Academic journal article Journal of Small Business Management

Firm Size and the Nature of International Relationships: The Case of Globally Integrated Small Firms

Academic journal article Journal of Small Business Management

Firm Size and the Nature of International Relationships: The Case of Globally Integrated Small Firms

Article excerpt

During the past quarter of a century or so there was a marked increase in the number of studies exploring the internationalization of the small firm. Ihe basic premise of this body of literature was that the size of the firm mattered in the process of internationalization. Research in this area focused heavily on types of forward integration (particularly exporting), and examined a handful of key research questions: which national markets shall a small firm enter, how, and when, as well as the impact of internationalization on business performance. Rather unexpectedly, to date there have been no studies exploring the impact of firm size on the nature of relationships created by small firms. This paper aspires to address this gap in the literature by focusing upon globally integrated small enterprises. Drawing on the evidence of 755firms in five F.Vcountries the paper argues that there are no profound differences in the nature of international relationships created by globally integrated small firms in comparison to their large-scale counterparts. More importantly, however, the paper suggests that power asymmetty and mutuality may coexist in international relationship, and small firms may often occupy positions of power in global commodity chains.

Introduction

The past 20 years or so have been marked by a near universal acknowledgement of the increased integration of firms of all sizes (and particularly small) in international and global networks of production and distribution (Kalantaridis 2004; Tesar and Moini 1998). This led to the emergence of a growing number of studies exploring the internationalization of the small firm (Wright, Westhead, and Ucbasaran 2007). This body of knowledge is underpinned by the conceptual premise thai "size matters." The impact of smallness is invariably conceptualized in terms of resource-related constraints (OECD 2002). as well as the overarching influence Of the entrepreneurial personality (Mcl)ougal and Oviati 2000). The argument goes that as a result of size, the internationalization processes recorded in small businesses are significantly different from those concerning large--often multinational--enterprises (Dimitratos and Jones 2005).

Despite a proliferation of definitions, internationalization, in the small business literature, is viewed as a process of increasing involvement in international operations (Welch and l.uostarinen 1993). hi applying this concept to the analysis of empirical evidence most--although by no means all--studies focus heavily on forward internationalization, and on export in particular (Kalantaridis 2004; Ruzzier, llisrich, and Antoncic 2000). The internationalization of the small firm literature focuses heavily on a handful of key research questions: Which national markets shall a small firm enter? How (mode of entry), and when (in relation to the stage in the development of the firm)? As well as the impact of internationalization on business performance (for comprehensive reviews of the literature see Coviello and McAuley 1999; I'illis 2001; Ruzzier, Hisrich, and Antoncic 2006; and Wright. Westhead, and Ucbasaran 2007). The bulk of this research maintains a strong policy orientation: exploring the actions needed in order to encourage small firms to internationalize (ELM 2005). Within this context, particular emphasis is placed on overcoming liabilities relating to newness." "smallness," and "inexperience," as well as the perceived power of large firms that may dominate markets right. Westhead. and Ucbasaran 2007). Within this context, the development of networks and relationships is often viewed as a means of ensuring "that appropriate resources, knowledge, and learning are accumulated to provide a positive platform for internationalization" (Wright, Westhead, and Ucbasaran 2007, 1023). Rather unexpectedly, however, to date, then- have been no studies exploring the impact of firm size on structures governing relationships created by small firms (a gap also identified in the most recent review of the relevant literature by Wright, Westhead. …

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