Internationalization Of Small And Medium-sized Enterprises Research Articles

Networking B2B Relationships and SMEs Internationalization in Search of Competitiveness

The paper seeks to examine different facets of business-to-business (B2B) relationships availed by small and medium-sized enterprises (SMEs) in international contexts. The theoretical approach is meant as a preamble for further conceptual and empirical endeavors, putting forward a context-driven perspective.

SME Internationalization as a Puzzle of Cultural and Bilateral Distances: Using the Eisenhardt Approach

Small and medium-sized enterprises (SMEs) have recently been discovered to function as catalysts for globalization. However, despite the increasing interest in the internationalization of SMEs, doing business in another country offers its own unique set of challenges that must be overcome if an SME’s international venture is to be successful. For sectors where operational efficiency is necessary and there are added pressures due to cultural differences in consumer behaviour (e.g., fast-food chains), managing the operations process is essential for ensuring success and growth. Furthermore, the export of the conventional business model becomes complicated because of the significant variations in brand localization requirements across nations, which force businesses to make significant changes to cater to local client preferences. Given this scenario, how can an SME identify and adjust the critical barriers towards deciding and acting on foreign market entry and exit? To answer this question, we looked for a theoretical sample (case) of a business that successfully entered and operated in some markets and exited from others within the same period. In this investigation, we examine the Russian pizza company Dodo Pizza’s exodus from China and the UK as compared to their successful operations in Kazakhstan using Eisenhardt’s comparative case methodology. We use each country’s operations as a case in this research and apply Eisenhardt’s comparative case methodology to identify and theorize the factors of national context essential to the organization’s actions and outcomes in a given country.

Internationalization of SMEs: A Developing Country Perspective

Internationalization has become increasingly important to the competitiveness of firms of all sizes, including small and medium-sized enterprises (SMEs). SMEs play a crucial role in the development of lower-income countries. In Bangladesh, SMEs account for between 80 and 85 percent of industrial employment and 23 percent of total employment and are critical to economic growth. Though the literature on firm internationalization is well established, the internationalization process of SMEs from developing countries, such as Bangladesh, remains relatively under-explored. The main aim of this study is to explore factors that hinder the internationalization of SMEs in a developing country, with Bangladesh serving as the context of the investigation. Qualitative research methods were adopted, comprising semi-structured interviews with leaders of 16 SMEs in Bangladesh. Six major themes were identified as hindrances to the firms’ internationalization: (1) lack of market knowledge, (2) lack of family support, (3) the proliferation of ‘scammer buyers’, (4) the (negative) involvement of third parties, (5) mismanagement of domestic ports, and (6) unregulated local market. Regarding positive factors, only one theme emerged from the data, the strong support from the local government, which provides considerable backing for local SMEs with international ambitions. This study’s primary contribution and originality lie in the context of the investigation, with Bangladesh primarily overlooked in the international business literature. Therefore, the study presents several novel insights into the internationalization process of SMEs.

The role of entrepreneurial networks in overcoming export barriers of small and medium-sized enterprises from developing economies

The role of entrepreneurial networks in overcoming export barriers of small and medium-sized enterprises (SMEs) varies depending on the development level of the domestic institutional environment. So far relevant literature has been dominantly focused on the effects of participation of SMEs from developed economies in different forms of domestic and international entrepreneurial networks. However, in the last two decades, the SMEs from post-transition economies (PTE), namely developing economies, have become more involved in international business which is an important challenge for them because of resource scarcity and a long period of international isolation. Starting from the entrepreneurial perspective of internationalization based on accelerated internationalization models, the paper considers modes, motives, benefits, and obstacles of establishing alternative management structures - SME entrepreneurial networks in institutional discontinuity conditions. The research aim is to indicate the importance of establishing network connections as a modus for overcoming resource and institutional export barriers of SMEs from PTE. The research is based on the analysis and synthesis of relevant literature in the field of international entrepreneurship and network approach to the internationalization of SMEs in the context of PTE. Based on conceptual analysis and the results based on previous research, pragmatic recommendations for export SMEs from PTE regarding the choice of appropriate participation modality in entrepreneurial networks are stated.

