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2016, Vol. 4, No. 4 DOI: 10.15678/EBER.2016.040403
Identification of Linkages between the Competitive
Potential and Competitive Position of SMEs
Related to their Internationalization Patterns
Shortly after the Economic Crisis
Piotr Trąpczyński, Barbara Jankowska, Marlena Dzikowska, Marian Gorynia
A B S T R A C T
Objective
:
We aim to identify internationalization profiles of SMEs for the period
immediately following the global economic crisis (years 2010-2013) and characterise
them with reference to the firms' competitive potential during the crisis (year 2009),
and their competitive position at the end of the analysed period.
Research
Design
&
Methods
:
The study
is based on a complementary data set de-
rived from secondary (AMADEUS database) and primary sources of information (com-
puter assisted telephone interviews with top managers) for 553 micro, small and
medium firms located in Poland. We conduct a cluster analysis to identify different
internationalization profiles of SMEs for the years 2010-2013.
Findings:
In the year of the global economic crisis ambitious investors on average had
at their disposal substantially better competitive potential than the remaining two
groups. Ambitious exporters were better equipped than cautious internationalizers
only in terms of human resources, intangible resources and quality control.
Implications
&
Recommendations:
Policy support should be particularly oriented
towards supplying information about foreign markets and fostering firms in an opti-
mal allocation of their resources.
Contribution
&
Value
Added:
The study suggests that the strategy of diversifying
international markets during the economic crisis and recovery can be a means of
improving performance and reducing excessive dependence on fluctuations in key
markets.
Article type: research paper
Keywords: internationalization; SME; economic crisis; Poland; competitiveness
JEL codes: F23, F44, L25, M16
Received: 6 March 2016 Revised: 28 June 2016 Accepted: 29 July 2016
Suggested citation:
Trąpczyński, P., Jankowska, B., Dzikowska, M., & Gorynia, M. (2016). Identification of Linkages
between the Competitive Potential and Competitive Position of SMEs Related to their Internation-
alization Patterns Shortly after the Economic Crisis. Entrepreneurial Business and Economics
Review, 4(4), 29-50, DOI: http://dx.doi.org/10.15678/EBER.2016.040403
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Piotr Trąpczyński
, Barbara Jankowska, Marlena Dzikowska, Marian Gorynia
INTRODUCTION
Poland is often regarded as a country, which had not been significantly affected by the
global economic crisis. In fact, Poland’s annual GDP growth in 2009 amounted to 2.63%
as opposed to the average for OECD members of -3.94% (World Bank, 2012). Undoubt-
edly, the expansion of a nation's exports has positive effects on the growth of the econ-
omy as a whole, as well as on individual firms (Cavusgil & Nevin, 1981). Additionally, an
extensive network of international operations allows firms to react swiftly to unexpected
declines in demand or increases in production factor prices in both domestic and inter-
national markets, as it allows to shift sales to customers in more munificent environ-
ments or benefit from operational flexibility and move operations to less costly locations
(Kogut & Kulatilaka, 1994; Roberts & Tybout, 1997). At the same time, the capacity of the
firms to react actively to the challenges brought by the crisis, deeply influences the abil-
ity of the whole economy to recover from it. From this perspective changes in interna-
tionalization level of companies during economic crisis period is an interesting research
area worth further investigation. It is especially important in terms of a country that was
performing relatively well in terms of its economic results during the global economic
crisis (Poland) and relations of international expansion issue with aspects of firm compet-
itiveness in general. Therefore, the scientific problems undertaken in this paper is the
identification of internationalization profiles of Polish SMEs for the period following
global economic crisis and their background in terms of the competitive potential pos-
sessed by those companies before that period and the competitive position occupied by
them at its end.
Macroeconomic data indicate that changes in terms of Polish companies involve-
ment into foreign markets were taking place during the global economic crisis. This evi-
dence pertains to the most advanced form of firm internationalization, i.e. foreign direct
investment (FDI): net outflows from Poland in 2009 grew by 21.51%, as compared to
a sharp decline of 32.85% for the OECD group. This can reflect a relatively high immunity
of Polish firms to the economic downturn and increase in Polish companies’ interest in
expansion to foreign markets (Gorynia, Nowak, Trąpczyński & Wolniak, 2015b). Still, the
export of goods and services from Poland in 2009 decreased by 6.28%, and it was
accompanied by a decrease in import of goods and services amounting to 12.38%
(as opposed to a decline of respectively 11.40% and 11.76% for the OECD group) (World
Bank, 2016).
Adopting a microeconomic perspective towards Polish companies, in particular small
and medium enterprises (SMEs), extant studies point to clearly negative effects of the
crisis for domestic firms, including inter alia the decline of orders, sales, delayed or can-
celled payments (Orłowski, Pasternak, Flaht & Szubert, 2010), decline in corporate value
and increase in costs (Grądzki & Zakrzewska-Bielawska, 2009; Brojak-Trzaskowska
& Porada-Rochoń, 2012). Additionally, the study of Zelek and Maniak (2011) suggest that
SMEs most frequently recurred to defensive rather than offensive reactions to the crisis.
Furthermore, in the context of Polish SMEs there was evidence of a rather low perceived
effectiveness of expansion to new markets (Burlita, Bursiak, Grzesiuk, Lachowska, Mani-
ak, Świergiel & Zelek, 2011). Nevertheless, in the post-crisis time firms can respond to
changes in external settings by inter alia extending or limiting their international opera-
Identification of Linkages between the Compet
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tions, and deepening or shallowing their internationalization level. Thus, the aim of our
study is threefold. Firstly, we aim to identify the internationalization profiles of Polish
SMEs in terms of their internationalization after the global economic crisis (years 2010-
2013). For this purpose we look at the intensity of internationalization in terms of its
breadth and depth Second, our research is to detect whether the most ambitious inter-
nationalization behaviour described by the changes in its depth and breadth can be asso-
ciated with possessing a superior competitive potential. Third, our investigation is to
discover any links between the changes in the depth and breadth of internationalization
and competitive position of the firms.
We set out by outlining the conceptual background behind internationalization, firm
competitiveness, as well as their mutual relationships. We then use existing literature on
the effects of economic crisis on competitiveness and internationalization of firms to
formulate hypotheses related to the interplay of firm internationalization and competi-
tiveness under crisis conditions. Subsequently, we present the methodology of our em-
pirical data collection, as well as the findings of the related cluster analysis and the
Kruskal-Wallis H test. In the final part of the paper, we discuss the findings and highlight
their implications.
