The internationalization of small firms: The relationship between the global mindset and firms’ internationalization behavior

Some firms in internationally oriented industries are internationalized while other comparable firms in the same sector or industry do not. Observing this difference in strategic behavior among small firms led us to consider how differences in CEOs’ attitudes, international orientation, and mindset might explain it. Therefore, this study adopts a cognitive perspective on management to explore the formation of the global mindset and the relationship between the global mindset of small-firm decision makers and their firms’ internationalization behavior. A theory-based conceptual model and measurement instrument are developed and—using structural equation modeling—the model is estimated based on empirical data from cross-sectional samples of small Norwegian and Portuguese firms. The study finds: (1) a strong causal relationship between the global mindset and firms’ internationalization behavior; (2) the combination of the findings and substantive theory indicates that the main driver of firms’ internationalization operates through the global mindset. This study also covers the factors that strongly influence the formation of a global mindset, especially the decision makers’ work experience and personal characteristics in terms of propensity to interdisciplinary collaboration, cognitive flexibility, and networking capability. Based on these findings, suggestions are made for policies that can foster the internationalization of small firms.     

Industry characteristics and internationalization processes in small firms

The purpose of this study of small firms is to compare the process of internationalization in traditional manufacturing companies with corresponding processes in companies oriented toward innovation. Case studies were conducted in six small Nordic companies: three conventional and three innovative. The underlying concept of the conventional companies is strictly production oriented. Investment in engineering workshops and an effective organization for production constitute their most important strategy. In the innovative companies the production equipment is relatively easy to move, and over the years these companies have changed the location of production plants a number of times. The basic meaning of technology also differs in the two categories of industries. The conventional companies are based on an established technology that can be purchased through well-known market channels. In the innovative companies the process of developing new products or serving as intermediary between research organizations and end users demands close contact with people and organizations close to the technological core of the industry.The conventional companies are incorporated into a multidimensional industrial system of suppliers, competitors, and other companies, and the individual companies within these industries are constrained by the rules dictated by these networks. The innovative companies all have a concentrated product scope, which implies that it is relatively easy to achieve efficiency in various functions such as R&D, production, and marketing activities. This clear distinction between functions has been advantageous to the process of internationalization.The conventional companies have characteristics typical of family-controlled companies, i.e., the management team consists of a handful of people often closely associated with the owner family. The observation on the industry level that the game is governed by some very rigid rules is also evident on the management level, where the significant people are always kept within narrow limits. The individuals in the innovative companies have a very high level of education; they work in teams together with partners from other companies and/or organizations and they adhere to high professional demands.The results from these six case studies indicate that the internationalization process must be understood in the context of the industry, company, and people involved. International trade and cooperation will most certainly increase. Therefore it is important to observe that the conditions for industries and single companies are different. Conventional companies have a natural local concentration that ultimately implies different strategies from the innovative companies who have a global focus.     

An institutional work view toward the internationalization of emerging market firms

Through the lens of institutional work – the institutionally embedded practice that aims to create, maintain, or disrupt the rules and shared meanings in social life, we discuss how an emerging economy’s governments establish policies and regulations to develop outward foreign direct investment, and how domestic firms seek to shape these institutional arrangements to suit their interests and needs as they expand overseas. This study underscores the importance of the home country to multinational enterprises. We argue, the policymaking that underpins the internationalization of firms is not only a top-down (state inspired) but also a bottom-up process.     

Technology and export behaviour: A resource-based view approach

A firm's capacity to enter and sell products in international markets requires an important degree of competitiveness, which fundamentally resides in its intangible resources. Thus, in the current work and drawing from the resource-based view of the firm, we analyse the influence of a firm's technological capacity on both its decision to export and its export intensity from a sample of Spanish manufacturing firms using non-linear regression models. Our findings show that product innovations, patents and process innovations positively and significantly affect both the decision to export and the export intensity. R&D spending intensity is not significant in the decision to export, although it is significant in export intensity.     

