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Internationalization of SMEs

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Flashcards 105
Language English
Category Micro-Economics
Level University
Created / Updated 08.01.2022 / 17.01.2022
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3 push factors of internationalization 

  • market expansion strategy (niche)
  • follower strategy (customer)
  • transfer production units 

internationalization, def

firm increasing its operational involvement beyond national boundaries 

5 modes of internationalisation 

  • direct and indirect export 
    • FDI: producing abroad
  • import (cusromers, resources, goods, staff)
  • international partnership
  • international incentives 
  • franchising or licensing 

uppsala model, steps 

  1. indirect exporting
  2. direct exporting
  3. own exporting 
  4. franchising
  5. joint venture
  6. wholly owned subsidiary 

uppsala model, overall idea 

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firm consolidates position in home market, then expands in close neighbor countries, gradually commits in foreigh market 

uppsala model approach 

  • firm's level of commitment positively correlated to experience and accumlated knowledge from previous interactions 
    • effectuation approach: try out and see result
    • causation approach: market study 

assumptions of uppsala model

  • internationalisation is risky, managers are risk averse
  • market knowledge is driver of internationalisation
    • experimental (experience before knowledge) 
  • resource commitment defined by market knowledge and market commitment 

I-model stages 

  1. export awareness
  2. export intention
  3. export trial 
  4. export evaluation 
  5. export acceptance 

critics uppsala and I model

  • presented as historical descriptions
  • not customer driven
  • iternationalization follows patters, little influence of manager
  • litlle advice to manager 

network approach

  • internationalisation is a process of constinuously establishing relationships and managing them 
    • experimental knowledge 
    • relationships embedded in networks 
  • firm enters market through
    • new relationships w actor in new market
    • additional commitment in already existing market 

typoloogy of firms 4 (degree of int)

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  1. early starter: low degree of int of firm, low degree of int of newtorks 
  2. late starter: low degree of int of firm, low degree of int of networks
  3. lonely international: high degree of int of firm, low degree of int of netowrks 
  4. international among others: high degree of int of firm, high degree of int of netowrks 

measure degree of int of firm

  • market diversification (nb of countries)
  • export intensity (% of turnover abroad) 

measure degree of int of networks 

nb of international relationships 

proportion of international relationships 

open questions w network approach 

  • no predictability (too many variables, no pattern)
  • no criteria for types of participants
  • ignores external factors and actors 

types of networks 

  • personal or professional
  • bonding ties (common background)
  • bridging ties (common sector) 

born global 

  • firms internationalizing in first 2 years 
    • IT sector, Australian export 
  • 1990s
    • small is beautiful
    • gradual internationalization is dead 

born global results of 4:

  • new developments in market 
  • technological development 
  • increasing global networks 
  • entrepreneurs w enriched capabilities 

examples of success factors of born globals for 

  • entrepreneurial perspective
  • organizational perspective
  • strategic perpsective
  • external environment

  • entrepreneurial perspective: experience, ability 
  • organizational perspective: innovation culture, business network
  • strategic perpsective: competitive strategy
  • external environment perspective: policies 

financial reason for internationalisation

  1. find investors
  2. escape competition
  3. find attractive market 
  4. innovation culture 

covid 19 internationalization 

problem and key developments (6)

  • challenging global supply chain 
  • developments 
    • reshoring and nearshoring 
    • localization and regionalization
    • contingency planning 
    • diversification
    • agility
    • visibility
    • digitalization 

causal logic 

  • select a goal and use the means to achieve it 
    • goals and means are given
    • maximize decision outcomes 
  • problem: external situation can affect plan 

effectual logic 

  • start by identifying means without fixing goal, goal emerges from interaction w stakeholders 

causal logic elements 

effectual logic 

resource 

tangible or intangible assets a firm uses to choose and implementits strategies 

competitive advantage 

when a firm creates more economic value than its competitors 

resource as source of competitive advantage 

  1. valuable 
  2. rare 
  3. costly to imitate (time + money) 
  4. without close substitutes (organized / exploited) 

VRIO and competitive advantage 

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-: non sustainable BM

V: short term sustainable BM

VR: profitable BM 

VRI: long term sustainable BM

VRIO: BM w competitive advantage  

knowledge, def

familiarity, awareness or understanding 

  • propostional (facts)
  • procedural (skills)
  • acquaintance (objects) 

capability, def

ability to perform or achieve actions or outcomes 

competence 

set of demonstrable skills and characteristics to enable performance or efficiency 

capability as product and competence as product 

  • capability product of 
    • knowlegde
    • skills
  • competence product of
    • capability 
    • attitude 

explicit vs tacit knowledge 

  • explicit: codified
  • tacit: intuitive and unarticulated 
    • technical (know-how)
    • cognitive (beliefs, values, mental models) 

firms w high or low turnover 

  • more turnover is more loss of knowlegde, but more new knowledge coming in 

5 knowledge management activities 

  1. identifiy
  2. create
  3. store
  4. share
  5. use 

4 experimental knowledge types for SMEs 

  1. internationalization knowledge
  2. institutional knowledge 
  3. business knowledge 
  4. social network knowledge 

market driven learning 

international market knowledge based on experimental knowledge derived through direct interaction 

2 tier market driven learning: customer and competitor learning 

6 entrepreneurial comeptences 

  1. conceptual
  2. opportunity
  3. relationship
  4. organizing
  5. strategic
  6. commitment 

organizational capability 

firm's ability to perform tasks utilizing organizational resources to achieve an end result or to improve performance 

internal dimension 

gloabl mindset

manager's openness to cultural and strategic realities 

  • lean twds effectuation based logic 
  • understand how to convert uncertainty into opportunity 
  • manage geographically spread operations despite diversity 

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