Impact of COVID-19 on SMEs internationalisation: Future directions of Africa-China business relationships

Frank Nyamrunda, Mahmoud Moussa

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Abstract

The COVID-19 pandemic has created unprecedented challenges for businesses worldwide, altering business environments, and shifting the values and habits of the global population. Notably, this study examines the literature on the internationalisation of small and medium-sized enterprises (SMEs), particularly in South Africa, given its pivotal role as a primary trading ally with China in Africa. This research extends the existing literature on SME business relationships in cross-border contexts and elucidates the managerial implications of these newly emergent challenges. Africa’s business climate is noted for its volatility, a condition further complicated and intensified by the COVID-19 pandemic. These changing dynamics have fundamentally transformed products, services, and work modalities. Furthermore, traditional forecast-based approaches are proving to be less reliable in the face of such rapid and unexpected changes. Therefore, the resilience and adaptability of SMEs become essential, since they hold a crucial advantage in decision-making agility, which can lead to reduced response times during crises. The pandemic’s impact has manifested in various ways, notably through declining sales, supply chain disruptions, and diminished logistic services. Given the inherent vulnerabilities of SMEs due to constrained financial, organisational, and human resources, understanding their internationalisation efforts, especially in the African context becomes paramount. While the literature delves deeply into organisational resilience, there is a distinct gap in understanding the specific antecedents of resilience in SMEs.

In today’s global and digitised environment, networking and technological proficiencies stand out as two paramount capabilities. Networking is linked with an organisation’s interpersonal connections and affiliations across various entities. Such capabilities become indispensable for businesses, as they offer key market tools for integrating fresh information and gaining profound insights into the evolving business environment. This, in turn, equips firms to adapt to changes and maintain a competitive advantage over competitors. Moreover, the alliances that SMEs build with their customers, suppliers, and collaborators enhance their offerings. On the other hand, technological proficiencies encapsulate a firm’s capacity to harness pertinent technologies for product/service innovation, facility operations, and sales or marketing initiatives. Through the lens of the ‘dynamic capabilities’ theory, SMEs and their business partners are urged to become adept at sensing external environmental shifts, seizing emergent opportunities, and reconfiguring internal resources and expertise to effectively navigate these crises. Such capacities, including flexibility and creativity, are essential for SMEs to successfully survive negative external events. Additionally, the role of external institutions, primarily local governmental bodies and financial organisations in shaping the internationalisation trajectory of SMEs, cannot be underestimated. Our research examines the depth and breadth of support these external bodies extended to SMEs during the pandemic. Furthermore, our research aims to interpret how these external institutions align with SMEs capabilities, cultivating resilience.

Based on the analysis of the existing literature, a conceptual framework is gradually developed. The main objective of this study is to identify critical factors that might foster or hinder local governments and financial institutions’ ability to support the internationalisation of SMEs in the African context. While this study is non-statistical in nature, its insights aim to enrich our understanding of the dynamics of SMEs’ internationalisation processes. Taking into account the evolving challenges and prospects within today’s ever-changing business environment, this research indicates that SMEs can leverage their connections with local governmental institutions and financial entities. Subsequently, they can tap into external resources and critical information. This strategic move not only reinforces their adaptability and capacity to assimilate new knowledge in a fluctuating business environment, but also paves the way for enhanced overall organisational outcomes. For SME managers operating within an international business climate, the pandemic necessitates a strategic re-evaluation to account for the increased global uncertainties and risks. As SMEs continue to penetrate global markets, governmental policies must recalibrate to transition from domestic orientations to those reflecting the globalisation of markets and supply chains. Furthermore, SME managers should remain cognizant of their global business engagements. Solidifying relationships with international partners can display flexibility during crises, such as the COVID-19 pandemic, but requires an in-depth understanding of the strengths and weaknesses inherent in existing business relationships.

The COVID-19 pandemic has emphasised the need for SMEs to re-evaluate their internationalisation strategies, especially in the context of South Africa’s intricate trade relationships. While the challenges posed by the pandemic are diverse, the synergistic interplay between dynamic capabilities, external support systems, and strategic foresight can guide SMEs towards resilience and sustainable growth in these turbulent times. Lastly, this research offers both scholars and practitioners valuable insights into the complexities of SME internationalisation amidst global crises.
Original languageEnglish
Number of pages2
Publication statusPublished - 22 Nov 2023
EventAcademy of International Business – Oceania Chapter 2023: Research Symposium, Paper Development and Methods Workshops - The University of Adelaide, Adelaide , Australia
Duration: 22 Nov 202324 Nov 2023
https://oceania.aib.world/annual-symposium-2023/ (The annual meeting of AIB-Oceania is renowned for its informal and collegial character, with excellent keynote speakers, journal editors, mentors and a developmental approach.)

Conference

ConferenceAcademy of International Business – Oceania Chapter 2023
Abbreviated titleAIB Oceania 2023
Country/TerritoryAustralia
CityAdelaide
Period22/11/2324/11/23
Internet address

Bibliographical note

Conference presentation given in Session 1.2.3 Thursday 23rd November 2023.

Keywords

  • Africa-China business relationships
  • Agility
  • COVID-19
  • Local government
  • SMEs business relationships

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