The international market selection of Chinese SMEs: How institutional influence overrides psychic distance

The purpose of this research is to contribute to the ongoing debate about whether psychic distance still plays a vital role in the internationalisation of SMEs from emerging markets. Drawing on the prior research which suggests the salient impact of institutional factors on internationalisation, we investigate the role of home country institutions in international market selection. Adopting a multi-case methodology, we collected semi-structured interview data from six small and medium-sized manufacturing firms in China. Our findings suggest that while psychic distance is still important in some circumstances, both formal institutions, such as government support, and informal institutions, such as business and political guanxi, enable Chinese SMEs to choose psychically distant markets. Our findings also indicate that informal institutions interact with formal institutions to further influence SMEs’ international market selection. This research contributes to SME internationalisation studies by revealing how formal and informal institutional factors override psychic distance in influencing international market selection.     

Exploring brand identity and entrepreneurship as drivers of small specialist retailer internationalisation: a German case study

While the comparatively sparse literature on small specialist retailing typically supports a proactive interpretation of the drivers of retail internationalisation, a more differentiated picture exists with regard to understanding the role of the brand construct in this process. The wider marketing literature recognises that brand identity, as well as brand image, can inform the process of internationalisation; yet, research focusing on small specialist retail internationalisation remains underdeveloped in this regard. Neither the notion of a multi-faceted brand concept nor its function as a strategic device in the internationalisation process has been analysed with sufficient depth. Furthermore, a better understanding of how and to what extent brand identity is interdependent upon the characteristics and activities of the entrepreneur is yet to emerge. This paper explores the construct of brand identity and its role within small specialist retail internationalisation, and the related influence of the entrepreneur on the internationalisation process. A case study approach is adopted, examining one German small specialist retailer. Data collection involved semi-structured interviews with owner-managers and other senior management, an assessment of company documentation as well as participant observation, providing in-depth insights into distinctive internationalisation patterns. The study finds that a simple ‘either-or’ approach, in terms of characterising the retailer’s motivation to internationalisation as being either reactive or proactive, is inadequate in understanding this particular case. Whilst initial motivation was characterised as being reactive, the motivations underpinning further planned internationalisation are determined to be more proactive. More particularly, analysis reveals how brand identity is considered to play an important role in the internationalisation of the case study retailer, and highlights the numerous ways in which the characteristics and activities of the entrepreneurial owner-managers impact the firm’s internationalisation. This research contributes to retail and management research concerning SME internationalisation as well as to the retail branding literature.     

Realising the Marketing Advantages of International Standard-Setting Activities: Opportunities for Innovative Technology-Based SMEs

Despite a growing literature exploring the impact of international standards on the long-term competitive position of large technology-based multinational enterprises and, as a corollary, how these firms participate in standard-setting, comparatively little attention has been given to these phenomena with regard to the internationalisation of small and medium-sized enterprises (SMEs). This is perhaps a reflection of a 'master storyline' that assumes international standard-setting activities are almost solely the purview of larger organisations. Accordingly, this paper explores how small and medium technology-based enterprises participate in international standard-setting processes and the strategic marketing advantages that may accrue through such participation, using a qualitative case-study approach involving six technology-based SMEs in Australia. Summary frameworks depicting different means of participation and marketing related benefits are presented. The findings suggest that innovative technology-based SMEs may use the international standard-setting environment and processes more strategically than often supposed.     

Internationalisation of SMEs from the perspective of social learning theory

Internationalisation is seen as an important issue for the globalised economy. Therefore, it has been widely investigated among multinational enterprises and small- and medium-sized enterprises (SMEs). Even though earlier work acknowledges that internationalisation consists of entrepreneurial actions (e.g. discovery and exploitation of an international business opportunity) and learning from the market, detailed understanding of the process of social learning in internationalisation is still lacking. In this study, we use the cycle of expansive learning as a conceptual framework. It shows that entrepreneurial actions between SMEs construct international business opportunities. More specifically, entrepreneurial actions are about learning that constructs and co-creates knowledge. The cycle of expansive learning assumes that such knowledge is social in nature making the very nature of knowledge the basis of claims to explicate what the process of social learning entails. In the context of international entrepreneurship, there is also a by-product of that type of co-created and object-oriented action: the internationalisation of SMEs. The purpose of this study is to explore the internationalisation of SMEs through the cycle of expansive learning to better understand how such a by-product can be created. In examining a story of collaboration between two entrepreneurs, we found the start of the cycle to be more significant than the later stages. From the perspective of social learning, this suggests that entrepreneurs create meanings rather than exploit international opportunities in the business-sense alone. That said, internationalisation happens as a by-product of social acting.     

