OTTAWA, June 13, 2011 /CNW/ - The emergence of digital markets can help
Canada's small and medium-sized enterprises (SMEs) sell internationally
by increasing access to foreign customers and improving the quality,
speed, and cost-effectiveness of transactions.
Despite the potential benefits, Canadian small and medium-sized
enterprises (SMEs) are hesitant to sell online because they lack the
knowledge of how to do so effectively, according to a Conference Board
of Canada report, Building International Sales in a Digitized Economy: Best Practices for
SMEs (http://www.conferenceboard.ca/e-library/abstract.aspx?did=4252). The report identifies three main factors that contribute to success
in international digital markets: a favourable online reputation,
strong online technological capabilities, and an engaged online brand
"Most Canadian small and medium-sized businesses use the internet, but
online selling is not yet widespread," said Rebecca Reuber, co-author
and Professor of Strategic Management at the Rotman School of
Management, University of Toronto. "Many small and medium-sized
businesses do not know how to reach foreign customers online or how to
adapt their business model to take advantage of digital markets."
"Although greater internationalization provides growth opportunities,
doing business in foreign markets can be difficult and costly for
resource-constrained SMEs, and most of them operate solely in the
domestic market," said Eileen Fischer, co-author and Max and Anne
Tanenbaum Chair of Entrepreneurship and Family Enterprise. "One
particular hurdle for some firms is the investment that's required in
technology to sell effectively online. "
A Statistics Canada survey reported in 2008 that only 36 per cent of
Canadian private sector organizations believed doing business over the
Internet would allow them to reach new customers. And a 2010 Statistics
Canada study found that only seven per cent of small enterprises and 13
per cent of medium size enterprises were selling online in 2007, about
the same percentage reported in 2001.
The Conference Board report shows that the competitive context for SMEs
in international digital markets differs from that in traditional
markets. Online buyers are more apt to imitate the purchasing behavior
of other customers, technological capabilities increase in importance,
and online buyers are interested in participating in online
communities. As a result, three main factors that affect company
A favourable online reputation - elements include visibility,
trustworthiness, and signals of high product or service quality.
Strong online technological capabilities - the CEO and other top
managers must champion technological development, rather than
Engaged online brand communities - buyers increasingly want to become
involved with firms, so companies should invest resources in monitoring
a range of social media and interacting with customers.
The research also identifies three major challenges. First, SME owners
need to be cautious about relying exclusively on online contact with
customers. Second, entering foreign markets haphazardly - or as market
pioneers - can lead to costly mistakes that could be avoided with a
deliberate and coherent strategy. Third, SME owners need to think about
how "Canadian" they want their image or brand to be, as there can be
advantages in making borders as invisible as possible.
The report concludes on a series of eight policy-related implications,
foster offline interactions between buyers and sellers;
focus on foreign markets with high growth potential instead of simply
responding to unsolicited online requests;
ensure access to high capacity Internet and wireless networks;
ensure banks and government agencies are able to assess intangible
resources, such as a firm's reputation and online community;
provide more recent data about the international activities of Canadian
SME in digital markets;
This report was produced by the International Trade and Investment
Centre (http://www.conferenceboard.ca/ITIC/default.aspx), for the Conference Board's CanCompete program. CanCompete is a
three-year program of research and dialogue is designed to help leading
decision makers advance Canada on a path of national competitiveness.
The report is publicly available at www.e-library.ca. The International Trade and Investment Centre has also published Canada's Trade in a Digital World (http://www.conferenceboard.ca/reports/briefings/tradingdigitally/default.aspx) in April 2011.
SOURCE CONFERENCE BOARD OF CANADA
For further information:
Brent Dowdall, Media Relations, Tel.: 613- 526-3090 ext. 448