Report: Human Capital Investment Impact on SME Internationalization

This report presents an article review focusing on the impact of human capital investment on small and medium-sized enterprises (SMEs) and their internationalization efforts. The review examines the study by Onkelinx, Manolova, and Edelman (2016), which investigates how investments in employee development and recruitment correlate with labor productivity and the extent of business internationalization. The research highlights that strategic and gradual investments in human capital are crucial for SMEs seeking international expansion, contrasting with the challenges faced by firms attempting rapid internationalization. The study, conducted on Belgian SMEs, indicates that investing in a skilled workforce through training and incentives enhances productivity, positively affecting both the scope and scale of internationalization. The review emphasizes the importance of exporting as a cost-effective initial step for SMEs and underscores the benefits of internal training and knowledge sharing in boosting revenue and production. The paper serves as a guide for emerging SMEs aiming to expand their businesses globally.

Running head: ARTICLE REVIEW ON INVESTMENT IN HUMAN CAPITAL
Article Review on Investment in Human Capital
Name of the university
Name of the student
Author note

1ARTICLE REVIEW ON INVESTMENT IN HUMAN CAPITAL
The paper intends to present an article review regarding the investment in human
capital is how far feasible in case of small and medium sized enterprises. After an extensive
reading of this paper, it has been understood that, although, internationalization offers several
strategic benefits to business firms it is not easy to accomplish all of them. It needs thoughtful
investments on human capital of the organisation, which perfectly serves the organizational
purpose by executing global business strategy. Further, the journal by Onkelinx, Manolova
and Edelman (2016), has illustrated this investment does not work or behaves critically in
case of organisations who seek for fast internationalization. On the other hand, SMEs, which
plan more strategically and takes time to implement the plan, eventually, get success
investing human capital.
Gradually, the nature of world economy is changing into an integrated form
with the progression of time and opening up for more opportunities. It is no more a secret that
firms, who involve themselves into greater global business scenario likely to generate more
revenue as compared to organisations, who in spite of having productivity and efficient
workforce do not seek for internationalization. Even though the global scenario is so much
promising, most of the small and medium sized organisations are not yet active participants
of international business. The issue, which has been highlighted in its introductory paragraph
that due to lack of adequate resources and prior managerial experiences SMEs are not able to
compete in international market.
Therefore, the objective of this study is to connect the theory of SME
internationalization and economic framework of exporting goods to find out the
consequences of investing on human capital I case of globalizing a business. Based on the
main idea of investing on human capital enhances labour productivity, the paper researches
based on several multi-dimensional hypothesis. The first one states investments in employee
development and recruitment is associated with labour productivity in a positive sense. Next,
the research works on finding whether productivity is associated with various levels of
business internationalization like number of export market and its intensity. Again, another
hypothesis suggests that internationalization has stronger impact on those organisations who
seeks for internationalization by applying fast procedure instead of opting for gradual
implementation of plans.
According to the literature review and analysis conducted during the research;
investment in efficient well-educated and skilled workforce through various incentives and

2ARTICLE REVIEW ON INVESTMENT IN HUMAN CAPITAL
training-development sessions helps to enhance SMEs productivity in an advanced economic
setting like Belgium. In case of small and medium manufacturing companies, less legal
restrictions and technological advancement have made it easier and less pricy to export goods
still they are facing issues with substantial and additional costs, which they cannot afford.
In order to conduct the research, SMEs which have started exporting between 1998
and 2005. For the study, the oldest firm, which has been selected, was established in 1987.
571 business organisations have been taken into account established in 1998 or a little later
and ceased dealings by 2005. In order to measure levels of internationalizations two aspects
can be considered. Scales has been measured calculating the ratio of exports to the amount of
total sales. The number of countries to which an organization is exporting goods and
exploring available opportunities has measured scope. Apart from these, a collaborative
venture with National Bank of Belgium, social data regarding balance sheets and
organizational trade and annual accounts data have been collected to understand the effect of
internationalization in firm performance through investing in human capital.
Therefore, the results suggest that investing on development of human resource helps
to increase productivity and its effect on both the scales and scope of internationalization.
There are SMEs which are facing trouble to explore international opportunities due to limited
production and industry risks. Besides, as the study has evaluated limited samples
observation has a further scope to expand. While discussing the post result research it has
been understood that exporting can be considered as the first and the most cost effective step
towards internationalization for SMEs. This paper has clearly elaborated the consequences of
emphasizing on human resource development through internal trainings and mutual sharing
of knowledge, which is improvement of revenue and production.
Therefore, the journal strictly supports the fact that internationalization and exporting
goods to distant foreign lands is effective for SMEs for exploring opportunities of growth.
This paper can be regarded as a guideline to understand both the theoretical and applied
understanding of the entire procedure for the emerging small and medium sized companies
who want to expand business further.

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References
Onkelinx, J., Manolova, T. S., & Edelman, L. F. (2016). The human factor: Investments in
employee human capital, productivity, and SME internationalization. Journal of
International Management, 22(4), 351-364.