LITERATURE REVIEW
Firm Internationalization and Competitiveness
Welch and Luostarinen (1988, p. 36) define firm internationalization as “the process of
increasing involvement in international operations”. However, business reality clearly
indicates that sometimes firms tend to limit their international commitment. Particularly
for firms with less advanced international operations the probability of exiting foreign
markets is high (Benito & Welch, 1997). In fact, Benito and Welch (1994) argue that firms
learn throughout the process of internationalization, thus adjusting their approach to
risk and paying greater attention to subsequent expansion steps. Moreover, since both
organizational and environmental complexity rises with the widening of a firm's interna-
tional operations (Verbeke, Li & Goerzen, 2009), Calof and Beamish (1995) argue that
internationalization is related to adapting the firms’ operations to international envi-
ronments, which pertains to their strategy, structure and resources.
One of the key questions in the research on internationalization is whether the in-
crease of its degree is beneficial to firm performance (Verbeke, Li & Goerzen, 2009).
Meanwhile, the related academic debate remains inconclusive (Matysiak & Bausch,
2012). It has been argued that the predominant focus on the direct link between interna-
tionalization degree and performance is not entirely legitimate, as performance is a de-
rivative of its capabilities, leveraged in international markets (Luo, 2002). Thus, in order
to account for the interplay of resources, internationalization, and performance, it
appears legitimate to explore the concept of firm competitiveness.
In the presence of numerous determinants of competitiveness, it is relevant to de-
compose this concept into specific dimensions (Gorynia, Jankowska & Tarka, 2013; Buck-
ley, Pass & Prescott, 1988; Wach, 2014). According to the model of Gorynia (2004; 2005),
firm competitiveness can be divided into competitive potential, competitive strategy and
competitive position. However, even the deconstruction of the competitiveness concept
into competitive potential, competitive strategy and competitive position still does not
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Piotr Trąpczyński
, Barbara Jankowska, Marlena Dzikowska, Marian Gorynia
allow to conduct its measurement, and therefore, all those dimensions need to be oper-
ationalized into variables. Due to the aims of this paper our understanding of competi-
tive potential and competitive position are of special importance. In regard to competi-
tive potential, answering to an issue raised in the literature (Collins, 1991; Porter, 1991;
Dess, Gupta, Hennart & Hill, 1995; Spanos & Likoukas, 2001; Sheehan & Foss, 2009), the
perspective applied in the paper combines competences (Porter, 1985) and resources
(Wernerfelt, 1984; 1995; Prahalad & Hamel, 1990; Barney, 1991; 2002; Barney & Clark,
2009) as sources of a company’s competitiveness. Such approach has been also suggest-
ed in some previous studies refering to firm competitiveness (Dzikowska, 2014).
On the other hand, competitive position can be defined as the result of market eval-
uation of a firm's offering. It reflects constant rivalry between competitors and since that
it has a dynamic character (Porter, 2006). Variables expressing this dimenssion can be
classiffied into three basic groups: financial results (i.e. profits, rate of return on assets,
rate of return on investments etc.), market results (i.e. profits, market shares etc.) and
shareholders results (i.e. shareholder total return, economic value added etc.) (Richard,
Devinney, Yip & Johnson, 2009). Additionally, the mentioned variables can be expressed
as objective measures (nominal values) or subjective ones (evaluations of respondents).
It is easy to notice that the above mentioned competitive dimensions are inter-
linked. Competitive positions are results achieved thanks to the competitive potential
used during a competition process, conducted according to a scheme set by a company’s
competitive strategy that takes into account environmental conditions (Dzikowska, 2014;
Jankowska, 2011).
The achievement of a given competitive position is determined by the possession or
lack of competitive advantage, which pertains to the ability to survive in the middle- and
long-run. Competitive advantage results from “a skilful exploitation of existing potential
with the use of appropriate competitive instruments” (Gorynia, Jankowska & Tarka,
2013, p. 28).
The Role of Internationalization Depth and Breadth during Economic Crisis
Many international business studies focus on the relationship between widely under-
stood enterprise’s internationalization and it’s performance. However, at it was already
mentioned, the results remain inconclusive. While some results indicate that the rela-
tionship between the mentioned variables is linear and positive (Vernon, 1971; Grant,
1987) or negative (Collins, 1990), others suggest existanse of U-shaped (Qian, 1997;
Elango & Pattnaik, 2009), reverted U-shaped (Ramaswamy, 1995; Gomes & Ramaswamy,
1999) or S-shaped (Contractor, Kundu & Hsu, 2003) relationship. In a call to better ex-
plain the performance effects of internationalization, it has been argued that further
studies should explore the actual substance of internationalization, rather than simple
measures like the share of foreign sales (Verbeke, Li & Goerzen, 2009). While most stud-
ies still focus on the effect of the share of foreign sales on firm performance (for an over-
view see Matysiak & Bausch, 2012), there is also empirical evidence that it is FDI that
affects economic outcomes in international markets (Fang, Wade, Delios & Beamish,
2012; Luo, 2002). Hence, we argue that the breadth of internationalization should be
distinguished from its depth, the former meaning the number and diversity of foreign
markets served by the firm, while the latter referring to the advancement of the com-
mitment of resources to foreign markets. In fact, as it has been argued, the influence of
Identification of Linkages between the Compet
itive Potential and
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internationalization on firm competitiveness is contingent upon its stage of advancement
(Trąpczyński & Wrona, 2013), which can be measured both along its depth and breadth.
The ability of firms to sustain a favourable competitive position and even improve
financial performance during the period of crisis can be enhanced by the possession of
appropriate competitive potential in terms of product, process and organizational inno-
vativeness (Antonioli, Bianchi, Mazzanti, Montresor & Pini, 2011; Köksal & Özgül, 2007).
