Linking market orientation to international market selection and international performance

One key strategic decision in a firm's internationalization process is the international market selection (IMS). IMS must match the firm's own-specific resources and capabilities for optimal performance. This research, drawing on the resource-based view, investigates how a firm's market orientation (MO) resources and capabilities influence the firm's IMS between culturally close and distant markets and how the matching of MO and IMS impacts on its international performance. We hypothesize that market-oriented firms tend to choose culturally distant markets that help them exploit their MO. Firms with a fit between MO and IMS tend to perform better internationally than those without such a fit. Both hypotheses are supported by our database of Chinese manufacturing firms expanding internationally.     

Foreign market entries,exits and re-entries: The role of knowledge,network relationships and decision-making logic

We focus on the following question: how are knowledge, network relationships and decision-making logic interrelated throughout the internationalization process – foreign market entries, exits and re-entries? We contribute to the internationalization literature, network approach and effectuation theory that have not examined these interrelationships during internationalization – especially de- and re-internationalization – in detail yet. Thereby, we provide a more complete view of internationalization. Based on a single punctuated longitudinal case study, we show that lack of knowledge results in mostly effectual (opportunity-driven) decision-making: finding customers via weak ties, trade fairs and unsolicited export orders and experiencing numerous market exits and re-entries due to “experimenting”. Knowledge acquisition leads to more causal (systematic, plan-driven) decision-making and stronger ties, but serendipitous (“by chance”) entries can still occur, and exiting and re-entering foreign markets may continue. We suggest that managers should network and acquire knowledge actively, use both decision-making logics and accept uncertainty as normal during internationalization.     

The mediating role of alliances in the international market orientation-performance relationship of smes

Enhancing international performance is a critical issue for internationalizing SMEs. Researchers have suggested that firms need to enhance their international market orientation (IMO) in order to increase performance; but the way this association works is rather unexplored. This is important for both theory and practice since its exploration would lead to a better understanding on how SMEs can effectively enhance their international performance. In this paper, we examine whether alliances through which firms access knowledge and resources play a mediating role in the IMO and performance relationship. We investigate our hypothesis on a sample of 94 companies based in the United Arab Emirates. We discovered that alliances mediate the IMO-performance relationship and we extend the knowledge- and resource-based views of the firm.     

International market selection and subsidiary performance: A neural network approach

How should multinational enterprises (MNEs) select international markets? We develop a model of international market selection that adds firm-specific advantages and transaction cost considerations to previously explored target market factors based on Dunning's Eclectic Framework. Results obtained using neural network (NN) analysis indicates that our model has strong predictive power in explaining international market selection. Further tests show that firms selecting international markets predicted by the model reported significantly higher subsidiary performance relative to firms whose investments were not predicted by the model. Our results provide strong initial evidence that a firm-level strategic approach to international market selection facilitates MNE success.     

How personal and organizational drivers impact on SME international performance: The mediating role of organizational innovation

This article develops and tests a conceptual model to identify the impact of internal drivers (personal and organizational) on the international performance of small and medium-sized enterprises (SMEs). Drawing on the resource-based view of the firm and its capability extensions, it is argued that the effect of drivers is mediated by organizational innovation. To test the proposed theoretical model, we collected data from 120 exporting SMEs in Portugal. Results show that the indirect mediating effect of innovation is particularly relevant with regard to the organizational driver-performance link. Insights contribute to research on the importance of innovation for capability and resource deployment during internationalization.     

Effect of market orientation,network capability and entrepreneurial orientation on international performance of small and medium enterprises (SMEs)

This study contributes to literature on the internationalization of SMEs by analysing the influence of International Market Orientation, Network Capability, and International Entrepreneurial Orientation on the International Performance of this kind of businesses. Particularly, both the direct effects of explanatory variables of International Performance and interdependence relations between them are analysed. Results obtained from a sample of 161 Mexican SMEs using SEM-PLS analysis show that the International Performance of this kind of businesses is favourably influenced by their Network Capability and International Entrepreneurial Orientation, but not by their International Market Orientation. Similarly, it is verified that interdependence relations exist among the explanatory variables of International Performance of SMEs, where positive impact of International Entrepreneurial Orientation is observed on Network Capability and the International Market Orientation of SMEs.     

