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Key factors in the internationalisation process of SMEs exporting business software as a service

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Abstract

Little is known about how SMEs export business software as a service. This article describes six case studies in which prevailing factors regarded as essential for the internationalisation process of software as a service are identified: generic software, a domestic market base, technical internationalisation and localisation, entrepreneurial management, personal customer contact, and usage of specific market selection criteria such as high IT penetration and maturity levels and psychical proximity. These factors and their interplay do not fit in the established theoretical models of internationalisation in the literature. A redefinition and refinement of internationalisation theories specific to software as a service are needed.
Int. J. Business Information Systems, Vol. x, No. x, xxxx 1
Key Factors in the Internationalization Process
of SMEs Exporting Business Software as a
Service
Thomas Reuwer
University of Amsterdam,
Postbus 19268,
1000 GG Amsterdam,
the Netherlands
E-mail: thomas.reuwer@student.uva.nl
Slinger Jansen
Utrecht University,
P.O. Box 80.089,
3508 TB Utrecht,
The Netherlands
E-mail: slinger.jansen@uu.nl
Sjaak Brinkkemper
Utrecht University,
P.O. Box 80.089,
3508 TB Utrecht,
The Netherlands
E-mail: sjaak.brinkkemper@uu.nl
Abstract: Little is known about how SMEs export business Software
as a Service. This article describes six case studies in which
prevailing factors regarded as essential for the internationalization
process of Software as a Service are identified: generic software, a
domestic market base, technical internationalization and localization,
entrepreneurial management, personal customer contact, and usage
of specific market selection criteria such as high IT penetration
and maturity levels and psychical proximity. These factors and
their interplay do not fit in the established theoretical models of
internationalization in the literature. A redefinition and refinement
of internationalization theories specific to Software as a Service are
needed.
Keywords: Software as a Service, SaaS, business software, export,
internationalization process, stage theory, network theory, international
entrepreneurship theory, key factors
Reference to this paper should be made as follows:
Copyright c
2009 Inderscience Enterprises Ltd.
2Reuwer, Jansen & Brinkkemper
Biographical notes: Bios
1 Introduction
Software as a service (SaaS) is a software distribution model in which applications
are hosted by a vendor or service provider and made available to customers
over a network, typically the Internet (Bidgoli, 2010). Customers do not own the
software, but only pay for the used services provided by SaaS providers (Laplante
et al., 2008). The amount of applications and possibilities of SaaS have increased
significantly over the past decade and are considered to become increasingly
important for IT vendors in the near future (Pettey, 2006). Originally mainly used
in the sales force automation and customer relationships management domains,
SaaS is now widely applied in computerized billing, invoicing, human resource
management, service desk management, sales pipeline management and various
other business processes (Biddick, 2010). According to Gartner, the world wide
SaaS revenue will grow 18 percent annually until 2013 (Pettey and Stevens, 2009).
Both SaaS and on-premises software belong to the group of product software,
i.e., software that is created for a market (Xu and Brinkkemper, 2007). In
comparison to on-premises software, where the software is installed on a customer’s
hardware, the fundamentally different characteristics of SaaS are very promising
for both its vendors and customers (Armbrust et al., 2009). A key element here
is the online aspect, which enables consumers of the service to use the software
application anytime and anywhere around the world, as long as they have a
computer with a web browser and Internet access. No complicated hardware
or software is needed and high-priced licenses are evaded since the service is
used on demand, either through a time subscription or a ‘pay-as-you-go’ model.
Software and hardware storage can be outsourced to the SaaS vendor or third
party, diminishing server-costs and even total energy usage, while increasing
overall accessibility and security (Velte et al., 2010). Software that serves multiple
users, can be updated and upgraded automatically from one central location,
lowering implementation and maintenance costs. These aspects, combined with
the potential of remote client support, can deliver providers of SaaS enormous
economies of scale throughout the software life cycle (Kaplan, 2005). SaaS is a very
suitable and attractive export product, due to its online character.
Despite various efforts to outline an economic definition of internationalization,
a uniform agreed and unambiguous definition has not been established yet. This
article uses the definition provided by Welch and Luastarinen (1988), particularly
since it has been broadly applied in business studies and views internationalization
as progress-based, involving both sides of the process, i.e. both inward and
outward, which have become more closely linked in the dynamics of trade:
‘Internationalization is the process of increasing involvement of enterprises in
international operations’. Although this article concentrates on the economic
context of internationalization, the more technical aspects of internationalization
and localization used in computing are not ignored and are actually expected to
Exporting Business Software as a Service 3
be important factors in the economic internationalization process of SaaS, which
is the case with regard to on-premises software according to Esselink (2000). This
article aims to display key factors in the internationalization process of SaaS and
examines the validity of existing internationalization theories.
First, the research method applied to uncover how existing internationalization
theories are used in practice in the Netherlands is presented. In section 3 the
main three theories that were found in a literature study of internationalization
theories are examined and a comparison is made. Section 4 presents six case studies
performed at Netherlands-based international SaaS providers, thereby addressing
the occurrence of concepts from the three theories, but also looking at SaaS specific
characteristics of the internationalization process. In sections 5, 6, and 7 we present
the analysis of the results, discuss the validity of our conclusions, and provide the
final conclusions to our work.
2 Research Method
This research was conducted to answer the following three research questions:
1. What is the state of the art with regard to software internationalization and
can theories be identified?
2. How do these theories hold up in practice?
3. Is there a difference between on-premises software export (and
internationalization) and software as a service exporting?
To answer these research questions, three steps were taken. First, a short
literature study was conducted to uncover the theories that are described in
section 3. Next, six case studies were carried out by performing structured
interviews to see how well these theories apply in practice. Furthermore, to uncover
some of the intricacies of software as a service, interviews were designed to also
address the differences between on-premises software and SaaS software.
The case studies followed a case study protocol as prescribed by Jansen and
Brinkkemper (2008), Dul and Hak (2008), and Yin (2003). For each of the case
studies, one-day rounds of interviews were conducted at the case companies. These
interviews consisted of approximately two-hour sessions per interviewee. Interview
notes were transcribed and processed within 24 hours of the interview, usually the
next day. Interviews were recorded and the results were checked by both a fellow
scientist and the case study champion at the case company, in most cases the CEO
of the company. The case companies were selected from a list of 150 Dutch software
companies, of which was promoted through their web site that they supplied both
on-premises software (or had so in the past) and SaaS. Companies were contacted
by email. All six companies responded positively. The project was ended after the
sixth case study because little new material was added after the fourth case study.
