Many emerging-market enterprises have been able to internationalize rapidly thanks to growing levels of liberalization, privatization and globalization. The first step to trigger the internationalization process is usually exporting, since international activity is essential to support the growth of small and medium-sized enterprises (SMEs). In the context of emerging economies, SMEs stand out as employment generators, contributing up to 60% of total employment in emerging markets.
Unlike developed countries, emerging-market enterprises operate in settings that display limitations in their infrastructure and institutional support. Most of the enterprises in these markets are young SMEs that tend to lack financial, human and administrative resources.
The situation of these SMEs has been studied within the conceptual framework of dynamic capabilities, which consists of unique resources or capabilities to drive strategies and support the continuous development of new operational capabilities. Dynamic marketing capabilities are an extension of the dynamic capabilities that help to discover market opportunities through the acquisition and integration of information and the adaptation of products and services to offer customers added value.
These capabilities are particularly important when an SME is expanding into foreign markets, and include market orientation and innovation capabilities:
To assess the impacts of market orientation and innovation capability on the export performance of Latin American SMEs, we wrote the research article “The role of market orientation and innovation capability in export performance of small- and medium-sized enterprises: a Latin American perspective”, together with Universidad de Valencia professors Marta Frasquet and Haydeé Calderón, and which was published in the journal Multinational Business Review.
Market orientation and innovation capability are well-studied concepts, hence, this research is classified as a quasi-replication study. In other words, this research replicates previous studies in order to provide information from a Latin American context, considering the specific example of Mexican SMEs.
This particular aspect is important, since Latin American markets show peculiar characteristics that influence institutional behaviors and distinguish them from other emerging markets. Although SMEs represent 99.5% of enterprises in Latin America, they tend to display high levels of informality and low productivity levels (OECD, 2019). Despite the fact that wages are below the OECD average in Latin American SMEs, this has not managed to offset their low productivity levels and inefficiencies. In addition, a lagging capital market hinders the growth and internationalization of Latin American SMEs owing to their dependence on internal funds. Another influencing factor is reliance on informal agreements and family relationships. All of these factors, together with marketing strategies that focus on competing with low prices and undifferentiated and low-quality products, make it difficult for Latin American SMEs to compete in international markets.
This study contributes to assessing robustness and generalizability by adapting the empirical setting to the specific context of SMEs in Mexico’s manufacturing sector. Therefore, the research strengthens the empirical credibility of the measured dynamic marketing capabilities that can be developed by Latin American SMEs to improve their export performance.
The results of the study based on the responses of 155 manufacturing SMEs led to three main conclusions:
In short, Latin American SMEs can benefit from the implementation of business intelligence systems that will serve to observe customers and competitors and translate the knowledge acquired into innovative products or processes. The dynamic marketing capabilities analyzed help Latin American SMEs create value through differentiated products rather than engaging into a fierce price competition.
The author is a Research Professor in the Department of Marketing and Business Intelligence at EGADE Business School.