Political knowledge, political turbulence and uncertainty in the internationalization process of SMEs

Abstract

Purpose– The purpose of the study is to examine the political sources of uncertainty in the internationalization process of small- and medium-sized enterprises (SMEs).Design/methodology/approach– The authors theoretically derived a research model embracing three hypotheses. These hypotheses are tested on a sample of 203 on-site interviewed SMEs. Regression analysis is used to test two individual hypotheses and one interaction effect.Findings– The regression analysis reveals that political knowledge possessed by the firm reduces uncertainty in the internationalization process. Political turbulence is shown to increase uncertainty in the internationalization. The interaction shows that political turbulence obliterates the uncertainty reducing effect by political knowledge.Research limitations/implications– The authors identifies two main political sources of uncertainty in the internationalization process of SMEs. For managers and business researchers, it is shown that experiential knowledge is useful under stable conditions. When turbulence increases, however, firms need to develop alternative strategies for uncertainty management.Originality/value– This study is the first to test the uncertainty reducing effects of experiential knowledge in turbulent environments. Thus, by running the interaction between political knowledge and political turbulence, the authors shed new light on the usefulness of previous experiences in the internationalization process.