While in certain circumstances SMEs enjoys some advantages of flexibility, in general they suffer from structural handicaps in their operations arising from small size, particularly where exports are concerned. Even SMEs that are highly successful domestically, for a variety of reasons, do not find it easy to upgrade production to production for exports.
Problems faced by SMEs in developing countries typically include:
A large number of SMEs have successfully overcome these formidable difficulties, established a sound base in the domestic market, and may be potentially capable of breaking into export markets. However they may be hampered by a variety of circumstances:
SMEs are often uninterested and unprepared to enter export field owing to: Lack of market information, Lack of incentives, Lack of credit, Lack of staff and organization and Difficulties in obtaining export licenses, export guarantees and foreign exchange. Thus, while in many developing countries SMEs are now receiving greater attention and aid from both the public and the private sector in many developing countries, little attention has so far been focused on the specific help needed to increase exports from SMEs. Developing the export capabilities of SMEs is difficult because of their special problems. Yet it is often assumed that the needs of SMEs are adequately net by ‘traditional sources’ of assistance, which are usually geared to the needs of larger firms. While most developing countries have well-established SME support programmes with agencies. Yet it can be argued that many of the techniques used to stimulate and support small business growth in general can be extended to support the export activity of SMEs.
This argument is based on the fact that the development of export capability in small firms is just one more aspect of their business development. In the essence exporting means moving to improve basic organizational capabilities: such as management control, financing, costing and pricing, design and marketing management. General support structure for SME development to be linked with export support. This structure demonstrates the linkage between the general support infrastructure for SMEs and the specific export support infrastructure and their different goals.
The former has as its objective the development of capability of SMEs for survival and growth, the latter the development of specific capability for export. Whereas in the context of the firm the development of general organizational capability and that of specific organizational capability for export are obviously closely linked, casual observation indicates that there is often no close linkage between the general support infrastructure for SMEs and the export support infrastructure.
SMEs assistance institutions can be considered in terms of a number of characteristics including: Whether they are public, private or mixed. Whether they are local, regional or national. And their degree of coverage. Whether they provide integrated forms of assistance, meeting a variety of different kinds of needs; whether they are general or concentrated upon particular industry sectors or sectors of the population; whether they are strong in terms of resources and capability; and finally whether they are long established traditional sources of small business support with a good track record.
Today, export promotion in general by most of the developing countries and particularly by SMEs is not easy. This is true for a variety of reasons. Some of which are listed below.
A summary of some of these problems is given below.
The trade organizations and export service agencies in many developing countries interface only with exporting SMEs, though the majority of the SMEs are usually linked with national level with SME development agencies and institution. Many governments have established a network of SME institutions which are in close touch with SMEs. There is a need to deliver an export orientation programme to a new target audience, that is, established SMEs in the region who are currently not participating in exports. It is important to create awareness in SME development institutions and through them among the enterprises themselves of export potential for export. To achieve this, it will be necessary to strengthen SME development institutions capacities to provide export development services.
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