Introduction
Internationalizing the Small and Medium Sized Firm – four cases
As a small country with a limited home market, Swedish companies have been forced to be aggressive on the international markets. The first major phase of international expansion for Swedish companies took place the decades before World War I. At this time companies like AGA, Alfa-Laval, ASEA, Ericsson, Sandvik and SKF started their first international endeavors (Carlsson 1977).
The traditional approach to international expansion according to the findings by the so-called “Uppsala-school” during the 1970’s has been that companies take a cautious step-by-step approach (Johanson & Vahlne 1977). Limited investments are made in culturally and geographically close markets. After the company has gained experience, investments are increased and more distant markets are penetrated.
This cautious approach has been especially true for SME’s (Small and Medium-sized Enterprises) since they normally work with limited financial and managerial resources (Lindqvist 1991).
Today, as the world is getting more and more global, the approach to internationalization is somewhat changing. Most companies have an international perspective. Both large companies and SME’s see the international markets as natural expansion possibilities. Nevertheless, companies have different views on their international expansion. Some see it as a normal extension when the domestic market has been explored, other companies view international expansion as an obvious part already from start. The latter companies are often referred to as Born Globals (Rennie 1993).
The shift into the information society is one of the major factors behind the changed behavior when internationalizing. This has lead to that firms are better informed about foreign markets and that the difficulties with working on geographically distant markets have radically diminished (Nordström 1991). Furthermore, many Swedish companies produce technically complex products today. This normally means high R&D costs and a short lifecycle. This forces companies to internationalize at an early point, before the technology/product becomes obsolete or imitated by others (Lindqvist 1991). This is especially important for Swedish companies, due to their limited home market.
In recent years it has almost been seen as a must within young upcoming companies to have a clear strategy and focus on international expansion. In these cases, the expansion has often started long before the company has reached a mature status on the Swedish market. Venture capitalists eager to reap substantial revenues fast has been one important driver behind this development (Falk & Reimfelt 2002).