Lee, Beamish, Lee and Park (2009) argue, based on their study of Korean exporters dur-
ing the Asian crisis that firms with a leading market position were the most international-
ized. Meanwhile, this relationship was positively moderated by the possession of above-
average R&D capabilities (Lee et al., 2009). In the same vein, Filippov and Kalotay (2011)
argue that foreign operations of firms whose strategic position was strong already before
the crisis, were able to grow more quickly throughout the crisis. As far as the depth of
internationalization, i.e. the role of FDI in foreign expansion, is concerned, it has been
argued that the crisis increases the propensity of firms to raise control of foreign opera-
tions through capital ownership (Williams & Martinez, 2012). In fact, foreign operations
with a higher investment of the parent firm show higher survival chances (Chung
& Beamish, 2005). Another argument for the particular role of internationalization depth
during the crisis pertains to the acquisition mode. In fact, research indicates that reces-
sion conditions favour high-performing acquisitions as compared to pre- and post-crisis
conditions, which can be related to the emerging takeover opportunities (Wan & Yiu,
2009). Given the above, we propose that:
H1:
Higher competitive potential of SMEs at the outset of the economic crisis is
characteristic for firms that increase their internationalization depth rather
than breadth thorough the post-crisis period.
The gross financial results of Polish exporters declined from 44.4 billion PLN in the
first half of 2008 to 34 billion PLN in the first half of 2009. However, firms specialised in
export (whose share of export in total revenues exceeds 70%) managed to increase their
results in the same period from 9.2 billion PLN to 12.2 billion PLN (Wołodkiewicz-
Donimirski, 2010). Likewise, Amendola, Ferragina, Pittiglio & Reganati (2012) found that
Italian exporters from different sectors had higher survival chances, although this rela-
tionship was also affected by their liquidity and level of debt. In a similar vein, exporters
knowing a variety of host countries and having a network of foreign contacts, were more
able to cope with uncertainty related to economic risk, thus achieving higher perfor-
mance gains (Jansson, Hilmersson & Sandberg, 2010).
In the light of extant research, an extensive network of international operations
allows firms to react swiftly to unexpected declines in demand or increases in production
factor prices in both domestic and international markets, as it allows to shift sales to
customers in more munificent environments or benefit from operational flexibility and
move operations to less costly locations (Kogut & Kulatilaka, 1994; Roberts & Tybout,
1997). During the crisis, enhancing internationalization depth in a narrow number of
locations may not necessarily be an appropriate solution, since firms seek to limit their
investment risk in locations with higher uncertainty (Hryckiewicz & Kowalewski, 2010).
In fact, the economic crisis even intensifies the phenomenon of international divestment
(Benito & Welch, 1997; Filippov, 2011). Hence, we argue that it is the firms which diversi-
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Piotr Trąpczyński
, Barbara Jankowska, Marlena Dzikowska, Marian Gorynia
fy risks under crisis conditions by extending internationalization breadth more intensively
that will enjoy higher performance gains (Figure 1):
H2:
The improvement of competitive position of SMEs shortly after the economic
crisis is more positive for firms that increase their internationalization breadth
rather than depth.
Figure 1. Analytical framework
Source: own study.
MATERIAL AND METHODS
Objective, Methods, Variables and Operationalisation
The objective of the presented study is the identification of the linkages between the
competitive potential and competitive position of SMEs in Poland shortly after the eco-
nomic crisis with regard to their internationalization patterns. To meet this objective we
conducted the in-depth literature studies and then we collected primary data on the
topic using computer assisted telephone interviews (CATIs). CATIs were conducted with
firms fulfilling particular criteria presented in the next section and with the use of a ques-
tionnaire. The in-depth critical literature studies proceeded and supported the design of
the questionnaire. The results of the literature studies were exploited to properly define
the research variables and their measures. The initial version of the questionnaire was
discussed with the representatives of firms that were to participate in CATIs and later
updated according to their comments. It was necessary to test the the accuracy of the
face validity of the questionnaire and check the understanding and unambiguity of ques-
tions. Then the authors conducted the pilot study among 154 firms. This allowed for the
preparation of the final version of the questionnaire. The questionnaire referred to the
competitiveness of the firms, intensity of their internationalization, diversified external
circumstances related to demand, competition and resource conditions the firms had to
cope with. Nevertheless in the presented paper the authors report just on the results
related to the internationalization intensity and the competitiveness of the firms under
study. The dimensions of competitiveness of the firms in the years 2009, 2010, 2011,
2012 and 2013 were evaluated with the use of a 7-point Likert scale, with the range of
<-3; 3>, where the response -3 stood for "the company was much worse than competi-
tors”, and the 3 meant “the firm has been much better than the competitors” (Chang,
Chen & Huang, 2015; de Jong, van Dut, Jindra & Marek, 2015; Fernández-Mesa & Alegre,
Competitive
potential
Competitive
position change
Internationalization
depth
Internationalization
breadth
H1
H2
Identification of Linkages between the Compet
itive Potential and
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35
2015; Nguyen & Rugman, 2015). The internationalization issue was evaluated with re-
gard to the export intensity and intensity of foreign investment.
Table 1. Operationalisation of variables
Variable Operationalisation Internal
consistency
Internationalization depth
FDI intensity (IFDI)
The number of new FDI projects undertaken by a firm
diminished by the number of previous FDI projects
abandoned by a firm in the period 2010-2013.
Export intensity (EXPI) The share of export in total sales of the company in the
period 2010-2013.
Internationalization breadth
Number of new foreign
markets in the portfolio
of markets (NFM)
The number of new foreign markets a firm entered in
the period 2010-2013 diminished by the number of
previous markets a firm left in the period 2010-2013.
Competitive potential
in the crisis period
(2009)
13 variables on a 7-point Likert scale, where -3 stands
for "much worse than direct competitors”, an 3 stands
for "much better than direct competitors”. The set of
variables included resources and competences.
Resources
Material resources, human resources, intangible re-
sources (knowledge, brand, patents, etc.); financial
resources.
Cronbach’s
Alpha
(2009) = 0.974
Competences
Logistics (performance and efficiency), production (per-
formance and efficiency), marketing and sales (effec-
tiveness and efficiency), service (effectiveness and effi-
ciency), supplies (performance and efficiency), technolo-
gy (advancement and efficiency), management of hu-
man resources (efficiency and performance), firm man-
agement systems (efficiency and effectiveness), quality
control (efficiency)
Competitive position in the crisis period and shortly after (years 2009 and 2013 respectively)
Subjective measures
5 variables (profitability, sales growth, market share,
overall financial condition, customer satisfaction) evalu-
ated with the use of 7-point Likert scale, where
-3 stands for "much worse than direct competitors”,
3 stands for "much better than direct competitors”
Cronbach’s
Alpha
(2009) = 0.949
(2013) = 0.940
Objective measures
4 variables related to the financial position of a firm: the
profit margin (EBIT/revenues), sales growth (based on
company revenues - year to year), return on equity
Source: own study.