3 Theories of Internationalization
Research on the internationalization process of firms has not led to one universally
accepted model of internationalization yet, although several theories have been
4Reuwer, Jansen & Brinkkemper
developed. Three major schools of internationalization are most influential:
stage theory, network theory, and international entrepreneurship theory. The
presented theories are not necessarily mutually exclusive, but in fact can
complement each other in explaining and understanding the often highly complex
internationalization process of firms.
3.1 Stage Theory
Models of stage theory, like the most cited Uppsala model by Johanson and
Vahlne (1977), consider the internationalization process as a successive and
incremental concept based on market knowledge development connected to market
commitment. Originating from the behavioural theory of the firm by Cyert
and March (1992) and theory of growth of the firm by Penrose (2009), firms
are assumed to export only when they have a strong domestic market base.
Subsequently, while knowledge of foreign countries increases over time, markets
that are physically and psychically close are entered first, gradually expanding
international activities towards countries more distant. While physical distance
stands for the geographical distance between the domestic- and foreign market,
psychical distance refers to the differences in language, culture, political system
and business practice (Chetty and Campbell-Hunt, 2004). Although an earlier
study by Johanson and Wiederscheim-Paul (1975) formed the foundation of this
theory, the role of psychical distance has reduced due to globalization and therefore
the concepts of market commitment and knowledge have become the underlying
basis for the stage model (Hadjikhani, 1997).
According to the stage theory, the choice of entry mode reflects the gradual
process of commitment, since firms choose the entry mode that requires less
resource commitment (e.g. franchises or dealerships) first and later shift to another
entry mode that demands more resource commitment (e.g. alliances or direct
investments) as the perceived risks in the foreign market decrease as a result of
better or more market knowledge (Luostarinen, 1979). This conception, where
market knowledge is a key aspect in the process of business internationalization,
has been widely agreed upon (Blomstermo et al., 2002; Casillas et al., 2009).
While numerous authors support the stage theory and its incremental pattern
of increasing knowledge and commitment, others have rigorously criticized
it. Studies showed that smaller firms exhibit behaviour where traditional
stages of internationalization are omitted, entering international markets almost
instantly (Whitelock and Munday, 1993; McNaughton, 2003). Think, for example,
of companies such as companies like Google and Facebook, which went global
fairly quickly after launching in the US. Furthermore, the research of Bell (1995)
on the internationalization process of software SMEs showed that no specific
stages are followed at all. Despite this criticism there is ample empirical evidence
that multiple firms have internationalized in incremental stages and that others
continue to do so as shown later by Bell et al. (2003).
3.2 Network Theory
Through the interaction with suppliers, subcontractors, partners, customers, and
many other market actors, all firms are considered to be part of one or more
Exporting Business Software as a Service 5
business networks according to(Johanson and Mattsson, 1988), also known as
software ecosystems (Jansen et al., 2009). These software ecosystems can be
interpreted as business ecosystems: a set of two or more connected business
relationships, in which each exchange relation is between business firms that are
conceptualized as collective actors (Emerson, 1981). As shown in figure 1(b), these
business networks play a key role in the firms internationalization process, driving
market expansion and development activities, including choice of market and entry
mode (Coviello and Munro, 1997). Although the example figure is modelled from
the domestic country perspective, new network connections can arise in foreign
markets and additionally serve as new entrances to many other countries.
Business networks are often perceived as bridges to foreign markets (Sharma
and Johansen, 1987), allowing a much faster internationalization through the
experience and resources of network partners (Mitgwe, 2006). In this context, the
examination of Johanson and Vahlne (1992) of two case studies found foreign
market entry to be a gradual process, resulting from interaction between parties,
both developing and maintaining relationships over time. Complementary, studies
on internationalization indicated the extensive influence of network relationships
on foreign market selection and mode of entry, as well as product development
and diversification activities (Abraha et al., 2008; Amal and Filho, 2010). This is
consistent with findings from research by Coviello and Munro (1997) and Moen
et al. (2004) with regard to the internationalization of small software firms.
International new ventures or born globals, defined as: business organizations
that from inception seek to derive significant competitive advantage from the
use of resources and the sale of output in multiple countries (Oviatt and
McDougall, 1994), show similar results, selecting foreign markets based on their
own existing knowledge and the knowledge supplied by their network ties (Sharma
and Blomstermo, 2003).
3.3 International Entrepreneurship Theory
According to the international entrepreneurship theory (IET) as seen in
figure 1(c), individual and firm entrepreneurial behaviour form the basis of
foreign market entry (Mitgwe, 2006). Hence IET focuses on the role and
value of entrepreneurs, commonly cited as the most important variables in
the SMEs internationalization process (Miesenbock, 1988) and often prevalent
in well-established large organizations as well. The most recent definition of
international entrepreneurship by Zahra and George (2002) excludes firm size as
a variable: International Entrepreneurship is the process of creatively discovering
and exploiting opportunities that lie outside a firms domestic markets in the
pursuit of competitive advantage. Although it should be noted that small firm
international entrepreneurship appears to be considerably different from large firm
international entrepreneurship, as smaller firms are more prone to foreign risks and
manage them more effectively (Shrader et al., 2000), this definition is generally
accepted.
Born globals - or international new ventures - in different industries often
follow the path of international entrepreneurship theory (Oviatt and McDougall,
1994). Multiple studies also found evidence of existing born globals within the
software industry (Lopez et al., 2009; Dib et al., 2010; Wren and Gabrielson,
6Reuwer, Jansen & Brinkkemper
2011). Entrepreneurs of born globals are perceived as the initiator of the
internationalization process, being the main factor of sustained competitive
advantage, possessing socially complex resources (e.g. entrepreneurial knowledge,
experience and skills), which facilitate the capture of new resources for the venture
and recognition of new opportunities in and outside the domestic country as found
by Alvarez and Busenitz (2001). Moreover, these resources are often individual-
specific and therefore difficult for competitors to imitate.
3.4 Comparison of Internationalization Theories
For each of the described theories market knowledge and familiarity are essential
when entering a market. The main difference, however, can be found in the
method applied to uncover the best location to first start working towards. The
stage theory suggests that the best approach lies in finding those locations that
are psychically and physically close and assumes that little or no changes are
made to the way the organization does business. Network theory is similar but it
applies the network of the organization primarily, before looking at physical and
psychical distance. Finally, in the case of international entrepreneurship theory, the
organization is willing to change its business and product partly, simply because
it sees interesting opportunities in another country. IET takes different shapes
that determine the scope of the internationalization process. It could be that the
company has worldwide ambitions and therefore attempts to internationalize to as
many countries as possible in a short time. It could also be that an entrepreneur
simply sees an interesting cross-border opportunity and takes it without venturing
too far or investing immensely.
