Internationalization of SMEs: The Effect of Unfair Experience in the Home Country

Abstract

This study identifies a new motive which drives SMEs to go abroad. We investigate the impact of unfair experiences with large domestic partners on the internationalization of SMEs along with the moderating effects of industry competition and foreign networks. Using the survey data from Annual Survey of Korea Venture Firms (2014 ~ 2018), we find some support for the explanatory role of unfair experience and moderating roles of industry competition and foreign network on SMEs’ internationalization. The findings suggest that SMEs with unfair experiences in the home country are more likely to internationalize, and foreign networks may catalyze the internationalization of SMEs. However, industry competition may discourage the international expansion of SMEs because they need to focus more on defending their positions in the home country than expanding their business internationally.