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Piotr Trąpczyński
, Barbara Jankowska, Marlena Dzikowska, Marian Gorynia
To analyse primary data we applied the following statistical methods: two-step clus-
tering technique, the post-hoc test descriptive statistics and non-parametric analysis of
variance. Firstly, a hierarchical cluster analysis based on Ward’s minimum variance tech-
nique was carried out in order to identify the most stable number of clusters for the
proposed solution. To distinguish the clusters we used two variables – internationaliza-
tion breadth and internationalization depth (Table 1). The Cornbach’s alfa was applied to
check the reliability of indicators used to measure the construct of the competitive po-
tential and competitive position (Table 1). Secondly, a K-means cluster analysis was per-
formed to verify the hierarchical cluster analysis. To be more confident about the num-
ber of clusters that were to be indicated for the K-Means cluster analysis we applied
additional measure suggested by Mojena (1977) also known as the upper tail rule.
In order to check the differences between the variables in relation to the generated
clusters, the F-test was applied. Then the post hoc test – Games Howell test was con-
ducted.
In the next step we characterised the clusters with regard to internationalization and
evaluated the competitive potential and position of firms in the identified clusters using
descriptive statistics. Last but not least, we checked whether there are any statistically
significant differences among the clusters with regard to their competitive potential and
position using the Kruskal-Wallis non-parametric analysis of variance.
Sample and Time Frame
The study is based on data from the AMADEUS database and primary data from comput-
er assisted telephone interviews with top managers of 553 micro, small and medium
firms located in Poland and operating in 7 manufacturing industries defined according to
NACE Rev. 2 at the level of divisions (Table 2). The delimitation of the sectoral back-
ground of sample firms was determined by a prior analysis with the use of linear order-
ing of objects (Dzikowska, Gorynia & Jankowska, 2015). The latter’s aim was to identify
industries in which firms did relatively well during the economic crisis (division 10, 17, 25,
32) in Poland and those that had difficulties with returning to pre-crisis performance
(division 14, 15, 24). Subsequently, a ranking of industries was developed. The industries
included in our study encompass 44% of firms registered in Poland and operating in the
manufacturing sector.
Our proprietary electronic database featured complete contact and financial records
for a total of 2533 firms representing the 7 selected industries
1
. Thereof, 750 firms were
contacted in July and August 2015 and 701 completed questionnaires were accepted as
reliable data, resulting in an effective response rate of 25%. Among those 701 compa-
nies, there are 553 micro, small and medium entities, thereafter called SMEs for the
purpose of this study. The majority of SMEs represent division 10 (242 entities) and divi-
sion 25 (190 entities) which are industries that coped relatively well with the crisis. The
criteria used to identify the SMEs was the number of employees in 2009 indicated by
respondents in questionnaires.
The timeframe of the study embraces the period 2009-2013. The year 2009 is recog-
nised as the crisis period, while the years 2010-2013 represent the post-crisis time. The
1
That is the number of entities in the database without records related to firms that participated in the pilot
study that was conducted by the authors in 2014.
Identification of Linkages between the Compet
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first symptoms of the global economic crisis in Poland were visible in the second half of
2008, hence the year 2009 was defined as the period of the crisis. The growth of GDP in
2009 was 1.79%, down from 5.13% in 2008. In 2010, GDP growth recovered to the level
of 3.88% (World Bank, 2015).
Table 2. Sectoral structure of the sample – number of firms from particular divisions (n = 553)
Division Description of activity ≤ 9 employ-
ees
10-49 em-
ployees
50-249
employees
Total
number
Division
10
manufacture of food
products 15 80 147 242
Division
25
manufacture of fabricated
metal products, except
machinery and equip-
ment
19 89 82 190
Division
17
manufacture of paper and
paper products 0 19 30 49
Division
24
manufacture of basic
metals 4 8 10 22
Division
32
manufacture of other
manufacturing 4 9 8 21
Division
14
manufacture of wearing
apparel 0 14 9 23
Division
15
manufacture of leather
and related products 1 4 1 6
Source: own study.
RESULTS AND DISCUSSION
Identification of the most Ambitious Internationalizers – Cluster Analysis
First, the authors used a hierarchical clustering which created a hierarchy of clusters. The
applied algorithms for hierarchical clustering were agglomerative. The obtained dendro-
gram allowed to determine Euclidean distances between the analysed units. To deter-
mine the appropriate number of clusters the authors examined the fusion curve and it
suggested that there are 3 clusters of firms differ in terms of their internationalization
breadth and depth. The suggestion was supported by the upper tail rule. According to
the rule, we have selected the first number of groups that satisfied the Mojena’s equa-
tion which in our case amounted to 3. The three clusters embraced 492, 29 and 32 firms
respectively. The accuracy of delimitation of three clusters resonates with the results of
the analysis of variance presented in Table 3, statistically significant differences among
the identified clusters are easily visible. The variables were normalised to assure their
comparability.
The highest evaluation of IFDI is characteristic for cluster 3 (MN = 3.625
).
The EXPI in
cluster 3 (MN = 0.303
)
is higher than in cluster 1 (MN = 0.133), but lower than in cluster
2 (MN = 0.446). It means that firms in cluster 3 are the most involved in FDI, being at the
same time characterised by a lower export intensity. Firms in cluster 2 are practically not
involved in FDI as the mean value for IFDI is 0.000, but they report strong development
of their market portfolio (MN = 3.483), which means the breadth of their internationali-
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Piotr Trąpczyński
, Barbara Jankowska, Marlena Dzikowska, Marian Gorynia
zation is the largest. The same firms are the most involved in exporting (EXPI)
(MN = 0.446). The lowest evaluation of the EXPI (MN = 0.133) and IFDI (MN = 0.004)
variables is characteristic for cluster 1. Looking at the data in Table 4 we can conclude
that the most ambitious internationalizers – firms involved the most in the highest de-
gree of internationalization depth belong to cluster 3. However, to obtain a more de-
tailed and meaningful view of internationalization profiles of the identified clusters, it is
useful to analyse a number of indicators.
