase in markets diversification. But crisis also caused MBOs failures, building sector crisis.

  16. The production systems internationalisation • Main Conclusions/ Recommendation • Single Market Completion • SMEs face the costs of participation in a single market still incomplete, particularly in services, "running out" their chances and resources for internationalization in the European area • Bottlenecks hinder cross-border activities, despite the legal existence of the Single Market, cause of : a) the failure of the interconnection of networks and b) the inconsistency in the rules of the market. Often companies are dealing with 27 different legal systems for the same transaction • While EU companies, especially SMEs, are faced with fragmentation and conflicting rules, the Chinese competitors, U.S. or Japanese use of the advantages conferred by their large domestic markets

  17. The production systems Internationalisation Main Conclusions/Recommendation Spreading the culture of cooperation SMEs underestimate the benefits of cooperation and overestimate the disadvantages (working together with a competitor).A cooperative attitude is necessary for build a business network internationalization strategy. Trust-building  commitment  common identity  joint products and goals Good practices: i) the Agreement on internationalisation between Udine Chamber of Commerce and FVG Saving Bank provides for a 15% discount if the internationalisation activities aggregate at least 3 enterprises. ii) the cooperative approach and the networking is supported by GZS (Slovenian Chamber of Commerce and Industry) promoting the creation of Slovenian Houses, meeting point of Slovenian business abroad.

  18. The production systems Internationalisation • Main Conclusions/Recommendation Connection between medium and small / micro businesses • Financial constraints prevent micro business to get proper information  biased perception (barriers); incomplete information (public support; markets opportunities) • Often medium business “go alone” in foreign markets, also in the Districts, without satellite business Identification of functions / figures of Connection between medium and small / micro businesses  a) sunk-costs sharing; b) internationalization potential stepping up

  19. The production systemsinternationalisation • Main Conclusions/Recommendation • A single Agency for innovation and internationalisation? • 47% of internationally active SMEs in 2006-2008 introduced new products or services • 29% of internationally active SMEs in 2006-2008 introduced new products or services by themselves • Innovation is a strategy for SMEs planning for international activities. • In a “crisis time” 21,6% (Fvg enterprises) implemented planned investments and designed new ones, 57,5% implemented planned investments and just 20,9% stopped all investments in innovation. 12,6% enterprises had a R&D unit (5,5%), 19,8% rely on technical personnel skills while just 67,% do not implement R&D activities (Fondazione Nord Est Survey, February 2010)

  20. The production systems Internationalisation A single Agency for innovation and internationalisation? MainConclusions/Recommendation Legenda: LMS=LargeMember State; NC=NordicCountries; CE=Central – Eastern EU with. Poland; BR= Bulgaria and Romania

  21. The production systems’ Internationalisation A single Agency for innovation and internationalisation? MainConclusions/Recommendation Source: EIM/GDCC survey, Informestcalculations

  22. The production systems’ internationalisation MainConclusions/Recommendation • Promoting Internationalisation Awareness and Knowledge MT attitude towards internationalisation Ext.& int. Barriers Perception Procedures; tech. Aspects; organisational routines MT internationalisation knowledge Level of SME internationalisation Prior international experience MT: Manager or Management Team .....

  23. The production systems’ internationalisation • Promoting Internationalisation Awareness and Knowledge • An example of good practice • The Government program to promote the enterprises internationalization for the period 2010 – 2014 (Program Vlade RS za spodbujanje internacionalizacije podjetij za obdobje 2010 — 2014) includes: • Academy of internationalization (internationalization processes’ approaches & trends, strategies and operational tactics in different mkt, different approaches to research and mkt analysis, entry strategies, cultural diversity and corporate communications, selection of marketing strategies) • Individual assistance for specific needs of enterprises • Attraction of new FDI aimed at increasing the added value in specific areas and a decrease in barriers to FDI inflows • Training for international operations  "First access to market / first internationalization"

  24. The production systems’ Internationalisation Promoting Supporting Programme Awareness (awareness of PSP that could be used by enterprise) Source: Survey 2009, Internationalisation on European SMEs EIM/GDCC

  25. The production systems’ internationalisation Supporting programmes use The picture presents light and shade effects… … But the “net effect” on Internationalisation is too low Source: Survey 2009, Internationalisation on European SMEs EIM/GDCC

  26. The production systems’ internationalisation A preliminary step for a potential cross-border extension of production chains: mapping of actual sectoral synergies Comparative analysis (inter-regional; inter-sectoral) of the programming of Slovenia, Fvg, Carinthia  Complementary operational priorities  joint development strategies with financial coverage  Cross-border Operational Program (?)

  27. Forum on Cross-BorderIntegration Thank you for listening Contacts: CorradoCampobasso corrado.campobasso@informest.it Tel: +0390481 597 446 Projekt iCON sofinanciran v okviru Programa čezmejnega sodelovanja Slovenija-Italija 2007-2013 iz sredstev Evropskega sklada za regionalni razvoj in nacionalnih sredstev. Progetto iCON finanziato nell'ambito del Programma per laCooperazione Transfrontaliera Italia-Slovenia 2007-2013, dal Fondo europeo disviluppo regionale e dai fondi nazionali. Ministero dell'Economia e delle Finanze

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