Overcoming barriers in automotive SMEs to attain international competitiveness: an ISM approach modelling

PurposeThis paper aims to identify and model barriers to internationalising automotive small and medium-sized enterprises (SMEs) from emerging market perspectives using the interpretive structural modelling (ISM) approach.Design/methodology/approachIn this paper, 13 critical barriers are identified through an exhaustive literature review and the Delphi method. The ISM tool is then used to establish interrelationships among the identified barriers to expose and discuss the key barriers having high-driving power.FindingsIt was found that barriers such as trade agreements and export documentation, exchange rates and material inadequacies were relatively less challenging than the other barriers. At the next level, there are barriers such as supply chain, high international quality standards, legal barriers, skilled labour marketing capacity and information and logistics and infrastructure. Finally, barriers such as government policies, entrepreneurial orientation and technology and finance availability posed the most significant challenge for the internationalisation of Indian SMEs. These barriers warrants immediate and considerable attention.Research limitations/implicationsThis study developed a model based on experts’ opinions, which may be biased and influence the final model as proposed in this study. This research will help the owners/managers of the SMEs and policymakers identify and understand the significance and relevance of automotive sector barriers while strategizing.Originality/valueTo the best of the authors’ knowledge, this is the first time an attempt has been made to apply ISM methodology to explore the interdependencies among the critical barriers of internationalisation for SMEs of Indian automotive industries. This study will guide the owner–managers management practices to overcome ineffective practices and move towards successful internationalisation.

UNCTAD Insights: The role of innovation policies in SME internationalization: Evidence from Türkiye

This research note investigates the relative innovation performance and international presence of small and medium-sized enterprises (SMEs) in Türkiye. Using administrative data for the period 2006–2020, the empirical analysis shows that government support for research and development (R&D) correlates positively with firms’ innovation activities and R&D expenditure. The results also suggest that innovation activities increase the probability of outward foreign direct investment. The results have important policy implications for Türkiye and developing countries in general. The findings highlight the key role of public incentives in targeting innovative activities towards internationalization of SMEs.

Research Note: Greater risk and a smaller opportunity: The opportunity space of SME internationalization in lower-income countries

Why do small and medium-sized enterprises (SMEs) from lower-income countries internationalize using high-commitment modes? In this exploratory, qualitative study of 22 SMEs from South Africa (a middle-income country) and Malawi, Zambia and Zimbabwe (low-income countries), we document that the SMEs typically have both a greater tolerance for risk, likely due to the region from which they originate, and an appetite for opportunities smaller than what would be acceptable to multinational enterprises (MNEs) from advanced economies. This provides a very different opportunity space for the two types of enterprises. The size of the home country seems to matter: SMEs from middle-income countries often work on their own and target other emerging markets, but in poorer countries, SMEs often work synergistically with MNEs from more advanced economies, acting as their “delivery arm” into the small markets in their immediate region. This opens up a new way of understanding MNE-led development. Facilitating the development of partnerships between local SMEs and advanced MNEs is a potentially fruitful avenue that policymakers from poor countries can pursue to help their countries open to the benefits of internationalization.

Internationalization Of Small And Medium Enterprises In Indonesia: Towards Integrative Policy Approach Of Competitiveness And Connectivity

The paper focuses on the policy analysis influencing the internationalization of small and medium sized enterprises (SMEs) engaged in cultural and creative industries (CCIs) in Indonesia. Three approaches of internationalization are explored in this study: the market knowledge approach, the network approach and the international entrepreneurship approach. This article attempts to figure out internationalization as a process starting from the creating of favorable preconditions to the strengthening stage based on the interrelationship among those approaches. The purpose of this article tries to combine the important dimensions proposed by each approach towards an integrative policy approach based on the concept of competitiveness and connectivity. The conceptual model of integrated policy in this study contributes to resolve inefficiency issue as the main gap in the existing strategic policy on SME internationalization in Indonesia; enhance integrative policy analysis literature and propose a more integrated strategic policy for promoting internationalization.