What we feel is currently lacking in these theories, is that they do
not necessarily take into account the business opportunity that foregoes the
internationalization process. It could be that a company has saturated the local
market, which enables the organization to start venturing in any of the directions
proposed by the theories. It could also be that a company is approached by a
customer that is active in several countries already, and would like to purchase
the product in local versions also. It could also simply be that the organization
takes a worldview and is concerned with competition deploying similar products
in other countries. In the following six case descriptions, we have explicitly taken
the opportunity into account.
Figure 1 goes here
Exporting Business Software as a Service 7
4 Multi-Case Study Results
Based on the earlier discussed stage theory, network theory and international
entrepreneurship theory a theory-testing multi case study (Dul and Hak, 2008;
Jansen and Brinkkemper, 2008) was performed. The internationalization process
of six Dutch SMEs exporting business Software as a Service has been examined,
resulting in six case study reports. The identities of the firms have been
anonymized using pseudonyms.
A questionnaire was developed and interviews were held in person with key
individuals of each firm. People were questioned about: what kind of international
activities their company had yet employed, is planning to employ and to what
extension; chosen foreign entry modes; server- and customer support structure;
the importance of the IT penetration ratio and IT maturity; perceived market
knowledge; possibly experienced physical and psychical distance and the role of
technical internationalization and localization; the relevance of the firms position
in the domestic market; the role of network contacts and specific individuals during
the internationalization process. Finally, people were asked to reveal their golden
tip for SMEs keen on exporting their business SaaS product. After each interview
additional documentation was requested and examined if available.
4.1 Case 1 ERP Software
Case Subject. ERPComp is a vendor and manufacturer of Enterprise Resource
Planning (ERP) software, founded in 1996 as a result of a management buy-
out. The firm has approximately 300 employees and currently serves over 10,000
small, medium and large enterprises, concentrating on the fields of healthcare,
accountancy, education, and business. One standard product is offered, which can
be provided either on-premises or SaaS-based.
International Context and Opportunity. ERPComp serves the Dutch
market through its head office in the Netherlands, with regional offices situated in
Belgium and the Netherlands Antilles. For about ten years, a dealer in Belgium
handled the Belgium- and Luxembourg market, before the firm decided to have its
own foreign office one year ago. The same happened in the Netherlands Antilles,
where first a dealership served customers in the Netherlands Antilles and Aruba,
after which a regional unit was started there in 2007. When the SaaS-based
product was officially introduced in the beginning of 2009, it was directly available
for all discussed markets that were already served with on-premises software. Due
to the presence of local sales offices, the firm already had foreign market knowledge
before the SaaS-based product was introduced. This knowledge has enhanced
ever since. At the moment, ERPComp has not planned any future international
activities. All software and data needed for using the SaaS-based product is hosted
on a third party server in the Netherlands. Customers can get support through the
firms regional offices and online.
Challenges. The main issue ERPComps SaaS-based product is dealing with
is limited data traffic capacity in especially the Netherlands Antilles. Though the
use of satellite technology is expected to mitigate this problem eventually, high
IT penetration and IT maturity are still important conditions for a successful
implementation of the SaaS product internationally.
8Reuwer, Jansen & Brinkkemper
Although the online concept of SaaS diminishes the relevance of this factor
by enabling services as online user support, ERPComp emphasizes the need
for physical contact with managers from foreign offices. Thereby, the psychical
distance is expected to hamper the most important localization process as well
as marketing and sales, with differences in language and tax system perceived as
particularly cumbersome. ERPComp will therefore prefer physical and psychically
close countries like the United Kingdom, Germany, and France, if it decides to
further internationalize its activities in the future.
Future Internationalization Ambitions. The described expansion to
foreign markets should be considered as a concurrence of circumstances rather
than a part of the companys vision. In fact, ERPComp is not planning any further
expansion on short-term and emphasizes the importance of domestic market share
and satisfying current and local customers, before entering new markets and
complexities. In fact, people striving for international business ventures do not
align with the firms current focus on the domestic market.
Lessons Learned. Foreign customers in the firms network have increased the
firms knowledge of new markets, but the main focus will be on the network in the
current international context.
Internationalization Theory Applicability. The internationalization
process was initiated out of opportunism, and did not necessarily convey the
company vision at that time. We find elements of stage theory, since the
countries exported to are psychically very close. We also find elements of IET,
since ERPComp goes about its internationalization process pragmatically and
opportunistically.
Golden tip. ERPComps golden tip to SMEs keen on exporting their business
SaaS product is that the relative easiness of introducing the software in new
markets should not distract a firm from the real importance of localization and
effective sales and marketing.
4.2 Case 2 Accountancy Software
Case Subject. AccComp develops and sells accountancy software and presently
has over sixty employees and 40,000 users, representing over 80,000 companies
in nearly every sector. The firm offers one standard product, which can only be
delivered SaaS-based combined with a monthly subscription fee. The product was
originally aimed at end-users, who then had to convince their accountants to start
using the software. Contracting such customers directly proved not effective and
AccComp began to target accountancy offices instead, starting with smaller offices
and approaching increasingly larger accountancy firms along the way.
International Context and Opportunity. When the firm was founded in
fall 2000, its operations went international immediately, when they obtained a
large customer in the United Kingdom. However, a foreign solid base appeared
hard to accomplish for an alien firm without a reputation and the firm decided
to shift its focus to the domestic market. The firm went international in a
structured manner after seven years because the organization was showing solid
growth in the Netherlands, by expanding to the United Kingdom, Netherlands
Antilles, Denmark, Norway, Sweden, and Finland. In the beginning resellers were
appointed in these countries, but the use of these dealerships proved to be
Exporting Business Software as a Service 9
ineffective, as the relatively small markup on each product - caused by the monthly
subscription - was not profitable enough for them. Gradually, accComp replaced
each reseller with a local sales office with just one or a few employees, since only
a bridgehead is considered essential by AccComp. AccComp also has users in
other countries through subsidiaries of companies that are already customers. All
together, AccComp has users in 22 countries. All software and data is completely
hosted on servers in the Netherlands. AccComp also has a global support center at
their headquarters, which assists customers in their own language and even their
own time zone.
Future Internationalization Ambitions. The firm is currently exploring
with a potential business partner whether to enter the United States.
Lessons Learned. Foreign market selection is primarily based on the degree
of IT penetration, which was one of the main reasons to enter e.g. Scandinavia.
The firm emphasizes the inevitable higher product costs when deviated from this
rule.
AccComps considers foreign market knowledge as a process that is continuously
updated and refined and confirms that it has increased since the foundation of the
firm. Though the concept of SaaS is believed to reduce the role of physical distance,
personal contact is still found crucial in the firms internationalization process.
