The role of home market context in business model change in internationalizing SMEs

Abstract

PurposeThis paper aims to explore the underlying reasons for business model change among internationalizing SMEs and illustrate how home market context affects that change.Design/methodology/approachThis is a comparative case study of two companies with similar backgrounds from different countries of origin. In each case, the data were collected by means of in-depth interviews with key informants. For its theoretical background, the study draws on the business model innovation and international business literature.FindingsThe authors found that home market context has two kinds of effect on business model change in internationalizing SMEs. First, home market maturity has a strong effect on the timing of companies’ internationalization efforts. Second, the company’s home market can either be used to strengthen the value proposition or may be disguised, depending on how the country of origin is seen in international markets. This factor has a strong influence on how SMEs change their business model when internationalizing.Research limitations/implicationsThe study’s limitations relate to its qualitative and exploratory nature. Future research should further assess the generalizability of these findings across different cultural contexts and countries of origin by quantifying the central concepts and examining how they relate to larger-scale cross-national and cross-sectional panel data.Practical implicationsAs internationalization increasingly poses both threats and opportunities, companies must be able to experiment with business models when necessary to adapt to the host market. In so doing, it is also important to consider how a company’s home market affects business model change.Originality/valueThis is one of the first studies to illustrate how the process of internationalization drives SMEs to change their business models. As such, the paper enhances existing understanding of business model change in the context of internationalization. To our knowledge, no previous study has described these dynamics in a comparative context that takes account of SME country of origin.