International entrepreneurship 2 - Essay Example

Provision of Managerial Advice Governments have often found it necessary to intervene in SME operations as they play a crucial role in economic development. If the SMEs are of strategic importance to the nation; therefore, the government cannot risk them collapsing due to the competitiveness of the international free markets (Carter and Evans 2012, p.50). Governments can intervene by use of the financial systems put in place in order to ensure that the small businesses’ managers are properly trained on financial and managerial operations.

This would have the effect of increasing small businesses in the nation due to increase in expertise available and improved quality of service. In Germany after the destruction of the economy during World War II, small businesses were almost non-existent and the erection of the Berlin wall resulted in Eastern Germany lagging behind the West. As the two sides united in 1991, Eastern Germany’s small businesses stood at 80000 private craftsmanship firms with the largest employers having up to 1000 (Welter and Smallbone 2002, p.23). Due to the risks of lending money to such clients, German banks were instructed by the federal government to take an active role in the operations of clients businesses.

This included offering the clients advice this was to prevent the loss of their loans but also led to better security for the bank, as they were sure of how their investments were spent. Cross Border Entrepreneurship Cross border entrepreneurship can occur through partnership agreements between neighbouring countries. Cross border entrepreneurship (CBE) is when two or more countries will initiate business activities to meet the needs of the trading country. Therefore, with cross border trade, specialisation occurs on a national scale as SMEs begin to produce goods tailor made for the trading partner.

Cross border entrepreneurship requires good regional relationships to take place and governments to initiate the activities before small businesses can start producing subsidiary goods. The governments of the trading countries will have to have lower custom standards for goods from the selected countries. It has been observed that one unplanned advantage that does result from CBE is an increase in tourism from the trading countries (Welter, Smallbone and Xheneti 2012, p.203). These includes Greece, Macedonia and Bulgaria, which have implemented a cross border entrepreneurial policy that has seen Greece invest over 1.

5 billion dollars in Bulgaria between 1995 and 2005 (Welter Smallbone and Xheneti 2012, p.90), which has led to an exponential increase in trade volumes. Albania was recently included and combined its agricultural resources with Bulgaria for Albania and Greece. The governments of the four countries have offered subsidies to their partnering countries while removing the trade barriers and protectionist policies other countries receive when trading. The unemployment problem in Greece has been a barrier to effective trading and until it is resolved, cross border trading will not be fully implemented.

Subsidies Subsidies are incentives given by governments to various industries in order to promote growth and development in various fields. Small businesses do not enjoy economies of scale and during the formative years, they will find themselves lacking in many facilities that larger