Business-wise, Scandinavian countries are considered much alike the Netherlands
and are therefore attractive markets. This in contrast to the United Kingdom,
where the banking system is considerably different and three years behind on the
Dutch system and accountants are much less willing to switch to another software
service. Mediterranean countries show the same difficulties. Many countries also
show great cultural differences, like for instance the influence of hierarchy, which
are reasons for AccComp to avoid certain countries. In order to cope with the
functional and cultural differences the process of localization plays an important
role in the internationalization process, following the credo: Think global, act local.
Internationalization Theory Applicability. We find elements of IET and
network theory. The network theory applies, since, the first customer in the UK
was acquired through an old business partner of the firms founder. Also the
Scandinavian market was accessed through the network, via an accountancy office
that was already a customer of AccComp. On the other hand we see IET at work
as well, since both these options were found opportunistically. Also, when one of
the internationalization projects failed due to a weakened home base, the company
waited for seven years to try again.
Golden Tip. As golden tip, AccComp advises firms to Crack the code in the
domestic market before entering new markets. Foreign cultures should also not
be underestimated and personal customer contact remains crucial, regardless the
advantages of SaaS.
4.3 Case 3 Anti-Plagiarism Software
Case Subject. PlagComp develops and sells anti-plagiarism software to
educational establishments, such as universities and high schools. The company
was founded in 2003 and currently holds twelve fulltime employees in the
Netherlands and about thirty in foreign countries. More than 5,000 customers are
served directly or through integration partners, such as vendors of virtual learning
10 Reuwer, Jansen & Brinkkemper
environments. PlagComp delivers one standard product that is completely SaaS-
based and used through a one-year subscription.
International Context and Opportunity. In 2005 the firm became
international by approaching potential customers in Norway, Belgium, Germany,
France, Swiss and Austria. The opportunity grew out of demand from universities
and later as a firm strategy. Besides deliberately targeting certain countries,
PlagComp is also often approached by universities and schools in other countries,
with a customer portfolio including 26 countries as a result. All decisions are
taken at the firms headquarters in the Netherlands, from which all countries
are approached first. Thereafter, local resellers, i.e. integration partners and local
salesmen directly working for PlagComp, are used to further penetrate specific
markets. Still, internal employees working from the Netherlands are considered
important in regards to contact with foreign countries, to ensure that the
companys values and culture are safeguarded in foreign countries too. All future
international activities are completely focused on Europe.
PlagComp has a datacenter in the Netherlands, from which storage space for
databases is offered as a standard to customers, regardless of the country they are
located in. Occasionally foreign customers choose an alternative storage location in
their own country, if they prefer a physically closer datacenter. All client support is
centralized in the companys head office in the Netherlands, where employees that
speak the customers language assist the support division.
Countries with a high IT penetration are entered first, for reasons of easy
applicability of the product.
Before PlagComp went international, the firms knowledge of foreign markets
was minimal, though this has positively changed over time. The firm states that
this knowledge is still growing.
Challenges. Physical distance is an important limiting factor in foreign
market selection, since PlagComp prefers countries that can be reached by plane
within two to three hours. This is because physical contact with customers is found
crucial. Psychical distance is perceived as cultural differences and differences in
business practice, which the SaaS delivery model can sometimes tackle. PlagComp
recalls an example, where a foreign customer neglected to pay while using
the service, resulting in a remote shutdown. In order to prevent such events,
countries that show cultural similarity with the Netherlands are favoured. The
product is also deliberately kept rather simple, in order to reduce any psychical
differences and to diminish the difficulties in the technical internationalization- and
localization process.
Lessons Learned. A strong domestic market position is seen as a criterion
for even considering any international activities, since one first needs a solid base.
Due to the concept of SaaS, building this base can take quite some time, as the
companys revenues completely depend on yearly subscriptions.
Internationalization Theory Applicability. The companys network is
considered important. Many sales are still made through cold calling, but it is also
not uncommon for foreign universities to contact PlagComp first. Lately, a lot of
sales are done through network partners, who sell PlagComp’s products with their
main product. In this case, we see both IET and network theory at work.
Golden tip. As a golden tip, PlagComp advises to exercise test cases, where
selected markets are used as a try-out. Problems inherent in SaaS are also
Exporting Business Software as a Service 11
highlighted: obtaining a loan to start up your company can be difficult, since a
service is sold and not a product.
4.4 Case 4 Enterprise Software
Case Subject. EntComp develops and sells business software applications, such
as ERP and financial accounting software, to customers in a variety of industries.
The company was founded in 1980 and currently holds over 4,000 employees and
40,000 customers. All international and local products combined, EntComp offers
over one hundred software solution products, of which most are delivered on-
premises. Since 2009 the company also offers one natively SaaS-based product
internationally and in 2010 it expanded its portfolio by extending its international
flagship products with alternative delivery methods: on-premises, cloud or hybrid.
International Context and Opportunity. The firm has subsidiaries and
offices in 24 countries across Europe, North America and Asia. Furthermore,
the firm has its own resellers in Australia, South Africa and Uganda. In 2008,
EntComp acquired a firm that already had a financial SaaS-based product, which
used the platform of an American cloud computing firm. A joint venture between
EntComp and the American firm was formed in 2009 to expand the potential new
product. The new company has its headquarters in both the US and UK and
meanwhile operates from several offices around the world, profiting from existing
offices of EntComp. In less than one year, this SaaS-based product has reached
customers in more than twenty countries, mostly from native English speaking
countries or willing to use English-based software. To create economies of scale,
a special division was formed in 2010 to manage EntComps hybrid deployments
on a global scale, serving customers in those countries where the firm was already
operational. Both the joint venture and EntComps hybrid division will probably
focus on their current country portfolio in the near future. The company has
followed an international strategy since the 80s.
Whether clients data in a hybrid solution is stored on a server in the
Netherlands or in the foreign country itself varies by customer, not by country.
Especially government agencies tend to keep their data close. The hybrid division
handles technical customer support centrally, while local offices provide functional
support.
Challenges. High IT penetration ratio and IT maturity are considered very
important factors in the firms decision process with regard to internationalization.
For example, Scandinavias well-built IT infrastructure is one of the main reasons
why EntComps products have been proven highly successful in hosted situations
for over 10 years.
Information about the role of foreign market knowledge in the
internationalization process of the firms SaaS-based product could not be
explained. Since all hybrid solutions are offered in countries that were served
with on-premises software before, the firm already had a considerable amount of
foreign market knowledge prior to the introduction of SaaS. This knowledge is
continuously evolving.
Lessons learned. Psychical differences are considered a main issue in the
internationalization process, which is why English-speaking countries are targeted
first by the joint venture. By developing multilingual and multi-legislation products
12 Reuwer, Jansen & Brinkkemper
in consultation with local partners and offices, EntComp seeks to diminish the
psychical distance in the technical internationalization process. As long as latency
is low, the physical distance is thought to be less relevant in SaaS-computing.
