No full-text available
To read the full-text of this research,
you can request a copy directly from the authors.
Internationalization of SMEs from Transition Economies: Institutional Perspective
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).
... The literature suggests that the two more used theories in EEPs are the internationalisation theory (process or sequential approach to internationalisation) (Lim et al. 1996;Singer and Czinkota 1994) and the resourcebased view (RBV) (Francis and Collins-Dodd 2004;Gençtürk and Kotabe 2001;Seringhaus and Botschen 1991;Seringhaus and Rosson 1998;Spence 2003;Faroque and Takahashi 2015). The first approach is aimed at understanding how the different agencies and programmes help firms in their internationalisation process, passing from one stage to another, or increasing their commitment into the international markets. ...
... EPPs have the objectives of assisting SMEs in overcoming market access, information, and operational barriers in foreign markets; competing in international markets (Freixanet 2012); fostering the process of experience and market knowledge acquisition; and increasing the level of commitment towards export activities and international expansion (Shamsuddoha et al. 2009;Singer and Czinkota 1994). This diversity of programmes has been commonly analysed by creating different groupings of programmes. ...
... One of the reasons for the obtained results, in contrast with previous research studies, is that the results highlighted in this study demonstrate that the effect of the external variables of the firm, such as EPPs, will depend largely on the economy's institutional framework (Li et al. 2013;Shirokova and Tsukanova 2013). Unlike large export markets that possess strong (Henseler et al. 2016); confidence interval based on 5000 permutations Export promotion programmes as export performance catalysts for SMEs: insights from an emerging economy government bodies, emerging economies such as Peru possess weak institutions, and oftentimes they do not provide the appropriate resources to facilitate internationalisation of SMEs (Hessels and van Stel 2011;Li et al. 2013;Shirokova and Tsukanova 2013). ...
The purpose of the study is to analyse the joint impact of external factors of small and medium-sized enterprises (SMEs), such as export promotion programmes (EPPs), which encompass trade mobility-, information-, education-, and training-related programmes, and internal factors of SMEs, which encompass export-related resources, preceding-year export performance, and its impact on current-period export performance. The study tests their relationship with structural equation modelling using a random sample of 95 exporting SMEs in an emerging economy, Peru. The results indicate that experiential knowledge provided by trade mobility-related programmes and export performance of the preceding year positively influence the resources of SMEs oriented towards export activity as well as current export performance. Moreover, the results highlight the need to review the efficacy and design of EPPs, acknowledging the available resources of SMEs as well as the internationalisation theories of the firm, in order to enhance their influence on the international development and export performance of SMEs. Finally, the study has extended the knowledge about emerging economies by showing the role EPPs play in SMEs’ export performance.
... The digital transformation of the economy affects entrepreneurial practices and changes approaches to enterprise management [17,20,31,44,58]. According to research, entrepreneurship is a substantial source of economic growth [13,49,52,55]. Entrepreneurship creates workplaces and develops new opportunities for professional fulfillment. ...
The study identifies the need to develop the entrepreneurial competencies of specialists in business and management in the digital economy age and reveals the understanding of opportunities and risks of the digital transformation of the economy. It provides a theoretical framework, based on a scientometric analysis of publications on digital economy with VOSviewer Software and an extensive literature review, emphasizing the necessity of entrepreneurial competencies in the digital economy. The results of the exploratory qualitative study show how undergraduate students in management and business explain what digital economy is and who is the manager in the digital age, and explain opportunities and threats that they associate with the digital transformation. The paper discusses the results and major problems concerning the students’ perception of the digital economy and a manager in the digital context. This study contributes to the research that focuses on the development of management and entrepreneurship in the digital economy.
The article discusses the factors of internationalization of new ventures from emerging economies on the sample of firms from Russia. The study detected a significant positive influence of entrepreneurs' global orientation and personal networks on the degree of internationalization of new entrepreneurial firms. It was also found that domestic market size and level of institutional development have negative impact on the degree of internationalization. Beside the degree of internationalization, the size of the domestic market was also involved in the negative influence on the scope of internationalization. A positive association with the scope of internationalization was linked to the global orientation of the entrepreneurs and the existence of norms for international expansion in the industry. The influence of industry technological intensity on the degree and scope of internationalization has not found any empirical evidence
Amidst the increasing interest in entrepreneurial firm internationalization research, the question of why many firms do not internationalize is relatively unaddressed. Our multi-country study examines whether non-internationalization is influenced more by domestic success or perceived entry barriers. The results of the study suggest that entry barriers are a significant predictor of non-internationalization, and that this is particularly the case for firms headquartered in North America and publicly-held firms. We conclude the article with suggestions for how entrepreneurial firms and policy makers might work collaboratively with firms and other countries to facilitate increased internationalization for firms in their constituencies.
