The international market selection of Chinese SMEs: How institutional influence overrides psychic distance |
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| Affiliation: | 1. UQ Business School, University of Queensland, 39 Blair Dr, St Lucia, QLD, 4067, Australia;2. School of Management, QUT Business School, Queensland University of Technology, 2 George Street, Brisbane City, QLD, 4000, Australia;3. School of Management, Massey University, North Shore, Auckland, 0745, New Zealand;1. Ehrenberg-Bass Institute, University of South Australia Business School, 70 North Terrace, Adelaide, South Australia, 5000, Australia;2. University of South Australia (Online), 60 Light Square, Adelaide, South Australia, 5000, Australia;1. Department of Accounting, Finance and Economics, Salford Business School, Maxwell Building, University of Salford, The Crescent, Salford, Manchester M5 4WT, UK;2. Department of Logistics, Marketing, Hospitality and Analytics, Huddersfield Business School, University of Huddersfield, Queensgate Road, Huddersfield HD1 3DH, UK;1. Chair for International Management, University of Fribourg, Boulevard de Pérolles 90, 1700 Fribourg, Switzerland;2. Chair for International Management, University of Fribourg, Boulevard de Pérolles 90, 1700 Fribourg, Switzerland;1. School of Management, University of Bradford, Bradford, United Kingdom;2. KFUPM Business School, King Fahd University of Petroleum and Minerals, Saudi Arabia;3. Leicester Business School, De Montfort University, Leicester, United Kingdom;4. Kent Business School, University of Kent, United Kingdom;5. Leeds University Business School, University of Leeds, Leeds, United Kingdom;6. Beacom School of Business, University of South Dakota, United States;1. University of Strathclyde Business School, Department of Strategy and Organisation, 26 Richmond Street, Glasgow G1 1XH, UK;2. Birkbeck, University of London, Department of Management, Malet Street, Bloomsbury, London WC1E 7HX, UK;3. Sheffield Business School, Sheffield Hallam University, City Campus, Howard Street, Sheffield S1 1WB, UK |
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| Abstract: | 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. |
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| Keywords: | International market selection Home institutions Government support Guanxi Psychic distance Chinese SMEs |
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