The thematic analysis of interview data helped to identify five key internal enablers that influence the export performance of manufacturing firms in Qatar. These are discussed in the following sections.
Having employees with networking skills
Undoubtedly, SMEs engaged in exporting require specialized personnel with specific exporting competencies and expertise. Network connections are widely recognized as essential to SMEs’ internationalization efforts (Jeong et al. 2017). Manufacturing SMEs operating in Qatar increasingly view an employee with global perspective networking skills as crucial for reaching the targeted international market swiftly through their relationships with a previously developed customer base:
During the 2017 blockade in Qatar, we changed our export strategy and hired a dedicated export sales manager who had previously worked in the same industry and already had customer contacts. That is how we maintained our export business (Ahmed, General Manager, Plastic).
Ahmed notes that hiring an export manager with networking skills has resulted in a 5% increase in the value of the enterprise’s exports, with an additional 15% increase set as a long-term target. Notably, this example also shows that firms may engage in hiring specialized labor in response to external macro-environmental changes (e.g., political). This raises the question of whether SMEs would function well without specialized labor so long as external macroeconomic forces were favorable. Another intriguing rationale mentioned in Ahmed’s account is that firms may be hiring additional personnel not because of their specialized capabilities but because of the key customer lists and the networking opportunities they bring to the table.
While SMEs are primarily constrained in their international expansion by a lack of external resources, insufficient knowledge of foreign markets, lack of international experience, and lack of overseas contacts and business opportunities (Kazlauskaite et al. 2015), hiring personnel with networking capabilities is seen as a go-to solution to overcome such constraints. According to Zhang et al. (2014), the degree of internationalization that SMEs, particularly in emerging economies, may achieve is contingent on their ability to overcome resource constraints through networking. This being the case, the teams already dedicated to export-related activities in many firms have not prevented them from hiring additional skilled personnel with customer networking skills to boost export sales:
On the internal front, we have a capable export team that develops long-term ties in new markets. However, we are thinking of hiring skilled people from a competitive company, as they will bring their connections (Khalifa, Managing Director, Healthcare).
The exporting journey of Khalifa’s enterprise began by establishing relationships with distributors in Jordan and Sudan, but these raised value of their exports to 5% of its total revenue. Employing an internal export team enabled it to establish a foothold in Kenya, resulting in a 7% increase in export value. However, Khalifa was quick to point out that, due to the relatively slow progress in finalizing registration processes to expand exports to additional new markets, the next move for his enterprise was to recruit sales personnel with existing network connections. Notably, Khalifa’s account showed the significance of network connections in encouraging the development of export capabilities for SMEs.
Indeed, foreign market knowledge is indispensable for SMEs seeking success in international markets (Child et al. 2017; Oviatt and McDougall 1994; Zahra 2005). Thus, it is unsurprising that when SMEs hire personnel to boost exports, networking abilities may take precedence over other skills. This is particularly important in Middle Eastern countries since relationships with firms’ personnel may play a more critical role than functional factors in creating consumer experiences and reducing perceived risk (Elsharnouby and Parsons 2010a; 2010b). Aligned with the network approach (Johanson and Vahlne 2009; Ojala 2009), SMEs in Qatar, by using their employees’ personal networks, can increase the value of their exports by minimizing the costs associated with searching for and linking with prospective customers. This may be especially applicable to SMEs operating in emerging economies that can leverage reliable information to mitigate the investment risks related to exporting activities.
Effective supply chain management
In analyzing the data, it became clear that developing and managing effective supply chain networks serves as an internal enabler for SMEs’ exporting success. Notably, the global marketplace is frequently confronted with new realities, rendering previous strategies, particularly if developed in different contexts, unproductive, slow, and incompatible with rate of change and volatility in the marketplace. For example, excess inventory dilutes the underlying value of manufacturing products and triggers lagging supply chains that may fail to respond to changing market conditions (Christopher 2016). Similarly, a SME supply chain may have a direct impact on other internal processes.
Similarly, at the consumption end of the supply chain, customers have a substantial demand for the timely and reliable delivery of products, particularly in the modern e-commerce environment where they can easily evaluate and move to alternative products. In this regard it is worth noting that a short and consistent order cycle time can improve the customer experience of an exporting enterprise, thereby increasing the likelihood of repeat orders and bolstering the enterprise’s reputation and brand perception:
Order cycle time reduction is one of the primary internal operational areas that we focus on in order to improve our export delivery performance (Hisham, General Manager, Construction Materials).