This study introduces and validates a measure of country institutional profile for entrepreneurship consisting of regulatory, cognitive, and normative dimensions. Subscales based on data from six countries show reliability, discriminant validity, and external validity. The instrument provides researchers with a valuable resource for exploring why entrepreneurs in one country may have a competitive advantage over entrepreneurs in other countries and how specific country-level institutional differences contribute differently to levels and types of entrepreneurship.
The political economy literature investigates the determinants of foreign direct investment (FDI) based largely on aggregate data, ignoring the actual decision makers. The authors conduct a survey of U.S. chief executive officers— the actual decision makers—of corporations that have investments in Latin America to understand FDI inflows. The authors find that investment risk related to property-rights protection, adherence to rule of law, and an effective court system weighed most heavily in U.S. firm preferences. The results suggest that rather than stress democracy itself as a determining factor, researchers might better focus on the institutions found within democracies.
This study examines strategic process and export entry choice of small and medium manufacturing firms in Nigeria. The data was collected from a survey of 72 small and medium-sized manufacturers in Nigeria. Data were analyzed using descriptive statistics, t-test, and Pearson's product moment correlation analysis. Results show that firms' strategic choice to enter the export market was associated with entrepreneurial orientation. Entrepreneurs with high export orientation were exporters and were more involved in the export market than entrepreneurs with low export orientation. Findings also revealed that the most common barriers hampering export development among the firms surveyed include resource constraints, knowledge barriers, corruption, lack of export assistance, and poor infrastructure.
This paper is concerned with the effects of internationalisation on SMEs in countries that are becoming increasingly affected by market integration at a time when their economic structures are going through a process of radical transformation. Empirical data are drawn from recent surveys of SME managers in the food and clothing industries in Poland, Bulgaria and the Baltic States, which is compared with the results of similar surveys in the UK and Greece. The results show that the ability of SMEs in transition countries to compete in foreign and domestic markets, varies between sectors. In food processing, although some SMEs have been able to penetrate foreign markets, the main effect so far has been to increase the level of competition in domestic markets. The evidence shows that foreign market penetration by food processing SMEs in transition countries is often focused on markets in other transition countries rather than in Western markets. In the clothing industry, the effects of internationalisation are different because of the highly internationalised nature of the clothing market and the production system that supplies it. In this context, SMEs in countries such as Poland and Estonia particularly, have been able to attract subcontract type work from Western countries, based on their relatively low labour costs. However, as the Greek experience demonstrates, this type of production can be very volatile, disappearing almost as quickly as it is secured. Despite detailed differences between countries and between sectors, the evidence shows that in all the Central and East European countires (CEECs) featuring in the study, some SMEs in the emerging private sector are responding to new foreign market opportunities and, in the short term at least, managing to achieve competitiveness. However, there is also evidence that their current basis of competitiveness in foreign markets contains weaknesses which may affect their ability to sustain their export effort in the longer term. As far as SME managers in transition countries are concerned, the main priorities for government action to improve their ability to increase foreign market sales are assistance with export promotion and a reduction in the level of domestic taxation. The survey results show that although a significant minority of exporters in transition countries had been using external assistance to support their export effort, this was typically either on a fully paid for basis from consultants or informally from other firms or business associates rather than from trade organisations or formal business support organisations.
The aim of this paper is to contribute to international entrepreneurship theory by adopting a foreign market perspective when examining the links between network development and knowledge creation. Network development is argued to enhance the understanding of regional market structures and make firms more inclined − and better able − to create knowledge in foreign market business relationships (business relationships represent focal points in networks). The basis of this argument is that networks provide a multitude of opportunities for the exploitation of previously unexploited combinations of knowledge. Data were gathered from surveys conducted with an effective random sample of 188 small and medium-sized enterprises (SMEs) in Sweden. A LISREL-based analysis was performed to test the three hypotheses deduced from theory. Findings showed that network development has a direct positive impact on knowledge creation and that knowledge combination functions as a mediating construct between network development and knowledge creation.
