INTERNATIONALIZATION OF SMALL AND MEDIUM SIZED ENTERPRISES IN GHANA: THE ROLE OF INTER-FIRMS AND SOCIO-POLITICAL NETWORKS (Case Company: Kasapreko Company Limited)

ABSTRACT

Most small and medium size enterprises in their attempts to extend operating overseas rely heavily on the networks it has established with other players both within the firm and outside the firm. Several studies on the international activities of companies mostly in the area of business firm’s relationships focus much on the relationships between firms with less attention being paid to the socio-political networks that can be very crucial to the firm’s international activities as well. The objective of this study was to re-emphasize the significance of the network model of internationalisation of SMEs in Ghana, identify if there exist other forms of networks apart from the organisations inter-firms networks in Ghana and to examine how SMEs in Ghana mange their networks of relationships.

Qualitative method of research was employed in an attempt to gain an understanding of the research problems. Semi-structured questions were used in the interview with the respondents from the case company who are actively involved in the company’s internationalization.

The empirical findings revealed that networks, whether inter-firms or socio-political, are very critical in both the domestic and international operations of a firm. The result also indicated that communication is a critical management tool in the management of SME’s networks in Ghana.

TABLE OF CONTENTS

1 INTRODUCTION

            1.1 Background of the study

            1.2 Research Problems

                        1.2.1 Objectives

                        1.2.2 Research questions

            1.3 Methods

                        1.3.1 Usefulness of the study

                        1.3.2 Limitation(s) of the study

                        1.3.3 Structure of the thesis

2 LITERATURE REVIEW

            2.1 Introduction

                        2.1.1 Small and medium sized enterprises defined

            2.2 National Board for Small Scale Industries of Ghana (NBSSI) and Ghana Statistical Service (GSS) definition of SME

            2.3 EU Definition of SMEs

            2.4 The scope of SME activities in Ghana

            2.5 The nature of SMEs internationalisation

            2.6 The role of SMEs in developing economies

                        2.6.1 What is Internationalisation?

                        2.6.2 The economic school of thought of internationalisation

                        2.6.3 The behavioural school of thoughts (The Stage models of internationalisation)

            2.7 The network Model of Internationalisation

                        2.7.1 When are networks formed?

                        2.7.2 Components and characteristics of a network

                        2.7.3 Types of relationship

                        2.7.4 Formal / informal relationships

                        2.7.5 Direct and Indirect relationships

                        2.7.6 Business inter-firms networks

                        2.7.7 Knowledge and commitment building in networks

            2.8 The Socio –Political environment of Ghana

                        2.8.1 Government and political system in Ghana

                        2.8.2 Interest groups

                        2.8.3 International economic actors

                        2.8.4 Traditional authorities

            2.9 How can these socio-political actors affect Kasapreko’s operations?

                        2.9.1 Forms of political networks of firms

                        2.9.2 Socio-political activities of firms

            2.10 Significance of Networking in SME’s internationalisation

            2.11 Management of networks in SMEs

3 RESEARCH METHODOLOGY

            3.1 Method used

            3.2 Sampling size

            3.3 Data gathering method

                        3.3.1 Analysis of data

            3.4 The issue of validity and reliability

4 EMPIRICAL RESEARCH

            4.1 Case company in brief

            4.2 The need for export

            4.3 Products and Distributors

            4.4 KCL’s Foreign Market

                        4.4.1 Country information

5  FINDINGS, DICUSSIONS AND CONCLUSION

            5.1 Introduction

            5.2 Findings and Discussions

            5.3 KCL outside the firm Networks

                        5.3.1 KCL Network of local authorities

                        5.3.2 Kasapreko Company’s Networks

            5.4 Introduction

            5.4.1 Management of social Networks

            5.4.2 Management of distributors and suppliers network

5.5 Information and knowledge acquisition

            5.5.1 Assistance in the acquisition of financial support

5.6 Main Findings

            5.6.1 Traditional authorities as major external networks

            5.6.2 Reliance on the experience of network members

            5.6.3 Communication as a network management tool

5.7 Suggested Areas and patterns for further research

5.8 Recommendations and conclusions

5.9 Conclusion

Appendix

References

1      INTRODUCTION

1.1 Background of the study

Small and medium sized enterprises (SMEs) represent one of the fastest growing sectors of various economies including developing countries. As a result of this and the quest for growth, SMEs are increasingly becoming international in nature and according to Andersson et al (2004). SME are even appearing on the international stage at earlier age than was the case several years ago. However, according to Hadjikhani and Ghauri, (2001) several studies on the international activities of companies mostly in the area of business firm’s relationships, focus much on the relationships between firms with less attention being paid to the socio-political networks that can be very crucial to the firms international activities as well.

One major consideration of this thesis is the assumption that, the success of the SME in the international arena in the context of business network is not only limited to the relationships it has established with their inter-firms networks, but also, the Socio-political settings both in the domestic market and the foreign market it seeks to enter. The socio-political environment of businesses consist of various actors like the government, media, political parties and other social groups and movement such as ‘green movements’ whose activities can influence business operations Hadjikhani et al (2004). It is believed that these socio-political actors within the SMEs environment can exert a considerable amount of influence on the firm’s international operations both within the domestic market and the foreign market and, as a result, must be considered when forming networks of relationships.

1.2 Research Problems

The first research problem is that, in discussing the network approach to internationalisation, industrial network researches has over the years given less attention to the wider environment in which both parties; businesses and political actors, are connected (Welch and Wilkinson, 2002). It can be argued that the interface between the firm and the environment it operates is as important as the SMEs inter-firm networks. Earlier Findings such as the AAR model has, however, failed to acknowledge the factors that may exist beyond inter-firms interactions even though these factors could have an enormous impact on the SMEs activities both domestically and internationally (Welch & Wilkinson 2002).

Secondly, there have been quite a lot of theories that explain the internationalisation of firms, some of which have been welcomed with quite a number criticism. For example, the theory of systematic planning model according to Lei, Dan, & Tevfik, (2004), falls short of providing a reliable conclusions and outline that may assist researchers and professionals in the field to fully comprehend the internationalisation process of firms, hence, the need for the network view of internationalisation. According to (Johanson & Mattsson, (1988), networks are formed whenever an organisation establishes a mutually beneficial relationship with other actors in the firm’s domestic or overseas market. However, there were less or no further deliberations on how firms, especially SMEs, manage these networks of relationships after and during their relationships formation.

1.2.1    Objectives

The objectives of this thesis are focused on two main parts as indicated below;

1.      To emphasize the significance of the network model of internationalisation of SMEs in Ghana.

2.      To identify if there exist other forms of networks apart from the organisations inter-firms networks in Ghana.

3.      To examine how SMEs in Ghana mange their networks of relationships.

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Item Type: Project Material  |  Size: 64 pages  |  Chapters: 1-5

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