Internationalization of Canadian high tech small and medium enterprises (HTSMEs): Opportunities, Challenges, and Strategies

Abstract

Canadian high-technology small and medium sized enterprises (HTSMEs) have significant opportunities when internationalizing, however need adequate strategies in place to overcome challenges. The industry is known for rapidly changing technology and knowledge, meaning windows of opportunity to seize market share are incredibly small (Spence, 2003). HTSMEs tend to internationalize more rapidly than SMEs in other sectors (Spence & Crick, 2005). It is important to analyze this topic because Canadian HTSME’s have a wealth of opportunities to capture but must be aware of strategies to overcome challenges. Canadian HTSMEs are evaluated on their internationalization processes. Michael Porter’s model of National Competitive Advantage is applied, showing Canadians HTSMEs have limited domestic demand and will often focus on global markets at the same time, or even before the domestic market (Spence, 2003). As well, Canada has a low export to import ratio for high-tech goods due to a lack of supportive and related industries. Yet, there are significant opportunities. Opportunities identified are the ability to internationalize faster, greater market share opportunities outside of Canada, and the commercialization of innovative ideas to the global market. Firms also face challenges including barriers to enter the international market, rapid learning and ever-changing standards of technology, funding challenges, high levels of competition, and high costs of internationalization. Strategies to overcome these include the transformation of the company structure, market entry strategies, networking and clustering, implementation of modern technologies, and increasing learning efficiency. Overall, Canadian HTSMEs can reap significant benefits from internationalization, however those can be realized only if Canadian HTSMEs try to use recommend strategies to mitigate challenges in the internationalization process.