Relationship between Competitive Advantage and Success or Failure of Overseas Expansion in Small and Medium-Sized Manufacturers

Abstract

The objective of this research is to clarify, empirically, how business factors influence the overseas expansion of small-to-medium-sized manufacturers (SMMs). With the internationalisation of a business, many SMMs have increased their overseas expansion in recent years. On the one hand, the probability of success for overseas expansion is not necessarily high. Of course, a lot of SMMs have succeeded in overseas expansion and expanded their revenue. On the other hand, however, there are many cases of SMMs failing in and withdrawing from the overseas expansion process. Although the influence of succeeding or failing is great in regard to corporate performance, there is a lack of clarification as to which business factors serve as the basis for SMMs’ decision-making. In this paper, research hypotheses are proposed to help measure the influential difference between the following select sources of competitive advantage: (a) external positioning and internal organizational capability; and (b) static perspective and dynamic perspective. Then, the select sources of competitive advantage are typified based on prior research. To verify the hypotheses, a questionnaire was implemented toward SMMs of Japan that expanded their business overseas. As a result, it became clear that the optimal overseas expansion strategies are different according to an SMM’s source of competitive advantage. As a contribution, it is expected that the results of this research will support the decision-making of SMMs toward overseas expansion.