Small Entrepreneurial Firms Research Articles

Current perspectives on international entrepreneurship and the Internet

The Internet is widely seen as a powerful tool to help firms overcome physical and managerial barriers to internationalisation. This is particularly true for smaller entrepreneurial firms, given their widely recognised human and financial resource limitations, restricted international experience and lack of knowledge of global markets. Many commentators argue that Internet enablement offers the prospect of removing a whole range of potential internationalisation barriers (Hamill and Gregory, 1997; Quelch and Klein, 1996; Singh and Kundu, 2002). However, while setting up websites implies instant internationalisation from a technical perspective (Kotha et al., 2001), the successful deployment of this virtual presence is restrained by functional and organisational capabilities (Prasad et al., 2001; Samiee, 1998). The Internet allows addressing potential customers without geographical restrictions, yet the successful exploitation of these market opportunities might necessitate learning by (online) experience and avoiding ???shock effects??? (Pedersen and Petersen, 2004) when dealing with remote markets. Arguably, the pace of internationalisation is ???compressed??? (Vermeulen and Barkema, 2002) due to the Internet, but it will be interesting to see whether smaller entrepreneurial firms can capitalise on this particular effect more so than other organisational forms. This themed issue aims to contribute to ongoing debate by looking at the interface of the Internet and International Entrepreneurship. It considers important issues such as: what are the enabling dimensions of internationalisation regarding the Internet and e-commerce? Does the Internet facilitate rapid internationalisation? How can we measure a successful online presence of SMEs and is there such a thing as E-entrepreneurship? The papers selected for this themed issue are at the interface of international entrepreneurship and the Internet and follow this theme from general to the specific. The first contribu-tion by Maria J. Nieto and Zulima Fernandez explores the role of IT in corporate strategy of SMEs. Although they argue that ICT does not necessarily constitute a source of competitive advantage in itself, it is the complimentarity with other strategic resources that counts. Their empirical example of Spanish SMEs confirms the existence of a significant relationship between ICT and international competitiveness. Hence, SMEs using ICT tend to be more heavily involved in international activities and demonstrate higher performance results. The paper by Sharon Loane provides a good case for the role of the internet in the internationalisation of SMEs. After elaborating on the ???born global??? phenomenon, globalisation pressures and the impact of new ICT technologies, she builds on a cross national sample of small entrepreneurial firms from Canada, Ireland, Australia and New Zealand. Her interview material creates an understanding of the behaviour and strategies adopted by rapidly internationalising Internet enabled firms. Findings reveal the role of the Internet as a knowledge building tool in marketing, distribution, business processes, market intelligence and competitor analysis. Pia Arenius, Mika Gabrielsson and Viveca Sasi present an interesting case study on the rapid Internet-enabled internationalisation of a Finnish knowledge-intensive company. This case demonstrates that embracing the functional capabilities of the Internet may well support the theoretical advantages of rapid internationalisation. Moreover, their contribution is particularly interesting because it supports growing criticisms of the usefulness of internationalisation ???stages??? theories. Rasha Mostafa, Colin Wheeler and Marian Jones examine the multi-facetted construct using innovativeness, proactiveness and risk taking and linking it to export performance. Their study demonstrates that entrepreneurial exporters are more committed to the Internet and in respect of growth in export sales, have better export performance. The study has strong implications for public policy in support of internationalisation, suggesting that upgrading SMEs ICT knowledge and usage will lead to stronger performance on international markets. The paper by Rudolf Sinkovics and Elfriede Penz develops the debate on Internet, SMEs and Entrepreneurship in a pragmatic yet important direction. It explores a new construct of ???Web-Empowerment???. Although the quality of websites is deemed a crucial element for the communication with stakeholders, web-design for smaller firms is guided by practical approaches rather than conceptual considerations. The web-empowerment scale proposed provides a valuable tool that can empower entrepreneurs to approach web-design more strategically in order to benefit from a competitive online presence. The final paper in the themed issue by Elaine Ramsey and Patrick Ibbotson discusses e-entrepreneurial firms. The authors take a macro and micro-perspective on entrepreneurial enterprises and discuss e-opportunities for economic development and the internationalisation of small Irish firms. They argue that the willingness to embrace e-business will determine the future success of Ireland in the digital economy. They also outline future directions for policy makers.