Forty-four small, technology-based firms were clustered on the basis of size, age and degree of internationalisation. Three groups, (1) small, highly international, young firms (Group 1), (2) small, young, less international firms (Group 2) and (3) larger, older firms with a mid-level of internationalisation (Group 3), were identified. This paper studies the market selection, mode of entry and international expansion processes of these firms in relation to their degree of internationalisation. More recent firms begin to expand internationally at an early stage. The level of international success differs significantly (Groups 1 and 2). Group 2 firms expand rapidly into successive countries and regions and achieve lower levels of international success than Group 1 firms, which expand more rapidly within each market.
Purpose – Entrepreneurship and small businesses in Russia have been of academic interest for over 15 years. This paper seeks to bring together current knowledge concerning the phenomenon, and to suggest further directions for research.
Design/methodology/approach – The study consists of a systematic review of 48 refereed empirical articles on entrepreneurship and small businesses in Russia.
Findings – From the articles reviewed it appears that entrepreneurs in Russia use non-material resources to overcome the financial and institutional obstacles, which still seem to afflict the market. However, theoretical and methodological issues are, in many cases, poorly reported and this undermines the scientific rigour of the studies they report.
Research limitations/implications – Because of the wide scope of the studies reviewed the results included here provide somewhat broad-brush descriptions of the phenomenon. However, it is believed that the findings are valuable for an understanding of the current situation for entrepreneurship and small businesses in Russia. The findings may also stimulate more in-depth research in this increasingly important topic.
This paper examines the relationship of performance with product and international diversification on Japanese multinational firms from 1977 to 1993. We show the relationships between diversification and performance change over time through the use of multiple time periods and accounting for keiretsu membership. Results show that while diversity strategies vary between keiretsu and non-keiretsu firms, performance is not much different. Across time periods, performance varies considerably, but strategies are less variable. Product diversity has weak effects on firm performance only in one time period, while international diversification has negative profitability and positive growth consequences in in some periods. These results suggest first that diversification strategies and their effects on performance vary across time periods and generally produce some unexpected findings. We do not find strong interactive diversity effects. Copyright © 2000 John Wiley & Sons, Ltd.
Despite the fact that many firms in a wide range of industries in various countries internationalize at or near inception,
research on factors leading to the formation of born-globals has been limited to firms from advanced, open economies. In order
to give a voice to the phenomenon of Vietnamese founding born-globals, we conducted an exploratory, multiple-case study. Three
findings of this study are: (1) the major driver to the formation of Vietnamese born-globals is the entrepreneurs’ leadership
desire together with the need for short-term profits; (2) their choice of internationalization mode is influenced by market
conditions as well as the internationalization degree of the industries in which they find their business opportunities; and
(3) the reason why other motivators found in earlier studies do not apply lies in the peculiarity of the Vietnam context.
One of the issues facing Central and East European (C&EE) countries in the transformation from centrally planned into market-based economies is the need to develop a small and medium-sized enterprise (SME) sector. The potential role of SMEs includes generating employment and thus contributing to absorbing any labour surpluses which result from economic restructuring; using privatised property for production; contributing to the development of a diversified economic structure (including their role as suppliers to larger companies); and, in some cases, as a source of innovation (for a more detailed discussion see Smallbone, 1995). Moreover, it can be argued that the development of manufacturing SMEs is of particular significance in the transformation process because it is manufacturing (together with some parts of the service sector) that constitutes the economic base2 thus emphasising the potential role of the sector in generating external income and thereby contributing to the growth of the economy (Gudgin, 1982). In addition, the multiplier benefits of a given expansion in the manufacturing sector is likely to be greater than a similar growth in service sector activity. In the Baltic States there are additional factors which justify paying particular attention to manufacturing SMEs in policy terms. This is because of the need to modernise and re-orientate the manufacturing sector of the economy as part of a wider process of restructuring that involves a closure of some activities on the one hand, and the development of new activities on the other.
