Theoretical Aspects of the Risk Management Process of Internationalization of Small and Medium-Sized Enterprises
Keywords:SMEs, internationalization process, risk factors, risk management, types of risk
AbstractPurpose of the article: Currently the situation of Czech SMEs is quite difficult not only because of economic crisis, but also because of big rivalry at the domestic market. The increasing rivalry and declining demand cause that small and medium enterprises try to entry foreign markets. The internationalization proces is, as all companies’ processes, accompanied by risk. This paper is focused on risk management in the internationalization process of SMEs, because risk perception has a direct influence on the management of international activities of companies. Methodology/methods: The compilation of available approaches to risk management process in general was presented in this paper and there also were defined risks of the internationalization process. There also were presented available perspective on the structure of risks associated with internationalization. Furthermore, the risk typology and options of internationalization risk process quantification were presented. The last section is devoted to approaches to risk management process. Survey among Czech SMEs was carried out, focused on risk management. There has been processed data from 91 Czech SMEs. Based on the data obtained there were defined and tested three hypotheses related to risk management. Scientific aim: The aim of the paper is not only to focus on the current situation in the theory of risk management, specifically on risk management methodologies that would be applicable to SMEs, as they often do not have enough educated managers and so risk management is not implemented in SMEs or risk management is carried out at very low level, the aim of this paper is also to find out how Czech SMEs manage the risks. Findings: In the literature it is possible to find a wide range of approaches to risk management, risk management topics internationalization process of firms in the last decade is also fairly widely discussed. Most authors agree that the risk management process would be internationalization basic general principles of risk management, while small and medium-sized enterprises are not expected introduction of complex advanced methodologies of risk management projects. To identify and analyze the risks to businesses available wide range of methods that can be used. Also, methods which could be used to eliminate the risks are many. Conclusions: In this paper are presented methods and procedures applicable to the risk management proces of internationalization of small and medium enterprises. Small and medium-sized enterprises in mostly manages risks associated with entrance into foreign markets intuitively, SMEs usually do not have any detailed methodology, which would be internationalization of risk management discussed. Small businesses tend to have problems not only in choosing the appropriate method of eliminating the risks that come across in the course of internationalization activities, but also often do not have the knowledge or the appropriate methods to identify potential risks and analyze. The survey among Czech SMEs showed that Czech SMEs often manage the risks associated with access to foreign markets intuitively and do not have any detailed methodology that would address the risk management of internationalization. SMEs tend to have problems not only in choosing the appropriate methods to eliminate the risks they encounter in the course of internationalization activities, but also often do not have the knowledge or the appropriate methods to identify potential risks and analyze.
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