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Internationalization processes of small and medium-sized enterprises: Entering and taking off from emerging markets
Linnaeus University, Faculty of Business, Economics and Design, Linnaeus School of Business and Economics. (Baltic Business Research Center)
2012 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

The high economic growth of formerly closed markets such as China, Russia, Poland, and the Baltic states has created vast business and growth opportunities for small and medium-sized enterprises (SMEs). Although this international business expansion of SMEs occurs in highly dissimilar business contexts and fierce international competition, it remains overlooked by research. Therefore, the main aim of this thesis is to contribute to an enhanced understanding of internationalization processes of SMEs by studying the overarching research question: What are the main features of internationalization processes of SMEs in an emerging market context? Three sub-problems are researched with regard to SMEs entering and taking off from emerging markets, as well as differences and similarities between these processes, in order to identify what features characterize them. Empirically, two surveys of 116 and 203 Swedish SMEs, respectively, with experiences of entry into emerging markets were conducted through standardized questionnaires via mail and on-site visits. In addition, case studies were conducted through interviews and observations of five internationalizing Chinese SMEs and four Chinese wholesale and retail market platforms. Five essays are compiled within the thesis and major findings and conclusions provide theoretical and empirical contributions to research on the internationalization processes of SMEs. With regard to the overlooked internationally experienced manufacturing SMEs from mature markets such as Sweden, theoretical advancements are made identifying the main concepts of their entry into emerging markets: entry node (the establishment point into the foreign business network); market-specific experiential knowledge; and perceived institutional distance. With regard to the internationally novel Chinese SMEs, these were seen to diverge from traditional internationalization paths. Indications were found of a parallel expansion abroad and at home, even using foreign markets as a springboard for further growth at home. The take-off node concerns the departure from an emerging home market, where a paradox of knowledge was found: the use of indirect export via a domestic intermediary facilitates the take off, but hinders further international expansion since no international experience or relationships are built up. Moreover, institutional distance was reduced due to collective internationalization through co-locating abroad. Generally, degree of maturity of the home market; as well as degree of internationalization and type of firm; are the main features behind differences between internationalization processes of SMEs in an emerging market context.

Place, publisher, year, edition, pages
Växjö, Kalmar: Linnaeus University Press , 2012. , 272 p.
Series
Linnaeus University Dissertations, 78/2012
Keyword [en]
network approach to internationalization, foreign business networks and relationships, internationalization process, foreign market entry, entry/take-off node, experiential knowledge, institutional distance, emerging markets, Sweden, China, small and medium-sized enterprises (SMEs)
National Category
Social Sciences
Research subject
Economy, Business administration; Economy, Marketing
Identifiers
URN: urn:nbn:se:lnu:diva-17726ISBN: 978-91-86983-35-2 (print)OAI: oai:DiVA.org:lnu-17726DiVA: diva2:504939
Public defence
Ny200, Ekonomihögskolan, Kalmar Nyckel, Kalmar (Swedish)
Opponent
Supervisors
Available from: 2012-02-27 Created: 2012-02-22 Last updated: 2013-11-07Bibliographically approved
List of papers
1. Internationalization of Small and Medium Sized Enterprises in the Baltic Sea Region
Open this publication in new window or tab >>Internationalization of Small and Medium Sized Enterprises in the Baltic Sea Region
2008 (English)In: Journal of International Management, ISSN 1075-4253, E-ISSN 1873-0620, Vol. 14, no 1, 65-77 p.Article in journal (Refereed) Published
Abstract [en]

 

We integrate internationalization process theory with industrial network theory to explain SME entry in emerging markets. We show that entry modes are complemented by entry nodes and entry processes. We develop a Five/Five Stages Model to consider the dynamic interaction between these factors. We undertook a survey of 116 SMEs in Southern Sweden trading with the Baltic States, Poland and Russia, as complemented by a case study of ten SMEs trading with Poland and an analysis of trade statistics of SMEs in Southern Sweden.

We find that relationships are critical for entry as most firms rely on direct relationships with customers or dyads. The involvement of subsidiaries is uncommon, suggesting a low degree of FDI. Meanwhile, triads or indirect relationships through distributors or agents are more important. This low cost entry node creates a paradox in that the insufficient learning it provides about local markets obstructs further internationalization. By relating entries to the global internationalization process, we find that most SMEs trade with few countries in the region, indicating a low degree of regional internationalization.