The Impact of Perceived Ethical Culture of the Firm and Demographic Variables on Auditors’ Ethical Evaluation and Intention to Act Decisions

Studies into corporate social responsibility (CSR) in small and medium-sized enterprises (SMEs) have suggested that small businesses are different to the large companies on which CSR research usually focusses. Extending this argument, this article raises the question what differences in approaches to CSR there are within the SME category. Analysing the CSR strategy and performance of a medium-sized fashion retailer in the United Kingdom through manager interviews as well as customer and employee surveys, the article develops an analytical framework of CSR in small, medium and large firms. The argument is developed that medium-sized firms occupy a transition stage, where some CSR features that are reminiscent of small enterprises are still important but get overlaid with aspects that are more typical of large companies.     

Foreign market entry mode choice of small and medium-sized enterprises: A systematic review and future research agenda

Despite significant differences between small and medium-sized enterprises (SMEs) and large multinational enterprises (MNEs), the majority of extant foreign market entry mode choice literature has focused on MNEs. The current state of knowledge regarding SME foreign market entry mode choice is equivocal. The present paper reviews the current state of SME foreign market entry mode choice literature and maps future research directions. To this end, we systematically analyze 33 relevant journal articles for their theoretical frameworks and contextual dimensions. Based on this review, we identify gaps in the literature and develop an agenda to guide future scholarship in this important domain of research in taking SME-specific characteristics into consideration.     

Small shop survival – The financial response to a global financial crisis

Small and medium-sized enterprises (SMEs), many of which are small retail shops, remain the largest employer in the western world. Yet the financing of their fixed and working capital investments remains under-researched. This study focuses on this topic by examining Eurozone wholesale and retail SMEs enterprises at the peak of the 2008 financial credit crisis. In order to do this, an innovative analysis of existing theories in retail finance and policy research using generalised multilevel structural equation modelling is performed to establish how retail SMEs sourced capital during this period. This analysis, a first of its kind in wholesale and retail SME research, finds that pecking order theory, the independence of investment and financing, as well as the contest for financial resources between fixed and working capital do not hold for wholesale and retail SMEs. Moreover, it is found that government grants and subsidised loans were not used by SMEs in this sector of the Eurozone as primary sources of finance during the aftermath of the 2008 global credit crisis. Crucially, it is posited that a business environment characterized by stronger legal rights and deeper credit information did not improve SMEs’ access to external finance. The authors recommend that further research should be pursued in this field in order to improve current understanding of the resilience of retail SMEs for future global financial crises.     

Factors Influencing International Retailers' Market Entry Mode Strategy: Qualitative Evidence from the UK Fashion Sector

Research on the internationalisation of retail firms has focused on many diverse themes such as the motivations for internationalisation, individual company experiences and the direction and extent of international retail activity. One particular aspect of the retailer internationalisation process that has remained relatively under researched is entry mode choice. Furthermore, while research on fashion retailing is increasing, the internationalisation of the sector has been largely neglected in the literature. The aim of the current work is to provide an initial attempt at redressing this research gap. The paper reports findings from an in-depth study into the entry mode choice decision process of seven major UK international fashion retailers. It is found that entry mode strategy emerges over time as a result of a combination of historical, experiential, financial, opportunistic, strategic and company-specific factors.     

Dynamic managerial capability portfolios in early internationalising firms

It is acknowledged that dynamic capabilities can underlie internationalisation of firms, yet extant research has tended to examine the role of capabilities in international entrepreneurship in separate studies, neglecting that international enterprises tend to develop different bundles or portfolios of capabilities that may have differing impacts on their internationalisation. Applying the concept of dynamic managerial capabilities, this study illustrates how different capability portfolios of entrepreneurial decision-making and network capabilities explain early internationalisation of small- and medium-sized enterprises (SMEs). Employing a machine learning method through artificial neural network (ANN) analysis, the findings show how early internationalisation is predicted by a portfolio of different dynamic managerial capabilities. This study thus contributes to the international entrepreneurship literature by outlining the capability portfolios necessary for early internationalisation and proposing a taxonomy for capability portfolios for early and late internationalising firms, by clarifying the role of dynamic managerial capabilities in early and successful entrepreneurial internationalisation and by introducing the ANN methodology as a useful tool in the research corpus of the international entrepreneurship domain.     

