Theoretical Framwork
Internationalizing the Small and Medium Sized Firm – four cases
The intention of this chapter is to give the reader an insight into some of the theoretical concepts within the area of internationalization. A brief overview of some classic theories as well as some more recent work on the area will be discussed. Classical internationalization theories do not include specific theories about organization, culture, entrepreneurship etc. Therefore, a smaller set of chosen theories from other areas will be presented as well. These theories have been chosen based on initial conclusions drawn from the empirical study, and are later used in the analysis to support the authors’ conclusions. These theories are not in any way exhaustive on the area, but the authors think they present the most relevant selections to support the analysis. The chosen theories discuss aspects that became apparent for the authors during the empirical study. The authors leave the discussion around competitors and their possible impact outside this thesis. Main reason for doing so is that it never came up as perceived to have had an important impact on the success or failure in any of the case companies.
Most internationalization theories and research look at and try to explain the patterns of the process. Since the focus of this thesis will be to find and present factors for success or failure other viewpoints and possible explanations will be discussed as well. One weakness in the authors’ opinion with previous research on the area is that most of it focuses on larger firms. Only recently have we seen some contributions about internationalization focusing on smaller firms (see below). This is probably since last years have seen a wave of international expansions, mostly within SME’s, some small companies are even said to be pre-destined to internationalize, the so-called Born Globals (Rennie 1993 and Nyström-Andersson & Swenson 2001). Size does matter, but several studies have indicated that it is not a restraint when it comes to international competitiveness to be small (De Chiara & Minguzzi 2002). Something the authors of this thesis believe to true, but the process and explanatory factors ought to be somewhat different for SME’s. The general discussion around growth and development of SME’s falls outside the scope of this thesis, since the focus is on the internationalization process and not why SME’s grow. For those interested in reading further about growth in SME’s, the work done by Delmar, Davidsson & Wiklund (2001) is recommended as one example.
Some conclusions from a recent empirical study about success factors for internationalizing SME’s from Italy made by De Chiara & Minguzzi (2002:151) are interesting to mention. They conclude, “Increased exports have to be supported by an entrepreneurial culture open to change and learning”. They go on to suggest, “For the firm to remain internationally competitive, internal competencies need to be increased”.
Another recent study by Rainer Jansson (2001) on success factors for Finnish SME’s show that leadership and strategy play important roles. According to Jansson, management and key persons play a central role for a company’s success, especially when it comes to internationalization processes, when the professional and knowledge demands on those people rises. He mentions the lack of relevant management literature that is suitable for SME’s. His experience also shows that planning is a less common feature in SME’s.