 

Place, publisher, year, edition, pages
Elsevier, 2008
Keyword
Entry process, Regional and global internationalization processes, Network approach, Emerging markets, SMEs
National Category
Business Administration
Research subject
Economy, Marketing
Identifiers
urn:nbn:se:hik:diva-967 (URN)10.1016/j.intman.2007.02.005 (DOI)
Available from: 2009-01-08 Created: 2009-01-08 Last updated: 2017-12-14Bibliographically approved
2. Emerging market entry node pattern and experiential knowledge of small and medium-sized enterprises
Open this publication in new window or tab >>Emerging market entry node pattern and experiential knowledge of small and medium-sized enterprises
2013 (English)In: International Marketing Review, ISSN 0265-1335, E-ISSN 1758-6763, Vol. 30, no 2, 106-129 p.Article in journal (Refereed) Published
Abstract [en]

Purpose – To conceptualize “entry node”, to describe the entry node pattern (i.e. the initial entry node and changes in it) of SMEs entering emerging market business networks, and to determine how network nodes are associated with experiential knowledge.

Design/methodology – Using data from an on-site survey based on a standardized questionnaire, hypotheses were tested using ANOVA on 197 SMEs in southern Sweden that entered the emerging markets of the Baltic States, Poland, Russia, or China. 

Findings – The entry node is the establishment point into a foreign market network. Four entry situations are defined – triad via home market, triad via host market, dyad from home market, and dyad at host market – each using different entry nodes. After initial entry, one third of the firms changed their nodes, primarily into a more committed node. Various nodes display significant differences in the level of accumulated societal, business network and customer-specific experiential knowledge. A more committed node is associated with more experiential knowledge. 

Research limitations – Knowledge is complex to measure, since various factors influence the level of accumulated experiential knowledge. This study examines the association between types of nodes and experiential knowledge, but does not aim to explain knowledge accumulation. Perceptual measures are used and possible method biases involved are safeguarded through an on-site survey method.

Originality – This paper conceptualizes the novel concept of entry node, provides insight into the SME node pattern in emerging markets, and examines the association between nodes and experiential knowledge.

 

Keyword
Internationalization, Networks, Small-to-medium-sized enterprises, Sweden, Emerging markets, Market entry, Entry node, Experiential knowledge
National Category
Business Administration
Research subject
Economy, Business administration; Economy, Marketing
Identifiers
urn:nbn:se:lnu:diva-26305 (URN)10.1108/02651331311314547 (DOI)000318055200003 ()2-s2.0-84878225968 (Scopus ID)
Note

ersätter manuskriptet med titeln: SME node pattern and experiential knowledge in emerging markets

Available from: 2013-06-11 Created: 2013-06-11 Last updated: 2017-12-06Bibliographically approved
3. Perceived institutional distance in the emerging market entry process
Open this publication in new window or tab >>Perceived institutional distance in the emerging market entry process
2011 (English)In: International Journal of Business Environment, ISSN 1740-0589, E-ISSN 1740-0597, Vol. 4, no 3, 268-286 p.Article in journal (Refereed) Published
Abstract [en]

We claim that difference in business environments is the result of differences between institutions. In this paper, a network perspective is taken on business markets and we set out to examine how differences in institutions are perceived in business relationships between firms originating from disparate business networks. The concept of perceived institutional distance is developed in three sequential stages. First, we conceptually develop the concept as an anchored theoretical construct. Second, we try out the concept empirically. Third, we verify the dimensions in which perceived institutional distance is manifested. The study reports from an on-site survey of 203 SMEs with experience of entering emerging markets. Five dimensions in which perceived institutional distance is manifested are presented: patience and rationality from the cognitive institutional pillar, distrust and reliability from the normative pillar, and sanctions from the regulative pillar.

Keyword
internationalisation processes; institutional network approach; institutional distance; on-site survey method; managerial perceptions.
National Category
Business Administration
Research subject
Economy, Business administration
Identifiers
urn:nbn:se:lnu:diva-11804 (URN)10.1504/IJBE.2011.041596 (DOI)
Available from: 2011-05-20 Created: 2011-05-20 Last updated: 2017-12-11Bibliographically approved
4. Internationalization Patterns of Chinese Private Owned SMEs: Initial Stages of Internationalization and Cluster as Take Off Node
Open this publication in new window or tab >>Internationalization Patterns of Chinese Private Owned SMEs: Initial Stages of Internationalization and Cluster as Take Off Node
2009 (English)In: Research on Knowledge, Innovation and Internationalization / [ed] Larimo, J. and Vissak, T., Bingley: Emerald Group Publishing Limited , 2009, 89-114 p.Chapter in book (Other academic)
Abstract [en]

Purpose – To describe and analyze the situation prior to and during the initial stages of internationalization of Chinese SMEs, as well as analyzing the role of clusters as take-off nodes for such firms.