Customers can now buy foreign software as a service more easily, due to the rise
of a global market. Still, EntComp claims that customers will always prefer a local
business contact.
When the SaaS-based product was launched by the joint venture, it went
directly international without an introduction into the Dutch, domestic market
first. This also applies for the firms hybrid solutions.
Internationalization Theory Applicability. The firm’s existing
international network has been fundamental to the export of the SaaS
product, since steady sales channels had already been established decades
ago. Simultaneously, through strategic partnerships and joint ventures, new
opportunities were found worldwide, showing signs of IET and network theory.
Golden Tip. Since customers of SaaS have less commitment towards their
vendor, a switch to a competitor is easily made. Therefore, the firms golden tip is
to deliver high quality products in order to keep customers satisfaction high under
all circumstances.
4.5 Case 5 Administrative Software
Case Context. AdminComp, founded after a management buy-out in 1994,
develops and sells administrative software, supporting processes in human
resource management and both financial and payroll administration. As an
independent software vendor, the firm also uses platforms from a worldwide
operating developer, for implementing software solutions in the areas of enterprise
project management, file sharing (FSProd) and customer relationship management
(CRMProd). In this way, the firm does not have to build its own SaaS
environment. All products can be delivered on-premises, while FSProd has been
available as SaaS in the Netherlands for over one year now. AdminComp currently
has 125 employees and a total of about 1200 clients spread over a wide spectrum
of industries.
International Context and Opportunity. As of November 2010, both
FSProd and CRMProd are available as SaaS in Germany, where AdminComp
already has a regional office for its on-premises software. The SaaS-based products
are delivered there and in the Netherlands - first, before other countries in
Europe and possibly the United States will be approached. AdminComp also
has a software development office in Ireland, which is not commercially active.
AdminComp has only recently started its international activities, and these are
related to the fact that the company is growing steadily in the Netherlands, but
sees limits to its national growth.
The SaaS-based applications and clients’ data are stored on servers from the
same worldwide operating developer that provides AdminComp platforms for their
products. Although AdminComp has no control over where the data is stored, the
company acknowledges security matters with regard to governmental clients that
favour their data in their own country. Client support is provided in the country’s
language by its regional office.
Exporting Business Software as a Service 13
AdminComp’s file sharing product has been available in the firm’s domestic
market for over a year, prior to its introduction in Germany. Now both SaaS-based
products will need to prove their effectiveness in the Netherlands and Germany
first, before other markets will be entered.
Challenges. Cultural differences are the main reason for AdminComp to avoid
certain areas, such as Asia or the Middle East. Business practices in Europe and
the United States are experienced as easy going. However, the relevance of the
localization process must not be underestimated, since regional offices in England
and France were closed due to localization issues with the firm’s on-premises
software. The use of a generic and widely used platform for their current SaaS-
based products is expected to mitigate such problems. Although the physical
distance is found irrelevant, local offices or partners and assisting personnel are
still crucial in order to fulfil the essential need for physical client contact.
Lessons Learned. High IT penetration and IT maturity are considered
basics in the firm’s internationalization process. AdminComp has developed good
knowledge of its foreign market in the past few years by delivering on-premises
software in Germany. As SaaS has only recently been introduced internationally,
any change in foreign market knowledge with regard to SaaS has yet to occur.
Internationalization Theory Applicability. The developer that supplies
AdminComp its platforms (Microsoft) plays a major role in the firm’s
internationalization process, by providing a vast network of partners around the
world. AdminComp is most likely to leverage this network in the future, when
the firm plans to expand further. The firm’s network plays a key part, but the
organization prefers psychically (and even physically) close customers. This case
displays both network and staging theories at work.
Golden Tip. AdminComps golden tip is to generate simple software lacking the
need for support and to create volume, in order to simplify the internationalization
process. However, a steady foreign partner or own offices are considered to be
essential in business-to-business markets.
4.6 Case 6 Automation Software
Case Context. AutComp develops and sells both customized and standard
business automation software to customers mainly in retail, wholesale, transport
and logistics, healthcare, local governments and real estate. The firm has
approximately 5,300 employees serving thousands of customers and is part of
a larger corporation that also delivers financial, engineering and consultancy
services. AutComps wide variety of products cannot be strictly divided into a
SaaS-based or on-premises category. Instead, the best software solution is chosen
for each specific customer, containing the most suitable products and delivery
models.
International Context and Opportunity. The firms SaaS-based products
are offered in the Netherlands, Belgium, Germany, Switzerland and Sweden, which
are all countries where AutComp already had one or more regional offices for
its on-premises software. Any particular order of market entrance could not be
explained, although psychical and physical factors were mentioned. All SaaS
activities are locally managed and driven by regional offices, without the presence
of a company-wide internationalization strategy in relation to SaaS-products.
14 Reuwer, Jansen & Brinkkemper
AutComps current and future focus concerning both on-premises and SaaS-based
software is on the firms current country portfolio.
AutComp prefers its own datacenters in the Netherlands and Germany for
customer data and application storage, but the use of servers provided by
customers or third parties in these and other countries are common too. Security
issues and financial arguments are the main motives here. Support is provided by
the firms regional office in the country where the customer is located. IT maturity
is an important issue, especially when issues like uptime and redundancy are
critical. Decent hardware and network quality are therefore essential for AutComps
SaaS-based products.
Prior to the introduction of SaaS, the firm already enjoyed extensive foreign
market knowledge due to the delivery of on-premises software and this is yet
increasing over time.
Challenges. Since all SaaS-based products are delivered in countries where
AutComp was already acquainted with owing to the delivery of their on-premises
software, any psychical distance with regard to the internationalization of SaaS
specifically is not experienced. Nevertheless, cultural differences and differences
in language and business administration do prevent the firm from entering
certain countries. Physical distance is merely perceived on the customer side, as
customers do not always favour the idea of data storage in a distant country. The
globalization of standard hardware, software and network protocols simplifies the
technical internationalization and localization processes. AutComp thereby aims
to keep all their software as generic as possible.
Internationalization Theory Applicability. The internationalization of the
firm should be viewed as part of the firms strategy, with an opportunity driven
character. Since AutComp already enjoyed a solid domestic market base and
foreign offices, the firms SaaS-based products could relatively easily be sold.
The firms network should be considered as just one element of the total firms
internationalization decision process and does not play a key role specific to its
SaaS-based products. In this case study all three theories seem to apply, being
IET, stage theory, and network theory.
Lessons Learned. AutComps current owner and founder has directed the
firm towards other countries. However, prominent persons specifically dedicated
to the internationalization of SaaS could not be identified. This clearly illustrates
the firms view that SaaS is just another product, which does not need a specific
internationalization strategy.