Linking globalization of entrepreneurship in small organizations

The field of entrepreneurship spans a wide variety of topic areas, and among the most important is that of the small and medium-sized enterprise (SME). The aim of this paper is to link entrepreneurship and SMEs. Attempting to generalize the outcomes of entrepreneurship in small organizations from different sectors, countries or industries should be activities that are part of daily life on an international scale. In extracting and transferring the outcomes of this research into entrepreneurship and SMEs, policy makers should see an aspect that must be consolidated within the environment of international globalization that surrounds us. It should not be forgotten that what starts out as small (i.e. an SME) can become large over time and this entrepreneurship can form a part of a new organizational structure. A brief overview of the contents of each of the articles included in this special issue on the globalization of entrepreneurship in small organizations is also presented herein.      

Financing Small and Medium Enterprises (SMEs) in Ghana

Abstract

Issues of finance and small and medium-sized enterprises (SMEs) in developing countries have dominated the research agenda at various policy levels. However, very little empirical analysis, that is, hypothesis testing has been carried out to ascertain the relationship between finance and enterprise performance. Although a few studies have attempted to examine this relationship, yet there remain large gaps in our knowledge concerning the relationship between finance and SME development. This paper attempts to fill this gap by providing information on the relationship between finance and enterprise growth in Ghana.     

How SMEs exploit their intellectual property assets: evidence from survey data

This paper seeks to understand how motives to patent affect the use of the patent portfolio with a particular focus on motives aimed at the monetization of intellectual property. The analysis relies on data from an international survey conducted by the European Patent Office. There are three main results. First, small- and medium-sized enterprises (SMEs) exhibit a much stronger reliance on ??monetary patents?? than large companies and nearly half of the SMEs in the sample patent for monetary reasons. Second, SMEs tend to use their patents more actively than large firms. Third, smaller companies generally have a higher proportion of their portfolio that is licensed, but the licensing rate is significantly higher in the USA. An American SME is twice as likely as a European SME to have a high share of its portfolio that is actually licensed, witnessing a fragmented market for technology in Europe.     

Innovation capacity,international experience and export performance of SMEs in Brazil

Innovation capacity and international experience are factors often related to the internationalisation process of firms, with export activities as the first stage of the process. However, firms from emerging countries seem to show advantages and follow patterns of international expansion that may differ from firms based in developed countries, where the internationalisation models were created. Specifically, exporting firms from emerging countries tend to have limited resources, especially small firms (e.g., for investing in R&D). Despite these facts, the literature on export performance seems biased towards recommending firms to enhance, above all, their innovation capacity in order to achieve better export performance, while little attention is paid to international experience as a factor that is as important as innovation. In this context, the objective of this study is to investigate the impact of innovation capacity and international experience on the export performance of small and medium-sized enterprises (SMEs) located in an emerging country and to identify which factor is more significant. The Resource-Based View and Dynamic Capabilities approach were used as theoretical frameworks. A research model was developed and tested on a significant sample of Brazilian industrial SMEs. The data were analysed through partial least squares structural equation modelling. The results indicate that international experience has a greater impact on export performance than innovation capacity, showing that there is possibility of overemphasising the role of innovation in the export performance of SMEs, at least, in the Brazilian context.     

The effect of network competence and environmental hostility on the internationalization of SMEs

Research findings suggest that networks offer small and medium-sized enterprises (SMEs) opportunities to internationalize successfully. However, the role of internal organizational competence in the process of developing and maintaining such networks in hostile external environments has received little attention. The aim of this study is to shed light on the relationship by examining the positive influence that the network competence of SMEs has on their propensity to internationalize, and on their subsequent international performance. Given that the willingness of firms to enter and perform well in markets appears to also depend on environmental hostilities, this external influence on SME internationalization is incorporated into the study. We also examine whether the level of environmental hostility moderates the relationship between network competence and SME internationalization. The empirical part of the study comprises a web survey of 298 Finnish SMEs representing five different industry sectors: metal, food, furniture, software, and knowledge-intensive business services. Confirmatory factor analysis and regression models are used in the analysis. The results indicate that higher levels of network competence are positively related to the propensity of SMEs to internationalize, as well as to their international performance. Conversely, the level of environmental hostility has a negative effect on the performance measure, but not on the internationalization propensity. Additionally, the influence of network competence is not moderated by environmental hostility. The results indicate that internal network competence and external environmental hostility play a role in SME internationalization, and that the positive influence of network competence exists independently of the hostility in the environment.     