The internationalization process in the small and medium sized firms: A case study on the Italian clothing industry

In this research we use a data-base that reveals the propensity for contractual ventures and direct investments (1051 operations) of the clothing Italian companies during the period 1987–1991, on a national (342 operations) and international level (709 operations). The latter were analyzed with reference to the internal (412) and external growth strategies (297), cooperative (362) and non-cooperative (347) deals. Our analysis focuses on the different strategies that SMEs, on one hand, and large companies, on the other hand, show in the internationalization process. Main results of the study are:

the international growth of the SMEs takes place mainly through contractual agreements (68%), more so than with non-cooperative operation (32%), whereas in large companies the non-cooperative strategies slightly prevail (54%). Consequently, the external growth strategy is very important for the SMEs (72%) and somewhat less important for the large companies (54%);

the cooperative growth is usually seen by SMEs as an expansion both of the commercial (48% of the operations involves commercial purposes) and of the production areas (48% of the cases). This could indicate that SMEs try to organize on an international level the same network model used in Italy: SMEs decentralize their production within the country through networks of companies and industrial districts, whose horizontal connections (among SMEs themselves) and vertical connections (with large companies) provide flexibility and low costs;

large companies' expectations of the Single European Market have brought a great number of international operations in Europe (24%), notwithstanding the notable importance of Japan (23%) and U.S. (17%); on the contrary, SMEs focus on “niche and rich markets” as Japan (40%); but as far as the contractual agreements are concerned, both types of firm privilege the Japanese market: almost 50% of SMEs' international agreements are directed towards Japan (33% in the large company's case);

large companies and SMEs in the middle and high segments of the market carry out more operations than companies operating in the low quality and casual segments;

generally speaking, in Italy there is an urgent need for industrial policies promoting SMEs access to cooperative instruments (“learning by cooperating”).

     

The internationalization of Nigerian firms: Motivations and location patterns

Despite the increased number of studies of the internationalization of emerging‐market multinationals (EMNCs), Latin American and Asian firms have dominated the focus of such studies, while the study of the internationalization process of sub‐Saharan African firms in the international business literature is quite limited. Therefore, this article examines the motivations and location patterns of the internationalization process of four Nigerian firms through a multiple case study approach. The findings show that the internationalization of the Nigerian firms is a recent phenomenon, but the foreign investment pattern reflects a pan‐African investment strategy. However, the findings also reveal that the firm‐specific advantages that had been accumulated in the domestic market, coupled with home‐country factors and regional‐/host‐market factors, were key determinants of the motivations and location patterns in the internationalization process of Nigerian firms.     

University start-up formation and technology licensing with firms that go public: a resource-based view of academic entrepreneurship

Although academic entrepreneurship is a topic receiving some attention in the literature, higher education's appetite for expanding technology transfer activities suggests that more research is needed to inform practice. This study investigates the effects of particular resource sets on two university commercialization activities: the number of start-up companies formed and the number of initial public offering (IPO) firms to which a university had previously licensed a technology. Utilizing multisource data on 120 universities and a resource-based view of the firm framework, a set of university financial, human capital, and organizational resources were found to be significant predictors of one or both outcomes.     

A cross-national study on the impact of management teams on the rapid internationalization of small firms

While the importance of top management teams in the formation and development of new ventures is well recognised, their impact on the rapid internationalization of such firms remains relatively under-researched. This article presents the findings of a cross-national study conducted in Australia, Canada, Ireland and New Zealand that demonstrate the significant impact that such teams have in creating the core internal capabilities and leveraging the external resources required for rapid and dedicated internationalization. The need to augment the management team in order to address key resource or knowledge gaps and/or to expand international networks is also evident among many firms, as is the impact of changes in team structures on business strategy and internationalization. Directions for future research and implications for public policy in support of rapidly internationalizing small firms are presented and discussed.     

The internationalization of African firms: Opportunities,challenges, and risks

There has been a marked increase in the internationalization activities of African firms over the last two decades or so, resulting in the emergence of regional challenger firms that are aggressively competing with foreign multinationals in terrains historically dominated by the latter. However, our understanding of this phenomenon is limited, as empirical research examining the nature of internationalization of African firms is scarce, and research directly investigating drivers, outcomes, and boundary conditions of the internationalization of African firms is lacking. The goal of this special issue, therefore, is to contribute to the scholarly understanding of the increasingly prevalent internationalization of African firms. This guest editorial provides a summary of the six articles in this special issue, and highlights three broad thematic issues: internationalization opportunities for African firms (accelerated private‐sector development and regional integration, and ability to overcome institutional voids); internationalization challenges (global competitiveness challenges, limited management and cross‐cultural capabilities, and overcoming the liability of Africanness); and internationalization risks (losing focus on home markets and over‐internationalization).     