The dynamic capabilities framework analyzes the sources and methods of wealth creation and capture by private enterprise firms operating in environments of rapid technological change. The competitive advantage of firms is seen as resting on distinctive processes (ways of coordinating and combining), shaped by the firm's (specific) asset positions (such as the firm's portfolio of difficult-to-trade knowledge assets and complementary assets), and the evolution path(s) it has adopted or inherited. The importance of path dependencies is amplified where conditions of increasing returns exist. Whether and how a firm's competitive advantage is eroded depends on the stability of market demand, and the ease of replicability (expanding internally) and imitatability (replication by competitors). If correct, the framework suggests that private wealth creation in regimes of rapid technological change depends in large measure on honing internal technological, organizational, and managerial processes inside the firm. In short, identifying new opportunities and organizing effectively and efficiently to embrace them are generally more fundamental to private wealth creation than is strategizing, if by strategizing one means engaging in business conduct that keeps competitors off balance, raises rival's costs, and excludes new entrants. © 2003 by World Scientific Publishing Co. Pte. Ltd. All rights reserved.
Unstable government, an undeveloped legal system, overregulation, a virtually unfathomable business taxation system, a pervasive mafia, and an inadequate business infrastructure characterize the maze that Russian entrepreneurs must navigate in their attempts to create successful ventures. To better understand their attitudes and decisions in this hostile environment, we propose a framework for analyzing Russian entrepreneurship during the country's transition to a market-oriented economy. The framework draws upon the entrepreneurship and strategy literatures, and is illustrated primarily by the experiences of five entrepreneurial ventures we studied throughout the decade of the 1990s. Actions, based on the framework, are suggested for Russian entrepreneurs as well as Western executives who might do business with them, as ways of strengthening Russian entrepreneurship.
Exporting is an important source of revenues for many small and medium-sized U.S. companies in an emerging global economy. Although many factors are known to explain why companies begin to export, relatively little is known about why they decide to continue to export after their initial international transactions. Most small firms see exporting as a risky venture and many do not obtain immediate financial returns. This study of 138 small firms in North Carolina with exporting experience finds that although financial success is a crucial factor, financial gains alone do not fully explain the propensity of small companies to continue exporting. Firms that strongly value learning from international experience are more likely to continue exporting even when initial financial returns are disappointing.
Understanding sources of sustained competitive advantage has become a major area of research in strategic management. Building on the assumptions that strategic resources are heterogeneously distributed across firms and that these differences are stable over time, this article examines the link between firm resources and sustained competitive advantage. Four empirical indicators of the potential of firm resources to generate sustained competitive advantage-value, rareness, imitability, and substitutability are discussed. The model is applied by analyzing the potential of several firm resources for generating sustained competitive advantages. The article concludes by examining implications of this firm resource model of sustained competitive advantage for other business disciplines.
This study examined the antecedents and outcomes of the internationalization of 61 new high-potential ventures in the U.S. The results indicate that internationalization is directly related to the use of product differentiation as a source of competitive advantage, the international work experience of the board of directors, and size at the point of the IPO. The use of low cost, product differentiation, or innovation as a source of competitive advantage, and size at the point of the IPO were directly related to sales growth in the two-year period following the IPO. Finally, the level of Internationalization at the time of the IPO is positively related to earnings two years later.
The construct institutional profile is introduced as a means to conceptualize and measure country-level characteristics that affect organizations. A measurement instrument for institutional profile is developed and validated for the issue of quality management. Indexes for the regulatory, cognitive, and normative dimensions of institutional profiles are provided for ten countries.
How do organizations make strategic choices during the time of fundamental institutional transitions such as those sweeping numerous emerging economies? To answer this question, a two-phase model of institutional transitions is developed in this article. I focus on the longitudinal process to move from a relationship-based, personalized transaction structure calling for a network-centered strategy to a rule-based. Impersonal exchange regime suggesting a market-centered strategy. I then identify the points of inflection; predict strategic choices for incumbent, entrepreneurial, and foreign firms; and delineate their performance implications.
Unstable government, an undeveloped legal system, overregulation, a virtually unfathomable business taxation system, a pervasive mafia, and an inadequate business infrastructure characterize the maze that Russian entrepreneurs must navigate in their attempts to create successful ventures. To better understand their attitudes and decisions in this hostile environment, we propose a framework for analyzing Russian entrepreneurship during the country's transition to a market-oriented economy. The framework draws upon the entrepreneur,hip and strategy literatures, and is illustrated primarily by the experiences of five entrepreneurial ventures we studied throughout the decade of the 1990s. Actions, based on the framework, are suggested for Russian entrepreneurs as well as Western executives who might do business with them, as ways of strengthening Russian entrepreneurship.