The role of banks in the evolution of small entrepreneurial Irish firms

PurposeThe overall aim of the study was to gauge the perceptions of both small businesses and banks, as to the role of banks in the growth, development and success of small entrepreneurial Northern Irish businesses.Design/methodology/approachThe authors employed a mixed methodological approach, involving a series of focus groups and semi‐structured interviews with SMEs and staff from three leading high street banks. A follow up survey was conducted using a sample of 250 SMEs.FindingsEvidence suggests that banks in Northern Ireland have been, and continue to be very supportive to their small business client base and have played a major role in the growth and development of many of these small entrepreneurial firms. Many SMEs felt that their local branch manager was both understanding and sympathetic to their business needs.Research limitations/implicationsThe study examined the views of a relatively small sample of SMEs and bank staff. A further investigation is planned where a much larger sample will be used.Practical implicationsThe findings highlight the important role played by local branch managers in the support and development of SMEs. This is particularly important given the recent adverse publicity received by banks for “over‐charging” customers and the underlying threat faced by local bank branches.Originality/valueThe paper presents a different perspective on the relationship between banks and their small business clients, indicating that it is often positive, supportive and mutually beneficial.

The role of the internet in the internationalisation of small and medium sized companies

It is now recognised that many firms are “born global’ and initiate international business from inception or shortly thereafter. They have been influenced by both globalisation and the impact of new ICT technologies. This paper examines the role of the Internet in the internationalisation of a cross national sample of small entrepreneurial firms from Canada, Ireland, Australia and New Zealand. The findings are presented, including the role of the Internet in marketing, distribution, business processes and market intelligence and competitor analysis. The role of the Internet as a knowledge building tool is discussed, and areas for future research are presented.

The entrepreneurial firm internationalization process in the Southern African context

PurposeThe objectives of this paper are to: examine the specific process that small entrepreneurial firms follow in their internationalization; identify the key influences on the entire process; and identify the process outcomes.Design/methodology/approachFour research questions are proposed to achieve the stated objectives. A cross‐industry, cross‐sectional survey involving a judgment sample of 1,900 small entrepreneurial firms that are engaged in international business was used. A total of 494 (26 per cent) usable responses were obtained. Correlation coefficients, frequency tables, factor analysis and discriminant analysis were used to analyse the data.FindingsThere are four micro‐processes that have a bearing on the shape and pace of the internationalization process. These relate to: accelerators, export barriers, selectors of intra‐stage foreign market development and foreign market outcomes. The paper concludes that, based on the internationalization experience of small entrepreneurial firms within Southern Africa, there is a common: set of influences on the process; preference for exporting; set of intra‐stage alternatives; and set of market outcomes that modify future internationalization. Therefore, there is a common integrated model of entrepreneurial firm internationalization.Research limitations/implicationsWide generalizations cannot be made because of the localized context of the research. Therefore, the usefulness of the research is limited to the Southern African region. Future research could perhaps test the Southern African entrepreneurial firm internationalization model in other environments to facilitate comparisons.Practical implicationsEntrepreneurial firms with international ambitions must emphasize an international orientation in their recruitment and training of key managerial staff, while policy‐makers need to sharpen the focus of their interventions on profiling individuals first, and firms second, while at the same time building mechanisms that sustain small to medium‐sized enterprises (SME) international business growth.Originality/valueThe paper addresses a knowledge gap in respect of the entrepreneurial firm internationalization process in the context of Southern Africa. This knowledge is of value to academics, SMEs and policy‐makers alike. The paper also provides an integrative conceptual framework and practical advice on how SME international business growth can be encouraged, given its importance to economic growth prospects within the Southern African region.

Partner Selection for International Marketing and Distribution in Corporate New Ventures

The software industry offers numerous options for a firm to arrange its international marketing activities. Although a prominent way to enter the international market is through co-operation, there is a limited amount of research regarding partner selection. The purpose of this paper is to explore how entrepreneurial corporate new ventures use partners in their international marketing. A representative case study is used to illustrate the partner selection and evaluation process in the software industry. Our findings indicate that small entrepreneurial firms can and should use partners in their internationalization. However, a more analytical approach to their selection is needed.

Financial Integration and Entrepreneurial Activity: Evidence from Foreign Bank Entry in Emerging Markets

An extensive empirical literature has documented the positive growth effects of equity market liberalization. However, this line of research ignores the impact of financial integration on a category of firms crucial for economic development, i.e. the small entrepreneurial firms. This paper aims to fill this void. We employ a large panel containing almost 60,000 firm–year observations on listed and unlisted companies in Eastern European economies to assess the differential impact of foreign bank lending on firm growth and financing. Foreign lending stimulates growth in firm sales, assets, and leverage, but the effect is dampened for small firms. We also find that the most connected businesses benefit least from foreign bank entry. This finding suggests that foreign banks can help mitigate connected lending problems and improve capital allocation.