Hisham at once realized that his customers in Kuwait and Oman valued timely deliveries. He was quick to collaborate with a specialized logistics company, which then worked with his operations team to develop a standard operating procedure (SOP) that calculates the precise lead times required for delivery before Hisham commits to exporting to customers. Notably, for an SME that relies on adaptable and diversified global supply networks, an in-house solution to ensure timely deliveries is highly applicable, providing a competitive advantage in markets that particularly value timely deliveries. Given the typically stringent schedules and deadlines associated with construction projects, the value of on-time deliveries in this sector cannot be overstated. Subsequent material delivery disruptions have the potential to cause substantial financial penalties. Therefore, as Hisham’s assessment implies, the prompt delivery of construction materials following reducing order cycles plays a significant role in ensuring the efficient and timely completion of a project, thereby establishing his enterprise as a preferred supplier.
As demonstrated by the disruptive impact of the blockade (a diplomatic crisis in the Middle East began in 2017 when four countries severed diplomatic relations with Qatar) and of COVID-19 on SMEs operating in Qatar, structuring supply chain networks in the context of diverse alliances and efficient transportation routes is crucial for determining the degree of dependence that influences export performance:
We have learned that it is not just about export sales but also about having a roadmap with clear building blocks. Operationally, this means that we must plan our production and inventories differently, including lead times and export order cycle times (Farouk, General Manager, Food).
Farouk’s enterprise operates in the food industry and so he quickly realized that, by making use of optimal shipment quantities as a building block, he could effectively manage product inventories and reduce logistic and warehousing costs. Working with his largest importer in Kuwait, he determined that six containers was the optimal shipment order size. Equipped with this information, Farouk successfully negotiated with a local distributor to secure lower shipment charges. Farouk’s case serves to demonstrate the need for a contextualized approach to supply chain management that would embrace meticulous planning, optimized procedures, and flawless system integration. More importantly, this case exemplifies the critical importance of an effective supply chain in guaranteeing the safety and quality of exported food products, particularly those that have short expiry dates.
Notably, in the food industry, vulnerability to disruption as a result of reliance on a single supply chain network has forced firms to rethink their objectives in such areas as production cycles and inventory management. Effective supply chain management identifies and eliminates systemic inefficiencies and creates cross-network opportunities for Qatari SMEs to overcome natural and temporary gaps that may limit export performance. SMEs in emerging markets compete in a global environment where information is instantly accessible and supply chains that were on the cutting edge a week ago have been outperformed by newer, more innovative processes. This quickly makes existing supply chain processes antiquated and in need of regular redesign.
Product diversification
Another internal enabler we observed to be crucial for SMEs when they look for international expansion is product diversification. The adage about putting all of one’s eggs in one basket can apply to a firm’s business strategy. Concentrating few resources on a particular product or business area inevitably constrains SMEs’ growth and increases the risks of failure and loss. But at the same time, product diversification enhances a firm’s long-term stability and growth:
We learned that we must diversify our product portfolio by incorporating business ideas to produce innovative products such as 3D plastic medical devices, particularly given our competitive advantage of having access to cheaper and higher quality raw materials in Qatar (Samar, Chief Executive Officer, Medical Devices).
In the case of Samar, exporting medical equipment to Kenya, Sudan, and Nigeria marked the beginning of her SME’s exporting journey. However, the export quantity and value reached a state of stagnation because of the entrance of low-cost equipment manufactured in China, which flooded these specific markets. It taught Samar that exporting opportunities arise because of unmet market demands, which can be used for market penetration, especially through diversification strategies. Consequently, product diversification proved to be an essential critical enabler for Samar in adjusting to the constantly evolving dynamics of the medical industry and capitalizing on opportunities in untapped markets.