Supply chain capabilities for facilitating the internationalisation of retailers – a multiple case study of three Swedish retail companies

ABSTRACT

Market-oriented aspects of retail internationalisation have received a lot of research attention since the 1990s. However, beyond these aspects lies also supply-chain oriented capabilities that are necessary for retailers to successfully internationalise into foreign sales markets. By using a perspective based on resource-based theories, this paper explores supply-chain oriented capabilities that facilitate retail internationalisation. The research is based on a multiple case study of three Swedish retailers. Through the perspective of research based theories, specifically capabilities, the empirical data is studied in a single-case as well as a cross-case analysis. Findings reveal three supply chain-oriented capability categories (leadership capability, integration capability and learning capability) of importance for retail internationalisation. Resources necessary for the capabilities are to be found internally at the retailer, but also externally at other firms. This research adds to the market-oriented knowledge on retail internationalisation by adding a supply-chain oriented perspective. Further, it provides an understanding of the early phases of retail internationalisation.     

The Relevance of Stakeholder Theory and Social Capital Theory in the Context of CSR in SMEs: An Australian Perspective

The concept of business responsibility, usually termed as corporate social responsibility (CSR), originated in the early 1930s after the Wall Street crash of 1929 exposed corporate irresponsibility in large organisations. The understanding of CSR has evolved since then and its scope has now broadened from mere compliance to corporate laws to active alignment of internal business goals with externally set societal aspirations. Unfortunately, the significance of this multidimensional concept within the small and medium enterprise (SME) sector has continued to be overshadowed by its application in large and multinational organisations. More importantly, this has led to the practice of judging SMEs, which are experiencing increasing pressure to engage in social activities, as if they are no different from their larger counterparts. This study therefore investigates CSR from the perspective of SMEs in Australia without any theoretical presumptions and then comments on the relevance and applicability of the two theories that have been commonly used to investigate business responsibility, namely, stakeholder theory (ST) and social capital theory (SCT). The research findings indicate that CSR within the SME sector is more aligned to the fundamentals of SCT, mainly owing to the unique resource and survival challenges that they face, and which are, arguably, not so pronounced in large organisations.     

Export behaviour of SMEs in transition countries

Melitz’s dynamic model of export participation is the basis of our empirical specification that accounts for a wide range of internal and external factors affecting the export behaviour of small and medium-sized enterprises (SMEs) in Transition Countries (TCs). Using firm-level data, our estimates highlight the particular importance of the human and technology-related factors to the export behaviour of SMEs in TCs. Other important factors for SME exporting activities are productivity-enhancing spillovers from industry—especially vertical—linkages, firm size, ownership type, type of activity, the availability of external finance, networking through business associations, and market share. In addition, significant period and country differences are identified. This paper contributes to the transition literature by filling an important gap in the understanding of the SME internationalisation process and by identifying a comprehensive set of variables to explain firms’ export behaviour in TCs.     

Wo liegt der Kern des deutschen Mittelstands?

The Mittelstand is deemed to be a particular strength of the German economy. In international comparison, though, the contribution of small and medium enterprises (SMEs) to the economy is larger in many southern European countries. In this article, we argue that SMEs do not capture the core of the German Mittelstand, which instead lies in medium-sized companies larger than the current SME defi nition.     

International entrepreneurial SMEs in the muslim world: The role of religion in the GCC countries

Recent studies examining the internationalisation of SMEs in emerging economies have observed that religion affects international market entry, which suggests that specific cultural aspects, such as religion, have not hitherto received enough attention. Hence, this study examines a theme that has seemingly escaped the research agenda: how does religion affect SMEs’ internationalisation? The study draws empirical evidence from 10 manufacturing SMEs located in the Gulf Cooperation Council (GCC) region. Through an embedded approach to case study research, the study queries the role of religion in the development of intra-Muslim internationalisation and contributes to the scant literature that examines the impact of Islamic values on international business activities. The findings show three dimensions of Islamic entrepreneurship, viz. regional rather than international networking orientation, risk aversion and proactiveness.     

Experience,age and exporting performance in UK SMEs

We consider the determinants of SME exporting performance using a survey of internationally engaged UK SMEs. We first develop a model incorporating organisational and prior managerial learning effects. Our empirical analysis then allows us to identify separately the positive effects on exporting from the international experience of the firm and the negative effects of firm age. Positive exporting effects also result from grafted knowledge – acquired by the recruitment of management with prior international experience. Innovation also has positive exporting effects with more radical new-to-the-industry innovation most strongly linked to inter-regional exports; new-to-the-firm innovation is more strongly linked to intra-regional trade. Early internationalisation is also linked positively to the number of countries to which firms export and the intensity of their export activity. We find no evidence, however, relating early internationalisation to extra-regional exporting, suggesting that early-exporting SMEs tend be ‘born regional’ rather than ‘born global’.