SMEs and The New International Business Space

1. SMEs and The New International Business Space Terry Mughan Professor of International Management Ashcroft International Business School

2. So what is the New Space? A space for all companies A space for ideas A space for relationships A space for all citizens

3. So what was the old space? Not so much a space as a set of boxes Boxes for trade figures, multinational brands and exporters Latterly, boxes for FDI too Market share and competitive lone wolves.

4. And the New Space is about......? : Flexible, learning companies of all sizes Mobile citizens and knowledge sharing Supra-national and sub-national units of organisation Open innovation

5. Flexible, learning companies of all sizes The New Space • Mobile citizens and knowledge sharing • Supra-national and sub-national units of organisation and collaboration • Open innovation

6. Who are the key stakeholders in international business? Companies The global citizen National and supranational governance

7. International knowledge trading Transnational Multinational Universities Open innovation Migrant entrepreneurs Global • International Exporting Regional growth policy Public/private/ social Mini-multi Born Global MNC SME Student entrepreneurs FDI

8. And these views are based on what ...? Empirical studies of SME behaviour carried out for EEDA, UKTI and OECD/APEC Work with leading European science parks and MNCs

9. EEDA - Competing Effectively in International Markets Key Issues: • Why does the company go international? • How do they do it? • What problems do they encounter? • Where do they go for help?

10. Competing Effectively in International Markets How did we do it? • Telephone survey of 1,200 SMEs • Face-to-face interviews with • the strategic leader of 80 SMEs

11. Competing Effectively in International Markets Who did we talk to: A: The Curious B: The Frustrated C: The Tentative D: The Enthusiastic E: The Successful

12. Competing Effectively in International Markets Strategy Implications: • Complexity • Transferable skills and knowledge • Sustainability of support • Relationships and networks

13. i10 AND THE H.I.G.H.E.R. PROJECT

14. OBJECTIVES OF THE ENTIRE PROJECT • To improve international business support services for potential high-growth companies. • Identified from CEIM study • Middle-market as labelled by PWC • Interest in ‘born globals’ • Impact of economic change (globalisation, ) on SMEs • To promote knowledge-sharing between HEIs, companies and government support agencies.

15. HOW WE HAVE HELPEDTHE COMPANIES Strategic competence Organisational learning Planning Change management STRATEGIC RELATIONSHIP MANAGEMENT MARKET DECISIONS Cultural issues Environment assessment Knowledge exchange Market entry Long distance management Human Resources language skills Competitor analysis Partnership management Conflict resolution

16. EXPORTING AND BEYOND Exporting is not an end in itself Other activities should accompany and follow on from exporting Innovation and competitiveness in product and process in the firm is the goal.

17. Firms that become exporters in a given year experience more product innovation the following year • The more markets you enter, the more you innovate • Going directly to markets results in more innovation Source: Robert Salomon, Learning from Exporting, Edward Elgar, 2006

18. The Global Citizen

20. Global Destinations for International Students at the Post-Secondary (Tertiary) Level, 2001 and 2008

21. Open Innovation

22. ‘Open innovation’ • “[..] inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation [..].” Chesbrough, H., W. Vanhaverbeke, and J. West, eds. Open Innovation: Researching a New Paradigm. 2006, Oxford University Press.

23. OI Processes „If we can‘t turn all our discoveries into products, why don‘t we license them to third parties or even sell them entirely?“ Gerard Kleisterlee, Philips • Outside-In-ProcessesIntegrating external knowledge in the innovation process: • --> Using the expertise of suppliers, customers and external partners in order to improve the quality of the innovation process. • Inside-Out-ProcessesExternalising IP or internal knowledge: PUSH!, Business Angel Forum, Regional hubs, Experts‘ Database... Capitalise on this IP/knowledge through licensing, joint ventures and spin offs.

24. Project Secondary Target group Government Science Others Stake holders Primary Target group Companies Open Innovation • Stakeholders • Companies • Scientists • Government • Suppliers of knowledge (consultants, business schools) • Primary target group: • Companies • Secondary target group: • Other stakeholders

25. The model of ‘open innovation’ Research Development Commercialisation IP in-licensing Products in-sourced (e.g. Co-branding) Company Boundaries Core Market Focus Technology Spin-outs IP out-licensing Ideas & Technologies Docherty, M. (006), Primer on ‘Open Innovation’: Principles and Practice, pdma (Product Development and Management Association) Vision (April 006), pp.13-17. Chesbrough, H. (003), Open Innovation: The New Imperative for Creating and Profiting From Technology, Boston: Harvard Business School Press.

26. Collaboration and Governance

27. Towards “Open Innovation Governance” • Innovation policy and governance structures urgently need to anticipate changes and new developments in the national and European innovation system. • New generation of Innovation Governance has to open up for better horizontal and vertical co-operation of the regulatory regime • Policy makers and intermediaries have to prepare the innovation governance system for the paradigm shift to Open Innovation.  Benefit through learning from the experiences of the growing “co-opetition” culture in the private sector.

28. So what will this mean? A larger proportion of educated globally minded citizens in all countries A greater number of real born globals, i.e. cross-nationally constructed companies More transnational legislation permitting cross-national company formation Better, accessible skills everywhere to help companies compete and collaborate internationally

29. Within clusters, universities can provide: • People (employees, interns) • Expertise (consulting services) • Knowledge (tacit, explicit) • Resources (equipment, facilities, incubation) • Public spaces (conferences, networking) • New firms (spin-outs, start-ups) • But risk of ‘mixed mission’ • (academic / commercial, short-term / long-term)?

30. Research CY C L I C Scope from Action Service Design Transfer of knowledge into innovations(Value of competitiveness) World class academic research(Value of new knowledge) Global T H E M A T I C Designing Society Value transformation CREATIONS Impacts Academic Region Action Research L I N E A R Academic education (Intellectual value) Relevant to work (Business value) (Integration of values) • Industry and Services • Academy • Government Creations R E L E V A NT Reflection Education

31. Open Innovation Agency – Possible Structure Companies Research Institutes/Universities Excellence hubs and Cluster Initiatives Services: Brokerage, Assessment, Education and Training, Communication Open Innovation Agency European/Intl. Co-operation Membership Fees Premium Services Infrastructure, Personnel OI–Network: Business support, Research and Education Institutes Shareholders:RDAs and other Regional Intermediaries

32. CONTACT DETAILS: Prof. Terry Mughan Director, The Centre for Innovation in International Business Ashcroft International Business School Anglia Ruskin University East Road, Cambridge, CB1 1PT Tel: 0044 1223-196248 Fax: 0044 1223-698825 Email: terry.mughan@anglia.ac.uk