A resource-based analysis of realized knowledge relatedness in diversified firms

The competitiveness of related diversified firms depends upon their ability to exploit knowledge relatedness by using the internal knowledge transfer processes within the organizational network. However, most existing studies deal with potential knowledge relatedness at the corporate level, rather than focusing on realized knowledge flows among divisions at the business unit level. Little is consequently known about the very essence of related diversifiers, i.e., the management of knowledge flows within the corporate knowledge network. This study therefore attempts to bridge this research gap by distinguishing four knowledge roles within related firms and analyzing their relative performance outcomes. Based on a sample of 116 product divisions, results indicate that divisions playing a knowledge provider role outperform those that not play that role, thus signaling unique resource endowments in the formers. On the contrary, those divisions which plays a knowledge receiving role do not benefit from the internal accumulation of resources.     

Ownership structure and internationalization of Indian firms

We examine the longitudinal relationship between ownership structure and firm internationalization, in a sample of Indian firms. Drawing on principal-principal (PP) agency theory and the resource-based-view (RBV) of the firm, we argue that divergent preferences (motivations) of a firm's owners affect the firm's propensity to internationalize, while resource heterogeneity among these owners (owners' capability to access and provide resources) affects the firm's capability to internationalize. We argue that both motivation and capability are required for firms to pursue internationalization and that when either of these is missing in an owner, that owner's shareholding will be negatively associated with internationalization. Additionally, our results uncover an interesting dichotomy. While family owners with lower levels of ownership favor their firms' internationalization, they do not favor it at higher levels of ownership. Our results indicate that foreign owners appeared to adjust their roles to accommodate the preferences of the dominant family owners.     

Knowledge and internationalization of returnee entrepreneurial firms

This study aims to answer whether and how returnee entrepreneurs’ international experience and returnee entrepreneurial firms’ international market knowledge influence these firms’ internationalization. Anchored in a framework combining an entrepreneurial and knowledge-based view, we develop a model and four hypotheses on the relations between returnee entrepreneurs’ international experience, international market knowledge, international market commitment, and level of internationalization of the returnee entrepreneurial firm. Empirical evidence of the proposed model is derived from a recent sample of Chinese returnee SMEs in knowledge-intensive and high-technology industries. The main finding is that returnee entrepreneurs’ international experience nurtures international market knowledge of returnee entrepreneurial firms, which in turn has a positive effect on these firms’ international market commitment and level of internationalization. In terms of theory, the study extends our understanding of returnee entrepreneurial firms by uncovering the role of returnee entrepreneurs’ international experience and returnee firms’ international market knowledge during their initial and early international expansion.     

The internationalization process of Born Globals: a network view

This paper attempts to make a contribution to the theory of development of the internationalization process of Born Globals. We propose that models emphasizing knowledge and networks are suitable for this purpose. The findings show that Born Globals possess international market knowledge before their first foreign market entry. The selection of foreign market entry mode is based on their existing knowledge and the knowledge supplied by their network ties.     

Imitation and rapid internationalization of emerging market firms

By drawing upon imitation research, this study addresses the role peers play in rapid internationalization by emerging market firms (EMFs). We argue that imitation of industry peers’ international expansion accelerates EMFs’ internationalization speed through two mutually reinforcing mechanisms: information-based imitation, which legitimizes similar operations and conveys valuable information; and rivalry-based imitation, which exerts considerable competitive pressure. We find that industry peers’ international expansion is positively related to EMFs’ internationalization speed. Such positive effect is stronger when EMFs lack prior international experience and when industry competitive intensity is strong.     

Strategies of high performing new and small firms: A reexamination of the niche concept

Entrepreneurs seeking to position new or small firms in industries populated by well established competitors are frequently advised to seek the protection of a market niche. There, shielded by market characteristics which render the niche uninteresting to larger rivals, small firms are urged to compete at the fringe of the market. This article challenges this conventional wisdom, citing industry and firm characteristics which, under certain conditions, create opportunities for successful direct competition by some small or new firms against much larger and established competitors. However, the authors caution that the conditions which created the opportunity may erode in time, rendering the successful challenger vulnerable either to retaliation by the larger firm or challenge from subsequent entrants.Examples of successful direct confrontation by relatively small competitors are drawn from mature, low-tech industries, a rapidly growing high-tech industry and the service sector.     

