Internationalisation of SMEs: Enabling, Motivating, Mediating, and Moderating Forces

Aim/Research QuestionSmall and medium enterprises (SMEs) comprise around 99.8% of the total enterprise population of Europe (European Commission, 2015). Consequently understanding why, how, and when they internationalise is of... [ view full abstract ]

Aim/Research Question

Small and medium enterprises (SMEs) comprise around 99.8% of the total enterprise population of Europe (European Commission, 2015). Consequently understanding why, how, and when they internationalise is of significant practical and theoretical interest (Fletcher et al., 2013; Olejnik & Swoboda, 2012). Two contrasting streams of research have conceptualised SME internationalisation: the Uppsala School-influenced, traditional, `stage model´ of progressive internationalisation to neighbouring countries, with gradual acquisition of knowledge and experience (Johanson & Vahlne, 2009); versus SMEs with accelerated internationalisation from the outset sometimes termed ‘Born Global’ (Rialp et al., 2005).

Oviatt and McDougall’s (2005) widely-cited model suggests that the forces of technology, competition, the entrepreneurial actor's attitude, networks and knowledge act as enabling, motivating, moderating and mediating forces that influence the speed of internationalisation. There is limited research comparing the impact of these forces on stage versus accelerated internationalising SMEs (Chetty & Campbell-Hunt, 2004; Langseth et al., 2016).  Therefore the research questions identified for this study are:

• To what extent can Oviatt and McDougall´s (2005) model of forces be identified as enabling, motivating, moderating and mediating factors in the speed of the internationalisation of SMEs?
• To determine whether these factors impact differently on stage versus accelerated internationalised SMEs
• To explore whether networks and knowledge, identified by Oviatt and McDougall (2005), and confirmed by Langseth et al. (2016), as moderating factors, may also or alternatively be seen as enabling factors?

Design/Methodology/Approach

Qualitative interviews were conducted following previous research on internationalisation of SMEs generally (Kalinic & Forza, 2012) and in a variety of international contexts e.g. Australia, Canada, Ireland, New Zealand and Norway (Langseth et al., 2016; Loane & Bell, 2006). This paper broadly follows recent research by Langseth et al. (2016) which compares the forces influencing the speed of internationalisation in eight Norwegian and Irish SMEs (Langseth et al., 2016); here six SMEs from Spain and Ireland are researched. This study follows Langseth et al.’s (2016) criteria that to classify as accelerated a company must have internationalised from inception or within 3 years of inception, and to classify as stage the company must have internationalised more than 3 years from inception. The factors analysed in both Langseth et al. (2016) and this study are Oviatt and McDougall’s (2005) model of forces. Following Langseth et al. (2016) two countries are chosen for comparison: Spain and Ireland - both European countries, both with policies promoting the exporting activity of SMEs (European Commission, 2015). One of the researchers is a Spanish citizen and one an Irish citizen, thus providing relevant personal contacts, context and language skills for both countries.

Personal contacts were used to get a list of exporting SMEs located in Spain and in Ireland. Relevant industries were chosen based on the main sectors of SME activity according to the EU (European Commission, 2015), plus the technology sector, because accelerated SMEs are generally technology-based or enabled (Langseth et al., 2016; Rialp et al., 2005). Purposeful sampling was utilised to select the six SME cases: three Spanish and three Irish companies. See Table 1 for a detailed profile of companies participating in the study.

Findings 

Overall the findings illustrate that, as previous research found, there are elements impacting on the speed of internationalisation, of which the most significant are technology, networks, and knowledge; foreign market knowledge (FMK) mainly in stage companies, and a combination of product market knowledge (PMK) and FMK in accelerated companies. Competition was found to be a subsidiary force. See Table 2 for a precis of detailed findings. Specific findings in relation to the research questions were as follows:

To what extent can Oviatt and McDougall´s (2005) model of forces be identified as enabling, motivating, moderating and mediating factors in the speed of internationalisation of SMEs?

The findings indicate that Oviatt and McDougall’s (2005) model of forces applies to SMEs. However, here we find, along with Langseth et al. (2016), that competitors do not have as strong an influence as Oviatt and McDougall (2005) suggest. Technology is found to be an enabling factor, but, networks should also be considered as such. As previous research also found, knowledge and networks also play a role as moderating factors. Noteworthy however is the additional mediating force highlighted by all companies here, of the role of government agencies as facilitators of the internationalisation process, chiefly by creating networks and offering knowledge, compensating for the resource deficits of SMEs.

To determine whether these factors impact differently on ´stage´ versus ´accelerated´ international SMEs?

Stage companies tend to acquire market knowledge progressively and opt for a measurable and steady internationalisation path in line with the gradualist theories suggested by the Uppsala school (Johanson & Vahlne, 2009). Conversely, the highly specialized industries in which the accelerated companies operate makes product knowledge a key accelerating element over FMK (Kalinic & Forza, 2012) because it allows companies to react faster than competitors, and to skip some steps  (Ghauri, 2000). As previous research indicates networking is a strategic asset for both stage and accelerated companies, being a source of knowledge for stage SMEs (Johanson & Vahlne, 2009) and a source of opportunities for accelerated SMEs (Langseth et al., 2016; Oviatt & McDougall, 2005). The present study confirms Oviatt and McDougall’s (2005) and Langseth et al.’s (2016) findings that technology is an enabling factor that impacts on the speed of internationalisation

To explore whether network and knowledge, identified by Oviatt and McDougall (2005), and confirmed by Langseth et al (2016), as moderating factors, may also or alternatively be seen as enabling factors?

Foreign market knowledge is a powerful tool for stage companies because it allows them to overcome a barriers to internationalisation. In stage companies, networks do not have such a strong influence, although they allow for accumulation of FMK. The overall findings in this study suggest that networks are an enabling factor in internationalisation for both stage and accelerated companies, rather than a moderating force as Oviatt and McDougall (2005) propose. In addition the findings suggest that networks are growing in importance in relation to paths to internationalisation.

Research limitations/implications

The research is limited to SMEs in Spain and Ireland. An alternative selection of countries, or broader scope might lead to different conclusions or insights.

The interplay between knowledge and networks would be better studied separately from other forces because there are multiple variables and typologies that could be considered, and only some of them, such as FMK, PMK or weak and strong ties, have been explored in this study.

Practical implications 

Given the key role of networking in internationalisation governments might do well to consider strengthening this role of intermediary agencies supporting export and internationalisation efforts of domestic SMEs.

Social implications

International experience and entrepreneurial attitude have a significant impact on SME internationalisation, consequently governments might consider integration of international and entrepreneurial programmes in the second level education system, and reinforcing programmes aimed at promoting international educational or professional exchanges.

Originality/value 

This study offers a new finding of the mediating force of the role of government agencies in facilitating the internationalisation process in creating networks and knowledge. It is original in combining Irish and Spanish firms, and extends Langseth et al.’s (2016) study which compares Irish and Norwegian firms. It is one of the few to compare internationalisation forces impacting on stage versus accelerated companies. It contributes to a wide body of literature confirming the relevance and appropriateness of Oviatt and McDougall’s (2005) model of forces of internationalisation.

References

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European Commission. (2015). Report : Small and Medium Sized Enterprises and the Transatlantic Trade and Investment Partnership.

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Kalinic, I., & Forza. (2012). Rapid Internationalisation of Traditional SMEs: Between Gradualist Models and Born Globals. International Business Review 21(4): 694–707. http://dx.doi.org/10.1016/j.ibusrev.(2011).08.002.

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