Increasing the number of Scottish International Businesses

The aim of the paper is to consider the practical steps used by Scottish Enterprise/Scottish Development International (SE/SDI) to increase the number of exporters and, more widely, the number of international businesses. The paper considers the situation in Scotland currently in terms of the number of exporting businesses, and links this to the kinds of support SE has provided. It then outlines some refinements to this approach currently being implemented that has been designed to foster a highly collaborative approach to company international development in the future. The paper also presents a review of policy, which summarises the factors driving exporting and the elements linking to company decisions to export and to continue, broaden and deepen its export base. It also considers the relevant elements whereby a company will consider pursuing deeper forms of internationalisation, including the key role played by management teams in both taking the decision and then acting on that decision. It considers specifically the market failure rationale and positions this in the context of activities undertaken by SE to assist internationalisation. Finally, it outlines some examples of collaborations across Scotland for internationalisation support.

The paper builds on a previous conference paper from the authors, a review of existing research, data and SE reports and evaluations.

The paper reports that although Scotland has seen an increase in the number of exporting businesses persistently since data became available in 2011, it still has a lower proportion of exporters than other GB regions at 6.8% (11,500 businesses). This is compared with a high of 12.4% in the South East of England. Data also suggests that a lower proportion of Scottish SMEs are exporting compared with other OECD countries. Scottish exports are also highly concentrated - with an estimated 15 companies accounting for 30% of Scottish exports. Large companies (over 250 employees) are also dominant - accounting for 54% of all Scottish exports. However, an increasing number of businesses in Scotland are considering or undertaking deeper forms of internationalisation (e.g. joint ventures, strategic alliances, M&A) as a necessary part of their overall growth strategy. This has been made more acute by Brexit considerations. The ‘ACE’ framework (Ambition & Awareness; Capacity & Capability; Expansion & Extension) has been adopted by SE to support both export development and deeper internationalisation activities. An SDI evaluation of SE activities between 2010 and 2017 found that the number of assists and companies supported had grown significantly, particularly at the ‘A’ stage of the framework. There were also notable increases in the percentage of companies reporting: an impact on export sales; a major or moderate positive effect on exports; export sales in new markets; and export sales in existing markets. It concludes that the success of the above ACE framework, when combined with a focus on sustaining growth in Scottish high growth companies, suggests that more is possible.

The report outlines a number of ways in which SE intends to continue to support internationalisation in the Scottish economy. These include: maximising the impact of the Regional Economic Partnerships on Scotland’s trade performance, with an initial focus on growth, as set out in Scotland’s Economic Strategy, while also building a deep partnership approach able to respond to a variety of regional opportunities and demands as appropriate; and giving consideration to how it can develop the operational flexibility necessary to deliver appropriate trade support in response to the regional priorities across the country as they emerge.