Table 3. Analysis of variance
Variables Between
Clusters df Within
Clusters df
2
F Test Significance
level
Export itensity (EXPI) 3.3834 2 22.9027 550 40.625 0.000
Foreign outward invest-
ment intensity (IFDI) 395.3291 2 17.4919 550 6215.201 0.000
Number of new foreign
markets in the portfolio of
markets (NFM)
327.5687 2 171.8237 550 524.266 0.000
Source: own study.
Table 4. Mean values for cluster variables (normalised) (n = 553)
Source: own study.
The results of the analysis of variance (Table 3) show that the entities in the clusters
differ in a statistically significant way with regard to the breadth and depth of interna-
tionalization, but we still don’t know which of the specific clusters differ. To check it we
ran the multiple comparisons, post hoc test using the Games Howell test. There are dif-
ferences between the pair of clusters 1, 2 and 3 in terms of the EXPI, differences be-
tween the following pairs of clusters – cluster 1 and cluster 3; cluster 2 and cluster 3 in
terms of IFDI, and last but not least differences between the following pairs of clusters:
cluster 1 and cluster 2; cluster 2 and cluster 3 in terms of NFM.
Characteristics of the most Ambitious Internationalizers – Cluster Profiles
Looking at the shares of export in total value of sales, they were the highest in cluster
2 (Table 5). In each of the three identified clusters, the intensity of export grew through-
out the analysed period. However, the strongest growth of that indicator was observed
in the second cluster (over 6 percentage points).
Additionally, it is visible that cluster 2 is composed of firms that serve the biggest
number of foreign markets which confirms that their internationalization breadth is the
2
The number 550 results from subtracting the number of clusters on the number of survey units for which
complete data existed or 553-3 = 550.
Variables Cluster 1 Cluster 2 Cluster 3
EXPI 0.133 0.446 0.303
IFDI 0.004 0.000 3.625
NFM 0.024 3.483 0.188
Number of firms 492 29 32
Identification of Linkages between the Compet
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largest (Table 6). Simultaneously, when we compare the change in the number of foreign
markets that the firms entered and the number of foreign markets the firms left in all
respective years of the post-crisis period, the net result is positive and the most satisfac-
tory in the case of cluster 2. Accordingly, these firms were the most engaged in extend-
ing the breadth of their internationalization. On the other hand, the same difference in
cluster 1 is negative in 2010 and 2013, which means that de-internationalization oc-
curred and affected the breadth of internationalization. Cluster 1 encompasses compa-
nies that indicated the lowest number of foreign markets served.
Table 5. Share of import in total purchases and share of export in total sales during the post-
crisis period (n = 553)
Category 2010 2011 2012 2013
MN SD MN SD MN SD MN SD
Share of export in
total sales (%)
Cluster 1 12.92
19.83
13.35
20.36
13.40
20.26
13.52
20.58
Cluster 2 42.28
24.40
42.28
25.89
46.28
24.46
47.52
23.65
Cluster 3 28.75
20.15
30.50
21.88
30.72
22.46
31.25
23.37
Source: own study.
Table 6. The number of foreign markets served, left and entered by the company during the post
crisis period (n = 553)
Category 2010 2011 2012 2013
MN SD MN SD MN
SD MN SD
The number of foreign markets
served by the company (incl.
export markets)
Cluster 1
2.42
5.09
2.41
5.07
2.45
5.10
2.45 5.10
Cluster 2
7.76
5.00
8.83
4.53
9.83
5.29
10.55
5.59
Cluster 3
4.59
4.11
4.72
4.12
4.66
4.17
4.72 4.19
The number of foreign markets
the firm left (incl. export markets)
Cluster 1
0.02
0.16
0.04
0.27
0.02
0.15
0.03 0.17
Cluster 2
0.03
0.18
0.17
0.91
0.03
0.18
0.03 0.18
Cluster 3
0.00
0.00
0.00
0.00
0.09
0.29
0.00 0.00
The number of new foreign mar-
kets the firm entered (incl. export
markets)
Cluster 1
0.02
0.15
0.03
0.19
0.05
0.29
0.02 0.14
Cluster 2
0.69
0.88
1.28
1.11
1.03
1.71
0.76 1.07
Cluster 3
0.06
0.24
0.13
0.33
0.03
0.17
0.06 0.35
Source: own study.
The most diversified set of foreign markets is visible for cluster 2 (Table 7). This rein-
forces the earlier remark about the focus of firms in cluster 2 on extending international-
ization breadth rather than depth. The role of Central and Eastern Europe, Western
Europe, USA and Africa did not change in the post-crisis period, on the whole. The per-
centage of indication for particular regions in the case of firms from cluster 3 is stable
and similar for the crisis and post-crisis period, with the exception of Asia, where in 2009
its level of indication was 12.50% and in the post-crisis period it reached the level of
15.63%.
As far as FDI operations are concerned, it is visible that Cluster 3 is characterised by
firms strongly involved in FDI (Table 8). In the crisis year more than 80% of firms in clus-
ter 3 reported new FDI projects and the involvement of the companies in FDI has grown
since that year. It could suggest that they exploited the crisis to increase the depth of
their internationalization. Bearing in mind that their portfolio of markets was not that
much developed as in the case of cluster 2, we can suppose that they trade off breadth
40
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Piotr Trąpczyński
, Barbara Jankowska, Marlena Dzikowska, Marian Gorynia
for depth by switching from mere exporting to FDI, rather than diversifying their geo-
graphic portfolios. The highest mean values for IFDI (Table 4) is in a way confirmed by the
fact that more than 96% of those businesses reported undertaking new FDI projects and
just around 3% indicated dismantling their foreign investments. Thus, they can be re-
ferred to as ambitious investors.
Table 7. Percentage of firms doing business in particular locations in the post crisis period
(n = 553)
Region Cluster 2010 2011 2012 2013
Central and Eastern Europe
Cluster 1 32.59 32.79 32.65 32.38
Cluster 2 93.10 93.10 93.10 93.10
Cluster 3 93.75 93.75 93.75 93.75
Western Europe
Cluster 1 25.66 25.66 25.92 26.07
Cluster 2 82.76 82.76 86.21 86.21
Cluster 3 46.88 46.88 46.88 46.88
USA
Cluster 1 2.65 2.65 2.86 2.65
Cluster 2 24.14 20.69 27.59 34.48
Cluster 3 6.25 6.25 6.25 6.25
Asia
Cluster 1 5.30 5.50 5.51 5.50
Cluster 2 37.93 51.72 51.72 51.72
Cluster 3 15.63 15.63 15.63 15.63
Africa
Cluster 1 2.65 2.65 2.65 2.65
Cluster 2 3.45 3.45 3.45 6.90
Cluster 3 9.38 9.38 9.38 9.38
Source: own study.
