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Though a considerable number of European SMEs are invoved in international activities, only a small percentage is in to internationalisation, reports EU. Here, internationalisation refers to all activities helpful for SMEs to get in to a meaningful business relationship with a foreign partner. These activities are exports, imports, foreign direct investment, international subcontracting and international technical co-operation.
It was seen that internationalization affects the business performance. SMEs which are internationally active reported higher turnover growth than others which are not involved in international activities. More than 50% of SMEs, having investments in foreign countries and which are involved in international subcontracting, reported an increase in turnover from 2007- 2008, whereas for all the SMEs this was about 35%.
Internationally active SMES report higher employment growth than which are not. When the data is compared between them, the trend followed was, the growth in employment for exporters and non exportes was 7% and 3%, for importers and non importers was 8% and 2% , for SMEs invoved in both impoting and exporting was 10% and others were 3%, for SMEs involved in FDI it was 16% and others 4%, for the year 2007-2008.
Internationalization and innovation are also positively correlated. 26% of internationally active SMEs introduced products or services which are new for their sector in their country, while for other SMEs it is only 8%. 11% of internationally active SMEs are also more active with process innovations which are new to their sector in their country, while for others without international activities it is 3%.