Academic journal article The Qualitative Report

Straussian Grounded-Theory Method: An Illustration

Academic journal article The Qualitative Report

Straussian Grounded-Theory Method: An Illustration

Article excerpt

Background Information

It has been widely acknowledged that existing theories on firm-based internationalization are unable to explain the internationalization of small and medium-sized enterprises (SMEs) in transition economies (Griffith, Cavusgill, & Xu, 2008; Pisani, 2009). Firstly, the theories were constructed with data from developed economies (Canabala & White III, 2008; Werner, 2002) where the fundamental conditions for internationalization (such as availability of information, market structure, institutional stability, property rights, etc.) greatly differ from those in transition economies (Nee, 1992;; Peng, 2000; Peng & Heath, 1996). Therefore, analysis of the institutional variables of countries in transition is becoming an important component of our understanding of the globalization of business (Pisani 2009).

Furthermore, several assumptions underlying the existent theory are far removed from realities in transition economies (see Barney, Wright, & Ketchen, 2001; Benito, Petersen, & Welch, 2009; Buckley & Casson, 2009; Dunning, 2001; Johanson & Vahlne, 2009; Peng, 2001). For example, nontransparent information flows and lack of recourses and experience inhibit SMEs in these countries to acquire extensive knowledge of their domestic markets, let alone international markets. Moreover, managers of such firms are not free to choose the most efficient entry mode but the existent literature tends to assume so (Brouthers & Hennart, 2007). As a result, several theoretical statements (such as "firms internationalize in order to boost their profits and performance"; "firms internationalize in a systematic and planned manner"; "internationalization of firms is guided by its learning curve and follows sequential stages" etc.) do not appear to be applicable to firms in transition economies (Bjorkman & Forsgren, 2000; Masurel & Smit, 2000; Turnbull, 1993; Papadopoulos, 1988). It has been argued that how and why firms internationalize are dependent upon their relationships and external environment (Granovetter, 1985) but we still lack an empirically based theory that shows which of the many possible contextual factors influence the firm's internationalization process and how.

On the other hand, the literature built on data from transition economies and emerging markets has not yet addressed the process of internationalization as a whole although it has touched certain aspects of internationalization such as organization of joint-ventures in transition economies' turbulent environment (Mainela & Puhakka, 2009), export orientation of returnee entrepreneurs (Filatotchev, Liu, Buck, & Wright, 2009), factors influencing outward foreign direct investment (Yiu, Lau, & Bruton, 2007), drivers of internationalization from developing countries to developed countries (Yamakawa, Peng, & Deeds, 2008), and so on. Nevertheless, these studies strongly suggest that firms in transition economies behave very differently from firms in advanced economies.

For these reasons, transition economies present an interesting context that can help us clarify the existing theory and moves it forward. SMEs from these economies not only have to face with the well-known problems typically encountered by SMEs (e.g., lack of managerial and marketing skills, lack of financial resources and so on; (see Huang & Brown, 1999 for a full list), but also are further constrained by the unstable institutional environment at home as well as their lack of international knowledge and experience. For them, doing business abroad is like taking cautious steps into unknown territory rather than as a consequence of a rational choice based on economic analyses (Masurel & Smit 2000). Therefore, internationalization literature in the behavioral school of thought became our important starting point for our quest to understand the nature of the internationalization process of SMEs based in transition economies. …

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