A Proposed Framework for the Strategic Management of Small

Strategic management has been the subject of a substantial literature since the 1950s but has principally focused on the large corporation. By contrast the literature relating to strategic management within the small firms sector has remained limited. Much of the existingliterature has dealt with business planning rather than strategic management, or the processof strategy within the smaller firm. This paper outlines a proposed framework for understanding the strategic management of small entrepreneurial firms and draws upon the literature to illustrate aspects of the proposed model. Future directions for research using the framework are discussed.

Communities of Knowledge: Entrepreneurship, Innovation and Networks in the British Outdoor Trade, 1960–90

This article focuses on the innovation process in an important leisure-based industry in Great Britain since 1960. It explores the peculiar juxtaposition of social, economic, technological, and sporting forces, which provided the springboard for a number of British outdoor companies, including Karrimor, Berghaus and Mountain Equipment, to become leading international brands. More particularly, it highlights the way innovations were developed in relatively small entrepreneurial firms. The prime focus is on the way in which networking activity underpinned innovation and, by implication, the competitive advantage of firms. To achieve this, it also traces the bridges within the supply chain and, by exploring the relationship between innovation and markets, places an emphasis on products and their design. The small companies of the British outdoor trade were able to achieve high levels of innovation through a combination of personal knowledge and networks. The environment itself--with buoyant, emerging, and changing markets--encouraged innovation, which in turn was inseparable from sporting advances. Networking behavior also evolved through time, with changes in market conditions, company profiles, and the environment. Personal networks were especially important in the 1960s and 1970, when firms were small and where owners were usually responsible for both designing and marketing.

Internet Adoption by Entrepreneurial Small Firms (ESF’s): Purchasing Versus Non‐Purchasing Behaviors

Current models of Internet adoption at the marketing/entrepreneurship interface focus on the Entrepreneurial Small Firm (ESF) as the supplier in a supplier/buyer relationship. Analysis of a data set, which captured selected ESF Internet buying behaviours, offers insights from the buyer perspective. The authors present these findings and propose implications for the supplier/buyer relationship.

A Strategic Approach to Internationalization: A Traditional versus a “Born-Global” Approach

This article is based on a study of 16 in-depth case histories of New Zealand firms. It uses both the traditional and the “born-global” approaches as a framework to study the internationalization processes of the firms. The authors use the histories to conduct a systematic analysis of the extent to which firms that might be categorized as following a traditional or born-global internationalization path differ in the strategies they have used and in their prior motivations and capabilities. The main findings are that many attributes of the born-global model also characterize firms that began their internationalization along traditional lines but were radically transformed in the process of achieving global reach. This study identifies the consequences of rapid international growth, referred to as “the gusher,” among these firms and the destabilizing effects of the experience as the firm is taken in unexpected directions. The authors conclude that the born-global model has much in common with the internationalization of small entrepreneurial firms and that its most distinctive elements lie in the model's relevance to an increasingly globalized world economy and in the more aggressive learning strategies that are required to follow this path.

Trust and its alternatives

AbstractMost scholarly work on trust recognizes its importance as part of a nonmarket form of governance in exchanges between firms. However, trust is only one such governance device that can be used; other devices such as reputation, bargaining power, and contracts can also be used to govern exchanges. This article empirically examines the relationships between trust, reputation, bargaining power, and contracts as governance devices in agreements between smaller entrepreneurial firms and larger, more established firms. The findings suggest that while the role of trust is an important one, it may be more effective when combined with other governance devices. © 2004 Wiley Periodicals, Inc.