Golden Tip. As a golden tip, AutComp emphasizes the importance of cultural
differences and localization in the internationalization process. In relation to SaaS,
software must be held generic in order to create large volumes and benefit from
the delivery model. Restrictions with regard to customers who favour their data
close could require a distinction between a public and private cloud.
Exporting Business Software as a Service 15
5 Multi-Case Study Analysis
Table 1 goes here
The fundamentally different characteristics of SaaS question the validity of
existing internationalization theories. This article examines to what extent firms
exporting SaaS follow these theories.
Table 1 summarizes the multi-case study results in relation to the stage theory,
network theory and international entrepreneurship theory, and the aspects of
server and customer support structure and the role of technical internationalization
and localization.
With regard to the stage theory, each firm acknowledges the importance of a
solid domestic market base before entering new markets. Yet, the term domestic
is somewhat problematic, since firms that already served foreign countries with
on-premises software before the introduction of their SaaS-product, often consider
those countries as a part of their domestic market.
Most firms believe that their market knowledge has increased over time and
all firms are prone to choosing countries that are psychically close first. SaaS
can diminish the relevance of psychic distance by enabling the use of test cases
and providing the possibility of shutting down troublesome customers as one firm
did. Still, a direct relation between market knowledge and psychical distance can
neither be confirmed nor ruled out. This also applies for the relation between
market knowledge and physical distance. SaaS proves to diminish the role of this
distance, except for one case where the whole firm is directed from its head office
in the Netherlands. The key issue here is personal customer contact, which is found
essential in all the cases and can rather easily be provided by the local offices in
the other cases.
Four out of six firms had already committed their full resources in the selected
foreign countries, before they started exporting SaaS. Any relation between market
knowledge and resource commitment can therefore not be assumed. The other
firms do show an increase in resource commitment over time, although it is unclear
whether this is a direct effect of increased market knowledge. We also confirm
the view of Ojala and Tyrv¨ainen (2007), who state that for the first countries
that firms internationalize to, software firms will choose psychically close countries,
whereas thereafter they will move to countries further away, but with larger
markets, such as (seen from the Netherlands) the US, the United Kingdom, or
Spanish speaking countries.
As for the network theory, the firms that sell exclusively SaaS or use
a SaaS platform provided by another firm profit from their network in the
16 Reuwer, Jansen & Brinkkemper
internationalization process. The other firms that sell SaaS and software on-
premises as well consider the firms network more of a local instrument. Although
a specific crucial network actor cannot be indicated, it is found that providers of
worldwide used SaaS platforms can play a major role in creating bridges to foreign
countries, while reducing the firms development resources.
The presence of key individuals driving the internationalization in most cases
endorses the international entrepreneurship theory. Yet, the smaller firms that only
sell SaaS based software show a much more rapid internationalization of SaaS than
the firms that sell on-premises software as well. Moreover, certain key individuals
are often responsible for the internationalization of the whole firm, including that
of on-premises software, while persons concerning the internationalization of SaaS
in particular could not be found. It is also remarkable that two firms are led by real
entrepreneurs, while the international activities are considered to be a concurrence
of circumstances or opportunity driven.
Although firms prefer the use of a central datacenter in their server structure,
they are aware of restrictions posed on the customer side that may result in
the detrimental usage of local datacenters and a distinction between a public
and private cloud. The use of platforms and consequently servers from another
developer makes this even more complicated, since a firm loses its control over
where the data is stored. While local offices provide customer support in the
cases where firms sell SaaS and on-premises software, the other cases use remote
support. In the latter situation, customers are assisted in their own language and
in case two even their own time zone. It is noteworthy that the firms that already
had a local office before the introduction of SaaS, still prefer local support to
remote support.
In all cases, a country’s IT penetration and IT maturity level are analyzed
before a specific foreign market is entered. This study shows that these issues
are considered basics for a successful implementation of SaaS internationally,
preventing limited data traffic capacity, low acceptation rates and uptime
and redundancy problems. The processes of technical internationalization and
localization are also important issues in each case and help the firms cope with
experienced psychical distance. Developing generic and relatively simple software
can keep these processes rather uncomplicated and can help a firm deal with
psychical distance. This is also repeatedly underlined in the firms golden tip. The
use of widely applied platforms from other developers observed in some cases can
provide a secure framework in the technical internationalization process.
As a final observation we see that the larger companies use existing networks
and foreign subsidiaries for internationalization of their SaaS products. The smaller
ones follow some form or combination of the three theories, where new business
opportunities are always at the basis for the first move. It was also mentioned
frequently that intensive customer contact can reduce a customer’s perception that
a SaaS provider does not dedicate enough resources to a country to which it wishes
to internationalize.
This study also identifies several prevailing factors in SaaS internationalization,
as seen in figure 2. It might be worthwhile to investigate the relative relevance and
interplay of these key factors and to define a new theoretical internationalization
model specific to SaaS. This might lead to new strategies and guidelines for
SaaS vendors eager to export their product in the future. The figure can be
Exporting Business Software as a Service 17
interpreted as follows: there are three main domains that play a role in SaaS
internationalization, being the technical domain, the human domain, and the
market domain. In the technical domain, the product must be generic, i.e.,
applicable in foreign markets and the internationalization process should not cost
too many resources. In regards to the human domain, there must be intensive
relationships in the target countries to make the internationalization project work.
Furthermore, the entrepreneur must keep its eyes open for opportunities that
may accelerate an organization’s to in a foreign domain. Finally, in the market
domain three factors play a part. First, the domestic base must be strong enough
to invest largely in the export move. Some of the horror stories spoke of money
running out, a recession hitting in the home country or in the remote location,
etc. The psychical proximity also plays a large part in deciding which countries to
go to first. Most of the locations that the companies in our cases internationalized
to were English speaking countries, neighbouring countries, and former Dutch
colonies. Finally, a necessary success condition is the IT penetration in the target
country. If only 5% of businesses have a web connection that is fast enough to use
a SaaS product, one might consider skipping over to a country with higher internet
connectivity.
Finally, in regards to the golden tips, three things are prevalent: make a
winning business case, customer contact is key, and do not underestimate local
specifics. In regards to the winning business case the point is made that the actual
internationalization of the product is easy, but the establishment of a successful
foreign sales office is much harder and requires serious investment. Secondly it is
mentioned that customer contact is fundamental for a good customer relationship,
so a foreign office and mature support structure are required if the SaaS is to be
successful. Thirdly, the local customs and differences may be a lot less visible at
first. For point-of-sale systems in some countries, for instance, it may be custom
to add taxes only after the total of a bill is made, whereas in the Netherlands
taxes are already included in the product prices. These variances are easy to
support, but must first be uncovered. A way to circumvent problems with these
local specializations is by making test cases and prototypes early in the process.