A Review of International Mode of Entry Strategies for SMEs in East Java

The purpose of this research is to examine the internationalization of Small and Medium-sized Enterprises (SMEs) in East Java from both theoretical and practical perspectives. By analyzing existing literature and utilizing empirical data from earlier studies, this study seeks to deepen our understanding of the subject matter. The methodology of this study involves rigorous examination of the most recent theories and models, supplemented by empirical analysis of existing research on internationalization of SMEs. Various theories and models, ranging from classical to contemporary approaches, are explored in relation to the internationalization strategy of SMEs in East Java, and different entry modes for internationalization. The theoretical framework of this study is anchored on the resource-based view and network theory. This study uses content analysis of the latest theories and models coupled with empirical analysis of studies on the internationalization of SMEs that have been conducted. Several theories and models, both classical and new approaches, link the internationalization strategy of SMEs in East Java and several entry modes for internationalization. This theory is based on a resource-based view and network theory. The result of this study is East Java's SME internationalization strategy is hampered by various obstacles and issues, as per documented evidence. While the entry mode for internationalization hinges on networking, numerous SMEs in the region choose to network autonomously, as empirical data suggests. This study aims to provide policymakers, especially the government, with workable ideas for a long-term, proactive strategy to ensure the success of SMEs' internationalization in East Java. Empirical data proposes that limited knowledge about markets, trade regulations, communication barriers, financing, and transportation infrastructure supporting internationalization pose the most common challenges faced by SMEs in Indonesia. Consequently, the entry networking strategy mode is the key to independent internationalization for SMEs. This study contributes to a theoretical and practical review of SME internationalization mode entry strategies.

The impact of market uncertainty on international SME performance

This research explores the performance of international small and medium-sized enterprises (SMEs) in Iran. Iran as the 18th biggest market in the world, can potentially be an attractive market for firms. However, SMEs need to navigate the market uncertainty to achieve their performance goals. This study explores this issue by placing competitive advantage to mediate market uncertainty and international SMEs’ performance. A foreign SME in Iran is considered a company with 99 employees or less, and which was founded abroad but have an established branch within the country. We used the partial least square (PLS) method to analyse the data gathered from 166 foreign SMEs in Iran. The findings imply that market uncertainty significantly affects performance. Nevertheless, competitive advantage does not mediate the relationship. This study offers insights to international SMEs on how to leverage comprehensive knowledge on market uncertainty to enhance their performance in developing markets. The empirical findings from this research reaffirms the notion that international SMEs ought to be informed about the effects of uncertainty in order to achieve high performance. This is particularly important in developing markets which are more prone to ambiguity.

The effects of dynamic capabilities on international SMEs' performance

Developing countries such as Iran face many challenges which can impact international small and medium-sized enterprises (SMEs) to a larger extent due to their limited resources and bargaining power. International SMEs are confronted by a number of challenges such as how to develop the dynamic capabilities needed to help them attain a high level of performance. By studying international SMEs, we investigate this matter by situating competitive advantage to mediate dynamic capabilities and firm performance. The partial least square technique was used to analyse the data which was collected through a self-administered survey. The survey was obtained from 166 SMEs in Iran. The findings suggest that dynamic capability does not have a significant impact on international SME performance. Moreover, competitive advantage does not mediate the relationship. This study offers recommendations to international SMEs on how to leverage comprehensive knowledge on dynamic capabilities and competitive advantage to enhance their performance in developing markets.

The role of entrepreneurial ecosystems in the SME internationalization

The Entrepreneurial Ecosystems (EE) articulate concepts from various streams of literature and are formed by multiple stakeholders and relate to different levels of analysis. Although the literature shows a growing relevance on the theme of EE, most studies reveal to be conceptual, and the existence of empirical studies with quantitative methodologies is still scarce. This study attempts to contribute to filling this gap by developing a dynamic model of EE and its impact on the small and medium-sized enterprises (SME) international performance by aggregating different levels of analysis. Based on a sample of 120 SMEs, the results suggest that macro (agents) and meso (different partners) level variables positively impact international performance. We also find that technology transfer has a negative moderating effect on the meso level relationship of EE with digital performance. Our study also contributes to a greater understanding of the Entrepreneurial Ecosystems, its internationalization and the digital performance effect.

Effect of Combined Use of social media, Digital, and Traditional Communication Tools in the Business-to-Business Sales Process of Multinational Small and Medium-sized Enterprises (SMEs)

Social media and digital networks have gradually changed how firms sell themselves. In a world where technology is permeating society more and more, understanding how sales teams use business-to-business (B2B) markets can provide insight into the motivations driving the selling process. In the three crucial stages of the B2B sales process, this study investigates how global SMEs use traditional, digital, and social media sales communication methods. The paper's use of grounded theory shows how social media may be quite effective in luring clients from outside. The effective phase appears to be where digital communication tools are most common, whereas customer relationship management still favours more conventional communication methods. Nevertheless, certain important potential boundary circumstances, like relationship culture and closeness to a location, technology, the strategic value of the consumer, creativity, and capital, appear to have an impact on how international SMEs employ a range of communication channels when conducting business. To assist foreign SMEs with their sales communication, designers provide a method for understanding the flow of the B2B sales process.

