Competitiveness and Internationalisation in the Hungarian Small Business Sector in the 2010s

Many see the resurrection of the Hungarian economy, torn by the world economic crisis, in the acceleration of exports and, more generally, in the increasing internationalisation of domestic businesses. The government’s new foreign economic policy strategy, still only released in draft form, expresses ambitious goals; among others a six-fold expansion of businesses capable of export. This article uses data from a survey concluded in 2013 assessing 799 small businesses to analyse the tendencies towards internationalisation of Hungarian small businesses in the context of competitiveness. According to our observations, the ten pillars of competitiveness are closely connected to one another; the consonance of pillars is more important than achieving outstanding results in the case of any single one. Therefore we examine internationalisation not merely on its own but in conjunction with the nine other pillars constituting competitiveness. We evaluate the internationalisation and export potential of Hungarian small businesses through the comparative analysis of eight groups we created using cluster analysis. As expected, the most internationally active businesses also proved to be the most competitive. However, we found numerous businesses with low levels of competitiveness that – in contrast to the convictions of any internationalisation theory – were engaging in tangible export activities. Despite the presence today of several thousand exporting and export- capable small businesses in the Hungarian economy, we do not believe it likely that this number could grow drastically in a short period of time.*

Journal of Economic Literature (JEL) code: F 23, L 25