While product diversification contradicts the benefits of specialization at the heart of comparative advantage theory, it helps alleviate macroeconomic volatility. It is widely assumed that SMEs face resource constraints, diseconomies of scale, and lack of market power, which makes them more likely to compete in narrower product portfolios (Li et al. 2012). However, the contemporary global tech-savvy environment in which we live requires and yet forbids businesses to operate at near-breakneck speed to outperform competitors and get products to market in time to capitalize on local and international consumer demand. According to Samar, even SMEs in emerging economies must diversify to compete on a global scale, remain competitive and ensure their survival:
We began by exporting drip irrigation and high-pressure pipes, with exports accounting for around 20% of total revenue. However, following the blockade, we expanded our product portfolio by selling pipes, plastic film, and bags, with the goal of increasing export business to between 25% and 40% of total revenue (Ahmed, General Manager, Plastic).
Ahmed was keen to emphasize that the blockade had a detrimental effect on export quantities and values. Initially, most exports were destined for the GCC and African countries such as Tunisia, Morocco, and Burkina Faso. The decline in exports prompted his team to adopt a creative approach, and upon identifying a vacuum in the market for pipes and plastic film bags, the enterprise decided to diversify and was able to successfully penetrate markets such markets as Belgium, Germany, Iran, Italy, Turkey, and Uzbekistan.
While developing new products can be a challenging process, diversification if managed well can be extremely beneficial for SMEs seeking to establish or increase their presence in the global marketplace. More importantly, product diversification can play a crucial role in enabling exporting SMEs to effectively manage the risks linked to variations of demand in current markets, thereby establishing a foundation for more consistent revenue streams. Diversification proves to be particularly advantageous during political crises because it alleviates the reliance on a single geographic location for revenue generation.
Digitalization
The long-term competitiveness of SMEs fundamentally depends on their ability to participate in international marketplaces. The conventional SME model, generally defined by its comparatively small geographical footprint, minimal technological innovation, and lack of sustainability consciousness, is no longer viable (Denicolai et al. 2021). Regardless of the size of an SME, digital transformation has been a critical advantage both before and since the COVID-19 pandemic. The revolutionary impact of digitalization, which includes cost savings and greater network activity gives SMEs more chances to grow and internationalize, specifically through customer acquisition and online sales. More importantly, digitalization serves as a pull factor in motivating SMEs to pursue export opportunities (Danik et al. 2016). Notably, the onset of the COVID-19 pandemic uncovered flaws in communication strategies, prompting most businesses, including SMEs, to adapt quickly and establish new channels using technology to maintain their engagement with customers. Digitalization during the pandemic demonstrably revealed the vital role of technology, and its capacity to enable SMEs to continue, in contributing to the global economy. In essence, the world’s embrace of all things digital hastened every kind of communication by years as a result of the COVID-19 pandemic.
Platforms for sharing content, electronic procurement systems, social media, and websites have become the new norm for enabling firms to innovate, conduct research and development, and capitalize on new market opportunities (Vural et al. 2020). This being so, both large and SMEs have increasingly relied on technology to increase client reach and engagement as the demand for immediacy grows, while the pandemic serves as the impetus behind the greatest adoption of digitization in modern history:
With the COVID-19 pandemic, focusing more on the digital side, including virtual communications and exhibitions, connecting with new potential customers online and digitally promoting our company through B2B platforms such as Alibaba has increased our visibility and generated sales leads and inquiries (Ahmed, General Manager, Plastic).
Ahmed’s enterprise, becoming acclimated to virtual communications, participating in virtual exhibitions, and connecting with new potential consumers via online platforms have made it possible to learn to navigate in the export decline caused by the pandemic. Naturally, exporting needs SMEs to have a global perspective. Over the past two years, travel restrictions associated with COVID-19 have hampered the rate at which SMEs can orient themselves to the global marketplace. However, this study discovered that digitization has enabled SMEs in Qatar to grasp the impact of international marketplaces, particularly global developments and trends. Such awareness is critical if SMEs are to distinguish opportunities and challenges that could jeopardize their competitiveness and growth outlook:
Digitalization efforts, such as improving our website and establishing a digital presence on e-marketplaces, have aided our firm’s export performance (Amir, Managing Director, Paper).
The case of Amir exemplifies the significance of maintaining a fully functional digital platform as a potential viable alternative in facilitating direct consumer interactions to a physical market presence and traditional market intermediaries. Further, by embracing digitalization, Amir and his team have been able to penetrate new markets, such as Iraq, Kuwait, and Oman. Consequently, their firm has made a notable 14% growth in export value over the previous four-year period, indicating the advantages of implementing digitalization initiatives in facilitating the expansion of its export volume. While having an online presence has served as an important critical enabler for Amir’s paper enterprise, in today’s digital age, it is equally important for exporting enterprises in other industries.
