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Internationalization of SMEs from Transition Economies: Institutional Perspective

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Abstract

Internationalization of small and medium-sized enterprises (SMEs) has been actively studied in terms of international entrepreneurship since the 1990s (Coviello and McAuley, 1999; De Clercq, et al., 2005; Cieslik and Kaciak, 2009). The key assumption for understanding internationalization is as follows: in comparison with large companies the probability of SMEs’ internationalization is much lower because they are often constrained by scarce resources (Hollenstein, 2005). The research on internationalization determinants influencing SMEs includes the analysis of the impact of learning-oriented factors on firm readiness to enter a foreign market (Autio et al., 2000; Burpitt and Rondinelli, 2000; De Clercq et al., 2005); the analysis of social and business entrepreneurial networks during the process of internationalization (Yli-Renko et al., 2002; Kiss and Danis, 2010; Musteen et al., 2010; Tolstoy 2010; Ellis, 2011); the analysis of the impact of firms’ internal capabilities and resources on internationalization (Yiu et al., 2007; Hessels and Terjesen, 2010) and other factors. Concurrently, scholars pay more attention to the influence of institutional context and national business conditions on the speed and degree of SMEs’ internationalization (Descotes et al., 2007; Yamakawa et al., 2008; Cieslik and Kaciak, 2009).

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Multinational companies from emerging and developing economies (EMNCs) are becoming major players in the globalized world economy and are likely to wield growing influence on economic dynamics in OECD, emerging, and developing countries alike. This paper presents data gathered from Turkish firms investing in the transitional economies of the Central Asian Republics. Using an integrated risk management framework (Miller 1992) as a platform for investigating executives' perceptions of environmental uncertainty in entry mode decisions, we extend the framework through the addition of variables, such as corruption, which synthesise institutional level factors. The findings indicate that greater ethical-societal uncertainties result in a preference for joint venture over wholly owned subsidiary. There is a strong correlation between the perceived risk of intervention and joint venture entry mode. We find only limited support for the Uppsala internationalisation model.
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Drawing from entrepreneurship, cognition, and international business theory, this paper develops a model integrating individual-level and firm-level characteristics to provide an entrepreneurial cognition perspective on the internationalization of small and medium size ventures. The model is tested on a sample of Spanish ventures using structural equation modeling techniques (partial least squares). Support is found for the central role of cognition and risk perception of CEOs in explaining the implementation of international expansion strategies for their firms.
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This paper examines the role of social networks in the internationalization process of new ventures in the context of transition economies. We introduce a conceptual model in which the relationship between various dimensions of an entrepreneur’s network and new venture internationalization speed is contingent upon a country’s stage of institutional transition. We theorize that strong national ties and weak international ties, accessible through brokers, contribute to speedier new venture internationalization in contexts characterized by fundamental institutional upheaval. We also theorize that the value of various structural aspects of an entrepreneur’s network changes as transition progresses. KeywordsSocial networks-Transition economies-Internationalization speed-New venture internationalization
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A growing body of research on international entrepreneurship suggests that new ventures have succeeded in entering international markets by creatively exploiting their tangible and intangible technological resources. Using the resource-based view of the firm, this paper explores the impact of leveraging selected tangible and intangible technological resources on the speed and degree of sales internationalisation among US software new ventures. Even though R&D investments are not significant predictors of the speed or degree of sales internationalisation, technological networks and technological reputations are. The interactions of networks and reputation with R&D spending are also positively and significantly associated with higher sales internationalisation. Technological networks also interact positively with R&D spending to expedite sales internationalisation, but the interaction of these investments with technological reputations is not significant. The results show that intangible technological resources play an important role in the internationalisation of software new ventures' sales. The implications of the findings for future international entrepreneurship research are discussed.
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The set of technological opportunities in a given industry is one of the fundamental determinants of technical advance in that line of business. We examine the concept of technological opportunity and discuss three categories of sources of those opportunities: advances in scientific understanding and technique, technological advances originating in other industries and in other private and governmental institutions, and feedbacks from an industry's own technological advances. Data from the Yale Survey on Industrial Research and Development are used to measure the strength of various sources of technological opportunity and to discern interindustry differences in the importance of these sources. We find that interindustry differences in the strength and sources of technological opportunities contribute importantly to explanations of cross-industry variation in R&D intensity and technological advance.
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This paper develops a model of the international growth of technology-based new firms (TBNFs) by drawing on the social capital theory and the knowledge-based view of the firm. The model aims at explaining the role of intra- and inter-organizational relationships in building the firm’s distinctive knowledge base and in achieving international growth. It is hypothesized that internal and external social capital influence the acquisition and creation of knowledge, and that knowledge is a key resource driving the international growth of TBNFs. The model also takes into account the influence of growth orientation on international growth. The model is tested with longitudinal growth data from Finnish TBNFs. Structural equation modeling provides support for the hypotheses. The results suggest highly relevant practical implications for entrepreneurs: by fostering social capital within the firm and in external relationships, significant benefits can be achieved for the firm’s knowledge base and international growth.