SME foreign market entry mode choice and foreign venture performance: The moderating effect of international experience and product adaptation

Firms’ foreign market entry mode choice attracts considerable research attention. However, the performance implications of this choice remain inconclusive, particularly in the context of small and medium-sized enterprises (SMEs). The present paper draws on the resource-based view (RBV) and develops a theoretical model specifically tailored to the context of SMEs in order to study the relationship between entry mode choice and foreign venture performance. Testing hypotheses on 133 German SMEs, we show that international experience as a resource and product adaptation as a capability improve the performance of non-equity entry modes by mitigating liabilities of smallness inherent to SMEs. We furthermore find empirical support for the joint moderating effect of international experience and product adaptation on the focal relation. Our findings contribute to the SME foreign market entry mode literature and have implications for practitioners and future research.     

The supply-side of environmental sustainability and export performance: The role of knowledge integration and international buyer involvement

Most of previous studies seek to understand buyer perspectives in green supply chain relationships and devote inadequate attention to the strategic role of upstream suppliers. Drawing on a market-oriented approach to sustainability, this paper examines the enabling factors and processes that underpin how export suppliers from emerging economies leverage their strategic intent to develop knowledge integration capacity for achieving improved export performance. The results from a sample of Chinese exporters show that the relational capacity of knowledge integration mediates the performance impact of market-oriented environmental sustainability, and such a mediating process of leaning is further enhanced by international buyer involvement. We reveal that relationship efforts should be directed at developing integrative capacity involving key partners for implementing proactive environmental strategy in international business-to-business (B2B) markets. This study contributes to the research of supply chain sustainability in a global context.     

Reciprocity and informal institutions in international market entry

This article first identifies two gaps in the literature: (1) the need to expand international market entry research beyond contractual modes of “make, buy, and ally;” and (2) the need to address the imbalance in the institution-based view that has paid inadequate attention to informal institutions. To help close the two gaps, we identify reciprocity—the mutually contingent exchange of gratifications that is supported by informal institutions—to be a non-contractual mode of international market entry. We focus on how informal institutions provide some of the conditions, motivations, and precipitating circumstances behind the use of reciprocity.     

Strategic human resource practices and innovation performance — The mediating role of knowledge management capacity

This study examines the role of knowledge management capacity in the relationship between strategic human resource practices and innovation performance from the knowledge-based view. This study uses regression analysis to test the hypotheses in a sample of 146 firms. The results indicate that strategic human resource practices are positively related to knowledge management capacity which, in turn, has a positive effect on innovation performance. The findings provide evidence that knowledge management capacity plays a mediating role between strategic human resource practices and innovation performance. Finally, this study discusses managerial implications and highlights future research directions.     

Internationalization of knowledge-intensive SMEs: The role of network relationships in the entry to a psychically distant market

Current research emphasizes the role of extant network relationships in the international development of small- and medium-sized enterprises (SMEs). Inevitably, these relationships are there, most likely, to provide linkages with and facilitate entry into psychically and geographically close markets. But what of firms entering psychically distant markets, for strategic reasons, as is usually the case with knowledge-intensive SMEs? Will existing network relationships remain important, and will they operate in a similar way. In this exploratory case study, in which eight Finnish software SMEs enter the Japanese market, the decision to enter these markets is found to be for strategic reasons rather than in order to follow network relationships. In addition, the way to enter these markets is not seen influenced by extant business relationships. It seems more reasonable to argue that the important relationships were actively utilized or developed to achieve the market entry, and were, in many cases, mediated relationships with non-profit government-owned consulting firms.     

Market entry into Africa: Acquisitions and international joint ventures. Studies of foreign firms' market entry strategies,challenges, and performance in Africa

While the interest in investing in Africa is rising, the know‐how of business on the continent is very limited. There have been only recently few special issues focusing on sub‐Saharan Africa in the top international business journals: “Sub‐Saharan Africa at a key inflection point” (Thunderbird International Business Review 2009); “Contemporary developments in the management of human resources in Africa” (Journal of World Business 2011); “Contemporary challenges and opportunities of doing business in Africa” (Journal of Technological Forecasting and Social Change 2016); “Critical perspectives on international business in Africa (Critical Perspectives on International Business 2016); “Strategic Management in Africa (Global Strategy Journal, 2017); and “The internationalization of African firms (Thunderbird International Business Review 2016). The aim of this special issue is to advance understanding of international business in Africa and specifically focus on how foreign firms enter African markets via acquisitions and international joint ventures and extend knowledge of these market entry strategies and performance in Africa for research and for foreign firms intending to, or currently doing business in Africa. This guest editorial provides a summary of the five articles and one book review in this special issue categorized into three broad thematic issues: International joint ventures and acquisitions as market entry strategies in Africa; cross‐border investments of African firms; and theoretical underpinnings.     

