Internationalization of Intellectual Business Services for Private Sector Development

Author: Zviad Kvlividze - Advisor, “Geclose2eu” Project Implementation Enterprise Georgia.

For small and medium enterprises, working on exports and in the direction of internationalization is probably the only and most realistic way to develop and expand their business activities. This is largely because companies get opportunities for increasing turnover through international sales, obtaining international knowledge and experience and therefore hiring more people. It also generates new possibilities for importing innovation and technology to Georgia (in our case), which is essential, especially in today’s environment of global competition. However, it is worth mentioning that for small and medium-size companies, access to finance, lack of technology and international standards, as well as a scarcity of knowledge in modern business administration, still remains a challenging obstacle.

In general, the development of intellectual services plays a crucial role in economic and business development for the country. In developed countries with advanced economies, trading with services is increasingly higher than trading with goods of total trade. Due to increased global competition and technological progress, this trend is increasing. Even large multinational corporations that produce goods are trying to become service providers at the same time, all the while maximizing the value of the company, because of the increased global competition and technological progress.

With this exact belief and motivation in mind, in the summer of 2017, I moved from the Swedish International Development and Cooperation Agency (Sida) to the position of Deputy Director / Head of Export at Enterprise Georgia, which is the state institution responsible for SME development under the Ministry of Economy and Sustainable Development of Georgia. Using the knowledge I gained working for various international and organizations in the field of private sector development, my goal was to support and encourage the Georgian public sector to start working on new and innovative directions of SME development support. As such, in 2017, we defined new sectors; in addition to the food and beverages sectors, we shifted our focus to expanding Enterprise Georgia’s work on export potential development, export promotion and internationalization support for Georgian SMEs and tripled the important local and international activities.

We initiated and started working on the internationalization of services and managed to identify new sectors - Architecture and Design, Business Consulting and IT (Software Development), and began the implementation of various promotional, educational and business support activities on local and international markets. The work we undertook was recognized by the Swedish government (Sida/Embassy of Sweden in Georgia) and Economic Policy Research Centre (EPRC) as a priority and as important sectors to work with. By the end of 2018, the “Georgian Enterprises Close to Europe” Project kicked off, and aimed to increase the competitiveness of Georgia’s micro, small and medium-size enterprises on local and international markets. The “GEclose2EU” project is supported by Sida and implemented by EPRC (Georgian NGO) in close cooperation with Enterprise Georgia. The three-year project with a total budget of $2.3 million is quite unique and different from any other private sector development support projects that have been implemented in Georgia so far. Project content, design and priorities focus on the internationalization of intellectual business services as one of the main components of the project.

Under the scope of “GEclose2EU” project, activities will be implemented on behalf of Georgian SMEs in the architecture and design, business consulting and information technology sectors in order to help bring them closer to European standards as they relate to values, technologies, business management and systems, as well as growing business linkages with potential European partners, providing them access to technical assistance (based on competition) and consulting support in internationalization, expansion and development of their businesses.

One may ask why interior or product design is important, or why these fields are important to focus on? I believe that design is a very significant component when it comes to achieving success in business. That’s because all products need a good, attractive visual, which determines how competitive a product can be on the marketplace – let alone international markets. For example, if we look at Georgia’s ‘Rooms Hotel’ brand, which was designed by the Georgian design company called ‘Rooms Design’, it illustrates its own unique design, which added great value to the brand development of Rooms Hotel. This of course is in addition to the high-quality services and products the hotel offers its clients. One side of this successful business case, is that the hotel is very popular among Georgian and foreign customers/visitors and its direct contribution to Georgian tourism is high. Another aspect of the design’s contribution in the internationalization process is connected to the hotel brand’s plan to start operations in New York. Having said that, it’s not hard to see that product design plays a significant role in international business and it is solidly tied to the success in a value chain.

The Business Consulting sector has the same importance. The countries in which business consulting firms are strong and competitive, have advanced economies and a strong private sector, because as consumers (small and medium enterprises) are able to access to the high quality of services, which impacts on SMEs’ competitiveness, expansion and internationalization. Therefore, the development of the business consulting sector and advancing the quality of these services acts as a cornerstone for SMEs development and growth in a country. However, the consumption of business consulting services from small and medium enterprises is not high or at a desirable level in Georgia right now. As such, I believe that, increasing our focus on supporting the development of business consulting firms and promoting them to become more competitive and internationalized, has strategic importance for private sector development in the country.

The Information Technology sector is certainly apriority and, in many countries, the public, private and education sectors invest reasonably more resources in it. Increasing the scale and quality of the internationalization of software developers has many positive and multiple effects on the development of, expansion and internationalization potential of SMEs. For example, companies receive access to diverse high-tech business solutions with more competitive prices that ultimately help enterprises improve operational effectiveness and become more competitive in dynamic business environments on local and international markets.

I have had an opportunity to get to know the organizations that have more than 40 years of experience around world promoting small and medium size enterprises, such as Advantage Austria, Business Sweden, SME Support Japan and others. These government organizations have acquired the required knowledge and expertise and developed effective tools and instruments to improve access to finance, export and internationalization promotion, business expansion and business technologies for increasing competiveness of their SMEs. The same should be the case for Georgia, and certainly, more intensive work for supporting the internationalization of intellectual businesses services should continue.

ARTICLE IN GEORGIAN.

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