Figure 2 goes here
6 Discussion
There was no harm done in trying to apply the three theories in isolation to
our six case studies, but a well-fitting model was not found when applying the
theories, unless we are willing to accept that these theories work in unison for the
18 Reuwer, Jansen & Brinkkemper
SaaS situation under study. To improve on this situation, we have attempted to
create our own model, based on a semantic analysis of the most common terms
mentioned throughout the interviews. This model, however, has not been evaluated
with experts. It is easy to see, however, how elements from the three theories have
been combined into one model that appears to fit the case studies much better.
The case studies were the most effective way to establish whether these theories
were applied or not: conversations with six CEOs from the case companies and
others involved in the process of internationalization gave us quick insight into
the steps followed. Much of the interviews quickly took an anecdotal turn, where
stories were told about projects that were cancelled because of reasons mentioned
earlier: excessive projected investments, too low IT penetration in the target
country, customers that did not understand how the product could be applicable
in the target country, etc. Success stories were told as well, such as the business
customer that asked for an internationalized version of one of the SaaS products
under study in 12 countries, thereby accelerating the internationalization process
significantly. We therefore recommend using the case method for further study in
this area, although future work may also include surveys for further generalization
of the results.
The limitations of this work are that the findings are hard to generalize. Cases
were selected opportunistically, but due to the limited adoption of the software
as a service paradigm at the time of the research, the data set can be considered
relatively extensive. Furthermore, these six cases have led to theory building,
which, if the case method is followed closely, is sufficient. It is, however, possible
that observations led to poor derivations of the theory, which was attempted to
avoid by having peer-reviews from both academic colleagues and key informants at
the case study companies. In future work we hope to conduct a survey to further
strengthen and elaborate our findings.
7 Conclusion
In this article we show that there are three theories that explain the
internationalization process for organizations. We also show that these three
theories cannot be found in an isolated manner in six case studies. Furthermore, we
show that SaaS has some minor peculiarities when internationalizing: its software
and data can be hosted in the home or foreign country and the internationalization
process may be more extensive than initially expected due to cultural differences.
Finally, from these six case studies and three theories we extract three domains
that determine how the SaaS internationalization process will be executed, being
technological, human, and market. A model is presented that presents these three
domains and the factors they encapsulate.
This study shows that, although several components of each of the three
theoretical models are observed, none of the firms explicitly follows the paths of a
leading internationalization theory. A dominant model cannot be identified either.
Instead, firms appear to act intuitively and opportunistically, without a distinctive
internationalization strategy specific to SaaS. Firms that sell both SaaS and on-
premises software prove to internationalize based on their existing international
Exporting Business Software as a Service 19
infrastructure, while the firms exclusively selling SaaS internationalize much faster.
This indicates that SaaS specific strategies are feasible.
We see the development of a SaaS internationalization method (set) as future
work. Such a method (set) will assist SaaS firms in surveying markets, establishing
measures for success, making the leap, and extending business across different
dimensions. Furthermore, we hope to conduct a survey among SaaS companies,
similar to the Finnish software business surveys (R¨onkk¨o et al., 2009), that
specifically addresses the point of internationalization.
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Acknowledgements
The authors would like to thank the six firms and their representatives that made
this research possible. Thanks also to the reviewers for their helpful suggestions
and critical reading of the manuscript.
22 Reuwer, Jansen & Brinkkemper
SaaS Vendor
Country A Country B Country X
Strategy: Psychically and Physically Close Countries First
SaaS Vendor
Country A Country B Country Y
Strategy: Network Connections in Different Countries First
SaaS Vendor
Country A Country B Country Z
Strategy: Business Opportunities in Different Countries First
(a) Stage Theory
(b) Network Theory
(c) International Entrepreneurship Theory
...
...
...
Figure 1 Three Internationalization Strategies, being (a) Stage Theory, (b) Network
Theory, and (c) International Entrepreneurship Theory
Figure 2 Key Factors in the Internationalization of SaaS
Exporting Business Software as a Service 23
Table 1 Stage Theory Analysis for the Six Cases (i8n = internationalization, ST =
Stage Theory)
ERPComp AccComp PlagComp EntComp AdminComp AutComp
ST:
Resource
commitment
Already full
resource
commitment at
introduction
First sales from
the Netherlands,
then local offices
First sales from
the Netherlands,
then local salesmen
Full resource
commitment for
hybrid, joint-
venture for SaaS
Already full
resource
commitment at
introduction
Already full
resource
commitment at
introduction
ST: Market
knowledge
Extensive at
introduction, ever
increasing since
Minimal at
introduction, ever
increasing since
Minimal at
introduction, ever
increasing since
Extensive due
to acquisition
of international
competitor
Extensive at
introduction
Extensive at
introduction, ever
increasing since
ST:
Psychical
distance
Psychically close
countries are
preferred
Psychically close
countries are
preferred
Psychically close
countries are
preferred
Psychically close
countries are
preferred
Psychically close
countries are
preferred
Psychically close
countries are
preferred
ST:
Physical
distance
Minor role, but
physical customer
contact is crucial
Minor role, but
physical customer
contact is crucial
Major role,
physical customer
contact is crucial
Minor role, as long
as latency is low.
Physical customer
contact is crucial
Irrelevant, but
local offices or
partners providing
physical customer
contact are crucial
Minor role,
the physical
distance is merely
perceived on the
customer side
Network
Theory
Network does not
play large role
Network is used
extensively
International
integration
partners are used
Already
internationally
active, network
plays small role
Depends on
SaaS strategy of
platform provider
(Microsoft)
Network does not
play large role
IET Opportunism
over physical and
psychical distance
Opportunism
over physical and
psychical distance
Opportunism
over physical and
psychical distance
SaaS activities
take place in
internationally
based company
Opportunism
over physical and
psychical distance
Opportunism
over physical and
psychical distance
Data
location
Netherlands Netherlands Netherlands /
optional
Anywhere Platform provider
decides
Netherlands /
optional
Server
location
Netherlands Netherlands Netherlands /
optional
Anywhere Platform provider
decides
Netherlands /
optional
Support
center
Customer support
through regional
offices and online
Netherlands Netherlands Functional support
is provided locally,
Technical supp ort
centrally.
Netherlands Customer support
through regional
offices and online
Technical
i8n and
Localization
These processes
are important
issues, while
psychical distance
can hamper them
These processes
play an important
role in coping with
functional and
cultural differences
The product is
deliberately kept
rather simple to
simplify these key
processes
Hybrid:
Multilingual and
multi-legislation
products are
developed
A generic and
widely used
SaaS platform
is expected to
mitigate problems
regarding these
vital issues
These important
processes are
simplified by
the globalization
of standard
hardware,
software and
network protocols
... To take advantage of these opportunities, SMEs choose and build networks with partners carefully, which can be trusted to reduce risks and uncertainties. Ahmad (2014) and Reuwer et al. (2013) supported this study, which indicated that an international network pulled rapid born-global. These firms had established a significant global presence in a short timewithin 1-5 years of establishment. ...
