2019 Volume 11 Issue 2 Pages 31-47
Through the perspective of business independence, this paper explores how SMEs in the regional industrial agglomeration internationalize by focusing on and analyzing the SMEs located in the Hitachi area. Concerning the internationalization of SMEs, some previous research suggests that cutting edge technology adaptable only to niche market triggers the internationalization of SMEs, while others explain SMEs internationalization exploiting the Uppsala model in behavioral terms. Regarding business independence of SMEs, previous research reveals that the development of SMEs’ own technology derives the price bargaining power leads to the realization of business independence. On top of such arguments it has been pointed out that both SMEs’ internationalization and business independence proceeds in a mutually complementary way. But there has been no research trying to quantitatively analyze internationalization and business independence of SMEs located in a regional industrial agglomeration like the Hitachi area.
In this paper we try to revise and combine the DOI index and business independence index and try to analyze SMEs using the ideal profile method. Specifically we interviewed 49 SMEs in the Hitachi area and received answers via a questionnaire survey from 41 companies.
The DOI index includes internationalization stage, performance, ability to coordinate outsiders, and recognition of management for internationalization. The DOI index items based on previous research in western countries are revised to be adaptable to the reality of SMEs located in Japanese regions.
As the result of the questionnaire survey, it became clear that the majority of the SMEs are already attaining business independence, and even though the majority of the SMEs are domestic, around 20% are proceeding to internationalize while there are no SMEs just following the MNCs. Additionally we discovered different and diverse characteristics of DOI and independence among types of industries.
Overall, we conclude that the SMEs in the Hitachi area are no longer functioning as outsourcing companies. Instead, they are developing their technologies and improving their capabilities in order to internationalize themselves, realize business independence, or both.