We employed knowledge-based theory to shed light on international growth in entrepreneurial firms. We found earlier initiation of internationalization and greater knowledge intensity to be associated with faster international growth. However, contrary to expectations, firms with more imitable technologies also grew faster. The former results suggest that early pursuit of international opportunity induces greater entrepreneurial behavior and confers a growth advantage, whereas the latter call into question current views of the role of imitability in international growth.
] Based on in-depth interviews with French and Romanian SMEs from the textile and steel industry, this research aims at developing a measure of country-specific institutional profiles for exporting SMEs. For managers from both countries under study, the role of the institutional environment is seen as a major factor fostering SMEs' international development. The interviews – as well as a complementary literature review – allow one to identify and describe the regulatory, cognitive, and normative dimensions of the institutional environment of exporting SMEs. The scale suggested shall provide research and practice with a valuable instrument exploring why exporters in one country behave differently or may have a competitive advantage over exporters in other countries, and how specific country-level institutional differences leverage the different aspects of export behavior of international SMEs from different national settings. Potential implications for academicians, managers, and policy makers in future export-based studies are proposed.
Drawing upon network theory and institutional theory, this paper examines the influence of networks on the internationalization of Russian entrepreneurial firms. Our case analysis suggests that within the context of the Russian environment, networks play a much less important role in the internationalization process than it is usually assumed in the literature. For the Russian entrepreneurial firms examined in our study, the most important factor in their internationalization was their engagement in honest business practices that established trust and commitment in their relationships with international business partners. This study underscores the importance of the institutional context of an entrepreneurial firm’s country.
Recent studies have focused on the characteristics and policies of the state to explain the extent and causes of corruption, with little attention paid to the role played by firms. Consequently, the links between corporate governance and national governance have been unexplored. This paper summarises the results of the Business Environment and Enterprise Performance Survey (BEEPS) across 20 transition economies, providing an assessment of governance and corruption from the perspective of firms. The BEEPS is part of the global World Business Environment Survey being carried out by the World Bank. The survey design permits an in-depth empirical analysis of governance and corruption, unbundling governance into its component dimensions. This allows a more detailed quantitative assessment of corruption, a more nuanced understanding of the causes of the problem and as a result a stronger foundation for policy advice. Particular attention is paid to "state capture" by parts of the corporate sector (i.e. the propensity of firms to shape the underlying "rules of the game" including "purchase" of legislation and court decisions). The survey also provides measures of other dimensions of "grand corruption" such as that related to public procurement. Typically, crosscountry surveys suffer from a potential bias if firms have a tendency to systematically over- or underestimate the extent of problems in their own country. We implement a simple method for evaluating the extent of this "country perception bias" and find little evidence pointing to such bias in the BEEPS.
This study examines the forces driving outward FDI of emerging-market firms. Its contribution lies in integrating and testing insights from institutional theory, industrial organization economics and the resource-based view of the firm. This approach enables us to consider three different levels of analysis – firm, industry and country – and, thus, to distinguish between different sources of variation. Using a large firm-level Chinese dataset, we offer new evidence indicating that government support and the industrial structure of the home country of the investing firm play a crucial role in explaining outward FDI. By contrast, technological and advertising resources tend to be less important. The findings have important implications for theorizing. Although some firm-specific idiosyncrasies still play a role in explaining variations across firms in the same industry, the theoretical analysis and empirical results consistently indicate that foreign investment of Chinese firms is largely driven by their distinctive institutional and industrial environment.
Profiles of exporting and superior-performing private small and medium-sized enterprises (SMEs) are presented. Multivariate regression evidence suggests that SMEs focusing upon an offensive and market differentiation strategy of product/service protection is associated with the propensity and the intensity of exporting. Exporting SMEs are also associated with younger and manufacturing firms as well as firms with product or service quality and/or technology resources. The perceptions by SMEs of external environmental turbulence were not significantly associated with the exporting-dependent variables. Most notably, variables associated with exporting SMEs are not the same as those associated with superior firm performance. Moreover, exporting firms did not report superior levels of performance. Implications for policy-makers, practitioners and researchers are discussed.
