Do Entry Barriers, Perceived by SMEs, Affect Real Entry? Some Evidence from the Netherlands

Abstract

The objective of this paper is to analyse the relationship between perceived entry barriers and real entry. Real entry rates are interpreted as an indicator for the dynamics in an industry. The major hypothesis of this paper is that important entry barriers restrict new entry. Real entry rates are provided by a starter ratio for different industrial sectors and provinces in the Netherlands. Firms were interviewed in December 2004 to obtain data about the perceived importance of a large number of entry barriers (structural as well as strategic). The most important barriers, perceived by firms, are related to acquiring sufficient sales volume and capital, financial risks, cost disadvantages, cost of capital, economies of scale and product differentiation. The data on perceived entry barriers and information about the attractiveness of the market, are used to explain real entry in the first six months of 2005. Generally, the results confirm the expected relationship between entry barriers and real entry. However, some barriers seem to influence the starter ratio more strongly. Remarkably, several of the most 'important' perceived barriers do not restrict real entry rates. This result contains an interesting lesson for policy makers. They should not address important barriers per se, but scrutinize the effects of barriers that seem to restrict real entry. For example, government regulations are not perceived as one of the most important entry barriers. Nevertheless, this barrier has a strong impact on starter ratios. This result justifies why the Dutch government scrutinizes the relevance of existing rules and regulations.

Challenges of going global for SMES

“…For the fourth variable, respondents stated that marketing is also a challenge for SMEs and some of the difficulties they face are that they cannot easily market their products and services due to fierce competition; large profit is a major factor to consider when deciding to do business abroad and SMEs in Bahrain lack marketing strategy to reach the global market. The results conform with some previous studies such as Siringoringo et al (2009), Al-Rabeei and Scott (2011) and Dijksta et al (2006).…”

“…Many factors could be included in this variable such as lack of market research for goods that can be marketed globally, bad product quality, tough competition, lack of marketing plan, lack of knowledge of globalisation among students and business owners, insufficient sales volume and capital, financial risks, disadvantages in costs, lack of product differentiation (Al-Rabeei and Scott, 2011; Dijksta et al, 2006). Marketing here can be seen as an export problem which involves lack of knowledge about business practices of foreign markets and strategies of competitors, and lack of strategies for sales management (Siringoringo et al, 2009).…”

“…Broadly speaking, some of the challenges faced by firms in Netherlands are financial risks, acquiring insufficient sales volume, cost of capital, short of economies of scale, cost disadvantages and product differentiation problems (Dijksta et al, 2006). In Sweden, the most important challenges faced by their firms are insufficient security for loans, lack of risk capital, insufficient management expertise in the fields of technical development, lack of financial planning or marketing (Herzog and Heldge, 1998).…”

Barriers to Growth : Key Challenges Facing Bahraini Small and Medium Enterprises

“…The results of the European Commission survey of SMEs in 30 European Countries found that the four most important barriers to innovation in SMEs were a lack of financing, a scarcity of skilled labour, a lack of market demand, and the high cost of human resources (IMF, 2007). According to a study of barriers experienced by SMEs in the Netherlands, the key barriers perceived by firms are related to acquiring sufficient sales volume and capital, financial risks, cost disadvantages, cost of capital, economies of scale and product differentiation (Dijksta et al, 2006). The Swedish Board of Industry identified the following categories of obstacles (barriers) facing Swedish firms -insufficient security for loans, lack of risk capital, and sometimes insufficient management expertise in the fields of technical development, financial planning, or marketing (Herzog, 1982).…”

Οι Στρατηγικές Ανάπτυξης Και Επέκτασης Των Αεροπορικών Εταιριών Χαμηλού Κόστους Και Ο Ελληνικός Τουρισμός

“…Ένα ευρύ φάσμα της βιβλιογραφίας διερευνά την σημασία των εμποδίων εισόδου όπου μπορούν να εντοπιστούν δύο διαφορετικές προσεγγίσεις (Dijksta et al, 2006, Blees et al, 2003. Η προσέγγιση της Βιομηχανικής Οργάνωσης (Bain, 1956, Stigler, 1968, Von Weizsacker, 1980) και η προσέγγιση της Στρατηγικής Διοίκησης , Singh et al, 1998, Robinson et al, 2001 (Ferguson, 1974:10).…”