Methodology – A multiple case study is conducted based on semistructured interviews with five private-owned exporting Chinese SMEs. Also, data on Chinese industrial clusters are analyzed.

Findings – The findings complement the model presented with new knowledge. In the take-off situation, Chinese SMEs deviate from assumed paths due to disadvantages in the emerging Chinese market. In the initial stages of internationalization, the focus on indirect exports hinders the building of international relationships being the key for further international expansion. Cluster localization is a take-off node for individual dedicated exporters into international markets.

Research limitations – Few cases, co-location of firms in the advanced Yangtze River Delta region and issues of Chinese versus Western SME definitions limits the possibility to generalize the findings of the study.

Practical implications – Chinese as well as foreign firms can gain from this paper regarding, for example, that competitiveness built up abroad can be utilized for increasing the market share in an attractive domestic market, the pitfall of indirect exports can be overcome by developing direct international relationships, and cluster localization can spur the internationalization of (individual) Chinese SMEs.

Originality – Empirical contribution of internationalization patterns of Chinese private-owned SMEs as well as pinpointing the importance of the domestic market as trigger for internationalization.

Place, publisher, year, edition, pages
Bingley: Emerald Group Publishing Limited, 2009
Series
Progress in international business research, ISSN 1745-8862 ; 4
National Category
Business Administration
Research subject
Economy, Business administration
Identifiers
urn:nbn:se:lnu:diva-4210 (URN)10.1108/S1745-8862(2009)0000004009 (DOI)978-1-84855-957-8 (ISBN)978-1-84855-956-1 (ISBN)
Note
Nummer: Available from: 2010-04-27 Created: 2010-04-27 Last updated: 2012-02-27Bibliographically approved
5. Collective internationalization: a new take off route for SMEs from China
Open this publication in new window or tab >>Collective internationalization: a new take off route for SMEs from China
2014 (English)In: Journal of Asia Business Studies, ISSN 1558-7894, Vol. 8, no 1, 29-42 p.Article in journal (Refereed) Published
Abstract [en]

Purpose – The purpose of this paper is to investigate the establishments of Chinese wholesale and retail market platforms in China and Europe, creating a new takeoff route for SMEs from China, and to theorize on this as a new collective route to internationalization.

Methodology – An exploratory case study has been undertaken covering four Chinese market platforms: the role model in Yiwu, China, and the establishments in Warsaw, Poland; Budapest, Hungary; and Kalmar, Sweden.

Findings – A new collective internationalization route is identified, driven by the collectivistic Chinese culture. Here Chinese SMEs diverge from traditionally suggested paths of internationalization, taking off independently from the domestic business network but form a joint market platform in the foreign market. This collective behavior compensates for the resource constraints of internationally inexperienced Chinese SMEs. From the market platform, they plug into the local market network and are provided with economies of scale and scope, ultimately making them internationally competitive. This collective route offers the potential for joint learning and risk reduction when entering distant markets in the early internationalization stages.

Originality/value – The paper reports on an overlooked empirical phenomenon, namely the establishment of Chinese wholesale and retail market platforms in China and Europe. Through this establishment a new collective route into the global market by Chinese SMEs is identified and theorized.

Keywords – Collective Internationalization Processes; Market Entry Modes and Nodes; Motives of Internationalization; Market Platforms; Chinese SMEs

Paper type – Research paper

Keyword
Collective internationalization processes, market entry modes and nodes, motives of internationalization, market platform, Chinese SMEs
National Category
Economics and Business
Research subject
Economy, Business administration; Economy, Marketing
Identifiers
urn:nbn:se:lnu:diva-17724 (URN)10.1108/JABS-09-2012-0043 (DOI)2-s2.0-84992957286 (Scopus ID)
Note

I den tryckta avhandlingen ingår en tidigare version (ett manuskript).

Available from: 2012-02-22 Created: 2012-02-22 Last updated: 2014-04-23Bibliographically approved

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