Abstract
This article develops a new ‘sequential internationalization’ theoretical framework to explain internationalization by small- and medium-sized enterprises (SMEs) from a dynamic emerging economy. Looking at 18 cases of Korean SMEs in China, it analyzes the changing map of the division of labor between parent firms in Korea and subsidiaries in China. We find that internationalization has been sequential, reflecting the higher resource constraints facing SMEs in comparison with large firms. SMEs tend to proceed from a product-based to a value chain-based division of labor, and finally to a market-based division of labor between the parent firm and its local subsidiaries.
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