Purpose – The purpose of this paper is to provide an integrated framework that conceptualizes multifaceted antecedents pertaining to international expansion of Asian emerging multinational enterprise (MNEs) in relation to firm performance. The author argues that the accelerated process of Asian emerging MNEs internationalization appears to be a historically significant change in the way business is conducted. Design/methodology/approach – The paper tests how internationalization expansion path, geographic scope, industry and firm characteristics affect Asian emerging MNEs performance in a sample of 115 Asian MNEs over the period 2003-2006. Findings – The results indicate that an emerging MNE's institutional heritage and its own internationalization strategy are likely to create specific preference for operating in differing geographic regions. On the other hand, the results also indicate that domestic growth rate, global market growth rate and R&D investment influence the degree of internationalization of Asian emerging MNEs. Research limitations/implications – Future studies may apply time series data and require additional empirical research using samples from other emerging markets such as Eastern European, Russia and South America. Addressing industry-specific effects, and/or examine the influence of company characteristics would clearly add to this study. Originality/value – Asian merging MNEs have certain advantages over large developed country's MNEs, including greater flexibility, efficiency, quality and advantage-seeking behavior, which allow an emerging multinational enterprise MNE to develop capabilities to succeed in the international markets.
The dynamic capabilities framework analyzes the sources and methods of wealth creation and capture by private enterprise firms operating in environments of rapid technological change. The competitive advantage of firms is seen as resting on distinctive processes (ways of coordinating and combining), shaped by the firm's (specific) asset positions (such as the firm's portfolio of difftcult-to- trade knowledge assets and complementary assets), and the evolution path(s) it has aflopted or inherited. The importance of path dependencies is amplified where conditions of increasing retums exist. Whether and how a firm's competitive advantage is eroded depends on the stability of market demand, and the ease of replicability (expanding intemally) and imitatability (replication by competitors). If correct, the framework suggests that private wealth creation in regimes of rapid technological change depends in large measure on honing intemal technological, organizational, and managerial processes inside the firm. In short, identifying new opportunities and organizing effectively and efficiently to embrace them are generally more fundamental to private wealth creation than is strategizing, if by strategizing one means engaging in business conduct that keeps competitors off balance, raises rival's costs, and excludes new entrants. © 1997 by John Wiley & Sons, Ltd.
The paper focuses on three interrelated themes: the regional dimensions of institutionalisation and entrepreneurship policies; dialogue and governance issues, which present enormous challenges in a situation where there is no recent tradition of selfgoverning organisations; and regulation, in a context where the role of the state in relation to business needs to be redefined. The data used are drawn from a number of studies of entrepreneurship in countries that include Poland, the Baltic States, Russia, Belarus, Ukraine, Uzbekistan and Moldova. The process of market reform requires a fundamental shift in the role of the state in the economy, as government replaces its roles as planner of resource allocation and price setter, owner and financier of enterprise activity through subsidies and transfers, with a role as regulator and facilitator of private enterprise activity, with all that involves. Not surprisingly, the experience in this regard has varied considerably between countries, despite the fact that they may share a common socialist heritage. The contrasting experience described in the paper reflects differences in the level of commitment to market reforms, as well as in the knowledge and resources available to the state to implement what is required. For countries from Central and Eastern Europe that have recently joined the EU, the process of Accession gave added impetus to the ongoing process of market reform. By contrast, in many of the CIS, the process of market reform has stalled, essentially because of a lack of recognition and commitment on the part of the state to creating the conditions to enable entrepreneurs to fulfil their role as generators of wealth and drivers of economic development. In such conditions, private businesses exist despite the policies and actions of government, although the extent of productive entrepreneurship is limited and the behaviour of entrepreneurs necessarily shaped by institutional deficiencies.
A model to explain the degree of internationalisation of SMEs is proposed and tested using data obtained from a survey of 207 Canadian exporters. Certain aspects of the domestic competitive strategy employed by a SME are shown to have a significant effect upon the chosen export marketing strategy. In turn, the degree of internationalisation attained by the SME is shown to be influenced by two aspects of export marketing strategy, namely the level of support offered to the foreign distributor, and the pricing strategy adopted for the chosen export market.