Foreign market entry mode in the hotel industry: The impact of country- and firm-specific factors

One of the key decisions in the internationalisation process of hotel firms is the choice of the entry mode into a foreign country. Many different factors influence this strategic decision. From a sample of 127 entries carried out by Spanish hotel firms between 2001 and 2003, this study provides new empirical evidence that cultural distance reduces the likelihood of choosing equity entry modes, while firm profitability and internal financial funds availability favour the assumption of greater commitment in the international expansion process.     

Market similarity and market selection: Implications for international marketing strategy

International market selection patterns for a sample of 954 new products suggest that firms exhibit a significant preference for markets similar to the home market. Preferences for similar markets decline as firms gain experience in a variety of markets, however. This pattern suggests the importance of uncertainty and information in global market selection and marketing mix management. Alternative means of gathering information about foreign markets permit and support very different approaches to global marketing activity. More fundamentally, a global perspective on the relationship between market conditions, marketing policies and programs, and consumer response can be developed systematically to improve global marketing performance.     

International network formation,home market institutional support and post-entry performance of international new ventures

Effectuation and causation decision-making logics are noted to be major alternative approaches to international network formation. However, knowledge is lacking on how and the conditions under which the two approaches contribute to post-entry performance of international new ventures (INVs). We integrate the theory of effectuation and institutional development logic to explain how effectuation and causation approaches to international network formation individually and jointly contribute to post-entry performance under varying conditions of home market institutional support. We test our proposed framework on primary data from 228 INVs in a sub-Saharan African economy. Results suggest that greater uses of both effectuation and causation approaches to international network formation are associated with stronger post-entry performance. More interestingly, results show that the joint effect of the two international network formation approaches on post-entry performance is amplified under conditions of low home market institutional support. Our findings provide theoretical and managerial insights on the importance of complementing effectual and causal reasoning in international network formation in weak home market institutional environments.     

Trends in international business thought and literature: A review of international market entry mode research: Integration and synthesis

Although entry mode strategy has traditionally been a central topic of research in international business, it is only recently that integrated research frameworks have developed. Largely in response to the dynamic reconfiguration of global business, these new insights from channel management, global strategy, alliances, and political economy have infused new perspectives into entry mode research. This article reviews and synthesizes this literature. Within an over-arching classificatory framework, central themes and sub-themes within this body of literature are identified and their inter-linkages investigated. The evolutionary process of entry mode research is examined. The article concludes with directions for future research and the need to integrate entry mode research with partnering strategies.     

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.     

A hybrid approach to international market selection: The case of impact investing organizations

Social enterprises are hybrid organizations that concurrently pursue social and economic goals and hence are mid-way between conventional capitalistic firms and non-profit organizations. Many social enterprises are becoming international; delivering services across borders. With the objective of understanding the internationalization of these unconventional organizations, this paper examines their international market selection decision based on host countries’ macroeconomic conditions. Generally, we hypothesize that the international market selection decision of social enterprises is tied to their hybridity, an overarching characteristic that sets them apart from other types of organizations. We build an original dataset with information on 41 European and North American impact investing organizations and 153 developing countries. Largely, our findings support the hypothesis, suggesting that social enterprises operate in foreign countries that offer a desirable balance between their social and financial goals. However, they avoid contexts with high country risk, factors that could cause a shortfall in expected returns.     

A global market advantage framework: the role of global market knowledge competencies

The globalization forces engender companies to develop a new set of competencies that would enable the generation of abnormal returns in the global marketplace. This article reviews the extant literature regarding the effect of globalization on organizations and develops a conceptual framework that underlines the importance of knowledge management competencies in creating global market advantage. The knowledge management competencies consist of global customer, competitor and supplier knowledge development, inter-functional coordination and value chain coordination. The relationship between global market knowledge competencies and global market advantage is partially mediated by company's responsiveness. Global market advantage is positively associated with company's strategic and financial performance.     

Social capital and new product development outcomes: The mediating role of sensing capability in Chinese high-tech firms

This study investigates the effects of social capital (trust and power) on a high-tech firm's new product development outcomes through the leveraging of its sensing capability in an emerging market, China. A sample of high-tech firms in China is used to test the proposed relationships. Findings confirm that both trust and power in a high-tech firm's social network are significantly associated with its two new product development outcomes through sensing capability which fully mediates the relationships.