Exploring the Co-Creation of Small and Medium Enterprises, and Service Providers Enabled by Digital Interactive Platforms for Internationalization: A Case Study in Malaysia

Small and medium-sized enterprises (SMEs) make an important contribution to their country’s economy, job creation and balance of trade. The government has supported their development through service providers and has encouraged them to participate in the international market. Despite its importance and the encouragement from the government, participation in the international market is low and studies have shown that SMEs struggle to overcome barriers to internationalization. Digital technologies are tools to accelerate internationalization. This study aimed to explore the collaboration between SMEs and service providers enabled by digital interactive platforms (DIP) to accelerate internationalization. Interviews were conducted with seven participants involving two SME food and beverage (F&B) manufacturing company owners, three government agencies and two experts to gain a deeper understanding of the collaborative process through DIP to accelerate internationalization. A thematic analysis of the triadic qualitative study was utilized to understand the themes that emerged from different data sources, including in-depth interviews, observation and documentation review. Our findings show that the co-creation process was more effective through DIP and that it helps service providers create more value towards the internationalization of SMEs. In addition, the triadic approach proved that there was a more prevalent use-value among actors when using digital technology as a platform, as it helped them to expedite internationalization. The service experience by SMEs is also more impactful to a firm’s performance and enables them to follow strategic sustainability practices. We also found that the symbiotic relationship between SMEs and service providers has an important role to play in generating value for both parties.

The impact of board of directors’ characteristics on the internationalization of family SMEs

Family small and medium-sized enterprises (SMEs) face both general bounded rationality challenges and a unique expression of bounded rationality in their internationalization process: the bifurcation bias, a concept aligned with modern transaction cost theory (TCT). We argue that efficient governance in family SMEs, and especially features of the Board of Directors’ composition, can help alleviate bounded rationality. Complementing TCT with upper echelons theory (UET), we investigate which Board characteristics in family SMEs contribute to efficient governance and the ensuing strategy decisions. We focus specifically on strategy decisions in the internationalization sphere. Our empirical analysis of survey data from 328 Belgian family SMEs, operating out of a small open economy, reveals that family SMEs internationalize more if their Boards are ‘open’, ‘inclusive’, ‘experienced’ and ‘active’. These Board characteristics, all reflective of efficient governance, i.e., providing the Board with the capacity to alleviate bounded rationality constraints, positively contribute to internationalization, especially (and perhaps paradoxically) when the family SME is managed by a CEO who is also a family member.

The role of Australian local government in economic development: Building international engagement capacity

AbstractSister city relationships (SCRs) are a platform through which local governments (LGs) engage internationally. Increasingly, there is an expectation that such international engagement delivers economic opportunities and returns. Many LGs are therefore pursuing local economic development (LED) through their SCRs. Drawing on a national survey of Australian LGs (stage 1) and interviews with key council staff and stakeholders in five LG areas maintaining Australia–China SCRs (stage 2), this paper contributes to growing literature on LED by examining how LGs have developed their own capacities and supported local small‐ and medium‐sized enterprises (SMEs) to engage internationally. Our findings reveal insights into how Australian LGs have achieved international engagement through two strategies that leverage their SCRs, namely building government's capabilities and developing SMEs’ capabilities. This paper contributes new insights into the evolving role of LGs in LED, including both current experimentation, challenges, and future opportunities.Points for practitioners A growing number of Australian local governments pursue LED through their Chinese sister city relationships. Supporting the internationalisation of SMEs is an emerging component of local government pursuit of LED. International engagement of local governments has necessitated enhanced capacities in human, external, and financial resources. Findings highlight the unique and often overlooked role of local‐to‐local diplomatic and economic relations.

Influential dynamic capabilities and small and medium enterprises' internationalization success: mediating role of international entrepreneurial orientation