Internationalization of SMEs: Toward a New Paradigm

venturing abroad. Recently, scholars in the field of Entrepreneurship have questioned the universality of the stage-theory explanation of firm internationalization. They point to the inconsistency between the stage theory and the empirical reality of a growing number of entrepreneurially oriented firms, which tend to adopt a global focus from their conception. Not only do these new ventures lack a period of gradual internationalization, but they also tend to be small firms facing volatile markets with scant experience and resources. International Entrepreneurship, as a new field of inquiry, appears to have drawn both from International Business (traditionally focused on larger firms) and from Entrepreneurship, which primarily studies the entrepreneurial owner/ manager of small firms. Logically there is no conceptual barrier to the fusion of these two fields: larger firms can, in theory, act as entrepreneurs; and smaller entrepreneurial firms can take advantage of the vast opportunities of international markets previously exploited almost exclusively by larger firms. To explore and develop this emerging area of research, a pioneering, three-day conference was held in September 2000 at McGill University, in Montreal, Canada, under the joint auspices of McGill's Business and Management Research Centre, and the Dobson Centre for Entrepreneurial Studies. The conference brought together leading scholars from international business, and from small business/entrepreneurship, to stimulate integration of research in what had previously been widely divergent fields. Selected papers were subjected to a rigorous process of peer review and comments. Each was revised extensively to incorporate and to reflect the perspectives of other disciplines. The final product is a series of leading-edge research papers which are presented in this volume, as well as in two other publications.1 This collection opens with a study that tests empirically the degree to which International Entrepreneurship, as an emerging field of inquiry, draws on selective theory essentials from International Business and from Entrepreneurship. Hamid Etemad and Yender Lee searched for the evidence of fusion and cross-fertilization of each field's knowledge network. They report an accelerated emergence of International Entrepreneurship as a field of research through the late 1980s and 1990s, in terms of the number of scholarly publications. They also point to an increasing number of citations to works from both International Business and Entrepreneurship, as well as other fields. Their article sets the stage for examination of more detailed issues rooted in both International Business and Entrepreneurship. Final version accepted on October 2, 2001

Towards an Integrative Model of Small Firm Internationalisation

Firm internationalisation has long been regarded as an incremental process, wherein firms gravitate towards ‘psychologically close’ markets and increase commitment to international markets in a gradual, step-wise, manner through a series of evolutionary ‘stages’. However, much of the recent literature provides clear evidence of rapid and dedicated internationalisation by ‘born global firms’. Typically, these are smaller entrepreneurial firms that internationalise from inception, or start to shortly thereafter. Their main source of competitive advantage is often related to a more sophisticated knowledge base. In addition, the authors have found evidence of firms supporting this ‘born global’ pattern of behaviour but also evidence of firms that suddenly internationalise after a long period of focusing on the domestic market. These ‘born-again’ globals appear to be influenced by critical events that provide them with additional human or financial resources, such as changes in ownership/management, being taken over by another company with international networks, or themselves acquiring such a firm. Based upon the extant literature and our own research, we propose an integrative model that recognises the existence of different internationalisation ‘pathways’. We then explore differences in behaviour due to the firm's internationalisation trajectory and discuss the strategic and public policy implications.

Editorial Public Policy for International Entrepreneurial Small Firms: A Plea for Customised Support Measures

Editorial Public Policy for International Entrepreneurial Small Firms: A Plea for Customised Support Measures

The Need for a New Paradigm for Small Business Marketing? What is Wrong with the Old One?

The entrepreneurial marketing paradigm is open to several interpretations. One such is that we should consider, in particular, the behaviour of small firms, and in particular, small entrepreneurial firms; another interpretation is to argue for the building of a completely new, and substantive, paradigm that builds upon, for example personal contact network development and focuses upon marketing activity being compressed, non‐linear in outlook and application, and informal. In this article the author asks a fundamental question highly pertinent to the developing subject of marketing within small firms. Is conventional marketing theory and practice from the “classical school” applicable to all types of organisations no matter what their size, or do smaller firms need a different sort of marketing, more suited to their particular needs? The paper concludes that in many cases the central core hub of marketing that has become known as the classicist philosophy of strategic marketing management (see Brennan, Baines, and Garneau, 2003) is appropriate and can often be employed to the smaller enterprise with beneficial commercial effects. However there may be some reluctance on the part of small firms to accept the notion that conventional marketing is of particular use. The author hopes that this short paper will provoke a subsequent debate about the current “state of play” concerning the entrepreneurial marketing paradigm.

Compensation Practices in Small Entrepreneurial and High-Growth Companies in the United States and China

This article features a study that compares the extent to which U.S. pay practices are being used currently by small companies in China. Because of the high growth of small, fast-growth and entrepreneurial firms in China, small Chinese companies are compared with both small companies and fast-growth entrepreneurial firms in the United States. Results show that there are significant differences in pay practices in China when compared with firms in the United States. The article also discusses compensation issues for U.S. firms doing business with small Chinese companies.