Cluster 2 embraces firms that are involved the most significantly in exporting since
the EXPI indicator reached the highest value. No firm from that cluster reported any new
FDI projects in the crisis year 2009 and in the post-crisis period of 2010-2013 (Table 8).
There are no firms involved in withdrawing from FDI activities. However, they expanded
abroad by entering new foreign markets (Table 5). The mean values for the number of
new foreign markets is the highest in the case of cluster 2 and the set of foreign markets
served by the firms from cluster 2 is diversified the most (Table 6). Hence, they can be
called ambitious exporters.
Table 8. Undertaking or abandonment of FDI in the post-crisis period – percentages of indica-
tions (n = 553)
Category 2010 2011 2012 2013
Undertaking of new FDI
Cluster 1 0.41 0.00 0.20 0.41
Cluster 2 0.00 0.00 0.00 0.00
Cluster 3 93.75 96.88 96.88 96.88
Abandonment of FDI
Cluster 1 0.00 0.20 0.00 0.41
Cluster 2 0.00 0.00 0.00 0.00
Cluster 3 9.38 6.25 3.13 3.13
Source: own study.
Identification of Linkages between the Compet
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41
Cluster 1 are firms undertaking export and trying to win new foreign markets, but
their intensity of export is still the lowest within the whole sample of firms. Accordingly,
we call them cautious internationalizers. It should be noted at this juncture that they
constitute the majority of our total sample.
Competitive Potential of Ambitious Investors, Ambitious Exporters and Cautious
Internationalizers in the Crisis
A closer look at the elements of the competitive potential of firms within particular clus-
ters allows us to state that the highest values were reported among ambitious investors
(cluster 3, Table 9). Firms the most involved in FDI possessed the best competitive poten-
tial in the crisis year 2009. In the case of ambitious exporters and cautious international-
izers, a higher assessment for a larger number of aspects is visible for the cluster of cau-
tious internationalizers. This provides additional rationale for the term cautious. In fact,
they were better equipped than the ambitious exporters during the crisis, but still ex-
panded very carefully (Tables 4, 5 and 6).
In order to verify whether the differences in the competitive potential of firms rep-
resenting particular clusters are statistically significant, we used the Kruskal-Wallis test.
The results presented in Table 9 include critical values and significance levels in relation
to the elements of competitive potential where clear differences were observed in the
distribution of the answers related to the evaluation of its particular elements. A com-
parison between the H-values and the critical value in the statistical table of the chi-
square distribution for k-1 = 3-1 = 2 degrees of freedom and p = 0.05, which equals
5.991, showed that the calculated values of the H statistics were above the critical range
(H>5.991). Therefore, the differences in the competitive potential of ambitious investors,
ambitious exporters, and cautious internationalizers are statistically significant.
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Piotr Trąpczyński
, Barbara Jankowska, Marlena Dzikowska, Marian Gorynia
Table 9. Competitive potential of firms in 2009 – during the crisis (n = 553)
Aspects of competitive
potential Cluster MN SD Kruskal-
Wallis test
Level of
significance
Material resources (available ma-
chines, assets and infrastructure)
Cluster 1
0.41 0.87
H = 29.97 p = .0000 Cluster 2
0.41 0.93
Cluster 3
1.47 1.09
Human resources
Cluster 1
0.46 0.79
H = 30.81 p = .0000 Cluster 2
0.48 0.72
Cluster 3
1.47 1.09
Intangible resources (knowledge,
brand, patents, etc.)
Cluster 1
0.45 0.86
H = 33.87 p = .0000 Cluster 2
0.52 0.93
Cluster 3
1.50 1.00
Financial Resources
Cluster 1
0.39 0.93
H = 30.85 p = .0000 Cluster 2
0.10 0.92
Cluster 3
1.47 1.09
Logistics (efficiency and effectiveness)
Cluster 1
0.48 0.77
H = 28.52 p = .0000 Cluster 2
0.31 0.53
Cluster 3
1.31 0.92
Production (efficiency and effective-
ness)
Cluster 1
0.73 0.99
H = 14.35 p = .0008 Cluster 2
0.34 0.88
Cluster 3
1.38 1.29
Marketing and sales (effectiveness
and efficiency)
Cluster 1
0.35 1.28
H = 11.47 p = .0032 Cluster 2
0.17 1.12
Cluster 3
1.25 1.62
Service (efficiency and effectiveness)
Cluster 1
0.17 1.13
H = 13.13 p = .0014 Cluster 2
0.07 0.98
Cluster 3
1.19 1.65
Supply (efficiency and effectiveness)
Cluster 1
0.73 0.97
H = 17.43 p = .0002 Cluster 2
0.28 0.69
Cluster 3
1.38 1.29
Technology (advancement and per-
formance)
Cluster 1
0.42 0.89
H = 29.52 p = .0000 Cluster 2
0.34 0.71
Cluster 3
1.47 1.09
HR management (efficiency and effec-
tiveness)
Cluster 1
0.48 0.80
H = 29.15 p = .0000 Cluster 2
0.52 0.81
Cluster 3
1.47 1.09
Company management systems (effi-
ciency and effectiveness)
Cluster 1
0.35 1.27
H =11.08 p = .0039 Cluster 2
0.24 1.13
Cluster 3
1.25 1.62
Quality control (efficiency)
Cluster 1
0.15 1.12
H = 10.40 p = .0055 Cluster 2
0.31 0.99
Cluster 3
1.03 1.65
Source: own study.
