SMELLIE ON SME's: Independence vs collaboration

By Pattrick Smellie

Dec. 10 (BusinessDesk) - The little Kiwi battler, taking on with David-like determination the Goliaths of the international markets and winning, is a compelling story we like to tell ourselves.

But the reality may be that New Zealand small business owners are almost too independent for their own good, says new research from Dr Loren Stangl, at Massey University.

She says there's no doubt about kiwi firms' comparatively entrepreneurial and inventive tendencies.

But our small and medium-size enterprises often underestimate the need to bring a diversity of views, expertise and thinking to their products and services, and this can be a major reason they struggle to internationalise.

Networks are important, she says, and may include suppliers, customers, government agencies, universities, Crown Research Institutes and, believe it or not, competitors. In fact, find the right venue for information exchange, and competitors can become collaborators in ways that help you both.

“We need to quit being a country of independent operators if we are going to grow this economy,” says Stangl. “No SME has the resources to do it all themselves – they need to learn to collaborate. New businesses, especially, want to protect their intellectual property. Fair enough. But, this independent nature can hold them back.”

She bases her conclusions on the rich research now becoming available from the Nordic countries - Denmark, Sweden, Norway, and Finland - which, like Germany, have shown a particular aptitude for turning good ideas into high value, exportable products from economies that also sustain very high standards of living.

Like Germany, the Nordics also tend to rely more on small and medium-sized firms than on monster-sized businesses, as their engines of growth.

In part, Stangl thinks the willingness in those economies to collaborate, including among competitors, is cultural. New Zealanders, by comparison, are more independent-minded, she thinks. Yet if that's true, how come we're all blathering on about NZ Inc all the time? Could it be that New Zealand firms are so much smaller on average that they lack the mental "bandwidth" to do more than just hang in there, or that our dearth of experienced managers means too many SME's just don't know what they don't know?

Stangl is perhaps closest to putting her finger on it by saying the European examples in her study had understood better than New Zealand firms "the difference between innovation and invention".

In a comparison of 50 countries, Stangl found the level of exposure to international people and products had the greatest impact on SMEs’ ability to successfully export innovative products. This was more significant than other factors such as institutional support for innovation development and international commercialisation.

That suggests New Zealand's physical isolation from other markets is also a factor. We may band together as kiwis, but we don't have the depth of alternative views right on our borders to push us along.

However, Stangl is kinder than that. She suggests New Zealanders have a reasonable degree of exposure to foreign cultures and people through travel and migration and shouldn't lack for examples. But I have my doubts. We are certainly well-travelled as a people, but once on our own shores, our horizons very easily reduce.

At the very least, Stangl is suggesting, we can counteract that by talking to one another more, acting more collaboratively, and seeking out the opportunities that exist to learn from others.

It may seem like just another chore, but if it adds to the bottom line, it can't be time wasted.



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