162 vol. XVIII Special Issue no. 4 (2013) METALURGIA INTERNATIONAL These journals are included on ISI Web of knowledge regional Journal Expansion European Union 2010, multidisciplinary fields http://isiwebofknowledge.com/products_tools/multidisciplinary/webofscience/contentexp/eu/ SME TECHNOLOGY CAPACITY BUILDING FOR COMPETITIVENESS AND EXPORT - EVIDENCE FROM BALKAN COUNTRIES 1 Boris JEVTIC, 2 Stevica DEDJANSKI, 3 Milan BESLAC, 4 Radmila GROZDANIC, 5 Aleksandar DAMNJANOVIC 1 Banka Intesa, Belgrade, Serbia; 2 Megatrend University Belgrade Serbia; 3,4,5 Faculty for BA& Entrepreneurship, Belgrade Serbia Boris JEVTIC, MA Stevica DEDJANSKI, PhD Milan BESLAC ,PhD Radmila GROZDANIC, PhD Aleksandar DAMNJANOVIC, M.Sc Keywords: SMEs competitiveness, ICT competence, capacity building, export markets Abstract: Global challenges provided the opportunity for SMEs to participate in international supply chain, ability to adapt to new technology, especially ICT. Information technology operations can only exist if the firm does prepare a platform for information technology. Therefore, information technology objects refer to availability of hardware, software, and personnel to support the performance of information technologies. Reviews of literatures and logical analysis have confirmed that SME is able to achieve sustainable competitive advantage, increase their overall efficiency, thus raising multi-factor productivity (MFP) growth through integration of utilisation, objects in information technology and knowledge operations. Data for this paper is collected from SMEs in Western Balkan countries through various methods during 2010-2011, as well as through OECD SME Policy Index, SBA Charter dimensions to assess the progress that the Western Balkan countries have made in c reating support mechanisms to strengthen SMEs’ technological capacity. Specific data have been collected for Serbia for 2011 on SMEs use of ICT. Type of survey has been an telephone interview on sample size of 1200 enterprises. In the Western Balkan countries SMEs analyzed in this paper, SMEs are the backbone for their economic development, but the broad message of this paper is, that SMEs should incorporate an understanding of the ICT technology trends into their strategic thinking to help identify new market opportunities, invent new ways of doing business, and compete with an ever-growing number of innovative rivals at single and export markets. I INTRODUCTION Advancing technologies and their swift adoption are upending traditional business models. The ways information technologies are deployed are changing too, as new developments such as virtualization and cloud computing reallocate technology costs and usage patterns while creating new ways for individuals to consume goods and services and for SMEs to dream up viable business models. This paper aims to uncover the sources of sustainable competitive advantage for small and medium-size enterprises through information technology. The reason for this research is the fact that, the Western Balkan countries lag behind the EU with respect to their levels of competitiveness and innovation. Macro-economic background and the SME sector in the EU pre-accession economies: Croatia, Serbia, Bosnia and Herzegovina, Albania, Montenegro and FZR Macedonia. Croatia and Serbia are the two largest economies in the Western Balkans, accounting for 12% of the combined GDP of the EU pre-accession countries, but with significantly different income level. Croatia having the highest per capita income level in the EU pre-accession region. Both highly open economies, Croatia and Serbia share a high level of economic integration with the EU, accounting for over 61.1% and 63.6%1 of their trade flows respectively and 92.2%2 and 85%3 of their FDI inflow respectively, and a significant level of regional trade integration with their CEFTA partners. Both countries are specialized in low and medium technological products, with a strong presence of sectors such as agri- business, metal working, chemical products, pharmaceutical product, mechanical components, automotive components and transport equipment. The remaining economies in the Western Balkans are relative small open economies with an advance level of trade integration with the EU and the CEFTA area with an income per capita ranging from middle to middle low income level.