AD ALTA
JOURNAL OF INTERDISCIPLINARY RESEARCH
ENTREPRENEURSHIP INTERNATIONALIZATION – CASE OF SLOVAK FAMILY BUSINESSES
a
LADISLAV MURA
a
Pan-European University, Faculty of Economics and Business,
Tematínska 10, 851 05 Bratislava, Slovakia
email:
a
ladislav.mura@gmail.com
Scientific Paper was elaborated and financed within the framework of the project
GAAA 19/2018 Internationalization of family businesses: theoretical background –
practical implications and VEGA
1/0813/19 Managing the development of innovative
and start-up forms of businesses in international environment and verification of
INMARK concept .
Abstract: Small and medium-sized enterprises are well positioned identities in the
national economies of the EU countries. The SME sector is represented by a large
proportion of family businesses, which are not addressed adequate attention. As a
result of the competitive environment, the small and medium-sized enterprises are
forced to seek opportunities for further development and potential growth on the
market. As a potential opportunity, family businesses are trying to get involved in
international entrepreneurship. Research in this field can be described as unique,
however increased attention these business would deserve from the representatives of
academic life and the state. This article presents the partial results of research
supported by GAAA 19/2018 with a focus on internationalization of family
businesses, a research conducted on a sample of 240 family enterprises. Selected
statistical methods were applied to investigate the issue. Partial results of the research
revealed that family businesses are trying to get engaged in international business
activities. Since these business entities are more vulnerable, they feel more cautious
about extending their business activities beyond the borders compared to non-family
type of businesses.
Keywords: Family businesses, small and medium enterprises, internationalization,
international entrepreneurship
1 Introduction
The SME sector represents a significant part of business activity
not only in Slovakia, but in the European Union as well. It can
be considered as a core sector of the economy, represented by
97-99% of the business entities. It is an important reason why to
address adequate attention to family businesses. Partial problem
emphasized regarding the sector of small and medium-sized
enterprises is that they are not addressed adequate attention by
governments or professional organizations. As there is no single
definition applied for family businesses, neither a single family
register exists that makes the research even more complicated in
domestic and international measures. We can only rely on
estimates of the research conducted to quantify the family
enterprises. Family business have no long tradition in Slovakia.
They were established as a response to economic changes and
transformation in the society. In developed economies family
business have long established position alongside the non-family
enterprises. They are considered to be viable and innovative in
the western economies. More effective, transparent and targeted
attention is deserved by family owned enterprises also in
Slovakia. Strengthening their position in V4 is also vital. In
particular, the term family business refers to entrepreneurship in
small and medium-sized enterprise sector, trade law, business
economics and corporate governance. This is an interdisciplinary
field of research, therefore a number of issues regarding family
businesses concern a wider spectrum of business entities. The
problems family businesses have to deal with are largely the
same as those faced by non-family small and medium sized
enterprises (Vilcekova et al. , 2018). On the other hand, they are
also struggling with specific problems. The global trends are also
gradually affecting the activities of family businesses, which are
facing the challenge of choosing a strategy for their further
development.
The domestic business environment provides limited
opportunities for further development due to fierce competition
on the market. The management therefore is seeking other
opportunities for organic development. Strategic management
aims to find an appropriate corporate strategy to achieve success
(Saniuk and Gajdová, 2015). The opportunity to promote the
development of business entity and ensure demand for its
products and services is to penetrate international markets. Being
a member of the EU, Slovakia can utilize all those opportunities
provided by the market of 28 member states. Perspective
development of the entrepreneurial sector is seen by
Androniceanu et al. (2018) in the field of activities
comprehensively understood as sustainable development.
According to Balcerzak and Pietrzak (2017), sustainable
development in the EU countries has to be in line with the main
objectives of the EU, which has repeatedly declared its interest
in development of the small and medium sized business sector,
also represented by family businesses. This idea is also
supported by Grabara (2017), who emphasises that the Central
European countries have many common features the businesses
can benefit from, and have a potential to establish their activities
on individual markets. Slovakia, the Czech Republic, Poland and
Hungary are not only geographically close, but the markets, the
market structure, the conditions of entrepreneurship, the
competitiveness of businesses and the market itself are similar.
These similarities can be detected in the Benelux countries
thoroughly examined by Korauš, Mazák and Dobrovič (2018).
The business environment is shaped by the ongoing
globalization, which according to Zeibote, Volkova, and
Todorov, (2019) or Reklaite (2015) has significant influence on
internationalization of entrepreneurship by active support.
Zaušková and Grib (2016), who investigated the impact of
globalization on entrepreneurial activity of businesses found that
globalization does not only affect the decision-making of
management on strategic issues or the future of the enterprise,
but also the marketing activities and the innovation processes. It
is undisputable that globalization is increasingly affecting the
regional markets, dominated by small and medium-sized
enterprises. Pietrzak et al. (2017) examined the business
environment under the influence of globalization tendencies,
especially in the Polish regions, where part of the Slovak
businesses (mainly in the northern part of Slovakia) conduct
their business activity. Adamowicz a Machla (2016), Nesterak
and Gródek-
Szostak, (2016) or Macháček, (2017) emphasized
the importance of regional activity of businesses and discovered
that the support provided by regional governments is minimal,
often only verbally declared. According to Gajdová (2013) and
Virglerová et al. (2016), the strategic view should focus on the
local, regional and national development of the business sector.
Representatives of this group are the small and medium-sized
enterprises, certain part of them represented by family
businesses. Since they differ from non-family enterprises in
several terms, they have different needs, requirements and
attitude (Dvorský et al. 2016). The next chapters of this article
will address the specific problems of family enterprises and their
effort to penetrate international markets.
2 Literature review
There are several motives for enterprises to extend their
activities on international markets. According to Mitkus and
Maditinos (2017), the main incentive to enter international
markets is the possibility of higher revenue, profit and acquiring
new theories. Beside the opportunities that entry to international
markets can offer, there are also barriers to entrepreneurial
development. Conducting business activity on international field
can spur the innovation activity of enterprises, as well as it might
contribute to increasing competitiveness. According to many
authors, the owners of family business face barriers on the
domestic markets that do not allow them to expand their
business or make investment to grow. This issue is addressed by
Andrejovská and Pulikova (2018), Mihóková et al. (2018),
Okanazu (2018) and Kljucnikov et al. (2017). They emphasized
the significant tax burden on businesses and distorted financial
discipline as a result. These obstacles do not contribute to
business development. The financial risk these business face, has
negative impact on their finances and ability to develop on the
market (Virglerova et al. 2016). The discussed issue is not a
specific phenomenon of the Slovak market. These barriers are
described by foreign authors e.g. Baloch et al. (2018). As one of
the proposed solutions, they indicate the need for more
substantial financial reforms that can contribute to development
of the business sector. Horecký (2018) can see the possibility of
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