A resource-based view of partnership strategies in health care organizations

The distribution of management structures in health care has been shifting from independent ownership to interorganizational relationships with other firms. A shortage of resources has been cited as one cause for such collaboration among health care entities. The resource- based view of the firm suggests that organizations differentiate between strategic alliances and acquisition strategies based on a firm's internal resources and the types of resources a potential partner organization possesses. This paper provides a review of the literature using the resource-based theory of the firm to understand what conditions foster different types of health care partnerships. A model of partnership alliances using the resource-based view is presented, strategic linkages are presented, managerial implications are outlined, and directions for future research are given.     

A new entrepreneurial drive in large and small manufacturing firms in Japan

Japan's per capita GDP growth has been decelerating for at least three decades, despite groping towards better ways of accommodating individualistic Smithian market forces. Japan has made great progress in opening markets and fostering profit seeking, yet it has not reaped the benefits anticipated so far. Facing the most severe economic downturn of the post-war period, it is now rethinking the fundaments of its economic and management system. The necessity of developing competitive advantages in new industries has been identified but a crucial question is how they will affect the way industry has organized itself to maximize quality, efficiency and flexibility. It is said that an entrepreneurial culture was not needed during the post-war period in Japan because a group-based industrial organization could generate about the same dynamism and outcome. Nevertheless, this time, a venture-type business culture may be a key factor in the renewal of the Japanese economy to put it back on a sustainable growth path. The objective of the article is to make a critical assessment of the trends in entrepreneurship in Japan, using secondary data. They are complemented by partial results of two surveys made by the author, the first one in 1997 in ten electronic companies on intrapreneurship schemes, and the second one in 1998 in 40 small companies in the Hiroshima prefecture, centred on human resource management. To these are added information obtained through interviews in the small business agency, MITI, and a number of universities on business-university research collaboration schemes.     

Organizational slack and firm’s internationalization: A longitudinal study of high-technology firms

We employ both organization theory and economic theory for exploring how the effects of high-discretion organizational slack and low-discretion organizational slack impact the degree of firm’s internationalization. We tested hypotheses using longitudinal data (2000–2005) from 179 high-technology publicly listed companies in Taiwan. The results indicate a U-shaped relationship exists between high-discretion organizational slack and the internationalization of firms. In contrast, low-discretion organizational slack presents a positive linear relationship with the internationalization of firms.     

Organizational slack as an enabler of internationalization: The case of large Brazilian firms

In this paper, we address an empirical puzzle. We note that a deliberate and serious drive to internationalize has occurred rather late in the evolution of large Brazilian firms. Meanwhile, and despite their late internationalization, these Brazilian firms expanded rapidly and intently. Despite the rich literature on Emerging Market Multinational Enterprises (EMNEs), there is still much contention on what drives rapid EMNE internationalization, particularly for the less explored firms from Latin America. Using an inductive case study of five leading Brazilian MNEs, we bring new insights on this neglected question. We unveil that the existence of organizational slack (of operational, managerial, and financial nature) can indeed facilitate rapid internationalization, particularly when triggered by unique home country conditions (e.g., regulation; rising cost of doing business at home; exhaustion of profitable growth opportunities in the domestic market).     

Human capital in the internationalization of family firms

Research concerning the influence of human capital (HC) on internationalization strategies typically highlights skills displayed by business executives. This article is one of the few studies that examines the values, attitudes, and capabilities related to the HC of international companies. Our study attempts to understand the role that HC plays in the international commitment (IC) achieved by family and nonfamily firms and whether the HC of family firms (FFs) can be considered a source of competitive advantage in pursuing an international strategy. Partial Least Squares method is used for analyzing data collected from 270 Spanish firms. Results show HC differs between family and non‐FFs and plays a crucial role in the international strategy of FFs. Specifically, professional experience, training, and educational level, the degree of market and industry knowledge, specific skills to work in international markets, and concern for employees are superior in FFs, resulting in the achievement of higher levels of IC when compared to non‐FFs. The results should encourage managers and/or owners of these companies to exploit and effectively govern specific human resource strengths when they enter and experience growth in other markets.