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The introduction of new technologies is giving many small businesses a more global mind-set, a new study finds.
Research from software provider SAP AG and Oxford University's Oxford Economics shows that nearly 60 percent of small and medium-size businesses in North America are focused on penetrating new geographic markets.
Companies' overseas push has been motivated, in part, by the need to keep up with foreign peers who are already encroaching on their turf. More than half of the businesses surveyed said competition from other countries has increased substantially in the past two years.
Currently, more than three-quarters of the small and medium-size businesses surveyed generate at least some revenue from outside their home market. That portion is only projected to increase in the coming years, with the number of companies expecting to bring in as much as 40 percent of their revenue internationally forecast to jump by 36 percent in the next three years.
To smooth the transition overseas, most of the businesses surveyed are forming partnerships with suppliers and other vendors located in countries outside their home markets. Additionally, some companies are collaborating with other firms via online business networks and platforms in order to help drive innovation and growth.
"The overarching finding of the study was that successful SMEs [small and medium enterprises] are going outside of their home market to accelerate growth," said Eric Duffaut, president of global ecosystem and channels for SAP AG. "In their new international — or even global — landscape, business network and latest technology innovations are more and more required by SMEs to evolve their business models and effectively compete."
The research found that investing in new technologies — including business management software, data analytics, mobile, social media and cloud computing — is a top strategic priority as small businesses expand internationally. Almost two-thirds of those surveyed strongly believe technology is the key to helping them achieve longevity and sustainable growth.
Technology is also helping small businesses level the playing field with their more established competition. Less than one-third of small businesses feel they lack the technology capabilities of larger competitors.
"The road ahead is well-marked for SMEs," said Edward Cone, managing editor and senior analyst at Oxford Economics. "Globalization, transformation and technology will be the hallmarks of successful small and midsize companies."
The study was based on surveys of 2,100 small and medium-size businesses in 21 countries. Industries represented included manufacturing, professional services, consumer products, retail and wholesale.