PurposeThis study aims to analyze how international entrepreneurial orientation mediates the relationship between influential dynamic capabilities and the internationalization success of small and medium-sized enterprises (SMEs) in the context of the United Arab Emirates (UAE).Design/methodology/approachAdopting a quantitative approach, the researchers designed a questionnaire based on an extensive literature review and used structural equation modeling to ascertain the mediating role of international entrepreneurial orientation in the relationship between influential dynamic capabilities and SMEs' internationalization success.FindingsThe findings of this study indicate that international entrepreneurship orientation mediates the relationship between dynamic capabilities and internationalization success, as the indirect impact value is greater than the direct effect value for the relationship. Because the existence of the mediator in the model has no significant impact on the model's direct effects, full mediation is the most appropriate mediation type.Research limitations/implicationsThis study has some limitations. One of the major limitations of this study relates to the limited finances of the incumbent, as the questionnaires were delivered to the respondents via email, but the incumbent had to follow up with phone calls and reminders. Second, this study mainly relied upon primary data and analysis based on the use of qualitative techniques; in future, researchers can incorporate qualitative aspects using interviews and other qualitative analysis tools and techniques. Third, limitation relates to sample size, as the sample size of research was above 500 but was limited to just UAE. Future researchers can conduct a cross-sectional analysis to determine the mediating role of different factors for the promotion of internationalization.Practical implicationsThis study highlights the fundamental factors affecting the internationalization of SMEs in the UAE context, which has rarely been discussed. This study broadens the scope of internationalization by discussing its impact on SMEs' financial and non-financial performance.Social implicationsThis study will contribute to the advancement of current information about the elements that impact the internationalization of SMEs and develop a new framework for analyzing SMEs' internationalization in the UAE.Originality/valueThis study contributes to the literature by developing and testing a framework based on a comprehensive literature review to include different factors and their constructs that impact the potential internationalization of SMEs in developing economies. This study identifies and addresses a research gap regarding the relationship between internationalization and company performance among UAE SMEs.

How a chairperson's international experience can affect the post-entry speed of international SMEs from emerging economies: the roles of functional variety and power

PurposePrevious research features the international experience of managers in the decisions regarding internationalisation speed. However, the vitality of the role a chairperson plays in shaping the internationalisation decisions of small and medium-sized enterprises (SMEs) from emerging economies is intriguing. Moreover, the decision-making process and leadership context of SME internationalisation are not fully understood. Drawing upon the upper echelons decision-making theory and the cognitive perspectives of decision, this paper examines the impact of a chairperson's previous experience on the post-entry speed of internationalisation, highlighting the conditioning effects of leadership contingencies – the functional variety and power of the chairperson.Design/methodology/approachThe study uses a panel data set of Chinese SMEs active from 2010 to 2019 to test the research hypotheses. A feasible generalised least-squares estimator was applied to test the hypotheses.FindingsThe results show that the international experience of a chairperson speeds up the depth and breadth of the post-entry speed of internationalisation. However, the strength of these relationships depends on the leadership context. The chairperson's functional variety alleviates the influence of international experience, whilst the power of the chairperson reinforces its impact.Originality/valueThe results show that the international experience of a chairperson speeds up the depth and breadth of the post-entry speed of internationalisation. However, the strength of these relationships depends on the leadership context. The chairperson's functional variety alleviates the influence of international experience, whilst the power of the chairperson reinforces its impact.

The Impact of Industry Forces on International SME Performance in Iran: The Mediating Effect of Competitive Advantage

International small and medium-sized enterprises (SMEs) encounter several problems, including how to manage the industry forces in order to achieve their performance goals. Focusing mainly on international SMEs, we explored this issue by examining competitive advantage as a mediator in the relationship between industry forces and international SMEs’ performance. This study was conducted in the context of the Iranian market. Iran offers substantial economic opportunities to international SMEs since it has a population of 85 million people, a range of natural resources, and a sophisticated manufacturing industry. In Iran, an international SME is a firm with less than 100 employees that originated outside of Iran but has an entity inside the country. The partial least squares method was employed in analyzing the survey data collected from 166 international SMEs in Iran. The results indicate that industry forces have significant effects on performance, but competitive advantage does not have a mediating impact. The results of this study reaffirm that international SMEs should be aware of the consequences of industry forces in order to attain their performance goals. This is especially critical for some developing economies which are more characterized by ambiguities.

Domestic clustered networks and internationalization of agrifood SMEs

AbstractThis paper examines how participating in domestic clustered networks in the agri‐food industry affects the export status and export intensity of small and medium‐sized enterprises (SMEs). The Uppsala internationalization process model has been revisited in light of the knowledge that these networks can contribute to promoting the presence of SMEs abroad. The study uses a sample of companies in the Spanish wine industry and characterizes 76 domestic clustered business networks (Protected Designations of Origin). The value and originality of the paper reside in its contribution in terms of measuring the degree of internationalization of domestic clustered networks to which SMEs belong. It also assesses the effect of these networks on the internationalization process of the agri‐food industry, considering that domestic clustered networks with a strong international commitment generate greater internationalization opportunities. [EconLit Citations: F14, M21, Q13, Q17].