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The Competitive Position of Ambitious Investors, Ambitious Exporters and Cautious
Internationalizers – Contrasting the Crisis and Post-crisis Period
The changes in the intensity of internationalization, which can be considered as one of
the reactions to crisis, can have an impact on the competitive position of firms. Interest-
ingly, the mean values for subjective indicators of performance (Table 10) are generally
the lowest for the ambitious exporters (cluster 2) in the crisis period (year 2009), with
the exception of client satisfaction. It could mean that firms tried to keep their clients
even at the expense of their profitability (MN = -0.07). Being exporters very much fo-
cused on EU markets (Table 7), whose situation at that time was difficult, and coping
with the consequences of the depreciation of the Polish currency (PLN), which are nega-
tive in case of firms using imported goods in production (Table 5), they clearly perceived
their position as the worst within the whole sample. However, the evaluation of compet-
itive position for 2013 compared with the results from 2009 reveals that ambitious ex-
porters improved their performance to the highest extent during the post-crisis period
(Table 10).
Table 10. Competitive position according to subjective indicators contrasting the crisis and post-
crisis period (n = 553)
Dimensions
of competitive
position
Cluster
2009 2013 Change
2013-
2009
Kruskal-
Wallis test
Level of
significance
MN SD MN SD
Profitability
Cluster 1 0.32 1.40 0.63 1.39 0.31
H = 14.07
p = .0009 Cluster 2 -0.07 1.39 0.72 1.23 0.79
Cluster 3 1.25 1.50 1.59 1.30 0.34
Sales growth
Cluster 1 0.43 1.43 0.65 1.38 0.22
H = 13.65
p = .0011 Cluster 2 0.10 1.40 0.72 1.23 0.62
Cluster 3 1.25 1.62 1.59 1.30 0.34
Market share
Cluster 1 0.33 1.38 0.63 1.40 0,30
H = 13.65
p = .0011 Cluster 2 0.10 1.42 0.72 1.23 0.62
Cluster 3 1.31 1.51 1.59 1.30 0.28
Overall financial
condition
Cluster 1 0.46 1.45 0.61 1.44 0.15
H = 9.65 p = .0080 Cluster 2 0.10 1.32 0.66 1.18 0.55
Cluster 3 1.13 1.65 1.44 1.48 0.31
Client satisfaction
Cluster 1 0.75 0.77 0.76 0.76 0.02
H = 24.29
p = .0000 Cluster 2 0.79 0.71 0.86 0.68 0.07
Cluster 3 1.63 0.99 1.63 0.99 0.00
Source: own study.
To check if the differences in the competitive position of firms from particular clus-
ters measured with subjective indicators are statistically significant, we used the Kruskal-
Wallis test. The results, also presented in Table 10, include the critical values and signifi-
cance levels in relation to the indicators of competitive position, where clear differences
were observed in the distribution of the answers related to the evaluation of its particu-
lar dimensions. A comparison between the H values and the critical value in the statisti-
cal table of the chi-square distribution for k-1 = 3-1 = 2 degrees of freedom and p = 0.05,
44
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Piotr Trąpczyński
, Barbara Jankowska, Marlena Dzikowska, Marian Gorynia
which equals 5.991, demonstrates that the calculated values of the H-statistics are above
the critical range (H>5.991). Thus, the differences in the competitive position of firms
measured with subjective indicators representing our identified clusters are statistically
significant.
The evaluation of objective measures of competitive position for particular clusters
are presented in Table 11. The measures are based on the financial results reported by
the firms and available in the AMADEUS database. In the crisis period, the sales growth
was the highest in the case of cautious internationalizers, and the worst in the case of
ambitious exporters. To calculate the sales growth in 2009, we used data from 2009 and
2008. As 2008 was marked by recession particularly in Western Europe, which consti-
tutes the main export area of the firms representing the ambitious exporters, this finding
is not surprising. Cautious internationalizers depended much less on foreign markets,
thus they were able to achieve relatively higher sales growth. The highest profit margin
can be observed for ambitious investors in the crisis year 2009 in Poland. Ambitious
exporters scored the best result in terms of return on equity in 2009. It was the group of
firms that managed to improve its sale growth and profit margin the most – when we
compare the results from 2013 and 2009. However, these findings for objective indica-
tors are not statistically significant at p = 0.05.
Table 11. Competitive position according to objective indicators contrasting the crisis and post-
crisis period
Dimensions
of competi-
tive position
Cluster
2009 2013 Change
2013 vs
2009
Kruskal-
Wallis test
Level of
significance
MN SD MN SD
Sales growth
Cluster 1 0.96 10.43
0.02 0.48 -0.93
H = 4.84 p = .0888 Cluster 2 0.00 0.24 0.09 0.19 0.09
Cluster 3 0.06 0.28 0.00 0.26 -0.06
Profit margin
Cluster 1 0.03 0.96 -0.05 1.59 -0.08
H = 4.42 p = .1095 Cluster 2 0.03 0.08 0.05 0.07 0,02
Cluster 3 0.06 0.07 -0.07 0.70 -0.13
Return on
equity
Cluster 1 0.15 1.19 -0.21 9.35 -0.37
H = 1.51 p = .4698 Cluster 2 0.31 0.71 0.18 0.19 -0.13
Cluster 3 0.15 0.31 0.18 0.22 0.03
Source: own calculations based on data from the AMADEUS database.
CONCLUSIONS
Our study corroborates the findings or earlier research on the internationalization of
Polish firms that they are still at an early stage of evolution of their international opera-
tions (Burlita et al., 2011; Gorynia, Nowak, Trąpczyński & Wolniak, 2015b). In fact, we
identified three groups of firms characterised by different profiles of their international
strategy, as expressed by the breadth and depth of internationalization. Clearly, firms
belonging to cluster 1 (cautious internationalizers) are still limited both in terms of the
breadth and depth of their internationalization. They constitute the vast majority of our
sample, which is indicative of overall trends in the actual population of Polish SMEs doing
business abroad. Conversely, firms involved in broader and deeper internationalization,
Identification of Linkages between the Compet
itive Potential and
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45
i.e. ambitious exporters and ambitious investors, respectively, are far less numerous,
pointing to the still limited scale of this phenomenon.
