The Perception of Risk Factors in the Internationalization Process by Small and Medium-sized Enterprises

Internationalization as one of the ways to increase the company's competitiveness is currently frequently discussed topic in the context of small and medium-sized enterprises (SMEs). Although these companies cannot be considered as a homogeneous group, some similar characteristics can be noticed in association with them. One common characteristic is their attitude to risk management practices in the internationalization process. Many studies conducted both for SMEs from the Czech Republic or SMEs from other European countries (e.g. Poland) suggest that these enterprises do not pay enough attention to risks associated with internationalization when they enter the foreign markets. If they ever use some risk management methodology, it is predominantly an intuitive approach, or approach based on their previous experience. However, SMEs often ignore the risks due to the lack of necessary financial resources, time or staff required for risk management. Nevertheless, if they knew which risks are perceived as key ones, they could better prepare for their possible occurrence. This paper therefore deals with the identification of important risk factors which Czech SMEs face in their internationalization process with emphasis on the differences between micro-, small- and medium-sized enterprises. Moreover, the paper also discusses whether the subjective perception of risks, it means being risk averse or risk prone, affects the success of SMEs in the internationalization process. This paper also addresses the question whether the prior experience or information about foreign markets may affect the perception of SMEs regarding the risks related to activities in foreign markets.