The Internationalization Patterns of Norwegian Firms: Does Industry Matter?

Abstract

Previous research has shown that firms from small economies are prone to internationalize quicker and to a larger extent than firms from larger countries. In general, their international activities are largely influenced by the limited size of their domestic markets (Krugman, 1991). The lack of strong local forces that retain activities at home further pushes firms to move activities, sometimes even those of strategic character, to foreign locations (Benito et al., 2002). Indeed, small and peripheral countries often actively try to attract and retain inward foreign direct investment (FDI), albeit with mixed results (see Chapter 6, this volume). It is generally recognized that both internal and external factors influence firms’ internationalization patterns. However, most of the research literature has hitherto focused on firm-specific (internal) issues and on country-level (external) issues. Internationalization has traditionally been seen as a reflection of home country advantages (Kogut, 1991; Porter, 1990) and of decision-makers’ (entrepreneurs’) willingness to act upon market opportunities abroad (Andersson, 2000; Cavusgil, 1980; Johanson and Vahlne, 1977). Industry factors are often overlooked, generalized too much, or inadequately measured (Makhija et al., 1997). After decades of research on the internationalization of business activities, we still have limited knowledge about the influence of industry-specific factors on firms’ internationalization patterns.