20-21 February 2018, Mexico City: Workshop on building business linkages that boost SME productivity. oe.cd/sme

1. WORKSHOP ON BUILDING BUSINESS
LINKAGES THAT BOOST SME PRODUCTIVITY
Digital Technologies and SME Internationalisation:
Evidence and Policy Implications
Prof Lester Lloyd-Reason
Anglia Ruskin University, UK
Prof Kevin Ibeh
University of London, UK

2. CONTEXT (I)
 50%+ of world population of 8 billion have access to the
internet; 1.9 billion own a smartphone
 B2C purchases: China 60%, India 31%
 B2C using mobile devices China & India 50%+, USA, UK,
Germany 30%+
 E-Commerce revenue accounts for 12% of global trade and
outstrips bricks-and-mortar revenue by 3-1
 Currently around US$25bn of e-commerce is exported
estimated to grow to US$130bn by 2020.
 Mobile payments now exceed US$670bn with huge
competition to grow this flow of digital money
 In India, huge growth in mobile money wallets where there are
far more people with mobile phones than active bank accounts
 Uber valued at US$62.5bn, more than Fed-ex, General
Motors and Ford combined

3. Context (II)
Web 2.0 further demystifies internationalization and increasingly enables SMEs to
use web based platforms to deliver online business services and digital products
around the world.
It provides ‘plug and play’ infrastructure and disruptive and market-transforming
digital applications such as: Mobile internet; Fintech; Internet of things; Cloud;
computing; Data analytics; Advanced robotics; 3D printing
It generates waves of globally oriented start-ups in both the goods and services
sectors facilitating pervasive servitisation and hyperconnectivity. Hyper-specialised
and sophisticated industrial ecosystems or platforms that promote collaboration
between vendors, suppliers, service providers, micro-entrepreneurs, enterprise
users and end-customers as well as inter-operable smart environments blending
IoT, Cloud and Big Data analytics.
(IoT: 4.9 billion devices in 2015 projected to grow to 25 billion by 2020)

4. OPPORTUNITIES
 Expanding the opportunity map and enabling access to new
international markets and previously unreachable segments
 Enabling the establishment of new shop fronts in online
marketplaces and collaboration in global digital supply chains
 Enabling increasing cross-border online trade of data and digital
services and the distribution of digital processes – hosting, storage
and processing across many countries
 Enabling direct access to buyers in foreign markets without an
intermediary or geographically-distant physical presence
 Enabling SMEs to deliver services online to foreign markets or to
support offline international service delivery
 Facilitating inward internationalisation modes, notably importing,
international sourcing of inputs, knowledge, services and contract
manufacturing
 Enabling the establishment and management of digitally integrated
global supply chains and collaborations within global supply chains
 Mitigating funding challenges facing SMEs and facilitating access to
scale up finance and credit

5. GLOBAL GROWTH
South-East Asia
Projected to be the next boom market in mobile based e-commerce, across the six largest economies in the
region – Indonesia, Malaysia, Thailand, Singapore, Vietnam and the Philippines – e-commerce has grown from
US$7bn in 2013 to US$34.5bn in 2018.
Consumers in the Asia-Pacific region will account for 67% of the global middle class by 2030 where already the
figures for mobile shopping through Mastercard are: China 70%, India 63%, Taiwan 62%, Thailand 59%,
Indonesia 55%, Malaysia 46% and Vietnam 41%
Africa
Facebook deploying satellites to boost access across the continent supported by over 10,000 drones
and over 10,000 lasers to connect these to ground stations backed up by offering basic websites and
services known as “Free basics’
Google have completed a training programme for over 1 million Africans in digital skills
Microsoft4Africa projects initiated in 2013, including the ‘Affordable Access Initiative’, aims to provide
wireless broadband across the entire continent.

6. BARRIERS
 Lack of access to digital infrastructure, e.g. broadband and data, including their
availability in appropriately open (non-proprietorial) standards
 Unavailability of cost effective ICTs
 Lack of interoperability between different systems
 Lack of scale finance for high growth, rapidly expanding digital start-ups
 Need for additional investments in complimentary assets, including especially
ICT-related skills and organizational capital
 Regulatory conditions, including legal requirements for cross-border data
exchanges, settling disputes, taxation rules and costs associated with these
issues
 Lower commitment to and lower adoption and diffusion of ICT tools and lower e-
commerce readiness
 Lower levels of adaptation of communication for local language or culture
 Higher perception of rising digital security risks, lack of trust of online payment
systems
 Concerns about protection of privacy and IP rights
 Liability of foreignness, notably behavioural barriers
 Lack of resource base to develop and sustain links with HEIs

7. POLICY
RECOMMENDATIONS

8. POLICY: UNDERLYING
PRINCIPLES
 The need for continual benchmarking of SME
internationalisation support programmes
 The importance of an intensified focus on designing
support provision for digital internationalisation
 The need to adopt the much-lauded digital ecosystem
approach to providing support for digital
internationalisation
 The importance of understanding the appropriate domains
or levels - supranational, national and local – within which
particular policies or support programmes are best
designed and delivered

9. POLICY
RECOMMENDATIONS
1. A robust and sustained policy focus on providing and augmenting digital infrastructure
development-promoting organizations at global, supranational, and national
levels.
2. Improving SMEs’ access to scale-up finance and ICT investment funds through promoting
more widespread adoption and effective implementation of exemplary funding initiatives.
3. Assistance for SMEs to navigate the legal, regulatory and security concerns raised by
digital including online tax and custom duties’ payments, protecting IP and privacy in
online environments, and protection against increasingly reported cyber-security threats
and hostile actions by state and private actors.
4. Strengthening SMEs’ overall capacity to overcome identified internal barriers and
capitalise upon digital internationalisation opportunities through regularly auditing extant
capacity enhancement programmes and facilitating SMEs’ exposure to best practice
managerial and workforce skills needed for successful digital internationalisation.

10. FINALLY
We urge policy makers to pay greater attention
to not only the winners from disruptive
technologies, but also those upended by
disruption, including local SMEs and micro-
enterprises hitherto insulated from
international and larger-firm competition.
We argue that creative and imaginative policy
solutions are required to obviate possible
backlash against the digital economy and
disruptive technologies, by cushioning their
adverse effects on displaced enterprises and
squeezed-out or left-behind groups

11. THANK YOU FOR YOUR ATTENTION
Prof Lester Lloyd-Reason