Explores the role of industrial districts in theinternationalization process of small- and medium-sized enterprises (SMEs).Geographical agglomeration has been shown to lead to development of businessnetworks, which suggests agglomeration may intensify and speed a firm'sinternational strategy, export performance and export intensity. Specifically,this analysis examines whether being located within an industrial districtaffects the export performance and intensity of Spanish SMEs. The study was based on 285 questionnaires (gathered in 2000) from SMEmanufacturing firms operating in the region of Valencia, Spain,andinvolved in international markets. Overall, firms located inindustrial districts had a distinct advantage over firms not inanindustrial district once the firmsdecided to compete ininternational markets. It was found that: (1) such SME firms had superior export performance; (2)client networks are positively correlated with export performance andintensity; (3) supplier networks are negatively correlated with exportperformance; (4) marketing advantage is positively correlated with exportperformance and intensity; and (6) firms engaged in global sectors haveabove-average export performance and intensity. (TNM)
The resource-based view of the firm is used to develop a causal model for export strategy and performance.After a discussion of the evolution of export research and the resource-based view of the firm, the conceptual model is presented.A number of hypotheses are suggested by the model, suggesting that the larger the firm and the higher the enterprise of the firm, the higher the technological intensity and degree of internationalization will be.It is also hypothesized that technological intensity is positively related to internationalization and that internationalization, in turn, is positively related to performance. Data from a comparative survey of 70 U.S. and 87 Canadian exporters were used to test these hypotheses.The survey was designed to measure each participating firm's size, enterprise, technological intensity, performance, and export intensity and diversity.The survey data match well with the theoretical model and support the hypotheses: enterprise, technological intensity, and firm size are good predictors of export strategy, and export strategy has a positive impact on firm performance. (SAA)
In a study of 257 new ventures from China, India, Mexico, and South Africa, we find support for the mediating effect of strategic early internationalization on international sales intensity. We argued that when new ventures from emerging markets internationalize early and with commitment, the legitimacy they acquire helps them overcome liabilities of newness and foreignness. We develop a typology of international new ventures that, based on strategic intent and timing of internationalization, distinguishes strategic early internationalizers from persistent, serendipitous, and long-term internationalizers. We show that strategic early internationalization accounts for over half of the explained variance in international sales intensity and either fully or partially mediates the effects of managerial knowledge and market orientation on international sales intensity.
We discuss and explore the effects of internationalization, an entrepreneurial strategy employed by small and medium-sized enterprises (SMEs), on firm performance. Using concepts derived from the international business and entrepreneurship literatures, we develop four hypotheses that relate the extent of foreign direct investment (FDI) and exporting activity, and the relative use of alliances, to the corporate performance of internationalizing SMEs. Using a sample of 164 Japanese SMEs to test these hypotheses, we find that the positive impact of internationalization on performance extends primarily from the extent of a firm's FDI activity. We also find evidence consistent with the perspective that firms face a liability of foreignness. When firms first begin FDI activity, profitability declines, but greater levels of FDI are associated with higher performance. Exporting moderates the relationship FDI has with performance, as pursuing a strategy of high exporting concurrent with high FDI is less profitable than one that involves lower levels of exports when FDI levels are high. Finally, we find that alliances with partners with local knowledge can be an effective strategy to overcome the deficiencies SMEs face in resources and capabilities, when they expand into international markets. Copyright © 2001 John Wiley & Sons, Ltd.
The internationalization of new ventures from emerging economies to developed economies remains an unfilled gap at the intersection of the literature between international entrepreneurship and strategy in emerging economies. What drives some (but not all) new ventures from emerging economies to enter developed economies? We address this question by developing a comprehensive framework based on the three leading perspectives on strategy—industry-based, resource-based, and institution-based views. A series of propositions are proposed to explore the underlying logic behind new ventures' entrepreneurial entries from emerging to developed economies.
Drawing on social capital theory and the international entrepreneurship literature, we develop hypotheses relating the structural, cognitive and relational aspects of the international network of SME CEOs to two internationalization outcomes - speed and performance. The study is based on a sample of 155 Czech SMEs covering a broad range of manufacturing industries. Our findings indicate that firms sharing a common language with their international ties are able to internationalize faster than firms that do not share a common language. Moreover, we observe that geographically diverse networks contribute to superior performance. Extensive reliance on personal contacts hinders the performance of the first international venture.
In order to be able to seize the opportunities that a dynamic operating environment opens up, entrepreneurial firms have to
reconfigure their existing asset base and processes. This study explores the effect of an entrepreneurial orientation and
a firm's reconfiguring capabilities on international performance by using survey data from 217 manufacturing and service organizations.
Our findings indicate that a firm's entrepreneurial orientation and reconfiguring capabilities have an effect on its international
performance and provide empirical support for the dynamic capability view of the firm. Entrepreneurial behavior combined with
organizational reconfiguring capabilities constitutes a potential source of competitive advantage.
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.
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.
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
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.
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.
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.