Managing R&D in SMEs

It is a paradox of entrepreneurship that entrepreneurs often have to develop new products and/or modify existing ones for their entry into the market and for their survival, but find it difficult to attract the necessary expertise or afford the costs of setting up formal R&D facilities. This paper examines the ingenious methods employed by entrepreneurs to accomplish this apparently impossible task. Based on a review of the literature and an examination of anecdotes and case studies on new product launches, it is inferred that the principal strategy of entrepreneurs for developing and commercializing new ideas is to identify and leverage network resources. The most commonly used of these resources are: (a) large corporations with a need to externalize some of their activities; (b) small companies with similar or complementary interests but which are unable or unwilling to bear the full risk and therefore are interested in sharing the risk and returns; (c) research institutions that periodically come up with potentially useful ideas but are not in a position to commercialize them; (d) funding agencies that are interested in high returns and therefore are prepared to take high risks; and (e) government and public agencies interested in the development of their domains for which they consider the innovative entrepreneur to be one of the most effective instruments. All these organizations are motivated by self-interest and thus can provide opportunities for meaningful and productive partnerships for the entrepreneur. In this context, new product development in entrepreneurial small firms should be seen more as a social than a technological process.

Organizational Learning and Entrepreneurial Strategy

Globalization, deregulation and new information and communication technologies (ICT) are having enormous effects on all types of business. Indeed, ICT are now adding two new sources of entrepreneurial business alongside start-ups and management buy-ins and buy-outs — rejuvenated established firms and downsized, out-sourced former larger businesses. Schumpeter's five key areas of innovation (drivers of competitive advantage and entrepreneurial strategy) have taken on a new resonance as ICT have added others such as supply chain management, market information, financing and distribution. Outsourcing and ICT have made economies of scale quicker and easier to achieve for SMEs, but deeper and more extensive knowledge is required of the capabilities of ICT and of potential partners. Economies of scope also require increased knowledge of internal organizational capabilities and of potential external partners. Various studies in the UK highlight the increased importance to entrepreneurial small firms of ICT-supported networking with other firms and of the organizational knowledge that lies behind successful strategies in these areas. Thus, the ability of individual owners and managers to learn and the capacity for organizational learning within an SME become crucial determinants of success in the new knowledge economy. This paper is based on an intensive study of organizational learning among the smaller members of the UK's Institute of Directors (IoD). It identifies different levels of organizational learning and the characteristics of SMEs at different levels, with particular attention to differences in business strategies. The findings of the IoD study are augmented by findings from the independent non-profit Small Business Research Trust (SBRT). SBRT has collaborated with the Open University Business School in studies on the determinants of management development in SMEs and has longitudinal data for analysing whether there is a connection between growth-oriented, innovative, entrepreneurial SMEs and their propensity to network, to use ICT and to support learning in their organizations. Exploring the linkages between organizational learning and SME behaviour, strategy and performance, the paper concludes with a typology of SME strategies related to organizational learning and suggestions for future research in this area.

Quality Practices for a Competitive Advantage in Smaller Firms

This exploratory study examines the quality practices used in smaller entrepreneurial firms. The current literature defines flexibility as one of the primary competitive priorities for smaller firms. This study develops an exploratory proposition that relates the characteristics of quality systems used by small firms, and their value, to the competitive priority of flexibility. A survey of 184 small firms in the U.S. was conducted using the classification scheme for quality systems consistent with the Malcolm Baldridge National Quality Award (MBNQA) performance criteria. Overall, the results support the proposition that small firms tend to employ quality practices that enable change and that position the firm to pursue flexibility as a competitive priority. The paper concludes with a discussion of the insights generated by the findings and directions for future research.

Innovation and business performance: Small entrepreneurial firms in the UK and the EU

New EconomyVolume 8, Issue 3 p. 157-163 Innovation and business performance: Small entrepreneurial firms in the UK and the EU Alan Hughes, Alan Hughes Judge Institute of Management Studies and Centre for Business Research, University of CambridgeSearch for more papers by this author Alan Hughes, Alan Hughes Judge Institute of Management Studies and Centre for Business Research, University of CambridgeSearch for more papers by this author First published: 17 December 2002 https://doi.org/10.1111/1468-0041.00208Citations: 30AboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinkedInRedditWechat Citing Literature Volume8, Issue3September 2001Pages 157-163 RelatedInformation