In addition to this more descriptive contribution, our findings bear several normative
implications related to reactions to crisis and their consequences. In fact, the identified
firm clusters differ significantly in terms of changes in depth and breadth of their interna-
tionalization, as well as the initial competitive potential and the changes in their compet-
itive position during the crisis. Our cluster analysis provides support for the hypothesis
that better competitive potential of SMEs at the outset of the economic crisis is charac-
teristic for firms that increase rather their internationalization depth than breadth thor-
ough the post-crisis period (Hypothesis 1). In fact, we find that firms which are the most
dynamically engaging in FDI activities during the period of crisis and thereafter, are the
ones best equipped with different resources and capabilities, which resonates with exist-
ing theoretical concepts of FDI. Second, we argued earlier in the paper that bigger im-
provement of competitive position of SMEs shortly after the economic crisis is more
positive for firms that increase rather their internationalization breadth than depth (Hy-
pothesis 2). Our empirical evidence provides support for this assertion. In fact, it is the
ambitious exporters, focusing more on internationalization breadth than depth, that
managed to enhance their financial and non-financial performance most visibly, although
in absolute terms their performance was on average the lowest among our sample firms.
In particular, given the fact the crisis affected the key export markets of Polish firms, it
seems legitimate to argue based on the present findings that the strategy of diversifying
international markets during the economic crisis and recovery can be a mean of improv-
ing performance and reducing excessive dependence on fluctuations in key markets.
Overall, the findings contribute to the discussion whether reactive or proactive steps are
more effective in sustaining the crisis period. Contrary to some prior studies pointing to
a lesser perceived role of expansion as a means of withstanding the crisis (Lachowska,
2011; Orłowski et al., 2010; Zelek & Maniak, 2011), our study provides some arguments
to the debate about the effectiveness of proactive measures in crisis times.
Interestingly, we find that decisions related to enhancing or limiting a firm’s interna-
tionalization breadth and depth are not necessarily linked to their resources and capabil-
ities, or their performance outcomes, as the cautious internationalizers turned out to
excel in certain specific dimensions. This reinforces the notion that internationalization
decisions are complex in nature and highly affected by managerial values (Wrona
& Trąpczyński, 2012). Thus policy support should be particularly oriented towards sup-
plying information about foreign markets and fostering firms in an optimal allocation of
their resources (Gorynia, Nowak, Trąpczyński & Wolniak, 2015a).
The study is burdened with several limitations. The reliance on predominantly inter-
view-based measures may provide a biased account on the evaluations of resources and
performance. Applying the cluster analysis the authors are aware of its limitations. Bear-
ing in mind the strengths and weaknesses of this method of exploration of data, the
authors purposefully combined the hierarchical and non-hierarchical cluster analysis.
Moreover, while our cluster analysis allowed identifying the internationalization profiles
of SMEs as a reaction to crisis, how it was affected by the possession of capabilities, and
how it affected firm performance, the choice of our research methods only provides an
initial exploratory look at the data. We are aware that our study does not provide a full
46
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Piotr Trąpczyński
, Barbara Jankowska, Marlena Dzikowska, Marian Gorynia
understanding of causality in the studied relationships. Further studies should recur to
econometric modelling to investigate moderating effects of internationalization depth
and breadth on the relationships between firm resources and strategy on performance,
in order to seize the effect of internationalization in a more direct manner. To profile the
clusters we used the Kruskal-Wallis test which provides a correct in terms of methodolo-
gy, but rather not a very detailed and in-depth picture of the phenomenon. To obtain
more valuable results the authors plan to apply more advanced methods in the future,
such as discriminant analysis or decision trees. Furthermore, the nature of the sources of
competitive advantage of firms should be explored in more detail in different geographic
contexts, as it is the contexts in which the resources are deployed that their value can be
assessed. Accordingly, a more nuanced analysis with consideration of the geographic
patterns of expansion should be undertaken by future studies.
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Piotr Trąpczyński
, Barbara Jankowska, Marlena Dzikowska, Marian Gorynia
Authors
The contribution share of authors is amounted to 25% of Piotr Trąpczyński, 25% of Barbara
Jankowska, 25% of Marlena Dzikowska, 25% of Marian Gorynia.
Piotr Trąpczyński
Assistant Professor in Department of International Competitiveness at the Poznan Univeristy of
Economics and Business. His research focuses on strategy adaptation and performance in the
internationalization of firms as well as de-internationalization.
Correspondence to: Dr. Piotr Trąpczyński; Poznan Univeristy of Economics and Business, Facul-
ty of International Business and Economics, Department of International Competitiveness; al.
Niepodleglosci 10, 61-875 Poznan, Poland; e-mail: piotr.trapczynski@ue.poznan.pl
Barbara Jankowska
Associate Professor in Department of International Competitiveness at the Poznan Univeristy of
Economics and Business. Her research focues on internationalization with particular emphasis
on FDI and international competitiveness of firms and industries, on the role of business cluster
for innovativeness, internationalization and competitiveness of firms.
Correspondence to: Dr. hab. Barbara Jankowska; Poznan Univeristy of Economics and Business,
Faculty of International Business and Economics, Department of International Competitiveness;
al. Niepodleglosci 10, 61-875 Poznan, Poland; e-mail: barbara.jankowska@ue.poznan.pl
Marlena Dzikowska
Assistant Professor in Department of International Competitiveness at the Poznan Univeristy of
Economics and Business. Her research focuses on internationalization and international com-
petitiveness of firms with particular emphasis on global sourcing.
Correspondence to: Dr. Marlena Dzikowska; Poznan Univeristy of Economics and Business,
Faculty of International Business and Economics, Department of International Competitiveness;
al. Niepodleglosci 10, 61-875 Poznan, Poland; e-mail: marlena.dzikowska@ue.poznan.pl
Marian Gorynia
Full profesor in Department of International Competitiveness at the Poznan Univeristy of Eco-
nomics and Business. His research focuses on internationalization of firms and international
competitiveness of firms and industries.
Correspondence to: Prof. dr hab. Marian Gorynia; Poznan Univeristy of Economics and Busi-
ness, Faculty of International Business and Economics, Department of International Competi-
tiveness; al. Niepodleglosci 10, 61-875 Poznan, Poland; e-mail: marian.gorynia@ue.poznan.pl
Acknowledgements
and Financial Disclosure
The article came into being within a research project financed by the National Science Centre
no 2012/07/B/HS4/03050; title: International competitiveness of Polish companies during
period of prosperity and the global economic crisis.
Dr. Piotr Trąpczyński is supported by the Foundation for Polish Science (FNP).
Copyright and License
This article is published under the terms of the Creative Commons
Attribution – NonCommercial – NoDerivs (CC BY-NC-ND 3.0) License
http://creativecommons.org/licenses/by-nc-nd/3.0/
Published by the Centre for Strategic and International Entrepreneurship – Krakow, Poland
