“Born global” SMEs are defined as small businesses that internationalise very early in their development without first building a domestic client base. The term was coined at McKinsey way back when the primary means of international business communication was the fax machine. Since then, the “born global ” concept has become a particularly hot topic in small industrialised countries, such as New Zealand, where small, innovative niche companies are seen as real drivers of economic diversification and export-led GDP growth.

Now the democratisation and virtualisation of knowledge delivers direct access to overseas clients, and the Internet enables firms to  realise global aspirations across a wide range of industries. One area of study around “born globals” that remains somewhat sparse in the literature however is the phenomenon of cooperative partnerships and alliances between SMEs and much larger multinational companies. By nature of their imbalance in terms of resources and power, these assymetric alliances would seem to pose particular challenges and risks for the managers of SMEs.

For the SME, large multinationals offer rapid access to technology platforms, overseas market knowledge, distribution networks and brand recognition. Conversely, multinationals increasingly view SMEs as important sources of innovation and new product development, and may see cooperation with the SME as preferable to full buyout and absorption.

In one suggested model, “born global” SMEs use partnerships with much larger companies to accelerate their internationalisation. This helps to address their lack of financial resources, limited market knowledge, an aversion to risk-taking and a lack of economies of scale. However alliance/cooperative behaviour is only one of the strategies to overcome the constraints of small size. Partnerships sit alongside technical innovation, client-centred product development, leverage of personal networks and multiple entry modes.

A friend of mine, Richard Cotman, is pursuing an MBA research project exploring the role that alliances and partnerships play in SME internationalisation strategies and how the partnerships are formed and managed. If you are managing a New Zealand technology company that has forged international alliances and is doing a substantial amount of business globally, please consider letting Richard interview you.

You can reach Richard on Twitter, at his blog or by leaving a reply below.

I spent a day last week at the Focus on Health – New Zealand Innovation Challenge Wellington launch event. The programme aims to cultivate some innovative healthcare solutions that have commercialisation potential in the vast U.S. marketplace. But after the event I was left wondering how many of the participants actually had sound, commercial propositions that would scale successfully into such a competitive environment.

Remarkably the Innovation Challenge was one of the few economic development initiatives from the previous government to emerge unscathed from the post election cost cutting review. Six months later it has ministerial approval and everyone is working hard to position the project to take full advantage of U.S. economic stimulus spend, of which a large amount is directed at making health delivery more efficient. Better late than never. Perhaps most significant is advice that this programme could be a template for other sectors – if it can be shown to deliver some real wins.

So it is important that we get some companies with high value offerings to step up to the batters plate. It will be up to the Challenge judges to decide who goes forward, but I would imagine there will be a strong focus on health information technology, bioactive foods and medical equipment. So I was a little concerned that when I looked around the room, the majority of participants were not in these fields at all. Maybe that does not matter, part of the deal is to foster collaboration, educate business and open pathways by exposing New Zealand companies to offshore markets and investors. That in itself is a laudable goal.

In fact John Eyles gave an excellent talk on why collaboration is essential in order to take advantage of global opportunties. It was worth attending just to hear this message and I hope those listening took the message on board. We tend to be a nation of small businesses working in silos; which is one reason why our businesses remain small. You certainly don’t enter the American market unless you have robust partnerships and a lot of good advice under your belt.