Ironically, however, digitalization challenges the theoretical foundation of some classic models of internationalization, such as the Uppsala model (Johanson and Vahlne 1977; Johanson and Wiedersheim-Paul 1975). According to the Uppsala model, the primary impediment to internationalization is the lack of knowledge about international markets, which SMEs can overcome only via learning by doing business in the given markets. The model thus considers a firm’s first-hand experience as the primary source of its learning curve. However, the influence of digitalization means that knowledge may be transferred not only across international borders but also between employees, making the Uppsala model’s concept of first-hand knowledge at present less relevant to the process of internationalization.
Essentially, digitalization enables SMEs to gain insight into how customers, distributors, suppliers, other competitors, and public agencies behave and react in the ever-changing macroeconomic environment. This, in turn, supports SMEs’ improved understanding of prospective international markets before and during the internationalization process, thereby enhancing their competitiveness in the global economy.
Market intelligence capabilities
Each international market is distinct, and SMEs seeking to engage in exporting activities in potential markets must be familiar with their respective defining characteristics. If they lack such specialized knowledge, SMEs venturing into new markets face a higher risk of failure. Hence, market intelligence capabilities serve as an internal enabler for SMEs to explore export opportunities in international markets:
We collect market intelligence through the online ITC Trade Map portal to learn about a potential market’s significant players, tariffs, and non-tariff measures, among other things (Salem, General Manager, Electrical Materials).
By learning about new tenders and large projects in previously untapped markets such as Sri Lanka and Indonesia, Salem has enhanced his market intelligence capabilities by familiarizing himself with the Trade Map Portal; collaborating with Qatar Development Bank (QDB) has resulted in presenting his enterprise with export opportunities for agricultural plastic tunnels. By enhancing his market intelligence capabilities, Salem and his team were able to conduct effective market research, strategically analyze international markets and create a Market Access Map for their new innovative products. For instance, the team identified Hong Kong as a geographical area for their innovative insulated cables. In this way, intelligence capabilities helped Salem sell differentiated products that set his enterprise apart from his competitors’, as seen in the context of Hong Kong.
It is worth saying that SMEs are often reluctant to expand beyond their local markets due to the challenges and unfamiliarity that come with limited resources (D’Angelo et al. 2013). However, the use of Trade Map portals indicates that several SMEs in Qatar are willing to take risks and quickly expand their businesses when the opportunity arises. This practice is described as the “pacemaker” in the Conservative, Predictable and Pacemaker (CPP) model suggested by Paul and Sanchez-Morcillo (2019). Entering a new international market through exporting demands in-depth knowledge, which generally adds value to the products provided by SMEs. For this reason, accurate and timely market intelligence is critical for SMEs, particularly in making informed decisions in the analysis of possible international marketplaces for export. Research capabilities are equivalent to SMEs doing their homework to refine their exporting IQs (intelligence quotients):
Export opportunities are triggered when there is a gap or market need. We have learned that market research and intelligence are critical enablers of exporting activities (Samar, Chief Executive Officer, Medical Devices).
To Samar, market intelligence revealed a gap in the sale of cost-effective 3D plastic medical devices. This, coupled with the availability of inexpensive, high-quality polyethylene in Qatar, gave the company a competitive edge, thereby increasing the value of its exports to countries such as Jordan and Sudan. According to the dynamic capabilities theory, using marketing capabilities to identify untapped market opportunities enables firms to respond more quickly, accurately, and strategically to exporting opportunities in the international market than their competitors can (Elsharnouby and Elbanna 2021). Further, superior research capabilities serve as a foundation for the formation of born global SMEs capable of meeting the needs of customers in a global niche. Defined as entrepreneurial start-ups that aspire to generate a significant amount of their revenue through international markets (Cavusgil and Knight 2015), born global SMEs account for considerable trade flows globally, thereby serving to accelerate export performance.
The internal enablers discussed in this section are illustrated in Fig. 1 below.
Internal Enablers Enhancing SMEs’ Exporting Performance.
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