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Studies on the internationalization process of SMEs have fascinated the attention of researchers around the world. The dynamics in the internationalization process of SMEs have attracted researchers' interest in analyzing the behavior and the factors that influence it with various theoretical approaches to contribute to the development of international business studies. This paper intended to provide an overview of the various theories applied in investigating SMEs' internationalization process. The review was conducted on 100 journal articles between 2013 and 2020. The investigation results show that 17 different theories have been identified in the internationalization process of SMEs and we classified them into five streams. Based on our findings, from those 17 theories, the five primary published theories in order are (1) Uppsala theory, (2) Network theory, (3) Resource-based theory, (4) international entrepreneurship theory, and (5) institutional theory. This study also provides suggestions and implications for future research. Keywords— Internationalization process; Internationalization SME theory; Small and Medium Enterprises (SMEs)
... International entrepreneurship is defined by Zahra & George (2002) as the ability to creatively identify and exploit international markets opportunities that bring competitive advantages and superior value for clients. Smaller companies have a more entrepreneurial attitude towards risks (i.e. they are more prone to taking risks that are more effectively managed) and adopt more flexible strategies (Reuwer et al., 2013). Also, relational resources detained by entrepreneurs (knowledge, experience, entrepreneurial skills) are critical to the success of the internationalization process. ...
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... Plenty of opportunities arise as economic and political barriers fall, as global trade is more and more accepted and modern technology makes it possible to get within reach of a larger customer base. Although much research has already been conducted on the subject of internationalization focused primarily on internationalization strategies and opportunities [4,6,11,13], little research has been conducted on the influence of internationalization on software product management activities. We regard software product management as "the discipline and business process governing a product from its inception to the market or customer delivery and service in order to generate the largest possible value to a business" [7]. ...
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The role of software product management within firms specialized in product software is of strategic importance, albeit complex to execute. When looking at the role of product management in an international context then, the aforementioned level of complexity tends only to increase. In this paper we present the results of two case studies conducted with software firms that already successfully entered and established themselves in international markets, addressing experienced challenges , issues, and notable differences between conducting product management activities in domestic and international markets. An overview of recommendations based on this research can support other software firms willing to make the step towards internationalization. If product managers take these recommendations into account, better informed decisions could be made and potential pitfalls avoided, leading to higher rates of success and progress when entering international markets.
... In marketing terminology the procedure in which companies recognise and categorise potential markets is known as international market selection (Francioni, 2014). In business environment, managers have to select international markets in an intelligent way (Reuwer et al., 2013). To select international markets, companies need to use suitable methods (Gaston-Breton and Martin, 2011). ...
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By choosing the best international market from a set of potential countries, firms plan to start new or expand existing international activities. In marketing literature, this process is known as international market selection or target market selection. In realistic situations, some of data of international markets cannot be provided accurately since they are imprecise. Some other criteria of international market analysis are dual-role, i.e., they may be classified either as an input or as an output, simultaneously. The quantity of such factors may influence relative attractiveness of international markets. Moreover, in international market selection, some factors are beyond control of decision-maker(s) and cannot be modified at discretion of management. These factors may affect final decision. As a non-parametric technique, data envelopment analysis (DEA) provides adequate ability for decision makers to select a set of international markets. In this paper, using ternary variable, a new DEA-based model is proposed for international market selection in the presence of imprecise data, dual-role factors, and non-discretionary inputs. The proposed model is able to take into account radial and non-radial measures, as well. A case study illustrates the application of the proposed model.
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ISO/IEC 29110 is intended to help very small entities in improving their software processes. However, this standard is not the only initiative devoted to help organizations in these matters. For instance, ITMark is an established method with an important background in terms of number and diversity of assessments. The aim of this paper is to present a method to assess ISO/IEC 29110 by means of the evaluation performed under the ITMark certification schema built upon an experience factory. To do so, in this paper, authors present, firstly, a mapping for ITMark to ISO/IEC 29110 and, secondly, a study to test the applicability of the assessments made by ITMark in the ISO/IEC 29110 environment taking into account the previous mapping. The main conclusion from this industrial experience is that ITMark can be used as a method for assessing very small entities. Copyright
Conference Paper
Independent software vendors need to grow beyond their domestic markets. Software producing organizations are faced with a great number of options and opportunities on how they choose to conduct internationalization. Interestingly, efforts conducted have a high failure rate and software companies rarely succeed at first. In this paper we present a systematic mapping study and the results of 20 interviews with CEOs in the Dutch software sector. This study highlights the most important decisions made during the process of internationalization: the drivers, the process planning, market selection, and the followed market entry strategy. The choices available to the key decision makers in the right market selection and entry strategy are most strongly influenced and limited by the product architecture, characteristics of the product and company, and the level of internationalization experience located within the independent software company. The findings from this research support decision making in internationalization projects by software firms and policy makers in finding support strategies for export missions.
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A network approach, as it is developed by some Swedish researchers in industrial marketing and international business (see e.g. Hägg 6 Johanson (ed.), 1982 and Hammarkvist, Håkansson & Mattsson, 1982) is compared with the transaction cost approach associated with Oliver Williamson (e.g. Williamson, 1975, 1979, 1981). The reason we make such a tomparison is that we often get questions from colleagues in the scientific community, suggesting that what we try to do is rather similar to what the transaction cost approach is doing.
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With the globalization of the world economy, interest in international entrepreneurship has increased rapidly over the past decade. One of the most important features of today's global economy is the growing role of young entrepreneurial new ventures. Through the 1990s, researchers' attention has centered on exploring the motivations for, the pattern of, and the pace of internationalization by new ventures (i.e., firms eight years old or younger). Invoking multiple theoretical perspectives, some researchers suggest that new ventures frequently become active players in the global economy soon after the birth of these firms. More recently, however, researchers have focused on examining the entrepreneurial activities of established companies (i.e., firms older than eight years), aiming to uncover the key patterns of innovative activities associated with successful internationalization. By doing so, researchers have sought to explain how international entrepreneurship may lead to superior financial performance among established firms.
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The Organisation for Economic Co-operation and Development predicts that the internationalization of businesses will accelerate in the 21st century. Our study examined how the risks of accelerated internationalization may be managed in 212 foreign market entries by 87 new ventures based in the United States. Findings suggested that ventures managed strategic international risks by exploiting simultaneous trade-offs among foreign revenue exposure, country risk, and entry mode commitment in each country.