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SMEs can earn more further away from home

10 May 2017

The more SMEs export, the higher their profit margin. The positive effect is strongest for companies that are active outside Europe. These are the conclusions of a study by Dries Faems, Professor of Innovation & Organization at the University of Groningen. ‘The further away from home, the higher the profit.'

Faems studied the impact of exports on the profit margins of 624 small and medium-sized enterprises that took part in the North Netherlands Innovation Monitor in 2017. ‘This study indicates that there are still many opportunities beyond the European borders for small and medium-sized businesses. This can be financially very attractive as turnover realized outside Europe still tends to be relatively limited for most SMEs’, says Faems. He claims that the extra income from export outweighs the additional costs and risks and will present the results of his research during the Be Smart, Be International meeting on Friday 12 May in Assen.

29% of SMEs studied active outside Europe

On average, the businesses studied realize 77% of their turnover through activities in the Netherlands. Export within Europe constitutes 15% of SME turnover, while 8% is realized through exports outside Europe. Faems finds that ‘the differences between companies are nevertheless large’. ‘Forty-five percent of the companies that participated in our study do not export at all, 26% only export within Europe, and 29% of the companies are also active outside Europe.’

The extent to which companies export depends strongly on the sector where they are active. Manufacturing businesses clearly export more than service providers, while family businesses export significantly more than non-family businesses.

North Netherlands Innovation Monitor

The objective of the North Netherlands Innovation Monitor is to annually map and analyze the innovation activities, investments and performance of SMEs from the Northern Netherlands. The project is run by the Vinci Expertise Centre of the University of Groningen and The Northern Netherlands Provinces Alliance (SNN). Additional strategic partners include the NOM, the North Netherlands Technology Centre (TCNN), the Netherlands Patent Office and PNO Consultants. The full results of the Innovation Monitor 2017 will be presented in early July.

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